UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 June 30, 2015.
¨ TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
for the transition period from ______to _________.
Commission file number: 000-29363
(Exact name of registrant as specified in
its charter)
Nevada |
|
88-0343702 |
(State or other jurisdiction of
incorporation or organization) |
|
(IRS Employer
Identification No.) |
1771 E. Flamingo Road, #201-A
Las Vegas, NV |
|
89119 |
(Address of principal executive offices) |
|
(Zip Code) |
(702) 734-3457
(Registrant’s telephone number, including
area code)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes
¨ No x
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant
to Rule 405 of Regulation S-T (§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
x No ¨
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" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. (Check
one):
Large accelerated filer¨ |
Accelerated filer¨ |
|
|
Non-accelerated
filer¨
(Do not check if a smaller reporting company) |
Smaller reporting companyx |
Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act).
Yes
¨ No x
The number of shares outstanding of the Registrant’s Common
Stock on August 18, 2015 was 307,957,144.
PLAYERS NETWORK
FORM 10-Q
Quarterly Period Ended June 30, 2015
INDEX |
|
|
|
|
Page |
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS |
|
PART I. FINANCIAL INFORMATION |
|
Item 1. |
Financial Statements |
3 |
|
Balance Sheets as of June 30, 2015 (Unaudited) and December 31, 2014 |
3 |
|
Statements of Operations for the Three and Six Months ended June 30, 2015 and 2014 (Unaudited) |
4 |
|
Statements of Cash Flows for the Six Months ended June 30, 2015 and 2014 (Unaudited) |
5 |
|
Notes to the Condensed Consolidated financial statements (Unaudited) |
6 |
Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
29 |
Item 3. |
Quantitative and Qualitative Disclosures About Market Risk |
41 |
Item 4. |
Controls and Procedures |
41 |
|
|
|
PART II. OTHER INFORMATION |
|
Item 1. |
Legal Proceedings |
42 |
Item 1A. |
Risk Factors |
42 |
Item 2. |
Unregistered Sales of Equity Securities and Use of Proceeds |
42 |
Item 3. |
Defaults Upon Senior Securities |
43 |
Item 4. |
Mine Safety Disclosures |
43 |
Item 5. |
Other Information |
44 |
Item 6. |
Exhibits |
46 |
|
|
|
SIGNATURES |
48 |
SPECIAL NOTE REGARDING FORWARD—LOOKING
STATEMENTS
On one or more occasions, we may make forward-looking
statements in this Quarterly Report on Form 10-Q regarding our assumptions, projections, expectations, targets, intentions or beliefs
about future events. Words or phrases such as “anticipates,” “may,” “will,” “should,”
“believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,”
“projects,” “targets,” “will likely result,” “will continue” or similar expressions
identify forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject
to risks, uncertainties, and assumptions that are difficult to predict, including those identified in our Annual Report on Form
10-K. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We
undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future
events or otherwise. However, your attention is directed to any further disclosures made on related subjects in our subsequent
annual, periodic and current reports and other documents filed or furnished with the Securities and Exchange Commission.
Unless the context requires otherwise,
references to “we,” “us,” “our,” and the “Company” refer specifically to Players
Network.
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
PLAYERS NETWORK
CONDENSED CONSOLIDATED BALANCE SHEETS
| |
June 30, | |
December 31, |
| |
2015 | |
2014 |
Assets | |
(Unaudited) | |
|
| |
| |
|
Current assets: | |
| | | |
| | |
Cash | |
$ | 11,019 | | |
$ | 207,167 | |
Deferred television costs | |
| 116,454 | | |
| 116,454 | |
Other current assets | |
| 76,353 | | |
| 3,975 | |
Total current assets | |
| 203,826 | | |
| 327,596 | |
| |
| | | |
| | |
Investments, cost method | |
| — | | |
| — | |
Fixed assets, net | |
| 73,454 | | |
| 71,271 | |
Debt issuance costs, net | |
| 4,868 | | |
| 9,959 | |
| |
| | | |
| | |
Total Assets | |
$ | 282,148 | | |
$ | 408,826 | |
| |
| | | |
| | |
Liabilities and Stockholders' (Deficit) | |
| | | |
| | |
| |
| | | |
| | |
Current liabilities: | |
| | | |
| | |
Accounts payable | |
$ | 285,070 | | |
$ | 264,723 | |
Accrued expenses | |
| 222,232 | | |
| 180,579 | |
Deferred revenues | |
| 135,000 | | |
| 135,000 | |
Deferred rent obligations | |
| 4,064 | | |
| 4,432 | |
Convertible debentures, net of discounts of $459,113 and $537,505 at June 30, 2015 and December 31, 2014, respectively | |
| 185,287 | | |
| 183,998 | |
Short term debt | |
| — | | |
| 10,625 | |
Derivative liabilities | |
| 975,041 | | |
| 1,417,187 | |
Total current liabilities | |
| 1,806,694 | | |
| 2,196,544 | |
| |
| | | |
| | |
Total Liabilities | |
| 1,806,694 | | |
| 2,196,544 | |
| |
| | | |
| | |
Stockholders' (Deficit): | |
| | | |
| | |
Series A convertible preferred stock, $0.001 par value, 2,000,000 shares authorized; 2,000,000 shares issued and outstanding | |
| 2,000 | | |
| 2,000 | |
Series B convertible preferred stock, $0.001 par value, 10,873,347 shares authorized; -0- and 4,349,339 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | |
| — | | |
| 4,349 | |
Common stock, $0.001 par value, 600,000,000 shares authorized; 274,096,232 and 179,271,304 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively | |
| 274,096 | | |
| 179,271 | |
Additional paid-in capital | |
| 26,408,380 | | |
| 25,041,295 | |
Subscriptions payable, consisting of -0- and 1,534,929 shares at June 30, 2015 and December 31, 2014, respectively | |
| — | | |
| 19,238 | |
Accumulated (deficit) | |
| (28,013,572 | ) | |
| (26,848,642 | ) |
| |
| (1,329,096 | ) | |
| (1,602,489 | ) |
Noncontrolling Interest | |
| (195,450 | ) | |
| (185,229 | ) |
Total Stockholders' (Deficit) | |
| (1,524,546 | ) | |
| (1,787,718 | ) |
| |
| | | |
| | |
Total Liabilities and Stockholders' (Deficit) | |
$ | 282,148 | | |
$ | 408,826 | |
See accompanying notes to financial statements.
PLAYERS NETWORK
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
| |
For the Three | |
For the Six |
| |
Months Ended | |
Months Ended |
| |
June 30, | |
June 30, |
| |
2015 | |
2014 | |
2015 | |
2014 |
| |
| |
| |
| |
|
Revenue: | |
$ | 213 | | |
$ | 141,167 | | |
$ | 520 | | |
$ | 141,457 | |
| |
| | | |
| | | |
| | | |
| | |
Expenses: | |
| | | |
| | | |
| | | |
| | |
Direct operating costs | |
| 17,445 | | |
| 190,952 | | |
| 42,048 | | |
| 236,971 | |
General and administrative | |
| 153,465 | | |
| 201,236 | | |
| 394,762 | | |
| 354,867 | |
Officer salaries | |
| 45,850 | | |
| 44,339 | | |
| 140,195 | | |
| 427,656 | |
Depreciation and amortization | |
| 7,535 | | |
| 6,778 | | |
| 15,071 | | |
| 12,515 | |
Total operating expenses | |
| 224,295 | | |
| 443,305 | | |
| 592,076 | | |
| 1,032,009 | |
| |
| | | |
| | | |
| | | |
| | |
Net operating loss | |
| (224,082 | ) | |
| (302,138 | ) | |
| (591,556 | ) | |
| (890,552 | ) |
| |
| | | |
| | | |
| | | |
| | |
Other income (expense): | |
| | | |
| | | |
| | | |
| | |
Gain on debt extinguishment | |
| — | | |
| 2,510 | | |
| 6,482 | | |
| 343,335 | |
Interest expense | |
| (335,642 | ) | |
| (59,573 | ) | |
| (627,233 | ) | |
| (127,233 | ) |
Change in derivative liabilities | |
| (115,105 | ) | |
| 223,015 | | |
| 37,156 | | |
| (437,311 | ) |
Total other income (expense) | |
| (450,747 | ) | |
| 165,952 | | |
| (583,595 | ) | |
| (221,209 | ) |
| |
| | | |
| | | |
| | | |
| | |
Net loss | |
$ | (674,829 | ) | |
$ | (136,186 | ) | |
$ | (1,175,151 | ) | |
$ | (1,111,761 | ) |
Less: Net loss attributable to the noncontrolling interest | |
| 9,223 | | |
| — | | |
| 10,221 | | |
| — | |
Net loss attributable to Players Network | |
$ | (665,606 | ) | |
$ | (136,186 | ) | |
$ | (1,164,930 | ) | |
$ | (1,111,761 | ) |
| |
| | | |
| | | |
| | | |
| | |
Weighted average number of common shares outstanding - basic and fully diluted | |
| 237,907,752 | | |
| 156,085,155 | | |
| 216,401,748 | | |
| 149,779,119 | |
| |
| | | |
| | | |
| | | |
| | |
Net loss per share - basic and fully diluted | |
$ | (0.00 | ) | |
$ | (0.00 | ) | |
$ | (0.01 | ) | |
$ | (0.01 | ) |
See accompanying notes to financial statements.
PLAYERS NETWORK
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| |
For the Six |
| |
Months Ended |
| |
June 30, |
| |
2015 | |
2014 |
Cash flows from operating activities | |
| | | |
| | |
Net (loss) | |
$ | (1,164,930 | ) | |
$ | (1,111,761 | ) |
Minority interest in net loss | |
| (10,221 | ) | |
| — | |
Adjustments to reconcile net (loss) to net cash used in operating activities: | |
| | | |
| | |
Depreciation and amortization expense | |
| 15,071 | | |
| 12,515 | |
Gain on debt extinguishment | |
| (6,482 | ) | |
| (343,335 | ) |
Change in fair market value of derivative liabilities | |
| (37,156 | ) | |
| 437,311 | |
Amortization of convertible note payable discounts | |
| 513,614 | | |
| 88,096 | |
Amortization of debt issuance costs | |
| 14,091 | | |
| 8,238 | |
Stock issued for services | |
| 191,191 | | |
| 207,427 | |
Stock issued for compensation, related party | |
| 73,800 | | |
| 147,500 | |
Options and warrants granted for services | |
| — | | |
| 27,252 | |
Options and warrants granted for services, related party | |
| — | | |
| 217,971 | |
Decrease (increase) in assets: | |
| | | |
| | |
Accounts receivable | |
| — | | |
| (2,950 | ) |
Deferred television costs | |
| — | | |
| 116,454 | |
Prepaid expenses | |
| (72,378 | ) | |
| (4,850 | ) |
Increase (decrease) in liabilities: | |
| | | |
| | |
Accounts payable | |
| 20,347 | | |
| (48,633 | ) |
Accrued expenses | |
| 68,852 | | |
| 13,903 | |
Deferred revenues | |
| — | | |
| (135,000 | ) |
Deferred rent obligations | |
| (368 | ) | |
| (421 | ) |
Net cash used in operating activities | |
| (394,569 | ) | |
| (370,283 | ) |
| |
| | | |
| | |
Cash flows from investing
activities | |
| | | |
| | |
Purchase of fixed assets | |
| (17,254 | ) | |
| (34,648 | ) |
Net cash used in investing activities | |
| (17,254 | ) | |
| (34,648 | ) |
| |
| | | |
| | |
Cash flows from financing activities | |
| | | |
| | |
Proceeds from convertible debentures | |
| 344,000 | | |
| 441,500 | |
Repayment of convertible debentures | |
| (111,200 | ) | |
| (38,000 | ) |
Repayment of short term debt | |
| (8,125 | ) | |
| (8,125 | ) |
Payments on debt issuance costs | |
| (9,000 | ) | |
| (11,250 | ) |
Proceeds from sale of common stock | |
| — | | |
| 131,000 | |
Net cash provided by financing activities | |
| 215,675 | | |
| 515,125 | |
| |
| | | |
| | |
Net increase (decrease) in cash | |
| (196,148 | ) | |
| 110,194 | |
Cash - beginning | |
| 207,167 | | |
| 4,696 | |
Cash - ending | |
$ | 11,019 | | |
$ | 114,890 | |
| |
| | | |
| | |
Supplemental disclosures: | |
| | | |
| | |
Interest paid | |
$ | 37,742 | | |
$ | 31,729 | |
Income taxes paid | |
$ | — | | |
$ | — | |
| |
| | | |
| | |
Non-cash investing and financing activities: | |
| | | |
| | |
Value of debt discounts | |
$ | 417,722 | | |
$ | 434,627 | |
Value of shares issued for conversion of debt | |
$ | 350,620 | | |
$ | 88,068 | |
Value of derivative adjustment due to debt conversions | |
$ | 822,712 | | |
$ | 598,246 | |
See accompanying notes to financial statements.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
Note 1 – Basis of Presentation
The interim condensed consolidated financial
statements of Players Network (the “Company”) included herein, presented in accordance with United States generally
accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures
normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed
or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to not make
the information presented misleading.
These statements reflect all adjustments,
which in the opinion of management, are necessary for fair presentation of the information contained therein. Except as otherwise
disclosed, all such adjustments are of a normal recurring nature. It is suggested that these interim condensed consolidated financial
statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2014 and
notes thereto included in the Company's annual report on Form 10-K filed with the SEC. The Company follows the same accounting
policies in the preparation of interim reports.
Principles of Consolidation
The accompanying consolidated financial
statements include the accounts of the following entities, all of which are under common control and ownership:
| |
State of | |
| |
Abbreviated |
Name of Entity(2) | |
Incorporation | |
Relationship | |
Reference |
Players Network(1) | |
Nevada | |
Parent | |
PNTV |
Green Leaf Farms Holdings, Inc.(2) | |
Nevada | |
Subsidiary | |
GLFH |
Green Leaf Medical, LLC(3) (4) | |
Nevada | |
Subsidiary | |
GLML |
(1)Players Network entity is
in the form of a Corporation.
(2)Majority-owned subsidiary
formed on July 8, 2014, in which PNTV retained 83% ownership, with the remaining 17% held by key experts and advisors.
An additional 1.6% was sold to an investor on December 8, 2014, giving PNTV 81.4% ownership and minority interests ownership
of 18.6% as of December 31, 2014.
(3)Wholly-Owned subsidiary of
GLFH formed for prospective purposes, but has not incurred any income or expenses to date.
(4)Entity formed for prospective
purposes, but has not incurred any income or expenses to date.
The consolidated financial statements herein
contain the operations of the wholly-owned subsidiaries listed above. All significant inter-company transactions have been eliminated
in the preparation of these financial statements. The parent company, PNTV and subsidiaries, GLFH and GLML will be collectively
referred to herein as the “Company”, “Players Network” or “PNTV”. The Company's headquarters
are located in Las Vegas, Nevada and substantially all of its customers are within the United States.
Fair Value of Financial Instruments
Under FASB ASC 820-10-05, the Financial
Accounting Standards Board 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 this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying
amounts of cash, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate
fair value primarily due to the short term nature of the instruments. In addition, the Company had debt instruments that required
fair value measurement on a recurring basis.
Deferred
Television Costs
Deferred television costs included direct
production and development costs stated at the lower of cost or net realizable value based on anticipated revenue. Production overhead
is not included as the Company outsources its production costs to third party vendors. Capitalized television production costs
for each pilot episode are to be expensed as revenues are recognized upon delivery and acceptance of the completed pilot episodes
using the individual-film-forecast-computation method for each television show produced. The Company recognized $95,000 of revenues
on November 1, 2012 with the completion of the first of three pilot episodes; and accordingly, recognized $75,617 of expenses related
to the development of the pilot. The remaining $135,000 of revenues, and corresponding $116,454 of deferred television costs, were
deferred and will be recognized upon completion and delivery of the remaining content. We also delivered a series of ‘webisodes’
and miscellaneous footage in the second quarter of 2014, however, the recipient refused to accept the modification of the terms
and we had to reverse the recognition and defer the revenue and related television costs as of December 31, 2014.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
Deferred television costs consist of the
following at June 30, 2015 and December 31, 2014:
| |
June 30, | |
December 31, |
| |
2015 | |
2014 |
Development and pre-production costs | |
$ | — | | |
$ | — | |
In-production | |
| 68,264 | | |
| 68,264 | |
Post production | |
| 48,190 | | |
| 48,190 | |
Total deferred television costs | |
$ | 116,454 | | |
$ | 116,454 | |
Due to practical limitations applicable
to monetizing our developed content over On-Demand networks, the Company has not considered collectability of advertising or television
license revenues to be reasonably assured, and accordingly, the Company has expensed production costs related to the development
of our On-Demand and internet-based content as incurred.
Revenue
Recognition
The Company recognizes revenue from its
internet television platform from internally generated products and from partnered merchants when the following criteria are met:
persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability
is reasonably assured. These criteria are met when the customers purchase a product or access a web-based video, the product or
web-based video has been electronically delivered to the purchaser and payment has been received. At that time, the Company's obligations
to the customer is substantially complete. The Company records the net amount it retains from the sale of items from its internet
television platform after paying any agreed upon percentage of the purchase price to the featured advertising merchant excluding
any applicable taxes. Revenue is recorded on a net basis because the Company is acting as an agent of the partnered merchant in
the transaction. 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 over the period in which the subscription service is available. 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 and collection is reasonably assured.
Revenue from the distribution of domestic
television series is recognized as earned using the following criteria:
| · | Persuasive evidence of an arrangement
exists; |
| · | The show/episode is complete, and in accordance
with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery; |
| · | The license period has begun and the customer
can begin its exploitation, exhibition or sale; |
| · | The price to the customer is fixed and
determinable; and |
| · | Collectability is reasonably assured. |
Due to practical limitations applicable
to operating relationships with On-Demand networks, the Company has not considered collectability of advertising or television
license revenues to be reasonably assured, and accordingly, the Company has not recognize such revenue unless payment has been
received.
Audio/Video content licensing revenues
were recognized when the underlying royalties from the sales of the related products were earned. The Company recognized minimum
revenue guarantees, if any, ratably over the term of the license or as earned royalties based on actual sales of the related products,
if greater.
Deferred revenues consist of the following
at June 30, 2015 and December 31, 2014:
| |
June 30, | |
December 31, |
| |
2015 | |
2014 |
| |
| | | |
| | |
Deferred revenues on television pilot episodes | |
$ | 135,000 | | |
$ | 135,000 | |
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
Deferred Rent Obligation
The Company has entered into operating
lease agreements for its corporate office and GLFH’s warehouse which contains provisions for future rent increases. In accordance
with generally accepted accounting principles, the Company records monthly rent expense equal to the total of the payments due
over the lease term, divided by the number of months of the lease terms. The difference between rent expense recorded and the amount
paid is credited or charged to “Deferred rent obligation,” which is reflected as a separate line item in the accompanying
Balance Sheets.
Derivative Liability
The Company evaluates its convertible instruments,
options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives
to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment
is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event
that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income
(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 ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification
date. We analyzed the derivative financial instruments (the Convertible Note and tainted Warrant), in accordance with ASC 815.
The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s
own stock. This determination is needed for a scope exception which would enable a derivative instrument to be accounted for under
the accrual method. The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on
whether the instrument is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s
own stock cannot be classified as equity and must be accounted for as a liability. There is a two-step approach in determining
whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument's contingent exercise
provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions. The Company utilized
multinomial lattice models that value the derivative liability within the notes based on a probability weighted discounted cash
flow model. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the
amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing
parties, that is, other than in a forced or liquidation sale.
Recent Accounting Pronouncements
In April 2015, the Financial Accounting
Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03, Interest–Imputation
of Interest (Subtopic 835-30) (“ASU 2015-03”), which changes the presentation of debt issuance costs in financial
statements. ASU 2015-03 requires an entity to present such costs in the balance sheet as a direct deduction from the related debt
liability rather than as an asset. Amortization of the costs will continue to be reported as interest expense. It is effective
for annual reporting periods beginning after December 15, 2016. Early adoption is permitted. The new guidance will be
applied retrospectively to each prior period presented. The Company is currently in the process of evaluating the impact of adoption
of ASU 2015-03 on its balance sheets.
In August 2014, the FASB issued ASU No.
2014-15, Presentation of Financial Statements - Going Concern (Subtopic 205-40) (“ASU 2014-15”), which
addresses management's responsibility to evaluate whether there is substantial doubt about an entity's ability to continue as a
going concern and in certain circumstances to provide related footnote disclosures. The standard is effective for the annual period
beginning after December 15, 2016 and for annual and interim periods thereafter. Early adoption is permitted. The Company
does not believe that the adoption of ASU 2014-15 will have a material impact on its financial statements.
In May 2014, the FASB issued ASU No. 2014-09,
Revenue from Contracts with Customers (“ASU 2014-09”), which supersedes the revenue recognition requirements
in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics
of the Codification. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred
to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09
is effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting
period, and early application is not permitted. ASU 2014-09 allows for either full retrospective or modified retrospective adoption.
We do not expect the adoption of the new provisions to have a material impact on our financial condition or results of operations.
No other new accounting pronouncements,
issued or effective during the first half of 2015, have had or are expected to have a significant impact on the Company’s
financial statements.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
Note 2 – Going Concern
As shown in the accompanying condensed
consolidated financial statements, the Company has incurred recurring losses from operations resulting in an accumulated deficit
of ($28,013,572), and as of June 30, 2015, the Company’s current liabilities exceeded its current assets by $1,602,868
and its total liabilities exceeded its total assets by $1,524,546. 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. Management believes these factors will contribute
toward achieving profitability. The accompanying financial statements do not include any adjustments that might be necessary if
the Company is unable to continue as a going concern.
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. These 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
Officers
On April 19, 2015, a total of 120,000 warrants
held by our CEO with a strike price of $0.15 per share expired.
On February 14, 2015, a total of 80,000
warrants held by our CEO with a strike price of $0.15 per share expired.
On January 25, 2015, the Company issued
1,500,000 shares of common stock to its CEO as compensation for services as a Director. The total fair value of the common stock
was $24,600 based on the closing price of the Company’s common stock on the date of grant.
Officer compensation expense was $140,195
and $427,656 at June 30, 2015 and 2014, respectively. The balance owed was $18,238 and $22,940 at June 30, 2015
and 2014, respectively.
Board of Directors
On February 29, 2015, a total of 300,000
options held by one of the Company’s Directors expired.
On January 25, 2015, the Company issued
1,500,000 shares of common stock to its President of Programming as compensation for services as a Director. The total fair value
of the common stock was $24,600 based on the closing price of the Company’s common stock on the date of grant.
On January 25, 2015, the Company issued
1,500,000 shares of common stock to one of its Directors as compensation for services as a Director. The total fair value of the
common stock was $24,600 based on the closing price of the Company’s common stock on the date of grant.
Note 4 – Fair Value of Financial
Instruments
Under FASB ASC 820-10-5, fair value is
defined 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 FASB ASC 820-10-50 details the disclosures that are required
for items measured at fair value.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
The Company has convertible notes that
must be measured under the new fair value standard. 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:
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.
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 schedule summarizes the valuation
of financial instruments at fair value on a non-recurring basis in the balance sheets as of June 30, 2015 and December 31, 2014,
respectively:
| |
Fair Value Measurements at June 30, 2015 |
| |
Level 1 | |
Level 2 | |
Level 3 |
Assets | |
| |
| |
|
Cash | |
$ | 11,019 | | |
$ | — | | |
$ | — | |
Total assets | |
| 11,019 | | |
| — | | |
| — | |
Liabilities | |
| | | |
| | | |
| | |
Convertible debentures, net of discounts of $459,113 | |
| — | | |
| — | | |
| 185,287 | |
Derivative liability | |
| — | | |
| — | | |
| 975,041 | |
Total liabilities | |
| — | | |
| — | | |
| 1,160,328 | |
| |
$ | 11,019 | | |
$ | — | | |
$ | (1,160,328 | ) |
| |
Fair Value Measurements at December 31, 2014 |
| |
Level 1 | |
Level 2 | |
Level 3 |
Assets | |
| |
| |
|
Cash | |
$ | 207,167 | | |
$ | — | | |
$ | — | |
Total assets | |
| 207,167 | | |
| — | | |
| — | |
Liabilities | |
| | | |
| | | |
| | |
Convertible debentures, net of discounts of $537,505 | |
| — | | |
| — | | |
| 183,998 | |
Short term debt | |
| — | | |
| 10,625 | | |
| — | |
Derivative liability | |
| — | | |
| — | | |
| 1,417,187 | |
Total liabilities | |
| — | | |
| 10,625 | | |
| 1,601,185 | |
| |
$ | 207,167 | | |
$ | (10,625 | ) | |
$ | (1,601,185 | ) |
There were no transfers of financial assets
or liabilities between Level 1 and Level 2 inputs for the six months ended June 30, 2015 and the year ended December 31, 2014.
Level 2 liabilities consisted of a short
term, unsecured, promissory note. No fair value adjustment was necessary during the six months ended June 30, 2015 and
the year ended December 31, 2014.
Level 3 liabilities consist of a total
of $644,400 and $721,503 of convertible debentures and the related derivative liability as of June 30, 2015 and December 31, 2014,
respectively. A discount of $459,113 and $537,505 was recognized at June 30, 2015 and December 31, 2014, respectively.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
Note 5 – Subsidiary Formation
On July 8, 2014, we formed a subsidiary,
Green Leaf Farms Holdings, Inc. (“GLFH”), in which we retained 83% ownership, with the remaining 17% held by key experts
and advisors, of which 16% was distributed to individuals as compensation for their services, including 3% to Mr. Bradley, CEO
and 1% to Mr. Berk, President of Programming, and an additional 1% was sold to one of those individuals for $60,000. An additional
1.6% was sold to an investor on December 8, 2014, giving PNTV 81.4% ownership and minority interests ownership of 18.6%
as of December 31, 2014. The subsidiary has been formed as a holding company to potentially own additional subsidiaries
that may operate medical marijuana related businesses. These additional subsidiaries have yet to be formed, and, or, acquired,
with the exception of Green Leaf Medical, LLC (“GLML”), which was formed on July 18, 2014 and has no activity to date.
We had applied for a Medical Marijuana Dispensary special use permit with the City of Las Vegas, and Cultivation and Processing
special use permits in North Las Vegas and a license for all permits in the State of Nevada, and have currently been granted the
two special use permits in North Las Vegas, however there can be no assurance we will be able to conduct these operations. As such,
there is a risk that we may not be able to expand our operations into this field as intended.
Note 6 – Investments
On May 11, 2011, we acquired a 10% interest
in iCandy, Inc. (“ICI”), and a 10% interest in iCandy Burlesque, Inc. (“ICB”), Nevada entertainment companies
that develop and operate a variety of entertainment shows in the United States, primarily in casinos within Las Vegas, NV and Atlantic
City, NJ. We acquired the interests in exchange for $25,499 that was in turn spent on the development of a promotional video that
was to be distributed on our website. In addition, we agreed to pay a license fee of 20% of the adjusted gross revenues that we
were to earn from the distribution and sales related to the promotional video content. No such revenues have been earned to date.
On March 23, 2011 and April 20, 2011 we then loaned $19,000 and $1,000, respectively, to ICI on an unsecured convertible promissory
note carrying a 6% interest rate, maturing on May 11, 2012. In accordance with ASC 310-10-35-17, we applied normal loan
review procedures and determined it was probable all amounts due from our loan would not be collected due to the financial condition
of the debtor. As a result, we recognized impairment of $20,000 in 2011. On November 1, 2012, the Company elected to convert the
total note receivable of $22,477, consisting of $20,000 of principal and $2,477 of interest receivable in exchange for an additional
7.5% ownership interest in ICI, and 7.5% interest in ICB. The conversion resulted in a total ownership of 17.5% in both entities
as of November 1, 2012. Both the investments and the note receivable had been written off as impaired in 2011 due to valuation
and collectability uncertainties, as a result the 17.5% investment in both entities are no longer on the balance sheets as of June 30, 2015
and December 31, 2014.
