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, 2015 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 holds 84.4% ownership, with the remaining 15.6% held by key experts and advisors
as of March 31, 2016.
(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.
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
Deferred
television costs consist of the following at March 31, 2016 and December 31, 2015:
|
|
March
31, 2016
|
|
|
December
31, 2015
|
|
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 March 31, 2016 and December 31, 2015:
|
|
March
31, 2016
|
|
|
December
31, 2015
|
|
|
|
|
|
|
|
|
|
|
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
January 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
No. 2016-16,
Financial Instruments - Overall (Subtopic 825-10), Recognition and Measurement of Financial Assets and Financial
Liabilities.
The provisions of the update require equity investments to be measured at fair value with changes in fair value
recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair
values at cost minus impairment. The update also simplifies the impairment assessment of equity investments without readily determinable
fair values by requiring a qualitative assessment to identify impairment. It also eliminates the requirement to disclose the fair
value of financial instruments measured at amortized cost for entities that are not public business entities, and eliminates the
requirement for public business entities to disclose the methods and significant assumptions used to estimate the fair value for
financial instruments measured at amortized cost on the balance sheet. ASU No. 2016-16 requires public business entities to use
the exit price notion when measuring the fair value of financial instruments for disclosure purposes. It also requires an entity
to present separately in other comprehensive income the portion of the total change in the fair value of a liability resulting
from a change in the instrument-specific credit risk when the entity has elected to measure the liability at fair value in accordance
with the fair value option for financial instruments. The update requires separate presentation of financial assets and financial
liabilities by category and form on the balance sheet or the accompanying notes to the financial statements. In addition, the
update clarifies that an entity should evaluate the need for a valuation allowance on a deferred tax asset related to available-for-sale
securities in combination with the entity’s other deferred tax assets. For public business entities, the amendments in the
update are effective for fiscal years beginning after December 15, 2017, including interim periods. The adoption of this ASU is
not expected to have a material impact on the Company’s financial statements.
In
April 2015, the FASB issued 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. For public business entities, ASU 2015-03 is effective for financial statements
issued for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. For all other entities,
ASU 2015-03 is effective for financial statements issued for fiscal years beginning after December 15, 2015, and interim periods
within fiscal years beginning after December 15, 2016. Early adoption is permitted for financial statements that have not been
previously issued. The new guidance should be applied on a retrospective basis. The Company adopted ASU 2015-03 on its balance
sheets retrospectively during the interim period ending March 31, 2016.
No
other new accounting pronouncements, issued or effective during the three months ended March 31, 2016, 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 ($29,676,218), and as of March 31, 2016, the Company’s current liabilities exceeded
its current assets by $2,220,929. 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
March 2, 2016, we issued a total of 6,250,000 shares of the Company’s series C preferred stock to Mark Bradley, the Company’s
Chief Executive Officer, in lieu of $18,750 of unpaid compensation pursuant to the terms of the new employment agreement. The
total fair value of the Series C shares was $192,000 based on an independent valuation on the date of grant, resulting in additional
compensation expense of $173,250.
Officer
compensation expense was $43,750 and $94,345, including $-0- and $49,200 of stock based bonuses, at March 31, 2016 and 2015, respectively.
The balance owed was $58,700 at March 31, 2016.
Board
of Directors
On
March 4, 2016, Mr. Brett Pojunis was appointed to the Company’s Board of Directors and Mr. Doug Miller resigned from the
Board.
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.
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.
