Quarterly Report (10-q)

Date : 05/16/2017 @ 2:41PM
Source : Edgar (US Regulatory)
Stock : Players Network (the) (QB) (PNTV)
Quote : 0.0598  0.0 (0.00%) @ 7:16AM

Quarterly Report (10-q)

 

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

for the quarterly period ended March 31, 2017.

 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

for the transition period from _________ to _________.

 

Commission file number: 000-29363

 

(Exact name of registrant as specified in its charter)

 

Nevada   88-0343702

(State or other jurisdiction of

incorporation or organization)

 

(IRS Employer

Identification No.)

 

1771 E. Flamingo Road, #201-A

Las Vegas, NV

  89119
(Address of principal executive offices)   (Zip Code)

 

(702) 840-3270

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes [  ] No [X]

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes [X] No [  ]

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer [  ] Accelerated filer [  ]
   

Non-accelerated filer [  ]

(Do not check if a smaller reporting company)

Smaller reporting company [X]

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes [  ] No [X]

 

The number of shares outstanding of the Registrant’s Common Stock on May 12, 2017 was 551,673,658.

 

 

 

     

 

 

PLAYERS NETWORK

FORM 10-Q

Quarterly Period Ended March 31, 2017

 

INDEX

 

  Page
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS 1
PART I. FINANCIAL INFORMATION 2
Item 1. Financial Statements 2
  Balance Sheets as of March 31, 2017 (Unaudited) and December 31, 2016 2
  Statements of Operations for the Three Months ended March 31, 2017 and 2016 (Unaudited) 3
  Statements of Cash Flows for the Three Months ended March 31, 2017 and 2016 (Unaudited) 4
  Notes to the Condensed Consolidated financial statements (Unaudited) 5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 18
Item 3. Quantitative and Qualitative Disclosures About Market Risk 25
Item 4. Controls and Procedures 25
     
PART II. OTHER INFORMATION 25
Item 1. Legal Proceedings 25
Item 1A. Risk Factors 25
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 25
Item 3. Defaults Upon Senior Securities 26
Item 4. Mine Safety Disclosures 26
Item 5. Other Information 26
Item 6. Exhibits 27
   
SIGNATURES 28

 

     

 

 

SPECIAL NOTE REGARDING FORWARD—LOOKING STATEMENTS

 

On one or more occasions, we may make forward-looking statements in this Quarterly Report on Form 10-Q regarding our assumptions, projections, expectations, targets, intentions or beliefs about future events. Words or phrases such as “anticipates,” “may,” “will,” “should,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “targets,” “will likely result,” “will continue” or similar expressions identify forward-looking statements. Readers are cautioned that these forward-looking statements are only predictions and are subject to risks, uncertainties, and assumptions that are difficult to predict, including those identified in our Annual Report on Form 10-K. Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. However, your attention is directed to any further disclosures made on related subjects in our subsequent annual, periodic and current reports and other documents filed or furnished with the Securities and Exchange Commission.

 

Unless the context requires otherwise, references to “we,” “us,” “our,” and the “Company” refer specifically to Players Network.

 

    1  

 

 

PART I - FINANCIAL INFORMATION

 

Item 1 - Financial Statements

 

PLAYERS NETWORK

CONDENSED CONSOLIDATED BALANCE SHEETS

 

    March 31,
2017
    December 31,
2016
 
      (Unaudited)          
Assets                
                 
Current assets:                
Cash   $ 11,326     $ 145,119  
Other current assets     77,839       85,150  
Total current assets     89,165       230,269  
                 
Fixed assets, net     33,678       29,128  
Construction in progress     334,115       239,220  
                 
Total Assets   $ 456,958     $ 498,617  
                 
Liabilities and Stockholders’ (Deficit)                
                 
Current liabilities:                
Accounts payable   $ 306,266     $ 298,861  
Accrued expenses     320,226       293,418  
Deferred rent obligations     20,552       15,656  
Settlements payable     40,000       70,000  
Convertible debentures, net of discounts of $225,821 and $241,634 at March 31, 2017 and December 31, 2016, respectively     74,179       58,366  
Short term debt, net of discounts of $-0- and $60 at March 31, 2017 and December 31, 2016, respectively     143,000       142,940  
Derivative liabilities     622,599       482,674  
Total current liabilities     1,526,822       1,361,915  
                 
Long term debt, net of discounts of $771,106 and $885,271 at March 31, 2017 and December 31, 2016, respectively     153,894       39,729  
Total Liabilities     1,680,716       1,401,644  
                 
Stockholders’ (Deficit):                
Series A convertible preferred stock, $0.001 par value, 2,000,000 shares authorized; 2,000,000 shares issued and outstanding     2,000       2,000  
Series C convertible preferred stock, $0.001 par value, 12,000,000 shares authorized; 12,000,000 shares issued and outstanding     12,000       12,000  
Common stock, $0.001 par value, 1,200,000,000 shares authorized; 547,394,239 and 524,394,239 shares issued and outstanding at March 31, 2017 and December 31, 2016, respectively     547,394       524,394  
Additional paid-in capital     29,900,073       29,463,343  
Subscriptions payable, consisting of -0- and 1,000,000 shares at March 31, 2017 and December 31, 2016, respectively    

-

      11,400  
Accumulated (deficit)     (31,381,015 )     (30,639,417 )
      (919,548 )     (626,280 )
Noncontrolling Interest     (304,210 )     (276,747 )
Total Stockholders’ (Deficit)     (1,223,758 )     (903,027 )
                 
Total Liabilities and Stockholders’ (Deficit)   $ 456,958     $ 498,617  

 

See accompanying notes to financial statements.

 

    2  

 

 

PLAYERS NETWORK

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

 

    For the Three Months Ended  
    March 31,  
    2017     2016  
Revenue:   $ 91     $ 101  
                 
Expenses:                
Direct operating costs     21,202       8,810  
General and administrative     418,436       275,238  
Officer salaries     78,350       43,750  
Depreciation and amortization     2,774       7,536  
Total operating expenses     520,762       335,334  
                 
Operating loss     (520,671 )     (335,233 )
                 
Other income (expense):                
Gain on debt extinguishment, net    

-

      35,231  
Interest expense     (148,535 )     (178,924 )
Change in derivative liabilities     (99,855 )     (263,381 )
Total other income (expense)     (248,390 )     (407,074 )
                 
Net loss   $ (769,061 )   $ (742,307 )
Less: Net loss attributable to the noncontrolling interest     27,463       3,696  
Net loss attributable to Players Network   $ (741,598 )   $ (738,611 )
                 
Weighted average number of common shares outstanding - basic and fully diluted     541,027,572       367,665,999  
                 
Net loss per share - basic and fully diluted   $ (0.00 )   $ (0.00 )

 

See accompanying notes to financial statements.

