Form 10-Q for PLAYERS NETWORK
23-Nov-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 September 30, 2015 and 2014:
For the Three
Months Ended
September 30, Increase /
2015 2014 (Decrease)
Revenues $ 129 $ 168 $ (39 )
Direct operating costs 8,467 77,350 (68,883 )
General and administrative 299,604 1,214,180 (914,576 )
Officer salaries 46,555 97,261 (50,706 )
Depreciation and amortization 7,536 7,469 67
Total Operating Expenses 362,162 1,396,260 (1,034,098 )
Net Operating Loss (362,033 ) (1,396,092 ) (1,034,059 )
Total other income (expense) (467,560 ) (349,769 ) 117,791
Net Loss $ (829,593 ) $ (1,745,861 ) $ (916,268 )
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During the three months ended September 30, 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 September 30, 2015 were $129, compared to revenues of $168 in the three months ended September 30, 2014, a decrease in revenues of $39, or 23%.
Direct Operating Costs:
Direct operating costs were $8,467 for the three months ended September 30, 2015 compared to $77,350 for the three months ended September 30, 2014, a decrease of $68,883, or 89%. Our direct operating costs decreased primarily due to diminished content production for our new media platform, other than our Weed.tv channel, as we focused more on the development of our medical marijuana ventures during the three months ended September 30, 2015.
General and Administrative:
General and administrative expenses were $299,604 for the three months ended September 30, 2015, compared to $1,214,180 for the three months ended September 30, 2014, a decrease of $914,576, or 75%. General and administrative expense decreased primarily due to decreased stock-based compensation paid to employees and consultants during the three months ended September 30, 2015 compared to the three months ended September 30, 2014.
Officer salaries:
Officer salaries expense totaled $46,555 for the three months ended September 30, 2015, compared to $97,261 for the three months ended September 30, 2014, an increase of $50,706, or 52%.
Depreciation and Amortization:
Depreciation and amortization expense was $7,536 for the three months ended September 30, 2015, compared to $7,469 for the three months ended September 30, 2014, an increase of $67, or 1%. The increase in depreciation and amortization was primarily due to additional depreciation on fixed asset additions acquired after the end of the comparative period.
Net Operating Loss:
Net operating loss for the three months ended September 30, 2015 was $362,033, or ($0.00) per share, compared to a net operating loss of $1,396,092 for the three months ended September 30, 2014, or ($0.01) per share, a decrease of $1,034,098, or 74%. Net operating loss decreased primarily due to reduced spending on content production for our new media platform and reductions in stock-based compensation paid to employees and consultants during the three months ended September 30, 2015 compared to the three months ended September 30, 2014.
Other Income (Expense):
Other expense was $467,560 for the three months ended September 30, 2015, compared to other expense of $349,769 for the three months ended September 30, 2014, an increase of $117,791, or 34%. Other expense increased primarily due to increased interest expense of $119,844 on our increased indebtedness during the three months ended September 30, 2015, compared to the three months ended September 30, 2014.
Net Loss:
The net loss for the three months ended September 30, 2015 was $829,593, or ($0.00) per share, compared to a net loss of $1,745,861, or ($0.01) per share, for the three months ended September 30, 2014, a decreased net loss of $916,268, or 52%. Net loss decreased primarily due to decreased stock-based compensation paid to employees and consultants during the three months ended September 30, 2015, compared to the three months ended September 30, 2014.
Results of Operations for the Nine Months Ended September 30, 2015 and 2014:
For the Nine
Months Ended
September 30, Increase /
2015 2014 (Decrease)
Revenues $ 649 $ 141,625 $ (140,976 )
Direct operating costs 50,515 314,321 (263,806 )
General and administrative 694,366 1,569,047 (874,681 )
Officer salaries 186,750 524,917 (338,167 )
Depreciation and amortization 22,607 19,984 2,623
Total Operating Expenses 954,238 2,428,269 (1,474,031 )
Net Operating Loss (953,589 ) (2,286,644 ) (1,333,055 )
Total other income (expense) (1,051,155 ) (570,978 ) 480,177
Net Loss $ (2,004,744 ) $ (2,857,622 ) $ (852,878 )
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During the nine months ended September 30, 2015 and 2014, we received revenues primarily from the sale of in-home media, advertising fees on content development and the recognition of deferred revenues on content development. Aggregate revenues for the nine months ended September 30, 2015 were $649, compared to revenues of $141,625 in the nine months ended September 30, 2014, a decrease in revenues of $140,976, or 100%. Our revenues decreased primarily due to the recognition of $135,000 of deferred revenues from the completion and delivery of the final two pilot episodes of our “Naked Empire Series” project with HJ Productions during the nine months ended September 30, 2014 that was subsequently reversed on December 31, 2014. During the nine months ended September 30, 2014, we also recognized a total of $5,950 from the first sales of advertising on our new media channel, “Weed.tv” within our internet platform.
