Form 10-Q for PLAYERS NETWORK
14-May-2015
Quarterly Report
Players Network is a vertically integrated diversified, fully reporting public company that is engaged in the development of digital networks, and is actively pursuing the cultivation and processing of medical marijuana in North Las Vegas pursuant to two medical marijuana establishments (MME) licenses we were granted by the city of North Las Vegas for cultivation and production. The Company holds an 81.4% interest in Green Leaf Farms Holdings, LLC, which is a holding company formed to house our medical marijuana business. We distribute broadband video and other social media content over a wide variety of internet enabled devices and cable television channels. The Company has launched its proprietary scalable NexGenTV technology platform. The platform is designed to deliver video content and develop digital social communities, including “Vegas On Demand TV”, “Real Vegas TV” and “Weed TV” on the media side of the business.
The Company operates a Video On Demand (“VOD”) television channel, also named Vegas On Demand, which consists of original programming that is distributed over its own VOD channels to approximately 23 million homes via a major cable company, and 80 million homes via the internet on the Over The Top Television platform, with distribution partners that include Blinkx, YouTube Video and other internet and various mobile platforms. Players Network has a seventeen-year history of providing consumers with quality ‘Gaming and Las Vegas Lifestyle’ video content.
We have developed NexGenTV, an innovative, proprietary Enterprise Web Platform that incorporates the best parts of Hulu, YouTube, Facebook, Zenga and Groupon. We believe it will change how businesses approach building digital brand extensions.
NexGenTV, our scalable Digital Technology Platform, allows Players Network to distribute content for brands, businesses and celebrities, and provide them with an unlimited amount of lifestyle category content and the tools to launch their own “Branded Channel, Social Community and Marketplace Destination”. NexGenTV’s scalability can create hundreds of niche digital networks that can be viewed worldwide on any smart TV, computer, tablet or mobile device by millions of people simultaneously. The platform allows advertisers and marketing partners the ability to capture their target market through rich content such as professionally produced, branded television segments; user-generated videos; blogs; editorials; tweets; photos; special offers; events and custom-designed contests.
Our business model incorporates elements of traditional proven media features such as advertising and transactional delivery methods, but also offers professional production, marketing and distribution services to build and monetize its branded channel destination, in which we will retain a continuous revenue stream with our partners. Channel partners have the option to manage their own Branded New Media Channel, or use our professional services team of television producers, writers, graphic designers and technologists to keep their channel updated, and their content fresh and relevant.
Vegas On Demand TV, Real Vegas TV and Weed TV are the Company’s first three channel offerings that provide their audience the ability to connect to industry insiders and businesses through unique, high-quality marketing, content production and content management system. In the Las Vegas market, Vegas On Demand captures the excitement, sex appeal, entertainment, and the non-stop adrenaline rush of the Las Vegas gaming lifestyle. Our content goes beyond poker, casino action, sports betting, and racing, to lifestyle programs about entertainment and fine living that attract young and sophisticated viewers that comprise the major digital media demographic. Whenever possible, our content will incorporate an expert, insider or celebrity within the Vegas community in order to enhance promotional merchandising to prospective customers.
Weed TV launched on April 20, 2014, and was the Company’s third network to be launched. Weed TV is a Lifestyle Channel Destination powered by PNTV’s NextGenTV(SM) enterprise platform. Weed TV is the ‘go to’ source for informational entertainment, products and services for people who relate to the marijuana lifestyle and social community. Weed TV will feature daily stories sourced by weedtv.com correspondents and contributors from around the world. It will provide a wide variety of editorial content, videos and entertainment, including lead stories, political news, business news on the industry, financial analysis from industry experts, growing tips, cooking tips, a “Weed101″ section, medical uses, lifestyle features, entertainment specials and merchandise shopping cart offering the latest products and services.
We plan for Weed TV to have other features by the middle of 2015 and adapt new technology that the other networks don’t have, including a directory of businesses that cater to the marijuana business, such as dispensaries, smoke shops, doctors, financial institutions, manufactures and more. These businesses will have a free basic listing and the ability to upgrade for an extra fee of about $500 per month, where they can build their own media channel using the ‘NextGenTV” Platform. We estimate this market is in excess of approximately 70,000 businesses and will continue to grow as more states legalize MME businesses. Our goal in 2015 is to begin to capture this market that will translate to significant revenues even if we only convert a small amount of this market into marketing partners who use our platform.