 

    3  

 

 

PLAYERS NETWORK

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

    For the Three Months Ended  
    March 31,  
    2017     2016  
Cash flows from operating activities                
Net loss   $ (741,598 )   $ (738,611 )
Minority interest in net loss     (27,463 )     (3,696 )
Adjustments to reconcile net loss to net cash used in operating activities:                
Depreciation and amortization expense     2,774       7,536  
Gain on debt extinguishment, net     -       (35,231 )
Change in fair market value of derivative liabilities     99,855       263,381  
Amortization of debt discounts     130,038       167,710  
Stock issued for services     17,300       -  
Stock issued for compensation, related party     121,100       192,000  
Decrease (increase) in assets:                
Other current assets     7,311       287  
Increase (decrease) in liabilities:                
Checks drawn in excess of available funds     -       (2,154 )
Accounts payable     7,405       (9,673 )
Accrued expenses     26,808       133,885  
Deferred rent obligations     4,896       (793 )
Settlements payable     (30,000 )     (48,998 )
Net cash used in operating activities     (381,574 )     (74,357 )
                 
Cash flows from investing activities                
Purchase of fixed assets and construction in progress     (102,219 )     (10,500 )
Net cash used in investing activities     (102,219 )     (10,500 )
                 
Cash flows from financing activities                
Repayment of convertible debentures     -       (80,890 )
Proceeds from short term debt     -       45,000  
Repayment of short term debt     -       (2,500 )
Proceeds from sale of common stock     350,000       124,600  
Net cash provided by financing activities     350,000       86,210  
                 
Net increase (decrease) in cash     (133,793 )     1,353  
Cash - beginning     145,119       -  
Cash - ending   $ 11,326     $ 1,353  
                 
Supplemental disclosures:                
Interest paid   $ -     $ 230  
Income taxes paid   $ -     $ -  
                 
Non-cash investing and financing activities:                
Convertible debts settled with cash repayment agreements   $ -     $ 150,000  
Value of debt discounts   $ -     $ 7,400  
Value of shares issued for conversion of debt   $ -     $ 13,500  
Value of warrants issued with short term debt   $ 40,070     $ -  
Value of derivative adjustment due to debt conversions   $ -     $ 319,749  

 

See accompanying notes to financial statements.

 

    4  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 1 – Basis of Presentation

 

The interim condensed consolidated financial statements of Players Network (the “Company”) included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to not make the information presented misleading.

 

These statements reflect all adjustments, which in the opinion of management, are necessary for fair presentation of the information contained therein. Except as otherwise disclosed, all such adjustments are of a normal recurring nature. It is suggested that these interim condensed consolidated financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2016 and notes thereto included in the Company’s annual report on Form 10-K filed with the SEC. The Company follows the same accounting policies in the preparation of interim reports.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the following entities, all of which are under common control and ownership:

 

    State of       Abbreviated
Name of Entity   Incorporation   Relationship   Reference
             
Players Network (1)   Nevada   Parent   PNTV
GLFH, LLC (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 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 form of the entity was changed from a Corporation to a Limited Liability Company on May 9, 2017 at which time the name was changed from Green Leaf Farms Holdings, Inc. to GLFH, LLC.

 

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.

 

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.

 

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 March 31, 2017, the Company incurred and capitalized in Construction in Progress $334,115. The estimated cost to be incurred in 2017 and 2018 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.

 

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.

 

    5  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

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 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.

 

    6  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Recent Accounting Pronouncements

 

In March 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2017-7, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost . This ASU requires that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost, which include interest cost and prior service cost or credit, among others, are required to be presented in the income statement separately from the service cost component and outside a subtotal of income from operations, if one is presented. This ASU is effective for the Company’s fiscal year 2018, including interim periods. The Company is currently evaluating the effects that the adoption of this ASU will have on its consolidated financial statements. The Company has not yet concluded how the new standard will impact the consolidated financial statements.

 

In January 2017, the FASB issued ASU No. 2017-3, Accounting Changes and Error Corrections (Topic 250) and Investments-Equity Method and Joint Ventures (Topic 232): Amendments to SEC Paragraphs Pursuant to Staff Announcements at the September 22, 2016 and November 17, 2016 EITF Meetings . This ASU expands disclosures regarding potential material effects to the Company’s consolidated financial statements that may occur when adopting ASU’s in the future. When a company cannot reasonably estimate the impact of adopting an ASU, disclosures are to be expanded to include qualitative disclosures including a description to the effect to the company’s accounting policies, a comparison the existing policies, the status of its process to implement the new standard and any significant implementation matters yet to be addressed. This standard will generally require more disclosure in the Company’s consolidated financial statements when adopted.

 

No other new accounting pronouncements, issued or effective during the three months ended March 31, 2017, 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 condensed consolidated financial statements, the Company has incurred recurring losses from operations resulting in an accumulated deficit of ($31,381,015), and as of March 31, 2017, the Company’s current liabilities exceeded its current assets by $1,437,657. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management is actively pursuing new ventures to increase revenues. In addition, the Company is currently seeking additional sources of capital to fund short term operations. Management believes these factors will contribute toward achieving profitability. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.

 

The financial statements do not include any adjustments that might result from the outcome of any uncertainty as to the Company’s ability to continue as a going concern. These financial statements also do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classifications of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Note 3 – Related Party

 

Officers

 

On 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.

 

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.

 

Officer compensation expense was $78,350 and $43,750, including $34,600 and $-0- of stock based bonuses, at March 31, 2017 and 2016, respectively. The balance owed was $45,656 at March 31, 2017.

 

Board of Directors

 

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.

 

    7  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

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.

 

The following schedule summarizes the valuation of financial instruments at fair value on a non-recurring basis in the balance sheets as of March 31, 2017 and December 31, 2016, respectively:

 

    Fair Value Measurements at March 31, 2017  
    Level 1     Level 2     Level 3  
Assets                  
Cash   $ 11,326     $ -     $ -  
Total assets     11,326       -       -  
Liabilities                        
Convertible debentures, net of discounts of $225,821     -       -       74,179  
Long term debt, net of discounts of $771,106     -       -       153,894  
Short term debt     -       143,000       -  
Derivative liability     -       -       622,599  
Total liabilities     -       143,000       850,672  
    $ 11,326     $ (143,000 )   $ (850,672 )

 

    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 )

 

There were no transfers of financial assets or liabilities between Level 1 and Level 2 inputs for the three months ended March 31, 2017 and the year ended December 31, 2016.