Note 7 – Fixed Assets
Fixed assets consist of the following at
June 30, 2015 and December 31, 2014, respectively:
| |
June 30, | |
December 31, |
| |
2015 | |
2014 |
Office equipment | |
$ | 48,884 | | |
$ | 48,884 | |
Website development costs | |
| 99,880 | | |
| 99,880 | |
Furniture and fixtures | |
| 2,730 | | |
| 2,730 | |
Warehouse equipment | |
| 17,254 | | |
| — | |
| |
| 168,748 | | |
| 151,494 | |
Less accumulated depreciation | |
| (95,294 | ) | |
| (80,223 | ) |
| |
$ | 73,454 | | |
$ | 71,271 | |
Depreciation and amortization expense totaled
$15,071 and $12,515 for the six months ended June 30, 2015 and 2014, respectively.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
Note 8 – Accrued Expenses
As of June 30, 2015 and December 31, 2014
accrued expenses included the following:
| |
June 30, | |
December 31, |
| |
2015 | |
2014 |
Accrued Payroll, Officers | |
$ | 18,238 | | |
$ | 228 | |
Accrued Payroll and Payroll Taxes | |
| 135,234 | | |
| 135,234 | |
Accrued Interest | |
| 68,760 | | |
| 45,117 | |
| |
$ | 222,232 | | |
$ | 180,579 | |
Note 9 – Convertible Debentures
Convertible debentures consist of the following
at June 30, 2015 and December 31, 2014, respectively:
| |
June 30, | |
December 31, |
| |
2015 | |
2014 |
On June 25, 2015, the Company received net proceeds of $105,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (12%) with a face value of $115,500 (“Fourth Vista Note”), which matures on June 1, 2016, as part of a larger financing agreement that enables the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carries a total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing bid prices during the sixteen (16) trading days prior to the conversion request date. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 120% of the outstanding balance at the time of default. The promissory note carries a $10,500 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company must at all times reserve at least 35 million shares of common stock for potential conversions as depicted in the First Vista Note. | |
$ | 115,500 | | |
$ | — | |
| |
| | | |
| | |
On June 24, 2015, the Company issued an 8% interest bearing; unsecured convertible promissory note with a face value of $119,052 (“First Collier Note”), which matures on June 23, 2017 in exchange for the cancellation of three outstanding JMJ Notes, consisting of an aggregate of $108,492 of principal and $10,560 of interest, that were acquired by Collier Investments, LLC. The principal and interest is convertible into shares of common stock at 70% of the lowest volume weighted average price (“VWAP”) over the 20 days prior to conversion. The note includes prepayment cash redemption penalties of 145% of outstanding principal and interest, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company must at all times reserve at least 100 million shares of common stock for potential conversions. Upon default, 145% of outstanding principal and interest shall be due immediately. | |
| 119,052 | | |
| — | |
| |
| | | |
| | |
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
On June 15, 2015, the Company received net proceeds of $15,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (12%) with a face value of $16,500 (“Third Vista Note”), which matures on June 1, 2016, as part of a larger financing agreement that enables the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carries a total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing bid prices during the sixteen (16) trading days prior to the conversion request date. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 120% of the outstanding balance at the time of default. The promissory note carries a $1,500 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company must at all times reserve at least 35 million shares of common stock for potential conversions as depicted in the First Vista Note. | |
| 16,500 | | |
| — | |
| |
| | | |
| | |
On May 15, 2015, the Company received net proceeds of $60,000 in exchange for an 8% interest bearing; unsecured convertible promissory note dated May 1, 2015 with a face value of $64,000 (“First Vis Vires Note”), which matures on February 5, 2016. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to 61% of the average of the three (3) lowest closing bid prices over the 10 days prior to conversion. The note includes various prepayment penalties ranging from 112% through 130%, and default provisions of 150% of the then outstanding principal and interest, and an interest rate of 22% thereafter. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company must at all times reserve at least 59 million shares of common stock for potential conversions. | |
| 64,000 | | |
| — | |
| |
| | | |
| | |
On March 11, 2015, the Company received net proceeds of $70,000 in exchange for a 12% interest bearing; unsecured convertible promissory note dated March 2, 2015 with a face value of $75,000 (“First JSJ Note”), which matures on September 2, 2015. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to the lesser of: (i) 58% of the average of the two (2) lowest closing prices over the 10 days prior to conversion; or (ii) 58% of the average of the two (2) lowest closing prices over the 10 days prior to the execution of the note (which was $0.008932). The note includes prepayment cash redemption penalties between 25% and 40% of outstanding principal and interest, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company must at all times reserve at least 30 million shares of common stock for potential conversions. | |
| 75,000 | | |
| — | |
| |
| | | |
| | |
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
On February 5, 2015, the Company received net proceeds of $50,000 with a face value of $53,750 that carries an 8% interest rate (“Second Tangiers Note”), which matures on February 5, 2016. The note is part of total loan offering with a $236,500 face value and OID of 7.5% of any consideration paid, whereby $75,250 was previously advanced with the initial execution of the note on October 13, 2014. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty percent (60%) of the average of the two lowest trading prices of the Company’s common stock for the fifteen (15) trading days prior to, and including, the conversion date. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to fifty percent (50%), rather than the sixty percent (60%) conversion rate while that “Chill” is in effect, and an additional 5% discount if the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer (“FAST”) is not eligible for a cumulative total conversion price equal to forty five percent (45%). The note carries a twenty percent (20%) interest rate and $1,000 per day of liquidated damages in the event of default, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company paid total debt issuance cost of $2,500 that is being amortized on the straight line method, which approximates the effective interest method, over the life of the loan. The Company must at all times reserve at least 5 million shares of common stock for potential conversions. | |
| 53,750 | | |
| — | |
| |
| | | |
| | |
On January 27, 2015, the Company received $35,000 in exchange for an unsecured convertible promissory note with a face value of $36,750 that carries a 12% interest rate (“Second Group 10 Note”), which matures on January 27, 2016. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to the lesser of (a) fifty-eight percent (58%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of forty-two percent (42%)) or (b) five cents ($0.05). The conversion price is subject to the following adjustments: i. If the market capitalization of the Borrower is less than Three Hundred Thousand Dollars ($300,000) on the day immediately prior to the date of the Notice of Conversion, then the Conversion Price shall be twenty-five percent (25%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of seventy-five percent (75%)); and ii. If the closing price of the Borrower’s Common Stock on the day immediately prior to the date of the Notice of Conversion is less than .001 then the Conversion Price shall be twenty-five percent (25%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of seventy-five percent (75%)). The note carries an eighteen percent (18%) interest rate in the event of default along with a $1,000 penalty per business day commencing the business day following the date of the event of default. The note also includes prepayment cash redemption penalties between up to 15% of outstanding principal and interest, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The promissory note carries a $1,750 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company must at all times reserve at least 20 million shares of common stock for potential conversions. | |
| 36,750 | | |
| — | |
| |
| | | |
| | |
On December 15, 2014, the Company received net proceeds of $60,000 in exchange for an unsecured convertible promissory note with a face value of $64,000 that carries an 8% interest rate (“Second KBM Note”), which matures on June 13, 2015. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty one percent (61%) of the average of the three (3) lowest closing bid prices of the Company’s common stock over the ten (10) trading days prior to the conversion date. The note carries a twenty two percent (22%) interest rate in the event of default, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company paid a debt issuance cost of $4,000 that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company reserved at least 25 million shares of common stock for potential conversions. On June 25, 2015, the Company repaid the loan, consisting of $64,000 of principal and $22,400 of interest and prepayment penalties. The Note was subsequently cancelled as paid in full and the reserved shares have been released. | |
| — | | |
| 64,000 | |
| |
| | | |
| | |
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
On November 5, 2014, the Company received net proceeds of $100,000 in exchange for an unsecured convertible promissory note with a face value of $104,000 that carries an 8% interest rate (“First KBM Note”), which matures on July 29, 2015. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty one percent (61%) of the average of the three (3) lowest closing bid prices of the Company’s common stock over the ten (10) trading days prior to the conversion date. The note carried a twenty two percent (22%) interest rate in the event of default, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company paid a debt issuance cost of $4,000 that was amortized over the life of the loan on the straight line method, which approximates the effective interest method. On various dates between May 7, 2015 and June 9, 2015, the note holder elected to convert a total of $94,300 of principal in exchange for 24,955,749 shares. On June 25, 2015, the Company repaid $12,000, consisting of $9,700 of principal and $2,300 of interest. The Company reserved at least 43 million shares of common stock for potential conversions. The Note was subsequently cancelled as paid in full and the reserved shares have been released. | |
| – | | |
| 104,000 | |
| |
| | | |
| | |
On October 13, 2014, the Company received net proceeds of $70,000 in exchange for an unsecured convertible promissory note with a face value of $75,250 that carries an 8% interest rate (“First Tangiers Note”), which matures on October 13, 2015. The note is part of total loan offering with a $236,500 face value and OID of 7.5% of any consideration paid. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty percent (60%) of the average of the two lowest trading prices of the Company’s common stock for the fifteen (15) trading days prior to, and including, the conversion date. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to fifty percent (50%), rather than the sixty percent (60%) conversion rate while that “Chill” is in effect, and an additional 5% discount if the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer (“FAST”) is not eligible for a cumulative total conversion price equal to forty five percent (45%). The note carries a twenty percent (20%) interest rate and $1,000 per day of liquidated damages in the event of default, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company paid total debt issuance cost of $2,500 that is being amortized on the straight line method, which approximates the effective interest method, over the life of the loan. On various dates between April 27, 2015 and June 23, 2015, the note holder elected to convert a total of $43,500 of principal in exchange for 12,680,782 shares. The Company must at all times reserve at least 5 million shares of common stock for potential conversions. | |
| 31,750 | | |
| 75,250 | |
| |
| | | |
| | |
On September 22, 2014, the Company received net proceeds of $35,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (12%) with a face value of $38,500 (“Second Vista Note”), which matures on June 1, 2016, as part of a larger financing agreement that enables the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carries a total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing bid prices during the sixteen (16) trading days prior to the conversion request date. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 120% of the outstanding balance at the time of default. The promissory note carries a $3,500 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company must at all times reserve at least 35 million shares of common stock for potential conversions as depicted in the First Vista Note. | |
| 38,500 | | |
| 38,500 | |
| |
| | | |
| | |
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
On August 19, 2014, the Company received net proceeds of $40,000 in exchange for an unsecured convertible promissory note, bearing interest at 8% annually, with a face value of $80,000 (“Second WHC Note”), which matures on August 19, 2015. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to fifty seven and a half percent (57.5%) of the average of the two (2) lowest closing bid prices of the Company’s common stock over the ten (10) trading days immediately preceding the conversion request date. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 150% of the outstanding balance at the time of default, and the interest rate increases to twenty two percent (22%) per annum. The promissory note carries a $5,000 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company must at all times reserve at least 12 million shares of common stock for potential conversions. The Note is currently in default. | |
| 45,000 | | |
| 45,000 | |
| |
| | | |
| | |
On July 15, 2014, the Company received net proceeds of $35,000 in exchange for an unsecured convertible promissory note that carries an 8% interest rate with a face value of $37,500 (“Third LG Note”), which matures on March 15, 2015. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty percent (60%) of the lowest trading price of the Company’s common stock for the twelve (12) trading days prior to, and including, the conversion date if received after 4PM Eastern Standard Time. The note also carries an additional “Back-end Note” with the same terms as the original note that enables the lender to lend the Company another $37,500, less $1,750 of debt issuance costs and $3,500 in due diligence fees, with a holding period that tacks to the original note for purposes of Rule 144 of the Securities Exchange Act of 1934. The note carries an eighteen percent (18%) interest rate in the event of default, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to 55% instead of 60% while that “Chill” is in effect. The Company paid total debt issuance cost of $2,500 that was amortized over the life of the loan on the straight line method, which approximated the effective interest method. The Company had to at all times reserve at least 9,513,000 shares of common stock for potential conversions. On March 12, 2015, the Company repaid $50,542, consisting of $37,500 of principal and $13,042 of interest and prepayment penalties. The convertible promissory note was subsequently cancelled as paid in full and the reserved shares have been released. | |
| – | | |
| 37,500 | |
| |
| | | |
| | |
On June 13, 2014, the Company received net proceeds of $75,000 in exchange for an unsecured convertible promissory note, bearing interest at 8% annually, with a face value of $80,000 (“First WHC Note”), which matures on June 13, 2015. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty two and a half percent (62.5%) of the average of the two (2) lowest closing bid prices of the Company’s common stock over the ten (10) trading days immediately preceding the conversion request date. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 150% of the outstanding balance at the time of default, and the interest rate increases to twenty two percent (22%) per annum. The promissory note carries a $5,000 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. In addition, the Company issued warrants to purchase 1.5 million shares of the Company’s common stock at a strike price of $0.05 per share exercisable over three years from the date of issuance. On various dates between December 26, 2014 and June 18, 2015, the note holder elected to convert a total of $78,000 of principal in exchange for 14,872,903 shares of common stock. The Company must at all times reserve at least 24 million shares of common stock for potential conversions. The Note is currently in default. | |
| 2,000 | | |
| 70,000 | |
| |
| | | |
| | |
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
On June 2, 2014, the Company received net proceeds of $50,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (12%) with a face value of $55,000 (“First Vista Note”), which matures on June 1, 2016, as part of a larger financing agreement that enables the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carries a total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing bid prices during the sixteen (16) trading days prior to the conversion request date. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 120% of the outstanding balance at the time of default. The promissory note carries a $5,000 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. On various dates between December 10, 2014 and April 16, 2015, the note holder elected to convert a total of $43,402 of principal in exchange for 7,165,571 shares. The Company must at all times reserve at least 35 million shares of common stock for potential conversions. | |
| 11,598 | | |
| 45,762 | |
| |
| | | |
| | |
On May 20, 2014, the Company received net proceeds of $100,000 in exchange for an unsecured convertible promissory note, bearing interest at 10% annually, with a face value of $113,000 (“First Typenex Note”), which matures on May 19, 2015. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the three (3) lowest (“Trading Prices”), whereby Trading Price is defined as the volume weighted average price (“VWAP”) of the Company’s common stock over the fifteen (15) trading days prior to the conversion request date. If the arithmetic average of the three (3) lowest Trading Prices is less than $0.01, then the Conversion Factor will be reduced to 60%. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 125% of the outstanding balance at the time of default, and the interest rate increases to twenty two percent (22%) per annum. The promissory note carries a $10,000 Original Issue Discount, and loan origination costs of $3,000, that are being amortized over the life of the loan on the straight line method, which approximates the effective interest method. On various dates between November 24, 2014 and June 11, 2015, the note holder elected to convert a total of $122,121, consisting of $113,000 of principal and $9,121 of interest, in exchange for 17,864,267 shares of common stock. In addition, another 656,735 shares, valued at $10,508 were issued pursuant to a forbearance agreement as a penalty for delays in the issuance of one of the conversions. The Company reserved at least three times the number of shares equal to the outstanding balance divided by the conversion price, but in any event not less than 22 million shares of common stock for potential conversions. The Note was satisfied in full and the reserved shares have been released. | |
| – | | |
| 78,000 | |
| |
| | | |
| | |
On May 9, 2014, the Company received $50,000 in exchange for an unsecured convertible promissory note that carries a 12% interest rate (“First Group 10 Note”), which matures on May 8, 2015. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to the lesser of (a) fifty eight percent (58%) of the average of the two lowest closing bid prices of the Company’s common stock for the seventeen (17) trading days prior to the conversion notice date, or (b) four and a half cents ($0.045) per share. The note carries an eighteen percent (18%) interest rate in the event of default, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The promissory note carries a $2,500 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. On various dates between November 10, 2014 and February 2, 2015, the note holder elected to convert a total of $53,536, consisting of $50,000 of principal and $3,536 of interest, in exchange for 5,346,392 shares of common stock in complete satisfaction of the debt. The convertible promissory note was subsequently cancelled as paid in full. The Company had to reserve at least 20 million shares of common stock for potential conversions. The Note was satisfied in full and the reserved shares have been released. | |
| – | | |
| 20,000 | |
| |
| | | |
| | |
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
On April 24, 2014, the Company received net proceeds of $33,250 in exchange for an unsecured convertible promissory note that carries an 8% interest rate with a face value of $35,000 (“Second LG Note”), which matures on April 11, 2015. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to fifty five percent (55%) of the average of the lowest closing bid prices of the Company’s common stock for the twelve (12) trading days prior to, and including, the conversion date. The note carries an eighteen percent (18%) interest rate in the event of default, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company paid total debt issuance cost of $1,750 that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company must at all times reserve at least 5 million shares of common stock for potential conversions. On October 31, 2014, the note holder sent demand for repayment. The note is currently in default. | |
| 35,000 | | |
| 35,000 | |
| |
| | | |
| | |
On April 17, 2014, the Company received net proceeds of $40,000 in exchange for a non-interest bearing, unsecured convertible promissory note with a face value of $44,000 (“Fourth JMJ Note”), which matures on April 16, 2015, as part of a larger financing agreement that enables the Company to draw total proceeds of $400,000 at the discretion of the lender. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to fifty five percent (55%) of the lowest trading price of the Company’s common stock over the twenty five (25) trading days prior to the conversion request date, as amended within the original promissory note on April 10, 2014. The note carries a one-time twelve percent (12%) of principal interest charge in the event of default, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The promissory note carries a $4,000 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company reserved at least 60 million shares of common stock for potential conversions. This Note was sold and assigned to Collier Investments, LLC and, on June 24, 2015, was exchanged in the aggregate with two other JMJ Notes for the First Collier Note in the amount of $119,052, consisting of $108,492 of principal and $10,560 of interest. The Note was satisfied in full and the reserved shares have been released. | |
| – | | |
| 44,000 | |
| |
| | | |
| | |
On February 20, 2014, the Company received net proceeds of $40,000 in exchange for a non-interest bearing, unsecured convertible promissory note with a face value of $44,000 (“Third JMJ Note”), which matures on February 19, 2015, as part of a larger financing agreement that enables the Company to draw total proceeds of $400,000 at the discretion of the lender. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the lowest trading price of the Company’s common stock over the twenty five (25) trading days prior to the conversion request date, as amended within the original promissory note on April 10, 2014. An additional 5% discount applies on conversion shares that are ineligible for deposit into the DTC system and are only eligible for Xclearing deposit. The note carries a one-time twelve percent (12%) of principal interest charge if the note isn’t repaid within the first ninety (90) days, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The promissory note carries a $4,000 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company reserved at least 60 million shares of common stock for potential conversions, as noted in the First JMJ Note disclosure. This Note was sold and assigned to Collier Investments, LLC and, on June 24, 2015, was exchanged in the aggregate with two other JMJ Notes for the First Collier Note in the amount of $119,052, consisting of $108,492 of principal and $10,560 of interest. The Note was satisfied in full and the reserved shares have been released. | |
| – | | |
| 44,000 | |
| |
| | | |
| | |
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
On June 4, 2013, the Company received net proceeds of $25,000 in exchange for a non-interest bearing, unsecured convertible promissory note with a face value of $27,500 (“Second JMJ Note”), which matures on June 3, 2014, as part of a larger financing agreement that enables the Company to draw total proceeds of $400,000 at the discretion of the lender. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the lowest trading price of the Company’s common stock over the twenty five (25) trading days prior to the conversion request date. An additional 5% discount applies on conversion shares that are ineligible for deposit into the DTC system and are only eligible for Xclearing deposit. The note carries a one-time twelve percent (12%) of principal interest charge if the note isn’t repaid within the first ninety (90) days, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company amortized the $2,500 original issuance discount over the life of the loan on the straight line method, which approximated the effective interest method. On May 12, 2014, the note holder elected to convert a total of $10,308, consisting of $7,008 of principal and $3,300 of accrued interest, in exchange for 805,058 shares of common stock. The Company reserved at least 60 million shares of common stock for potential conversions, as noted in the First JMJ Note disclosure. This Note was sold and assigned to Collier Investments, LLC and, on June 24, 2015, was exchanged in the aggregate with two other JMJ Notes for the First Collier Note in the amount of $119,052, consisting of $108,492 of principal and $10,560 of interest. The Note was satisfied in full and the reserved shares have been released. | |
$ | – | | |
$ | 20,491 | |
| |
| | | |
| | |
Total convertible debentures | |
| 644,400 | | |
| 721,503 | |
Less: unamortized debt discounts | |
| (459,113 | ) | |
| (537,505 | ) |
Convertible debentures | |
$ | 185,287 | | |
$ | 183,998 | |
In accordance with ASC 470-20 Debt with
Conversion and Other Options, the Company recorded total discounts of $435,222 and $818,877 for the variable conversion features
of the convertible debts incurred during the six months ended June 30, 2015 and the year ended December 31, 2014,
respectively. The discounts, including Original Issue Discounts of $17,500 and $44,250 during the six months ended June 30, 2015
and the year ended December 31, 2014, respectively, are being amortized to interest expense over the term of the debentures
using the effective interest method. The Company recorded $513,614 and $88,096 of interest expense pursuant to the amortization
of the note discounts during the six months ended June 30, 2015 and 2014, respectively.
In addition, a total of $9,000 and $21,750
of loan origination costs were incurred pursuant to the closings of convertible debentures during the six months ended June 30, 2015,
and the year ended December 31, 2014, respectively, which are being amortized to interest expense over the term of the
debentures using the straight line method, which approximates the effective interest method. The Company recorded $14,091 and $8,238
of interest expense pursuant to the amortization of the loan origination costs during the six months ended June 30, 2015
and 2014, respectively.
All of the convertible debentures carry
default provisions that place a “maximum share amount” on the note holders. The maximum share amount that can be owned
as a result of the conversions to common stock by the note holders is 4.99% of the Company’s issued and outstanding shares.
In accordance with ASC 815-15, the Company
determined that the variable conversion feature and shares to be issued represented embedded derivative features, and these are
shown as derivative liabilities on the balance sheet. The Company calculated the fair value of the compound embedded derivatives
associated with the convertible debentures utilizing a lattice model.
The Company recorded interest expense pursuant
to the stated interest rates on the convertible debentures in the amount of $88,584 and $29,763 for the six months ended June 30, 2015
and 2014, respectively related to convertible debts.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
Note 10 – Investment Agreement
with Dutchess Opportunity Fund II, LP
On November 7, 2012, the Company entered
into an Investment Agreement (“Investment Agreement”) with Dutchess Opportunity Fund, II, LP, a Delaware limited partnership
(“Dutchess”), as amended on July 5, 2013. Pursuant to the terms of the Investment Agreement, Dutchess committed to
purchase, in a series of purchase transactions (“Puts”), up to eight million five hundred thousand ($8,500,000) dollars
of the Company’s common stock over a period of up to thirty-six (36) months from the effective date of the registration statement
covering the Equity Line Financing with Dutchess, which was September 26, 2013.
The amount that the Company is entitled
to request with each Put delivered to Dutchess is equal to, at its option, either (i) two hundred (200%) percent of the average
daily volume (U.S. market only) of its common stock for three (3) trading days prior to the applicable Put Notice Date, multiplied
by the average of the three (3) daily closing prices immediately preceding the Put Date or (ii) fifty thousand ($50,000) dollars.
The purchase price to be paid by Dutchess for the shares of the Company’s common stock covered by each Put will be equal
to ninety-five (95%) percent of the lowest daily volume weighted average price (“VWAP”) of the Company’s common
stock during the period beginning on the Put Notice Date and ending on and including the date that is five (5) trading days after
such Put Notice Date (“Pricing Period”). The “Put Notice Date” is the trading day immediately following
the day on which Dutchess receives a Put Notice from the Company.
For each Put Notice submitted to Dutchess
under the Investment Agreement, there is a Suspension Price of $0.01 for that Put. In the event the common stock falls below the
Suspension Price, the put shall be temporarily suspended. The Put shall resume at such time as the common stock is above the Suspension
Price, provided the dates for the Pricing Period for that particular put are still valid. In the event the Pricing Period has been
complete, any shares above the Suspension Price due to Dutchess shall be sold to Dutchess by us at the volume weighted average
price under the terms of the Investment Agreement.
In conjunction with the Investment Agreement,
the Company also entered into a registration rights agreement (“Registration Rights Agreement”) with Dutchess. Pursuant
to the Registration Rights Agreement, the Company filed a registration statement on Form S-1 with the Securities and Exchange Commission
(“SEC”) on September 26, 2013 covering 22,750,000 shares of the Company’s common stock underlying a portion of
the Investment Agreement. In addition, during the term of the Registration Rights Agreement, the Company is obligated to maintain
the effectiveness of this registration statement, as well as any subsequent registration statements that may be associated with
the Investment Agreement and/or Registration Rights Agreement.
As of the filing date of this report, the
Company had not sold any shares to Dutchess nor received any financing from Dutchess.
Note 11 – Short Term Debt
Short-term debt consists of the following
at June 30, 2015 and December 31, 2014, respectively:
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
4% unsecured debenture, due June 7, 2012. Currently in default. On June 2, 2014, the Company and the lender entered into a settlement agreement whereby the note will be considered satisfactorily paid in full with the successful payment of four equal payments of $8,125 made in quarterly periods, which were delivered on June 27, 2014, August 26, 2014, November 17, 2014 and February 2, 2015. Pursuant to the terms of the settlement agreement, the note was subsequently cancelled as paid in full, and 4,349,339 shares of series B preferred stock held by the lender were exchanged for 4,349,339 shares of common stock. | |
$ | – | | |
$ | 10,625 | |
The Company recorded interest expense pursuant
to the stated interest rate on the above promissory note in the amount of $-0- and $3,592 at June 30, 2015 and 2014,
respectively.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
The following presents components of interest
expense by instrument type at June 30, 2015 and 2014, respectively:
| |
June 30, | | |
June 30, | |
| |
2015 | | |
2014 | |
Interest on convertible debentures | |
$ | 88,584 | | |
$ | 29,763 | |
Amortization of discount on convertible debentures | |
| 513,614 | | |
| 88,096 | |
Amortization of debt issuance costs | |
| 14,091 | | |
| 8,238 | |
Loss on debt conversions | |
| 10,508 | | |
| – | |
Interest on short term debt | |
| – | | |
| 700 | |
Accounts payable related finance charges | |
| 436 | | |
| 436 | |
| |
$ | 627,233 | | |
$ | 127,233 | |
Note 12 – Derivative Liabilities
As discussed in Note 9 under Convertible
Debentures, the Company issued convertible notes payable that provide for the issuance of convertible notes with variable conversion
provisions. The conversion terms of the convertible notes are variable based on certain factors, such as the future price of the
Company’s common stock. The number of shares of common stock to be issued is based on the future price of the Company’s
common stock. The number of shares of common stock issuable upon conversion of the promissory note is indeterminate. Due to the
fact that the number of shares of common stock issuable could exceed the Company’s authorized share limit, the equity environment
is tainted and all additional convertible debentures and warrants are included in the value of the derivative. Pursuant to ASC
815-15 Embedded Derivatives, the fair values of the variable conversion option and warrants and shares to be issued were recorded
as derivative liabilities on the issuance date.
The fair values of the Company’s
derivative liabilities were estimated at the issuance date and are revalued at each subsequent reporting date, using a lattice
model. The Company recognized current derivative liabilities of $975,041 and $1,417,187 at June 30, 2015 and December 31, 2014,
respectively. The change in fair value of the derivative liabilities resulted in a gain (loss) of $37,156 and ($437,311) for the
six months ended June 30, 2015 and 2014, respectively, which has been reported as other income (expense) in the
statements of operations. The gain of $37,156 for the six months ended June 30, 2015 consisted of a loss of $238,821
due to the value in excess of the face value of the convertible notes, a gain of $2,793 attributable to the fair value of preferred
stock, a gain of $109,685 attributable to the fair value of warrants and a net gain in market value of $163,499 on the convertible
notes. The loss of $437,311 for the six months ended June 30, 2014 consisted of a loss of $343,853 due to the value in
excess of the face value of the convertible notes, a gain of $26,732 attributable to the fair value of preferred stock, a loss
of $182,948 attributable to the fair value of warrants and a net loss in market value of $303,138 on the convertible notes.
The following presents the derivative liability
value by instrument type at June 30, 2015 and December 31, 2014, respectively:
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
Convertible debentures | |
$ | 973,970 | | |
$ | 1,301,032 | |
Common stock warrants | |
| 1,071 | | |
| 110,756 | |
Convertible preferred stock | |
| – | | |
| 5,399 | |
| |
$ | 975,041 | | |
$ | 1,417,187 | |
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
The following is a summary of changes in
the fair market value of the derivative liability during the six months ended June 30, 2015 and the year ended December 31, 2014,
respectively:
| |
Derivative | |
| |
Liability | |
| |
Total | |
Balance, December 31, 2013 | |
$ | 648,298 | |
Increase in derivative value due to issuances of convertible promissory notes | |
| 1,434,887 | |
Increase in derivative value attributable to tainted warrants | |
| 20,633 | |
Change in fair market value of derivative liabilities due to the mark to market adjustment | |
| 153,998 | |
Debt conversions | |
| (840,629 | ) |
Balance, December 31, 2014 | |
$ | 1,417,187 | |
Increase in derivative value due to issuances of convertible promissory notes | |
| 656,543 | |
Increase in derivative value attributable to issuance of warrants | |
| – | |
Change in fair market value of derivative liabilities due to the mark to market adjustment | |
| (275,977 | ) |
Debt conversions | |
| (822,712 | ) |
Balance, June 30, 2015 | |
$ | 975,041 | |
Key inputs and assumptions
used to value the convertible debentures and warrants issued during the six months ended June 30, 2015 and the year ended
December 31, 2014:
| · | Stock prices
on all measurement dates were based on the fair market value and would fluctuate with projected volatility. |
| · | The warrant exercise prices ranged from
$0.04 to $0.18, exercisable over 2 to 10 year periods from the grant date. |
| · | The holders of the securities would convert
monthly to the ownership limit starting at 4.99% increasing by 10% per month. |
| · | The monthly trading volume would reflect
historical averages and would increase at 1% per month. |
| · | The holder would automatically convert
the notes at maturity at the greater of 2 times the conversion price or stock price if the registration was effective and the Company
was not in default. |
| · | An event of default for the convertible
note would occur 0% of the time, increasing to 1% per month to a maximum of 5%. |
| · | Alternative financing for the convertible
note would be initially available to redeem the note 0% of the time and increase monthly by 1% to a maximum of 10%. |
| · | The computed volatility was projected
based on historical volatility. |
Note 13 – Changes in Stockholders’
Equity (Deficit)
Convertible
Preferred Stock
The Board, from the authorized capital
of 25,000,000 preferred shares, has authorized and designated 2,000,000 shares of Series A preferred stock (“Series A”)
and 10,873,347 shares of Series B preferred stock (“Series B”), of which 2,000,000 shares and -0- shares are issued
and outstanding, respectively. A total of 12,126,653 shares remained undesignated as of June 30, 2015.
The Series A shares carry 25:1 preferential
voting rights, and are convertible into shares of common stock on a 1:1 basis.
The Series B shares were convertible at
the option of the holder into shares of common stock at an initial ratio of one share of series B preferred stock into one share
of common stock (1:1), as adjusted for the dilutive effects of additional stock subsequent to the original issuance of the series
B shares on December 17, 2010. The Series B Preferred conversion ratio shall be adjusted to a price determined by multiplying such
Conversion Price by a fraction, the numerator of which shall be the number of shares of Common Stock Outstanding (meaning (1) outstanding
Common Stock, (2) Common Stock issuable upon conversion of outstanding Preferred Stock, (3) Common Stock issuable upon exercise
of outstanding stock options (including Common Stock issuable upon the conversion of shares or other securities issued pursuant
to the exercise of outstanding stock options) and (4) Common Stock issuable upon exercise (and, in the case of warrants to purchase
Preferred Stock or other securities, conversion) of outstanding warrants. Shares described in (1) through (4) above shall be included
whether vested or unvested, whether contingent or non-contingent and whether exercisable or not yet exercisable.) immediately prior
to such issuance plus the number of shares of Common Stock that the aggregate consideration received by this Corporation for such
issuance would purchase at such Conversion Price; and the denominator of which shall be the number of shares of Common Stock Outstanding
immediately prior to such issuance plus the number of shares of such Additional Stock. The maximum shares of common stock convertible
are to be reserved from the authorized shares.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
On June 2, 2014, the Company and the Series
B Preferred shareholder entered into a settlement agreement whereby an outstanding $35,000 promissory note was satisfied with the
successful payment of $32,500, consisting of four equal payments of $8,125, which were delivered on June 27, 2014, August 26, 2014,
November 17, 2014 and February 2, 2015. Upon successful payment of the settlement obligations, the shareholder
converted his 4,349,339 shares of Convertible Series B Preferred shares into 4,349,339 shares of common stock on March 31, 2015.
Preferred Stock
No preferred shares were issued during
the six months ended June 30, 2015.
Common Stock Authorized
The Company has authorized 600,000,000
shares of common stock, of which 307,957,144 shares were issued and outstanding and 292,042,856 shares were reserved as of the
date of this filing.
Common Stock Issuances for Debt Conversions
On June 23, 2015, the Company issued 5,641,026
shares of common stock pursuant to the conversion of $11,000 of outstanding principal on the First Tangiers Note. The note was
converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On June 18, 2015, the Company issued 4,383,562
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On June 15, 2015, the Company issued 2,976,191
shares of common stock pursuant to the conversion of $7,500 of outstanding principal on the First Tangiers Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On June 11, 2015, the Company issued 5,684,421
shares of common stock pursuant to the conversion of $15,121, consisting of $6,000 of outstanding principal and $9,121 of interest,
on the First Typenex Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On June 9, 2015, the Company issued 11,269,231
shares of common stock pursuant to the conversion of $29,300 of outstanding principal on the First KBM Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On May 29, 2015, the Company issued 5,882,353
shares of common stock pursuant to the conversion of $20,000 of outstanding principal on the First KBM Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On May 21, 2015, the Company issued 3,191,489
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First KBM Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On May 15, 2015, the Company issued 1,727,116
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First Tangiers Note. The note was
converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On May 13, 2015, the Company issued 2,500,000
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First KBM Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On May 7, 2015, the Company issued 2,112,676
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First KBM Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On April 29, 2015, the Company issued 2,360,140
shares of common stock pursuant to the conversion of $13,500 of outstanding principal on the First Typenex Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
On April 27, 2015, the Company issued 2,336,449
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First Tangiers Note. The note was
converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On April 16, 2015, the Company issued 2,750,000
shares of common stock pursuant to the conversion of $14,479 of outstanding principal on the First Vista Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On April 14, 2015, the Company issued 1,975,309
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On April 2, 2015, the Company issued 1,975,309
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On April 1, 2015, the Company issued 2,428,058
shares of common stock pursuant to the conversion of $13,500 of outstanding principal on the First Typenex Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On March 23, 2015, the Company issued 1,777,778
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On March 10, 2015, the Company issued 2,000,000
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First Vista Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On March 10, 2015, the Company issued 1,861,042
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First Typenex Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On February 24, 2015, the Company issued
2,068,966 shares of common stock pursuant to the conversion of $18,000 of outstanding principal on the First WHC Note. The note
was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On February 20, 2015, the Company issued
1,463,557 shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First Typenex Note. The
note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On February 10, 2015, the Company issued
1,000,000 shares of common stock pursuant to the conversion of $9,685 of outstanding principal on the First Vista Note. The note
was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On February 5, 2015, the Company issued
1,479,290 shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First Typenex Note. The
note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On February 2, 2015, the Company issued
1,133,914 shares of common stock pursuant to the conversion of $9,536 of outstanding debt, consisting of $6,000 of principal and
$3,536 of interest, on the First Group 10 Note. The note was converted in accordance with the conversion terms; therefore no gain
or loss has been recognized.
On January 27, 2015, the Company issued
1,190,477 shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note. The note
was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On January 2, 2015, the Company issued
1,415,571 shares of common stock pursuant to the conversion of $14,000 of outstanding principal on the First Group 10 Note. The
note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
Common Stock Issuances on Subscriptions
Payable
On January 5, 2015, the Company issued
750,000 shares of common stock in satisfaction of a subscriptions payable pursuant to the December 10, 2014 conversion
of $9,238 of outstanding principal on the First Vista Note.
On January 2, 2015, the Company issued
784,929 shares of common stock in satisfaction of a subscriptions payable pursuant to the December 30, 2014 conversion
of $10,000 of outstanding principal on the First Typenex Note.
Common Stock Issuances for Services
On April 29, 2015, the Company issued 656,735
shares of common stock pursuant to a forbearance agreement as financing costs in consideration for penalties on the April 29, 2015
conversion on the First Typenex Note. The total fair value of the common stock was $10,508 based on the closing price of the Company’s
common stock on the date of grant.
