NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
1 – Nature of Business and Significant Accounting Policies
Nature
of Business
Players
Network (Stock Symbol: PNTV) was incorporated in the State of Nevada in March of 1993. Players Network is a vertically integrated
diversified company that is engaged in the development of digital networks, and is actively pursuing the cultivation and processing
of medical marijuana in North Las Vegas pursuant to two medical marijuana establishments (MME) licenses we were granted by the
city of North Las Vegas for cultivation and production. The Company holds an 84.4% interest in Green Leaf Farms Holdings, LLC,
which is a holding company formed to house our medical marijuana business. We distribute broadband video and other social media
content over a wide variety of internet enabled devices and cable television channels with content focused toward Las Vegas entertainment,
gaming and medical marijuana interests. The Company has launched in its alpha stage a proprietary scalable NexGenTV technology
platform (“Platform”). The Platform is a content management system that designed to deliver and manage video content
with integrated digital social communities, including “Vegas On Demand TV”, “Real Vegas TV” and “Weed
TV” on the media side of the business that will help streamline the delivery of content to our distribution partners.
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. 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 15.6%. 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. 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.
Basis
of Accounting
Our
consolidated financial statements are prepared using the accrual method of accounting as generally accepted in the United States
of America (U.S. GAAP) and the rules of the Securities and Exchange Commission (SEC).
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
|
|
Incorporation
|
|
Relationship
|
|
Reference
|
Players
Network
(1)
|
|
Nevada
|
|
Parent
|
|
PNTV
|
Green
Leaf Farms Holdings, Inc.
(2)
|
|
Nevada
|
|
Subsidiary
|
|
GLFH
|
(1)
Players
Network entity is in the form of a Corporation.
(2)
Majority-owned
subsidiary formed on July 8, 2014, in which PNTV retained 84% ownership, with the remaining 16% held by
key experts and advisors. 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 85.4% ownership and minority interests
ownership of 14.6%.
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
subsidiary, GLFH 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.
These
statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management are necessary
for fair presentation of the information contained therein.
Segment
Reporting
Under
FASB ASC 280-10-50, the Company operates as a single segment and will evaluate additional segment disclosure requirements as it
expands its operations.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results
could differ from those estimates.
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.
Cash
and Cash Equivalents
PNTV
maintains cash balances in non-interest-bearing transaction accounts, which do not currently exceed federally insured limits.
For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less
are considered to be cash equivalents. There were no cash equivalents on hand at December 31, 2016 and 2015.
Allowance
for Doubtful Accounts
We
generate the majority of our revenues and corresponding accounts receivable from video production services on a project basis
and subscriptions for video content. We evaluate the collectability of our accounts receivable considering a combination of factors.
In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us, we record
a specific reserve for bad debts against amounts due in order to reduce the net recognized receivable to the amount we reasonably
believe will be collected. For all other customers, we recognize reserves for bad debts based on past write-off experience and
the length of time the receivables are past due. We had no debts expense during the years ended December 31, 2016 and 2015, respectively.
Cost
Method of Accounting for Investments
Investee
companies not accounted for under the consolidation or the equity method of accounting are accounted for under the cost method
of accounting. Under this method, the Company’s share of the earnings or losses of such Investee companies is not included
in the Balance Sheet or Statement of Operations. However, impairment charges are recognized in the Statement of Operations. If
circumstances suggest that the value of the Investee Company has subsequently recovered, such recovery is not recorded. Our investments
which are accounted for on the cost method of accounting have been completely impaired previously, and no impairment expense was
recognized during the years ended December 31, 2016 or 2015.
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 were recognized upon completion in 2016.
Deferred
television costs consist of the following at December 31, 2016 and 2015:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
Development and pre-production costs
|
|
$
|
-
|
|
|
$
|
-
|
|
In-production
|
|
|
-
|
|
|
|
68,264
|
|
Post production
|
|
|
-
|
|
|
|
48,190
|
|
Total
deferred television costs
|
|
$
|
-
|
|
|
$
|
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.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Fixed
Assets
Fixed
assets are stated at the lower of cost or estimated net recoverable amount. The cost of property, plant and equipment is depreciated
using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based on the
following life expectancy:
Software
|
3
years
|
Office
equipment and website development costs
|
5
years
|
Furniture
and fixtures
|
7
years
|
Repairs
and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which have extend the
useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are
retired or sold, the cost and related accumulated depreciation and amortization are eliminated and any resulting gain or loss
is reflected in operations.
Impairment
of Long-Lived Assets
Long-lived
assets held and used by the Company are reviewed for possible impairment whenever events or circumstances indicate the carrying
amount of an asset may not be recoverable or is impaired. Recoverability is assessed using undiscounted cash flows based upon
historical results and current projections of earnings before interest and taxes. Impairment is measured using discounted cash
flows of future operating results based upon a rate that corresponds to the cost of capital. Impairments are recognized in operating
results to the extent that carrying value exceeds discounted cash flows of future operations. The Company did not recognize any
impairment losses on the disposal of fixed assets during the years ended December 31, 2016 and 2015.
Construction
in Progress
The
Company is constructing a grow house in its leased facility, which is scheduled to be operational during the second quarter of
2017, at which time depreciation will commence. As of December 31, 2016, the Company incurred and capitalized in Construction
in Progress $239,220. The estimated cost to be incurred in 2016 and 2017 to complete construction of the grow house is approximately
$1.7 million. The construction will be completed in phases and the portion of the $1.7 million incurred after the facility is
initially operational will be capitalized separately as separate leasehold improvements, while the costs incurred to get the facility
operational will begin to be depreciated upon commencement of operations.
Deferred
Rent Obligation
The
Company has entered into operating lease agreements for its corporate office 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.
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.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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 December 31, 2016 and 2015:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
|
|
|
|
|
|
|
Deferred
revenues on television pilot episodes
|
|
$
|
-
|
|
|
$
|
135,000
|
|
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.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Advertising
Costs
The
Company expenses the cost of advertising and promotions as incurred. Advertising and promotions expense was $11,571 and $16,097
for the years ended December 31, 2016 and 2015, respectively.
Website
Development Costs
The
Company accounts for website development costs in accordance with ASC 350-50, “Accounting for Website Development Costs”
(“ASC 350-50”), wherein website development costs are segregated into three activities:
|
1)
|
Initial
stage (planning), whereby the related costs are expensed.
|
|
|
|
|
2)
|
Development
(web application, infrastructure, graphics), whereby the related costs are capitalized and amortized once the website is ready
for use. Costs for development content of the website may be expensed or capitalized depending on the circumstances of the
expenditures.
|
|
|
|
|
3)
|
Post-implementation
(after site is up and running: security, training, admin), whereby the related costs are expensed as incurred. Upgrades are
usually expensed, unless they add additional functionality.
|
The
Company had no capitalized website development costs during the years ended December 31, 2016 and 2015 related to its internet
television platforms pursuant to the development stage.
Basic
and Diluted Loss Per Share
The
basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding.
Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by
the weighted average number of common shares outstanding plus potential dilutive securities. For 2016 and 2015, potential dilutive
securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.
Stock-Based
Compensation
Under
FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, to be recognized in the
income statement based on their fair values. Pro forma disclosure is no longer an alternative. Stock and stock options issued
for services and compensation totaled $431,500 and $460,191 for the years ended December 31, 2016 and 2015, respectively.
Income
Taxes
PNTV
recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and
liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered.
PNTV provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more
likely than not.
Uncertain
Tax Positions
In
accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax benefit from an uncertain
tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing
authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute
for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These
standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure,
and transition.
Various
taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s
tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions.
In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records
allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established,
is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.
The
assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with
the Company’s various filing positions.
Various
taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s
tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions.
In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records
allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established,
is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.
The
assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with
the Company’s various filing positions.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Recent
Accounting Pronouncements
In
January 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”)
2017-04,
Intangibles – Goodwill and Other (Topic 350)
. ASU 2017-04 simplifies the subsequent measurement of goodwill
by removing the second step of the two-step impairment test. The amendment requires an entity to perform its annual, or interim
goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount. An impairment charge should
be recognized for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized
should not exceed the total amount of goodwill allocated to that reporting unit. An entity still has the option to perform the
qualitative assessment for a reporting unit to determine if the quantitative impairment test is necessary. The amendment should
be applied on a prospective basis. ASU 2017-04 is effective for fiscal years beginning after December 15, 2019, including interim
periods within those fiscal years. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing
dates after January 1, 2017. The Company intends to early adopt the ASU in 2017.
In
January 2017, the FASB issued ASU 2017-01,
Business Combinations (Topic 805): Clarifying the Definition of a Business
,
which clarifies the definition of a business to assist entities with evaluating whether transactions should be accounted for as
acquisitions (or disposals) of assets or businesses. The standard will be effective for the Company in the first quarter of 2018.
Early adoption is permitted. The Company is currently evaluating the impact of adopting this ASU on its consolidated financial
statements.