 

Level 2 liabilities consisted of a total of $143,000 of short term, unsecured, promissory notes, net of discounts of $-0- and $60 as of March 31, 2017 and December 31, 2016, respectively. No fair value adjustment was necessary during the three months ended March 31, 2017 and the year ended December 31, 2016.

 

Level 3 liabilities consist of a total of $300,000 of convertible debentures, net of discounts of $225,821 and $241,634 as of March 31, 2017 and December 31, 2016, respectively, along with $925,000 of long term debt, net of discounts of $771,106 and $885,271 as of March 31, 2017 and December 31, 2016, in addition to the related derivative liabilities of $622,599 and $482,674 at March 31, 2017 and December 31, 2016, respectively.

 

    8  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 5 – Subsidiary Formation

 

On July 8, 2014, we formed a subsidiary, GLFH, LLC (“GLFH”), in which we retained 83% ownership, with the remaining 17% held by key experts and advisors, of which 16% was distributed to individuals as compensation for their services, including 3% to Mr. Bradley, CEO and 1% to Mr. Berk, President of Programming, and an additional 1% was sold to one of those individuals for $60,000. An additional 1.6% was sold to an investor on December 8, 2014 and 3% was transferred back from a founding member on December 2, 2015, giving PNTV 84.4% ownership and minority interests ownership of 15.6%. The subsidiary has been formed as a holding company to potentially own additional subsidiaries that may operate medical marijuana related businesses. The form of the entity was changed from a Corporation to a Limited Liability Company on May 9, 2017 at which time the name was changed from Green Leaf Farms Holdings, Inc. to GLFH, LLC. 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.

 

Note 6 – Other Current Assets

 

Other current assets included the following as of March 31, 2017 and December 31, 2016, respectively:

 

    March 31,
2017
    December 31,
2016
 
Security deposits   $ 52,100     $ 50,000  
Prepaid expenses     25,739       35,150  
    $ 77,839     $ 85,150  

 

Note 7 – Fixed Assets and Construction in Progress

 

Fixed assets consist of the following at March 31, 2017 and December 31, 2016, respectively:

 

    March 31,
2017
    December 31,
2016
 
Office equipment   $ 62,868     $ 60,968  
Website development costs     99,880       99,880  
Furniture and fixtures     8,154       2,730  
Total     170,902       163,578  
Less accumulated depreciation     (137,224 )     (134,450 )
Fixed assets, net   $ 33,678     $ 29,128  

 

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 March 31, 2017, represents leasehold improvements under construction. As of March 31, 2017, the Company incurred and capitalized in Construction in Progress $334,115.

 

Depreciation and amortization expense totaled $2,774 and $7,536 for the three months ended March 31, 2017 and 2016, respectively.

 

    9  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 8 – Accrued Expenses

 

As of March 31, 2017 and December 31, 2016 accrued expenses included the following:

 

    March 31,
2017
    December 31,
2016
 
Accrued Payroll, Officers   $ 45,656     $ 31,343  
Accrued Payroll and Payroll Taxes     135,234       135,234  
Accrued Interest     39,336       21,841  
Refundable Advances     100,000       105,000  
    $ 320,226     $ 293,418  

 

Note 9 – Settlements Payable

 

Settlements payable consisted of $40,000 and $70,000 owed to WHC Capital, LLC as of March 31, 2017 and December 31, 2016, 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 March 31, 2017, the Company had paid a total of $60,000 on the settlement, as specified in the agreement.

 

Note 10 – Convertible Debentures

 

Convertible debentures consist of the following at March 31, 2017 and December 31, 2016, respectively:

 

    March 31,
2017
  December 31,
2016

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   $ 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     35,000

 

    10  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

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     30,000
             
On April 24, 2014, the Company received net proceeds of $33,250 in exchange for an unsecured convertible promissory note that carries an 8% interest rate with a face value of $35,000 (“Second LG Note”), which matured on April 11, 2015. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to fifty five percent (55%) of the average of the lowest closing bid prices of the Company’s common stock for the twelve (12) trading days prior to, and including, the conversion date. The note carries an eighteen percent (18%) interest rate in the event of default, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company paid total debt issuance cost of $1,750 that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company must at all times reserve at least 5 million shares of common stock for potential conversions. On October 31, 2014, the note holder sent demand for repayment. The note is currently in default.   $ 35,000   $ 35,000
         
Total convertible debentures   300,000   300,000
Less: unamortized debt discounts   (225,821)   (241,634)
Convertible debentures   $ 74,179   $ 58,366

 

In accordance with ASC 470-20 Debt with Conversion and Other Options, the Company recorded total discounts of $257,379 for the variable conversion features of the convertible debts incurred during the year ended December 31, 2016. The discounts are being amortized to interest expense over the term of the debentures using the effective interest method. The Company recorded $15,813 and $166,915 of interest expense pursuant to the amortization of the note discounts during the three months ended March 31, 2017 and 2016, 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 $4,501 and $9,832 for the three months ended March 31, 2017 and 2016, respectively related to convertible debts.

 

    11  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 11 – Short Term Debt

 

Short-term debt consists of the following at March 31, 2017 and December 31, 2016, respectively:

 

    March 31,
2017
    December 31,
2016
 

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 GLFH. 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     $ 143,000  
Less: unamortized debt discounts     -       (60 )
Short term debt   $ 143,000     $ 142,940  

 

The Company recorded $60 and $-0- of interest expense pursuant to the amortization of the note discounts during the three months ended March 31, 2017 and 2016, respectively.

 

The Company recorded interest expense pursuant to the stated interest rate on the above promissory notes in the amount of $1,430 and $87 at March 31, 2017 and 2016, respectively.