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
The
following schedule summarizes the valuation of financial instruments at fair value on a non-recurring basis in the balance sheets
as of March 31, 2016 and December 31, 2015, respectively:
|
|
Fair
Value Measurements at March 31, 2016
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
1,353
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total assets
|
|
|
1,353
|
|
|
|
-
|
|
|
|
-
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debentures, net of discounts
of $120,887
|
|
|
-
|
|
|
|
-
|
|
|
|
289,663
|
|
Short term debt, net of discounts of
$6,605
|
|
|
-
|
|
|
|
40,895
|
|
|
|
-
|
|
Derivative liability
|
|
|
-
|
|
|
|
-
|
|
|
|
989,536
|
|
Total liabilities
|
|
|
-
|
|
|
|
-
|
|
|
|
1,279,199
|
|
|
|
$
|
1,353
|
|
|
$
|
(40,895
|
)
|
|
$
|
(1,279,199
|
)
|
|
|
Fair
Value Measurements at December 31, 2015
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total assets
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debentures,
net of discounts of $287,802
|
|
|
-
|
|
|
|
-
|
|
|
|
384,138
|
|
Short term debt
|
|
|
-
|
|
|
|
8,500
|
|
|
|
-
|
|
Derivative liability
|
|
|
-
|
|
|
|
-
|
|
|
|
1,038,504
|
|
Total liabilities
|
|
|
-
|
|
|
|
8,500
|
|
|
|
1,422,642
|
|
|
|
$
|
-
|
|
|
$
|
(8,500
|
)
|
|
$
|
(1,422,642
|
)
|
There
were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the three months ended March 31, 2016
and the year ended December 31, 2015.
Level
2 liabilities consisted of a total of $47,500 and $8,500 of short term, unsecured, promissory notes, net of discounts of $6,605
and $-0- as of March 31, 2016 and December 31, 2015, respectively. No fair value adjustment was necessary during the three months
ended March 31, 2016 and the year ended December 31, 2015.
Level
3 liabilities consist of a total of $410,550 and $671,940 of convertible debentures, net of discounts of $120,887 and $287,802
as of March 31, 2016 and December 31, 2015, respectively, in addition to the related derivative liabilities of $989,536 and $1,038,504
at March 31, 2016 and December 31, 2015, respectively.
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 and 3% was transferred back from
a founding member on December 2, 2015, giving PNTV 84.4% ownership and minority interests ownership of 18.6% as of December 31,
2015. 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.
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
Note
6 – Fixed Assets
Fixed
assets consist of the following at March 31, 2016 and December 31, 2015, respectively:
|
|
March
31, 2016
|
|
|
December
31, 2015
|
|
Office equipment
|
|
$
|
48,884
|
|
|
$
|
48,884
|
|
Website development costs
|
|
|
99,880
|
|
|
|
99,880
|
|
Furniture and fixtures
|
|
|
2,730
|
|
|
|
2,730
|
|
Leasehold
improvements
|
|
|
10,500
|
|
|
|
-
|
|
|
|
|
161,994
|
|
|
|
151,494
|
|
Less
accumulated depreciation
|
|
|
(117,902
|
)
|
|
|
(110,366
|
)
|
|
|
$
|
44,092
|
|
|
$
|
41,128
|
|
Depreciation
and amortization expense totaled $7,536 and $7,536 for the three months ended March 31, 2016 and 2015, respectively.
Note
7 – Accrued Expenses
As
of March 31, 2016 and December 31, 2015 accrued expenses included the following:
|
|
March 31,
2016
|
|
|
December
31, 2015
|
|
Accrued Payroll, Officers
|
|
$
|
58,700
|
|
|
$
|
64,624
|
|
Accrued Payroll and Payroll Taxes
|
|
|
135,234
|
|
|
|
135,234
|
|
Accrued Interest
|
|
|
79,955
|
|
|
|
89,377
|
|
Refundable
Advances
|
|
|
173,000
|
|
|
|
43,000
|
|
|
|
$
|
446,889
|
|
|
$
|
332,235
|
|
Note
8 – Settlements Payable
Settlements
payable consisted of the following as of March 31, 2016 and December 31, 2015, respectively:
|
|
March 31, 2016
|
|
|
December 31, 2015
|
|
Tangiers Investment Group, LLC
|
|
$
|
66,000
|
|
|
$
|
-
|
|
JSJ Investments, Inc.
|
|
|
35,002
|
|
|
|
-
|
|
|
|
$
|
101,002
|
|
|
$
|
-
|
|
On
January 21, 2016, the Company entered into a settlement agreement with Tangiers Investment Group. Pursuant to the agreement, the
Company is obligated to repay a total of $80,000 in various monthly installments of between $6,000 and $20,000 from February 8, 2016
through June 26, 2016 in satisfaction of a total of approximately $85,820, consisting of $75,500 of principal and $10,320 of interest
on the First and Second Tangiers Notes.