In
December 2016, the FASB issued ASU 2016-20,
Technical Corrections and Improvements to Topic 606, Revenue from Contracts with
Customers
. ASU 2016-20 amended guidance regarding accounting for
Revenue from Contracts with Customers
, which requires
an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services
to customers. When effective, this standard will replace most existing revenue recognition guidance in generally accepted accounting
principles (“GAAP”). The standard also requires more detailed disclosures and provides additional guidance for transactions
that were not comprehensively addressed in GAAP. This guidance is required to be adopted by us in the first quarter of fiscal
2019 by either recasting all years presented in our financial statements or by recording the impact of adoption as an adjustment
to retained earnings at the beginning of the year of adoption. We are currently evaluating the impact this guidance will have
on our consolidated financial statements.
In
October 2016, the FASB issued ASU No. 2016-17,
Consolidation (Topic 810): Interests Held through Related Parties that are under
Common Control
. The amendments in this Update improve GAAP involving situations consisting of common control, wherein a single
decision maker focuses on the economics to which it is exposed when determining whether it is the primary beneficiary of a variable
interest entity (“VIE”) before potentially evaluating which party is most closely associated with the VIE. ASU 2016-17
is effective for public entities for fiscal periods beginning after December 15, 2017, including interim periods within those
fiscal years. Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in
an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period.
The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements.
In
October 2016, the FASB issued ASU No. 2016-16,
Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory
,
which reduces the complexity in the accounting standards by allowing the recognition of current and deferred income taxes for
an intra-entity asset transfer, other than inventory, when the transfer occurs. Historically, recognition of the income tax consequence
was not recognized until the asset was sold to an outside party. This amendment should be applied on a modified retrospective
basis through a cumulative-effect adjustment directly to retained earnings as of the beginning of the period of adoption. ASU
2016-16 is effective for annual periods beginning after December 15, 2017, including interim reporting periods within those annual
reporting periods. Early adoption is permitted for all entities as of the beginning of an annual reporting period for which financial
statements (interim or annual) have not been issued or made available for issuance. That is, earlier adoption should be in the
first interim period if an entity issues interim financial statements. The Company is currently evaluating the impact of adopting
this ASU on its consolidated financial statements.
In
August, 2016, the FASB issued ASU No. 2016-15,
Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts
and Cash Payments
(a consensus of the Emerging Issues Task Force). Effective for public business entities for fiscal years
beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective
for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019.
Early adoption is permitted, including adoption in an interim period. If an entity early adopts the amendments in an interim period,
any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects
early adoption must adopt all of the amendments in the same period. The Company is evaluating the impact of this ASU on the Company’s
financial statements.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
In
June, 2016, the FASB issued ASU No. 2016-13,
Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses
on Financial Instruments.
For public business entities that are U.S. Securities and Exchange Commission (SEC) filers, the
amendments in this Update are effective for fiscal years beginning after December 15, 2019, including interim periods within those
fiscal years. For all other public business entities, the amendments in this Update are effective for fiscal years beginning after
December 15, 2020, including interim periods within those fiscal years. For all other entities, including not-for-profit entities
and employee benefit plans within the scope of Topics 960 through 965 on plan accounting, the amendments in this Update are effective
for fiscal years beginning after December 15, 2020, and interim periods within fiscal years beginning after December 15, 2021.
All entities may adopt the amendments in this Update earlier as of the fiscal years beginning after December 15, 2018, including
interim periods within those fiscal years. The Company is evaluating the impact of this ASU on the Company’s financial statements.
In
March 2016, the FASB issued ASU No. 2016-09,
Improvements to Employee Share-Based Payment Accounting (Topic 718)
(“ASU
2016-09”)
.
The provisions of the update amend ASC Topic 718, Compensation – Stock Compensation, and includes
provisions intended to simplify various aspects related to how share-based payments are accounted for and presented in the financial
statements, including accounting for the income tax consequences, estimates of forfeitures and classification of excess tax benefits
on the statement of cash flows. For public business entities, this update is effective for fiscal years beginning after December
15, 2016, including interim periods. The Company is evaluating the impact of this ASU on the Company’s financial statements.
In
March, 2016, the FASB issued ASU No. 2016-08,
Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations
(Reporting Revenue Gross versus Net).
The amendments in this Update affect the guidance in Accounting Standards Update 2014-09,
Revenue from Contracts with Customers (Topic 606)
, which is not yet effective. The effective date and transition requirements
for the amendments in this Update are the same as the effective date and transition requirements of Update 2014-09. Accounting
Standards Update No. 2015-14,
Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date
, defers
the effective date of Update 2014-09 by one year. The Company is evaluating the impact of this ASU on the Company’s financial
statements.
In
March, 2016, the FASB issued ASU No. 2016-07,
Investments—Equity Method and Joint Ventures (Topic 323): Simplifying the
Transition to the Equity Method of Accounting.
Effective for all entities for fiscal years, and interim periods within those
fiscal years, beginning after December 15, 2016. The amendments should be applied prospectively upon their effective date to increases
in the level of ownership interest or degree of influence that result in the adoption of the equity method. Earlier application
is permitted. The Company is evaluating the impact of this ASU on the Company’s financial statements.
In
March, 2016, the FASB issued ASU No. 2016-04,
Liabilities—Extinguishments of Liabilities (Subtopic 405-20): Recognition
of Breakage for Certain Prepaid Stored-Value Products
(a consensus of the Emerging Issues Task Force). Effective for public
business entities, certain not-for-profit entities, and certain employee benefit plans for financial statements issued for fiscal
years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, effective for
financial statements issued for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning
after December 15, 2019. Earlier application is permitted, including adoption in an interim period. The Company is evaluating
the impact of this ASU on the Company’s financial statements.
No
other new accounting pronouncements, issued or effective during the year ended December 31, 2016, have had or are expected to
have a significant impact on the Company’s financial statements.
Note
2 – Going Concern
As
shown in the accompanying consolidated financial statements, the Company has incurred recurring losses from operations resulting
in an accumulated deficit of ($30,639,417), and as of December 31, 2016, the Company’s current liabilities exceeded its
current assets by $1,131,646 and its total liabilities exceeded its total assets by $903,027. 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 consolidated financial statements do not
include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The
consolidated 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.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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.
On
September 2, 2016, the Company issued 20,400,000 shares of common stock to its CEO in satisfaction of unpaid compensation. The
total fair value of the common stock was $102,000 based on the closing price of the Company’s common stock on the date of
grant.
On
December 29, 2015, the Company issued 3,000,000 shares of restricted common stock to its President of Programming as a compensation
bonus. The total fair value of the common stock was $5,400 based on the closing price of the Company’s common stock on the
date of grant.
On
July 21, 2015, we issued an aggregate of 5,750,000 shares of the Company’s newly created series C preferred stock to Mark
Bradley, the Company’s Chief Executive Officer, in lieu of $17,250 of unpaid compensation pursuant to the terms of the new
employment agreement. The total fair value of the Series C shares was $164,000 based on an independent valuation on the date of
grant, resulting in additional compensation expense of $146,750.
On
April 19, 2015, a total of 120,000 warrants held by our CEO with a strike price of $0.15 per share expired.
On
February 14, 2015, a total of 80,000 warrants held by our CEO with a strike price of $0.15 per share expired.
On
January 25, 2015, the Company issued 1,500,000 shares of common stock to its CEO as compensation for services as a Director. The
total fair value of the common stock was $24,600 based on the closing price of the Company’s common stock on the date of
grant.
Officer
compensation expense was $175,673 and $228,330 at December 31, 2016 and 2015, respectively. The balance owed was $31,343 and $64,624
at December 31, 2016 and 2015, respectively.
Board
of Directors
On
September 2, 2016, the Company issued 3,000,000 shares of common stock to each of its three Directors for services performed.
The total fair value of the common stock was $45,000 based on the closing price of the Company’s common stock on the date
of grant.
On
December 29, 2015, the Company issued 3,000,000 shares of common stock to its President of Programming as compensation for services
as a Director. The total fair value of the common stock was $5,400 based on the closing price of the Company’s common stock
on the date of grant.
On
December 29, 2015, the Company issued 3,000,000 shares of common stock to one of its Directors as compensation for services as
a Director. The total fair value of the common stock was $5,400 based on the closing price of the Company’s common stock
on the date of grant.
On
December 29, 2015, the Company issued 3,000,000 shares of common stock to another one of its Directors as compensation for services
as a Director. The total fair value of the common stock was $5,400 based on the closing price of the Company’s common stock
on the date of grant.
On
February 29, 2015, a total of 300,000 options held by one of the Company’s Directors expired.
On
January 25, 2015, the Company issued 1,500,000 shares of common stock to its President of Programming as compensation for services
as a Director. The total fair value of the common stock was $24,600 based on the closing price of the Company’s common stock
on the date of grant.
On
January 25, 2015, the Company issued 1,500,000 shares of common stock to one of its Directors as compensation for services as
a Director. The total fair value of the common stock was $24,600 based on the closing price of the Company’s common stock
on the date of grant.