 

The following presents components of interest expense by instrument type at March 31, 2017 and 2016, respectively:

 

    March 31,
2017
    March 31,
2016
 
Interest on convertible debentures   $ 29,012     $ 121,916  
Amortization of debt discounts     305,747       718,264  
Loss on debt conversions     4,272       10,508  
Interest on short term debt     2,597       53  
Accounts payable related finance charges     3,646       655  
    $ 345,274     $ 851,396  

 

Note 12 – Long Term Debt

 

Long term debt consists of the following at March 31, 2017 and December 31, 2016, respectively:

 

    March 31,
2017
    December 31,
2016
 

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     $ 925,000  
Less: unamortized debt discounts     (771,106 )     (885,271 )
Long term debt   $ 153,894     $ 39,729  

 

    12  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

The Company recorded $114,165 and $-0- of interest expense pursuant to the amortization of the note discounts during the three months ended March 31, 2017 and 2016, respectively.

 

The Company recorded interest expense pursuant to the stated interest rate on the above promissory notes in the amount of $11,564 and $-0- during the three months ended March 31, 2017 and 2016, respectively.

 

The following presents components of interest expense by instrument type at March 31, 2017 and 2016, respectively:

 

    March 31,
2017
    March 31,
2016
 
Interest on convertible debentures   $ 4,501     $ 9,832  
Amortization of debt discounts     130,038       167,710  
Interest on short and long term debt     12,994       87  
Accounts payable related finance charges     1,002       1,295  
    $ 148,535     $ 178,924  

 

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 $622,599 and $482,674 at March 31, 2017 and December 31, 2016, respectively. The change in fair value of the derivative liabilities resulted in a loss of $99,855 and $263,381 for the three months ended March 31, 2017 and 2016, respectively, which has been reported as other expense in the statements of operations. The loss of $99,855 for the three months ended March 31, 2017 consisted of a gain of $121,076 attributable to the fair value of warrants and a net loss in market value of $21,221 on the convertible notes. The loss of $263,381 for the three months ended March 31, 2016 consisted of a loss of $1,475 attributable to the fair value of warrants and a net loss in market value of $261,906 on the convertible notes.

 

    13  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

The following presents the derivative liability value by instrument type at March 31, 2017 and December 31, 2016, respectively:

 

    March 31,
2017
    December 31,
2016
 
Convertible debentures   $ 441,268     $ 462,489  
Common stock warrants     181,331       20,185  
    $ 622,599     $ 482,674  

 

The following is a summary of changes in the fair market value of the derivative liability during the three months ended March 31, 2017 and the year ended December 31, 2016, respectively:

 

    Derivative  
    Liability  
    Total  
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  
Increase in derivative value attributable to issuance of warrants     40,070  
Change in fair market value of derivative liabilities due to the mark to market adjustment     99,855  
Balance, March 31, 2017   $ 622,599  

 

Key inputs and assumptions used to value the convertible debentures and warrants issued during the three months ended March 31, 2017 and the year ended December 31, 2016:

 

  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 average below $1,112,000 in the period 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 5% to a maximum of 50%.
     
  The computed volatility was projected based on historical volatility.

 

Note 14 – Changes in 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

 

Common Stock Authorized

 

The Company has authorized 1,200,000,000 shares of common stock, as amended on July 22, 2015, of which 551,673,658 shares were issued and outstanding and 54,831,889 shares were reserved as of the date of this filing.

 

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.

 

    14  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Common Stock Issued for Services

 

On February 2, 2017, we issued 1,000,000 shares of common stock valued at $11,400 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.

 

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.

 

Note 15 – Options and Warrants

 

Warrants Granted

 

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.

 

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.

  

    15  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 16 – Income Taxes

 

The Company accounts for income taxes under FASB ASC 740-10, which requires use of the liability method. FASB ASC 740-10-25 provides that deferred tax assets and liabilities are recorded based on the differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes, referred to as temporary differences.

 

For the three months ended March 31, 2017 and the year ended December 31, 2016, the Company incurred a net operating loss and, accordingly, no provision for income taxes has been recorded. In addition, no benefit for income taxes has been recorded due to the uncertainty of the realization of any tax assets. At March 31, 2017, the Company had approximately $22,812,000 of federal net operating losses. The net operating loss carry forwards, if not utilized, will begin to expire in 2025.

 

The components of the Company’s deferred tax asset are as follows:

 

    March 31,
2017
    December 31,
2016
 
Deferred tax assets:                
Net operating loss carry forwards   $ 7,984,200     $ 7,763,000  
                 
Net deferred tax assets before valuation allowance     7,984,200       7,763,000  
Less: Valuation allowance     (7,984,200 )     (7,763,000 )
Net deferred tax assets   $ -     $ -  

 

Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at March 31, 2017 and December 31, 2016, respectively.

 

A reconciliation between the amounts of income tax benefit determined by applying the applicable U.S. and State statutory income tax rate to pre-tax loss is as follows:

 

    March 31,
2017
    December 31,
2016
 
Federal and state statutory rate     35 %     35 %
Change in valuation allowance on deferred tax assets     (35 %)     (35 %)

 

In accordance with FASB ASC 740, the Company has evaluated its tax positions and determined there are no uncertain tax positions.

 

Note 17 – Non-Controlling Interest

 

Non-controlling interest originally represented 17% interest in the subsidiary held amongst eleven individuals, of whom the Company’s CEO, Mark Bradley and the Company’s President of Programming, Michael Berk own 3% and 1%, respectively, through December 8, 2014. On December 9, 2014, one of the non-officer, minority investors exercised an option to purchase an additional 1.6% interest in the Company’s subsidiary from the parent in exchange for proceeds of $160,000 and 3% was transferred back to Players Network from a founding member on December 2, 2015, thereby resulting in a minority interest in the subsidiary of 15.6% amongst ten individuals. The net loss attributable to the non-controlling interest totaled $27,463 and $3,696 during the three months ended March 31, 2017 and 2016, respectively. The net loss attributable to the parent was and $148,585 and $20,000 during the three months ended March 31, 2017 and 2016, respectively.

  

    16  

 

 

Players Network

Notes to Condensed Consolidated Financial Statements

(Unaudited)

 

Note 18 – Subsequent Events

 

Common Stock Issuances for Debt Conversions

 

On April 18, 2017, the Company issued 2,009,419 shares of common stock pursuant to the conversion of $40,000 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, and the settlement terms have been fully realized paying off the debt in full.

 

Common Stock Issuances for Services

 

On May 1, 2017, the Company issued a total of 1,220,000 shares of common stock to four service providers for services provided on behalf of our subsidiary, GLFH. The total fair value of the common stock was $76,250 based on the closing price of the Company’s common stock on the date of grant.