On
January 4, 2016, the Company entered into a settlement agreement with JSJ Investments. Pursuant to the agreement, the Company
is obligated to repay a total of $70,000 in six monthly installments of approximately $11,667 from January 21, 2016 through June
21, 2016 in satisfaction of a total of approximately $82,564, consisting of $75,000 of principal and $7,564 of interest on the
First JSJ Note.
Note
9 – Convertible Debentures
Convertible
debentures consist of the following at March 31, 2016 and December 31, 2015, respectively:
|
|
March
31, 2016
|
|
|
December
31, 2015
|
|
On September 17, 2015,
the Company received proceeds of $22,500 in exchange for an unsecured convertible promissory note, bearing interest at eight
percent (8%) with a face value of $25,000 (“Second TJC Note”), which matures on September 16, 2016,
as part of a larger financing agreement that enables the Company to draw total proceeds of $105,000 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 seventy percent (70%) of the average of the three (3) lowest closing traded prices during the fifteen (15) trading
days prior to the conversion request date (the “Variable Conversion Price”). If at any time while this note is
outstanding, the lowest closing traded price is equal to or less than $0.0001, then the conversion price shall equal the lesser
of the (1) Variable Conversion Price or (2) $0.00001 until the note is no longer outstanding. 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 was expensed as interest. 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. The Company is required
at all times to have authorized and reserved three times the number of shares that is actually issuable upon full conversion
of the note. On January 6, 2016, the Company repaid the first and second TJC convertible notes with an aggregate payment of
$51,000 in satisfaction of a total of approximately $50,890 of principal and $1,229 of interest, resulting in a gain of $1,119
on the debt extinguishment. The convertible promissory notes were subsequently cancelled as paid in full.
|
|
$
|
-
|
|
|
$
|
25,000
|
|
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
On September 17, 2015,
the Company issued an unsecured replacement convertible promissory note in exchange for Second Group 10 Note, bearing interest
at eight percent (8%) with a face value of $29,404 (“First TJC Note”), which matured on September 17,
2015. TJC Trading, LLC had acquired the promissory note from Group 10 Holdings, LLC, consisting of $26,750 of outstanding
principal and $2,654 of interest. The principal and interest is convertible into shares of common stock at the discretion
of the note holder at a price equal to seventy percent (70%) of the average of the three (3) lowest closing traded prices
during the fifteen (15) trading days prior to the conversion request date (the “Variable Conversion Price”). If
at any time while this note is outstanding, the lowest closing traded price is equal to or less than $0.0001, then the conversion
price shall equal the lesser of the (1) Variable Conversion Price or (2) $0.00001 until the note is no longer outstanding.
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. The Company is required at all times to have authorized and reserved three
times the number of shares that is actually issuable upon full conversion of the note. On December 24, 2015, the
note holder elected to convert a total of $3,513 of principal in exchange for 3,660,000 shares. As disclosed above, on January
6, 2016, the Company repaid the first and second TJC convertible notes with an aggregate payment of $51,000 in satisfaction
of a total of approximately $50,890 of principal and $1,229 of interest, resulting in a gain of $1,119 on the debt extinguishment.
