As filed with the Securities and Exchange Commission on April 27 , 2018

Registration No. 333-222579

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON D.C. 20549

 

 

 

Amendment No. 2 to

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

 

 

 

PLAYERS NETWORK
(Exact name of Registrant as specified in its charter)

 

Nevada   6770   88-0343702
(State or other jurisdiction of
incorporation or organization)
  (Primary Standard Industrial
Classification Code Number)
  (I.R.S. Employer
Identification Number)

 

1771 E. Flamingo Road, #201-A
Las Vegas, NV
(702) 840-3270
(Address, including zip code, and telephone number, including area code, of Registrant’s principal executive offices)

 

Mark Bradley
Chief Executive Officer
1771 E. Flamingo Road, #201-A
Las Vegas, NV (702) 840-3270
(Name, address, including zip code, and telephone number, including area code, of agent for service)

 

with a copy to:
Zev M. Bomrind, Esq .
Fox Rothschild LLP

100 Park Avenue

New York, NY 10017

(212) 878-7951

 

As soon as practicable after the effective date of this registration statement.

(Approximate date of commencement of proposed sale to the public)

 

If any securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box: [X]

 

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [  ]

 

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

 

Large accelerated filer [  ] Accelerated filer [  ]
Non-accelerated filer [  ] (Do not check if a smaller reporting company) Smaller reporting company [X]
  Emerging growth company [  ]

 

 

 

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall hereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

 

 

 

     
 

 

The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.

 

PRELIMINARY PROSPECTUS
SUBJECT TO COMPLETION, DATED April 27 , 2018

 

PLAYERS NETWORK

 

93,522,930 Shares of Common Stock

 

 

 

This prospectus relates to the resale of up to 93,522,930 shares of common stock of Players Network, a Nevada corporation, of which up to 75,400,000 shares may be resold by Kodiak Capital Group, LLC, or Kodiak, including 37,500,000 shares of common stock which are issuable pursuant to an equity financing facility established by the terms of the Purchase Agreement described in this prospectus. In addition, we are registering 400,000 shares of common stock issued to Kodiak in consideration of entering into the Purchase Agreement with us, 37,500,000 shares of common stock that Kodiak may acquire upon exercise of a warrant we issued to Kodiak under the Purchase Agreement, and 18,122,930 shares of common stock that may be acquired by other stockholders of ours upon exercise of warrants and conversion of notes. We may draw on the equity financing facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of the Purchase Agreement, by delivering “put notices” to Kodiak.

 

We are not selling any securities under this prospectus and will not receive any of the proceeds from the sale of the shares of our common stock by any selling stockholder. We will, however, receive proceeds from the sale of common stock directly to Kodiak pursuant to the Purchase Agreement. When we put shares of our common stock to Kodiak, the per-share purchase price that Kodiak will pay to us in respect of the put will be equal to 80% of lowest closing bid price for the Company’s common stock on the OTCQB, as reported by Bloomberg Finance L.P., during the three trading days immediately following the applicable put notice. Closings from time to time under the Purchase Agreement will only occur if the lowest daily volume weighted average price of the Company’s common stock during the applicable valuation period is greater than or equal to $0.14 per share, unless otherwise agreed to by us and Kodiak.

 

Kodiak is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act. Kodiak may sell the shares of common stock described in this prospectus in a number of different ways and at varying prices. See “Plan of Distribution” for more information about how the selling stockholders may sell the shares of common stock being registered pursuant to this prospectus.

 

Our common stock is listed on OTCQB under the symbol “PNTV”. On April 23 , 2018, our common stock closed at $0. 051 per share.

 

These are speculative securities. Investing in these securities involves significant risks. You should purchase these securities only if you can afford a complete loss of your investment. You should carefully consider the risk factors beginning on page 4 of this prospectus before purchasing any of the shares offered by this prospectus.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

Prospectus dated April [●], 2018.