 

On May 1, 2017, the Company issued a total of 1,050,000 shares of common stock to five service providers for services provided. The total fair value of the common stock was $65,625 based on the closing price of the Company’s common stock on the date of grant.

 

Options Issued for Services

 

On May 1, 2017, the Company awarded fully vested options to the Company’s President of Programming, Michael Berk, to acquire up to 1,000,000 shares of common stock, exercisable at $0.07 per share over a thirty six (36) month period from the origination date. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 234% and a call option value of $0.0525, was $52,542.

 

On May 1, 2017, the Company awarded fully vested options to our Director, Brett Pojunis, to acquire up to 2,000,000 shares of common stock, exercisable at $0.07 per share over a thirty six (36) month period from the origination date. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 234% and a call option value of $0.0525, was $105,083.

 

On May 1, 2017, the Company awarded fully vested options to a consultant to acquire up to 1,000,000 shares of common stock, exercisable at $0.07 per share over a thirty six (36) month period from the origination date. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 234% and a call option value of $0.0525, was $52,542.

 

On May 1, 2017, the Company awarded fully vested options to a consultant to acquire up to 500,000 shares of common stock, exercisable at $0.07 per share over a thirty six (36) month period from the origination date. The estimated value using the Black-Scholes Pricing Model, based on a volatility rate of 234% and a call option value of $0.0525, was $26,271.

 

    17  

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

Overview and Outlook

 

Players Network is a vertically integrated company that is engaged in the development of digital networks, and is also 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 GLFH, LLC, which is a holding company formed to house our medical marijuana and recreational marijuana businesses. We distribute broadband video and other social media content over a wide variety of internet enabled devices and cable television channels. The Company has launched its proprietary scalable NexGenTV technology platform. The platform is designed to deliver video content and develop digital social communities, including “Vegas On Demand TV” and “Weed TV” on the media side of the business.

 

Our scalable Digital Technology Platform, allows Players Network to distribute content for brands, businesses and celebrities, and provide them with an unlimited amount of lifestyle category content and the tools to launch their own “Branded Channel, Social Community and Marketplace Destination”. NexGenTV’s scalability can create hundreds of niche digital networks that can be viewed worldwide on any smart TV, computer, tablet or mobile device by millions of people simultaneously.

 

Vegas On Demand TV and Weed TV are the Company’s first two channel offerings that provide their audience the ability to connect to industry insiders and businesses through a unique, high-quality marketing, content production and content management system. In the Las Vegas market, Vegas On Demand captures the excitement, sex appeal, entertainment, and the non-stop adrenaline rush of the Las Vegas gaming lifestyle.

 

We plan for Weed TV to have other features by the middle of 2017 and adapt new technology that the other networks don’t have, including a directory of businesses that cater to the marijuana business, such as dispensaries, smoke shops, doctors, financial institutions, manufacturers and more. These businesses will have a free basic listing and the ability to upgrade for an extra fee of approximately $500 per month, where they can build their own media channel using the ‘NexGenTV” Platform. We estimate this market is in excess of approximately 70,000 businesses and will continue to grow as more states legalize MME businesses. Our goal in 2017 is to begin to capture this market in an effort to increase our revenues.

 

Our enterprise platform is highly scalable and can efficiently deploy, manage and distribute videos with integrated revenue-generating tools that go beyond traditional advertising. On our platform, the viewer of a video is brought into a web environment encompassing the lifestyle represented within the video content where they may be presented with membership, merchandising, couponing, subscription, loyalty programs, contest and other marketing opportunities, including the integration of live events. The platform also integrates branded sponsorships, and a game-like virtual economy supported by our Cost Per Action (“CPA”) advertising network.

 

    18  

 

 

GLFH Overview

 

GLFH, LLC (“GLFH”, “Green Leaf”) was selected and granted two Medical Marijuana Establishments (MME) licenses by the State of Nevada; one for cultivation, and one for production of extracts.

 

The Cannabis Industry is one of the fastest growing markets in the America, and Nevada is uniquely positioned to become one of, if not the largest market in the country. It is projected that by the end of 2017 there will be 43,000 Nevada State issued medical marijuana cardholders. Of equal importance, is the fact that Nevada law offers reciprocity to Out-of-State medical cannabis cardholders. With nearly one million medical marijuana cardholders residing in states adjacent to Nevada, and more than 52 million annual visitors to Nevada, the market for medical marijuana is substantial, and with the recent passage of recreational marijuana laws that are expected to be implemented in the summer of 2017, Nevada is expected to generate $1.8 billion in revenue from cannabis in 2018. As large as the medical marijuana market is, it is dwarfed by the potential adult recreational marijuana market.

 

Products & Services

 

Green Leaf expects to provide the following products and services:

 

  Premium organic medical cannabis sold wholesale to licensed retailers
     
  If legalized, recreational marijuana cannabis products sold wholesale to distributors and retailers
     
  Extraction products such as oils and waxes (as distinguished from cultivation grow house atmospheres) derived from in-house cannabis production
     
  Value-added products (e.g., salves, tinctures, oils) processed from in-house cannabis production
     
  Edibles produced in an on-site commercial kitchen from in-house cannabis production
     
  Processing and extraction services for licensed medical cannabis cultivators in Nevada
     
  High quality cannabis genetics in the form of vegetative cuttings for sale to licensed medical cannabis cultivators in Nevada

 

Future Outlook 

 

Green Leaf plans to focus on developing high quality products and to employ a strong branding strategy to sell its custom cannabis strains. The quality and consistency of our branded products would help build consumer loyalty. The growing facility, with modular construction would allow us to scale efficiency from both a cost and operational standpoint.

 

    19  

 

 

Results of Operations for the Three Months Ended March 31, 2017 and 2016:

 

    For the Three Months Ended        
    March 31,     Increase /  
    2017     2016     (Decrease)  
Revenues   $ 91     $ 101     $ (10 )
                         
Direct operating costs     21,202       8,810       12,392  
General and administrative     418,436       275,238       143,198  
Officer salaries     78,350       43,750       34,600  
Depreciation and amortization     2,774       7,536       (4,762 )
                         
Total Operating Expenses     520,762       335,334       185,428  
                         
Operating Loss     (520,671 )     (335,233 )     185,438  
                         
Total other income (expense)     (248,390 )     (407,074 )     (158,684 )
                         
Net Loss   $ (769,061 )   $ (742,307 )   $ 26,754  

 

Revenues:

 

During the three months ended March 31, 2017 and 2016, we received revenues from the sale of in-home media products. Aggregate revenues for the three months ended March 31, 2017 were $91, compared to revenues of $101 during the three months ended March 31, 2016, a decrease in revenues of $10, or 10%.