The convertible promissory notes were subsequently cancelled as paid in full.
|
|
|
-
|
|
|
|
25,890
|
|
|
|
|
|
|
|
|
|
|
On August 24, 2015, the Company received
net proceeds of $60,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (10%)
with a face value of $66,000 (“Third WHC Note”), which matures on August 24, 2016. The financing carries
a total face value of $66,000 and a $6,000 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 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 $6,000 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 50 million shares of common stock for potential conversions.
|
|
|
66,000
|
|
|
|
66,000
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
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. On August 4, 2015,
the note holder elected to convert a total of $40,600 of principal in exchange for 20,000,000 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 March 2, 2016, the Company repaid $30,000 of principal on the First Collier
Note, and an additional $20,000 of principal was forgiven on the Second Vista Capital Note that are held by common ownership.
|
|
|
48,452
|
|
|
|
78,452
|
|
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
|
|
|
|
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 matured 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. The
note is currently in default.
|
|
|
64,000
|
|
|
|
64,000
|
|
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
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 matured 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 January 4, 2016, the Company entered
into a settlement agreement with JSJ Investments. Pursuant to the agreement, the Company is obligated to repay a total of
$70,000 in six monthly installments of approximately $11,667 from January 21, 2016 through June 21, 2016 in satisfaction of
a total of approximately $82,564, consisting of $75,000 of principal and $7,564 of interest on the First JSJ Note. Commensurate
with the settlement, the outstanding debt and interest was reclassified to Settlements Payable and a gain on debt extinguishment
of $12,564 was realized.
|
|
|
-
|
|
|
|
75,000
|
|
|
|
|
|
|
|
|
|
|
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 matured 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 21, 2016, the Company entered into a settlement agreement with Tangiers
Investment Group. Pursuant to the agreement, the Company is obligated to repay a total of $80,000 in various monthly installments
of between $6,000 and $20,000 from February 8, 2016 through June 26, 2016 in satisfaction of a total of
approximately $85,820, consisting of $75,500 of principal and $10,320 of interest on the First and Second Tangiers Notes,
resulting in a gain on debt extinguishment of $5,820.
|
|
|
-
|
|
|
|
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 matured 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:
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|
|
|
|
|
|
|
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 carried 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 had to reserve at least 20 million
shares of common stock for potential conversions. On July 30, 2015, the note holder elected to convert a total of
$10,000 of principal in exchange for 7,194,245 shares. On September 17, 2015, the remaining balance of the note was settled
with the issuance of a new note (First TJC Note) in the amount of $29,404, representing $26,750 of outstanding principal and
$2,654 of interest.
|
|
|
-
|
|
|
|
-
|
|
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
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 matured 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.
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
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 matured 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.
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
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 matured 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 September 24, 2015, the note holder
elected to convert a total of $53,500 of principal in exchange for 19,091,038 shares. The Company must at all times reserve
at least 5 million shares of common stock for potential conversions. As disclosed above, on January 21, 2016, the
Company entered into a settlement agreement with Tangiers Investment Group. Pursuant to the agreement, the Company is obligated
to repay a total of $80,000 in various monthly installments of between $6,000 and $20,000 from February 8, 2016
through June 26, 2016 in satisfaction of a total of approximately $85,820, consisting of $75,500 of principal and
$10,320 of interest on the First and Second Tangiers Notes, resulting in a gain on debt extinguishment of $5,820.
|
|
|
-
|
|
|
|
21,750
|
|
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. As disclosed above, on March 2, 2016, the Company repaid $30,000 of principal on the First Collier Note, and an
additional $20,000 of principal was forgiven on the Second Vista Capital Note that are held by common ownership.
|
|
|
18,500
|
|
|
|
38,500
|
|
|
|
|
|
|
|
|
|
|
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 matured 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.
On March 14, 2016, the Company issued 7,812,500 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. The note is currently in default.
|
|
|
35,000
|
|
|
|
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 matured 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.
|
|
|
-
|
|
|
|
-
|
|
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
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 matured 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 $95,000, consisting of $80,000 principal and $15,000
of interest and penalties, in exchange for 28,539,570 shares of common stock. The convertible promissory note was subsequently
cancelled as paid in full and the reserved shares have been released.
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
11,598
|
|
|
|
|
|
|
|
|
|
|
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 matured 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.
|
|
|
-
|
|
|
|
-
|
|
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
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 matured 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.