Officer
and Director Changes
On
March 4, 2016, Mr. Brett Pojunis was appointed to the Company’s Board of Directors and Mr. Doug Miller resigned from the
Board.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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 CONSOLIDATED FINANCIAL STATEMENTS
The
following schedule summarizes the valuation of financial instruments at fair value on a non-recurring basis in the balance sheets
as of December 31, 2016 and 2015, respectively:
|
|
Fair
Value Measurements at December 31, 2016
|
|
|
|
Level
1
|
|
|
Level
2
|
|
|
Level
3
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
145,119
|
|
|
$
|
-
|
|
|
$
|
-
|
|
Total
assets
|
|
|
145,119
|
|
|
|
-
|
|
|
|
-
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Convertible debentures, net of discounts
of $241,634
|
|
|
-
|
|
|
|
-
|
|
|
|
58,366
|
|
Short term debt, net of discounts of
$60
|
|
|
-
|
|
|
|
142,940
|
|
|
|
-
|
|
Long term debt, net of discounts of
$885,271
|
|
|
-
|
|
|
|
-
|
|
|
|
39,729
|
|
Derivative liability
|
|
|
-
|
|
|
|
-
|
|
|
|
482,674
|
|
Total
liabilities
|
|
|
-
|
|
|
|
142,940
|
|
|
|
580,769
|
|
|
|
$
|
145,119
|
|
|
$
|
(142,940
|
)
|
|
$
|
(580,769
|
)
|
|
|
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 years ended December 31, 2016
and 2015.
Level
2 liabilities consist of a total face value of $143,000 and $8,500 of short term unsecured promissory notes. Debt discounts of
$60 and $-0- was recognized at December 31, 2016 and 2015, respectively.
Level
3 liabilities consist of a total face value of $1,225,000 and $671,940 of convertible debentures and the related derivative liability
as of December 31, 2016 and 2015, respectively. Debt discounts of $1,126,905 and $287,802 was recognized at December 31, 2016
and 2015, respectively.
Note
5 – Subsidiary Formation
OOn
July 8, 2014, we formed a subsidiary, Green Leaf Farms Holdings, Inc. (“GLFH”), in which we retained 84% ownership,
with the remaining 16% held by key experts and advisors, of which 15% 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 85.4% ownership and minority interests
ownership of 14.6%. 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. 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 CONSOLIDATED FINANCIAL STATEMENTS
Note
6 – Other Current Assets
Other
current assets included the following as of December 31, 2016 and 2015, respectively:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
Security deposit, facility
lease
|
|
$
|
50,000
|
|
|
$
|
-
|
|
Prepaid expenses
|
|
|
35,150
|
|
|
|
625
|
|
|
|
$
|
85,150
|
|
|
$
|
625
|
|
Note
7 – Fixed Assets and Construction in Progress
Fixed
assets consist of the following at December 31, 2016 and 2015, respectively:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
Office equipment
|
|
$
|
60,968
|
|
|
$
|
48,884
|
|
Website development costs
|
|
|
99,880
|
|
|
|
99,880
|
|
Furniture and
fixtures
|
|
|
2,730
|
|
|
|
2,730
|
|
Total
|
|
|
163,578
|
|
|
|
151,494
|
|
Less
accumulated depreciation
|
|
|
(134,450
|
)
|
|
|
(110,366
|
)
|
Fixed
assets, net
|
|
$
|
29,128
|
|
|
$
|
41,128
|
|
Construction
in progress is stated at cost, which includes the cost of construction and other indirect costs attributable to the construction.
No provision for depreciation is made on construction in progress until such time as the relevant assets are completed and put
into use. Construction in progress at December 31, 2016, represents leasehold improvements under construction. As of December
31, 2016, the Company incurred and capitalized in Construction in Progress $239,220.
Depreciation
and amortization expense totaled $24,084 and $30,143 for the years ended December 31, 2016 and 2015, respectively.
On
November 9, 2015, the Company sold plastic injection molding equipment with a net book value of $6,500 for net proceeds of $4,400,
resulting in a loss on disposal of $2,100. In addition, a total of $10,754 of warehouse equipment was disposed of on November
30, 2015, resulting in a total loss on disposal of fixed assets of $12,854 for the year ended December 31, 2015.
Note
8 – Accrued Expenses
Accrued
expenses included the following as of December 31, 2016 and 2015, respectively:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
Accrued payroll, officers
|
|
$
|
31,343
|
|
|
$
|
64,624
|
|
Accrued payroll and payroll taxes
|
|
|
135,234
|
|
|
|
135,234
|
|
Accrued interest
|
|
|
21,841
|
|
|
|
89,377
|
|
Advances
|
|
|
105,000
|
|
|
|
43,000
|
|
|
|
$
|
293,418
|
|
|
$
|
332,235
|
|
Note
9 – Settlements Payable
Settlements
payable consisted of $70,000 and $-0- owed to WHC Capital, LLC as of December 31, 2016 and 2015, respectively.
On
September 22, 2016, the Company entered into a payoff agreement to pay WHC Capital, LLC a total of $100,000 in five installments
ranging between $15,000 and $25,000 payable from October 21, 2016 through February 21, 2017 in satisfaction of a total of $114,002
of principal and unpaid interest on two convertible notes originally entered into with WHC on August 24, 2015 and August 19, 2014.
As of December 31, 2016, the Company had paid a total of $30,000 on the settlement, as specified in the agreement.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
On
August 12, 2016, the Company entered into a settlement agreement to pay Vis Vires a total of $70,000 in four installments of $17,500
payable from August 6, 2016 through November 3, 2016 in satisfaction of the $64,000 of principal and all unpaid interest on the
convertible note originally entered into with Vis Vires on May 1, 2015. The settlement was satisfied in full as of November 22,
2016.
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. The settlement was satisfied in full as of August 30, 2016.
On
January 4, 2016, the Company entered into a settlement agreement with JSJ Investments. Pursuant to the agreement, the Company
was 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. The settlement was satisfied in full as of June 21, 2016.
Note
10 – Convertible Debentures
Convertible
debentures consist of the following at December 31, 2016 and 2015, respectively:
|
|
December 31,
2016
|
|
|
December 31,
2015
|
|
On August 15, 2016, the
Company entered into a definitive funding agreement with RxMM Health Limited (“RxMM”) in which a convertible note
was issued for a total gross investment of $2,500,000. In consideration of such investment, RxMM will receive 50,000,000 callable
warrants as a fee per the milestone schedule below, and will be entitled to 20% of all adjusted gross revenue and 20% of the
gross income generated by the Company through any of its medical marijuana holdings or its media platform, of which shall
reduce the principal until this debenture is either paid back or converted into equity.
|
|
|
|
|
|
|
|
|
Debenture
Funding Milestone
|
Warrants
and Exercise Price Details
|
|
|
|
|
|
|
|
|
$400,000
|
10 million
shares exercisable at $0.05 per share over 2 years
|
|
|
|
|
|
|
|
|
$400,001
- $800,000
|
15 million
shares exercisable at $0.06 per share over 2 years
|
|
|
|
|
|
|
|
|
$800,001
- $1,600,000
|
15 million
shares exercisable at $0.07 per share over 2 years
|
|
|
|
|
|
|
|
|
$1,600,001
- $2,500,000
|
10 million
shares exercisable at $0.08 per share over 2 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The warrants are callable if the
stock averages 200% of the warrant strike price for any thirty (30) day trading period. The convertible debenture, bearing
interest at 5% per annum, will mature 24 months after the full investment is realized, and is convertible into common stock
at a 25% discount to the preceding 30 day average closing stock price. The Company is required at all times to have authorized
and reserved the number of shares that is actually issuable upon full conversion of the note. The Company has received the
following payments on the funding agreement:
|
|
|
|
|
|
|
|
|
$ 25,000 – August 19, 2016
|
|
|
|
|
|
|
|
|
$ 175,000 – August
15, 2016
|
|
$
|
200,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
On July 28, 2016, the Company received
proceeds of $35,000 in exchange for an unsecured convertible promissory note, bearing interest at eight percent (8%) (“First
EJR Note”), which matures on July 28, 2017. The principal and interest is convertible into shares of common stock at
the discretion of the note holder at a price equal to seventy eight percent (78%) of the average of the closing traded prices
during the ten (10) trading days prior to the conversion request date (the “Variable Conversion Price”). The Company
is required at all times to have authorized and reserved the number of shares that is actually issuable upon full conversion
of the note.
|
|
|
35,000
|
|
|
|
-
|
|
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
On June 24, 2016, the
Company received proceeds of $30,000 in exchange for an unsecured convertible promissory note, bearing interest at eight percent
(8%) (“First SH Note”), which matures on June 24, 2017. The principal and interest is convertible into shares
of common stock at the discretion of the note holder at a price equal to seventy eight percent (78%) of the average of the
closing traded prices during the ten (10) trading days prior to the conversion request date (the “Variable Conversion
Price”). In the event of default, the outstanding principal, unpaid interest and liquidated damages and fees immediately
prior to the occurrence of the event of default shall become immediately due and payable in cash, at the Lender’s election,
at a premium default rate determined by dividing the outstanding amount by the Variable Conversion Price on the date of default.
The Company is required at all times to have authorized and reserved the number of shares that is actually issuable upon full
conversion of the note.
|
|
|
30,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
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
|
|
|
|
|
|
|
|
|
|
|
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. The remaining balance of $66,000 was settled pursuant
to a settlement agreement on September 22, 2016.
|
|
|
-
|
|
|
|
66,000
|
|
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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 matured 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 was 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 was 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 carried a $10,500 Original Issue Discount that was being amortized over
the life of the loan on the straight line method, which approximated the effective interest method. The Company had to reserve
at least 35 million shares of common stock for potential conversions as depicted in the First Vista Note. On November 3, 2016,
the note holder elected to convert $86,709 of principal in exchange for 12,182,508 shares. The remaining balance of $28,791
was forgiven, along with $18,834 of unpaid interest.
|
|
|
-
|
|
|
|
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. On
various dates between June 15, 2016 and September 22, 2016, the note holder elected to convert a total of $57,975, consisting
of $48,451 of principal and $9,524 of interest, in exchange for 28,813,364 shares.