On April 15, 2015, the Company issued 500,000
shares of restricted common stock for professional services provided. The total fair value of the common stock was $8,200 based
on the closing price of the Company’s common stock on the date of grant.
On April 15, 2015, the Company issued 500,000
shares of restricted common stock for platform development services provided. The total fair value of the common stock was $8,200
based on the closing price of the Company’s common stock on the date of grant.
On April 15, 2015, the Company issued 1,500,000
shares of restricted common stock for video production services provided. The total fair value of the common stock was $18,000
based on the closing price of the Company’s common stock on the date of grant.
On April 15, 2015, the Company issued 600,000
shares of S-8 common stock for professional services provided. The total fair value of the common stock was $7,200 based on the
closing price of the Company’s common stock on the date of grant.
On April 15, 2015, the Company issued 500,000
shares of S-8 common stock for professional services provided. The total fair value of the common stock was $6,000 based on the
closing price of the Company’s common stock on the date of grant.
On April 15, 2015, the Company issued 500,000
shares of S-8 common stock for professional services provided. The total fair value of the common stock was $6,000 based on the
closing price of the Company’s common stock on the date of grant.
On January 25, 2015, the Company issued
500,000 shares of restricted common stock for professional services provided. The total fair value of the common stock was $8,200
based on the closing price of the Company’s common stock on the date of grant.
On January 25, 2015, the Company issued
500,000 shares of restricted common stock for professional services provided. The total fair value of the common stock was $8,200
based on the closing price of the Company’s common stock on the date of grant.
On January 25, 2015, the Company issued
500,000 shares of restricted common stock for professional services provided. The total fair value of the common stock was $8,200
based on the closing price of the Company’s common stock on the date of grant.
On January 25, 2015, the Company issued
500,000 shares of restricted common stock for professional services provided. The total fair value of the common stock was $8,200
based on the closing price of the Company’s common stock on the date of grant.
On January 25, 2015, the Company issued
500,000 shares of restricted common stock for platform development services provided. The total fair value of the common stock
was $8,200 based on the closing price of the Company’s common stock on the date of grant.
On January 25, 2015, the Company issued
1,600,000 shares of restricted common stock for video production services provided. The total fair value of the common stock was
$26,240 based on the closing price of the Company’s common stock on the date of grant.
On January 25, 2015, the Company issued
1,500,000 shares of common stock to its CEO as compensation for services as a Director. The total fair value of the common stock
was $24,600 based on the closing price of the Company’s common stock on the date of grant.
On January 25, 2015, the Company issued
1,500,000 shares of common stock to its President of Programming as compensation for services as a Director. The total fair value
of the common stock was $24,600 based on the closing price of the Company’s common stock on the date of grant.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
On January 25, 2015, the Company issued
1,500,000 shares of common stock to one of its Directors as compensation for services as a Director. The total fair value of the
common stock was $24,600 based on the closing price of the Company’s common stock on the date of grant.
On January 25, 2015, the Company issued
500,000 shares of S-8 common stock for professional services provided. The total fair value of the common stock was $8,200 based
on the closing price of the Company’s common stock on the date of grant.
On January 25, 2015, the Company issued
500,000 shares of S-8 common stock for professional services provided. The total fair value of the common stock was $8,200 based
on the closing price of the Company’s common stock on the date of grant.
Common Stock Issued in Settlement for
Series B Preferred Stock Cancellation
On March 31, 2015, the Company cancelled
4,349,339 shares of Series B Preferred Stock pursuant to a settlement agreement entered into on April 10, 2014 with Tice Capital,
LLC, and issued 4,349,339 shares of common stock in exchange. No additional Series B Preferred shares are outstanding.
Note 14 – Options and Warrants
Options
and Warrants Granted
No options or warrants were granted during
the six months ended June 30, 2015.
Options Expired
On February 29, 2015, a total of 450,000
options amongst two option holders with a strike price of $0.08 per share expired.
Warrants Expired
On April 19, 2015, a total of 120,000 warrants
held by our CEO with a strike price of $0.15 per share expired.
On February 14, 2015, a total of 80,000
warrants held by our CEO with a strike price of $0.15 per share expired.
On January 15, 2015, a total of 250,000
warrants with a strike price of $0.15 per share expired.
On January 1, 2015, a total of 300,000
warrants with a strike price of $0.08 per share expired.
Options and Warrants Exercised
No options or warrants were exercised during
the six months ended June 30, 2015.
Note 15 – Gain on Debt Settlements
The Company recognized a gain on debt extinguishment
in the total amount of $6,482 and $343,335 during the six months ended June 30, 2015 and 2014, respectively, as
presented in other income within the Statements of Operations.
The Company and one of our lenders entered
into a settlement agreement whereby an outstanding $35,000 promissory note was satisfied with the successful payment of $32,500,
consisting of four equal payments of $8,125, which were delivered on June 27, 2014, August 26, 2014, November 17, 2014
and February 2, 2015, resulting in a $6,482 gain on settlement, consisting of $2,500 of principal and $3,982 of accrued
interest, as presented in other income at June 30, 2015.
Note 16 – Income Taxes
The Company accounts for income taxes under
FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 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.
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
For the six months ended June 30, 2015
and the year ended December 31, 2014, 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 June 30, 2015, the Company had approximately $19,825,000 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:
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
Deferred tax assets: | |
| | | |
| | |
Net operating loss carry forwards | |
$ | 6,938,750 | | |
$ | 6,440,000 | |
| |
| | | |
| | |
Net deferred tax assets before valuation allowance | |
| 6,938,750 | | |
| 6,440,000 | |
Less: Valuation allowance | |
| (6,938,750 | ) | |
| (6,440,000 | ) |
Net deferred tax assets | |
$ | – | | |
$ | – | |
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 June 30, 2015 and December 31, 2014, 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:
| |
June 30, | | |
December 31, | |
| |
2015 | | |
2014 | |
| |
| | | |
| | |
Federal and state statutory rate | |
| 35% | | |
| 35% | |
Change in valuation allowance on deferred tax assets | |
| (35% | ) | |
| (35% | ) |
In accordance with FASB ASC 740, the Company
has evaluated its tax positions and determined there are no uncertain tax positions.
Note 17 – Non-Controlling Interest
Non-controlling interest represented 17%
interest in the subsidiary held amongst eleven individuals, of whom the Company’s CEO, Mark Bradley and the Company’s
President of Programming, Michael Berk own 3% and 1%, respectively, through December 8, 2014. On December 9, 2014,
one of the non-officer, minority investors exercised an option to purchase an additional 1.6% interest in the Company’s subsidiary
from the parent in exchange for proceeds of $160,000, thereby increasing the minority interest in the subsidiary to 18.6% amongst
the same individuals, which represented the outstanding non-controlling interest for the six months ended June 30, 2015.
The net loss attributable to the non-controlling interest totaled $10,221 and $185,229 during the six months ended June 30, 2015
and the year ended December 31, 2014, respectively.
Effects of changes in Players Network’s ownership interest
in its subsidiary during the year ended December 31, 2014 are as follows:
| |
December 31, | |
| |
2014 | |
| |
| |
Net loss attributable to parent from July 8, 2014 through December 31, 2014 | |
$ | (904,306 | ) |
Transfers to the non-controlling interest: | |
| | |
Increase in parent’s paid-in capital for sale of 1% interest in subsidiary | |
| 60,000 | |
Increase in parent’s paid-in capital for exchange of 16% interest in subsidiary for services | |
| 960,000 | |
Increase in parent’s paid-in capital for sale of 1.6% interest in subsidiary | |
| 160,000 | |
Net transfers to the non-controlling interest | |
| 1,180,000 | |
Change from net loss attributable to the parent and transfers to the non-controlling interest | |
$ | 275,694 | |
Players Network
Notes to Condensed Consolidated Financial
Statements
(Unaudited)
Note 18 – Subsequent Events
Amendment to Articles of Incorporation
On July 17, 2015, the board of directors
approved an amendment to our articles of incorporation, as amended (the “Articles”), to increase our authorized capital
stock from 625,000,000 shares to 1,250,000,000 shares, of which 1,200,000,000 shares was common stock and 50,000,000 was preferred
stock, and to eliminate our Series B preferred stock. The stockholders holding a majority of our voting power also approved the
above actions on July 22, 2015. Stockholders of record at the close of business on July 22, 2015 were entitled to notice of these
stockholder actions by written consent. Because these actions have been approved by the holders of the required majority of the
voting power of our voting stock, no proxies were solicited. The Amendments will not be effected until at least 20 calendar days
after the mailing of the Information Statement accompanying this Notice. We anticipate that the Amendments will become effective
on or about September 2, 2015, at such time as a certificate of amendment to our Articles is filed with the Secretary of State
of Nevada.
Employment Agreement
On July 17, 2015, the Company entered into
a new employment agreement with Mr. Bradley, effective July 1, 2015. The New Employment Agreement replaces Mr. Bradley’s
2010 Employment Agreement, which was set to expire on September 1, 2015, and which was terminated on July 17, 2015, effective July
1, 2015, pursuant to a mutual agreement of the parties.
Pursuant to the terms of the new employment
Agreement, Mr. Bradley will serve as the Company’s CEO and Chairman. The new employment agreement has a term of five years
and six months, commencing July 1, 2015. The Company agrees to pay Mr. Bradley an annual base salary of $175,000 or such greater
amount as may be determined by the board of directors in connection with a performance review to be performed at least once annually.
In the event that the board determines that the Company cannot afford to pay Mr. Bradley any portion of his base salary, Mr. Bradley
may, at his sole option, elect one of the following:
|
(a) |
Defer receipt of his base salary until such time as the Company has the funds to pay him. In the event that Mr. Bradley elects this option, the unpaid salary shall be paid with no interest. |
|
(b) |
Elect to convert all, or a portion of the unpaid salary into Series C Preferred Stock at an exchange rate equal to the closing price of the Company’s common stock on the date immediately preceding each election. |
The Company will also pay Mr. Bradley an
annual bonus, subject to meeting mutually agreed upon annual performance criteria mutually established by the Company and Mr. Bradley.
Preferred Stock Issuances
On July 21, 2015, we issued an aggregate
of 5,750,000 shares of the Company’s newly created Series C preferred stock to Mark Bradley, the Company’s Chief Executive
Officer, in lieu of $17,250 of unpaid compensation pursuant to the terms of the new employment agreement.
Common Stock Issuances for Debt Conversions
On August 4, 2015, the Company issued 20,000,000
shares of common stock pursuant to the conversion of $40,600 of outstanding principal on the First Collier Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
On July 30, 2015, the Company issued 7,194,245
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the Second Group 10 Note. The note was
converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On July 28, 2015, the Company issued 6,666,667
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note. The note was converted
in accordance with the conversion terms; therefore no gain or loss has been recognized.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
Overview and Outlook
Players Network is a vertically integrated
diversified, fully reporting public company that is engaged in the development of digital networks, and is actively pursuing the
cultivation and processing of medical marijuana in North Las Vegas pursuant to two medical marijuana establishments (MME) licenses
we were granted by the city of North Las Vegas for cultivation and production. The Company holds an 81.4% interest in Green Leaf
Farms Holdings, LLC, which is a holding company formed to house our medical marijuana business. We distribute broadband video and
other social media content over a wide variety of internet enabled devices and cable television channels. The Company has launched
its proprietary scalable NexGenTV technology platform. The platform is designed to deliver video content and develop digital social
communities, including “Vegas On Demand TV”, “Real Vegas TV” and “Weed TV” on the media side
of the business.
The Company operates a Video On Demand
(“VOD”) television channel, also named Vegas On Demand, which consists of original programming that is distributed
over its own VOD channels to approximately 23 million homes via a major cable company, and 80 million homes via the internet on
the Over The Top Television platform, with distribution partners that include Blinkx, YouTube Video and other internet and various
mobile platforms. Players Network has a seventeen-year history of providing consumers with quality ‘Gaming and Las Vegas
Lifestyle’ video content.
We have developed NexGenTV, an innovative,
proprietary Enterprise Web Platform that incorporates the best parts of Hulu, YouTube, Facebook, Zenga and Groupon. We believe
it will change how businesses approach building digital brand extensions.
NexGenTV, our scalable Digital Technology
Platform, allows Players Network to distribute content for brands, businesses and celebrities, and provide them with an unlimited
amount of lifestyle category content and the tools to launch their own “Branded Channel, Social Community and Marketplace
Destination”. NexGenTV’s scalability can create hundreds of niche digital networks that can be viewed worldwide on
any smart TV, computer, tablet or mobile device by millions of people simultaneously. The platform allows advertisers and marketing
partners the ability to capture their target market through rich content such as professionally produced, branded television segments;
user-generated videos; blogs; editorials; tweets; photos; special offers; events and custom-designed contests.
Our business model incorporates elements
of traditional proven media features such as advertising and transactional delivery methods, but also offers professional production,
marketing and distribution services to build and monetize its branded channel destination, in which we will retain a continuous
revenue stream with our partners. Channel partners have the option to manage their own Branded New Media Channel, or use our professional
services team of television producers, writers, graphic designers and technologists to keep their channel updated, and their content
fresh and relevant.
Vegas On Demand TV, Real Vegas TV and Weed
TV are the Company’s first three channel offerings that provide their audience the ability to connect to industry insiders
and businesses through unique, high-quality marketing, content production and content management system. In the Las Vegas market,
Vegas On Demand captures the excitement, sex appeal, entertainment, and the non-stop adrenaline rush of the Las Vegas gaming lifestyle.
Our content goes beyond poker, casino action, sports betting, and racing, to lifestyle programs about entertainment and fine living
that attract young and sophisticated viewers that comprise the major digital media demographic. Whenever possible, our content
will incorporate an expert, insider or celebrity within the Vegas community in order to enhance promotional merchandising to prospective
customers.
Weed TV launched on April
20, 2014, and was the Company’s third network to be launched. Weed TV is a Lifestyle Channel Destination powered by PNTV’s
NextGenTV(SM) enterprise platform. Weed TV is the ‘go to’ source for informational entertainment, products and services
for people who relate to the marijuana lifestyle and social community. Weed TV will feature daily stories sourced by weedtv.com
correspondents and contributors from around the world. It will provide a wide variety of editorial content, videos and entertainment,
including lead stories, political news, business news on the industry, financial analysis from industry experts, growing tips,
cooking tips, a “Weed101” section, medical uses, lifestyle features, entertainment specials and merchandise shopping
cart offering the latest products and services.
We plan for Weed TV to
have other features by the middle of 2015 and adapt new technology that the other networks don’t have, including a directory
of businesses that cater to the marijuana business, such as dispensaries, smoke shops, doctors, financial institutions, manufactures
and more. These businesses will have a free basic listing and the ability to upgrade for an extra fee of about $500 per month,
where they can build their own media channel using the ‘NextGenTV” Platform. We estimate this market is in excess of
approximately 70,000 businesses and will continue to grow as more states legalize MME businesses. Our goal in 2015 is to begin
to capture this market that will translate to significant revenues even if we only convert a small amount of this market into marketing
partners who use our platform.
We plan to use both Weed TV’s platform
and original branded programming and events, as a means to develop additional revenue streams, in addition to providing marketing
and membership benefits of our social media platform. These revenue streams include branded entertainment, sponsorships for events,
media placement, third party commissions for video and banner advertisements, merchandise and production sales and services.
We have addressed the digital market in
an effort to grow as a New Media Company using “Vegas On Demand” and Real Vegas TV, our flagship branded television
channel, and to use our scalable custom enterprise web platform, which can also be replicated to launch thousands of channel destinations
in any lifestyle category for any lifestyle brand.
Our enterprise platform is highly scalable
and can efficiently deploy, manage and distribute videos with integrated revenue-generating tools that go beyond traditional advertising.
On our platform, the viewer of a video is brought into a web environment encompassing the lifestyle represented within the video
content where they are presented with membership, merchandising, couponing, subscription, loyalty programs, contest and other marketing
opportunities, including the integration of live events. The platform also integrates branded sponsorships, and a game-like virtual
economy supported by our Cost Per Action (“CPA”) advertising network.
Our next-generation media network operates
across all distribution platforms from TV screens to mobile devices, gaming consoles, computers and tablets. We have positioned
ourselves to provide companies an affordable, turnkey, integrated solution. We have not yet generated revenues from our Platform,
but plan to market our services to companies in 2015.
Through the cross-promotional integration
of sponsored live events, contests and media creation and distribution, our Platform can deliver a targeted audience that can be
monetized in multiple ways. The platform is an engine that grows as audience and page views increase. The platform also provides
a self-perpetuating aggregation juncture where Las Vegas businesses and “insiders” can connect socially with their
audience/customer.
The ability to monetize video in so many
ways, coupled with an efficient, easy-to-use technical and administrative back-end dashboard is a powerful feature of our platform.
It allows the creation of unlimited, new channel destinations using our scalable content management system (“CMS”)
framework, with cost-competitive operations. Importantly, it enables administrative and editorial level employees to manage content
without the expense of having a full-time technical engineering staff in-house.
Premium members must be industry insiders
and/or experts in their lifestyle category. For example, with regard to Vegas On Demand, insiders are designed to be the who’s-who
of Vegas: entertainers, nightclub promoters, casino hosts, famous chefs, etc. who offer our members deals on transactions connected
to their sphere of influence. Deals may include being invited to a special VIP event, line passes, two-for-one offers, pay-per-view
video discounts, etc.
Results of Operations for the Three
Months Ended June 30, 2015 and 2014:
| |
For the Three | | |
| |
| |
Months Ended | | |
| |
| |
June 30, | | |
Increase / | |
| |
2015 | | |
2014 | | |
(Decrease) | |
| |
| | | |
| | | |
| | |
Revenues | |
$ | 213 | | |
$ | 141,167 | | |
$ | (140,954 | ) |
| |
| | | |
| | | |
| | |
Direct operating costs | |
| 17,445 | | |
| 190,952 | | |
| (173,507 | ) |
General and administrative | |
| 153,465 | | |
| 201,236 | | |
| (47,771 | ) |
Officer salaries | |
| 45,850 | | |
| 44,339 | | |
| 1,511 | |
Depreciation and amortization | |
| 7,535 | | |
| 6,778 | | |
| 757 | |
| |
| | | |
| | | |
| | |
Total Operating Expenses | |
| 224,295 | | |
| 443,305 | | |
| (219,010 | ) |
| |
| | | |
| | | |
| | |
Net Operating Loss | |
| (224,082 | ) | |
| (302,138 | ) | |
| (78,056 | ) |
| |
| | | |
| | | |
| | |
Total other income (expense) | |
| (450,747 | ) | |
| 165,952 | | |
| (616,699 | ) |
| |
| | | |
| | | |
| | |
Net Loss | |
$ | (674,829 | ) | |
$ | (136,186 | ) | |
$ | 538,643 | |
Revenues:
During the three months ended June 30, 2015
and 2014, we received revenues primarily from the sale of in-home media, advertising fees on content development and the recognition
of deferred revenues on content development. Aggregate revenues for the three months ended June 30, 2015 were $213, compared
to revenues of $141,167 in the three months ended June 30, 2014, a decrease in revenues of $140,954, or 100%. Our revenues
decreased primarily due to the recognition of $135,000 of deferred revenues from the completion and delivery of the final two pilot
episodes of our “Naked Empire Series” project with HJ Productions during the six months ended June 30, 2014 that was
subsequently reversed on December 31, 2014. During the three months ended June 30, 2014, we also recognized a total of
$5,950 from the first sales of advertising on our new media channel, “Weed.tv” within our internet platform.
Direct Operating Costs:
Direct operating costs were $17,445 for
the three months ended June 30, 2015 compared to $190,952 for the three months ended June 30, 2014, a decrease
of $173,507, or 91%. Our direct operating costs decreased primarily due to diminished content production for our new media platform,
other than our Weed.tv channel, as we focused more on the development of our medical marijuana ventures during the three months
ended June 30, 2015.
General and Administrative:
General and administrative expenses were
$153,465 for the three months ended June 30, 2015, compared to $201,236 for the three months ended June 30, 2014,
a decrease of $47,771, or 24%. General and administrative expense decreased primarily due to decreased stock-based compensation
paid to employees and consultants during the three months ended June 30, 2015 compared to the three months ended June 30,
2014.
Officer salaries:
Officer salaries expense totaled $45,850
for the three months ended June 30, 2015, compared to $44,339 for the three months ended June 30, 2014, an
increase of $1,511, or 3%.
Depreciation and Amortization:
Depreciation and amortization expense was
$7,535 for the three months ended June 30, 2015, compared to $6,778 for the three months ended June 30, 2014, an
increase of $757, or 11%. The increase in depreciation and amortization was primarily due to additional depreciation on fixed asset
additions acquired after the end of the comparative period.
Net Operating Loss:
Net operating loss for the three months
ended June 30, 2015 was $224,082, or ($0.00) per share, compared to a net operating loss of $302,138 for the three months
ended June 30, 2014, or ($0.00) per share, a decrease of $78,056, or 26%. Net operating loss decreased primarily due to reduced
spending on content production for our new media platform, as diminished by the lack of revenues during the three months ended
June 30, 2015 compared to the three months ended June 30, 2014.
Other Income (Expense):
Other income (expense) was $(450,747) for
the three months ended June 30, 2015, compared to other income of $165,952 for the three months ended June 30, 2014,
a decrease of $616,699, or 372%. Other expense decreased on a net basis primarily due to an $338,120 decrease in our $115,105 net
loss related to the change in derivative liabilities on our convertible debentures recognized during the three months ended June 30, 2015,
compared to the net gain of $223,015 related to the change in derivative liabilities recognized during the three months ended June 30,
2014, by increased interest expense of $276,069 on our increased indebtedness during the three months ended June 30, 2015,
compared to the three months ended June 30, 2014, and a decreased gain on debt extinguishment of $2,510 during the three months
ended June 30, 2015, compared to the three months ended June 30, 2014.
Net Loss:
The net loss for the three months ended
June 30, 2015 was $674,829, or ($0.00) per share, compared to a net loss of $136,186, or ($0.00) per share, for the three
months ended June 30, 2014, an increased net loss of $538,643, or 396%. Net loss increased primarily due to changes in our
derivative liabilities and increased interest expense on our convertible debentures during the three months ended June 30, 2015,
compared to the three months ended June 30, 2014.
Results of Operations for the Six Months
Ended June 30, 2015 and 2014:
| |
For the Six | | |
| |
| |
Months Ended | | |
| |
| |
June 30, | | |
Increase / | |
| |
2015 | | |
2014 | | |
(Decrease) | |
| |
| | | |
| | | |
| | |
Revenues | |
$ | 520 | | |
$ | 141,457 | | |
$ | (140,937 | ) |
| |
| | | |
| | | |
| | |
Direct operating costs | |
| 42,048 | | |
| 236,971 | | |
| (194,923 | ) |
General and administrative | |
| 394,762 | | |
| 354,867 | | |
| 39,895 | |
Officer salaries | |
| 140,195 | | |
| 427,656 | | |
| (287,461 | ) |
Depreciation and amortization | |
| 15,071 | | |
| 12,515 | | |
| 2,556 | |
| |
| | | |
| | | |
| | |
Total Operating Expenses | |
| 592,076 | | |
| 1,032,009 | | |
| (439,933 | ) |
| |
| | | |
| | | |
| | |
Net Operating Loss | |
| (591,556 | ) | |
| (890,552 | ) | |
| (298,996 | ) |
| |
| | | |
| | | |
| | |
Total other income (expense) | |
| (583,595 | ) | |
| (221,209 | ) | |
| 362,386 | |
| |
| | | |
| | | |
| | |
Net Loss | |
$ | (1,175,151 | ) | |
$ | (1,111,761 | ) | |
$ | 63,390 | |
Revenues:
During the six months ended June 30, 2015
and 2014, we received revenues primarily from the sale of in-home media, advertising fees on content development and the recognition
of deferred revenues on content development. Aggregate revenues for the six months ended June 30, 2015 were $520, compared
to revenues of $141,457 in the six months ended June 30, 2014, a decrease in revenues of $140,937, or 100%. Our revenues
decreased primarily due to the recognition of $135,000 of deferred revenues from the completion and delivery of the final two pilot
episodes of our “Naked Empire Series” project with HJ Productions during the six months ended June 30, 2014 that was
subsequently reversed on December 31, 2014. During the six months ended June 30, 2014, we also recognized a total of
$5,950 from the first sales of advertising on our new media channel, “Weed.tv” within our internet platform.
Direct Operating Costs:
Direct operating costs were $42,048 for
the six months ended June 30, 2015 compared to $236,971 for the six months ended June 30, 2014, a decrease
of $194,923, or 82%. Our direct operating costs decreased primarily due to diminished content production for our new media platform,
other than our Weed.tv channel, as we focused more on the development of our medical marijuana ventures during the six months ended
June 30, 2015.
General and Administrative:
General and administrative expenses were
$394,762 for the six months ended June 30, 2015, compared to $354,867 for the six months ended June 30, 2014, an
increase of $39,895, or 11%. General and administrative expense increased primarily due to increased professional fees and administrative
costs paid to consultants during the six months ended June 30, 2015 compared to the six months ended June 30, 2014.
Officer salaries:
Officer salaries expense totaled $140,195
for the six months ended June 30, 2015, compared to $427,656 for the six months ended June 30, 2014, a decrease
of $287,461, or 67%. The decrease in officer salaries was primarily due to non-cash, stock-based compensation bonuses issued to
our CEO during the six months ended June 30, 2014, consisting of 4 million shares of common stock with a fair value
of $120,000, and 8 million common stock options valued at $217,971, that were greater than the comparative stock-based compensation,
consisting of 1.5 million shares of common stock with a fair value of $24,600, during the six months ended June 30, 2015.
Depreciation and Amortization:
Depreciation and amortization expense was
$15,071 for the six months ended June 30, 2015, compared to $12,515 for the six months ended June 30, 2014, an increase
of $2,556, or 20%. The increase in depreciation and amortization was primarily due to additional depreciation on fixed asset additions
acquired after the end of the comparative period.
Net Operating Loss:
Net operating loss for the six months ended
June 30, 2015 was $591,556, or ($0.00) per share, compared to a net operating loss of $890,552 for the six months ended
June 30, 2014, or ($0.01) per share, a decrease of $298,996, or 34%. Net operating loss decreased primarily due to reduced
spending on content production for our new media platform and decreased officer compensation from the lack of stock-based compensation,
as diminished by the lack of revenues during the six months ended June 30, 2015 compared to the six months ended June 30, 2014.
Other Income (Expense):
Other income (expense) was $(583,595) for
the six months ended June 30, 2015, compared to $(221,209) for the six months ended June 30, 2014, an increase
of $362,386, or 164%. Other expense increased on a net basis primarily due to increased interest expense of $500,000 on our increased
indebtedness and a decreased gain on debt extinguishment of $336,853 during the six months ended June 30, 2015, compared
to the six months ended June 30, 2014, as diminished by a $474,467 increase related to our the change in derivative liabilities
recognized during the six months ended June 30, 2015, compared to the six months ended June 30, 2014.
Net Loss:
The net loss for the six months ended June 30, 2015
was $1,175,151, or ($0.01) per share, compared to a net loss of $1,111,761, or ($0.01) per share, for the six months ended June 30,
2014, an increased net loss of $63,390, or 6%. Net loss increased primarily due to increased interest expense on our convertible
debentures and reductions in gains on debt extinguishment, as diminished by changes in our derivative liabilities during the six
months ended June 30, 2015, compared to the six months ended June 30, 2014.
LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes total assets,
accumulated deficit, stockholders’ equity and working capital at June 30, 2015 compared to December 31, 2014.
| |
June 30, | | |
December 31, | | |
Increase / | |
| |
2015 | | |
2014 | | |
(Decrease) | |
| |
| | |
| | |
| |
Total Assets | |
$ | 282,148 | | |
$ | 408,826 | | |
$ | (126,678 | ) |
| |
| | | |
| | | |
| | |
Total Liabilities | |
$ | 1,806,694 | | |
$ | 2,196,544 | | |
$ | (389,850 | ) |
| |
| | | |
| | | |
| | |
Accumulated (Deficit) | |
$ | (28,013,572 | ) | |
$ | (26,848,642 | ) | |
$ | 1,164,930 | |
| |
| | | |
| | | |
| | |
Stockholders’ Equity (Deficit) | |
$ | (1,524,546 | ) | |
$ | (1,787,718 | ) | |
$ | (263,172 | ) |
| |
| | | |
| | | |
| | |
Working Capital (Deficit) | |
$ | (1,602,868 | ) | |
$ | (1,868,948 | ) | |
$ | (266,080 | ) |
Our principal source of operating capital
has been provided from convertible debt financings and investments in our recently established subsidiaries. At June 30, 2015,
we had a negative working capital position of $1,602,868.
Debt Financing
On June 25, 2015, the Company received
net proceeds of $105,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (12%) with
a face value of $115,500 (“Fourth Vista Note”), which matures on June 1, 2016, as part of a larger financing
agreement that enables the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carries a
total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest is convertible into shares of common
stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing
bid prices during the sixteen (16) trading days prior to the conversion request date. The debt holder is limited to owning 4.99%
of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the
occurrence of the event of default shall immediately increase to 120% of the outstanding balance at the time of default. The promissory
note carries a $10,500 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which
approximates the effective interest method. The Company must at all times reserve at least 35 million shares of common stock
for potential conversions as depicted in the First Vista Note.
On June 24, 2015, the Company issued an
8% interest bearing; unsecured convertible promissory note with a face value of $119,052 (“First Collier Note”), which
matures on June 23, 2017 in exchange for the cancellation of three outstanding JMJ Notes, consisting of an aggregate
of $108,492 of principal and $10,560 of interest, that were acquired by Collier Investments, LLC. The principal and interest is
convertible into shares of common stock at 70% of the lowest volume weighted average price (“VWAP”) over the 20 days
prior to conversion. The note includes prepayment cash redemption penalties of 145% of outstanding principal and interest, and
the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company must at all times
reserve at least 100 million shares of common stock for potential conversions. Upon default, 145% of outstanding principal
and interest shall be due immediately.
On June 15, 2015, the Company received
net proceeds of $15,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (12%) with
a face value of $16,500 (“Third Vista Note”), which matures on June 1, 2016, as part of a larger financing
agreement that enables the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carries a
total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest is convertible into shares of common
stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing
bid prices during the sixteen (16) trading days prior to the conversion request date. The debt holder is limited to owning 4.99%
of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the
occurrence of the event of default shall immediately increase to 120% of the outstanding balance at the time of default. The promissory
note carries a $1,500 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which
approximates the effective interest method. The Company must at all times reserve at least 35 million shares of common stock
for potential conversions as depicted in the First Vista Note.
On May 15, 2015, the Company received net
proceeds of $60,000 in exchange for an 8% interest bearing; unsecured convertible promissory note dated May 1, 2015 with
a face value of $64,000 (“First Vis Vires Note”), which matures on February 5, 2016. The principal and interest
is convertible into shares of common stock at the discretion of the note holder at a price equal to 61% of the average of the three
(3) lowest closing bid prices over the 10 days prior to conversion. The note includes various prepayment penalties ranging from
112% through 130%, and default provisions of 150% of the then outstanding principal and interest, and an interest rate of 22% thereafter.
The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company must at all times
reserve at least 59 million shares of common stock for potential conversions.
On March 11, 2015, the Company received
net proceeds of $70,000 in exchange for a 12% interest bearing, unsecured convertible promissory note dated March 2, 2015
with a face value of $75,000 (“First JSJ Note”), which matures on September 2, 2015. The principal and interest
is convertible into shares of common stock at the discretion of the note holder at a price equal to the lesser of: (i) 58% of the
average of the two (2) lowest closing prices over the 10 days prior to conversion; or (ii) 58% of the average of the two (2) lowest
closing prices over the 10 days prior to the execution of the note (which was $0.008932). The note includes prepayment cash redemption
penalties between 25% and 40% of outstanding principal and interest, and the debt holder is limited to owning 4.99% of the Company’s
issued and outstanding shares. The Company must at all times reserve at least 30 million shares of common stock for potential
conversions.