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
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 matured 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 matured 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.
|
|
|
-
|
|
|
|
-
|
|
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
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 matured 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.
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
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 matured 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.
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Total convertible debentures
|
|
|
410,550
|
|
|
|
671,940
|
|
Less: unamortized
debt discounts
|
|
|
(120,887
|
)
|
|
|
(287,802
|
)
|
Convertible
debentures
|
|
$
|
289,663
|
|
|
$
|
384,138
|
|
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
Each
of the above outstanding notes are currently in default by the nature of not being current with the Company’s filing requirements
with the SEC. These defaults will be cured with the submission of this filing.
In
accordance with ASC 470-20 Debt with Conversion and Other Options, the Company recorded total discounts of $-0- and $559,626 for
the variable conversion features of the convertible debts incurred during the three months ended March 31, 2016 and
the year ended December 31, 2015, respectively. The discounts, including Original Issue Discounts of $-0- and $23,500
during the three months ended March 31, 2016 and the year ended December 31, 2015, respectively, are being
amortized to interest expense over the term of the debentures using the effective interest method. The Company recorded $166,915
and $264,037 of interest expense pursuant to the amortization of the note discounts during the three months ended March 31, 2016
and 2015, 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 $9,832
and $27,336 for the three months ended March 31, 2016 and 2015, respectively related to convertible debts.
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. The
registration statement will expire on September 26, 2016 and a new Form S-1 would need to be refiled in order to continue
with the agreement.
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
Note
11 – Short Term Debt
Short-term
debt consists of the following at March 31, 2016 and December 31, 2015, respectively:
|
|
March
31, 2016
|
|
|
December
31, 2015
|
|
On March 8, 2016, the
Company received proceeds of $45,000 in exchange for a non-interest bearing, unsecured promissory note (“First SCP Note”),
which matures on June 8, 2016, and detachable warrants to acquire up to 9,000,000 shares of common stock, exercisable
at $0.005 per share over a period from the origination date until four (4) months after the note is repaid. The fair value
of the warrants is $7,400 and is being amortized over the life of the loan as a debt discount. The note carries a default
rate of 18% and an additional 1,000,000 warrants issued each 30 day period the note remains unpaid.
|
|
$
|
45,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Non-interest bearing, unsecured debenture,
due on demand. Originated on December 9, 2015, included a $1,000 loan origination cost. On March 8, 2015, a partial payment
of $2,500 was repaid.
|
|
|
2,500
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
10% unsecured debenture, due on demand.
Originated on August 6, 2015. On March 31, 2016, the Company issued 2,500,000 shares of common stock in exchange for $3,500
of outstanding principal and $228 of interest. The total fair value of the common stock was $8,000 based on the closing price
of the Company’s common stock on the date of grant, resulting in a loss on debt extinguishment of $4,272.
|
|
|
-
|
|
|
|
3,500
|
|
|
|
|
|
|
|
|
|
|
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 was 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, resulting in a gain on debt extinguishment of $6,482. 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.
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total short term debt
|
|
|
47,500
|
|
|
|
8,500
|
|
Less: unamortized debt discounts
|
|
|
(6,605
|
)
|
|
|
-
|
|
Short term debt
|
|
$
|
40,895
|
|
|
$
|
8,500
|
|
The
Company recorded interest expense pursuant to the stated interest rate on the above promissory notes in the amount of $87 and $-0-
at March 31, 2016 and 2015, respectively.