 

     
 

 

TABLE OF CONTENTS

 

  Page
ABOUT THIS PROSPECTUS ii
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ii
PROSPECTUS SUMMARY 1
RISK FACTORS 4
USE OF PROCEEDS 11
PLAN OF DISTRIBUTION 13
MARKET FOR OUR COMMON STOCK 15
DIVIDEND POLICY 15
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 16
DESCRIPTION OF OUR BUSINESS 29
DESCRIPTION OF PROPERTY 31
LEGAL PROCEEDINGS 32
DESCRIPTION OF CAPITAL STOCK 32
MANAGEMENT 33
DISCLOSURE OF COMMISSION POSITION ON  INDEMNIFICATION FOR SECURITIES LIABILITIES 36
LEGAL MATTERS 36
EXPERTS 36
AVAILABLE INFORMATION 37

 

  i  
 

 

ABOUT THIS PROSPECTUS

 

You should rely only on the information contained in or incorporated by reference in this prospectus. We have not authorized any person to provide you with different or inconsistent information. If anyone provides you with different or inconsistent information, you should not rely on it. This is not an offer to sell or seeking an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus and the documents incorporated by reference is accurate only as of their respective dates. Our business, financial condition, results of operations and prospects may have changed since such dates.

 

We further note that the representations, warranties and covenants made by us in any document that is filed as an exhibit to the registration statement of which this prospectus is a part and in any document that is incorporated by reference herein were made solely for the benefit of the parties to such agreement, including, in some cases, for the purpose of allocating risk among the parties to such agreements, and should not be deemed to be a representation, warranty or covenant to you. Moreover, such representations, warranties or covenants were accurate only as of the date when made. Accordingly, such representations, warranties and covenants should not be relied on as accurately representing the current state of our affairs.

 

Unless the context otherwise requires, the terms “Players Network”, the “Company”, “we”, “us”, “our” and similar terms used in this prospectus refer to Players Network and our subsidiaries.

 

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

 

This prospectus and the documents incorporated by reference in this prospectus “forward-looking statements” about our business, financial condition and prospects based on our current expectations, assumptions, estimates, and projections about us and our industry. All statements other than statements of historical fact are “forward-looking statements”, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

 

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Unless otherwise required by law, we do not intend, and undertake no obligation, to update any forward-looking statement.

 

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

 

  the potential for increased government regulation and enforcement actions, and the potential for changes in laws, that would restrict or otherwise impact our cannabis or gaming programming operations;
  the competitive environment of the industries in which we operate;
  our need for additional funding;
  general economic and business conditions, and trends in the travel and entertainment industries;
  the potential impact of any negative publicity or lawsuits;
  deterioration in general or regional economic conditions;
  competitive threats posed by rapid technological changes;
  uncertainties inherent in our ability to execute upgrades of our video systems, including uncertainties associated with operational, economic and other factors;
  the ability of vendors to deliver required equipment, software and services;
  inability to achieve future sales levels or other operating results; and
  operational inefficiencies in distribution or other systems.

 

You should read the matters described in “Risk Factors” below and disclosed in the documents incorporated by reference in this prospectus and the other cautionary statements made in this prospectus and in the documents incorporated by reference in this prospectus as being applicable to all related forward-looking statements wherever they appear in this prospectus and in the documents incorporated by reference in this prospectus. We cannot assure you that the forward-looking statements in this prospectus and in the documents incorporated by reference in this prospectus will prove to be accurate and therefore prospective investors are encouraged not to place undue reliance on forward-looking statements.

 

  ii  
 

 

 

PROSPECTUS SUMMARY

 

This summary highlights certain information described in greater detail elsewhere or incorporated by reference in this prospectus. Before deciding to invest in our securities you should read the entire prospectus carefully, including the “Risk Factors” section contained in this prospectus, and our consolidated financial statements and the related notes, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and the other documents incorporated by reference into this prospectus.

 

Company Overview

 

Players Network is actively pursuing the cultivation and processing of medical and recreational marijuana in North Las Vegas pursuant to two medical marijuana establishments (MME) licenses that were granted by the city of North Las Vegas for cultivation and production to its majority-owned subsidiary, Green Leaf Farms Holdings LLC, in which the Company holds an 85.4% interest. We also distribute content relating to the cannabis industry at WeedTV.com.

 

Our principal office is located at 1771 E. Flamingo Road, #201-A, Las Vegas, NV 89119. Our telephone number is (702) 840-3270.

 

Green Leaf Cannabis Business

 

Green Leaf was granted two Medical Marijuana Establishment (MME) licenses by the City of North Las Vegas and State of Nevada; one for cultivation, and one for production of extracts, along with cultivation and production licenses for recreational cannabis that went into effect on July 1, 2017.