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-
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78,452
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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 matured on June 1, 2016, as part of a larger financing
agreement that enabled the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carried
a total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest was 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 was
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 was amortized over the life of the
loan on the straight line method, which approximated the effective interest method. The Company had to reserve at least 35
million shares of common stock for potential conversions as depicted in the First Vista Note. On November 3, 2016, the note
holder agreed to forgive the remaining balance of $16,500, along with $2,745 of unpaid interest.
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-
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16,500
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PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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 remaining
balance of $64,000 was settled, along with $6,000 of unpaid interest pursuant to a settlement agreement on July 26, 2016.
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-
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64,000
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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.
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-
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75,000
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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.
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-
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53,750
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PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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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
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ii.
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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%)).
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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.
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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.
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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.
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PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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21,750
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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 matured on June 1, 2016, as part of a larger financing
agreement that enabled the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carried
a total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest was 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 was
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 carried a $3,500 Original Issue Discount that was being amortized over the life
of the loan on the straight line method, which approximated the effective interest method. The Company had to 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 $1,382 of principal was forgiven
on the Second Vista Capital Note that are held by common ownership on September 22, 2016. On November 3, 2016, the note holder
agreed to forgive the remaining balance of $17,118, along with $8,122 of unpaid interest.
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38,500
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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. On various dates between March
14, 2016 and August 24, 2016, the Company issued 13,782,196 shares of common stock pursuant to the conversion of $19,800 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 remaining balance of $25,200 was settled pursuant to a settlement agreement on September
22, 2016.
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-
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45,000
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PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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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.
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PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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 remaining balance of $11,598 was forgiven, along with $7,020 of unpaid interest on September 22, 2016. The Company
must at all times reserve at least 35 million shares of common stock for potential conversions.
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11,598
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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.
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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.
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PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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.
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35,000
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35,000
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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.
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-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
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.
|
|
|
-
|
|
|
|
-
|
|
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
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
|
|
|
300,000
|
|
|
|
671,940
|
|
Less: unamortized
debt discounts
|
|
|
(241,634
|
)
|
|
|
(287,802
|
)
|
Convertible
debentures
|
|
$
|
58,366
|
|
|
$
|
384,138
|
|
In
accordance with ASC 470-20 Debt with Conversion and Other Options, the Company recorded total discounts of $257,379 and $559,626
for the variable conversion features of the convertible debts incurred during the years ended December 31, 2016 and 2015, respectively.
The discounts, including Original Issue Discounts of $-0- and $23,500 during the years ended December 31, 2016 and 2015, respectively,
are being amortized to interest expense over the term of the debentures using the effective interest method. The Company recorded
$357,612 and $820,287 of interest expense pursuant to the amortization of the note discounts during the years ended December 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 $31,330
and $135,314 for the years ended December 31, 2016 and 2015, respectively related to convertible debts.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
11 – Short Term Debt
Short
term debt consists of the following at December 31, 2016 and 2015, respectively:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
On July 1, 2016, the Company issued
a promissory note to PNTV Investors, LLC in the amount of $25,000 for an advance that was received on December 16, 2015 as
the Company and an investor developed terms to a potential partnership agreement with Green Leaf Farms Holdings. The unsecured
promissory note bears interest at 8% per annum (“First PNTV Investors Note”), which matured on December 15, 2016,
and carried default provisions that enable the holder to purchase 4,285,000 shares of stock at $0.007 per share in the event
of default. On November 2, 2016, the note was assigned to SK L-43, LLC and rolled into a long term note.
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
On various dates between
January 11, 2016 and April 20, 2016, the Company received aggregate refundable advances of $143,000 as the Company and an
investor developed terms to a potential partnership agreement with Green Leaf Farms Holdings. On June 1, 2016, the Company
issued a promissory note in exchange for those deposits. The unsecured promissory note bears interest at 4% per annum (“First
ZG Note”), which matures on January 3, 2017, and awarded the lender options to acquire up to 5,000,000 shares of common
stock, exercisable at $0.01 per share over a four (4) week period from the origination date, which expired on July 1, 2016,
in addition to options to acquire up to another 3,000,000 shares of common stock, exercisable at $0.08 per share over a twenty
four (24) month period from the origination date. The aggregate fair value of the options is $6,996 and is being amortized
over the earlier of the life of the loan, or the life of the options, as a debt discount. The note carries a default rate
of 10%.
|
|
|
143,000
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
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 carried a default rate of 18% and
an additional 1,000,000 warrants issued each 30 day period the note remains unpaid. On August 5, 2016, the note was repaid
out of the proceeds of the exercised warrant.
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
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, and the remaining $2,500 and an additional $99 of interest was repaid on September 27, 2016.
|
|
|
-
|
|
|
|
5,000
|
|
|
|
|
|
|
|
|
|
|
10% unsecured debenture, due on demand.
Originated on August 6, 2015. On June 30, 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
|
|
|
143,000
|
|
|
|
8,500
|
|
Less: unamortized
debt discounts
|
|
|
(60
|
)
|
|
|
-
|
|
Short term
debt
|
|
$
|
142,940
|
|
|
$
|
8,500
|
|
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
12 – Long Term Debt
Long
term debt consists of the following at December 31, 2016 and 2015, respectively:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
On
November 21, 2016, the Company entered into a letter agreement with SK L-43, LLC providing
for the making of loans by the SK L-43 to the Company, at SK L-43’s option (i) in the
aggregate principal amount of $925,000 by December 15, 2016, and (ii) in the amounts of $1,500,000
each on or before each of April 1, 2017 and May 1, 2017. Advances under the letter agreement
are unsecured; bear interest at a rate of 5% per annum, payable on December 31
st
of each year; mature two years from the making of the applicable Advance; and are subject
to acceleration upon customary events of default set forth in the promissory notes. To date,
SK L-43 has advanced to the Company the following loans:
$125,000
– November 02, 2016 (including $25,000 assigned from PNTV Investors Note)
$267,000
– November 21, 2016
$267,000
– December 02, 2016
$266,000
– December 19, 2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pursuant to the advances above, SK
L-43 was issued warrants to purchase up to 92,500,002 shares of the Company’s common stock as additional consideration
for making the loans at various exercise prices of $0.03 and $0.06 per share. For each additional loan of $1,500,000 each
on or before each of April 1, 2017 and May 1, 2017, SK L-43 will also be entitled to additional warrants to purchase 42,857,142
shares of the Company’s common stock. These additional warrants will have an exercise price equal to 125% of the average
closing price of the Company’s common stock over the thirty trading days immediately preceding the date of the applicable
additional loan; provided, however, that if during the 90 trading day period following the date of such additional loan, the
average closing price of the Company’s common stock (the “Post-Advance Closing Average”) is equal to or
less than 80% of the Pre-Advance Closing Average, the exercise price for such additional warrant will be equal to 125% of
the Post-Advance Closing Average.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Each warrant will vest
and become exercisable four months following its date of issuance and remain exercisable for a period of two years thereafter;
provided, however, that if the Company’s common stock on each of the 30 trading days preceding the vesting date of a
warrant equals or exceeds 300% of the exercise price for such warrant, then the Company will have the right to reduce the
length of the exercise period for such warrant to 45 days following delivery of notice to SK L-43.
|
|
$
|
925,000
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Total long term debt
|
|
|
925,000
|
|
|
|
-
|
|
Less: unamortized
debt discounts
|
|
|
(885,271
|
)
|
|
|
-
|
|
Long term
debt
|
|
$
|
39,729
|
|
|
$
|
-
|
|
The
Company recorded $14,336 and $-0- of interest expense pursuant to the amortization of the note discounts during the years ended
December 31, 2016 and 2015, respectively.
The
Company recorded interest expense pursuant to the stated interest rate on the above promissory notes in the amount of $12,131
and $141 at December 31, 2016 and 2015, respectively.
The
following presents components of interest expense by instrument type at December 31, 2016 and 2015, respectively:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
Interest on convertible
debentures
|
|
$
|
31,330
|
|
|
$
|
135,314
|
|
Amortization of debt discounts
|
|
|
357,612
|
|
|
|
820,288
|
|
Loss on debt conversions
|
|
|
4,272
|
|
|
|
10,508
|
|
Interest on short term debt
|
|
|
12,131
|
|
|
|
141
|
|
Accounts payable
related finance charges
|
|
|
4,303
|
|
|
|
2,499
|
|
|
|
$
|
409,648
|
|
|
$
|
968,750
|
|
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
13 – Derivative Liabilities
As
discussed in Note 10 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 $482,674 and $1,038,504 at December
31, 2016 and 2015, respectively. The change in fair value of the derivative liabilities resulted in a loss of $231,519 and a loss
of $13,091 for the years ended December 31, 2016 and 2015, respectively, which has been reported as other income (expense) in
the statements of operations. The loss of $231,519 for the year ended December 31, 2016 consisted of a loss of $4,417 due to the
value in excess of the face value of the convertible notes, a loss of $17,604 attributable to the fair value of warrants and a
net loss in market value of $209,498 on the convertible notes. The loss of $13,091 for the year ended December 31, 2015 consisted
of a loss of $306,538 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 $110,477 attributable to the fair value of warrants and a net gain in market value
of $180,177 on the convertible notes.