Direct Operating Costs:
Direct operating costs were $50,515 for the nine months ended September 30, 2015 compared to $314,321 for the nine months ended September 30, 2014, a decrease of $263,806, or 84%. Our direct operating costs decreased primarily due to diminished content production for our new media platform, other than our Weed.tv channel, as we focused more on the development of our medical marijuana ventures during the nine months ended September 30, 2015.
General and Administrative:
General and administrative expenses were $694,366 for the nine months ended September 30, 2015, compared to $1,569,047 for the nine months ended September 30, 2014, a decrease of $874,681, or 56%. General and administrative expense decreased primarily due to decreased stock-based compensation paid to employees and consultants and administrative costs paid to consultants during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.
Officer Salaries:
Officer salaries expense totaled $186,750 for the nine months ended September 30, 2015, compared to $524,917 for the nine months ended September 30, 2014, a decrease of $338,167, or 64%. The decrease in officer salaries was primarily due to non-cash, stock-based compensation bonuses issued to our CEO during the nine months ended September 30, 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 nine months ended September 30, 2015.
Depreciation and Amortization:
Depreciation and amortization expense was $22,607 for the nine months ended September 30, 2015, compared to $19,984 for the nine months ended September 30, 2014, an increase of $2,623, or 13%. The increase in depreciation and amortization was primarily due to additional depreciation on fixed asset additions acquired after the end of the comparative period.
Net Operating Loss:
Net operating loss for the nine months ended September 30, 2015 was $953,589, or ($0.00) per share, compared to a net operating loss of $2,286,644 for the nine months ended September 30, 2014, or ($0.01) per share, a decrease of $1,333,055, or 58%. Net operating loss decreased primarily due to reduced spending on content production for our new media platform and decreased officer compensation from the lack of stock-based compensation, as diminished by the lack of revenues during the nine months ended September 30, 2015 compared to the nine months ended September 30, 2014.
Other Income (Expense):
Other income (expense) was $(1,051,155) for the nine months ended September 30, 2015, compared to $(570,978) for the nine months ended September 30, 2014, an increase of $480,177, or 84%. Other expense increased on a net basis primarily due to increased interest expense of $619,844 on our increased indebtedness and a decreased gain on debt extinguishment of $336,853 during the nine months ended September 30, 2015, compared to the nine months ended September 30, 2014, as diminished by a $476,520 decrease related to our change in derivative liabilities recognized during the nine months ended September 30, 2015, compared to the nine months ended September 30, 2014.
Net Loss:
The net loss for the nine months ended September 30, 2015 was $2,004,744, or ($0.01) per share, compared to a net loss of $2,857,622, or ($0.02) per share, for the nine months ended September 30, 2014, a decreased net loss of $852,878, or 30%. Net loss decreased primarily due to reduced content production for our new media platform, decreased stock based compensation for services, and a reduction in losses resulting from changes in our derivative liabilities as diminished by increased interest expense on our convertible debentures during the nine months ended September 30, 2015, compared to the nine months ended September 30, 2014.
LIQUIDITY AND CAPITAL RESOURCES
The following table summarizes total assets, accumulated deficit, stockholders'
equity and working capital at September 30, 2015 compared to December 31, 2014.
September 30, December 31, Increase /
2015 2014 (Decrease)
Total Assets $ 212,983 $ 408,826 $ (195,843 )
Total Liabilities $ 2,230,121 $ 2,196,544 $ 33,577
Accumulated (Deficit) $ (28,828,128 ) $ (26,848,642 ) $ 1,971,986
Stockholders' Equity (Deficit) $ (2,017,138 ) $ (1,787,718 ) $ (229,420 )
Working Capital (Deficit) $ (2,092,371 ) $ (1,868,948 ) $ (215,923 )
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Debt Financing
On September 17, 2015, the Company received proceeds of $22,500 in exchange for an unsecured convertible promissory note, bearing interest at eight percent (8%) with a face value of $25,000 (“Second TJC Note”), which matures on September 16, 2016, as part of a larger financing agreement that enables the Company to draw total proceeds of $105,000 at the discretion of the lender. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to seventy percent (70%) of the average of the three (3) lowest closing traded prices during the fifteen (15) trading days prior to the conversion request date (the “Variable Conversion Price”). If at any time while this note is outstanding, the lowest closing traded price is equal to or less than $0.0001, then the conversion price shall equal the lesser of the (1) Variable Conversion Price or (2) $0.00001 until the note is no longer outstanding. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The promissory note carries a $2,500 Original Issue Discount that was expensed as interest. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 150% of the outstanding balance at the time of default. The Company is required at all times to have authorized and reserved three times the number of shares that is actually issuable upon full conversion of the note.
