Players Network Inc. (PNTV: OTCQB), is a diversified holding company that is focused on two primary industries: media and medical marijuana. PNTV offers the opportunity to invest in their diversified cannabis company Green Leaf Farms (GLFH) that is levered to the legal Nevada marijuana market. Technical420 is favorable on shares of PNTV and thinks the stock is undervalued. For this reason, Technical420 has a Buy rating on shares of PNTV. The company is one of the only fully reporting companies that has received a license to cultivate and process cannabis. This gives us confidence that PNTV is one of the more legitimate OTC traded marijuana stocks.
Entrance into the marijuana space
In late July, Players Network entered the marijuana industry through the formation of Green Leaf Farms Holdings Inc. (GLFH). PNTV owns 80% of Greenleaf Farms and the remaining 20% is held by key advisors and experts.
A few months after forming Green Leaf Farms Holdings, the City of North Las Vegas approved two conditional use permits for medical marijuana cultivation and production facilities. The permits are for a medical marijuana cultivation facility and a marijuana-infused products (edibles) production facility. In November, the Department of Health and Human Services Nevada Division of Public Behavioral Health approved Green Leaf’s medical marijuana cultivation and production facilities. On November 24, 2014, PNTV announced that the State approved Green Leaf’s two applications which will allow them to proceed with medical marijuana cultivation and production.
Green Leaf Farms Holdings is the contract purchaser of 3.2 acres on Apex Great Basin Way in North Las Vegas, Nevada. This will support a cultivation and production facility of up to 70,000 square feet, which the company’s consultants expect will generate between $12 and $14 million in annual revenue during its first year of operations and additionally has an option on a an existing building also in North Las Vegas
Mark Bradley, CEO of PNTV, informed me that within the next few weeks the company will decide which of two direction they will go. If they do, the company goes into an existing building; they should be cultivating by June 2015 and generating revenue by September. If PNTV builds from the ground up, they expect to start cultivating by December and generating a profit by early 2016.
Unique business model can create synergies for their two business units
Players Network is also actively involved in the media industry through their proprietary channels. The company will use WeedTV.com, one of such channels, to increase exposure for Green Leaf and increase sales for all of Green Leaf Products, which is something that no other Medical Marijuana company has the ability to do. This channel also generates revenues through advertising, cross selling with other companies and premium membership subscriptions.
PNTV has been in the media game a long time. The company was the first video on demand service and they partnered with Comcast to create Vegas On Demand which reached over 100 million households. This proves that PNTV has the infrastructure and technology to build and scale networks. Technical420 expects that the service PNTV plans to release will be a game changer for the industry and will provide users with easily accessible information.
This unique advantage offers the company another source of revenue and free exposure for their marijuana business. If PNTV is able to successfully execute on their business plan the company will be able to create synergies between Weed TV and Green Leaf Farms Holdings, which will lead to increased revenues. These synergies will also lead to higher margins which will improve the company’s bottom line.
Mark Bradley told me that WeedTV will be focused on content creation and will aggregate news and information from other sources. The company has a first mover advantage in this industry and is led by a team of executives with a significant media and television industry background. Mr. Bradley plans to create a service that competes with companies like Leafly and Weedmaps. PNTV’s services, however, will be more comprehensive with more locations to make it easier for their customers and offer media and marketing services that reach beyond what these other sites offer.
Strong management team
PNTV has been around since the early 1990s and have created many strategic relationships that strengthen its footprint. The company’s CEO and founder, Mark Bradley, founded Players Network in 1993 and has served as CEO since its inception. Mr. Bradley was a producer/director at United Artists, and served as a studio manager and postproduction supervisor at United Cable Television in Los Angeles where he was engaged in the production, packaging and syndication of television and film productions for media venues such as HBO, Nickelodeon and MTV.
The company’s Chief Creative Officer, Michael Berk, is a prolific writer, producer and director with over three hundred hours of television programming to his credit. Berk created and executive produced “Baywatch”,one of the most popular series in television history. He is currently producing a large-budget “Baywatch” feature film for Paramount. AS such Mr. Berk syndicated the program worldwide and made it into a signifcant international brand.