The
following presents components of interest expense by instrument type at March 31, 2016 and 2015, respectively:
|
|
March
31, 2016
|
|
|
March
31,2015
|
|
Interest on convertible
debentures
|
|
$
|
9,832
|
|
|
$
|
27,336
|
|
Amortization of debt discounts
|
|
|
167,710
|
|
|
|
264,037
|
|
Interest on short term debt
|
|
|
87
|
|
|
|
-
|
|
Accounts payable
related finance charges
|
|
|
1,295
|
|
|
|
218
|
|
|
|
$
|
178,924
|
|
|
$
|
291,591
|
|
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
Note
12 – Derivative Liabilities
As
discussed in Note 8 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 $989,536 and $1,038,504 at March 31, 2016
and December 31, 2015, respectively. The change in fair value of the derivative liabilities resulted in a gain (loss)
of $(263,381) and $152,261 for the three months ended March 31, 2016 and 2015, respectively, which has been reported as other
income (expense) in the statements of operations. The loss of $263,381 for the three months ended March 31, 2016 consisted of
a loss of $1,475 attributable to the fair value of warrants and a net loss in market value of $261,906 on the convertible notes.
The gain of $152,261 for the three months ended March 31, 2015 consisted of a loss of $86,971 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 $70,467
attributable to the fair value of warrants and a net gain in market value of $165,972 on the convertible notes.
The
following presents the derivative liability value by instrument type at March 31, 2016 and December 31, 2015, respectively:
|
|
March
31, 2016
|
|
|
December
31, 2015
|
|
Convertible debentures
|
|
$
|
980,382
|
|
|
$
|
1,038,225
|
|
Common stock
warrants
|
|
|
9,154
|
|
|
|
279
|
|
|
|
$
|
1,237,442
|
|
|
$
|
1,038,504
|
|
The
following is a summary of changes in the fair market value of the derivative liability during the three months ended March 31,
2016 and the year ended December 31, 2015, respectively:
|
|
Derivative
|
|
|
|
Liability
|
|
|
|
Total
|
|
Balance, December 31, 2014
|
|
$
|
1,417,187
|
|
Increase in derivative
value due to issuances of convertible promissory notes
|
|
|
524,626
|
|
Change in fair market
value of derivative liabilities due to the mark to market adjustment
|
|
|
13,091
|
|
Debt
conversions
|
|
|
(916,400
|
)
|
Balance, December 31, 2015
|
|
$
|
1,038,504
|
|
Increase in derivative
value attributable to issuance of warrants
|
|
|
7,400
|
|
Change in fair market
value of derivative liabilities due to the mark to market adjustment
|
|
|
263,381
|
|
Debt
conversions
|
|
|
(319,749
|
)
|
Balance, March 31, 2016
|
|
$
|
989,536
|
|
Key
inputs and assumptions used to value the convertible debentures and warrants issued during the three months ended March 31, 2016
and the year ended December 31, 2015:
|
●
|
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.
|
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
Note
13 – Changes in Stockholders’ Equity (Deficit)
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.
Convertible
Preferred Stock
The
Board, from the authorized capital of 50,000,000 preferred shares, as amended on July 22, 2015, has authorized and designated
2,000,000 shares of series A preferred stock (“Series A”) and 12,000,0000 shares of series C preferred stock (“Series
C”), of which 2,000,000 shares and 12,000,000 shares are issued and outstanding, respectively. A total of 36,000,000 shares
remained undesignated as of March 31, 2016.
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 C shares carry 50:1 preferential voting rights, and are convertible into shares of common stock on a 1:1 basis.
Series
C Preferred Stock Issuances
On
March 2, 2016, we issued a total of 6,250,000 shares of the Company’s series C preferred stock to Mark Bradley, the Company’s
Chief Executive Officer, in lieu of $18,750 of unpaid compensation pursuant to the terms of the new employment agreement. The
total fair value of the Series C shares was $192,000 based on an independent valuation on the date of grant, resulting in additional
compensation expense of $173,250.
Common
Stock Authorized
The
Company has authorized 1,200,000,000 shares of common stock, as amended on July 22, 2015, of which 393,917,678 shares were issued
and outstanding and 730,125,835 shares were reserved as of the date of this filing.
Common
Stock Sales
On
March 2, 2016, the Company sold 14,000,000 shares of its common stock to an accredited investor in exchange for proceeds of $61,600.
On
February 1, 2016, the Company sold 15,000,000 shares of its common stock to an accredited investor in exchange for proceeds of
$63,000.