The
following presents the derivative liability value by instrument type at December 31, 2016 and 2015, respectively:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
Convertible debentures
|
|
$
|
462,489
|
|
|
$
|
1,038,225
|
|
Common stock
warrants
|
|
|
20,185
|
|
|
|
279
|
|
|
|
$
|
482,674
|
|
|
$
|
1,038,504
|
|
The
following is a summary of changes in the fair market value of the derivative liability during the years ended December 31, 2016
and 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 due to issuances of convertible promissory notes
|
|
|
261,796
|
|
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
|
|
|
227,102
|
|
Debt
conversions
|
|
|
(1,052,128
|
)
|
Balance, December
31, 2016
|
|
$
|
482,674
|
|
Key
inputs and assumptions used to value the convertible debentures and warrants issued during the years ended December 31, 2016 and
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 $0.03 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 CONSOLIDATED FINANCIAL STATEMENTS
Note
14 –Stockholders’ Equity (Deficit)
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. On July 22, 2015, the series
B class of stock was terminated. A total of 36,000,000 shares remained undesignated.
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
B Preferred Stock Cancellation
On
June 2, 2014, the Company and the Series B Preferred shareholder entered into a settlement agreement whereby an outstanding $35,000
promissory note was satisfied with the successful payment of $32,500, consisting of four equal payments of $8,125, which were
delivered on June 27, 2014, August 26, 2014, November 17, 2014 and February 2, 2015. On March 31, 2015, upon successful payment
of the settlement obligations, the shareholder converted his 4,349,339 shares of Convertible Series B Preferred shares into 4,349,339
shares of common stock.
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.
On
July 21, 2015, we issued an aggregate of 5,750,000 shares of the Company’s newly created series C preferred stock to Mark
Bradley, the Company’s Chief Executive Officer, in lieu of $17,250 of unpaid compensation pursuant to the terms of the new
employment agreement. The total fair value of the Series C shares was $164,000 based on an independent valuation on the date of
grant, resulting in additional compensation expense of $146,750.
Common
Stock Authorized
The
Company has authorized 1,200,000,000 shares of common stock, as amended on July 22, 2015, of which 547,394,239 shares were issued
and outstanding and 54,831,889 shares were reserved as of April 14, 2017.
Common
Stock Sales (2016)
On
October 14, 2016, the Company sold 1,500,000 shares of its common stock to an accredited investor in exchange for proceeds of
$12,000.
On
September 15, 2016, the Company sold 16,750,000 shares of its common stock to an accredited investor in exchange for proceeds
of $117,250.
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 Sales (2015)
On
December 3, 2015, the Company sold 7,500,000 shares of its common stock in exchange for proceeds of $6,000.
On
November 19, 2015, the Company sold 2,800,000 shares of its common stock in exchange for proceeds of $3,000.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Exercise
of Warrants (2016)
On
August 5, 2016, the Company issued 9,000,000 shares of its common stock pursuant to the exercise of an equal number warrants in
exchange for proceeds of $45,000 that were used to repay the corresponding First SCP Note. No warrants were exercised during the
year ended December 31, 2015.
Common
Stock Issuances for Debt Conversions (2016)
On
November 3, 2016, the Company issued 12,182,508 shares of common stock pursuant to the conversion of $86,709 of outstanding principal
on the Fourth Vista Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
In addition, Vista Capital forgave the remaining principal and interest on all outstanding Vista Notes, resulting in a gain on
debt extinguishment of $92,110.
On
October 24, 2016, the Company issued 1,461,187 shares of common stock pursuant to the conversion of $10,000 of outstanding principal
on the WHC Notes settlement in lieu of cash. The note was converted in accordance with the conversion terms; therefore no gain
or loss has been recognized.
On
September 23, 2016, the Company issued 7,238,041 shares of common stock pursuant to the conversion of $16,512 of outstanding principal
on the First WHC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
September 22, 2016, the Company issued 13,813,364 shares of common stock pursuant to the conversion of $29,975 of outstanding
principal on the First Collier Note. The note was converted in accordance with the conversion terms; therefore no gain or loss
has been recognized.
On
August 30, 2016, the Company issued 4,667,667 shares of common stock pursuant to the conversion of $7,000 of outstanding principal
on the First Tangiers Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
August 24, 2016, the Company issued 5,000,000 shares of common stock pursuant to the conversion of $7,800 of outstanding principal
on the First WHC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
August 24, 2016, the Company issued 10,000,000 shares of common stock pursuant to the conversion of $18,900 of outstanding principal
on the First Collier Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
July 20, 2016, the Company issued 4,995,098 shares of common stock pursuant to the conversion of $10,190 of outstanding principal
on the First Tangiers Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
July 15, 2016, the Company issued 969,696 shares of common stock pursuant to the conversion of $2,000 of outstanding principal
on the Second WHC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
June 15, 2016, the Company issued 5,000,000 shares of common stock pursuant to the conversion of $9,100 of outstanding principal
on the First Collier Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
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.
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 CONSOLIDATED FINANCIAL STATEMENTS
Common
Stock Issuances for Debt Conversions (2015)
On
December 24, 2015, the Company issued 3,660,000 shares of common stock pursuant to the conversion of $3,513 of outstanding principal
on the First TJC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
September 24, 2015, the Company issued 6,410,256 shares of common stock pursuant to the conversion of $10,000 of outstanding principal
on the First Tangiers Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
August 24, 2015, the Company issued 7,000,000 shares of common stock pursuant to the conversion of $7,000 of outstanding principal
on the First WHC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
August 4, 2015, the Company issued 20,000,000 shares of common stock pursuant to the conversion of $40,600 of outstanding principal
on the First Collier Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
July 30, 2015, the Company issued 7,194,245 shares of common stock pursuant to the conversion of $10,000 of outstanding principal
on the Second Group 10 Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
July 28, 2015, the Company issued 6,666,667 shares of common stock pursuant to the conversion of $10,000 of outstanding principal
on the First WHC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
June 23, 2015, the Company issued 5,641,026 shares of common stock pursuant to the conversion of $11,000 of outstanding principal
on the First Tangiers Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
June 18, 2015, the Company issued 4,383,562 shares of common stock pursuant to the conversion of $10,000 of outstanding principal
on the First WHC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
June 15, 2015, the Company issued 2,976,191 shares of common stock pursuant to the conversion of $7,500 of outstanding principal
on the First Tangiers Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
June 11, 2015, the Company issued 5,684,421 shares of common stock pursuant to the conversion of $15,121, consisting of $6,000
of outstanding principal and $9,121 of interest, on the First Typenex Note. The note was converted in accordance with the conversion
terms; therefore no gain or loss has been recognized.
On
June 9, 2015, the Company issued 11,269,231 shares of common stock pursuant to the conversion of $29,300 of outstanding principal
on the First KBM Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
May 29, 2015, the Company issued 5,882,353 shares of common stock pursuant to the conversion of $20,000 of outstanding principal
on the First KBM Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
May 21, 2015, the Company issued 3,191,489 shares of common stock pursuant to the conversion of $15,000 of outstanding principal
on the First KBM Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
May 15, 2015, the Company issued 1,727,116 shares of common stock pursuant to the conversion of $10,000 of outstanding principal
on the First Tangiers Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
On
May 13, 2015, the Company issued 2,500,000 shares of common stock pursuant to the conversion of $15,000 of outstanding principal
on the First KBM Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
May 7, 2015, the Company issued 2,112,676 shares of common stock pursuant to the conversion of $15,000 of outstanding principal
on the First KBM Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
April 29, 2015, the Company issued 2,360,140 shares of common stock pursuant to the conversion of $13,500 of outstanding principal
on the First Typenex Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
April 27, 2015, the Company issued 2,336,449 shares of common stock pursuant to the conversion of $15,000 of outstanding principal
on the First Tangiers Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
April 16, 2015, the Company issued 2,750,000 shares of common stock pursuant to the conversion of $14,479 of outstanding principal
on the First Vista Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
April 14, 2015, the Company issued 1,975,309 shares of common stock pursuant to the conversion of $10,000 of outstanding principal
on the First WHC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
April 2, 2015, the Company issued 1,975,309 shares of common stock pursuant to the conversion of $10,000 of outstanding principal
on the First WHC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
April 1, 2015, the Company issued 2,428,058 shares of common stock pursuant to the conversion of $13,500 of outstanding principal
on the First Typenex Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
March 23, 2015, the Company issued 1,777,778 shares of common stock pursuant to the conversion of $10,000 of outstanding principal
on the First WHC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
March 10, 2015, the Company issued 2,000,000 shares of common stock pursuant to the conversion of $10,000 of outstanding principal
on the First Vista Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
March 10, 2015, the Company issued 1,861,042 shares of common stock pursuant to the conversion of $15,000 of outstanding principal
on the First Typenex Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
February 24, 2015, the Company issued 2,068,966 shares of common stock pursuant to the conversion of $18,000 of outstanding principal
on the First WHC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
February 20, 2015, the Company issued 1,463,557 shares of common stock pursuant to the conversion of $15,000 of outstanding principal
on the First Typenex Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
February 10, 2015, the Company issued 1,000,000 shares of common stock pursuant to the conversion of $9,685 of outstanding principal
on the First Vista Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
On
February 5, 2015, the Company issued 1,479,290 shares of common stock pursuant to the conversion of $15,000 of outstanding principal
on the First Typenex Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
On
February 2, 2015, the Company issued 1,133,914 shares of common stock pursuant to the conversion of $9,536 of outstanding debt,
consisting of $6,000 of principal and $3,536 of interest, on the First Group 10 Note. The note was converted in accordance with
the conversion terms; therefore no gain or loss has been recognized.