 

Direct Operating Costs:

 

Direct operating costs were $21,202 for the three months ended March 31, 2017 compared to $8,810 for the three months ended March 31, 2016, an increase of $12,392, or 141%. Our direct operating costs increased primarily due to the addition of a new contractor that has been working to roll out our new media platform during the three months ended March 31, 2017.

 

General and Administrative:

 

General and administrative expenses were $418,436 for the three months ended March 31, 2017, compared to $275,238 for the three months ended March 31, 2016, an increase of $143,198, or 52%. General and administrative expense increased primarily due to increased rent of approximately $86,000 on our new cannabis production facility and additional expenses as we readied the facility for operation during the three months ended March 31, 2017 compared to the three months ended March 31, 2016.

 

Officer Salaries:

 

Officer salaries expense totaled $78,350 for the three months ended March 31, 2017, compared to $43,750, for the three months ended March 31, 2016, an increase of $34,600, or 79%. The increase was due to a bonus of 2,000,000 shares issued to our CEO in the current year valued at $34,600.

 

Depreciation and Amortization:

 

Depreciation and amortization expense was $2,774 for the three months ended March 31, 2017, compared to $7,536 for the three months ended March 31, 2016, a decrease of $4,762, or 63%. Depreciation decreased primarily due to decreased depreciation on assets reaching the end of their depreciable life cycle during the three months ended March 31, 2017 compared to the three months ended March 31, 2016.

 

Operating Loss:

 

Operating loss for the three months ended March 31, 2017 was $520,762 or ($0.00) per share, compared to an operating loss of $335,233 for the three months ended March 31, 2016, or ($0.00) per share, a decrease of $185,438, or 55%. Operating loss increased primarily due to increased rent of approximately $86,000 on our new cannabis production facility and additional expenses as we readied the facility for operation during the three months ended March 31, 2017 compared to the three months ended March 31, 2016.

 

    20  

 

 

Other Income (Expense):

 

Other income (expense), on a net basis, was $(248,390) for the three months ended March 31, 2017, compared to other expense of $(407,074) for the three months ended March 31, 2016, a decreased net expense of $158,684, or 39%. Other expense decreased primarily due to the change in derivative liability of $(99,855) during the three months ended March 31, 2017, compared to the $(163,526) change in derivative liability for the three months ended March 31, 2016, resulting in a decrease of $163,526, or 62%, a decreased interest expense on debt financing of approximately $30,389, or 17%, as offset by a decreased gain on debt extinguishment of $35,231, during the three months ended March 31, 2017, compared to the three months ended March 31, 2016.

 

Net Loss:

 

The net loss for the three months ended March 31, 2017 was $769,061, or ($0.00) per share, compared to a net loss of $742,307, or ($0.00) per share, for the three months ended March 31, 2016, an increased net loss of $26,754, or 4%. Net loss increased primarily due to the increased costs of readying our cannabis production facility, as offset by decreased interest expense on debt financing costs of approximately $194,000 during the three months ended March 31, 2017, compared to the three months ended March 31, 2016.

 

    21  

 

 

LIQUIDITY AND CAPITAL RESOURCES

 

The following table summarizes total assets, accumulated deficit, stockholders’ equity and working capital at March 31, 2017 compared to December 31, 2016.

 

    March 31,
2017
    December 31,
2016
    Increase /
(Decrease)
 
Total Assets   $ 456,958     $ 498,617     $ (41,659 )
                         
Total Liabilities   $ 1,680,716     $ 1,401,644     $ 279,072  
                         
Accumulated (Deficit)   $ (31,381,015 )   $ (30,639,417 )   $ 741,598  
                         
Stockholders’ Equity (Deficit)   $ (1,223,758 )   $ (903,027 )   $ 320,731  
                         
Working Capital (Deficit)   $ (1,437,657 )   $ (1,131,646 )   $ 306,011  

 

Our principal source of operating capital has been provided from convertible debt financings and investments in our recently established subsidiaries. At March 31, 2017, we had a negative working capital position of $1,437,657.

 

Convertible Debenture Repayment and Settlements 

 

During the three months ended March 31, 2017, the Company repaid $30,000 of debt pursuant to a payoff agreement with WHC Capital, LLC. The remaining $40,000 of the settlement liability was subsequently satisfied in full with the issuance of 2,009,419 shares of stock on April 18, 2017.

 

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.

 

We have utilized these funds to repay approximately $30,000 of previously issued convertible debentures and settlements, comply with our regulatory reporting requirements, and to fund our subsidiary’s medical marijuana business during the quarter. Although our revenues are expected to grow as we expand our operations, our revenues are not expected to exceed our investment and operating costs in the next twelve months, and we do not have funds sufficient to fund our operations at their current level for the next twelve months. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of operations. To address these risks, we must, among other things, seek growth opportunities through investment and acquisitions in our industry, effectively monitor and manage our claims for payments that are owed to us, implement and successfully execute our business strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. We cannot assure that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition and results of operations.

 

To conserve on the Company’s capital requirements, the Company has issued shares in lieu of cash payments to outside consultants, and the Company expects to continue this practice. In the three months ended March 31, 2017, the Company granted a total of $138,400 stock-based compensation, consisting of 2,000,000 shares of common stock valued at $34,600 as a bonus to our CEO, as well as an aggregate 5,000,000 shares of common stock valued at $86,500 to our Directors and an aggregate 1,000,000 shares valued at $17,300 to other service providers, compared to a total of 6,250,000 shares of preferred stock valued at $192,000 in lieu of cash payments to our CEO, compared to the issuance of 13,949,339 shares of common stock valued at an aggregate of $205,283 in lieu of cash payments to employees and outside consultants during the three months ended March 31, 2016. The Company is not now in a position to determine an approximate number of shares that the Company may issue for the preceding purpose in the remainder of 2017.