Common
Stock Issuances for Debt Conversions
On
March 31, 2016, the Company issued 2,500,000 shares of common stock in exchange for $3,500 of outstanding principal and $228 of
interest. The total fair value of the common stock was $8,000 based on the closing price of the Company’s common stock on
the date of grant, resulting in a loss on debt extinguishment of $4,272.
On
March 14, 2016, the Company issued 7,812,500 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.
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
Note
14 – Options and Warrants
Options
Granted
No
options were granted during the three months ended March 31, 2016.
Warrants
Granted
On
March 8, 2016, the Company granted detachable warrants pursuant to a $45,000 promissory note to acquire up to 9,000,000 shares
of common stock, exercisable at $0.005 per share over a period from the origination date until four (4) months after the note
is repaid. The fair value of the warrants is $7,400 and is being amortized over the life of the loan as a debt discount. The note
carries a default rate of 18% and an additional 1,000,000 warrants issued each 30 day period the note remains unpaid.
Options
Expired
On
April 11, 2016, a total of 500,000 options amongst two option holders with a strike price of $0.05 per share expired.
Warrants
Expired
On
April 8, 2016, a total of 200,000 warrants with a strike price of $0.06 per share expired.
Options
and Warrants Exercised
No
options or warrants were exercised during the three months ended March 31, 2016.
Note
15 – Gain on Debt Extinguishment, Net
The
Company recognized a net gain on debt extinguishment in the total amount of $35,231 and $6,482 during the three months ended March
31, 2016 and 2015, respectively, as presented in other income within the Statements of Operations.
On
March 31, 2016, the Company issued 2,500,000 shares of common stock in exchange for $3,500 of outstanding principal and $228 of
interest. The total fair value of the common stock was $8,000 based on the closing price of the Company’s common stock on
the date of grant, resulting in a loss on debt extinguishment of $4,272.
On
March 2, 2016, the Company repaid $30,000 of principal on the First Collier Note, and an additional $20,000 of principal was forgiven
on the Second Vista Capital Note that are held by common ownership.
On
January 21, 2016, the Company entered into a settlement agreement with Tangiers Investment Group. Pursuant to the agreement, the
Company is obligated to repay a total of $80,000 in various monthly installments of between $6,000 and $20,000 from February 8, 2016
through June 26, 2016 in satisfaction of a total of approximately $85,820, consisting of $75,500 of principal and $10,320 of interest
on the First and Second Tangiers Notes, resulting in a gain of $5,820 on debt extinguishment. The convertible promissory notes
will be subsequently cancelled as paid in full.
On
January 6, 2016, the Company repaid the first and second TJC convertible notes with an aggregate payment of $51,000 in satisfaction
of a total of approximately $50,890 of principal and $1,229 of interest, resulting in a gain of $1,119 on the debt extinguishment.
The convertible promissory notes were subsequently cancelled as paid in full.
On
January 4, 2016, the Company entered into a settlement agreement with JSJ Investments. Pursuant to the agreement, the Company
is obligated to repay a total of $70,000 in six monthly installments of approximately $11,667 from January 21, 2016 through June
21, 2016 in satisfaction of a total of approximately $82,564, consisting of $75,000 of principal and $7,564 of interest on the
First JSJ Note, resulting in a gain of $12,564 on debt extinguishment. The convertible promissory note will be subsequently cancelled
as paid in full.
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 March 31, 2016.
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
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.