 

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. The sale of cannabis in Nevada for medical purposes has been legal since 2015, and on July 1, 2017, the recreational use of cannabis became legal in the State of Nevada.

 

It is estimated that there are approximately 43,000 Nevada State issued medical marijuana cardholders. Nevada also 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 were 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 Nevada’s adult recreational marijuana market.

 

Green Leaf offers the following products and services:

 

  Premium organic medical cannabis sold wholesale to licensed retailers
  Recreational marijuana cannabis products sold wholesale to distributors and retailers
  Extraction products such as oils and waxes derived from in-house cannabis production
  Processing and extraction services for licensed medical cannabis cultivators in Nevada
  High quality cannabis strains in the form of vegetative cuttings for sale to licensed medical cannabis cultivators in Nevada

 

Media Content Distribution; Weed TV

 

Historically, we have distributed video and other media content over cable television channels and a wide variety of internet enabled devices, focusing primarily on the gaming industry and Las Vegas lifestyle. Our current media operations are focused on our recently launched Web site, WeedTV.com, and its related social media presence.

 

Weed TV is a source of informational entertainment, products and services for people who relate to the marijuana lifestyle and social community. Weed TV content is currently available at www.weedtv.com . We plan to continuously add features and content to Weed TV, including a directory of businesses that cater to the marijuana business, such as dispensaries, smoke shops, doctors, financial institutions, manufacturers and more.

 

 

  1  

 

 

 

Kodiak Purchase Agreement

 

This prospectus relates in part to the resale of up to 37,500,000 shares of our common stock that Kodiak has committed to purchase from us following our delivery to Kodiak of “Put Notices” from time to time under the terms of an Equity Purchase Agreement we entered into on August 14, 2017, as amended on January 5, 2018.

 

Pursuant to the Purchase Agreement, subject to the effectiveness of the registration statement that includes this prospectus and our compliance with other terms set forth therein, Kodiak has committed to purchase up to 37,500,000 shares of common stock upon our delivery of Put Notices at a price equal to the greater of (i) $0.14 per share and (ii) 80% of the lowest daily volume weighted average price of our common stock during the three trading days following the delivery of the applicable Put Notice (the “VWAP Price”), but in no event at a price greater than $0.50 per share. Notwithstanding the foregoing, Kodiak will not be required to purchase common stock under a Put Notice if the VWAP Price during the applicable valuation period is less than $0.14 per share. Kodiak’s commitment to purchase common stock under the Purchase Agreement will terminate on March 31, 2019. The Purchase Agreement also provides that Kodiak is not required to purchase common stock to the extent that following such purchase, Kodiak would beneficially own in excess of 9.99% of our outstanding shares of common stock.

 

This prospectus also relates to the resale by Kodiak of 400,000 shares of common stock we issued to Kodiak upon the execution of the Purchase Agreement in consideration of its commitment to purchase shares of common stock thereunder.

 

In connection with the Purchase Agreement, we also issued Kodak a warrant to purchase an additional 37,500,000 shares of our common stock, which is exercisable for a three-year period and has an initial exercise price that will be equal to 140% of the initial purchase price paid by Kodiak under the Purchase Agreement. The warrant restricts Kodiak from exercising the Warrant to the extent that following such exercise, Kodiak would either beneficially own in excess of 4.99% of the outstanding shares of common stock or together with shares issuable under the Purchase Agreement would beneficially own in excess of 9.99% of the outstanding shares of common stock . The resale of the shares we may issue to Kodiak under the warrant is also covered by this prospectus.

 

  2  

 

 

 

The Offering

 

The following summary contains basic information about the offering and the securities being registered hereunder and is not intended to be complete. It does not contain all the information that is important to you. For a more complete understanding of the securities we are offering, please refer to the sections of this prospectus titled “Description of Capital Stock.”

 

Securities Being Registered:   93,522,930 Shares of common stock.
     
Shares of Common Stock Outstanding Before the Offering:     589,994,130
     
Shares of Common Stock Outstanding After the Offering:    

683,117,060

     
Use of Proceeds:   The shares offered by this prospectus will be sold by the selling stockholders. We will not receive any proceeds from the sale of shares by the selling stockholder.  However, we will receive proceeds from the sale of shares of our common stock to Kodiak under the Purchase Agreement, and upon the exercise of warrants held by Kodiak and the other selling stockholders.  These proceeds would be used for general working capital purposes and for the expansion of Green Leaf’s cultivation facilities.
     