 

    22  

 

 

As of May 12, 2017, we had five convertible notes outstanding with a cumulative outstanding principal balance of $300,000. Repayment of the notes must be done at a premium to the then-outstanding balance, resulting in the need for approximately $400,000 in liquid capital. If, rather than repay these notes, we allow them to convert into our common stock, which conversions would be done at a discount to the market price of our common stock, all of which could be sold into the open market at the time of conversion. The potential dilutive effects of these conversions at various conversion prices below our most recent market price of $0.054 per share is as follows:

 

      100%     75%     50%     25%
Potential conversion prices   $ 0.054     $ 0.0405     $ 0.027     $ 0.0135  
                                 
Potential dilutive shares     5,555,556       7,407,407       11,111,111       22,222,222  

 

Off-Balance Sheet Arrangements

 

As of March 31, 2017, we did not have any off-balance sheet arrangements that have or are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations liquidity, capital expenditures or capital resources.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.

 

The Company has had recurring net losses, an accumulated deficit, and a working capital deficiency. These conditions raise substantial doubt about its ability to continue as a going concern. Management plans to try to increase sales and improve operating results through the expansion of the distribution channels of our programming with a view to increasing advertising and sponsorship revenues. Management believes that funds generated from operations will not be sufficient to cover cash needs in the foreseeable future, and we will continue to rely on expected increased revenues and private equity to cover our cash needs, although there can be no assurance in this regard. In the event sales do not materialize at the expected rates, management would seek additional financing or would conserve cash by further reducing expenses. There can be no assurance that we will be successful in achieving these objectives, becoming profitable or continuing our business without either a temporary interruption or a permanent cessation.

 

The unaudited consolidated financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

 

Critical Accounting Policies

 

We have identified the following policies below as critical to our business and results of operations. Our reported results are impacted by the application of the following accounting policies, certain of which require management to make subjective or complex judgments. These judgments involve making estimates about the effect of matters that are inherently uncertain and may significantly impact quarterly or annual results of operations. For all of these policies, management cautions that future events rarely develop exactly as expected, and the best estimates routinely require adjustment. Specific risks associated with these critical accounting policies are described in the following paragraphs.

 

Principles of Consolidation

 

The accompanying consolidated financial statements include the accounts of the following entities, all of which are under common control and ownership:

 

    State of       Abbreviated
Name of Entity   Incorporation   Relationship   Reference
             
Players Network (1)   Nevada   Parent   PNTV
GLFH, LLC (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 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 form of the entity was changed from a Corporation to a Limited Liability Company on May 9, 2017 at which time the name was changed from Green Leaf Farms Holdings, Inc. to GLFH, LLC.

 

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.

 

    23  

 

  

Revenue Recognition

 

The Company recognizes revenue from its internet television platform from internally generated products and from partnered merchants when the following criteria are met: persuasive evidence of an arrangement exists; delivery has occurred; the selling price is fixed or determinable; and collectability is reasonably assured. These criteria are met when the customers purchase a product or access a web-based video, the product or web-based video has been electronically delivered to the purchaser and payment has been received. At that time, the Company’s obligations to the customer is substantially complete. The Company records the net amount it retains from the sale of items from its internet television platform after paying any agreed upon percentage of the purchase price to the featured advertising merchant excluding any applicable taxes. Revenue is recorded on a net basis because the Company is acting as an agent of the partnered merchant in the transaction. Provisions for discounts and rebates to customers, estimated returns and allowances, and other adjustments are provided for in the same period the related sales are recorded. The Company defers any revenue for which the product has not been delivered or is subject to refund until such time that the Company and the customer jointly determine that the product has been delivered or no refund will be required.

 

Network revenue consists of monthly network broadcast subscription revenue, which is recognized over the period in which the subscription service is available. Broadcast television advertising revenue is recognized when advertisements are aired. Video production revenue is recognized as digital video film is completed and accepted by the customer and collection is reasonably assured.

 

Revenue from the distribution of domestic television series is recognized as earned using the following criteria:

 

  Persuasive evidence of an arrangement exists;
     
  The show/episode is complete, and in accordance with the terms of the arrangement, has been delivered or is available for immediate and unconditional delivery;
     
  The license period has begun and the customer can begin its exploitation, exhibition or sale;
     
  The price to the customer is fixed and determinable; and
     
  Collectability is reasonably assured.

 

Due to practical limitations applicable to operating relationships with On-Demand networks, the Company has not considered collectability of advertising or television license revenues to be reasonably assured, and accordingly, the Company has not recognize such revenue unless payment has been received.

 

Audio/Video content licensing revenues were recognized when the underlying royalties from the sales of the related products were earned. The Company recognized minimum revenue guarantees, if any, ratably over the term of the license or as earned royalties based on actual sales of the related products, if greater.

 

Derivative Liability

 

The Company evaluates its convertible instruments, options, warrants or other contracts to determine if those contracts or embedded components of those contracts qualify as derivatives to be separately accounted for under ASC Topic 815, “Derivatives and Hedging.” The result of this accounting treatment is that the fair value of the derivative is marked-to-market each balance sheet date and recorded as a liability. In the event that the fair value is recorded as a liability, the change in fair value is recorded in the statement of operations as other income (expense). Upon conversion or exercise of a derivative instrument, the instrument is marked to fair value at the conversion date and then that fair value is reclassified to equity. Equity instruments that are initially classified as equity that become subject to reclassification under ASC Topic 815 are reclassified to liabilities at the fair value of the instrument on the reclassification date. We analyzed the derivative financial instruments (the Convertible Note and tainted Warrant), in accordance with ASC 815. The objective is to provide guidance for determining whether an equity-linked financial instrument is indexed to an entity’s own stock. This determination is needed for a scope exception which would enable a derivative instrument to be accounted for under the accrual method. The classification of a non-derivative instrument that falls within the scope of ASC 815-40-05 “Accounting for Derivative Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own Stock” also hinges on whether the instrument is indexed to an entity’s own stock. A non-derivative instrument that is not indexed to an entity’s own stock cannot be classified as equity and must be accounted for as a liability. There is a two-step approach in determining whether an instrument or embedded feature is indexed to an entity’s own stock. First, the instrument’s contingent exercise provisions, if any, must be evaluated, followed by an evaluation of the instrument’s settlement provisions. The Company utilized multinomial lattice models that value the derivative liability within the notes based on a probability weighted discounted cash flow model. The Company utilized the fair value standard set forth by the Financial Accounting Standards Board, defined as the amount at which the assets (or liability) could be bought (or incurred) or sold (or settled) in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

 

    24  

 

 

Item 3. Quantitative and Qualitative Disclosures about Market Risks

 

Not applicable.