On February 5, 2015, the Company received
net proceeds of $50,000 with a face value of $53,750 that carries an 8% interest rate (“Second Tangiers Note”), which
matures on February 5, 2016. The note is part of total loan offering with a $236,500 face value and OID of 7.5% of any consideration
paid, whereby $75,250 was previously advanced with the initial execution of the note on October 13, 2014. The principal
and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty percent
(60%) of the average of the two lowest trading prices of the Company’s common stock for the fifteen (15) trading days prior
to, and including, the conversion date. In the event the Company experiences a DTC “Chill” on its shares, the conversion
price shall be decreased to fifty percent (50%), rather than the sixty percent (60%) conversion rate while that “Chill”
is in effect, and an additional 5% discount if the Depository Trust Company’s (“DTC”) Fast Automated Securities
Transfer (“FAST”) is not eligible for a cumulative total conversion price equal to forty five percent (45%). The note
carries a twenty percent (20%) interest rate and $1,000 per day of liquidated damages in the event of default, and the debt holder
is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company paid total debt issuance cost of $2,500
that is being amortized on the straight line method, which approximates the effective interest method, over the life of the loan.
The Company must at all times reserve at least 5 million shares of common stock for potential conversions.
On January 27, 2015, the Company received
$35,000 in exchange for an unsecured convertible promissory note with a face value of $36,750 that carries a 12% interest rate
(“Second Group 10 Note”), which matures on January 27, 2016. The principal and interest is convertible into shares
of common stock at the discretion of the note holder at a price equal to the lesser of (a) fifty-eight percent (58%) multiplied
by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of forty-two percent
(42%)) or (b) five cents ($0.05). The conversion price is subject to the following adjustments:
| i. | If the market capitalization of the Borrower is less than Three Hundred Thousand Dollars ($300,000)
on the day immediately prior to the date of the Notice of Conversion, then the Conversion Price shall be twenty-five percent (25%)
multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of seventy-five
percent (75%)); and |
| ii. | If the closing price of the Borrower’s Common Stock on the day immediately prior to the date
of the Notice of Conversion is less than .001 then the Conversion Price shall be twenty-five percent (25%) multiplied by the Lowest
Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of seventy-five percent (75%)). |
The note carries an eighteen percent (18%)
interest rate in the event of default along with a $1,000 penalty per business day commencing the business day following the date
of the event of default. The note also includes prepayment cash redemption penalties between up to 15% of outstanding principal
and interest, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The promissory
note carries a $1,750 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which
approximates the effective interest method. The Company must at all times reserve at least 20 million shares of common stock
for potential conversions.
We have utilized these funds to repay $50,542
of previously issued convertible debentures, comply with our regulatory reporting requirements, and to expand our media distribution
platforms to launch Weed.tv. Although our revenues are expected to grow as we expand our operations, our revenues are not expected
to exceed our investment and operating costs in the next twelve months, and we do not have funds sufficient to fund our operations
at their current level for the next twelve months. Our prospects must be considered in light of the risks, expenses and difficulties
frequently encountered by companies in their early stage of operations. To address these risks, we must, among other things, seek
growth opportunities through investment and acquisitions in our industry, effectively monitor and manage our claims for payments
that are owed to us, implement and successfully execute our business strategy, respond to competitive developments, and attract,
retain and motivate qualified personnel. We cannot assure that we will be successful in addressing such risks, and the failure
to do so could have a material adverse effect on our business prospects, financial condition and results of operations.
To conserve on the Company's capital requirements,
the Company has issued shares in lieu of cash payments to outside consultants, and the Company expects to continue this practice.
In the three months ended June 30, 2015, the Company granted a total of 13,700,000 shares of common stock valued at $206,640
in lieu of cash payments to employees and outside consultants, compared to the issuance of 11,276,061 shares of common stock valued
at $352,335 in lieu of cash payments to employees and outside consultants during the six months ending June 30, 2014.
In addition, the Company exchanged 4,349,339 shares of common stock for 4,349,339 shares of series B preferred stock, resulting
in $47,843 of stock based compensation. 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 the remainder of 2015.
During the six months ended June 30, 2015,
we issued a total of 74,583,925 shares of common stock pursuant to the conversion of $350,620 of indebtedness on convertible debentures.
The conversion prices of a total of $644,400 in outstanding convertible notes outstanding as of June 30, 2015, is convertible
at various prices discounted to market as depicted in the table below. As a result, any conversion of the Convertible Notes and
sale of shares of common stock issuable in connection with the conversion thereof will likely cause the value of our common stock,
if any, to decline in value, as described in greater detail under the Risk Factors below.
| |
| |
| | |
Potential issuable shares at various conversion prices | |
| |
| |
| | |
below the most recent market price of $0.002 per share | |
Lender / | |
Conversion | |
Principal | | |
100% | | |
75% | | |
50% | | |
25% | |
Origination | |
Terms | |
Borrowed | | |
$0.0020 | | |
$0.0015 | | |
$0.0010 | | |
$0.0005 | |
| |
| |
| | |
| | |
| | |
| | |
| |
LG Capital Funding, LLC (Second LG Capital Note) April 24, 2014 | |
Convertible into 55% of the average of the lowest closing bid prices over the 12 trading days prior to the conversion request. | |
$ | 35,000 | | |
| 17,500,000 | | |
| 23,333,333 | | |
| 35,000,000 | | |
| 70,000,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Vista Capital (First Vista Note) June 2, 2014 | |
Convertible into 65% of the average of the two (2) lowest closing bid prices during the sixteen (16) trading days prior to the conversion request date. | |
$ | 11,598 | | |
| 5,799,000 | | |
| 7,732,000 | | |
| 11,598,000 | | |
| 23,196,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
WHC Capital (First WHC Note) June 13, 2014 | |
Convertible into 62.5% of the average of the two (2) lowest closing bid prices over the 10 trading days prior to the conversion request. | |
$ | 2,000 | | |
| 1,000,000 | | |
| 1,333,333 | | |
| 2,000,000 | | |
| 4,000,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
WHC Capital (Second WHC Note) August 19, 2014 | |
Convertible into 57.5% of the average of the two (2) lowest closing bid prices over the 10 trading days prior to the conversion request. | |
$ | 45,000 | | |
| 22,500,000 | | |
| 30,000,000 | | |
| 45,000,000 | | |
| 90,000,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Vista Capital Investments, LLC (Second Vista Note) September 22, 2014 | |
Convertible into 65% of the average of the two (2) lowest closing bid prices during the sixteen (16) trading days prior to the conversion request date. | |
$ | 38,500 | | |
| 19,250,000 | | |
| 25,666,667 | | |
| 38,500,000 | | |
| 77,000,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Tangiers Investment Group, LLC (First Tangiers Note) October 13, 2014 | |
Convertible at a price equal to sixty percent (60%) of the average of the two lowest trading prices of the Company’s common stock for the fifteen (15) trading days prior to, and including, the conversion date. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to fifty percent (50%), rather than the sixty percent (60%) conversion rate while that “Chill” is in effect, and an additional 5% discount if the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer (“FAST”) is not eligible for a cumulative total conversion price equal to forty five percent (45%). | |
$ | 31,750 | | |
| 1,875,000 | | |
| 21,166,667 | | |
| 31,750,000 | | |
| 63,500,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
|
Group 10 Funding, LLC (Second Group 10 Note) January 27, 2015 | |
Convertible at a price equal to the lesser of (a) fifty-eight percent (58%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of forty-two percent (42%)) or (b) five cents ($0.05). The conversion price is subject to the following adjustments: iii. If the market capitalization of the Borrower is less than Three Hundred Thousand Dollars ($300,000) on the day immediately prior to the date of the Notice of Conversion, then the Conversion Price shall be twenty-five percent (25%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of seventy-five percent (75%)); and iv. If the closing price of the Borrower’s Common Stock on the day immediately prior to the date of the Notice of Conversion is less than .001 then the Conversion Price shall be twenty-five percent (25%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of seventy-five percent (75%)). | |
$ | 36,750 | | |
| 18,375,000 | | |
| 24,500,000 | | |
| 36,750,000 | | |
| 73,500,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Tangiers Investment Group, LLC (Second Tangiers Note) February 5, 2015 | |
Convertible at a price equal to sixty percent (60%) of the average of the two lowest trading prices of the Company’s common stock for the fifteen (15) trading days prior to, and including, the conversion date. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to fifty percent (50%), rather than the sixty percent (60%) conversion rate while that “Chill” is in effect, and an additional 5% discount if the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer (“FAST”) is not eligible for a cumulative total conversion price equal to forty five percent (45%). | |
$ | 53,750 | | |
| 26,875,000 | | |
| 35,833,333 | | |
| 53,750,000 | | |
| 107,500,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
JSJ Investments, Inc. (First JSJ Note) March 2, 2015 | |
Convertible at a price equal to the lesser of: (i) 58% of the average of the two (2) lowest closing prices over the 10 days prior to conversion; or (ii) 58% of the average of the two (2) lowest closing prices over the 10 days prior to the execution of the note (which was $0.008932). | |
$ | 75,000 | | |
| 37,500,000 | | |
| 50,000,000 | | |
| 75,000,000 | | |
| 150,000,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Vis Vires Group (First Vis Vires Note) May 1, 2015 | |
Convertible into shares of common stock at the discretion of the note holder at a price equal to 61% of the average of the three (3) lowest closing bid prices over the 10 days prior to conversion. | |
$ | 64,000 | | |
| 32,000,000 | | |
| 42,666,667 | | |
| 64,000,000 | | |
| 128,000,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
|
Vista Capital Investments, LLC (Third Vista Note) June 15, 2015 | |
Convertible into shares of common stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing bid prices during the sixteen (16) trading days prior to the conversion request date. | |
$ | 16,500 | | |
| 8,250,000 | | |
| 11,000,000 | | |
| 16,500,000 | | |
| 33,000,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Collier Investments, LLC (First Collier Note) June 24, 2015 | |
Convertible into shares of common stock at 70% of the lowest volume weighted average price (“VWAP”) over the 20 days prior to conversion. | |
$ | 119,052 | | |
| 59,526,000 | | |
| 79,368,000 | | |
| 119,052,000 | | |
| 238,104,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
Vista Capital Investments, LLC (Fourth Vista Note) June 25, 2015 | |
Convertible into shares of common stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing bid prices during the sixteen (16) trading days prior to the conversion request date. | |
$ | 115,500 | | |
| 57,750,000 | | |
| 77,000,000 | | |
| 115,500,000 | | |
| 231,000,000 | |
| |
| |
| | | |
| | | |
| | | |
| | | |
| | |
| |
| |
$ | 644,400 | | |
| 322,200,000 | | |
| 429,600,000 | | |
| 644,400,000 | | |
| 1,288,800,000 | |
Off-Balance Sheet Arrangements
As of June 30, 2015, we did not have any
off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations liquidity, capital expenditures or capital
resources.
Going Concern
The accompanying consolidated financial
statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations,
realization of assets, and liquidation of liabilities in the normal course of business.
The Company has had recurring net losses,
an accumulated deficit, and a working capital deficiency. These conditions raise substantial doubt about its ability to continue
as a going concern. 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.
The unaudited consolidated financial statements
do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification
of liabilities that might be necessary should the Company be unable to continue as a going concern.
Critical Accounting Policies
We have identified the following policies
below as critical to our business and results of operations. Our reported results are impacted by the application of the following
accounting policies, certain of which require management to make subjective or complex judgments. These judgments involve making
estimates about the effect of matters that are inherently uncertain and may significantly impact quarterly or annual results of
operations. For all of these policies, management cautions that future events rarely develop exactly as expected, and the best
estimates routinely require adjustment. Specific risks associated with these critical accounting policies are described in the
following paragraphs.
Principles of Consolidation
The accompanying consolidated financial
statements include the accounts of the following entities, all of which are under common control and ownership:
| |
State of | |
| |
Abbreviated |
Name of Entity(2) | |
Incorporation | |
Relationship | |
Reference |
Players Network(1) | |
Nevada | |
Parent | |
PNTV |
Green Leaf Farms Holdings, Inc.(2) | |
Nevada | |
Subsidiary | |
GLFH |
Green Leaf Medical, LLC(3) (4) | |
Nevada | |
Subsidiary | |
GLML |
(1)Players Network entity is
in the form of a Corporation.
(2)Majority-owned subsidiary
formed on July 8, 2014, in which PNTV retained 83% ownership, with the remaining 17% held by key experts and advisors.
An additional 1.6% was sold to an investor on December 8, 2014, giving PNTV 81.4% ownership and minority interests ownership
of 18.6% as of December 31, 2014.
(3)Wholly-Owned subsidiary of
GLFH formed for prospective purposes, but has not incurred any income or expenses to date.
(4)Entity formed for prospective
purposes, but has not incurred any income or expenses to date.
The consolidated financial statements herein
contain the operations of the wholly-owned subsidiaries listed above. All significant inter-company transactions have been eliminated
in the preparation of these financial statements. The parent company, PNTV and subsidiaries, GLFH and GLML will be collectively
referred to herein as the “Company”, “Players Network” or “PNTV”. The Company's headquarters
are located in Las Vegas, Nevada and substantially all of its customers are within the United States.
Revenue
Recognition
The Company recognizes revenue from its
internet television platform from internally generated products and from partnered merchants when the following criteria are met:
persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability
is reasonably assured. These criteria are met when the customers purchase a product or access a web-based video, the product or
web-based video has been electronically delivered to the purchaser and payment has been received. At that time, the Company's obligations
to the customer is substantially complete. The Company records the net amount it retains from the sale of items from its internet
television platform after paying any agreed upon percentage of the purchase price to the featured advertising merchant excluding
any applicable taxes. Revenue is recorded on a net basis because the Company is acting as an agent of the partnered merchant in
the transaction. 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 over the period in which the subscription service is available. 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 and collection is reasonably assured.
Revenue from the distribution of domestic
television series is recognized as earned using the following criteria:
| · | Persuasive evidence of an arrangement
exists; |
| · | The show/episode is complete, and in accordance
with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery; |
| · | The license period has begun and the customer
can begin its exploitation, exhibition or sale; |
| · | The price to the customer is fixed and
determinable; and |
| · | Collectability is reasonably assured. |
Due to practical limitations applicable
to operating relationships with On-Demand networks, the Company has not considered collectability of advertising or television
license revenues to be reasonably assured, and accordingly, the Company has not recognize such revenue unless payment has been
received.
Audio/Video content licensing revenues
were recognized when the underlying royalties from the sales of the related products were earned. The Company recognized minimum
revenue guarantees, if any, ratably over the term of the license or as earned royalties based on actual sales of the related products,
if greater.
Derivative Liability
The Company evaluates its convertible instruments,
options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives
to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment
is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event
that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income
(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 ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification
date. We analyzed the derivative financial instruments (the Convertible Note and tainted Warrant), in accordance with ASC 815.
The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s
own stock. This determination is needed for a scope exception which would enable a derivative instrument to be accounted for under
the accrual method. The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting
for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on
whether the instrument is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s
own stock cannot be classified as equity and must be accounted for as a liability. There is a two-step approach in determining
whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument's contingent exercise
provisions, if any, must be evaluated, followed by an evaluation of the instrument's settlement provisions. The Company utilized
multinomial lattice models that value the derivative liability within the notes based on a probability weighted discounted cash
flow model. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the
amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing
parties, that is, other than in a forced or liquidation sale.
Item 3. Quantitative and Qualitative Disclosures about Market
Risks
Not applicable.
Item 4. Controls and Procedures
Evaluation of Disclosure Controls and Procedures
We carried out an evaluation as of June 30, 2015,
under the supervision and with the participation of our management, including our principal executive officer and principal financial
officer, who are one and the same, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules
13a–15(f) and 15d–15(e)). Based upon that evaluation, our principal executive officer and principal financial 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 and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control
over financial reporting during our most recent quarter that have materially affected, or are reasonably likely to materially affect,
our internal control over financial reporting.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
In the ordinary course of business, we
may become subject to lawsuits and other claims and proceedings that might arise from litigation matters or regulatory audits.
Such matters are subject to uncertainty and outcomes are often not predictable with assurance. Our management does not presently
expect that such matters will have a material adverse effect on the Company’s financial condition or results of operations.
We are not currently involved in any pending or threatened material litigation or other material legal proceedings, nor have we
been made aware of any penalties from regulatory audits, except as we have previously disclosed, or may in the future disclose.
Item 1A. Risk Factors
As a smaller reporting company, we are
not required to provide the information required by this Item.
Item 2. Unregistered Sales of Equity Securities and Use of
Proceeds
The following sales of equity securities
by the Company occurred during the three month period ended June 30, 2015:
Common Stock Issuances for Debt Conversions
On June 23, 2015, the Company issued 5,641,026
shares of common stock pursuant to the conversion of $11,000 of outstanding principal on the First Tangiers Note.
On June 18, 2015, the Company issued 4,383,562
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note.
On June 15, 2015, the Company issued 2,976,191
shares of common stock pursuant to the conversion of $7,500 of outstanding principal on the First Tangiers Note.
On June 11, 2015, the Company issued 5,684,421
shares of common stock pursuant to the conversion of $15,121, consisting of $6,000 of outstanding principal and $9,121 of interest,
on the First Typenex Note.
On June 9, 2015, the Company issued 11,269,231
shares of common stock pursuant to the conversion of $29,300 of outstanding principal on the First KBM Note.
On May 29, 2015, the Company issued 5,882,353
shares of common stock pursuant to the conversion of $20,000 of outstanding principal on the First KBM Note.
On May 21, 2015, the Company issued 3,191,489
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First KBM Note.
On May 15, 2015, the Company issued 1,727,116
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First Tangiers Note.
On May 13, 2015, the Company issued 2,500,000
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First KBM Note.
On May 7, 2015, the Company issued 2,112,676
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First KBM Note.
On April 29, 2015, the Company issued 2,360,140
shares of common stock pursuant to the conversion of $13,500 of outstanding principal on the First Typenex Note.
On April 27, 2015, the Company issued 2,336,449
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First Tangiers Note.
On April 16, 2015, the Company issued 2,750,000
shares of common stock pursuant to the conversion of $14,479 of outstanding principal on the First Vista Note.
On April 14, 2015, the Company issued 1,975,309
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note.
On April 2, 2015, the Company issued 1,975,309
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note.
On April 1, 2015, the Company issued 2,428,058
shares of common stock pursuant to the conversion of $13,500 of outstanding principal on the First Typenex Note.
The foregoing securities issued upon conversion
of the Notes are restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The issuances of the
Notes were exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated
thereunder. The purchasers were accredited and sophisticated investors, familiar with our operations, and there was no solicitation.
Common Stock Issuances for Services
On April 29, 2015, the Company issued 656,735
shares of common stock pursuant to a forbearance agreement as financing costs in consideration for penalties on the April 29, 2015
conversion on the First Typenex Note.
On April 15, 2015, the Company issued 500,000
shares of restricted common stock for professional services provided.
On April 15, 2015, the Company issued 500,000
shares of restricted common stock for platform development services provided.
On April 15, 2015, the Company issued 1,500,000
shares of restricted common stock for video production services provided.
On April 15, 2015, the Company issued 600,000
shares of S-8 common stock for professional services provided.
On April 15, 2015, the Company issued 500,000
shares of S-8 common stock for professional services provided.
On April 15, 2015, the Company issued 500,000
shares of S-8 common stock for professional services provided.
The foregoing securities were issued in
reliance on Section 4(a)(2) and/or Regulation D of the Securities Act of 1933, as amended. The shares were issued in private transactions
to United States residents. The shares of common stock have not been registered under the Securities Act or under any state securities
laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable
exemption from the registration requirements. The shareholders acknowledged that the securities to be issued have not been registered
under the Securities Act, that they understood the economic risk of an investment in the securities, and that they had the opportunity
to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities.
Item 3. Defaults Upon Senior Securities
On October 24, 2014, a note holder submitted
a conversion request to convert $10,000 of principal on the Second LG Note, which was inconsistent with the conversion terms as
stated in the convertible promissory note. The Company requested that the conversion notice be corrected and resubmitted, at which
time the note holder contended the conversion terms were intended to be based on 55% of the lowest closing bid price over the preceding
twelve trading days, as opposed to the stated 55% of the average of the lowest closing bid price of the Common Stock over the preceding
twelve trading days. On October 31, 2014, the note holder sent demand for repayment on the Second LG Note, consisting of $35,000
of principal and $1,214 of accrued interest outstanding as of June 30, 2015. As a result, we are in default on this convertible
promissory note. The note carries an 18% default interest rate and a penalty of $250 per day that the shares are not issued, beginning
on the 4th day after the conversion notice was delivered to the Company. This penalty increased to $500 per day beginning on the
10th day after the conversion notice was delivered to the Company.
Item 4. Mine Safety Disclosures
Not applicable.
Item 5. Other Information
Convertible Debenture Proceeds
On June 25, 2015, the Company received
net proceeds of $105,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (12%) with
a face value of $115,500 (“Fourth Vista Note”), which matures on June 1, 2016, as part of a larger financing
agreement that enables the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carries a
total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest is convertible into shares of common
stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing
bid prices during the sixteen (16) trading days prior to the conversion request date. The debt holder is limited to owning 4.99%
of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the
occurrence of the event of default shall immediately increase to 120% of the outstanding balance at the time of default. The promissory
note carries a $10,500 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which
approximates the effective interest method. The Company must at all times reserve at least 35 million shares of common stock
for potential conversions as depicted in the First Vista Note.
On June 24, 2015, the Company issued an
8% interest bearing; unsecured convertible promissory note with a face value of $119,052 (“First Collier Note”), which
matures on June 23, 2017 in exchange for the cancellation of three outstanding JMJ Notes, consisting of an aggregate
of $108,492 of principal and $10,560 of interest, that were acquired by Collier Investments, LLC. The principal and interest is
convertible into shares of common stock at 70% of the lowest volume weighted average price (“VWAP”) over the 20 days
prior to conversion. The note includes prepayment cash redemption penalties of 145% of outstanding principal and interest, and
the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company must at all times
reserve at least 100 million shares of common stock for potential conversions. Upon default, 145% of outstanding principal
and interest shall be due immediately.
On June 15, 2015, the Company received
net proceeds of $15,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (12%) with
a face value of $16,500 (“Third Vista Note”), which matures on June 1, 2016, as part of a larger financing
agreement that enables the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carries a
total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest is convertible into shares of common
stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing
bid prices during the sixteen (16) trading days prior to the conversion request date. The debt holder is limited to owning 4.99%
of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the
occurrence of the event of default shall immediately increase to 120% of the outstanding balance at the time of default. The promissory
note carries a $1,500 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which
approximates the effective interest method. The Company must at all times reserve at least 35 million shares of common stock
for potential conversions as depicted in the First Vista Note.
On May 15, 2015, the Company received net
proceeds of $60,000 in exchange for an 8% interest bearing; unsecured convertible promissory note dated May 1, 2015 with
a face value of $64,000 (“First Vis Vires Note”), which matures on February 5, 2016. The principal and interest
is convertible into shares of common stock at the discretion of the note holder at a price equal to 61% of the average of the three
(3) lowest closing bid prices over the 10 days prior to conversion. The note includes various prepayment penalties ranging from
112% through 130%, and default provisions of 150% of the then outstanding principal and interest, and an interest rate of 22% thereafter.
The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company must at all times
reserve at least 59 million shares of common stock for potential conversions.
Convertible Debenture Repayments
On June 25, 2015, the Company
repaid the Second KBM Note, as originated on December 15, 2014, consisting of $64,000 of principal and $22,400 of interest and
prepayment penalties. The convertible promissory note was subsequently cancelled as paid in full.
On June 25, 2015, the Company
repaid $12,000 on the First KBM Note, as originated on November 5, 2014, consisting of $9,700 of the remaining outstanding principal
and $2,300 of interest. The convertible promissory note was subsequently cancelled as paid in full and the reserved shares have
been released.
On June 24, 2015, the Company issued an
unsecured convertible promissory note with a face value of $119,052 (“First Collier Note”), in exchange for the cancellation
of three outstanding JMJ Notes, consisting of an aggregate of $108,492 of principal and $10,560 of interest, that were acquired
by Collier Investments, LLC.
Common Stock Issuances for Debt Conversions
On June 23, 2015, the Company issued 5,641,026
shares of common stock pursuant to the conversion of $11,000 of outstanding principal on the First Tangiers Note.
On June 18, 2015, the Company issued 4,383,562
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note.
On June 15, 2015, the Company issued 2,976,191
shares of common stock pursuant to the conversion of $7,500 of outstanding principal on the First Tangiers Note.
On June 11, 2015, the Company issued 5,684,421
shares of common stock pursuant to the conversion of $15,121, consisting of $6,000 of outstanding principal and $9,121 of interest,
on the First Typenex Note.
On June 9, 2015, the Company issued 11,269,231
shares of common stock pursuant to the conversion of $29,300 of outstanding principal on the First KBM Note.
On May 29, 2015, the Company issued 5,882,353
shares of common stock pursuant to the conversion of $20,000 of outstanding principal on the First KBM Note.
On May 21, 2015, the Company issued 3,191,489
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First KBM Note.
On May 15, 2015, the Company issued 1,727,116
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First Tangiers Note.
On May 13, 2015, the Company issued 2,500,000
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First KBM Note.
On May 7, 2015, the Company issued 2,112,676
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First KBM Note.
On April 29, 2015, the Company issued 2,360,140
shares of common stock pursuant to the conversion of $13,500 of outstanding principal on the First Typenex Note.
On April 27, 2015, the Company issued 2,336,449
shares of common stock pursuant to the conversion of $15,000 of outstanding principal on the First Tangiers Note.
On April 16, 2015, the Company issued 2,750,000
shares of common stock pursuant to the conversion of $14,479 of outstanding principal on the First Vista Note.
On April 14, 2015, the Company issued 1,975,309
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note.
On April 2, 2015, the Company issued 1,975,309
shares of common stock pursuant to the conversion of $10,000 of outstanding principal on the First WHC Note.
On April 1, 2015, the Company issued 2,428,058
shares of common stock pursuant to the conversion of $13,500 of outstanding principal on the First Typenex Note.
Item 6. Exhibits
3.1 |
March 26, 1998 – Articles of Incorporation (incorporated by reference to Exhibit 2.(A)(1) of the Form 10-SB filed with the Securities and Exchange Commission by Players Network on February 7, 2000) |
|
|
3.2 |
March 26, 1998 – Bylaws of the Company (incorporated by reference to Exhibit 2.(A)(2) of the Form 10-SB filed with the Securities and Exchange Commission by Players Network on February 7, 2000) |
|
|
3.3 |
June 9, 1994 – Certificate of Amendment of Articles of Incorporation adopting name change to Players Network filed with the Nevada Secretary of State (incorporated by reference to Exhibit 5.1 of the Company's Registration Statement on Form S-8 filed with the Securities and Exchange Commission by Players Network on September 13, 2004) |
|
|
3.4 |
June 4, 2007 – Certificate of Amendment of Articles of Incorporation Increasing the Authorized Stock filed with the Nevada Secretary of State (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission by Players Network on June 8, 2007) |
|
|
3.5 |
May 6, 2013 – Certificate of Amendment of Articles of Incorporation Increasing the Authorized Stock filed with the Nevada Secretary of State (incorporated by reference to Exhibit 3.5 of the Form 10-Q filed with the Securities and Exchange Commission by Players Network on May 13, 2013) |
|
|
3.6 |
July 8, 2014 - Articles of Incorporation for Green Leaf Farms Holdings, Inc. filed with the Nevada Secretary of State (incorporated by reference to Exhibit 3.2 of the Form 10-Q filed with the Securities and Exchange Commission by Players Network on November 18, 2014) |
|
|
3.7 |
July 18, 2014 - Articles of Organization for Green Leaf Medical, LLC. filed with the Nevada Secretary of State (incorporated by reference to Exhibit 3.3 of the Form 10-Q filed with the Securities and Exchange Commission by Players Network on November 18, 2014) |
|
|
4.1 |
August 31, 2004 – 2004 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 4.1 of the Company's Registration Statement on Form S-8 filed with the Securities and Exchange Commission by Players Network on September 13, 2004) |
|
|
4.2 |
November 29, 2006 – 2006 Non-Qualified Attorneys & Accountants Stock Compensation Plan (incorporated by reference to Exhibit 10.1 of the Company's Registration Statement on Form S-8 filed with the Securities and Exchange Commission by Players Network on January 18, 2007) |
|
|
4.3 |
July 24, 2007 – Certificate of Designation for Series A Preferred Stock filed with the Nevada Secretary of State (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by Players Network on July 26, 2007) |
|
|
4.4 |
July 22, 2009 – Amended and Restated 2004 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 4.1 of the Company's Registration Statement on Form S-8 filed with the Securities and Exchange Commission by Players Network on July 22, 2009) |
|
|
4.5 |
December 17, 2010 – Certificate of Designation for Series B Preferred Stock filed with the Nevada Secretary of State on (incorporated by reference to Exhibit 4.1 of the Form 8-K filed with the Securities and Exchange Commission by Players Network on December 23, 2010) |
|
|
4.6 |
December 17, 2010 – Form of Series B Stock Warrant (incorporated by reference to Exhibit 4.2 of the Form 8-K filed with the Securities and Exchange Commission by Players Network on December 23, 2010) |
|
|
4.7 |
December 16, 2013 – Amended and Restated 2004 Non-Qualified Stock Option Plan (incorporated by reference to Exhibit 4.1 of the Company's Registration Statement on Form S-8 filed with the Securities and Exchange Commission by Players Network on December 17, 2013) |
|
|
10.1 |
January 27, 2015 – Form of Convertible Promissory Note (Second Group 10 Note) (incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q filed with the Securities and Exchange Commission by Players Network on May 14, 2015) |
|
|
10.2 |
March 2, 2015 – Form of Convertible Promissory Note (First JSJ Note) (incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q filed with the Securities and Exchange Commission by Players Network on May 14, 2015) |
|
|
10.3 |
July 1, 2015 – Employment Agreement with Mark Bradley (incorporated by reference to Exhibit 10.1 of the Company's Form 8-K filed with the Securities and Exchange Commission by Players Network on July 22, 2015) |
|
|
10.4* |
May 1, 2015 – Form of Convertible Promissory Note (First Vis Vires Note) |
|
|
10.5* |
May 1, 2015 – Form of Securities Purchase Agreement (First Vis Vires Note) |
|
|
10.6* |
June 24, 2015 – Form of Convertible Promissory Note (First Collier Note) |
|
|
21.1 |
Subsidiaries (incorporated by reference to Exhibit 10.1 of the Company's Form 10-Q filed with the Securities and Exchange Commission by Players Network on May 14, 2015) |
|
|
31.1* |
Certification of Mark Bradley, CEO and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act |
|
|
32.1* |
Certification of Mark Bradley, CEO and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act |
|
|
101.INS* |
XBRL Instance Document |
|
|
101.SCH* |
XBRL Schema Document |
|
|
101.CAL* |
XBRL Calculation Linkbase Document |
|
|
101.DEF* |
XBRL Definition Linkbase Document |
|
|
101.LAB* |
XBRL Labels Linkbase Document |
|
|
101.PRE* |
XBRL Presentation Linkbase Document |
* Filed herewith
** Confidential Treatment Requested
*** Management contract or any other compensatory
plan, contract, or arrangement
SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date: August 21, 2015 |
|
|
|
|
|
|
Players Network |
|
|
|
|
|
|
|
|
|
|
|
/s/ Mark Bradley |
|
|
Mark Bradley |
|
|
Chief Executive Officer |
|
|
(Principal Executive Officer and Principal Financial Officer) |
|
Exhibit 10.4
NEITHER THE ISSUANCE AND SALE OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE CONVERTIBLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.