On September 17, 2015, the Company issued an unsecured replacement convertible promissory note in exchange for Second Group 10 Note, bearing interest at eight percent (8%) with a face value of $29,404 (“First TJC Note”), which matures on September 17, 2015. TJC Trading, LLC had acquired the promissory note from Group 10 Holdings, LLC, consisting of $26,750 of outstanding principal and $2,654 of interest. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to seventy percent (70%) of the average of the three (3) lowest closing traded prices during the fifteen
(15) trading days prior to the conversion request date (the “Variable Conversion Price”). If at any time while this note is outstanding, the lowest closing traded price is equal to or less than $0.0001, then the conversion price shall equal the lesser of the (1) Variable Conversion Price or (2) $0.00001 until the note is no longer outstanding. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 150% of the outstanding balance at the time of default. The Company is required at all times to have authorized and reserved three times the number of shares that is actually issuable upon full conversion of the note.
On August 24, 2015, the Company received net proceeds of $60,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (10%) with a face value of $66,000 (“Third WHC Note”), which matures on August 24, 2016. The financing carries a total face value of $66,000 and a $6,000 Original Issue Discount. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty two and a half percent (62.5%) of the average of the two (2) lowest closing bid prices of the Company’s common stock over the ten (10) trading days immediately preceding the conversion request date. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 150% of the outstanding balance at the time of default, and the interest rate increases to twenty two percent (22%) per annum. The promissory note carries a $6,000 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company must at all times reserve at least 50 million shares of common stock for potential conversions.
On June 25, 2015, the Company received net proceeds of $105,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (12%) with a face value of $115,500 (“Fourth Vista Note”), which matures on June 1, 2016, as part of a larger financing agreement that enables the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carries a total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing bid prices during the sixteen (16) trading days prior to the conversion request date. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 120% of the outstanding balance at the time of default. The promissory note carries a $10,500 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company must at all times reserve at least 35 million shares of common stock for potential conversions as depicted in the First Vista Note.
On June 24, 2015, the Company issued an 8% interest bearing; unsecured convertible promissory note with a face value of $119,052 (“First Collier Note”), which matures on June 23, 2017 in exchange for the cancellation of three outstanding JMJ Notes, consisting of an aggregate of $108,492 of principal and $10,560 of interest, that were acquired by Collier Investments, LLC. The principal and interest is convertible into shares of common stock at 70% of the lowest volume weighted average price (“VWAP”) over the 20 days prior to conversion. The note includes prepayment cash redemption penalties of 145% of outstanding principal and interest, and the debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. The Company must at all times reserve at least 100 million shares of common stock for potential conversions. Upon default, 145% of outstanding principal and interest shall be due immediately.
On June 15, 2015, the Company received net proceeds of $15,000 in exchange for an unsecured convertible promissory note, bearing interest at twelve percent (12%) with a face value of $16,500 (“Third Vista Note”), which matures on June 1, 2016, as part of a larger financing agreement that enables the Company to draw total proceeds of $225,000 at the discretion of the lender. The financing carries a total face value of $250,000 and a $25,000 Original Issue Discount. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to sixty five percent (65%) of the average of the two (2) lowest closing bid prices during the sixteen (16) trading days prior to the conversion request date. The debt holder is limited to owning 4.99% of the Company’s issued and outstanding shares. In the event of default, the outstanding balance immediately prior to the occurrence of the event of default shall immediately increase to 120% of the outstanding balance at the time of default. The promissory note carries a $1,500 Original Issue Discount that is being amortized over the life of the loan on the straight line method, which approximates the effective interest method. The Company must at all times reserve at least 35 million shares of common stock for potential conversions as depicted in the First Vista Note.
On May 15, 2015, the Company received net proceeds of $60,000 in exchange for an . . .
MAPH Enterprises, LLC | (305) 414-0128 | 1501 Venera Ave, Coral Gables, FL 33146 | new@marijuanastocks.com