We plan to use both Weed TV’s platform and original branded programming and events, as a means to develop additional revenue streams, in addition to providing marketing and membership benefits of our social media platform. These revenue streams include branded entertainment, sponsorships for events, media placement, third party commissions for video and banner advertisements, merchandise and production sales and services.
We have addressed the digital market in an effort to grow as a New Media Company using “Vegas On Demand” and Real Vegas TV, our flagship branded television channel, and to use our scalable custom enterprise web platform, which can also be replicated to launch thousands of channel destinations in any lifestyle category for any lifestyle brand.
Our enterprise platform is highly scalable and can efficiently deploy, manage and distribute videos with integrated revenue-generating tools that go beyond traditional advertising. On our platform, the viewer of a video is brought into a web environment encompassing the lifestyle represented within the video content where they are presented with membership, merchandising, couponing, subscription, loyalty programs, contest and other marketing opportunities, including the integration of live events. The platform also integrates branded sponsorships, and a game-like virtual economy supported by our Cost Per Action (“CPA”) advertising network.
Our next-generation media network operates across all distribution platforms from TV screens to mobile devices, gaming consoles, computers and tablets. We have positioned ourselves to provide companies an affordable, turnkey, integrated solution. We have not yet generated revenues from our Platform, but plan to market our services to companies in 2015.
Through the cross-promotional integration of sponsored live events, contests and media creation and distribution, our Platform can deliver a targeted audience that can be monetized in multiple ways. The platform is an engine that grows as audience and page views increase. The platform also provides a self-perpetuating aggregation juncture where Las Vegas businesses and “insiders” can connect socially with their audience/customer.
The ability to monetize video in so many ways, coupled with an efficient, easy-to-use technical and administrative back-end dashboard is a powerful feature of our platform. It allows the creation of unlimited, new channel destinations using our scalable content management system (“CMS”) framework, with cost-competitive operations. Importantly, it enables administrative and editorial level employees to manage content without the expense of having a full-time technical engineering staff in-house.
Premium members must be industry insiders and/or experts in their lifestyle category. For example, with regard to Vegas On Demand, insiders are designed to be the who’s-who of Vegas: entertainers, nightclub promoters, casino hosts, famous chefs, etc. who offer our members deals on transactions connected to their sphere of influence. Deals may include being invited to a special VIP event, line passes, two-for-one offers, pay-per-view video discounts, etc.
Results of Operations for the Three Months Ended March 31, 2015 and 2014:
For the Three
Months Ended
March 31, Increase /
2015 2014 (Decrease)
Revenues $ 307 $ 290 $ 17
Direct operating costs 24,603 46,019 (21,416 )
General and administrative 241,297 153,631 87,666
Officer salaries 94,345 383,317 (288,972 )
Depreciation and amortization 7,536 5,737 1,799
Total Operating Expenses 367,781 588,704 (220,923 )
Net Operating Loss (367,474 ) (588,414 ) (220,940 )
Total other income (expense) (132,848 ) (387,161 ) (254,313 )
Net Loss $ (500,322 ) $ (975,575 ) $ (475,253 )
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During the three months ended March 31, 2015 and 2014, we received revenues primarily from the sale of in-home media and advertising fees on content development. Aggregate revenues for the three months ended March 31, 2015 were $307, compared to revenues of $290 in the three months ended March 31, 2014, an increase in revenues of $17, or 6%.
Direct Operating Costs:
Direct operating costs were $24,603 for the three months ended March 31, 2015 compared to $46,019 for the three months ended March 31, 2014, a decrease of $21,416, or 47%. Our direct operating costs decreased primarily due to diminished content production for our new media channel, Weed.tv, as we focused more on the development of our medical marijuana ventures during the three months ended March 31, 2015.