Principal Amount: $64,000.00 |
|
Issue Date: May 1, 2015 |
Purchase Price: $64,000.00 |
|
|
CONVERTIBLE PROMISSORY NOTE
FOR VALUE RECEIVED,
PLAYERS NETWORK, a Nevada corporation (hereinafter called the “Borrower”), hereby promises to pay to the order
of VIS VIRES GROUP, INC., a New York corporation, or registered assigns (the “Holder”) the sum of $64,000.00
together with any interest as set forth herein, on February 5, 2016 (the “Maturity Date”), and to pay interest on the
unpaid principal balance hereof at the rate of eight percent (8%) (the “Interest Rate”) per annum from the date hereof
(the “Issue Date”) until the same becomes due and payable, whether at maturity or upon acceleration or by prepayment
or otherwise. This Note may not be prepaid in whole or in part except as otherwise explicitly set forth herein. Any amount of principal
or interest on this Note which is not paid when due shall bear interest at the rate of twenty two percent (22%) per annum from
the due date thereof until the same is paid (“Default Interest”). Interest shall commence accruing on the date that
the Note is fully paid and shall be computed on the basis of a 365-day year and the actual number of days elapsed. All payments
due hereunder (to the extent not converted into common stock, $0.001 par value per share (the “Common Stock”) in accordance
with the terms hereof) shall be made in lawful money of the United States of America. All payments shall be made at such address
as the Holder shall hereafter give to the Borrower by written notice made in accordance with the provisions of this Note. Whenever
any amount expressed to be due by the terms of this Note is due on any day which is not a business day, the same shall instead
be due on the next succeeding day which is a business day and, in the case of any interest payment date which is not the date on
which this Note is paid in full, the extension of the due date thereof shall not be taken into account for purposes of determining
the amount of interest due on such date. As used in this Note, the term “business day” shall mean any day other than
a Saturday, Sunday or a day on which commercial banks in the city of New York, New York are authorized or required by law or executive
order to remain closed. Each capitalized term used herein, and not otherwise defined, shall have the meaning ascribed thereto in
that certain Securities Purchase Agreement dated the date hereof, pursuant to which this Note was originally issued (the “Purchase
Agreement”).
This Note is free from
all taxes, liens, claims and encumbrances with respect to the issue thereof and shall not be subject to preemptive rights or other
similar rights of shareholders of the Borrower and will not impose personal liability upon the holder thereof.
The following terms
shall apply to this Note:
Article
I. CONVERSION RIGHTS
1.1 Conversion
Right. The Holder shall have the right from time to time, and at any time during the period beginning on the date which is
one hundred eighty (180) days following the date of this Note and ending on the later of: (i) the Maturity Date and (ii) the date
of payment of the Default Amount (as defined in Article III) pursuant to Section 1.6(a) or Article III, each in respect of the
remaining outstanding principal amount of this Note to convert all or any part of the outstanding and unpaid principal amount of
this Note into fully paid and non- assessable shares of Common Stock, as such Common Stock exists on the Issue Date, or any shares
of capital stock or other securities of the Borrower into which such Common Stock shall hereafter be changed or reclassified at
the conversion price (the “Conversion Price”) determined as provided herein (a “Conversion”); provided,
however, that in no event shall the Holder be entitled to convert any portion of this Note in excess of that portion of
this Note upon conversion of which the sum of (1) the number of shares of Common Stock beneficially owned by the Holder and its
affiliates (other than shares of Common Stock which may be deemed beneficially owned through the ownership of the unconverted portion
of the Notes or the unexercised or unconverted portion of any other security of the Borrower subject to a limitation on conversion
or exercise analogous to the limitations contained herein) and (2) the number of shares of Common Stock issuable upon the conversion
of the portion of this Note with respect to which the determination of this proviso is being made, would result in beneficial ownership
by the Holder and its affiliates of more than 9.99% of the outstanding shares of Common Stock. For purposes of the proviso to the
immediately preceding sentence, beneficial ownership shall be determined in accordance with Section 13(d) of the Securities Exchange
Act of 1934, as amended (the “Exchange Act”), and Regulations 13D-G thereunder, except as otherwise provided in clause
(1) of such proviso, provided, further, however, that the limitations on conversion may be waived by the Holder
upon, at the election of the Holder, not less than 61 days’ prior notice to the Borrower, and the provisions of the conversion
limitation shall continue to apply until such 61st day (or such later date, as determined by the Holder, as may be specified in
such notice of waiver). The number of shares of Common Stock to be issued upon each conversion of this Note shall be determined
by dividing the Conversion Amount (as defined below) by the applicable Conversion Price then in effect on the date specified in
the notice of conversion, in the form attached hereto as Exhibit A (the “Notice of Conversion”), delivered to the Borrower
by the Holder in accordance with Section 1.4 below; provided that the Notice of Conversion is submitted by facsimile or e-mail
(or by other means resulting in, or reasonably expected to result in, notice) to the Borrower before 6:00 p.m., New York, New York
time on such conversion date (the “Conversion Date”). The term “Conversion Amount” means, with respect
to any conversion of this Note, the sum of (1) the principal amount of this Note to be converted in such conversion plus
(2) at the Holder’s option, accrued and unpaid interest, if any, on such principal amount at the interest rates provided
in this Note to the Conversion Date, plus (3) at the Holder’s option, Default Interest, if any, on the amounts referred
to in the immediately preceding clauses (1) and/or (2) plus (4) at the Holder’s option, any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof.
1.2 Conversion
Price.
(a) Calculation
of Conversion Price. The conversion price (the “Conversion Price”) shall equal the Variable Conversion Price (as
defined herein) (subject to equitable adjustments for stock splits, stock dividends or rights offerings by the Borrower relating
to the Borrower’s securities or the securities of any subsidiary of the Borrower, combinations, recapitalization, reclassifications,
extraordinary distributions and similar events). The "Variable Conversion Price" shall mean 61% multiplied by the Market
Price (as defined herein) (representing a discount rate of 39%). “Market Price” means the average of the lowest three
(3) Trading Prices (as defined below) for the Common Stock during the ten (10) Trading Day period ending on the latest complete
Trading Day prior to the Conversion Date. “Trading Price” means, for any security as of any date, the closing bid price
on the Over-the-Counter Bulletin Board, Pink Sheets electronic quotation system or applicable trading market (the “OTC”)
as reported by a reliable reporting service (“Reporting Service”) designated by the Holder (i.e. Bloomberg) or, if
the OTC is not the principal trading market for such security, the closing bid price of such security on the principal securities
exchange or trading market where such security is listed or traded or, if no closing bid price of such security is available in
any of the foregoing manners, the average of the closing bid prices of any market makers for such security that are listed in the
“pink sheets”. If the Trading Price cannot be calculated for such security on such date in the manner provided above,
the Trading Price shall be the fair market value as mutually determined by the Borrower and the holders of a majority in interest
of the Notes being converted for which the calculation of the Trading Price is required in order to determine the Conversion Price
of such Notes. “Trading Day” shall mean any day on which the Common Stock is tradable for any period on the OTC, or
on the principal securities exchange or other securities market on which the Common Stock is then being traded.
(b) Conversion
Price During Major Announcements. Notwithstanding anything contained in Section 1.2(a) to the contrary, in the event the Borrower
(i) makes a public announcement that it intends to consolidate or merge with any other corporation (other than a merger in which
the Borrower is the surviving or continuing corporation and its capital stock is unchanged) or sell or transfer all or substantially
all of the assets of the Borrower or (ii) any person, group or entity (including the Borrower) publicly announces a tender offer
to purchase 50% or more of the Borrower’s Common Stock (or any other takeover scheme) (the date of the announcement referred
to in clause (i) or (ii) is hereinafter referred to as the “Announcement Date”), then the Conversion Price shall, effective
upon the Announcement Date and continuing through the Adjusted Conversion Price Termination Date (as defined below), be equal to
the lower of (x) the Conversion Price which would have been applicable for a Conversion occurring on the Announcement Date and
(y) the Conversion Price that would otherwise be in effect. From and after the Adjusted Conversion Price Termination Date, the
Conversion Price shall be determined as set forth in this Section 1.2(a). For purposes hereof, “Adjusted Conversion Price
Termination Date” shall mean, with respect to any proposed transaction or tender offer (or takeover scheme) for which a public
announcement as contemplated by this Section 1.2(b) has been made, the date upon which the Borrower (in the case of clause (i)
above) or the person, group or entity (in the case of clause (ii) above) consummates or publicly announces the termination or abandonment
of the proposed transaction or tender offer (or takeover scheme) which caused this Section 1.2(b) to become operative.
1.3 Authorized
Shares. The Borrower covenants that during the period the conversion right exists, the Borrower will reserve from its authorized
and unissued Common Stock a sufficient number of shares, free from preemptive rights, to provide for the issuance of Common Stock
upon the full conversion of this Note issued pursuant to the Purchase Agreement. The Borrower is required at all times to have
authorized and reserved eight times the number of shares that is actually issuable upon full conversion of the Note (based on the
Conversion Price of the Notes in effect from time to time)(the “Reserved Amount”). The Reserved Amount shall be increased
from time to time in accordance with the Borrower’s obligations hereunder. The Borrower represents that upon issuance, such
shares will be duly and validly issued, fully paid and non-assessable. In addition, if the Borrower shall issue any securities
or make any change to its capital structure which would change the number of shares of Common Stock into which the Notes shall
be convertible at the then current Conversion Price, the Borrower shall at the same time make proper provision so that thereafter
there shall be a sufficient number of shares of Common Stock authorized and reserved, free from preemptive rights, for conversion
of the outstanding Notes. The Borrower (i) acknowledges that it has irrevocably instructed its transfer agent to issue certificates
for the Common Stock issuable upon conversion of this Note, and (ii) agrees that its issuance of this Note shall constitute
full authority to its officers and agents who are charged with the duty of executing stock certificates to execute and issue the
necessary certificates for shares of Common Stock in accordance with the terms and conditions of this Note.
If, at any time the Borrower
does not maintain the Reserved Amount it will be considered an Event of Default under Section 3.2 of the Note.
1.4 Method of Conversion.
(a) Mechanics
of Conversion. Subject to Section 1.1, this Note may be converted by the Holder in whole or in part at any time from time to
time after the Issue Date, by (A) submitting to the Borrower a Notice of Conversion (by facsimile, e-mail or other reasonable
means of communication dispatched on the Conversion Date prior to 6:00 p.m., New York, New York time) and (B) subject to Section
1.4(b), surrendering this Note at the principal office of the Borrower.
(b) Surrender
of Note Upon Conversion. Notwithstanding anything to the contrary set forth herein, upon conversion of this Note in accordance
with the terms hereof, the Holder shall not be required to physically surrender this Note to the Borrower unless the entire unpaid
principal amount of this Note is so converted. The Holder and the Borrower shall maintain records showing the principal amount
so converted and the dates of such conversions or shall use such other method, reasonably satisfactory to the Holder and the Borrower,
so as not to require physical surrender of this Note upon each such conversion. In the event of any dispute or discrepancy, such
records of the Borrower shall, prima facie, be controlling
and determinative in the absence of manifest error. Notwithstanding the foregoing, if any portion of this Note is converted as
aforesaid, the Holder may not transfer this Note unless the Holder first physically surrenders this Note to the Borrower, whereupon
the Borrower will forthwith issue and deliver upon the order of the Holder a new Note of like tenor, registered as the Holder (upon
payment by the Holder of any applicable transfer taxes) may request, representing in the aggregate the remaining unpaid principal
amount of this Note. The Holder and any assignee, by acceptance of this Note, acknowledge and agree that, by reason of the provisions
of this paragraph, following conversion of a portion of this Note, the unpaid and unconverted principal amount of this Note represented
by this Note may be less than the amount stated on the face hereof.
(c) Payment of
Taxes. The Borrower shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue
and delivery of shares of Common Stock or other securities or property on conversion of this Note in a name other than that of
the Holder (or in street name), and the Borrower shall not be required to issue or deliver any such shares or other securities
or property unless and until the person or persons (other than the Holder or the custodian in whose street name such shares are
to be held for the Holder’s account) requesting the issuance thereof shall have paid to the Borrower the amount of any such
tax or shall have established to the satisfaction of the Borrower that such tax has been paid.
(d) Delivery
of Common Stock Upon Conversion. Upon receipt by the Borrower from the Holder of a facsimile transmission or e-mail (or other
reasonable means of communication) of a Notice of Conversion meeting the requirements for conversion as provided in this Section
1.4, the Borrower shall issue and deliver or cause to be issued and delivered to or upon the order of the Holder certificates for
the Common Stock issuable upon such conversion within three (3) business days after such receipt (the “Deadline”) (and,
solely in the case of conversion of the entire unpaid principal amount hereof, surrender of this Note) in accordance with the terms
hereof and the Purchase Agreement.
(e) Obligation
of Borrower to Deliver Common Stock. Upon receipt by the Borrower of a Notice of Conversion, the Holder shall be deemed to
be the holder of record of the Common Stock issuable upon such conversion, the outstanding principal amount and the amount of accrued
and unpaid interest on this Note shall be reduced to reflect such conversion, and, unless the Borrower defaults on its obligations
under this Article I, all rights with respect to the portion of this Note being so converted shall forthwith terminate except the
right to receive the Common Stock or other securities, cash or other assets, as herein provided, on such conversion. If the Holder
shall have given a Notice of Conversion as provided herein, the Borrower’s obligation to issue and deliver the certificates
for Common Stock shall be absolute and unconditional, irrespective of the absence of any action by the Holder to enforce the same,
any waiver or consent with respect to any provision thereof, the recovery of any judgment against any person or any action to enforce
the same, any failure or delay in the enforcement of any other obligation of the Borrower to the holder of record, or any setoff,
counterclaim, recoupment, limitation or termination, or any breach or alleged breach by the Holder of any obligation to the Borrower,
and irrespective of any other circumstance which might otherwise limit such obligation of the Borrower to the Holder in connection
with such conversion. The Conversion Date specified in the Notice of Conversion shall be the Conversion Date so long as the Notice
of Conversion is received by the Borrower before 6:00 p.m., New York, New York time, on such date.
(f) Delivery
of Common Stock by Electronic Transfer. In lieu of delivering physical certificates representing the Common Stock issuable
upon conversion, provided the Borrower is participating in the Depository Trust Company (“DTC”) Fast Automated Securities
Transfer (“FAST”) program, upon request of the Holder and its compliance with the provisions contained in Section 1.1
and in this Section 1.4, the Borrower shall use its best efforts to cause its transfer agent to electronically transmit the Common
Stock issuable upon conversion to the Holder by crediting the account of Holder’s Prime Broker with DTC through its Deposit
Withdrawal Agent Commission (“DWAC”) system.
(g) Failure to
Deliver Common Stock Prior to Deadline. Without in any way limiting the Holder’s right to pursue other remedies, including
actual damages and/or equitable relief, the parties agree that if delivery of the Common Stock issuable upon conversion of this
Note is not delivered by the Deadline (other than a failure due to the circumstances described in Section 1.3 above, which failure
shall be governed by such Section) the Borrower shall pay to the Holder $2,000 per day in cash, for each day beyond the Deadline
that the Borrower fails to deliver such Common Stock. Such cash amount shall be paid to Holder by the fifth day of the month following
the month in which it has accrued or, at the option of the Holder (by written notice to the Borrower by the first day of the month
following the month in which it has accrued), shall be added to the principal amount of this Note, in which event interest shall
accrue thereon in accordance with the terms of this Note and such additional principal amount shall be convertible into Common
Stock in accordance with the terms of this Note. The Borrower agrees that the right to convert is a valuable right to the Holder.
The damages resulting from a failure, attempt to frustrate, interference with such conversion right are difficult if not impossible
to qualify. Accordingly the parties acknowledge that the liquidated damages provision contained in this Section 1.4(g) are justified.
1.5 Concerning
the Shares. The shares of Common Stock issuable upon conversion of this Note may not be sold or transferred unless (i) such
shares are sold pursuant to an effective registration statement under the Act or (ii) the Borrower or its transfer agent shall
have been furnished with an opinion of counsel (which opinion shall be in form, substance and scope customary for opinions of counsel
in comparable transactions) to the effect that the shares to be sold or transferred may be sold or transferred pursuant to an exemption
from such registration or (iii) such shares are sold or transferred pursuant to Rule 144 under the Act (or a successor rule)
(“Rule 144”) or (iv) such shares are transferred to an “affiliate” (as defined in Rule 144) of the Borrower
who agrees to sell or otherwise transfer the shares only in accordance with this Section 1.5 and who is an Accredited Investor
(as defined in the Purchase Agreement). Except as otherwise provided in the Purchase Agreement (and subject to the removal provisions
set forth below), until such time as the shares of Common Stock issuable upon conversion of this Note have been registered under
the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities as of a particular
date that can then be immediately sold, each certificate for shares of Common Stock issuable upon conversion of this Note that
has not been so included in an effective registration statement or that has not been sold pursuant to an effective registration
statement or an exemption that permits removal of the legend, shall bear a legend substantially in the following form, as appropriate:
“NEITHER THE ISSUANCE AND
SALE OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED
FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.”
The legend set forth
above shall be removed and the Borrower shall issue to the Holder a new certificate therefore free of any transfer legend if (i)
the Borrower or its transfer agent shall have received an opinion of counsel, in form, substance and scope customary for opinions
of counsel in comparable transactions, to the effect that a public sale or transfer of such Common Stock may be made without registration
under the Act, which opinion shall be accepted by the Company so that the sale or transfer is effected or (ii) in the case of the
Common Stock issuable upon conversion of this Note, such security is registered for sale by the Holder under an effective registration
statement filed under the Act or otherwise may be sold pursuant to Rule 144 without any restriction as to the number of securities
as of a particular date that can then be immediately sold. In the event that the Company does not accept the opinion of counsel
provided by the Holder with respect to the transfer of Securities pursuant to an exemption from registration, such as Rule 144
or Regulation S, at the Deadline, it will be considered an Event of Default pursuant to Section 3.2 of the Note.
1.6 Effect of Certain
Events.
(a) Effect of
Merger, Consolidation, Etc. At the option of the Holder, the sale, conveyance or disposition of all or substantially all of
the assets of the Borrower, the effectuation by the Borrower of a transaction or series of related transactions in which more than
50% of the voting power of the Borrower is disposed of, or the consolidation, merger or other business combination of the Borrower
with or into any other Person (as defined below) or Persons when the Borrower is not the survivor shall either: (i) be deemed to
be an Event of Default (as defined in Article III) pursuant to which the Borrower shall be required to pay to the Holder upon the
consummation of and as a condition to such transaction an amount equal to the Default Amount (as defined in Article III) or (ii)
be treated pursuant to Section 1.6(b) hereof. “Person” shall mean any individual, corporation, limited liability company,
partnership, association, trust or other entity or organization.
(b) Adjustment
Due to Merger, Consolidation, Etc. If, at any time when this Note is issued and outstanding and prior to conversion of all
of the Notes, there shall be any merger, consolidation, exchange of shares, recapitalization, reorganization, or other similar
event, as a result of which shares of Common Stock of the Borrower shall be changed into the same or a different number of shares
of another class or classes of stock or securities of the Borrower or another entity, or in case of any sale or conveyance of all
or substantially all of the assets of the Borrower other than in connection with a plan of complete liquidation of the Borrower,
then the Holder of this Note shall thereafter have the right to receive upon conversion of this Note, upon the basis and upon the
terms and conditions specified herein and in lieu of the shares of Common Stock immediately theretofore issuable upon conversion,
such stock, securities or assets which the Holder would have been entitled to receive in such transaction had this Note been converted
in full immediately prior to such transaction (without regard to any limitations on conversion set forth herein), and in any such
case appropriate provisions shall be made with respect to the rights and interests of the Holder of this Note to the end that the
provisions hereof (including, without limitation, provisions for adjustment of the Conversion Price and of the number of shares
issuable upon conversion of the Note) shall thereafter be applicable, as nearly as may be practicable in relation to any securities
or assets thereafter deliverable upon the conversion hereof. The Borrower shall not affect any transaction described in this Section
1.6(b) unless (a) it first gives, to the extent practicable, thirty (30) days prior written notice (but in any event at least fifteen
(15) days prior written notice) of the record date of the special meeting of shareholders to approve, or if there is no such record
date, the consummation of, such merger, consolidation, exchange of shares, recapitalization, reorganization or other similar event
or sale of assets (during which time the Holder shall be entitled to convert this Note) and (b) the resulting successor or acquiring
entity (if not the Borrower) assumes by written instrument the obligations of this Section 1.6(b). The above provisions shall similarly
apply to successive consolidations, mergers, sales, transfers or share exchanges.
(c) Adjustment
Due to Distribution. If the Borrower shall declare or make any distribution of its assets (or rights to acquire its assets)
to holders of Common Stock as a dividend, stock repurchase, by way of return of capital or otherwise (including any dividend or
distribution to the Borrower’s shareholders in cash or shares (or rights to acquire shares) of capital stock of a subsidiary
(i.e., a spin-off)) (a “Distribution”), then the Holder of this Note shall be entitled, upon any conversion of this
Note after the date of record for determining shareholders entitled to such Distribution, to receive the amount of such assets
which would have been payable to the Holder with respect to the shares of Common Stock issuable upon such conversion had such Holder
been the holder of such shares of Common Stock on the record date for the determination of shareholders entitled to such Distribution.
(d) Adjustment
Due to Dilutive Issuance. If, at any time when any Notes are issued and outstanding, the Borrower issues or sells, or in accordance
with this Section 1.6(d) hereof is deemed to have issued or sold, any shares of Common Stock for no consideration or for a consideration
per share (before deduction of reasonable expenses or commissions or underwriting discounts or allowances in connection therewith)
less than the Conversion Price in effect on the date of such issuance (or deemed issuance) of such shares of Common Stock (a “Dilutive
Issuance”), then immediately upon the Dilutive Issuance, the Conversion Price will be reduced to the amount of the consideration
per share received by the Borrower in such Dilutive Issuance.
The Borrower shall
be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or grants any warrants, rights or
options (not including employee stock option plans), whether or not immediately exercisable, to subscribe for or to purchase Common
Stock or other securities convertible into or exchangeable for Common Stock (“Convertible Securities”) (such warrants,
rights and options to purchase Common Stock or Convertible Securities are hereinafter referred to as “Options”) and
the price per share for which Common Stock is issuable upon the exercise of such Options is less than the Conversion Price then
in effect, then the Conversion Price shall be equal to such price per share. For purposes of the preceding sentence, the “price
per share for which Common Stock is issuable upon the exercise of such Options” is determined by dividing (i) the total amount,
if any, received or receivable by the Borrower as consideration for the issuance or granting of all such Options, plus the minimum
aggregate amount of additional consideration, if any, payable to the Borrower upon the exercise of all such Options, plus, in the
case of Convertible Securities issuable upon the exercise of such Options, the minimum aggregate amount of additional consideration
payable upon the conversion or exchange thereof at the time such Convertible Securities first become convertible or exchangeable,
by (ii) the maximum total number of shares of Common Stock issuable upon the exercise of all such Options (assuming full conversion
of Convertible Securities, if applicable). No further adjustment to the Conversion Price will be made upon the actual issuance
of such Common Stock upon the exercise of such Options or upon the conversion or exchange of Convertible Securities issuable upon
exercise of such Options.
Additionally, the Borrower
shall be deemed to have issued or sold shares of Common Stock if the Borrower in any manner issues or sells any Convertible Securities,
whether or not immediately convertible (other than where the same are issuable upon the exercise of Options), and the price per
share for which Common Stock is issuable upon such conversion or exchange is less than the Conversion Price then in effect, then
the Conversion Price shall be equal to such price per share. For the purposes of the preceding sentence, the “price per share
for which Common Stock is issuable upon such conversion or exchange” is determined by dividing (i) the total amount, if any,
received or receivable by the Borrower as consideration for the issuance or sale of all such Convertible Securities, plus the minimum
aggregate amount of additional consideration, if any, payable to the Borrower upon the conversion or exchange thereof at the time
such Convertible Securities first become convertible or exchangeable, by (ii) the maximum total number of shares of Common Stock
issuable upon the conversion or exchange of all such Convertible Securities. No further adjustment to the Conversion Price will
be made upon the actual issuance of such Common Stock upon conversion or exchange of such Convertible Securities.
(e) Purchase
Rights. If, at any time when any Notes are issued and outstanding, the Borrower issues any convertible securities or rights
to purchase stock, warrants, securities or other property (the “Purchase Rights”) pro rata to the record holders of
any class of Common Stock, then the Holder of this Note will be entitled to acquire, upon the terms applicable to such Purchase
Rights, the aggregate Purchase Rights which such Holder could have acquired if such Holder had held the number of shares of Common
Stock acquirable upon complete conversion of this Note (without regard to any limitations on conversion contained herein) immediately
before the date on which a record is taken for the grant, issuance or sale of such Purchase Rights or, if no such record is taken,
the date as of which the record holders of Common Stock are to be determined for the grant, issue or sale of such Purchase Rights.
(f) Notice of
Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price as a result of the events described
in this Section 1.6, the Borrower, at its expense, shall promptly compute such adjustment or readjustment and prepare and furnish
to the Holder a certificate setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment
or readjustment is based. The Borrower shall, upon the written request at any time of the Holder, furnish to such Holder a like
certificate setting forth (i) such adjustment or readjustment, (ii) the Conversion Price at the time in effect and (iii) the number
of shares of Common Stock and the amount, if any, of other securities or property which at the time would be received upon conversion
of the Note.
1.7 Trading Market
Limitations. Unless permitted by the applicable rules and regulations of the principal securities market on which the Common
Stock is then listed or traded, in no event shall the Borrower issue upon conversion of or otherwise pursuant to this Note and
the other Notes issued pursuant to the Purchase Agreement more than the maximum number of shares of Common Stock that the Borrower
can issue pursuant to any rule of the principal United States securities market on which the Common Stock is then traded (the “Maximum
Share Amount”), which shall be 9.99% of the total shares outstanding on the Closing Date (as defined in the Purchase Agreement),
subject to equitable adjustment from time to time for stock splits, stock dividends, combinations, capital reorganizations and
similar events relating to the Common Stock occurring after the date hereof. Once the Maximum Share Amount has been issued, if
the Borrower fails to eliminate any prohibitions under applicable law or the rules or regulations of any stock exchange, interdealer
quotation system or other self-regulatory organization with jurisdiction over the Borrower or any of its securities on the Borrower’s
ability to issue shares of Common Stock in excess of the Maximum Share Amount, in lieu of any further right to convert this Note,
this will be considered an Event of Default under Section 3.3 of the Note.
1.8 Status as Shareholder.
Upon submission of a Notice of Conversion by a Holder, (i) the shares covered thereby (other than the shares, if any, which cannot
be issued because their issuance would exceed such Holder’s allocated portion of the Reserved Amount or Maximum Share Amount)
shall be deemed converted into shares of Common Stock and (ii) the Holder’s rights as a Holder of such converted portion
of this Note shall cease and terminate, excepting only the right to receive certificates for such shares of Common Stock and to
any remedies provided herein or otherwise available at law or in equity to such Holder because of a failure by the Borrower to
comply with the terms of this Note. Notwithstanding the foregoing, if a Holder has not received certificates for all shares of
Common Stock prior to the tenth (10th) business day after the expiration of the Deadline with respect to a conversion of any portion
of this Note for any reason, then (unless the Holder otherwise elects to retain its status as a holder of Common Stock by so notifying
the Borrower) the Holder shall regain the rights of a Holder of this Note with respect to such unconverted portions of this Note
and the Borrower shall, as soon as practicable, return such unconverted Note to the Holder or, if the Note has not been surrendered,
adjust its records to reflect that such portion of this Note has not been converted. In all cases, the Holder shall retain all
of its rights and remedies (including, without limitation, (i) the right to receive Conversion Default Payments pursuant to Section
1.3 to the extent required thereby for such Conversion Default and any subsequent Conversion Default and (ii) the right to have
the Conversion Price with respect to subsequent conversions determined in accordance with Section 1.3) for the Borrower’s
failure to convert this Note.
1.9 Prepayment.
Notwithstanding anything to the contrary contained in this Note, at any time during the periods set forth on the table immediately
following this paragraph (the “Prepayment Periods”), the Borrower shall have the right, exercisable on not less than
three (3) Trading Days prior written notice to the Holder of the Note to prepay the outstanding Note (principal and accrued interest),
in full, in accordance with this Section 1.9. Any notice of prepayment hereunder (an “Optional Prepayment Notice”)
shall be delivered to the Holder of the Note at its registered addresses and shall state: (1) that the Borrower is exercising its
right to prepay the Note, and (2) the date of prepayment which shall be not more than three (3) Trading Days from the date of the
Optional Prepayment Notice. On the date fixed for prepayment (the “Optional Prepayment Date”), the Borrower shall make
payment of the Optional Prepayment Amount (as defined below) to Holder, or upon the order of the Holder as specified by the Holder
in writing to the Borrower, at least one (1) business day prior to the Optional Prepayment Date. If the Borrower exercises its
right to prepay the Note, the Borrower shall make payment to the Holder of an amount in cash (the “Optional Prepayment Amount”)
equal to the percentage (“Prepayment Percentage”) as set forth in the table immediately following this paragraph opposite
the applicable Prepayment Period, multiplied by the sum of: (w) the then outstanding principal amount of this Note plus
(x) accrued and unpaid interest on the unpaid principal amount of this Note to the Optional Prepayment Date plus (y)
Default Interest, if any, on the amounts referred to in clauses (w) and (x) plus (z) any amounts owed to the Holder pursuant
to Sections 1.3 and 1.4(g) hereof. If the Borrower delivers an Optional Prepayment Notice and fails to pay the Optional Prepayment
Amount due to the Holder of the Note within two (2) business days following the Optional Prepayment Date, the Borrower shall forever
forfeit its right to prepay the Note pursuant to this Section 1.9.
Prepayment Period |
Prepayment Percentage |
1. The period beginning on the Issue Date and ending on the date which is thirty (30) days following the Issue Date. |
112% |
2. The period beginning on the date which is thirty-one (31) days following the Issue Date and ending on the date which is sixty (60) days following the Issue Date |
117% |
3. The period beginning on the date which is sixty-one (61) days following the Issue Date and ending on the date which is ninety (90) days following the Issue Date |
123% |
4. The period beginning on the date that is ninety-one (91) day from the Issue Date and ending one hundred twenty (120) days following the Issue Date |
128% |
5. The period beginning on the date that is one hundred twenty-one (121) day from the Issue Date and ending one hundred eighty (180) days following the Issue Date |
130% |
|
|
After the expiration
of one hundred eighty (180) days following the Issue Date, the Borrower shall have no right of prepayment.
Article
II. CERTAIN COVENANTS
2.1 Distributions
on Capital Stock. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the Holder’s
written consent (a) pay, declare or set apart for such payment, any dividend or other distribution (whether in cash, property or
other securities) on shares of capital stock other than dividends on shares of Common Stock solely in the form of additional shares
of Common Stock or (b) directly or indirectly or through any subsidiary make any other payment or distribution in respect of its
capital stock except for distributions pursuant to any shareholders’ rights plan which is approved by a majority of the Borrower’s
disinterested directors.
2.2 Restriction
on Stock Repurchases. So long as the Borrower shall have any obligation under this Note, the Borrower shall not without the
Holder’s written consent redeem, repurchase or otherwise acquire (whether for cash or in exchange for property or other securities
or otherwise) in any one transaction or series of related transactions any shares of capital stock of the Borrower or any warrants,
rights or options to purchase or acquire any such shares.
2.3 Borrowings.
So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent,
create, incur, assume guarantee, endorse, contingently agree to purchase or otherwise become liable upon the obligation of any
person, firm, partnership, joint venture or corporation, except by the endorsement of negotiable instruments for deposit or collection,
or suffer to exist any liability for borrowed money, except (a) borrowings in existence or committed on the date hereof and of
which the Borrower has informed Holder in writing prior to the date hereof, (b) indebtedness to trade creditors or financial institutions
incurred in the ordinary course of business or (c) borrowings, the proceeds of which shall be used to repay this Note.
2.4 Sale of Assets.
So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s written consent,
sell, lease or otherwise dispose of any significant portion of its assets outside the ordinary course of business. Any consent
to the disposition of any assets may be conditioned on a specified use of the proceeds of disposition.
2.5 Advances and
Loans. So long as the Borrower shall have any obligation under this Note, the Borrower shall not, without the Holder’s
written consent, lend money, give credit or make advances to any person, firm, joint venture or corporation, including, without
limitation, officers, directors, employees, subsidiaries and affiliates of the Borrower, except loans, credits or advances (a)
in existence or committed on the date hereof and which the Borrower has informed Holder in writing prior to the date hereof, (b)
made in the ordinary course of business or (c) not in excess of $100,000.
Article
III. EVENTS OF DEFAULT
If any of the following
events of default (each, an “Event of Default”) shall occur:
3.1 Failure to
Pay Principal or Interest. The Borrower fails to pay the principal hereof or interest thereon when due on this Note, whether
at maturity, upon acceleration or otherwise.