Leslie Thomas is the marketing and operations manager for PNTV. Thomas works directly with major media outlets which include: Comcast Communications, DirecTV, AT&T, Verizon, and TivoCast, as well as multiple broadband sites.
The marketing and licensing advisor, John Raczka, has a proven track record of success in driving revenue growth in the linear, interactive and gaming entertainment sectors worldwide. He works in Macao and Las Vegas and handles the Asian Markets for many companies.
Edward Sullivan serves as the company’s media, branding, and marketing advisor. Sullivan has overseen branding & marketing efforts for over 50 launches and re-launches of major media companies such as: CBS, ABC, FOX, Discovery Networks, Turner Broadcasting, HBO, and Disney cable networks.
Doug Miller serves on the board of PNTV and brings over thirty years of hands-on operating experience to the Players Network Board. Focusing on high growth start-up and turnaround companies, Mr. Miller participated in leading four companies to IPO´s. He holds a bachelors degree from the University of Nebraska and an MBA from Stanford.
Significantly Undervalued
Even though PNTV generates minimal revenue and has been operating at a loss for some time now, the company is significantly undervalued. In October, Mark Bradley stated that “Capital has already been raised in Green Leaf Farms Holdings for these applications at a $10 million valuation.” PNTV owns 80% of Green Leaf which makes that asset worth $8 million. The total market capitalization of PNTV is $3.75 million. As such, the Green Leaf asset alone offers more than a 100% upside to the current price of the stock. What makes this asset even sweeter is that the $10 million valuation was placed on Green Leaf before they got a license. The company plans to raise capital again at a much higher valuation.
PNTV also has a $27 million tax loss carry over. If you combine that with the value of Green Leaf, that is $35 million. This offers investors a substantial upside to current levels. The company, though, faces some dilution risk with more convertible notes coming out in five months and is trying to clear out $300,000 worth of notes over the next quarter.
PNTV has another asset that makes them even more undervalued.
PNTV has entered into a lawsuit against cable giant Comcast for $150 million for a breach of contract. The case is currently in discovery and the company hopes this will be resolved with a settlement payment to PNTV, otherwise the case will be scheduled for trial in a Federal Court in Nevada PNTV’s legal team is hopeful ….Since Comcast has no business presence in Nevada, this should give PNTV a home field advantage and could settle long before trial.
Outlook
Although PNTV’s entrance into the medical marijuana market offers considerable upside to current estimates, the stock has not reacted favorably. PNTV is down 33% during the last month even though the company’s fundamental story has improved. Technical420 has a Buy rating on shares of PNTV because we think the selloff was excessive and given their unique business model the company has the potential to be a legitimate player in the cannabis industry. Additionally, PNTV is one of only two fully reporting companies who have won a license in the Marijuana space.
Important Investor Disclosures:
All information relied upon for the above report is publically available via various research resources, including third-party sources we consider reliable, but we do not guarantee that any of such information is accurate or complete. In its evaluation of PNTV Technical420 has also relied upon Securities and Exchange Commission Disclosure and Representations Documentation required to be filed by PNTV. The SEC Documentation is available through the Company’s website at https://www.playersnetwork.com/investors/sec-filings
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General Risk Factors: Following are some but not all risk factors that pertain to companies under Technical420’s coverage: (1) Industry fundamentals with respect to customer demand or product / service pricing could change and adversely impact expected revenues and earnings; (2) Issues relating to major competitors or market shares or new product expectations could change investor attitudes toward the sector or this stock; (3) Unforeseen developments with respect to the management, financial condition or accounting policies or practices could alter the prospective valuation; or (4) External factors that affect the U.S. economy, interest rates, the U.S. dollar or major segments of the economy could alter investor confidence and investment prospects. International investments involve additional risks such as currency fluctuations, differing financial accounting standards, and possible political and economic instability. Additional risk factors include the fact that cannabis remains illegal at the U.S. Federal Level and the Government has an uneven policy regarding the pursuit of operators in states where cannabis is legal.
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