General and Administrative:
General and administrative expenses were $241,297 for the three months ended March 31, 2015, compared to $153,631 for the three months ended March 31, 2014, an increase of $87,666, or 57%. General and administrative expense increased primarily due to increased stock-based compensation paid to employees and consultants during the three months ended March 31, 2015 compared to the three months ended March 31, 2014.
Officer salaries:
Officer salaries expense totaled $94,345 for the three months ended March 31, 2015, compared to $383,317 for the three months ended March 31, 2014, a decrease of $288,972, or 75%. The decrease in officer salaries was primarily due to non-cash, stock-based compensation bonuses issued to our CEO during the three months ended March 31, 2014, consisting of 4 million shares of common stock with a fair value of $120,000, and 8 million common stock options valued at $217,971, that were greater than the comparative stock-based compensation, consisting of 1.5 million shares of common stock with a fair value of $24,600, during the three months ended March 31, 2015.
Depreciation and Amortization:
Depreciation and amortization expense was $7,536 for the three months ended March 31, 2015, compared to $5,737 for the three months ended March 31, 2014, an increase of $1,799, or 31%. The increase in depreciation and amortization was primarily due to additional depreciation on a total of $34,648 of fixed asset additions acquired during the three months ending March 31, 2014.
Net Operating Loss:
Net operating loss for the three months ended March 31, 2015 was $367,474, or ($0.00) per share, compared to a net operating loss of $588,414 for the three months ended March 31, 2014, or ($0.00) per share, a decrease of $220,940, or 38%. Net operating loss decreased primarily due to stock based compensation bonuses issued to our officers and directors that were granted in the comparative quarter that weren’t issued during the three months ended March 31, 2015.
Other Income (Expense):
Other income (expense) was $(132,848) for the three months ended March 31, 2015, compared to $(387,161) for the three months ended March 31, 2014, a decrease of $254,313, or 66%. Other expense decreased on a net basis primarily due to an $812,587 increase in our $152,261 net gain related to the change in derivative liabilities on our convertible debentures recognized during the three months ended March 31, 2015, compared to the net loss of $660,326 related to the change in derivative liabilities recognized during the three months ended March 31, 2014, as diminished by, increased interest expense of $223,931 on our increased indebtedness during the three months ended March 31, 2015, compared to the three months ended March 31, 2014, and a decreased gain on debt extinguishment of $334,343 during the three months ended March 31, 2015, compared to the three months ended March 31, 2014.
Net Loss:
The net loss for the three months ended March 31, 2015 was $500,322, or ($0.00) per share, compared to a net loss of $975,575, or ($0.01) per share, for the three months ended March 31, 2014, a decreased net loss of $475,253, or 49%. Net loss decreased primarily due to $313,371 less of stock based compensation issued to our CEO, and an $812,587 increase in our net gain related to the change in derivative liabilities on our convertible debentures, as diminished by, increased interest expense of $223,931 on our increased indebtedness and a decreased gain on debt extinguishment of $334,343 during the three months ended March 31, 2015, compared to the three months ended March 31, 2014.
LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes total assets, accumulated deficit, stockholders'
equity and working capital at March 31, 2015 compared to December 31, 2014.
March 31, December 31, Increase /
2015 2014 (Decrease)
Total Assets $ 356,714 $ 408,826 $ (52,112 )
Total Liabilities $ 2,068,671 $ 2,196,544 $ (127,873 )
Accumulated (Deficit) $ (27,347,966 ) $ (26,848,642 ) $ 499,324
Stockholders' Equity (Deficit) $ (1,711,957 ) $ (1,787,718 ) $ (75,761 )
Working Capital (Deficit) $ (1,785,139 ) $ (1,868,948 ) $ (83,809 )
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Debt Financing
On March 11, 2015, the Company received net proceeds of $70,000 in exchange for a 12% interest bearing, unsecured convertible promissory note dated March 2, 2015 with a face value of $75,000 (“First JSJ Note”), which matures on September 2, 2015. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to the lesser of: (i) 58% of the average of the two (2) lowest closing prices over the 10 days prior to conversion; or (ii) 58% of the average of the two (2) lowest closing prices over the 10 days prior to the execution of the note (which was $0.008932). The note includes prepayment cash redemption penalties between 25% and 40% of outstanding principal and interest, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company must at all times reserve at least 30 million shares of common stock for potential conversions.