On
January 27, 2015, the Company issued 1,190,477 shares of common stock pursuant to the conversion of $10,000 of outstanding principal
on the First WHC Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been recognized.
On
January 2, 2015, the Company issued 1,415,571 shares of common stock pursuant to the conversion of $14,000 of outstanding principal
on the First Group 10 Note. The note was converted in accordance with the conversion terms; therefore no gain or loss has been
recognized.
Common
Stock Issued for Services (2016)
On
October 14, 2016, the Company has agreed to issue 1,000,000 shares of common stock to the landlord of our leased facility as payment
for deferring our rent on behalf of our subsidiary, GLFH. The total fair value of the common stock was $11,400 based on the closing
price of the Company’s common stock on the date of grant. The shares were subsequently issued on February 2, 2017.
On
October 14, 2016, the Company issued 1,250,000 shares of common stock for professional services to a consultant for services provided
on behalf of our subsidiary, GLFH. The total fair value of the common stock was $14,250 based on the closing price of the Company’s
common stock on the date of grant.
On
October 14, 2016, the Company issued 750,000 shares of common stock for cultivation services to an independent contractor for
services provided on behalf of our subsidiary, GLFH. The total fair value of the common stock was $8,550 based on the closing
price of the Company’s common stock on the date of grant.
On
October 14, 2016, the Company issued 500,000 shares of common stock for construction services to a contractor for services provided
on behalf of our subsidiary, GLFH. The total fair value of the common stock was $5,700 based on the closing price of the Company’s
common stock on the date of grant.
On
October 14, 2016, the Company issued 500,000 shares of common stock for cultivation services to an independent contractor for
services provided on behalf of our subsidiary, GLFH. The total fair value of the common stock was $5,700 based on the closing
price of the Company’s common stock on the date of grant.
On
October 14, 2016, the Company issued 500,000 shares of common stock for production services to an independent contractor for services
provided on behalf of our subsidiary, GLFH. The total fair value of the common stock was $5,700 based on the closing price of
the Company’s common stock on the date of grant.
On
October 14, 2016, the Company issued 500,000 shares of common stock for website development services to an independent contractor.
The total fair value of the common stock was $5,700 based on the closing price of the Company’s common stock on the date
of grant.
On
October 14, 2016, the Company has issued 2,500,000 shares of common stock to a vendor as payment for $20,000 of outstanding video
editing services. The total fair value of the common stock was $28,500 based on the closing price of the Company’s common
stock on the date of grant.
On
September 2, 2016, the Company issued 20,400,000 shares of common stock to its CEO in satisfaction of unpaid compensation. The
total fair value of the common stock was $102,000 based on the closing price of the Company’s common stock on the date of
grant.
On
September 2, 2016, the Company issued 3,000,000 shares of common stock to each of its three Directors for services performed.
The total fair value of the common stock was $45,000 based on the closing price of the Company’s common stock on the date
of grant.
On
July 15, 2016, as part of its engagement letter with JSBarkats, securities counsel, the Company issued 2,000,000 shares of common
stock for services to JS Barkats, PLLC. The total fair value of the common stock was $7,000 based on the closing price of the
Company’s common stock on the date of grant.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Common
Stock Issuances for Services (2015)
On
December 29, 2015, the Company issued 3,000,000 shares of restricted common stock to Mr. Michael Berk for director services provided.
The total fair value of the common stock was $5,400 based on the closing price of the Company’s common stock on the date
of grant.
On
December 29, 2015, the Company issued 3,000,000 shares of restricted common stock to Mr. Doug Miller for director services provided.
The total fair value of the common stock was $5,400 based on the closing price of the Company’s common stock on the date
of grant.
On
December 29, 2015, the Company issued 3,000,000 shares of restricted common stock for website development services provided. The
total fair value of the common stock was $5,400 based on the closing price of the Company’s common stock on the date of
grant.
On
December 29, 2015, the Company issued 3,000,000 shares of restricted common stock for consulting services provided. The total
fair value of the common stock was $5,400 based on the closing price of the Company’s common stock on the date of grant.
On
December 29, 2015, the Company issued 1,500,000 shares of restricted common stock for video production services provided. The
total fair value of the common stock was $2,700 based on the closing price of the Company’s common stock on the date of
grant.
On
December 29, 2015, the Company issued 500,000 shares of restricted common stock for legal services provided. The total fair value
of the common stock was $900 based on the closing price of the Company’s common stock on the date of grant.
On
October 26, 2015, the Company issued 2,500,000 shares of S-8 common stock for professional services provided. The total fair value
of the common stock was $6,000 based on the closing price of the Company’s common stock on the date of grant.
On
April 29, 2015, the Company issued 656,735 shares of common stock pursuant to a forbearance agreement as financing costs in consideration
for penalties on the April 29, 2015 conversion on the First Typenex Note. The total fair value of the common stock was $10,508
based on the closing price of the Company’s common stock on the date of grant.
On
April 15, 2015, the Company issued 500,000 shares of restricted common stock for professional services provided. The total fair
value of the common stock was $6,000 based on the closing price of the Company’s common stock on the date of grant.
On
April 15, 2015, the Company issued 500,000 shares of restricted common stock for platform development services provided. The total
fair value of the common stock was $6,000 based on the closing price of the Company’s common stock on the date of grant.
On
April 15, 2015, the Company issued 1,500,000 shares of restricted common stock for video production services provided. The total
fair value of the common stock was $18,000 based on the closing price of the Company’s common stock on the date of grant.
On
April 15, 2015, the Company issued 600,000 shares of S-8 common stock for professional services provided. The total fair value
of the common stock was $7,200 based on the closing price of the Company’s common stock on the date of grant.
On
April 15, 2015, the Company issued 500,000 shares of S-8 common stock for professional services provided. The total fair value
of the common stock was $6,000 based on the closing price of the Company’s common stock on the date of grant.
On
April 15, 2015, the Company issued 500,000 shares of S-8 common stock for professional services provided. The total fair value
of the common stock was $6,000 based on the closing price of the Company’s common stock on the date of grant.
On
January 25, 2015, the Company issued 500,000 shares of restricted common stock for professional services provided. The total fair
value of the common stock was $8,200 based on the closing price of the Company’s common stock on the date of grant.
On
January 25, 2015, the Company issued 500,000 shares of restricted common stock for professional services provided. The total fair
value of the common stock was $8,200 based on the closing price of the Company’s common stock on the date of grant.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
On
January 25, 2015, the Company issued 500,000 shares of restricted common stock for professional services provided. The total fair
value of the common stock was $8,200 based on the closing price of the Company’s common stock on the date of grant.
On
January 25, 2015, the Company issued 500,000 shares of restricted common stock for professional services provided. The total fair
value of the common stock was $8,200 based on the closing price of the Company’s common stock on the date of grant.
On
January 25, 2015, the Company issued 500,000 shares of restricted common stock for platform development services provided. The
total fair value of the common stock was $8,200 based on the closing price of the Company’s common stock on the date of
grant.
On
January 25, 2015, the Company issued 1,600,000 shares of restricted common stock for video production services provided. The total
fair value of the common stock was $26,240 based on the closing price of the Company’s common stock on the date of grant.
On
January 25, 2015, the Company issued 1,500,000 shares of common stock to its CEO as compensation for services as a Director. The
total fair value of the common stock was $24,600 based on the closing price of the Company’s common stock on the date of
grant.
On
January 25, 2015, the Company issued 1,500,000 shares of common stock to its President of Programming as compensation for services
as a Director. The total fair value of the common stock was $24,600 based on the closing price of the Company’s common stock
on the date of grant.
On
January 25, 2015, the Company issued 1,500,000 shares of common stock to one of its Directors as compensation for services as
a Director. The total fair value of the common stock was $24,600 based on the closing price of the Company’s common stock
on the date of grant.
On
January 25, 2015, the Company issued 500,000 shares of S-8 common stock for professional services provided. The total fair value
of the common stock was $8,200 based on the closing price of the Company’s common stock on the date of grant.
On
January 25, 2015, the Company issued 500,000 shares of S-8 common stock for professional services provided. The total fair value
of the common stock was $8,200 based on the closing price of the Company’s common stock on the date of grant.
Contributed
Capital
During
May of 2016, a note holder and potential investor in Green Leaf Farms Holdings contributed $14,000 to pay an installment on a
debt settlement agreement with Tangiers Investment Group.
Note
15 – Common Stock Options
Common
Stock Options Granted (2016)
On
June 1, 2016, the Company awarded a lender fully vested options to acquire up to 5,000,000 shares of common stock, exercisable
at $0.01 per share over a four (4) week period from the origination date, which expired on July 1, 2016. The estimated value using
the Black-Scholes Pricing Model, based on a volatility rate of 227% and a call option value of $0.0001, was $432.
On
June 1, 2016, the Company awarded the same lender fully vested options to acquire up to 3,000,000 shares of common stock, exercisable
at $0.08 per share over a twenty four (24) month period from the origination date. The estimated value using the Black-Scholes
Pricing Model, based on a volatility rate of 227% and a call option value of $0.0022, was $6,564.