Risk Factors:   An investment in our securities involves a high degree of risk and could result in the loss of your entire investment. Prior to making an investment decision, you should carefully consider all of the information in this prospectus and, in particular, you should evaluate the risk factors set forth under the caption “Risk Factors” beginning on page 4 of this prospectus.
     
OTCQB Trading Symbol:   PNTV

 

 

  3  

 

 

RISK FACTORS

 

Investment in our securities involves a high degree of risk. You should carefully consider the risks described below, as well as the other information in this prospectus. Each of the risks could adversely affect our business, financial condition, results of operations and prospects, and could result in a complete loss of your investment. This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks mentioned above.

 

Risks Relating to our Company

 

We have had a history of losses, we expect losses in the future, and there can be no assurance that we will become profitable in the future.

 

We were incorporated under the laws of the State of Nevada on March 16, 1993. Since inception, we have experienced operating losses on an on-going basis. For our fiscal year s ended December 31, 201 7 and 2016 , we incurred net losses of $ 13,957,984 and $ 1,701,810, respectively. As of such dates, we had accumulated deficits of $ 44,597,401 and $ 30,639,417, respectively. We expect our losses to continue for the foreseeable future. These continuing losses may be greater than current levels. If our revenues do not increase substantially or if our expenses exceed our expectations, we may never become profitable. Even if we do achieve profitability, we may not sustain profitability on a quarterly or annual basis in the future.

 

Our auditor has given us a “going concern” qualification, which questions our ability to continue as a going concern without additional financing.

 

Our independent certified public accountant has added an emphasis paragraph to its report on our financial statements for the year ended December 31, 201 7 regarding our ability to continue as a going concern. Key to this determination is our recurring net losses, an accumulated deficit, and a working capital deficiency. 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.

 

We need additional capital in the future to finance our planned growth, which we may not be able to raise or it may only be available on terms unfavorable to us or our stockholders, which may result in our inability to fund our working capital requirements and harm our operational results.

 

We have and expect to continue to have substantial capital expenditure and working capital needs. We do not now have funds sufficient to fund our operations at their current level for the next 12 months. We need to raise additional cash to fund our operations and implement our business plan. We are maintaining an on-going effort to locate sources of additional funding, without which we will not be able to remain a viable entity. If we are able to obtain the financing required to remain in business, eventually achieving operating profits will require substantially increasing revenues or drastically reducing expenses from their current levels or both. If we are able to obtain the required financing to remain in business, future operating results depend upon a number of factors that are outside of our control. The expected operating losses, coupled with a lack of liquidity, raise a substantial doubt about our ability to continue as a going concern. If we raise additional funds through the issuance of equity or convertible debt securities, the percentage ownership of our stockholders would be reduced, and these newly issued securities might have rights, preferences or privileges senior to those of existing stockholders.

 

At this stage of our business operations, investors may lose their entire investment.

 

Because of the factors described above, and given the nature of our business and our changing business focus, we may not be able to execute our business plan and may be forced to cease operations, which could result in the loss by investors of their entire investment in our common stock.

 

  4  

 

 

If we are unable to retain the services of Messrs. Bradley or Berk, or if we are unable to successfully recruit qualified managerial and sales personnel having experience in business, we may not be able to continue our operations.

 

Our success depends to a significant extent upon the continued service of Mark Bradley, our Chief Executive Officer and Michael Berk, our President of Programming. Loss of the services of Messrs. Bradley or Berk could have a material adverse effect on our growth, revenues, and prospective business. In order to successfully implement and manage our business plan, we will be dependent upon (among other things) successfully recruiting qualified managerial and sales personnel having experience in business. Competition for qualified individuals is intense. There can be no assurance that we will be able to find, attract and retain existing employees or that we will be able to find, attract and retain qualified personnel on acceptable terms.

 

Our current management resources may not be sufficient for the future, and we have no assurance that we can attract additional qualified personnel.