3.2 Conversion
and the Shares. The Borrower fails to issue shares of Common Stock to the Holder (or announces or threatens in writing that
it will not honor its obligation to do so) upon exercise by the Holder of the conversion rights of the Holder in accordance with
the terms of this Note, fails to transfer or cause its transfer agent to transfer (issue) (electronically or in certificated form)
any certificate for shares of Common Stock issued to the Holder upon conversion of or otherwise pursuant to this Note as and when
required by this Note, the Borrower directs its transfer agent not to transfer or delays, impairs, and/or hinders its transfer
agent in transferring (or issuing) (electronically or in certificated form) any certificate for shares of Common Stock to be issued
to the Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note, or fails to remove (or directs
its transfer agent not to remove or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or
to withdraw any stop transfer instructions in respect thereof) on any certificate for any shares of Common Stock issued to the
Holder upon conversion of or otherwise pursuant to this Note as and when required by this Note (or makes any written announcement,
statement or threat that it does not intend to honor the obligations described in this paragraph) and any such failure shall continue
uncured (or any written announcement, statement or threat not to honor its obligations shall not be rescinded in writing) for three
(3) business days after the Holder shall have delivered a Notice of Conversion. It is an obligation of the Borrower to remain current
in its obligations to its transfer agent. It shall be an event of default of this Note, if a conversion of this Note is delayed,
hindered or frustrated due to a balance owed by the Borrower to its transfer agent. If at the option of the Holder, the Holder
advances any funds to the Borrower’s transfer agent in order to process a conversion, such advanced funds shall be paid by
the Borrower to the Holder within forty eight (48) hours of a demand from the Holder.
3.3 Breach of Covenants.
The Borrower breaches any material covenant or other material term or condition contained in this Note and any collateral documents
including but not limited to the Purchase Agreement and such breach continues for a period of ten (10) days after written notice
thereof to the Borrower from the Holder.
3.4 Breach of Representations
and Warranties. Any representation or warranty of the Borrower made herein or in any agreement, statement or certificate given
in writing pursuant hereto or in connection herewith (including, without limitation, the Purchase Agreement), shall be false or
misleading in any material respect when made and the breach of which has (or with the passage of time will have) a material adverse
effect on the rights of the Holder with respect to this Note or the Purchase Agreement.
3.5 Receiver or
Trustee. The Borrower or any subsidiary of the Borrower shall make an assignment for the benefit of creditors, or apply for
or consent to the appointment of a receiver or trustee for it or for a substantial part of its property or business, or such a
receiver or trustee shall otherwise be appointed.
3.6 Judgments.
Any money judgment, writ or similar process shall be entered or filed against the Borrower or any subsidiary of the Borrower or
any of its property or other assets for more than $50,000, and shall remain unvacated, unbonded or unstayed for a period of twenty
(20) days unless otherwise consented to by the Holder, which consent will not be unreasonably withheld.
3.7 Bankruptcy.
Bankruptcy, insolvency, reorganization or liquidation proceedings or other proceedings, voluntary or involuntary, for relief under
any bankruptcy law or any law for the relief of debtors shall be instituted by or against the Borrower or any subsidiary of the
Borrower.
3.8 Delisting of
Common Stock. The Borrower shall fail to maintain the listing of the Common Stock on at least one of the OTC (which specifically
includes the Pink Sheets electronic quotation system) or an equivalent replacement exchange, the Nasdaq National Market, the Nasdaq
SmallCap Market, the New York Stock Exchange, or the American Stock Exchange.
3.9 Failure to
Comply with the Exchange Act. The Borrower shall fail to comply with the reporting requirements of the Exchange Act; and/or
the Borrower shall cease to be subject to the reporting requirements of the Exchange Act.
3.10 Liquidation. Any
dissolution, liquidation, or winding up of Borrower or any substantial portion of its business.
3.11 Cessation
of Operations. Any cessation of operations by Borrower or Borrower admits it is otherwise generally unable to pay its debts
as such debts become due, provided, however, that any disclosure of the Borrower’s ability to continue as a “going
concern” shall not be an admission that the Borrower cannot pay its debts as they become due.
3.12 Maintenance
of Assets. The failure by Borrower to maintain any material intellectual property rights, personal, real property or other
assets which are necessary to conduct its business (whether now or in the future).
3.13 Financial
Statement Restatement. The restatement of any financial statements filed by the Borrower with the SEC for any date or period
from two years prior to the Issue Date of this Note and until this Note is no longer outstanding, if the result of such restatement
would, by comparison to the unrestated financial statement, have constituted a material adverse effect on the rights of the Holder
with respect to this Note or the Purchase Agreement.
3.14 Reverse Splits. The
Borrower effectuates a reverse split of its Common Stock without twenty (20) days prior written notice to the Holder.
3.15
Replacement of Transfer Agent. In the event that the Borrower proposes to replace its transfer agent, the Borrower
fails to provide, prior to the effective date of such replacement, a fully executed Irrevocable Transfer Agent Instructions in
a form as initially delivered pursuant to the Purchase Agreement (including but not limited to the provision to irrevocably reserve
shares of Common Stock in the Reserved Amount) signed by the successor transfer agent to Borrower and the Borrower.
3.16 Cross-Default.
Notwithstanding anything to the contrary contained in this Note or the other related or companion documents, a breach or default
by the Borrower of any covenant or other term or condition contained in any of the Other Agreements, after the passage of all applicable
notice and cure or grace periods, shall, at the option of the Holder, be considered a default under this Note and the Other Agreements,
in which event the Holder shall be entitled (but in no event required) to apply all rights and remedies of the Holder under the
terms of this Note and the Other Agreements by reason of a default under said Other Agreement or hereunder.
“Other Agreements” means, collectively, all agreements and instruments between, among or by: (1) the Borrower,
and, or for the benefit of, (2) the Holder and any affiliate of the Holder, including, without limitation, promissory notes;
provided, however, the term “Other Agreements” shall not include the related or companion documents to this Note. Each
of the loan transactions will be cross-defaulted with each other loan transaction and with all other existing and future debt of
Borrower to the Holder.
Upon the occurrence
of any Event of Default specified in Section 3.1 (solely with respect to failure to pay the principal hereof or interest thereon
when due at the Maturity Date), the Note shall become immediately due and payable and the Borrower shall pay to the Holder, in
full satisfaction of its obligations hereunder, an amount equal to the Default Sum (as defined herein). UPON THE OCCURRENCE
OF ANY EVENT OF DEFAULT SPECIFIED IN SECTION 3.2, THE NOTE SHALL BECOME IMMEDIATELY DUE AND PAYABLE AND THE BORROWER SHALL PAY
TO THE HOLDER, IN FULL SATISFACTION OF ITS OBLIGATIONS HEREUNDER, AN AMOUNT EQUAL TO: (Y) THE DEFAULT SUM (AS DEFINED HEREIN);
MULTIPLIED BY (Z) TWO (2). Upon the occurrence of any Event of Default, other than Section 3.2, exercisable through the delivery
of written notice to the Borrower by such Holders (the “Default Notice”), the Note shall become immediately due and
payable and the Borrower shall pay to the Holder, in full satisfaction of its obligations hereunder, an amount equal to the greater
of (i) 150% times the sum of (w) the then outstanding principal amount of this Note plus (x) accrued and unpaid
interest on the unpaid principal amount of this Note to the date of payment (the “Mandatory Prepayment Date”) plus
(y) Default Interest, if any, on the amounts referred to in clauses (w) and/or (x) plus (z) any amounts owed to the Holder
pursuant to Sections 1.3 and 1.4(g) hereof (the then outstanding principal amount of this Note to the date of payment plus
the amounts referred to in clauses (x), (y) and (z) shall collectively be known as the “Default Sum”) or (ii) the “parity
value” of the Default Sum to be prepaid, where parity value means (a) the highest number of shares of Common Stock issuable
upon conversion of or otherwise pursuant to such Default Sum in accordance with Article I, treating the Trading Day immediately
preceding the Mandatory Prepayment Date as the “Conversion Date” for purposes of determining the lowest applicable
Conversion Price, unless the Default Event arises as a result of a breach in respect of a specific Conversion Date in which case
such Conversion Date shall be the Conversion Date), multiplied by (b) the highest Closing Price for the Common Stock during
the period beginning on the date of first occurrence of the Event of Default and ending one day prior to the Mandatory Prepayment
Date (the “Default Amount”) and all other amounts payable hereunder shall immediately become due and payable, all without
demand, presentment or notice, all of which hereby are expressly waived, together with all costs, including, without limitation,
legal fees and expenses, of collection, and the Holder shall be entitled to exercise all other rights and remedies available at
law or in equity.
If the Borrower
fails to pay the Default Amount within five (5) business days of written notice that such amount is due and payable, then the Holder
shall have the right at any time, so long and to the extent that there are sufficient authorized shares, to require the Borrower,
upon written notice, to convert the Default Amount into shares of Common Stock of the Borrower pursuant to Section 1.1 hereof.
Article
IV. MISCELLANEOUS
4.1 Failure or
Indulgence Not Waiver. No failure or delay on the part of the Holder in the exercise of any power, right or privilege hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such power, right or privilege preclude other
or further exercise thereof or of any other right, power or privileges. All rights and remedies existing hereunder are cumulative
to, and not exclusive of, any rights or remedies otherwise available.
4.2 Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the
Borrower, to:
PLAYERS NETWORK
1771 East Flamingo Road, # 201-A
Las Vegas, NV 89119
Attn: MARK
BRADLEY, Chief Executive Officer
facsimile:
With a copy by fax
only to (which copy shall not constitute notice):
[enter name of law
firm]
Attn: [attorney
name]
[enter
address line 1]
[enter
city, state, zip]
facsimile:
[enter fax number]
If to the Holder:
VIS VIRES GROUP, INC.
111 Great
Neck Road – Suite 216
Great Neck,
NY 11021
Attn: Curt Kramer, President
e-mail:
info@visviresgroup.com
With a copy by fax
only to (which copy shall not constitute notice):
Naidich
Wurman LLP
Att: Judah
A. Eisner, Esq.
Attn: Bernard S. Feldman, Esq.
facsimile:
516-466-3555
4.3 Amendments.
This Note and any provision hereof may only be amended by an instrument in writing signed by the Borrower and the Holder. The term
“Note” and all reference thereto, as used throughout this instrument, shall mean this instrument (and the other Notes
issued pursuant to the Purchase Agreement) as originally executed, or if later amended or supplemented, then as so amended or supplemented.
4.4 Assignability.
This Note shall be binding upon the Borrower and its successors and assigns, and shall inure to be the benefit of the Holder and
its successors and assigns. Each transferee of this Note must be an “accredited investor” (as defined in Rule 501(a)
of the 1933 Act). Notwithstanding anything in this Note to the contrary, this Note may be pledged as collateral in connection with
a bona fide margin account or other lending arrangement.
4.5 Cost of Collection.
If default is made in the payment of this Note, the Borrower shall pay the Holder hereof costs of collection, including reasonable
attorneys’ fees.
4.6 Governing Law.
This Note shall be governed by and construed in accordance with the laws of the State of New York without regard to principles
of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated by this Note
shall be brought only in the state courts of New York or in the federal courts located in the state and county of Nassau. The parties
to this Note hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The Borrower and Holder waive
trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's fees and costs.
In the event that any provision of this Note or any other agreement delivered in connection herewith is invalid or unenforceable
under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that it may conflict
therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may prove invalid
or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement. Each party
hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding in
connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail or
overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and
agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall
be deemed to limit in any way any right to serve process in any other manner permitted by law.
4.7 Certain Amounts.
Whenever pursuant to this Note the Borrower is required to pay an amount in excess of the outstanding principal amount (or the
portion thereof required to be paid at that time) plus accrued and unpaid interest plus Default Interest on such interest, the
Borrower and the Holder agree that the actual damages to the Holder from the receipt of cash payment on this Note may be difficult
to determine and the amount to be so paid by the Borrower represents stipulated damages and not a penalty and is intended to compensate
the Holder in part for loss of the opportunity to convert this Note and to earn a return from the sale of shares of Common Stock
acquired upon conversion of this Note at a price in excess of the price paid for such shares pursuant to this Note. The Borrower
and the Holder hereby agree that such amount of stipulated damages is not plainly disproportionate to the possible loss to the
Holder from the receipt of a cash payment without the opportunity to convert this Note into shares of Common Stock.
4.8 Purchase Agreement.
By its acceptance of this Note, each party agrees to be bound by the applicable terms of the Purchase Agreement.
4.9 Notice of Corporate
Events. Except as otherwise provided below, the Holder of this Note shall have no rights as a Holder of Common Stock unless
and only to the extent that it converts this Note into Common Stock. The Borrower shall provide the Holder with prior notification
of any meeting of the Borrower’s shareholders (and copies of proxy materials and other information sent to shareholders).
In the event of any taking by the Borrower of a record of its shareholders for the purpose of determining shareholders who are
entitled to receive payment of any dividend or other distribution, any right to subscribe for, purchase or otherwise acquire (including
by way of merger, consolidation, reclassification or recapitalization) any share of any class or any other securities or property,
or to receive any other right, or for the purpose of determining shareholders who are entitled to vote in connection with any proposed
sale, lease or conveyance of all or substantially all of the assets of the Borrower or any proposed liquidation, dissolution or
winding up of the Borrower, the Borrower shall mail a notice to the Holder, at least twenty (20) days prior to the record date
specified therein (or thirty (30) days prior to the consummation of the transaction or event, whichever is earlier), of the date
on which any such record is to be taken for the purpose of such dividend, distribution, right or other event, and a brief statement
regarding the amount and character of such dividend, distribution, right or other event to the extent known at such time. The Borrower
shall make a public announcement of any event requiring notification to the Holder hereunder substantially simultaneously with
the notification to the Holder in accordance with the terms of this Section 4.9.
4.10 Remedies.
The Borrower acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Holder, by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Borrower acknowledges that the remedy at law for
a breach of its obligations under this Note will be inadequate and agrees, in the event of a breach or threatened breach by the
Borrower of the provisions of this Note, that the Holder shall be entitled, in addition to all other available remedies at law
or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing or curing
any breach of this Note and to enforce specifically the terms and provisions thereof, without the necessity of showing economic
loss and without any bond or other security being required.
IN WITNESS WHEREOF,
Borrower has caused this Note to be signed in its name by its duly authorized officer this May 1, 2015.
PLAYERS NETWORK
By: /s/ Mark Bradley
MARK BRADLEY
Chief Executive Officer
EXHIBIT A -- NOTICE OF CONVERSION
The undersigned hereby
elects to convert $_________________ principal amount of the Note (defined below) into that number
of shares of Common Stock to be issued pursuant to the conversion of the Note (“Common Stock”) as set forth
below, of PLAYERS NETWORK, a Nevada corporation (the “Borrower”) according to the conditions of the convertible note
of the Borrower dated as of May 1, 2015 (the “Note”), as of the date written below. No fee will be charged to the Holder
for any conversion, except for transfer taxes, if any.
Box Checked as to applicable
instructions:
| [ ] | The Borrower shall electronically transmit the Common
Stock issuable pursuant to this Notice of Conversion to the account of the undersigned or its nominee with DTC through its Deposit
Withdrawal Agent Commission system (“DWAC Transfer”). |
Name of DTC Prime Broker:
Account
Number:
| [ ] | The undersigned hereby requests that the Borrower
issue a certificate or certificates for the number of shares of Common Stock set forth below (which numbers are based on the Holder’s
calculation attached hereto) in the name(s) specified immediately below or, if additional space is necessary, on an attachment
hereto: |
VIS VIRES GROUP, INC.
111 Great Neck Road – Suite
216
Great Neck, NY 11021
Attention: Certificate Delivery
e-mail: info@visviresgroup.com
Date
of Conversion: |
|
____________________ |
Applicable Conversion Price: |
|
$___________________ |
Number of Shares of Common Stock to be Issued Pursuant to Conversion of the Notes: |
|
____________________ |
Amount of Principal Balance Due remaining Under the Note after this conversion: |
|
____________________ |
|
|
|
VIS VIRES GROUP, INC.
By:_____________________________
Name: Curt Kramer
Title: President
Date: May 1,
2015
OFFICER’S
CERTIFICATE
The undersigned, MARK BRADLEY, Chief Executive
Officer of PLAYERS NETWORK, a Nevada Corporation (the "Company"), in connection with the authorization and issuance
of 8% Convertible Promissory Note in the aggregate principal amount of $64,000.00 in accordance with the Securities Purchase Agreement
dated May 1, 2015 by and among the Company and each of the purchasers set forth on the signature pages thereto (the "Purchase
Agreement"), hereby certifies that:
1. I am the duly appointed Chief Executive
Officer of the Company.
2. The representations and warranties
made by the Company in Section 3 of the Purchase Agreement are true and correct in all material respects as of the date of this
Officer's Certificate. The capitalization of the Company described in Section 3(c) of the Purchase Agreement has not changed as
of the date hereof.
3. As of the date hereof, the Company
has satisfied and duly performed all of the conditions and obligations specified in Section 7 of the Purchase Agreement to be
satisfied on or prior to the Closing Date (as defined in the Purchase Agreement) or such conditions and obligations have been
waived expressly in writing signed by the purchaser.
4. The Company has complied with or,
if compliance prior to Closing (as defined in the Purchase Agreement) is not required, promptly following the Closing the Company
will comply with, the filing requirements in respect of this transaction under (a) Regulation D under the Securities Act of 1933,
as amended (the "1933 Act") (and applicable Blue Sky regulations) and (b) the Securities Exchange Act of 1934, as amended.
5. There has been no adverse change in
the business, affairs, prospects, operations, properties, assets or condition of the Company since December 31, 2014, the date
of the Company's most recent reviewed financial statements delivered to the Buyers (as defined in the Purchase Agreement), other
than losses and matters which would not, individually or in the aggregate, have a Material Adverse Effect (as defined in the Purchase
Agreement).
6. The Company is qualified as a foreign corporation in all jurisdictions in which the Company owns or leases properties,
or conducts any business except where failure of the Company to be so qualified would not have a Material Adverse Effect (as defined
in the Purchase Agreement).
IN WITNESS WHEREOF, the undersigned has
executed this Officer’s Certificate as of May 1, 2015.
/s/ Mark Bradley
MARK BRADLEY
Chief Executive Officer
Exhibit 10.5
SECURITIES PURCHASE AGREEMENT
This SECURITIES
PURCHASE AGREEMENT (the “Agreement”), dated as of May 1, 2015, by and between PLAYERS NETWORK, a Nevada
corporation, with headquarters located at 1771 East Flamingo Road, # 201-A, Las Vegas, NV 89119 (the “Company”), and
VIS VIRES GROUP, INC., a New York corporation, with its address at 111 Great Neck Road, Suite 216, Great Neck, NY 11021
(the “Buyer”).
WHEREAS:
A. The Company and
the Buyer are executing and delivering this Agreement in reliance upon the exemption from securities registration afforded by the
rules and regulations as promulgated by the United States Securities and Exchange Commission (the “SEC”) under the
Securities Act of 1933, as amended (the “1933 Act”);
B. Buyer desires
to purchase and the Company desires to issue and sell, upon the terms and conditions set forth in this Agreement an 8% convertible
note of the Company, in the form attached hereto as Exhibit A, in the aggregate principal amount of $64,000.00 (together with any
note(s) issued in replacement thereof or as a dividend thereon or otherwise with respect thereto in accordance with the terms thereof,
the “Note”), convertible into shares of common stock, $0.001 par value per share, of the Company (the “Common
Stock”), upon the terms and subject to the limitations and conditions set forth in such Note.
C. The Buyer wishes
to purchase, upon the terms and conditions stated in this Agreement, such principal amount of Note as is set forth immediately
below its name on the signature pages hereto; and
NOW THEREFORE,
the Company and the Buyer severally (and not jointly) hereby agree as follows:
1. Purchase and
Sale of Note.
a. Purchase of
Note. On the Closing Date (as defined below), the Company shall issue and sell to the Buyer and the Buyer agrees to purchase
from the Company such principal amount of Note as is set forth immediately below the Buyer’s name on the signature pages
hereto.
b. Form of Payment.
On the Closing Date (as defined below), (i) the Buyer shall pay the purchase price for the Note to be issued and sold to it at
the Closing (as defined below) (the “Purchase Price”) by wire transfer of immediately available funds to the Company,
in accordance with the Company’s written wiring instructions, against delivery of the Note in the principal amount equal
to the Purchase Price as is set forth immediately below the Buyer’s name on the signature pages hereto, and (ii) the
Company shall deliver such duly executed Note on behalf of the Company, to the Buyer, against delivery of such Purchase Price.
c. Closing Date.
Subject to the satisfaction (or written waiver) of the conditions thereto set forth in Section 6 and Section 7 below, the date
and time of the issuance and sale of the Note pursuant to this Agreement (the “Closing Date”) shall be 12:00 noon,
Eastern Standard Time on or about May 5, 2015, or such other mutually agreed upon time. The closing of the transactions contemplated
by this Agreement (the “Closing”) shall occur on the Closing Date at such location as may be agreed to by the parties.
2. Buyer’s
Representations and Warranties. The Buyer represents and warrants to the Company that:
a. Investment
Purpose. As of the date hereof, the Buyer is purchasing the Note and the shares of Common Stock issuable upon conversion of
or otherwise pursuant to the Note (including, without limitation, such additional shares of Common Stock, if any, as are issuable
(i) on account of interest on the Note, (ii) as a result of the events described in Sections 1.3 and 1.4(g) of the Note
or (iii) in payment of the Standard Liquidated Damages Amount (as defined in Section 2(f) below) pursuant to this Agreement,
such shares of Common Stock being collectively referred to herein as the “Conversion Shares” and, collectively with
the Note, the “Securities”) for its own account and not with a present view towards the public sale or distribution
thereof, except pursuant to sales registered or exempted from registration under the 1933 Act; provided, however,
that by making the representations herein, the Buyer does not agree to hold any of the Securities for any minimum or other specific
term and reserves the right to dispose of the Securities at any time in accordance with or pursuant to a registration statement
or an exemption under the 1933 Act.
b. Accredited
Investor Status. The Buyer is an “accredited investor” as that term is defined in Rule 501(a) of Regulation D (an
“Accredited Investor”).
c. Reliance on
Exemptions. The Buyer understands that the Securities are being offered and sold to it in reliance upon specific exemptions
from the registration requirements of United States federal and state securities laws and that the Company is relying upon the
truth and accuracy of, and the Buyer’s compliance with, the representations, warranties, agreements, acknowledgments and
understandings of the Buyer set forth herein in order to determine the availability of such exemptions and the eligibility of the
Buyer to acquire the Securities.
d. Information.
The Buyer and its advisors, if any, have been, and for so long as the Note remain outstanding will continue to be, furnished with
all materials relating to the business, finances and operations of the Company and materials relating to the offer and sale of
the Securities which have been requested by the Buyer or its advisors. The Buyer and its advisors, if any, have been, and for so
long as the Note remain outstanding will continue to be, afforded the opportunity to ask questions of the Company. Notwithstanding
the foregoing, the Company has not disclosed to the Buyer any material nonpublic information and will not disclose such information
unless such information is disclosed to the public prior to or promptly following such disclosure to the Buyer. Neither such inquiries
nor any other due diligence investigation conducted by Buyer or any of its advisors or representatives shall modify, amend or affect
Buyer’s right to rely on the Company’s representations and warranties contained in Section 3 below. The Buyer understands
that its investment in the Securities involves a significant degree of risk. The Buyer is not aware of any facts that may constitute
a breach of any of the Company's representations and warranties made herein.
e. Governmental
Review. The Buyer understands that no United States federal or state agency or any other government or governmental agency
has passed upon or made any recommendation or endorsement of the Securities.
f. Transfer or
Re-sale. The Buyer understands that (i) the sale or re-sale of the Securities has not been and is not being registered under
the 1933 Act or any applicable state securities laws, and the Securities may not be transferred unless (a) the Securities
are sold pursuant to an effective registration statement under the 1933 Act, (b) the Buyer shall have delivered to the Company,
at the cost of the Buyer, an opinion of counsel that shall be in form, substance and scope customary for opinions of counsel in
comparable transactions to the effect that the Securities to be sold or transferred may be sold or transferred pursuant to an exemption
from such registration, which opinion shall be accepted by the Company, (c) the Securities are sold or transferred to an “affiliate”
(as defined in Rule 144 promulgated under the 1933 Act (or a successor rule) (“Rule 144”)) of the Buyer who agrees
to sell or otherwise transfer the Securities only in accordance with this Section 2(f) and who is an Accredited Investor, (d) the
Securities are sold pursuant to Rule 144, or (e) the Securities are sold pursuant to Regulation S under the 1933 Act (or a
successor rule) (“Regulation S”), and the Buyer shall have delivered to the Company, at the cost of the Buyer, an opinion
of counsel that shall be in form, substance and scope customary for opinions of counsel in corporate transactions, which opinion
shall be accepted by the Company; (ii) any sale of such Securities made in reliance on Rule 144 may be made only in accordance
with the terms of said Rule and further, if said Rule is not applicable, any re-sale of such Securities under circumstances in
which the seller (or the person through whom the sale is made) may be deemed to be an underwriter (as that term is defined in the
1933 Act) may require compliance with some other exemption under the 1933 Act or the rules and regulations of the SEC thereunder;
and (iii) neither the Company nor any other person is under any obligation to register such Securities under the 1933 Act or any
state securities laws or to comply with the terms and conditions of any exemption thereunder (in each case). Notwithstanding the
foregoing or anything else contained herein to the contrary, the Securities may be pledged as collateral in connection with a bona
fide margin account or other lending arrangement.
g. Legends.
The Buyer understands that the Note and, until such time as the Conversion Shares have been registered under the 1933 Act may be
sold pursuant to Rule 144 or Regulation S without any restriction as to the number of securities as of a particular date that can
then be immediately sold, the Conversion Shares may bear a restrictive legend in substantially the following form (and a stop-transfer
order may be placed against transfer of the certificates for such Securities):
“NEITHER THE ISSUANCE AND SALE
OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE EXERCISABLE HAVE BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE OFFERED FOR SALE,
SOLD, TRANSFERRED OR ASSIGNED (I) IN THE ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR (B) AN OPINION OF COUNSEL (WHICH COUNSEL SHALL BE SELECTED BY THE HOLDER), IN A GENERALLY ACCEPTABLE
FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID ACT. NOTWITHSTANDING
THE FOREGOING, THE SECURITIES MAY BE PLEDGED IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR FINANCING ARRANGEMENT
SECURED BY THE SECURITIES.”
The legend set forth
above shall be removed and the Company shall issue a certificate without such legend to the holder of any Security upon which it
is stamped, if, unless otherwise required by applicable state securities laws, (a) such Security is registered for sale under an
effective registration statement filed under the 1933 Act or otherwise may be sold pursuant to Rule 144 or Regulation S without
any restriction as to the number of securities as of a particular date that can then be immediately sold, or (b) such holder provides
the Company with an opinion of counsel, in form, substance and scope customary for opinions of counsel in comparable transactions,
to the effect that a public sale or transfer of such Security may be made without registration under the 1933 Act, which opinion
shall be accepted by the Company so that the sale or transfer is effected. The Buyer agrees to sell all Securities, including those
represented by a certificate(s) from which the legend has been removed, in compliance with applicable prospectus delivery requirements,
if any. In the event that the Company does not accept the opinion of counsel provided by the Buyer with respect to the transfer
of Securities pursuant to an exemption from registration, such as Rule 144 or Regulation S, at the Deadline, it will be considered
an Event of Default pursuant to Section 3.2 of the Note.
h. Authorization;
Enforcement. This Agreement has been duly and validly authorized. This Agreement has been duly executed and delivered on behalf
of the Buyer, and this Agreement constitutes a valid and binding agreement of the Buyer enforceable in accordance with its terms.
i. Residency.
The Buyer is a resident of the jurisdiction set forth immediately below the Buyer’s name on the signature pages hereto.
3. Representations
and Warranties of the Company. The Company represents and warrants to the Buyer that:
a. Organization
and Qualification. The Company and each of its Subsidiaries (as defined below), if any, is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it is incorporated, with full power and authority (corporate
and other) to own, lease, use and operate its properties and to carry on its business as and where now owned, leased, used, operated
and conducted. Schedule 3(a) sets forth a list of all of the Subsidiaries of the Company and the jurisdiction in which each is
incorporated. The Company and each of its Subsidiaries is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which its ownership or use of property or the nature of the business conducted by it makes such
qualification necessary except where the failure to be so qualified or in good standing would not have a Material Adverse Effect.
“Material Adverse Effect” means any material adverse effect on the business, operations, assets, financial condition
or prospects of the Company or its Subsidiaries, if any, taken as a whole, or on the transactions contemplated hereby or by the
agreements or instruments to be entered into in connection herewith. “Subsidiaries” means any corporation or other
organization, whether incorporated or unincorporated, in which the Company owns, directly or indirectly, any equity or other ownership
interest.
b. Authorization;
Enforcement. (i) The Company has all requisite corporate power and authority to enter into and perform this Agreement, the
Note and to consummate the transactions contemplated hereby and thereby and to issue the Securities, in accordance with the terms
hereof and thereof, (ii) the execution and delivery of this Agreement, the Note by the Company and the consummation by it of the
transactions contemplated hereby and thereby (including without limitation, the issuance of the Note and the issuance and reservation
for issuance of the Conversion Shares issuable upon conversion or exercise thereof) have been duly authorized by the Company’s
Board of Directors and no further consent or authorization of the Company, its Board of Directors, or its shareholders is required,
(iii) this Agreement has been duly executed and delivered by the Company by its authorized representative, and such authorized
representative is the true and official representative with authority to sign this Agreement and the other documents executed in
connection herewith and bind the Company accordingly, and (iv) this Agreement constitutes, and upon execution and delivery by the
Company of the Note, each of such instruments will constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms.
c. Capitalization.
As of the date hereof, the authorized capital stock of the Company consists of: (i) 600,000,000 authorized shares of Common Stock,
$0.001 par value per share, of which 214,549,534 shares are issued and outstanding; and (ii) 2,000,000 authorized shares of Series
A Preferred Stock, $0.001 par value per share, of which 2,000,000 shares are issued and outstanding and (iii) 10,873,347 authorized
shares of Series A Preferred Stock, $0.001 par value per share, of which 4,349,339 shares are issued and outstanding; no shares
are reserved for issuance pursuant to the Company’s stock option plans, no shares are reserved for issuance pursuant to securities
(other than the Note) exercisable for, or convertible into or exchangeable for shares of Common Stock and 59,000,000 shares are
reserved for issuance upon conversion of the Note. All of such outstanding shares of capital stock are, or upon issuance will be,
duly authorized, validly issued, fully paid and non-assessable. No shares of capital stock of the Company are subject to preemptive
rights or any other similar rights of the shareholders of the Company or any liens or encumbrances imposed through the actions
or failure to act of the Company. As of the effective date of this Agreement, (i) there are no outstanding options, warrants, scrip,
rights to subscribe for, puts, calls, rights of first refusal, agreements, understandings, claims or other commitments or rights
of any character whatsoever relating to, or securities or rights convertible into or exchangeable for any shares of capital stock
of the Company or any of its Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is or may become bound
to issue additional shares of capital stock of the Company or any of its Subsidiaries, (ii) there are no agreements or arrangements
under which the Company or any of its Subsidiaries is obligated to register the sale of any of its or their securities under the
1933 Act and (iii) there are no anti-dilution or price adjustment provisions contained in any security issued by the Company (or
in any agreement providing rights to security holders) that will be triggered by the issuance of the Note or the Conversion Shares.
The Company has furnished to the Buyer true and correct copies of the Company’s Certificate of Incorporation as in effect
on the date hereof (“Certificate of Incorporation”), the Company’s By-laws, as in effect on the date hereof (the
“By-laws”), and the terms of all securities convertible into or exercisable for Common Stock of the Company and the
material rights of the holders thereof in respect thereto. The Company shall provide the Buyer with a written update of this representation
signed by the Company’s Chief Executive on behalf of the Company as of the Closing Date.
d. Issuance of
Shares. The Conversion Shares are duly authorized and reserved for issuance and, upon conversion of the Note in accordance
with its respective terms, will be validly issued, fully paid and non-assessable, and free from all taxes, liens, claims and encumbrances
with respect to the issue thereof and shall not be subject to preemptive rights or other similar rights of shareholders of the
Company and will not impose personal liability upon the holder thereof.
e. Acknowledgment
of Dilution. The Company understands and acknowledges the potentially dilutive effect to the Common Stock upon the issuance
of the Conversion Shares upon conversion of the Note. The Company further acknowledges that its obligation to issue Conversion
Shares upon conversion of the Note in accordance with this Agreement, the Note is absolute and unconditional regardless of the
dilutive effect that such issuance may have on the ownership interests of other shareholders of the Company.
f. No Conflicts.