Common
Stock Options Granted (2015)
No
options were granted during the year ended December 31, 2015.
Common
Stock Options Expired (2016)
On
July 1, 2016, a total of 5,000,000 options with a strike price of $0.01 per share 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 Options Expired (2015)
On
February 29, 2015, a total of 450,000 options amongst two option holders with a strike price of $0.08 per share expired.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
The
following is a summary of information about the Common Stock Options outstanding at December 31, 2016.
|
|
|
|
|
|
|
|
|
|
Shares Underlying
|
|
Shares
Underlying Options Outstanding
|
|
|
Options
Exercisable
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Average
|
|
Weighted
|
|
|
Shares
|
|
|
Weighted
|
|
Range of
|
|
Underlying
|
|
|
Remaining
|
|
Average
|
|
|
Underlying
|
|
|
Average
|
|
Exercise
|
|
Options
|
|
|
Contractual
|
|
Exercise
|
|
|
Options
|
|
|
Exercise
|
|
Prices
|
|
Outstanding
|
|
|
Life
|
|
Price
|
|
|
Exercisable
|
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.01
– $0.08
|
|
|
13,350,000
|
|
|
1.02
years
|
|
$
|
0.06
|
|
|
|
13,350,000
|
|
|
$
|
0.06
|
|
The
fair value of each option grant is estimated on the date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants under the fixed option plan:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
|
|
|
|
|
|
|
Average risk-free interest
rates
|
|
|
0.59
|
%
|
|
|
N/A%
|
|
Average expected life (in years)
|
|
|
1
|
|
|
|
N/A
|
|
Volatility
|
|
|
227
|
%
|
|
|
N/A%
|
|
The
Black-Scholes option pricing model was developed for use in estimating the fair value of short-term traded options that have no
vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions
including expected stock price volatility. Because the Company’s common stock options have characteristics significantly
different from those of traded options and because changes in the subjective input assumptions can materially affect the fair
value estimate, in management’s opinion the existing models do not necessarily provide a reliable single measure of the
fair value of its common stock options. During 2016 and 2015, there were no options granted with an exercise price below the fair
value of the underlying stock at the grant date.
The
weighted average fair value of options granted with exercise prices at the current fair value of the underlying stock during the
years ended December 31, 2016 and 2015 was approximately $0.001 and $0.05 per option, respectively.
The
following is a summary of activity of outstanding common stock options:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
Number
|
|
|
Exercise
|
|
|
|
of
Shares
|
|
|
Price
|
|
|
|
|
|
|
|
|
Balance, December 31, 2014
|
|
|
11,300,000
|
|
|
$
|
0.05
|
|
Options
expired
|
|
|
(450,000
|
)
|
|
|
(0.08
|
)
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2015
|
|
|
10,850,000
|
|
|
|
0.05
|
|
Options expired
|
|
|
(5,500,000
|
)
|
|
|
(0.01
|
)
|
Options
granted
|
|
|
8,000,000
|
|
|
|
0.04
|
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2016
|
|
|
13,350,000
|
|
|
$
|
0.06
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
December 31, 2016
|
|
|
13,350,000
|
|
|
$
|
0.06
|
|
No
expense was recognized from the amortization of common stock options during the years ended December 31, 2016 and 2015.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
16 – Common Stock Warrants
Warrants
Granted (2016)
On
November 21, 2016, the Company entered into a letter agreement (“Financing Agreement”) with SK L-43, LLC providing
for the making of loans by the Investor to the Company, at the Investor’s option (i) in the aggregate principal amount of
$925,000 by December 15, 2016 (the “Initial Advances”), and (ii) in the amounts of $1,500,000 each on or before each
of April 1, 2017 and May 1, 2017 (the “Additional Advances” and, together with the Initial Advances, the “Advances”).
Pursuant
to the Financing Agreement, SK L-43, LLC was issued warrants to purchase shares of the Company’s common stock as additional
consideration, as follows:
Advance
Date
|
|
Advance
Amount
|
|
|
Warrant
A (Number of Warrant Shares)
|
|
|
Warrant
A Exercise Price
|
|
|
Warrant
B (Number of Warrant Shares)
|
|
|
Warrant
B Exercise Price
|
|
|
Warrant
C (Number of Warrant Shares)
|
|
|
Warrant
C Exercise Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
November 02, 2016
|
|
$
|
125,000.00
|
|
|
|
4,166,667
|
|
|
$
|
0.03
|
|
|
|
4,166,667
|
|
|
$
|
0.06
|
|
|
|
4,166,667
|
|
|
$
|
0.06
|
|
November 21, 2016
|
|
$
|
267,000.00
|
|
|
|
8,900,000
|
|
|
$
|
0.03
|
|
|
|
8,900,000
|
|
|
$
|
0.06
|
|
|
|
8,900,000
|
|
|
$
|
0.06
|
|
December 02, 2016
|
|
$
|
267,000.00
|
|
|
|
8,900,000
|
|
|
$
|
0.03
|
|
|
|
8,900,000
|
|
|
$
|
0.06
|
|
|
|
8,900,000
|
|
|
$
|
0.06
|
|
December 19, 2016
|
|
$
|
266,000.00
|
|
|
|
8,866,667
|
|
|
$
|
0.03
|
|
|
|
8,866,667
|
|
|
$
|
0.06
|
|
|
|
8,866,667
|
|
|
$
|
0.06
|
|
Total
|
|
$
|
925,000.00
|
|
|
|
30,833,334
|
|
|
|
|
|
|
|
30,833,334
|
|
|
|
|
|
|
|
30,833,334
|
|
|
|
|
|
Each
Warrant will vest and become exercisable four months following its date of issuance and remain exercisable for a period of two
years thereafter; provided, however, that if the Company’s Common Stock on each of the 30 trading days preceding the vesting
date of a Warrant equals or exceeds 300% of the exercise price for such Warrant, then the Company will have the right to reduce
the length of the exercise period for such Warrant to 45 days following delivery of notice to SK L-43, LLC.
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 was amortized over the life of the loan as a debt discount. The note carried
a default rate of 18% and an additional 1,000,000 warrants issued each 30 day period the note remained unpaid, however, the note
was repaid out of the proceeds from the exercised warrants on August 5, 2016.
Common
Stock Warrants Granted (2015)
No
warrants were granted during the year ended December 31, 2015.
Common
Stock Warrants Expired (2016)
On
April 8, 2016, a total of 200,000 warrants with a strike price of $0.06 per share expired.
On
March 28, 2016, a total of 2,000,000 warrants with a strike price of $0.06 per share expired.
On
January 30, 2016, a total of 1,000,000 warrants with a strike price of $0.07 per share expired.
Common
Stock Warrants Expired (2015)
On
April 19, 2015, a total of 120,000 warrants held by our CEO with a strike price of $0.15 per share expired.
On
February 14, 2015, a total of 80,000 warrants held by our CEO with a strike price of $0.15 per share expired.
On
January 15, 2015, a total of 250,000 warrants with a strike price of $0.15 per share expired.
On
January 1, 2015, a total of 300,000 warrants with a strike price of $0.08 per share expired.
Common
Stock Warrants Exercised
On
August 5, 2016, the Company issued 9,000,000 shares of its common stock pursuant to the exercise of an equal number warrants in
exchange for proceeds of $45,000 that were used to repay the corresponding First SCP Note.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
No
warrants were exercised during the year ended December 31, 2015.
The
following is a summary of information about the Common Stock Warrants outstanding at December 31, 2016.
|
|
|
|
|
|
|
|
|
|
Shares
Underlying
|
|
Shares
Underlying Warrants Outstanding
|
|
|
Warrants
Exercisable
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
|
|
Shares
|
|
|
Average
|
|
Weighted
|
|
|
Shares
|
|
|
Weighted
|
|
Range of
|
|
Underlying
|
|
|
Remaining
|
|
Average
|
|
|
Underlying
|
|
|
Average
|
|
Exercise
|
|
Warrants
|
|
|
Contractual
|
|
Exercise
|
|
|
Warrants
|
|
|
Exercise
|
|
Prices
|
|
Outstanding
|
|
|
Life
|
|
Price
|
|
|
Exercisable
|
|
|
Price
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.03
- $0.18
|
|
|
102,700,002
|
|
|
2.6
years
|
|
$
|
0.05
|
|
|
|
102,700,002
|
|
|
$
|
0.05
|
|
The
fair value of each warrant grant is estimated on the date of grant using the Black-Scholes option pricing model with the following
weighted-average assumptions used for grants under the fixed option plan:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
|
|
|
|
|
|
|
Average risk-free interest
rates
|
|
|
1.13
|
%
|
|
|
N/A
|
|
Average expected life (in years)
|
|
|
2.4
|
|
|
|
N/A
|
|
Volatility
|
|
|
238
|
%
|
|
|
N/A
|
|
The
Black-Scholes option pricing model was developed for use in estimating the fair value of short-term traded options that have no
vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions
including expected stock price volatility. Because the Company’s common stock warrants have characteristics significantly
different from those of traded options and because changes in the subjective input assumptions can materially affect the fair
value estimate, in management’s opinion the existing models do not necessarily provide a reliable single measure of the
fair value of its common stock warrants. During 2016 and 2015, there were no warrants granted with an exercise price below the
fair value of the underlying stock at the grant date.