 

There can be no assurance that the current level of management is sufficient to perform all responsibilities necessary or beneficial for management to perform. Our success in attracting additional qualified personnel will depend on many factors, including our ability to provide them with competitive compensation arrangements, equity participation and other benefits. There is no assurance that (if we need to) we will be successful in attracting highly qualified individuals in key management positions.

 

Limitations on claims against our officers and directors, and our obligation to indemnify them, could prevent our recovery for losses caused by them.

 

The corporation law of Nevada allows a Nevada corporation to limit the liability of its directors to the corporation and its stockholders to a certain extent, and our Articles of Incorporation have eliminated our directors’ and officers’ personal liability for damages for breaches of fiduciary duty but do not eliminate or limit the liability of a director officer for (a) acts or omissions which involve intentional misconduct, fraud or a knowing violation of the law, or (b) the payment of dividends in violation of applicable law. The corporation law of Nevada allows a Nevada corporation to indemnify each director, officer, agent and/or employee to the extent that certain standards are met. Further, we may purchase and maintain insurance on behalf of any such persons whether or not we have the power to indemnify such person against the liability insured against. Consequently, because of the actions or omissions of officers, directors, agents and employees, we could incur substantial losses and be prevented from recovering such losses from such persons. Further, the Commission maintains that indemnification for liabilities arising under the Securities Act is against the public policy expressed in the Securities Act, and is therefore unenforceable.

 

Mark Bradley, our Chief Executive Officer controls a majority of our outstanding voting shares, which prevents other stockholders from influencing significant corporate decisions.

 

Mark Bradley, our founder CEO, is able to exercise voting rights with respect to approximately 56.7% of the voting power of our outstanding capital stock, and therefore has the ability to control the outcome of all matters submitted to our stockholders for approval, including the election of directors and any merger, consolidation, or sale of all or substantially all of our assets. This concentrated control could delay, defer, or prevent a change of control, merger, consolidation, or sale of all or substantially all of our assets that our other stockholders support, or conversely, could result in the consummation of such a transaction that our other stockholders do not support. This concentrated control could also discourage a potential investor from acquiring our common stock due to the limited voting power of such stock relative to the Series A and Series C preferred stock held by Mr. Bradley.

 

We may experience rapid growth, and in such case we will need to manage this growth effectively.

 

We believe that, given the right business opportunities, we may expand our operations rapidly and significantly. If rapid growth were to occur, it could place a significant strain on our management, operational and financial resources. To manage any significant growth of our operations, we will be required to undertake the following successfully:

 

  Manage relationships with various strategic partners and other third parties;
  Hire and retain skilled personnel necessary to support our business;
  Train and manage a growing employee base; and
  Continually develop our financial and information management systems.

 

If we fail to make adequate allowances for the costs and risks associated with this expansion or if our systems, procedures or controls are not adequate to support our operations, our business could be harmed. Our inability to manage growth effectively could materially adversely affect our business, results of operations and financial condition.

 

  5  

 

 

Risks Related To Our Cannabis Business

 

Cannabis remains illegal under federal law and a change in federal enforcement practices could significantly and negatively affect our cannabis cultivation and production business.

 

State laws legalizing medicinal and adult cannabis use are in conflict with the Federal Controlled Substances Act, which classifies cannabis as a Schedule-I controlled substance and makes cannabis use and possession illegal on a national level. The United States Supreme Court has ruled that the Federal government has the right to regulate and criminalize cannabis, even for medical purposes, and thus Federal law criminalizing the use of cannabis preempts state laws that legalize its use. While the prior Obama Administration has effectively stated that it is not an efficient use of resources to direct Federal law enforcement agencies to prosecute those lawfully abiding by state-designated laws allowing the use and distribution of medical and recreational cannabis, on January 4, 2018, the United States Attorney General announced the rescission of the Obama Administration’s policy, which negatively impacted our stock price. The Federal government’s enforcement of Federal laws could cause significant financial damage to us and our stockholders.

 

Our business is dependent on state laws pertaining to the cannabis industry.

 

Twenty-nine states and the District of Columbia allow its citizens to use medical cannabis. Additionally, Alaska, California, Colorado, Maine, Massachusetts, Nevada, Oregon, and Washington, and the District of Columbia have legalized cannabis for adult recreational use, and additional recreational measures are expected to be pursued by other states in the future. Continued development of the cannabis industry is dependent upon continued legislative authorization of cannabis at the state level. Any number of factors could slow or halt progress in this area. Further, progress in the cannabis industry, while encouraging, is not assured. While there may be ample public support for legislative action, numerous factors impact the legislative process. Any one of these factors could slow or halt use of cannabis, which would negatively impact our business.