For
the three months ended March 31, 2016 and the year ended December 31, 2015, 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 March 31, 2016, the Company had approximately $21,382,000 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:
|
|
March
31, 2016
|
|
|
December
31, 2015
|
|
Deferred tax assets:
|
|
|
|
|
|
|
Net
operating loss carry forwards
|
|
$
|
7,483,700
|
|
|
$
|
7,203,700
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets before valuation
allowance
|
|
|
7,483,700
|
|
|
|
7,203,700
|
|
Less:
Valuation allowance
|
|
|
(7,483,700
|
)
|
|
|
(7,203,700
|
)
|
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 March 31, 2016 and December 31, 2015, 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:
|
|
March
31, 2016
|
|
|
December
31, 2015
|
|
|
|
|
|
|
|
|
|
|
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 originally 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 and 3% was transferred back to Players
Network from a founding member on December 2, 2015, thereby resulting in a minority interest in the subsidiary of 15.6% amongst
ten individuals. The net loss attributable to the non-controlling interest totaled $3,696 and $998 during the three months ended
March 31, 2016 and 2015, respectively.
Players
Network
Notes
to Condensed Consolidated Financial Statements
(Unaudited)
Effects
of changes in Players Network’s ownership interest in its subsidiary during the three months ended March 31, 2016 and the
year ended December 31, 2015 are as follows:
|
|
March
31, 2016
|
|
|
December
31, 2015
|
|
|
|
|
|
|
|
|
Net
loss attributable to parent
|
|
$
|
(19,999
|
)
|
|
$
|
(129,313
|
)
|
Transfers to (from)
the non-controlling interest:
|
|
|
|
|
|
|
|
|
Decrease
in parent’s paid-in capital for return of 3% interest in subsidiary
|
|
|
-
|
|
|
|
(180,000
|
)
|
Net
transfers to the non-controlling interest
|
|
|
-
|
|
|
|
(180,000
|
)
|
Change from net
loss attributable to the parent and transfers to the non-controlling interest
|
|
$
|
(19,999
|
)
|
|
$
|
(309,313
|
)
|
Note
18 – Legal Proceedings
Players
Network filed a civil suit in the Eighth Judicial District Court in Clark County, Nevada on January 2, 2014, and served the suit
on January 23, 2014, listed as case number A-13-693908-B against Defendants, Comcast Corporation and Advanced Information Systems
Inc. We have currently completed the Discovery process, and summary judgment pleadings are being prepared by both parties. Additional
information and details will be forthcoming as permitted by public disclosure. Mr. Barney C. Ales and his firm based in Las Vegas,
Nevada have been retained as the Company’s Special Counsel, for the litigation and ultimate trial of this matter.
Players
Network filed a civil suit in the Eighth Judicial District Court in Clark County, Nevada on December 7, 2015, listed as case number
A-15-728649-C against Defendant, Katherine Petersen for failure to meet capital obligations, and on January 15, 2016, Mrs. Petersen
filed a counterclaim. The case was withdrawn and voluntarily dismissed without prejudice on March 31, 2016, allowing both parties
the opportunity’s to meet and mediate the matters.
Players
Network filed a civil suit in the Eighth Judicial District Court in Clark County, Nevada against Vis Vires Group Inc., KBM Worldwide
Inc., Asher Enterprises, Inc., Curt Kramer, Seth Kramer and Clear Trust, LLC, which was moved to the Eastern District of New York,
USDC-ENNY Case No; CV-15-6226 The case was voluntarily moved to New York due to jurisdiction maters and has a preliminary hearing
set for May 19, 2016. Vis Vires Group filed a counterclaim against Players Network for anticipatory breach of their agreement.
The Company is in the process of retaining a New York law firm to handle these matters.
Note
19 – Subsequent Events
Advances
Received
On
various dates between April 20, 2016 and May 16, 2016, the Company received total proceeds of $83,000 in anticipation of a partnership
with two investment groups that intend to partner with Green Leaf Farms Holdings to develop its MME businesses. The terms of the
partnership agreements have not yet been finalized.
Common
Stock Issuances for Debt Conversions
On
April 8, 2016, the Company issued 2,777,778 shares of common stock pursuant to the conversion of $5,000 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.
Common
Stock Options Expired
On
April 11, 2016, a total of 500,000 options amongst two option holders with a strike price of $0.05 per share expired.
Common
Stock Warrants Expired
On
April 8, 2016, a total of 200,000 warrants with a strike price of $0.06 per share expired.