 

Item 4. Controls and Procedures

 

Evaluation of Disclosure Controls and Procedures

 

We carried out an evaluation as of March 31, 2017, under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, who are one and the same, of the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(f) and 15d–15(e)). Based upon that evaluation, our principal executive officer and principal financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

 

Changes in Internal Control over Financial Reporting

 

There were no changes in our internal control over financial reporting during our most recent quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

 

PART II - OTHER INFORMATION

 

Item 1. Legal Proceedings

 

In the ordinary course of business, we may become subject to lawsuits and other claims and proceedings that might arise from litigation matters or regulatory audits. Such matters are subject to uncertainty and outcomes are often not predictable with assurance. Our management does not presently expect that such matters will have a material adverse effect on the Company’s financial condition or results of operations. We are not currently involved in any pending or threatened material litigation or other material legal proceedings, nor have we been made aware of any penalties from regulatory audits, except as we have previously disclosed, or may in the future disclose.

 

Item 1A. Risk Factors

 

As a smaller reporting company, we are not required to provide the information required by this Item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

The following sales of equity securities by the Company occurred during the three month period ended March 31, 2017:

 

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.

 

On January 22, 2017, the Company issued 2,000,000 shares of common stock one of its three Directors for board services performed.

 

On January 22, 2017, the Company issued 3,000,000 shares of common stock one of its three Directors for board services performed.

 

On January 22, 2017, the Company issued 200,000 shares of common stock for professional services to a consultant for services provided.

 

    25  

 

 

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.

 

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.

 

On January 22, 2017, the Company issued 150,000 shares of common stock for administrative services to a consultant for services provided.

 

The foregoing securities issued upon conversion of the Notes are restricted securities as defined in Rule 144 promulgated under the Securities Act of 1933. The issuances of the Notes were exempt from the registration requirements of the Securities Act of 1933 pursuant to Rule 506 of Regulation D promulgated thereunder. The purchasers were accredited and sophisticated investors, familiar with our operations, and there was no solicitation.

 

Item 3. Defaults Upon Senior Securities

 

On October 24, 2014, a note holder submitted a conversion request to convert $10,000 of principal on the Second LG Note, which was inconsistent with the conversion terms as stated in the convertible promissory note. The Company requested that the conversion notice be corrected and resubmitted, at which time the note holder contended the conversion terms were intended to be based on 55% of the lowest closing bid price over the preceding twelve trading days, as opposed to the stated 55% of the average of the lowest closing bid price of the Common Stock over the preceding twelve trading days. On October 31, 2014, the note holder sent demand for repayment on the Second LG Note, consisting of $35,000 of principal and $8,214 of accrued interest outstanding as of March 31, 2017. As a result, we are in default on this convertible promissory note. The note carries an 18% default interest rate and a penalty of $250 per day that the shares are not issued, beginning on the 4th day after the conversion notice was delivered to the Company. This penalty increased to $500 per day beginning on the 10th day after the conversion notice was delivered to the Company.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

    26  

 

 

Item 6. Exhibits

 

3.1 March 26, 1998 – Articles of Incorporation (incorporated by reference to Exhibit 2.(A)(1) of the Form 10-SB filed with the Securities and Exchange Commission by Players Network on February 7, 2000)
   
3.2 March 26, 1998 – Bylaws of the Company (incorporated by reference to Exhibit 2.(A)(2) of the Form 10-SB filed with the Securities and Exchange Commission by Players Network on February 7, 2000)
   
3.3 June 9, 1994 – Certificate of Amendment of Articles of Incorporation adopting name change to Players Network filed with the Nevada Secretary of State (incorporated by reference to Exhibit 5.1 of the Company’s Registration Statement on Form S-8 filed with the Securities and Exchange Commission by Players Network on September 13, 2004)
   
3.4 June 4, 2007 – Certificate of Amendment of Articles of Incorporation Increasing the Authorized Stock filed with the Nevada Secretary of State (incorporated by reference to Exhibit 3.1 of the Form 8-K filed with the Securities and Exchange Commission by Players Network on June 8, 2007)
   
3.5 May 6, 2013 – Certificate of Amendment of Articles of Incorporation Increasing the Authorized Stock filed with the Nevada Secretary of State (incorporated by reference to Exhibit 3.5 of the Form 10-Q filed with the Securities and Exchange Commission by Players Network on May 13, 2013)
   
3.6 July 8, 2014 - Articles of Incorporation for Green Leaf Farms Holdings, Inc. filed with the Nevada Secretary of State (incorporated by reference to Exhibit 3.2 of the Form 10-Q filed with the Securities and Exchange Commission by Players Network on November 18, 2014)
   
3.7 July 18, 2014 - Articles of Organization for Green Leaf Medical, LLC. filed with the Nevada Secretary of State (incorporated by reference to Exhibit 3.3 of the Form 10-Q filed with the Securities and Exchange Commission by Players Network on November 18, 2014)
   
10.1 May 8, 2017 - Securities Purchase Agreement between Players Network and Black Mountain Equities, Inc. and Gemini Master Fund, Ltd. (incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed with the Securities and Exchange Commission by Players Network on May 12, 2017)
   
10.2 May 8, 2017 - Form of Promissory Note issued under Securities Purchase Agreement between Players Network and Black Mountain Equities, Inc. and Gemini Master Fund, Ltd. (incorporated by reference to Exhibit 10.2 of the Company’s Form 8-K filed with the Securities and Exchange Commission by Players Network on May 12, 2017)
   
10.3 May 8, 2017 - Form of Warrant to Purchase Shares of Common Stock issued under Securities Purchase Agreement between Players Network and Black Mountain Equities, Inc. and Gemini Master Fund, Ltd. (incorporated by reference to Exhibit 10.3 of the Company’s Form 8-K filed with the Securities and Exchange Commission by Players Network on May 12, 2017)
   
31.1* Certification of Mark Bradley, CEO and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act
   
32.1* Certification of Mark Bradley, CEO and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act
   
101.INS* XBRL Instance Document
   
101.SCH* XBRL Schema Document
   
101.CAL* XBRL Calculation Linkbase Document
   
101.DEF* XBRL Definition Linkbase Document
   
101.LAB* XBRL Labels Linkbase Document
   
101.PRE* XBRL Presentation Linkbase Document

 

* Filed herewith

 

    27  

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Date: May 15, 2017  
  Players Network
   
  /s/ Mark Bradley
  Mark Bradley
  Chief Executive Officer
  (Principal Executive Officer and Principal Financial Officer)

 

    28  

 

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