 

Laws and regulations affecting the cannabis and marijuana industries are constantly changing, which could detrimentally affect our business, and we cannot predict the impact that future regulations may have on us.

 

Local, state and federal cannabis laws and regulations are constantly changing and they are subject to evolving interpretations, which could require us to incur substantial costs associated with compliance or to alter one or more of our service offerings. In addition, violations of these laws, or allegations of such violations, could disrupt our business and result in a material adverse effect on our revenues, profitability, and financial condition. We cannot predict the nature of any future laws, regulations, interpretations or applications, nor can we determine what effect additional governmental regulations or administrative policies and procedures, when and if promulgated, could have on our business. Any change in law or interpretation could have a material adverse effect on our business, financial condition, and results of operations.

 

Expansion by well-established cultivation and production companies into the cannabis industry could prevent us from realizing anticipated growth in customers and revenues.

 

Established dispensary companies may expand their businesses into cannabis cultivation and production. If they decided to expand into cultivation and production, this could hurt the growth of our business and cause our revenues to be lower than we expect.

 

Due to our involvement in the cannabis industry, we may have a difficult time obtaining the various insurances that are desired to operate our business, which may expose us to additional risk and financial liabilities.

 

Insurance that is otherwise readily available, such as workers compensation, general liability, and directors and officers insurance, is more difficult for us to find, and more expensive, because we are service providers to companies in the cannabis industry. There are no guarantees that we will be able to find such insurances in the future, or that the cost will be affordable to us. If we are forced to go without such insurances, it may prevent us from entering into certain business sectors, may inhibit our growth, and may expose us to additional risk and financial liabilities.

 

Participants in the cannabis industry have difficulty accessing the service of banks, which may make it difficult for us to operate.

 

Despite recent rules issued by the United States Department of the Treasury mitigating the risk to banks that do business with cannabis companies permitted under state law, as well as recent guidance from the United States Department of Justice, banks remain wary to accept funds from businesses in the cannabis industry. Since the use of cannabis remains illegal under Federal law, there remains a compelling argument that banks may be in violation of Federal law when accepting for deposit, funds derived from the sale or distribution of cannabis. Consequently, businesses involved in the cannabis industry continue to have trouble establishing banking relationships. An inability to open bank accounts may make it difficult for us, or some of our customers, to do business.

 

We have identified material weaknesses in our internal controls over financial reporting.

 

As a result of management’s assessment of our internal control over financial reporting as of December 31, 2017, management concluded that there were weaknesses in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. While we have identified material weaknesses, we believe that our consolidated audited financial statements have been prepared in accordance with accounting principles generally accepted in the United States.

 

  6  

 

 

Risks Related To Our Media Business

 

We face intense competition in our Weed TV and media business.

 

We operate in a highly competitive industry, and we may not be able to generate or maintain advertising and sales revenues, if any, from our media content. Our media and advertising businesses compete for audiences and advertising revenues with other media businesses, as well as with other media, such as newspapers, magazines, television, direct mail, mobile devices, satellite radio, Internet-based services and live entertainment. Our competitors may develop technology, services or advertising media that are equal or superior to those we provide or that achieve greater market acceptance and brand recognition than we achieve. It also is possible that new competitors may emerge and rapidly acquire significant market share in any of our business segments. An increased level of competition for advertising dollars may lead to lower advertising rates as we attempt to retain customers or may cause us to lose customers to our competitors who offer lower rates that we are unable or unwilling to match.

 

If our security measures are breached, we may face liability and public perception of our services could be diminished, which would negatively impact our ability to attract listeners, business partners and advertisers.

 

Although we have security measures to protect against the loss, misuse and alteration of our websites, digital assets and proprietary business information as well as consumer information, no security measures are perfect and impenetrable and we may be unable to anticipate or prevent unauthorized access. A security breach could occur due to the actions of outside parties, employee error, malfeasance or a combination of these or other actions. If an actual or perceived breach of our security occurs, we could lose competitively sensitive business information or suffer disruptions to our business operations. In addition, the public perception of the effectiveness of our security measures or services could be harmed, we could lose consumers, business partners and advertisers and we could suffer financial exposure in connection with remediation efforts, investigations and legal proceedings and changes in our security and system protection measures.