On February 5, 2015, the Company received net proceeds of $50,000 with a face value of $53,750 that carries an 8% interest rate (“Second Tangiers Note”), which matures on February 5, 2016. The note is part of total loan offering with a $236,500 face value and OID of 7.5% of any consideration paid, whereby $75,250 was previously advanced with the initial execution of the note on October 13, 2014. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty percent (60%) of the average of the two lowest trading prices of the Company’s common stock for the fifteen (15) trading days prior to, and including, the conversion date. In the event the Company experiences a DTC “Chill” on its shares, the conversion price shall be decreased to fifty percent (50%), rather than the sixty percent (60%) conversion rate while that “Chill” is in effect, and an additional 5% discount if the Depository Trust Company’s (“DTC”) Fast Automated Securities Transfer (“FAST”) is not eligible for a cumulative total conversion price equal to forty five percent (45%). The note carries a twenty percent (20%) interest rate and $1,000 per day of liquidated damages in the event of default, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company paid total debt issuance cost of $2,500 that is being amortized on the straight line method, which approximates the effective interest method, over the life of the loan. The Company must at all times reserve at least 5 million shares of common stock for potential conversions.
On January 27, 2015, the Company received $35,000 in exchange for an unsecured convertible promissory note with a face value of $36,750 that carries a 12% interest rate (“Second Group 10 Note”), which matures on January 27, 2016. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to the lesser of (a) fifty-eight percent (58%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of forty-two percent (42%)) or (b) five cents ($0.05). The conversion price is subject to the following adjustments:
i. If the market capitalization of the Borrower is less than Three Hundred Thousand Dollars ($300,000) on the day immediately prior to the date of the Notice of Conversion, then the Conversion Price shall be twenty-five percent (25%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of seventy-five percent (75%)); and
ii. If the closing price of the Borrower’s Common Stock on the day immediately prior to the date of the Notice of Conversion is less than .001 then the Conversion Price shall be twenty-five percent (25%) multiplied by the Lowest Closing Price as of the date a Notice of Conversion is given (which represents a discount rate of seventy-five percent (75%)).
The note carries an eighteen percent (18%) interest rate in the event of default along with a $1,000 penalty per business day commencing the business day following the date of the event of default. The note also includes prepayment cash redemption penalties between up to 15% of outstanding principal and interest, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The promissory note carries a $1,750 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company must at all times reserve at least 20 million shares of common stock for potential conversions.
We have utilized these funds to repay $50,542 of previously issued convertible debentures, comply with our regulatory reporting requirements, and to expand our media distribution platforms to launch Weed.tv. Although our revenues are expected to grow as we expand our operations, our revenues are not expected to exceed our investment and operating costs in the next twelve months, and we do not have funds sufficient to fund our operations at their current level for the next twelve months. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of operations. To address these risks, we must, among other things, seek growth opportunities through investment and acquisitions in our industry, effectively monitor and manage our claims for payments that are owed to us, implement and successfully execute our business strategy, respond to competitive developments, and attract, retain and motivate qualified personnel. We cannot assure that we will be successful in addressing such risks, and the failure to do so could have a material adverse effect on our business prospects, financial condition and results of operations.
To conserve on the Company’s capital requirements, the Company has issued shares in lieu of cash payments to outside consultants, and the Company expects to continue this practice. In the three months ended March 31, 2015, the Company granted a total of 9,600,000 shares of common stock valued at $157,440 in lieu of cash payments to employees and outside consultants, compared to the issuance of 6,708,333 shares of common stock valued at $235,259 in lieu of cash payments to employees and outside consultants during the three months ending March 31, 2014. In addition, the Company exchanged 4,349,339 shares of common stock for 4,349,339 shares of series B preferred stock, resulting in $47,843 of stock based compensation. The Company is not now in a position to determine an approximate number of shares that the Company may issue for the preceding purpose in the remainder of 2015.