The execution, delivery and performance of this Agreement, the Note by the Company and the consummation by the Company of the transactions
contemplated hereby and thereby (including, without limitation, the issuance and reservation for issuance of the Conversion Shares)
will not (i) conflict with or result in a violation of any provision of the Certificate of Incorporation or By-laws, or (ii) violate
or conflict with, or result in a breach of any provision of, or constitute a default (or an event which with notice or lapse of
time or both could become a default) under, or give to others any rights of termination, amendment, acceleration or cancellation
of, any agreement, indenture, patent, patent license or instrument to which the Company or any of its Subsidiaries is a party,
or (iii) result in a violation of any law, rule, regulation, order, judgment or decree (including federal and state securities
laws and regulations and regulations of any self-regulatory organizations to which the Company or its securities are subject) applicable
to the Company or any of its Subsidiaries or by which any property or asset of the Company or any of its Subsidiaries is bound
or affected (except for such conflicts, defaults, terminations, amendments, accelerations, cancellations and violations as would
not, individually or in the aggregate, have a Material Adverse Effect). Neither the Company nor any of its Subsidiaries is in violation
of its Certificate of Incorporation, By-laws or other organizational documents and neither the Company nor any of its Subsidiaries
is in default (and no event has occurred which with notice or lapse of time or both could put the Company or any of its Subsidiaries
in default) under, and neither the Company nor any of its Subsidiaries has taken any action or failed to take any action that would
give to others any rights of termination, amendment, acceleration or cancellation of, any agreement, indenture or instrument to
which the Company or any of its Subsidiaries is a party or by which any property or assets of the Company or any of its Subsidiaries
is bound or affected, except for possible defaults as would not, individually or in the aggregate, have a Material Adverse Effect.
The businesses of the Company and its Subsidiaries, if any, are not being conducted, and shall not be conducted so long as the
Buyer owns any of the Securities, in violation of any law, ordinance or regulation of any governmental entity. Except as specifically
contemplated by this Agreement and as required under the 1933 Act and any applicable state securities laws, the Company is not
required to obtain any consent, authorization or order of, or make any filing or registration with, any court, governmental agency,
regulatory agency, self regulatory organization or stock market or any third party in order for it to execute, deliver or perform
any of its obligations under this Agreement, the Note in accordance with the terms hereof or thereof or to issue and sell the Note
in accordance with the terms hereof and to issue the Conversion Shares upon conversion of the Note. All consents, authorizations,
orders, filings and registrations which the Company is required to obtain pursuant to the preceding sentence have been obtained
or effected on or prior to the date hereof. If the Company is listed on the OTCBB, the Company is not in violation of the listing
requirements of the Over-the-Counter Bulletin Board (the “OTCBB”) and does not reasonably anticipate that the Common
Stock will be delisted by the OTCBB in the foreseeable future. The Company and its Subsidiaries are unaware of any facts or circumstances
which might give rise to any of the foregoing.
g. SEC Documents;
Financial Statements. The Company has timely filed all reports, schedules, forms, statements and other documents required to
be filed by it with the SEC pursuant to the reporting requirements of the Securities Exchange Act of 1934, as amended (the “1934
Act”) (all of the foregoing filed prior to the date hereof and all exhibits included therein and financial statements and
schedules thereto and documents (other than exhibits to such documents) incorporated by reference therein, being hereinafter referred
to herein as the “SEC Documents”). Upon written request the Company will deliver to the Buyer true and complete copies
of the SEC Documents, except for such exhibits and incorporated documents. As of their respective dates, the SEC Documents complied
in all material respects with the requirements of the 1934 Act and the rules and regulations of the SEC promulgated thereunder
applicable to the SEC Documents, and none of the SEC Documents, at the time they were filed with the SEC, contained any untrue
statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made, not misleading. None of the statements made in any
such SEC Documents is, or has been, required to be amended or updated under applicable law (except for such statements as have
been amended or updated in subsequent filings prior the date hereof). As of their respective dates, the financial statements of
the Company included in the SEC Documents complied as to form in all material respects with applicable accounting requirements
and the published rules and regulations of the SEC with respect thereto. Such financial statements have been prepared in accordance
with United States generally accepted accounting principles, consistently applied, during the periods involved and fairly present
in all material respects the consolidated financial position of the Company and its consolidated Subsidiaries as of the dates thereof
and the consolidated results of their operations and cash flows for the periods then ended (subject, in the case of unaudited statements,
to normal year-end audit adjustments). Except as set forth in the financial statements of the Company included in the SEC Documents,
the Company has no liabilities, contingent or otherwise, other than (i) liabilities incurred in the ordinary course of business
subsequent to December 31, 2014, and (ii) obligations under contracts and commitments incurred in the ordinary course of business
and not required under generally accepted accounting principles to be reflected in such financial statements, which, individually
or in the aggregate, are not material to the financial condition or operating results of the Company. The Company is subject to
the reporting requirements of the 1934 Act.
h. Absence of
Certain Changes. Since December 31, 2014, there has been no material adverse change and no material adverse development in
the assets, liabilities, business, properties, operations, financial condition, results of operations, prospects or 1934 Act reporting
status of the Company or any of its Subsidiaries.
i. Absence of
Litigation. There is no action, suit, claim, proceeding, inquiry or investigation before or by any court, public board, government
agency, self-regulatory organization or body pending or, to the knowledge of the Company or any of its Subsidiaries, threatened
against or affecting the Company or any of its Subsidiaries, or their officers or directors in their capacity as such, that could
have a Material Adverse Effect. Schedule 3(i) contains a complete list and summary description of any pending or, to the knowledge
of the Company, threatened proceeding against or affecting the Company or any of its Subsidiaries, without regard to whether it
would have a Material Adverse Effect. The Company and its Subsidiaries are unaware of any facts or circumstances which might give
rise to any of the foregoing.
j. Patents, Copyrights,
etc. The Company and each of its Subsidiaries owns or possesses the requisite licenses or rights to use all patents, patent
applications, patent rights, inventions, know-how, trade secrets, trademarks, trademark applications, service marks, service names,
trade names and copyrights (“Intellectual Property”) necessary to enable it to conduct its business as now operated
(and, as presently contemplated to be operated in the future); there is no claim or action by any person pertaining to, or proceeding
pending, or to the Company’s knowledge threatened, which challenges the right of the Company or of a Subsidiary with respect
to any Intellectual Property necessary to enable it to conduct its business as now operated (and, as presently contemplated to
be operated in the future); to the best of the Company’s knowledge, the Company’s or its Subsidiaries’ current
and intended products, services and processes do not infringe on any Intellectual Property or other rights held by any person;
and the Company is unaware of any facts or circumstances which might give rise to any of the foregoing. The Company and each of
its Subsidiaries have taken reasonable security measures to protect the secrecy, confidentiality and value of their Intellectual
Property.
k. No Materially
Adverse Contracts, Etc. Neither the Company nor any of its Subsidiaries is subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation which in the judgment of the Company’s officers has or is
expected in the future to have a Material Adverse Effect. Neither the Company nor any of its Subsidiaries is a party to any contract
or agreement which in the judgment of the Company’s officers has or is expected to have a Material Adverse Effect.
l. Tax Status.
The Company and each of its Subsidiaries has made or filed all federal, state and foreign income and all other tax returns, reports
and declarations required by any jurisdiction to which it is subject (unless and only to the extent that the Company and each of
its Subsidiaries has set aside on its books provisions reasonably adequate for the payment of all unpaid and unreported taxes)
and has paid all taxes and other governmental assessments and charges that are material in amount, shown or determined to be due
on such returns, reports and declarations, except those being contested in good faith and has set aside on its books provisions
reasonably adequate for the payment of all taxes for periods subsequent to the periods to which such returns, reports or declarations
apply. There are no unpaid taxes in any material amount claimed to be due by the taxing authority of any jurisdiction, and the
officers of the Company know of no basis for any such claim. The Company has not executed a waiver with respect to the statute
of limitations relating to the assessment or collection of any foreign, federal, state or local tax. None of the Company’s
tax returns is presently being audited by any taxing authority.
m. Certain Transactions.
Except for arm’s length transactions pursuant to which the Company or any of its Subsidiaries makes payments in the ordinary
course of business upon terms no less favorable than the Company or any of its Subsidiaries could obtain from third parties and
other than the grant of stock options disclosed on Schedule 3(c), none of the officers, directors, or employees of the Company
is presently a party to any transaction with the Company or any of its Subsidiaries (other than for services as employees, officers
and directors), including any contract, agreement or other arrangement providing for the furnishing of services to or by, providing
for rental of real or personal property to or from, or otherwise requiring payments to or from any officer, director or such employee
or, to the knowledge of the Company, any corporation, partnership, trust or other entity in which any officer, director, or any
such employee has a substantial interest or is an officer, director, trustee or partner.
n. Disclosure.
All information relating to or concerning the Company or any of its Subsidiaries set forth in this Agreement and provided to the
Buyer pursuant to Section 2(d) hereof and otherwise in connection with the transactions contemplated hereby is true and correct
in all material respects and the Company has not omitted to state any material fact necessary in order to make the statements made
herein or therein, in light of the circumstances under which they were made, not misleading. No event or circumstance has occurred
or exists with respect to the Company or any of its Subsidiaries or its or their business, properties, prospects, operations or
financial conditions, which, under applicable law, rule or regulation, requires public disclosure or announcement by the Company
but which has not been so publicly announced or disclosed (assuming for this purpose that the Company’s reports filed under
the 1934 Act are being incorporated into an effective registration statement filed by the Company under the 1933 Act).
o. Acknowledgment
Regarding Buyer’ Purchase of Securities. The Company acknowledges and agrees that the Buyer is acting solely in the capacity
of arm’s length purchasers with respect to this Agreement and the transactions contemplated hereby. The Company further acknowledges
that the Buyer is not acting as a financial advisor or fiduciary of the Company (or in any similar capacity) with respect to this
Agreement and the transactions contemplated hereby and any statement made by the Buyer or any of its respective representatives
or agents in connection with this Agreement and the transactions contemplated hereby is not advice or a recommendation and is merely
incidental to the Buyer’ purchase of the Securities. The Company further represents to the Buyer that the Company’s
decision to enter into this Agreement has been based solely on the independent evaluation of the Company and its representatives.
p. No Integrated
Offering. Neither the Company, nor any of its affiliates, nor any person acting on its or their behalf, has directly or indirectly
made any offers or sales in any security or solicited any offers to buy any security under circumstances that would require registration
under the 1933 Act of the issuance of the Securities to the Buyer. The issuance of the Securities to the Buyer will not be integrated
with any other issuance of the Company’s securities (past, current or future) for purposes of any shareholder approval provisions
applicable to the Company or its securities.
q. No Brokers.
The Company has taken no action which would give rise to any claim by any person for brokerage commissions, transaction fees or
similar payments relating to this Agreement or the transactions contemplated hereby.
r. Permits; Compliance.
The Company and each of its Subsidiaries is in possession of all franchises, grants, authorizations, licenses, permits, easements,
variances, exemptions, consents, certificates, approvals and orders necessary to own, lease and operate its properties and to carry
on its business as it is now being conducted (collectively, the “Company Permits”), and there is no action pending
or, to the knowledge of the Company, threatened regarding suspension or cancellation of any of the Company Permits. Neither the
Company nor any of its Subsidiaries is in conflict with, or in default or violation of, any of the Company Permits, except for
any such conflicts, defaults or violations which, individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect. Since December 31, 2014, neither the Company nor any of its Subsidiaries has received any notification
with respect to possible conflicts, defaults or violations of applicable laws, except for notices relating to possible conflicts,
defaults or violations, which conflicts, defaults or violations would not have a Material Adverse Effect.
s. Environmental
Matters.
(i) There are, to
the Company’s knowledge, with respect to the Company or any of its Subsidiaries or any predecessor of the Company, no past
or present violations of Environmental Laws (as defined below), releases of any material into the environment, actions, activities,
circumstances, conditions, events, incidents, or contractual obligations which may give rise to any common law environmental liability
or any liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980 or similar federal, state,
local or foreign laws and neither the Company nor any of its Subsidiaries has received any notice with respect to any of the foregoing,
nor is any action pending or, to the Company’s knowledge, threatened in connection with any of the foregoing. The term “Environmental
Laws” means all federal, state, local or foreign laws relating to pollution or protection of human health or the environment
(including, without limitation, ambient air, surface water, groundwater, land surface or subsurface strata), including, without
limitation, laws relating to emissions, discharges, releases or threatened releases of chemicals, pollutants contaminants, or toxic
or hazardous substances or wastes (collectively, “Hazardous Materials”) into the environment, or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or handling of Hazardous Materials,
as well as all authorizations, codes, decrees, demands or demand letters, injunctions, judgments, licenses, notices or notice letters,
orders, permits, plans or regulations issued, entered, promulgated or approved thereunder.
(ii) Other than those
that are or were stored, used or disposed of in compliance with applicable law, no Hazardous Materials are contained on or about
any real property currently owned, leased or used by the Company or any of its Subsidiaries, and no Hazardous Materials were released
on or about any real property previously owned, leased or used by the Company or any of its Subsidiaries during the period the
property was owned, leased or used by the Company or any of its Subsidiaries, except in the normal course of the Company’s
or any of its Subsidiaries’ business.
(iii) There are no
underground storage tanks on or under any real property owned, leased or used by the Company or any of its Subsidiaries that are
not in compliance with applicable law.
t. Title to Property.
The Company and its Subsidiaries have good and marketable title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the business of the Company and its Subsidiaries, in each case free
and clear of all liens, encumbrances and defects except such as are described in Schedule 3(t) or such as would not have a Material
Adverse Effect. Any real property and facilities held under lease by the Company and its Subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as would not have a Material Adverse Effect.
u. Insurance.
The Company and each of its Subsidiaries are insured by insurers of recognized financial responsibility against such losses and
risks and in such amounts as management of the Company believes to be prudent and customary in the businesses in which the Company
and its Subsidiaries are engaged. Neither the Company nor any such Subsidiary has any reason to believe that it will not be able
to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not have a Material Adverse Effect. Upon written request the
Company will provide to the Buyer true and correct copies of all policies relating to directors’ and officers’ liability
coverage, errors and omissions coverage, and commercial general liability coverage.
v. Internal Accounting
Controls. The Company and each of its Subsidiaries maintain a system of internal accounting controls sufficient, in the judgment
of the Company’s board of directors, to provide reasonable assurance that (i) transactions are executed in accordance with
management’s general or specific authorizations, (ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to maintain asset accountability, (iii) access to assets
is permitted only in accordance with management’s general or specific authorization and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences.
w. Foreign Corrupt
Practices. Neither the Company, nor any of its Subsidiaries, nor any director, officer, agent, employee or other person acting
on behalf of the Company or any Subsidiary has, in the course of his actions for, or on behalf of, the Company, used any corporate
funds for any unlawful contribution, gift, entertainment or other unlawful expenses relating to political activity; made any direct
or indirect unlawful payment to any foreign or domestic government official or employee from corporate funds; violated or is in
violation of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as amended, or made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment to any foreign or domestic government official or employee.
x. Solvency.
The Company (after giving effect to the transactions contemplated by this Agreement) is solvent (i.e., its assets have a
fair market value in excess of the amount required to pay its probable liabilities on its existing debts as they become absolute
and matured) and currently the Company has no information that would lead it to reasonably conclude that the Company would not,
after giving effect to the transaction contemplated by this Agreement, have the ability to, nor does it intend to take any action
that would impair its ability to, pay its debts from time to time incurred in connection therewith as such debts mature. The Company
did not receive a qualified opinion from its auditors with respect to its most recent fiscal year end and, after giving effect
to the transactions contemplated by this Agreement, does not anticipate or know of any basis upon which its auditors might issue
a qualified opinion in respect of its current fiscal year.
y. No Investment
Company. The Company is not, and upon the issuance and sale of the Securities as contemplated by this Agreement will not be
an “investment company” required to be registered under the Investment Company Act of 1940 (an “Investment Company”).
The Company is not controlled by an Investment Company.
z. Breach of
Representations and Warranties by the Company. If the Company breaches any of the representations or warranties set forth in
this Section 3, and in addition to any other remedies available to the Buyer pursuant to this Agreement, it will be considered
an Event of default under Section 3.4 of the Note.
4. COVENANTS.
a. Best Efforts.
The parties shall use their best efforts to satisfy timely each of the conditions described in Section 6 and 7 of this Agreement.
b. Form D; Blue
Sky Laws. The Company agrees to file a Form D with respect to the Securities as required under Regulation D and to provide
a copy thereof to the Buyer promptly after such filing. The Company shall, on or before the Closing Date, take such action as the
Company shall reasonably determine is necessary to qualify the Securities for sale to the Buyer at the applicable closing pursuant
to this Agreement under applicable securities or “blue sky” laws of the states of the United States (or to obtain an
exemption from such qualification), and shall provide evidence of any such action so taken to the Buyer on or prior to the Closing
Date.
c. Use of Proceeds.
The Company shall use the proceeds for general working capital purposes.
d. Right of First
Refusal. Unless it shall have first delivered to the Buyer, at least seventy two (72) hours prior to the closing of such Future
Offering (as defined herein), written notice describing the proposed Future Offering (“ROFR Notice”), including the
terms and conditions thereof, identity of the proposed purchaser and proposed definitive documentation to be entered into in connection
therewith, and providing the Buyer an option during the seventy two (72) hour period following delivery of such notice to purchase
the securities being offered in the Future Offering on the same terms as contemplated by such Future Offering (the limitations
referred to in this sentence and the preceding sentence are collectively referred to as the “Right of First Refusal”)
(and subject to the exceptions described below), the Company will not conduct any equity (or debt with an equity component) financing
in an amount less than $100,000 (“Future Offering(s)”) during the period beginning on the Closing Date and ending six
(6) months following the Closing Date. Notwithstanding anything contained herein to the contrary, the Company shall not consummate
any Future Offering with an investor, or an affiliate of such investor (collectively “Prospective Investor”), identified
on an ROFR Notice whereby the Buyer exercised its Right of First Refusal for a period of forty (45) days following such exercise;
and any subsequent offer by a Prospective Investor is subject to this Section 4(d) and the Right of First Refusal. In the event
the terms and conditions of a proposed Future Offering are amended in any respect after delivery of the notice to the Buyer concerning
the proposed Future Offering, the Company shall deliver a new notice to the Buyer describing the amended terms and conditions of
the proposed Future Offering and the Buyer thereafter shall have an option during the seventy two (72) hour period following delivery
of such new notice to purchase its pro rata share of the securities being offered on the same terms as contemplated by such proposed
Future Offering, as amended. The foregoing sentence shall apply to successive amendments to the terms and conditions of any proposed
Future Offering. The Right of First Refusal shall not apply to any transaction involving (i) issuances of securities in a firm
commitment underwritten public offering (excluding a continuous offering pursuant to Rule 415 under the 1933 Act) or (ii) issuances
of securities as consideration for a merger, consolidation or purchase of assets, or in connection with any strategic partnership
or joint venture (the primary purpose of which is not to raise equity capital), or in connection with the disposition or acquisition
of a business, product or license by the Company. The Right of First Refusal also shall not apply to the issuance of securities
upon exercise or conversion of the Company’s options, warrants or other convertible securities outstanding as of the date
hereof or to the grant of additional options or warrants, or the issuance of additional securities, under any Company stock option
or restricted stock plan approved by the shareholders of the Company.
e. Expenses.
At the Closing, the Company shall reimburse Buyer for expenses incurred by them in connection with the negotiation, preparation,
execution, delivery and performance of this Agreement and the other agreements to be executed in connection herewith (“Documents”),
including, without limitation, reasonable attorneys’ and consultants’ fees and expenses, transfer agent fees, fees
for stock quotation services, fees relating to any amendments or modifications of the Documents or any consents or waivers of provisions
in the Documents, fees for the preparation of opinions of counsel, escrow fees, and costs of restructuring the transactions contemplated
by the Documents. When possible, the Company must pay these fees directly, otherwise the Company must make immediate payment for
reimbursement to the Buyer for all fees and expenses immediately upon written notice by the Buyer or the submission of an invoice
by the Buyer. The Company’s obligation with respect to this transaction is to reimburse Buyer’ expenses shall be $4,000.00.
f. Financial
Information. Upon written request the Company agrees to send or make available the following reports to the Buyer until the
Buyer transfers, assigns, or sells all of the Securities: (i) within ten (10) days after the filing with the SEC, a copy of
its Annual Report on Form 10-K its Quarterly Reports on Form 10-Q and any Current Reports on Form 8-K; (ii) within one (1)
day after release, copies of all press releases issued by the Company or any of its Subsidiaries; and (iii) contemporaneously
with the making available or giving to the shareholders of the Company, copies of any notices or other information the Company
makes available or gives to such shareholders.
g. [INTENTIONALLY
DELETED]
h. Listing.
The Company shall promptly secure the listing of the Conversion Shares upon each national securities exchange or automated quotation
system, if any, upon which shares of Common Stock are then listed (subject to official notice of issuance) and, so long as the
Buyer owns any of the Securities, shall maintain, so long as any other shares of Common Stock shall be so listed, such listing
of all Conversion Shares from time to time issuable upon conversion of the Note. The Company will obtain and, so long as the Buyer
owns any of the Securities, maintain the listing and trading of its Common Stock on the OTCBB or any equivalent replacement exchange
or electronic quotation system (including but not limited to the Pink Sheets electronic quotation system) and will comply in all
respects with the Company’s reporting, filing and other obligations under the bylaws or rules of the Financial Industry Regulatory
Authority (“FINRA”) and such exchanges, as applicable. The Company shall promptly provide to the Buyer copies of any
notices it receives from the OTCBB and any other exchanges or electronic quotation systems on which the Common Stock is then traded
regarding the continued eligibility of the Common Stock for listing on such exchanges and quotation systems.
i. Corporate
Existence. So long as the Buyer beneficially owns any Note, the Company shall maintain its corporate existence and shall not
sell all or substantially all of the Company’s assets, except in the event of a merger or consolidation or sale of all or
substantially all of the Company’s assets, where the surviving or successor entity in such transaction (i) assumes the Company’s
obligations hereunder and under the agreements and instruments entered into in connection herewith and (ii) is a publicly traded
corporation whose Common Stock is listed for trading on the Pink Sheets, OTCQX, OTCBB, Nasdaq, Nasdaq SmallCap, NYSE or AMEX.
j. No Integration.
The Company shall not make any offers or sales of any security (other than the Securities) under circumstances that would require
registration of the Securities being offered or sold hereunder under the 1933 Act or cause the offering of the Securities to be
integrated with any other offering of securities by the Company for the purpose of any stockholder approval provision applicable
to the Company or its securities.
k. Breach of
Covenants. If the Company breaches any of the covenants set forth in this Section 4, and in addition to any other remedies
available to the Buyer pursuant to this Agreement, it will be considered an event of default under Section 3.4 of the Note.
l. Failure to
Comply with the 1934 Act. So long as the Buyer beneficially owns the Note, the Company shall comply with the reporting requirements
of the 1934 Act; and the Company shall continue to be subject to the reporting requirements of the 1934 Act.
m. Trading Activities.
Neither the Buyer nor its affiliates has an open short position in the common stock of the Company and the Buyer agree that it
shall not, and that it will cause its affiliates not to, engage in any short sales of or hedging transactions with respect to the
common stock of the Company.
5. Transfer Agent
Instructions. The Company shall issue irrevocable instructions to its transfer agent to issue certificates, registered in the
name of the Buyer or its nominee, for the Conversion Shares in such amounts as specified from time to time by the Buyer to the
Company upon conversion of the Note in accordance with the terms thereof (the “Irrevocable Transfer Agent Instructions”).
In the event that the Borrower proposes to replace its transfer agent, the Borrower shall provide, prior to the effective date
of such replacement, a fully executed Irrevocable Transfer Agent Instructions in a form as initially delivered pursuant to the
Purchase Agreement (including but not limited to the provision to irrevocably reserve shares of Common Stock in the Reserved Amount)
signed by the successor transfer agent to Borrower and the Borrower. Prior to registration of the Conversion Shares under the 1933
Act or the date on which the Conversion Shares may be sold pursuant to Rule 144 without any restriction as to the number of Securities
as of a particular date that can then be immediately sold, all such certificates shall bear the restrictive legend specified in
Section 2(g) of this Agreement. The Company warrants that: (i) no instruction other than the Irrevocable Transfer Agent Instructions
referred to in this Section 5, and stop transfer instructions to give effect to Section 2(f) hereof (in the case of the Conversion
Shares, prior to registration of the Conversion Shares under the 1933 Act or the date on which the Conversion Shares may be sold
pursuant to Rule 144 without any restriction as to the number of Securities as of a particular date that can then be immediately
sold), will be given by the Company to its transfer agent and that the Securities shall otherwise be freely transferable on the
books and records of the Company as and to the extent provided in this Agreement and the Note; (ii) it will not direct its transfer
agent not to transfer or delay, impair, and/or hinder its transfer agent in transferring (or issuing)(electronically or in certificated
form) any certificate for Conversion Shares to be issued to the Buyer upon conversion of or otherwise pursuant to the Note as and
when required by the Note and this Agreement; and (iii) it will not fail to remove (or directs its transfer agent not to remove
or impairs, delays, and/or hinders its transfer agent from removing) any restrictive legend (or to withdraw any stop transfer instructions
in respect thereof) on any certificate for any Conversion Shares issued to the Buyer upon conversion of or otherwise pursuant to
the Note as and when required by the Note and this Agreement. Nothing in this Section shall affect in any way the Buyer’s
obligations and agreement set forth in Section 2(g) hereof to comply with all applicable prospectus delivery requirements, if any,
upon re-sale of the Securities. If the Buyer provides the Company, at the cost of the Buyer, with (i) an opinion of counsel
in form, substance and scope customary for opinions in comparable transactions, to the effect that a public sale or transfer of
such Securities may be made without registration under the 1933 Act and such sale or transfer is effected or (ii) the Buyer provides
reasonable assurances that the Securities can be sold pursuant to Rule 144, the Company shall permit the transfer, and, in the
case of the Conversion Shares, promptly instruct its transfer agent to issue one or more certificates, free from restrictive legend,
in such name and in such denominations as specified by the Buyer. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Buyer, by vitiating the intent and purpose of the transactions contemplated hereby.
Accordingly, the Company acknowledges that the remedy at law for a breach of its obligations under this Section 5 may be inadequate
and agrees, in the event of a breach or threatened breach by the Company of the provisions of this Section, that the Buyer shall
be entitled, in addition to all other available remedies, to an injunction restraining any breach and requiring immediate transfer,
without the necessity of showing economic loss and without any bond or other security being required.
6. Conditions to
the Company’s Obligation to Sell. The obligation of the Company hereunder to issue and sell the Note to the Buyer at
the Closing is subject to the satisfaction, at or before the Closing Date of each of the following conditions thereto, provided
that these conditions are for the Company’s sole benefit and may be waived by the Company at any time in its sole discretion:
a. The Buyer shall
have executed this Agreement and delivered the same to the Company.
b. The Buyer shall
have delivered the Purchase Price in accordance with Section 1(b) above.
c. The representations
and warranties of the Buyer shall be true and correct in all material respects as of the date when made and as of the Closing Date
as though made at that time (except for representations and warranties that speak as of a specific date), and the Buyer shall have
performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this Agreement
to be performed, satisfied or complied with by the Buyer at or prior to the Closing Date.
d. No litigation,
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
7. Conditions to
The Buyer’s Obligation to Purchase. The obligation of the Buyer hereunder to purchase the Note at the Closing is subject
to the satisfaction, at or before the Closing Date of each of the following conditions, provided that these conditions are for
the Buyer’s sole benefit and may be waived by the Buyer at any time in its sole discretion:
a. The Company shall
have executed this Agreement and delivered the same to the Buyer.
b. The Company shall
have delivered to the Buyer the duly executed Note (in such denominations as the Buyer shall request) in accordance with Section
1(b) above.
c. The Irrevocable
Transfer Agent Instructions, in form and substance satisfactory to a majority-in-interest of the Buyer, shall have been delivered
to and acknowledged in writing by the Company’s Transfer Agent.
d. The representations
and warranties of the Company shall be true and correct in all material respects as of the date when made and as of the Closing
Date as though made at such time (except for representations and warranties that speak as of a specific date) and the Company shall
have performed, satisfied and complied in all material respects with the covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by the Company at or prior to the Closing Date. The Buyer shall have received
a certificate or certificates, executed by the chief executive officer of the Company, dated as of the Closing Date, to the foregoing
effect and as to such other matters as may be reasonably requested by the Buyer including, but not limited to certificates with
respect to the Company’s Certificate of Incorporation, By-laws and Board of Directors’ resolutions relating to the
transactions contemplated hereby.
e. No litigation,
statute, rule, regulation, executive order, decree, ruling or injunction shall have been enacted, entered, promulgated or endorsed
by or in any court or governmental authority of competent jurisdiction or any self-regulatory organization having authority over
the matters contemplated hereby which prohibits the consummation of any of the transactions contemplated by this Agreement.
f. No event shall
have occurred which could reasonably be expected to have a Material Adverse Effect on the Company including but not limited to
a change in the 1934 Act reporting status of the Company or the failure of the Company to be timely in its 1934 Act reporting obligations.
g. The Conversion
Shares shall have been authorized for quotation on the OTCBB and trading in the Common Stock on the OTCBB shall not have been suspended
by the SEC or the OTCBB.
h. The Buyer shall
have received an officer’s certificate described in Section 3(c) above, dated as of the Closing Date.
8. Governing
Law; Miscellaneous.
a. Governing
Law. This Agreement shall be governed by and construed in accordance with the laws of the State of New York without regard
to principles of conflicts of laws. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement shall be brought only in the state courts of New York or in the federal courts located in the state and county
of Nassau. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens. The
Company and Buyer waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney's
fees and costs. In the event that any provision of this Agreement or any other agreement delivered in connection herewith is invalid
or unenforceable under any applicable statute or rule of law, then such provision shall be deemed inoperative to the extent that
it may conflict therewith and shall be deemed modified to conform with such statute or rule of law. Any such provision which may
prove invalid or unenforceable under any law shall not affect the validity or enforceability of any other provision of any agreement.
Each party hereby irrevocably waives personal service of process and consents to process being served in any suit, action or proceeding
in connection with this Agreement or any other Transaction Document by mailing a copy thereof via registered or certified mail
or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement
and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in any other manner permitted by law.
b. Counterparts.
This Agreement may be executed in one or more counterparts, each of which shall be deemed an original but all of which shall constitute
one and the same agreement and shall become effective when counterparts have been signed by each party and delivered to the other
party.
c. Headings.
The headings of this Agreement are for convenience of reference only and shall not form part of, or affect the interpretation of,
this Agreement.
d. Severability.
In the event that any provision of this Agreement is invalid or unenforceable under any applicable statute or rule of law, then
such provision shall be deemed inoperative to the extent that it may conflict therewith and shall be deemed modified to conform
with such statute or rule of law. Any provision hereof which may prove invalid or unenforceable under any law shall not affect
the validity or enforceability of any other provision hereof.
e. Entire Agreement;
Amendments. This Agreement and the instruments referenced herein contain the entire understanding of the parties with respect
to the matters covered herein and therein and, except as specifically set forth herein or therein, neither the Company nor the
Buyer makes any representation, warranty, covenant or undertaking with respect to such matters. No provision of this Agreement
may be waived or amended other than by an instrument in writing signed by the majority in interest of the Buyer.
f. Notices.
All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing
and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return
receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted
by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified
most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed
effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine,
at the address or number designated below (if delivered on a business day during normal business hours where such notice is to
be received), or the first business day following such delivery (if delivered other than on a business day during normal business
hours where such notice is to be received) or (b) on the second business day following the date of mailing by express courier service,
fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for
such communications shall be:
If to the
Company, to:
PLAYERS
NETWORK
1771 East
Flamingo Road, # 201-A
Las Vegas,
NV 89119
Attn: MARK BRADLEY, Chief Executive
Officer
facsimile: [enter fax number]
With a copy
by fax only to (which copy shall not constitute notice):
[enter
name of law firm]
Attn: [attorney
name]
[enter
address line 1]
[enter
city, state, zip]
facsimile:
[enter fax number]
If to the Buyer:
VIS VIRES GROUP, INC.