 

Additional restrictions on advertising of cannabis and other products may further restrict the categories of clients that can advertise on Weed TV.

 

Out-of-court settlements between the major U.S. tobacco companies and all 50 states, the District of Columbia, the Commonwealth of Puerto Rico and other U.S. territories include a ban on the outdoor advertising of tobacco products. Other products and services may be targeted in the U.S. in the future, including cannabis products. Any significant reduction in cannabis-related advertising or advertising of other products due to content-related restrictions could cause a reduction in our direct revenues from such advertisements.

 

There are various risks associated with our intellectual property rights.

 

No patent protection . We have no patents and rely on a combination of copyright and trade secret protection and nondisclosure agreements to establish and protect our proprietary rights. Despite our precautions, it may be possible for a third party to copy or otherwise obtain and use our proprietary information, products or technology without authorization, to imitate our programming, or to develop similar or superior programming or ideas independently. Imitation of our programming, the creation of similar or superior programming, or the infringement of our intellectual property rights could diminish the value of our programming or otherwise adversely affect our potential for revenue. Policing unauthorized use of our intellectual property will be difficult and expensive.

 

Enforcing our proprietary rights may require litigation . Litigation may be necessary in the future to enforce our intellectual property rights, to protect our trade secrets, to protect our copyrights, to determine the validity and scope of the proprietary rights of others, or to defend against claims of infringement or invalidity. Any such litigation could result in substantial costs and diversion of resources and could have a material adverse effect on our business, operating results or financial condition.

 

Others may assert infringement claims against us . One of the risks of our business is the possibility of claims that our productions infringe on the intellectual property rights of third parties with respect to previously developed content. In addition, our technology and software may be subject to patent, copyright or other intellectual property claims of third parties. We could receive in the future claims of infringement of other parties’ proprietary rights. There can be no assurance that infringement claims will not be asserted or prosecuted against us, or that any assertions or prosecutions will not materially adversely affect our business, financial condition or results of operations. Irrespective of the validity or the successful assertion of such claims, we would incur significant costs and diversion of resources with respect to the defense thereof, which could have a material adverse effect on our business, financial condition or results of operations. If any claims or actions are asserted against us, we may seek to obtain a license under a third party’s intellectual property rights. We cannot provide any assurances, however, that under such circumstances a license would be available on reasonable terms or at all.

 

  7  

 

 

We rely on a number of third parties, and such reliance exposes us to a number of risks.

 

Our operations depend and will depend on a number of third parties. We have limited control over these third parties. We do not and in the future may not have long-term agreements with them. In addition, we do not own a gateway onto the Internet. Instead, we now and presumably always will rely on a network operating center to connect our Web site to the Internet. Overall, our inability to maintain satisfactory relationships with the requisite third parties on acceptable commercial terms, or the failure of such third parties to maintain the quality of services they provide at a satisfactory standard, could materially adversely affect our business, results of operations and financial condition.

 

Risks Related To Our Common Stock

 

We have both the obligation and the ability to issue additional shares of our common stock, and the issuance of such additional shares of common stock may depress the price of our common stock.

 

We have both the ability as well as outstanding obligations to issue additional shares of common stock in the future. These include the following:

 

  ●  We may sell and issue to Kodiak up to 37,500,000 shares of common stock under the Purchase Agreement and will be required to issue up to an additional 37,500,000 shares of common stock under the warrant held by Kodiak upon exercise by Kodiak;
  ●  Our Amended and Restated 2004 Non-Qualified Stock Option Plan allows us to issue up to 25,000,000 shares of common stock and options. We currently have 2,075,272 shares of our common stock available for issuance under our Amended and Restated 2004 Non-Qualified Stock Option Plan;
  ●  There are 160,506,452 shares of common stock issuable pursuant to common stock options and warrants outstanding as of the date of this prospectus;
  ●  There are 2,000,000 shares of common stock reserved for issuance upon conversion of 2,000,000 shares of outstanding Series A Preferred Stock;
  ●  There are 12,000,000 shares of common stock reserved for issuance upon conversion of 2,000,000 shares of outstanding Series C Preferred Stock; and
  ●  Shares of common stock issuable pursuant to convertible debt instruments outstanding, as described further below.