During the three months ended March 31, 2015, we issued a total of 15,390,595 shares of common stock pursuant to the conversion of $126,221 of indebtedness on convertible debentures. The conversion prices of a total of $726,818 in outstanding convertible notes outstanding as of March 31, 2015, is convertible at various prices discounted to market as depicted in the table below. As a result, any conversion of the Convertible Notes and sale of shares of common stock issuable in connection with the conversion thereof will likely cause the value of our common stock, if any, to decline in value, as described in greater detail under the Risk Factors below.
Potential issuable shares at various conversion prices
below the most recent market price of $0.012 per share
Lender / Conversion Principal 100% 75% 50% 25%
Origination Terms Borrowed $0.0120 $0.0090 $0.0060 $0.0030
JMJ Financial Convertible into
(Second JMJ 65% of the average
Note) of the lowest
June 4, 2013 trading price over
the 25 trading days
prior to the
conversion request. $ 20,491 1,707,583 2,276,778 3,415,167 6,830,333
JMJ Financial Convertible into
(Third JMJ 65% of the average
Note) of the lowest
February 20, trading price over
2014 the 25 trading days
prior to the
conversion request. $ 44,000 3,666,667 4,888,889 7,333,333 14,666,667
JMJ Financial Convertible into
(Fourth JMJ 65% of the average
Note) of the lowest
April 17, trading price over
2014 the 25 trading days
prior to the
conversion request. $ 44,000 3,666,667 4,888,889 7,333,333 14,666,667
LG Capital Convertible into
Funding, LLC 55% of the average
(Second LG of the lowest
Capital Note) closing bid prices
April 24, over the 12 trading
2014 days prior to the
conversion request. $ 35,000 2,916,667 3,888,889 5,833,333 11,666,667
Typenex Convertible into
(First 65% of the average
Typenex Note) of the three (3)
May 20, 2014 lowest ("Trading
Prices"), whereby
Trading Price is
defined as the
volume weighted
average price
("VWAP") of the
Company's common
stock over the
fifteen (15)
trading days prior
to the conversion
request date. If
the arithmetic
average of the
three (3) lowest
Trading Prices is
less than $0.01,
then the Conversion
Factor will be
reduced to 60%. $ 33,000 2,750,000 3,666,667 5,500,000 11,000,000
Vista Capital Convertible into
(First Vista 65% of the average
Note) of the two (2)
June 2, 2014 lowest closing bid
prices during the
sixteen (16)
trading days prior
to the conversion
request date. $ 26,077 2,173,083 2,897,444 4,346,167 8,692,333
WHC Capital Convertible into
(First WHC 62.5% of the
Note) average of the two
June 13, 2014 (2) lowest closing
bid prices over the
10 trading days
prior to the
conversion request. $ 32,000 2,666,667 3,555,556 5,333,333 10,666,667
WHC Capital Convertible into
(Second WHC 57.5% of the
Note) average of the two
August 19, (2) lowest closing
2014 bid prices over the
10 trading days
prior to the
conversion request. $ 45,000 3,750,000 5,000,000 7,500,000 15,000,000
Vista Capital Convertible into
Investments, 65% of the average
LLC of the two (2)
(Second Vista lowest closing bid
Note) prices during the
September 22, sixteen (16)
2014 trading days prior
to the conversion
request date. $ 38,500 3,208,333 4,277,778 6,416,667 12,833,333
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Tangiers Convertible at a
Investment price equal to
Group, LLC sixty percent (60%)
(First of the average of
Tangiers the two lowest
Note) trading prices of
October 13, the Company's
2014 common stock for
the fifteen (15)
trading days prior
to, and including,
the conversion
date. In the event
the Company
experiences a DTC
"Chill" on its
shares, the
conversion price
shall be decreased
to fifty percent
(50%), rather than
the sixty percent
(60%) conversion
rate while that
"Chill" is in
effect, and an
additional 5%
discount if the
Depository Trust
Company's ("DTC")
Fast Automated
Securities Transfer
("FAST") is not
eligible for a
cumulative total
conversion price
equal to forty five
percent (45%). $ 75,250 6,270,833 8,361,111 12,541,667 25,083,333
KBM Worldwide Convertible at a
(First KBM price equal to
Note) sixty one percent
November 5, (61%) of the
2014 average of the
three (3) lowest
. . .
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MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