111 Great
Neck Road – Suite 216
Great Neck,
NY 11021
Attn: Curt Kramer, President
e-mail:
info@visviresgroup.com
With a copy
by fax only to (which copy shall not constitute notice):
Naidich
Wurman LLP
Att: Judah
A. Eisner, Esq.
Attn: Bernard S. Feldman, Esq.
facsimile:
516-466-3555
Each party shall provide
notice to the other party of any change in address.
g. Successors
and Assigns. This Agreement shall be binding upon and inure to the benefit of the parties and their successors and assigns.
Neither the Company nor the Buyer shall assign this Agreement or any rights or obligations hereunder without the prior written
consent of the other. Notwithstanding the foregoing, subject to Section 2(f), the Buyer may assign its rights hereunder to
any person that purchases Securities in a private transaction from the Buyer or to any of its “affiliates,” as that
term is defined under the 1934 Act, without the consent of the Company.
h. Third Party
Beneficiaries. This Agreement is intended for the benefit of the parties hereto and their respective permitted successors and
assigns, and is not for the benefit of, nor may any provision hereof be enforced by, any other person.
i. Survival.
The representations and warranties of the Company and the agreements and covenants set forth in this Agreement shall survive the
closing hereunder notwithstanding any due diligence investigation conducted by or on behalf of the Buyer. The Company agrees to
indemnify and hold harmless the Buyer and all their officers, directors, employees and agents for loss or damage arising as a result
of or related to any breach or alleged breach by the Company of any of its representations, warranties and covenants set forth
in this Agreement or any of its covenants and obligations under this Agreement, including advancement of expenses as they are incurred.
j. Publicity.
The Company, and the Buyer shall have the right to review a reasonable period of time before issuance of any press releases, SEC,
OTCBB or FINRA filings, or any other public statements with respect to the transactions contemplated hereby; provided, however,
that the Company shall be entitled, without the prior approval of the Buyer, to make any press release or SEC, OTCBB (or other
applicable trading market) or FINRA filings with respect to such transactions as is required by applicable law and regulations
(although the Buyer shall be consulted by the Company in connection with any such press release prior to its release and shall
be provided with a copy thereof and be given an opportunity to comment thereon).
k. Further Assurances.
Each party shall do and perform, or cause to be done and performed, all such further acts and things, and shall execute and deliver
all such other agreements, certificates, instruments and documents, as the other party may reasonably request in order to carry
out the intent and accomplish the purposes of this Agreement and the consummation of the transactions contemplated hereby.
l. No Strict
Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their
mutual intent, and no rules of strict construction will be applied against any party.
m. Remedies.
The Company acknowledges that a breach by it of its obligations hereunder will cause irreparable harm to the Buyer by vitiating
the intent and purpose of the transaction contemplated hereby. Accordingly, the Company acknowledges that the remedy at law for
a breach of its obligations under this Agreement will be inadequate and agrees, in the event of a breach or threatened breach by
the Company of the provisions of this Agreement, that the Buyer shall be entitled, in addition to all other available remedies
at law or in equity, and in addition to the penalties assessable herein, to an injunction or injunctions restraining, preventing
or curing any breach of this Agreement and to enforce specifically the terms and provisions hereof, without the necessity of showing
economic loss and without any bond or other security being required.
IN WITNESS WHEREOF,
the undersigned Buyer and the Company have caused this Agreement to be duly executed as of the date first above written.
PLAYERS NETWORK
By: /s/ Mark Bradley
MARK BRADLEY
Chief Executive Officer
VIS VIRES GROUP, INC.
By:_________________________________
Name: Curt Kramer
Title: President
111 Great Neck Road – Suite 216
Great Neck, NY 11021
AGGREGATE SUBSCRIPTION AMOUNT:
Aggregate Principal Amount of Note: |
|
$64,000.00 |
Aggregate Purchase Price: |
|
$64,000.00 |
Tranche #1 VIS VIRS GROUP-1110 (PNTV)
May 1, 2015
mbradley@playersnetwork.com
Exhibit 10.6
NEITHER THIS NOTE NOR THE SECURITIES
INTO WHICH THIS NOTE IS CONVERTIBLE HAVE BEEN REGISTERED WITH THE SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION
OF ANY STATE. THESE SECURITIES HAVE BEEN SOLD IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), AND, ACCORDINGLY, MAY NOT BE OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO,
THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS.
PLAYERS NETWORK
Convertible
Note
Issuance Date: June 24, 2015 |
Original Principal Amount: $119,051 |
Note No. PNTV-2 |
Consideration Paid at Close: $119,051 |
|
|
FOR VALUE RECEIVED,
Players Network, a Nevada corporation with a par value of $0.001 per common share (“Par Value”) (the "Company"),
hereby promises to pay to the order of Collier Investments, LLC or registered assigns (the “Holder”)
the amount set out above as the Original Principal Amount (as reduced pursuant to the terms hereof pursuant to redemption, conversion
or otherwise, the "Principal") when due, whether upon the Maturity Date (as defined below), acceleration, redemption
or otherwise (in each case in accordance with the terms hereof) and to pay interest ("Interest") on any outstanding
Principal at the applicable Interest Rate from the date set out above as the Issuance Date (the "Issuance Date")
until the same becomes due and payable, upon the Maturity Date or acceleration, conversion, redemption or otherwise (in each case
in accordance with the terms hereof).
The Original Principal
Amount is $119,051 (ninety eight thousand five hundred sixty) plus accrued and unpaid interest and any other fees. The Consideration
is $119,051 (ninety eight thousand five hundred sixty) payable by wire transfer. For purposes hereof, the term “Outstanding
Balance” means the Original Principal Amount, as reduced or increased, as the case may be, pursuant to the terms hereof for
conversion, breach hereof or otherwise, plus any accrued but unpaid interest, collection and enforcements costs, and any other
fees, penalties, damages or charges incurred under this Note.
(1) GENERAL
TERMS
(a) Payment
of Principal. The "Maturity Date" shall be two years from the date of each payment of Consideration, as may
be extended at the option of the Holder in the event that, and for so long as, an Event of Default (as defined below) shall not
have occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) or any event shall not have
occurred and be continuing on the Maturity Date (as may be extended pursuant to this Section 1) that with the passage of time and
the failure to cure would result in an Event of Default.
(b) Interest.
A one-time interest charge of eight percent (8%) (“Interest Rate”) shall be applied on the Issuance Date to
the Original Principal Amount. Interest hereunder shall be paid on the Maturity Date (or sooner as provided herein) to the Holder
or its assignee in whose name this Note is registered on the records of the Company regarding registration and transfers of Notes
in cash or converted into Common Stock at the Conversion Price provided the Equity Conditions are satisfied.
(c) Security.
This Note shall not be secured by any collateral or any assets pledged to the Holder
(2) EVENTS
OF DEFAULT.
(a) An
“Event of Default”, wherever used herein, means any one of the following events (whatever the reason and whether
it shall be voluntary or involuntary or effected by operation of law or pursuant to any judgment, decree or order of any court,
or any order, rule or regulation of any administrative or governmental body):
(i) The
Company's failure to pay to the Holder any amount of Principal, Interest, or other amounts when and as due under this Note (including,
without limitation, the Company's failure to pay any redemption payments or amounts hereunder);
(ii) A
Conversion Failure as defined in section 3(b)(ii)
(iii) The
Company or any subsidiary of the Company shall commence, or there shall be commenced against the Company or any subsidiary of the
Company under any applicable bankruptcy or insolvency laws as now or hereafter in effect or any successor thereto, or the Company
or any subsidiary of the Company commences any other proceeding under any reorganization, arrangement, adjustment of debt, relief
of debtors, dissolution, insolvency or liquidation or similar law of any jurisdiction whether now or hereafter in effect relating
to the Company or any subsidiary of the Company or there is commenced against the Company or any subsidiary of the Company any
such bankruptcy, insolvency or other proceeding which remains undismissed for a period of 61 days; or the Company or any subsidiary
of the Company is adjudicated insolvent or bankrupt; or any order of relief or other order approving any such case or proceeding
is entered; or the Company or any subsidiary of the Company suffers any appointment of any custodian, private or court appointed
receiver or the like for it or any substantial part of its property which continues undischarged or unstayed for a period of sixty
one (61) days; or the Company or any subsidiary of the Company makes a general assignment for the benefit of creditors; or the
Company or any subsidiary of the Company shall fail to pay, or shall state that it is unable to pay, or shall be unable to pay,
its debts generally as they become due; or the Company or any subsidiary of the Company shall call a meeting of its creditors with
a view to arranging a composition, adjustment or restructuring of its debts; or the Company or any subsidiary of the Company shall
by any act or failure to act expressly indicate its consent to, approval of or acquiescence in any of the foregoing; or any corporate
or other action is taken by the Company or any subsidiary of the Company for the purpose of effecting any of the foregoing;
(iv) The
Company or any subsidiary of the Company shall default in any of its obligations under any other Note or any mortgage, credit agreement
or other facility, indenture agreement, factoring agreement or other instrument under which there may be issued, or by which there
may be secured or evidenced any indebtedness for borrowed money or money due under any long term leasing or factoring arrangement
of the Company or any subsidiary of the Company in an amount exceeding $100,000, whether such indebtedness now exists or shall
hereafter be created; and
(v) The Common
Stock is suspended or delisted for trading on the Over the Counter OTCQB Venture Marketplace or OTCPink Open Marketplace (the “Primary
Market”).
(vi) The
Company loses its ability to deliver shares via “DWAC/FAST” electronic transfer.
(vii) The
Company loses its status as “DTC Eligible.”
(viii) The
Company shall become late or delinquent in its filing requirements as a fully-reporting issuer registered with the Securities &
Exchange Commission.
(ix) The
Company shall fail to reserve and keep available out of its authorized Common Stock a number of shares equal to at least 5 (five)
times the full number of shares of Common Stock issuable upon conversion of all outstanding amounts under this Note.
(b) Upon
the occurrence of any Event of Default, the Outstanding Balance shall immediately increase to 120% of the Outstanding Balance immediately
prior to the occurrence of the Event of Default (the “Default Effect”). The Default Effect shall automatically apply
upon the occurrence of an Event of Default without the need for any party to give any notice or take any other action.
(3) CONVERSION
OF NOTE. This Note shall be convertible into shares of the Company\'s Common Stock, on the terms and conditions set forth
in this Section 3.
(a) Conversion
Right. Subject to the provisions of Section 3(c), at any time or times on or after the Issuance Date, the Holder shall be entitled
to convert any portion of the outstanding and unpaid Conversion Amount (as defined below) into fully paid and nonassessable shares
of Common Stock in accordance with Section 3(b), at the Conversion Price (as defined below). The number of shares of Common Stock
issuable upon conversion of any Conversion Amount pursuant to this Section 3(a) shall be equal to the quotient of dividing the
Conversion Amount by the Conversion Price. The Company shall not issue any fraction of a share of Common Stock upon any conversion.
If the issuance would result in the issuance of a fraction of a share of Common Stock, the Company shall round such fraction of
a share of Common Stock up to the nearest whole share. The Company shall pay any and all transfer agent fees, legal fees, costs
and any other fees or costs that may be incurred or charged in connection with the issuance of shares of the Company’s Common
Stock to the Holder arising out of or relating to the conversion of this Note.
(i) "Conversion
Amount" means the portion of the Original Principal Amount and Interest to be converted, plus any penalties, redeemed
or otherwise with respect to which this determination is being made.
(ii) "Conversion
Price" shall equal 70% of the lowest Volume Weighted Average Price (“VWAP”) occurring during the twenty (20)
consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects to convert all or part
of this Note, subject to adjustment as provided in this Note.
(b) Mechanics
of Conversion.
(i) Optional
Conversion. To convert any Conversion Amount into shares of Common Stock on any date (a "Conversion Date"),
the Holder shall (A) transmit by email, facsimile (or otherwise deliver), for receipt on or prior to 11:59 p.m., New York, NY Time,
on such date, a copy of an executed notice of conversion in the form attached hereto as Exhibit A (the "Conversion
Notice") to the Company. On or before the third Business Day following the date of receipt of a Conversion Notice (the
"Share Delivery Date"), the Company shall (A) if legends are not required to be placed on certificates of Common
Stock pursuant to the then existing provisions of Rule 144 of the Securities Act of 1933 (“Rule 144”) and provided
that the Transfer Agent is participating in the Depository Trust Company's ("DTC") Fast Automated Securities Transfer
Program, credit such aggregate number of shares of Common Stock to which the Holder shall be entitled to the Holder's or its designee's
balance account with DTC through its Deposit Withdrawal Agent Commission system or (B) if the Transfer Agent is not participating
in the DTC Fast Automated Securities Transfer Program, issue and deliver to the address as specified in the Conversion Notice,
a certificate, registered in the name of the Holder or its designee, for the number of shares of Common Stock to which the Holder
shall be entitled which certificates shall not bear any restrictive legends unless required pursuant the Rule 144. If this Note
is physically surrendered for conversion and the outstanding Principal of this Note is greater than the Principal portion of the
Conversion Amount being converted, then the Company shall, upon request of the Holder, as soon as practicable and in no event later
than three (3) Business Days after receipt of this Note and at its own expense, issue and deliver to the holder a new Note representing
the outstanding Principal not converted. The Person or Persons entitled to receive the shares of Common Stock issuable upon a conversion
of this Note shall be treated for all purposes as the record holder or holders of such shares of Common Stock upon the transmission
of a Conversion Notice.
(ii) Company's
Failure to Timely Convert. If within two (2) Trading Days after the Company's receipt of the facsimile or email copy of a Conversion
Notice the Company shall fail to issue and deliver to Holder via “DWAC/FAST” electronic transfer the number of shares
of Common Stock to which the Holder is entitled upon such holder's conversion of any Conversion Amount (a "Conversion Failure"),
the Original Principal Amount of the Note shall increase by $2,000 per day until the Company issues and delivers a certificate
to the Holder or credit the Holder's balance account with DTC for the number of shares of Common Stock to which the Holder is entitled
upon such holder's conversion of any Conversion Amount (under Holder’s and Company’s expectation that any damages will
tack back to the Issuance Date). Company will not be subject to any penalties once its transfer agent processes the shares to
the DWAC system. If the Company fails to deliver shares in accordance with the timeframe stated in this Section, resulting
in a Conversion Failure, the Holder, at any time prior to selling all of those shares, may rescind any portion, in whole or in
part, of that particular conversion attributable to the unsold shares and have the rescinded conversion amount returned to the
Outstanding Balance with the rescinded conversion shares returned to the Company (under Holder’s and Company’s expectations
that any returned conversion amounts will tack back to the original date of the Note).
(iii) DWAC/FAST
Eligibility. If the Company fails for any reason to deliver to the Holder the Shares by DWAC/FAST electronic transfer (such
as by delivering a physical stock certificate), or if there is a Conversion Failure as defined in Section 3(b)(ii), and if the
Holder incurs a Market Price Loss, then at any time subsequent to incurring the loss the Holder may provide the Company written
notice indicating the amounts payable to the Holder in respect of the Market Price Loss and the Company must make the Holder whole
by either of the following options at Holder’s election:
Market Price
Loss = [(High trade price for the period between the day of conversion and the day the shares clear in the Holder’s brokerage
account) x (Number of shares receivable from the conversion)] – [(Net Sales price realized by Holder) x (Number of shares
receivable from the conversion)].
Option A –
Pay Market Price Loss in Cash. The Company must pay the Market Price Loss by cash payment, and any such cash payment must be made
by the third business day from the time of the Holder’s written notice to the Company.
Option B –
Add Market Price Loss to Outstanding Balance. The Company must pay the Market Price Loss by adding the Market Price Loss to the
Outstanding Balance (under Holder’s and the Company’s expectation that any Market Price Loss amounts will tack back
to the Issuance Date).
In the case that conversion
shares are not deliverable by DWAC/FAST electronic transfer an additional 10% discount to the Conversion Price will apply.
(iv) DTC
Eligibility & Sub-Penny. If the Company fails to maintain its status as “DTC Eligible” for any reason, or,
if the effective Conversion Price as calculated in Section 3(a)(ii) is less than $0.01 at any time (regardless of whether or not
a Conversion Notice has been submitted to the Company), the Principal Amount of the Note shall increase by ten thousand dollars
($10,000) (under Holder’s and Company’s expectation that any Principal Amount increase will tack back to the Issuance
Date). In addition, the Conversion Price shall be redefined to equal the lesser of (a) $0.20 or (b) 50% of the lowest trade occurring
during the twenty five (25) consecutive Trading Days immediately preceding the applicable Conversion Date on which the Holder elects
to convert all or part of this Note, subject to adjustment as provided in this Note.
(v) Par
Value True-Up. In the event that the Conversion Price is less than Par Value on the Conversion Date, the Holder may elect to
submit a Conversion Notice (attached hereto as Exhibit A) with a conversion price equal to the Company’s Par Value. In addition,
upon written notice from the Holder in the form attached hereto as Exhibit B (the “True-Up Notice”), the Holder
may require the Company, at the Holder’s election, to either (A) issue and deliver to the Holder a number of shares of Common
Stock as equals (X) the Conversion Amount divided by 60% of the lowest trade occurring during the twenty five (25) consecutive
Trading Days immediately preceding the applicable Conversion Date, less (Y) the Conversion Amount divided by the Par Value (Any
additional shares of Common Stock issuable pursuant to this Section 3(b)(v) shall be referred to herein as “True-Up Shares”),
or (B) add to the Outstanding Balance a dollar amount equal to the number of True-Up Shares (as calculated above) multiplied by
the high trade price on the Conversion Date (Any dollar amount added to the Outstanding Balance pursuant to this Section 3(b)(v)
shall be referred to herein as the “True-Up Balance”) (under Holder’s and the Company’s expectation that
any True-Up Balance amounts will tack back to the Issuance Date).
(vi) Book-Entry.
Notwithstanding anything to the contrary set forth herein, upon conversion of any portion of this Note in accordance with the terms
hereof, the Holder shall not be required to physically surrender this Note to the Company unless (A) the full Conversion Amount
represented by this Note is being converted or (B) the Holder has provided the Company with prior written notice (which notice
may be included in a Conversion Notice) requesting reissuance of this Note upon physical surrender of this Note. The Holder and
the Company shall maintain records showing the Principal and Interest converted and the dates of such conversions or shall use
such other method, reasonably satisfactory to the Holder and the Company, so as not to require physical surrender of this Note
upon conversion.
(c) Limitations
on Conversions or Trading.
(i) Beneficial
Ownership. The Company shall not effect any conversions of this Note and the Holder shall not have the right to convert any
portion of this Note or receive shares of Common Stock as payment of interest hereunder to the extent that after giving effect
to such conversion or receipt of such interest payment, the Holder, together with any affiliate thereof, would beneficially own
(as determined in accordance with Section 13(d) of the Exchange Act and the rules promulgated thereunder) in excess of 4.99% of
the number of shares of Common Stock outstanding immediately after giving effect to such conversion or receipt of shares as payment
of interest. Since the Holder will not be obligated to report to the Company the number of shares of Common Stock it may hold at
the time of a conversion hereunder, unless the conversion at issue would result in the issuance of shares of Common Stock in excess
of 4.99% of the then outstanding shares of Common Stock without regard to any other shares which may be beneficially owned by the
Holder or an affiliate thereof, the Holder shall have the authority and obligation to determine whether the restriction contained
in this Section will limit any particular conversion hereunder and to the extent that the Holder determines that the limitation
contained in this Section applies, the determination of which portion of the principal amount of this Note is convertible shall
be the responsibility and obligation of the Holder. If the Holder has delivered a Conversion Notice for a principal amount of this
Note that, without regard to any other shares that the Holder or its affiliates may beneficially own, would result in the issuance
in excess of the permitted amount hereunder, the Company shall notify the Holder of this fact and shall honor the conversion for
the maximum principal amount permitted to be converted on such Conversion Date in accordance with Section 3(a) and, any principal
amount tendered for conversion in excess of the permitted amount hereunder shall remain outstanding under this Note. In the event
that the Market Capitalization of the Company falls below $2,500,000, the term “4.99%” above shall be permanently replaced
with “9.99%”. “Market Capitalization” shall be defined as the product of (a) the closing price of the Common
Stock of the Common stock multiplied by (b) the number of shares of Common Stock outstanding as reported on the Company’s
most recently filed Form 10-K or Form 10-Q. The provisions of this Section may be waived at any time by Holder upon written notification
to the Company.
(ii) Capitalization.
So long as this as this Note is outstanding, upon written request of the Holder, the Company shall furnish to the Holder the then-current
number of common shares issued and outstanding, the then-current number of common shares authorized, and the then-current number
of shares reserved for third parties.
(d) Other
Provisions.
(i) Share
Reservation. The Company shall at all times reserve and keep available out of its authorized Common Stock a number of
shares equal to at least 5 (five) times the full number of shares of Common Stock issuable upon conversion of all outstanding amounts
under this Note; and within 3 (three) Business Days following the receipt by the Company of a Holder's notice that such minimum
number of shares of Common Stock is not so reserved, the Company shall promptly reserve a sufficient number of shares of Common
Stock to comply with such requirement. The Company will at all times reserve at least 100,000,000 shares of Common Stock
for conversion.
(ii) Prepayment. At
any time within the 90 day period immediately following the Issuance Date, the Company shall have the option, upon 10 business
days’ notice to Holder, to pre-pay the entire remaining outstanding principal amount of this Note in cash, provided that
(i) the Company shall pay the Holder 145% of the Outstanding Balance, (ii) such amount must be paid in cash on the next business
day following such 10 business day notice period, and (iii) the Holder may still convert this Note pursuant to the terms hereof
at all times until such prepayment amount has been received in full. Except as set forth in this Section the Company may not prepay
this Note in whole or in part.
(iii) Terms
of Future Financings. So long as this Note is outstanding, upon any issuance by the Company or any of its subsidiaries of any
security with any term more favorable to the holder of such security or with a term in favor of the holder of such security that
was not similarly provided to the Holder in this Note, then the Company shall notify the Holder of such additional or more favorable
term and such term, at Holder’s option, shall become a part of the Note. The types of terms contained in another security
that may be more favorable to the holder of such security include, but are not limited to, terms addressing conversion discounts,
conversion lookback periods, interest rates, original issue discounts, stock sale price, private placement price per share, and
warrant coverage.
(iv) All
calculations under this Section 3 shall be rounded up to the nearest $0.00001 or whole share.
(v) Nothing
herein shall limit a Holder's right to pursue actual damages or declare an Event of Default pursuant to Section 2 herein for the
Company's failure to deliver certificates representing shares of Common Stock upon conversion within the period specified herein
and such Holder shall have the right to pursue all remedies available to it at law or in equity including, without limitation,
a decree of specific performance and/or injunctive relief, in each case without the need to post a bond or provide other security.
The exercise of any such rights shall not prohibit the Holder from seeking to enforce damages pursuant to any other Section hereof
or under applicable law.
(4) Section
3(a)(9) or 3(a)(10) Transaction. So long as this Note is outstanding, the Company shall
not enter into any transaction or arrangement structured in accordance with, based upon, or related or pursuant to, in whole or
in part, either Section 3(a)(9) of the Securities Act (a “3(a)(9) Transaction”) or Section 3(a)(10) of the Securities
Act (a “3(a)(10) Transaction”). In the event that the Company does enter into, or makes any issuance of Common Stock
related to a 3(a)(9) Transaction or a 3(a)(10) Transaction while this note is outstanding, a liquidated damages charge of 25% of
the outstanding principal balance of this Note, but not less than $25,000, will be assessed and will become immediately due and
payable to the Holder at its election in the form of cash payment or addition to the balance of this Note.
(5) PIGGYBACK
REGISTRATION RIGHTS. The Company shall include on the next registration statement the Company files with SEC (or on the subsequent
registration statement if such registration statement is withdrawn) all shares issuable upon conversion of this Note. Failure to
do so will result in liquidated damages of 25% of the outstanding principal balance of this Note, but not less than $25,000, being
immediately due and payable to the Holder at its election in the form of cash payment or addition to the balance of this Note.
(6) REISSUANCE
OF THIS NOTE.
(a) Assignability.
The Company may not assign this Note. This Note will be binding upon the Company and its successors and will inure to the benefit
of the Holder and its successors and assigns and may be assigned by the Holder to anyone of its choosing without Company’s
approval.
(b) Lost,
Stolen or Mutilated Note. Upon receipt by the Company of evidence reasonably satisfactory to the Company of the loss, theft,
destruction or mutilation of this Note, and, in the case of loss, theft or destruction, of any indemnification undertaking by the
Holder to the Company in customary form and, in the case of mutilation, upon surrender and cancellation of this Note, the Company
shall execute and deliver to the Holder a new Note representing the outstanding Principal.
(7) NOTICES. Any
notices, consents, waivers or other communications required or permitted to be given under the terms hereof must be in writing
and will be deemed to have been delivered: (i) upon receipt, when delivered personally; (ii) upon receipt, when sent by facsimile
(provided confirmation of transmission is mechanically or electronically generated and kept on file by the sending party) (iii)
upon receipt, when sent by email; or (iv) one (1) Trading Day after deposit with a nationally recognized overnight delivery service,
in each case properly addressed to the party to receive the same. The addresses and facsimile numbers for such communications shall
be those set forth in the communications and documents that each party has provided the other immediately preceding the issuance
of this Note or at such other address and/or facsimile number and/or to the attention of such other person as the recipient party
has specified by written notice given to each other party three (3) Business Days prior to the effectiveness of such change. Written
confirmation of receipt (i) given by the recipient of such notice, consent, waiver or other communication, (ii) mechanically or
electronically generated by the sender's facsimile machine containing the time, date, recipient facsimile number and an image of
the first page of such transmission or (iii) provided by a nationally recognized overnight delivery service, shall be rebuttable
evidence of personal service, receipt by facsimile or receipt from a nationally recognized overnight delivery service in accordance
with clause (i), (ii) or (iii) above, respectively.
The addresses for such communications shall
be:
If to the Company, to:
____________________________________
____________________________________
____________________________________
____________________________________
Attn:
Email:
If to the Holder:
COLLIER INVESTMENTS, LLC
406 9th Avenue, Suite 201
San Diego, CA 92101
Attn: David Clark, Principal
Email: dclark@vci.us.com
(8) APPLICABLE
LAW AND VENUE. This Note shall be governed by and construed in accordance with the laws of the State of Nevada, without giving
effect to conflicts of laws thereof. Any action brought by either party against the other concerning the transactions contemplated
by this Agreement shall be brought only in the state courts of California or in the federal courts located in the city and county
of San Diego, in the State of California. Both parties and the individuals signing this Agreement agree to submit to the jurisdiction
of such courts.
(9) WAIVER.
Any waiver by the Holder of a breach of any provision of this Note shall not operate as or be construed to be a waiver of any other
breach of such provision or of any breach of any other provision of this Note. The failure of the Holder to insist upon strict
adherence to any term of this Note on one or more occasions shall not be considered a waiver or deprive that party of the right
thereafter to insist upon strict adherence to that term or any other term of this Note. Any waiver must be in writing.
(10) LIQUIDATED
DAMAGES. Holder and Company agree that in the event Company fails to comply with any of the terms or provisions of this Note,
Holder's damages would be uncertain and difficult (if not impossible) to accurately estimate because of the parties' inability
to predict future interest rates, future share prices, future trading volumes and other relevant factors. Accordingly, Holder and
Company agree that any fees, balance adjustments, default interest or other charges assessed under this Note are not penalties
but instead are intended by the parties to be, and shall be deemed, liquidated damages (under Holder's and Company's expectations
that any such liquidated damages will tack back to the Closing Date for purposes of determining the holding period under Rule 144).
[Signature Page Follows]
IN WITNESS WHEREOF,
the Company has caused this Convertible Note to be duly executed by a duly authorized officer as of the date set forth above.
COMPANY:
Players
Network
By:
Name: Mark Bradley
Title: Chief Executive
Officer
HOLDER:
COLLIER INVESTMENTS,
LLC.
By:
Name: David Clark
Title:
Principal
[Signature Page to Convertible Note No.
PNTV-2]
EXHIBIT A
CONVERSION NOTICE
[Company Contact, Position]
Players Network
[Company Address]
[Contact Email Address}
The undersigned hereby elects to convert a portion of the $________ Convertible Note _______ issued to Collier Investments, LLC on ____________ into Shares of Common Stock of ____________ according to the conditions set forth in such Note as of the date written below.
By accepting this notice of conversion, you are acknowledging that the number of shares to be delivered represents less than 10% (ten percent) of the common stock outstanding. If the number of shares to be delivered represents more than 9.99% of the common stock outstanding, this conversion notice shall immediately automatically extinguish and debenture Holder must be immediately notified.
Date of Conversion: |
|
________________________ |
Conversion Amount: |
|
________________________ |
Conversion Price: |
|
________________________ |
Shares to be Delivered: |
|
________________________ |
|
|
|
Shares delivered in name of:
COLLIER INVESTMENTS, LLC
Signature: |
|
_________________________ |
|
|
By: |
|
|
Title: |
|
|
Collier Investments, LLC |
|
|
|
EXHIBIT B
TRUE-UP NOTICE
[Company Contact, Position]
Players Network
[Company Address]
[Contact Email Address}
The undersigned hereby gives notice to
Players Network, a ______ corporation (the “Company”), pursuant to that certain Note dated _______ ___, 20__
by and between the Company and the Holder (the “Note”), that the Holder elects to:
| ___ | Receive fully paid and non-assessable True-Up Shares pursuant to Section 3(b)(v) of the Note (such
Additional Origination Shares shall be calculated as set forth below), or |
| ___ | Add to the Outstanding Balance a dollar amount equal to the True-Up Amount (such True-Up Amount
shall be calculated as set forth below). |
The number of True-Up Shares Holder is
entitled to receive is calculated as follows:
Conversion Amount ($___) / ___%
of the lowest trade occurring during the _________ (__) consecutive Trading Days immediately preceding the applicable Conversion
Date ($_.__) - Conversion Amount ($___) divided by the Par Value ($_.__) =
____________ True-Up
Shares
The amount of True-Up Balance to be added
to the Outstanding Balance is calculated as follows:
Number of True-Up Shares (_____)
* high trade price on the Conversion Date ($_.__)=
____________ True-Up
Balance
Shares delivered in name of:
COLLIER INVESTMENTS, LLC
Signature: |
|
_________________________ |
|
|
By: |
|
|
Title: |
|
|
Collier Investments, LLC |
|
|
|
Exhibit 31.1
CERTIFICATIONS
I, Mark Bradley, certify that:
1. I have reviewed this quarterly report
on Form 10-Q for the fiscal quarter ended March 31, 2015 of Players Network;
2. Based on my knowledge, this report does
not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in
light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial
statements, and other financial information included in this report, fairly present in all material respects the financial condition,
results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4. I am responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control
over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
a) Designed such disclosure controls
and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material
information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;
b) Designed such internal control
over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles;
c) Evaluated the effectiveness
of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness
of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation: and
d) Disclosed in this report any
change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent
fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or
is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5. I have disclosed, based on my most recent
evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s
board of directors (or persons performing the equivalent functions):
a) All significant deficiencies
and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to
adversely affect the registrant’s ability to record, process, summarize and report financial information; and
b) Any fraud, whether or not material,
that involves management or other employees who have a significant role in the registrant’s internal control over financial
reporting.
Date: August 21, 2015
/s/ Mark Bradley
By: Mark Bradley, Chief Executive Officer
(Principal Executive Officer and Principal Financial Officer)
Exhibit 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF
2002
I, Mark Bradley, Chief Executive Officer
and Principal Financial Officer of Players Network, a Nevada corporation (the "Company"), certify, pursuant to Section
906 of the Sarbanes-Oxley Act of 2002, that:
(1) The quarterly report on Form 10-Q of
Players Network. (the "Registrant") for the quarter ended June 30, 2015 (the "Report") which this
statement accompanies fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) Information contained in the Report
fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 21, 2015
/s/ Mark Bradley
Name: Mark Bradley
Title: Chief Executive Officer and
Principal Financial Officer