The
weighted average fair value of warrants granted with exercise prices at the current fair value of the underlying stock during
the years ended December 31, 2016 and 2015 was approximately $0.01 and $0.05 per warrant, respectively.
The
following is a summary of activity of outstanding common stock warrants:
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
Number
|
|
|
Exercise
|
|
|
|
of
Shares
|
|
|
Price
|
|
|
|
|
|
|
|
|
Balance, December 31, 2014
|
|
|
14,150,000
|
|
|
$
|
0.050
|
|
Warrants
expired
|
|
|
(750,000
|
)
|
|
|
(0.120
|
)
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2015
|
|
|
13,400,000
|
|
|
|
0.050
|
|
Warrants expired
|
|
|
(3,200,000
|
)
|
|
|
(0.065
|
)
|
Warrants granted
|
|
|
101,500,002
|
|
|
|
0.046
|
|
Warrants
exercised
|
|
|
(9,000,000
|
)
|
|
|
(0.005
|
)
|
|
|
|
|
|
|
|
|
|
Balance, December
31, 2016
|
|
|
102,700,002
|
|
|
$
|
0.050
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
December 31, 2016
|
|
|
102,700,002
|
|
|
$
|
0.050
|
|
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
17 – Gain on Debt Extinguishment
The
Company recognized debt forgiveness in the total amount of $165,615 and $11,282 during the years ended December 31, 2016 and 2015,
respectively, as presented in other income within the Statements of Operations.
Debt
Extinguishments (2016)
On
November 3, 2016, $92,110 of outstanding debts, consisting of $62,409 of principal and $29,701 of interest, was forgiven on outstanding
debts owed to Vista Capital Investments, LLC.
On
September 22, 2016, the Company entered into a payoff agreement to pay WHC Capital, LLC a total of $100,000 in five installments
ranging between $15,000 and $25,000 payable from October 21, 2016 through February 21, 2017 in satisfaction of a total of $114,002
of principal and unpaid interest on two convertible notes originally entered into with WHC on August 24, 2015 and August 19, 2014,
resulting in a gain of $14,002 on debt extinguishment. In addition, $20,000 of outstanding debts, consisting of $12,980 of principal
and $7,020 of interest, was forgiven on outstanding debts owed to Vista Capital Investments, LLC, which is a company under common
control with WHC Capital.
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 were subsequently cancelled as paid in full on August 30, 2016.
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 was subsequently cancelled
as paid in full on June 21, 2016.
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 September 30, 2016.
Debt
Extinguishments (2015)
On
December 29, 2015, we settled outstanding trade accounts payable in the total amount of $7,500 with the issuance of 1,500,000
shares of common stock valued at $2,700. The creditor forgave the remaining $4,800, resulting in a gain on debt settlements of
$4,800 as presented in other income at December 31, 2015.
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 December 31, 2015.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
18 – 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 years ended December 31, 2016 and 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 December 31, 2016, the Company had approximately $22,179,000 of federal net operating losses. The net operating
loss carry forwards, if not utilized, will begin to expire in 2025.
The
components of the Company’s deferred tax asset are as follows:
|
|
December
31,
|
|
|
|
2016
|
|
|
2015
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
Net
operating loss carry forwards
|
|
$
|
7,763,000
|
|
|
$
|
7,203,700
|
|
|
|
|
|
|
|
|
|
|
Net deferred tax assets before valuation
allowance
|
|
$
|
7,763,000
|
|
|
$
|
7,203,700
|
|
Less:
Valuation allowance
|
|
|
(7,763,000
|
)
|
|
|
(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 December 31, 2016 and 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:
|
|
December
31,
|
|
|
|
2016
|
|
|
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
19 – Future Minimum Lease Payments
Effective
July 1, 2013, we leased our office space in Las Vegas, Nevada under a 3-year operating lease expiring August 31, 2016. The lease
provides for increases in future minimum annual rental payments based on defined annual increases beginning with monthly payments
of $2,997 and culminating in a monthly payment of $3,191 in 2016. The lease contains provisions for future rent increases and
rent free periods for the first two months of the lease. The total amount of rental payments due over the lease term is being
charged to rent expense according to the straight-line method over the term of the lease. The difference between rent expense
recorded and the amount paid was credited or charged to “Deferred rent obligation,” in the accompanying Balance Sheets.
The lease is now on a month-to-month basis.
On
October 14, 2015, Green Leaf Farms Holding, Inc. (“GLFH”) and SFC Leasing, LLP entered into a settlement and release
of claims agreement that terminated GLFH’s lease that originated on April 16, 2015 for property located at 203 E. Mayflower
Avenue in North Las Vegas. The Company paid a total of $83,000 on this lease prior to the termination. The Company subsequently
obtained a new building location in order to transition its provisional medical marijuana production and cultivation licenses
to an approved status, which is necessary to implement their plan to enter into the medical marijuana industry. Pursuant to NAC
453A.324, the State of NV has imposed a deadline for the timeline to implement operations, which is currently approximately May
of 2016. If GLFH is not making significant progress towards being fully operational by then their licenses may be revoked.
On
March 4, 2016, GLFH leased a commercial building from Belmont NLV, LLC that originated on April 17, 2016 for its medical marijuana
production and cultivation business in North Las Vegas. The 5-year operating lease expires on April 16, 2021 and is renewable
for another 5 year term, required a $50,000 security deposit and includes an option to purchase the building for $3.8 million
during the third, fourth and fifth years of the lease. The lease provides for increases in future minimum annual rental payments
based on defined annual increases beginning with monthly payments of $26,786 and culminating in a monthly payment of $30,148 in
2021. The lease contains provisions for future rent increases. The total amount of rental payments due over the lease term is
being charged to rent expense according to the straight-line method over the term of the lease. The difference between rent expense
recorded and the amount paid will be credited or charged to “Deferred rent obligation,” in the Balance Sheets.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Future
minimum lease payments required under operating leases according to our fiscal year-end are as follows:
Year Ending
|
|
|
|
December
31,
|
|
Amount
|
|
2017
|
|
$
|
327,857
|
|
2018
|
|
|
337,693
|
|
2019
|
|
|
347,824
|
|
2020
|
|
|
358,258
|
|
2021
|
|
|
107,526
|
|
Thereafter
|
|
|
-
|
|
|
|
$
|
1,479,158
|
|
Rent
expense was $278,589 and $118,123 for the years ended December 31, 2016 and 2015, respectively.
Note
20 – 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 $61,998 and $29,520 during the years ended December 31, 2016
and 2015, respectively.
Effects
of changes in Players Network’s ownership interest in its subsidiary during the years ended December 31, 2016 and 2015 are
as follows:
|
|
December
31,
2016
|
|
|
December
31,
2015
|
|
|
|
|
|
|
|
|
Net loss attributable to
parent
|
|
$
|
(335,426
|
)
|
|
$
|
(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
|
)
|
Change from net
loss attributable to the parent and transfers to the non-controlling interest
|
|
$
|
(335,426
|
)
|
|
$
|
(309,313
|
)
|
Note
21 – 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.
Note
22 – Subsequent Events
Common
Stock Sales
On
January 26, 2017, the Company sold 14,000,000 units, consisting of 14,000,000 shares of common stock and 14,000,000 warrants exercisable
at $0.05 per share over the following 2 years, to its CEO in exchange for proceeds of $350,000.
Common
Stock Issued for Services
On
February 2, 2017, we issued 1,000,000 shares of common stock to the landlord of our leased facility as payment on a subscription
payable from an October 14, 2016 award.
On
January 22, 2017, the Company issued 2,000,000 shares of common stock to its CEO for board services performed. The total fair
value of the common stock was $34,600 based on the closing price of the Company’s common stock on the date of grant.
PLAYERS
NETWORK
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
On
January 22, 2017, the Company issued 2,000,000 shares of common stock one of its three Directors for board services performed.
The total fair value of the common stock was $34,600 based on the closing price of the Company’s common stock on the date
of grant.
On
January 22, 2017, the Company issued 3,000,000 shares of common stock one of its three Directors for board services performed.
The total fair value of the common stock was $51,900 based on the closing price of the Company’s common stock on the date
of grant.
On
January 22, 2017, the Company issued 200,000 shares of common stock for professional services to a consultant for services provided.
The total fair value of the common stock was $3,460 based on the closing price of the Company’s common stock on the date
of grant.
On
January 22, 2017, the Company issued 500,000 shares of common stock for professional services to a consultant for services provided
on behalf of our subsidiary, GLFH. The total fair value of the common stock was $8,650 based on the closing price of the Company’s
common stock on the date of grant.
On
January 22, 2017, the Company issued 150,000 shares of common stock for administrative services to a consultant on behalf of our
subsidiary, GLFH. The total fair value of the common stock was $2,595 based on the closing price of the Company’s common
stock on the date of grant.
On
January 22, 2017, the Company issued 150,000 shares of common stock for administrative services to a consultant for services provided.
The total fair value of the common stock was $2,595 based on the closing price of the Company’s common stock on the date
of grant.
Common
Stock Options Expired
On
March 1, 2017, a total of 1,200,000 warrants with a strike price of $0.08 per share expired.
On
January 8, 2017, a total of 1,150,000 warrants with a strike price of $0.08 per share expired.