 

The options, warrants and other convertible securities described above will permit the holders to purchase shares of common stock at specified prices. These purchase prices may be less than the then current market price of our common stock. Any shares of common stock issued pursuant to these options would further dilute the percentage ownership of existing stockholders. The terms on which we could obtain additional capital during the life of these options and warrants may be adversely affected because of such potential dilution. Finally, we may issue additional shares in the future other than as listed above. There are no preemptive rights in connection with our common stock. Thus, the percentage ownership of existing stockholders may be diluted if we issue additional shares in the future. Future issuances of additional shares pursuant to options, warrants other convertible securities could cause immediate and substantial dilution to the net tangible book value of shares of common stock issued and outstanding immediately before such issuances. Any future decrease in the net tangible book value of such issued and outstanding shares could materially and adversely affect the market value of the shares.

 

We may issue additional stock without stockholder consent.

 

Our Board of Directors has authority, without action or vote of the stockholders, to issue all or part of our authorized but unissued shares. Additional shares may be issued in connection with future financing, acquisitions, employee stock plans, or otherwise. Any such issuance will dilute the percentage ownership of existing stockholders. The Board, from the authorized capital of 25,000,000 preferred shares, has authorized and designated 2,000,000 shares of Series A Preferred Stock and 12,000,0000 shares of Series C Preferred Stock, of which 2,000,000 shares and 12,000,000 shares are issued and outstanding, respectively. The Board of Directors can issue preferred stock in one or more series and fix the terms of such stock without stockholder approval. Preferred stock may include the right to vote as a series on particular matters, preferences as to dividends and liquidation, conversion and redemption rights and sinking fund provisions. The issuance of preferred stock could adversely affect the rights of the holders of common stock and reduce the value of the common stock. In addition, specific rights granted to holders of preferred stock could discourage, delay or prevent a transaction involving a change in control of our company, even if doing so would benefit our stockholders. Such issuance could also discourage proxy contests and make it more difficult for you and other stockholders to elect directors of your choosing and to cause us to take other corporate actions you desire.

 

  8  

 

 

Offers or availability for sale of a substantial number of shares of our common stock may cause the price of our common stock to decline.

 

If our stockholders sell substantial amounts of our common stock in the public market, or upon the expiration of any statutory holding period under Rule 144, or upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an “overhang” and cause the market price of our common stock to fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could hinder our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate.

 

Broker-dealers may be discouraged from effecting transactions in our common stock because it is considered a penny stock and is subject to the penny stock rules.

 

Our common stock currently constitutes “penny stock.” Subject to certain exceptions, for the purposes relevant to us, “penny stock” includes any equity security that has a market price of less than $5.00 per share. Rules 15g-1 through 15g-9 promulgated under the Securities Exchange Act of 1934, as amended, impose sales practice and disclosure requirements on certain brokers-dealers who engage in certain transactions involving a “penny stock.” In particular, a broker-dealer selling penny stock to anyone other than an established customer or “accredited investor” (generally, an individual with net worth in excess of $1,000,000 or an annual income exceeding $200,000, or $300,000 together with his or her spouse), must make a special suitability determination for the purchaser and must receive the purchaser’s written consent to the transaction prior to sale, unless the broker-dealer or the transaction is otherwise exempt. In addition, the penny stock regulations require the broker-dealer to deliver, prior to any transaction involving a penny stock, a disclosure schedule prepared by the Securities and Exchange Commission relating to the penny stock market, unless the broker-dealer or the transaction is otherwise exempt. A broker-dealer is also required to disclose commissions payable to the broker-dealer and the registered representative and current quotations for the securities. Finally, a broker-dealer is required to send monthly statements disclosing recent price information with respect to the penny stock held in a customer’s account and information with respect to the limited market in penny stocks.

 

The additional sales practice and disclosure requirements imposed upon broker-dealers may discourage broker-dealers from effecting transactions in our shares, which could severely limit the market liquidity of the shares and impede the sale of our shares in the secondary market.

 

As an issuer of “Penny Stock” the protection provided by the federal securities laws relating to forward looking statements does not apply to us.

 

Although the federal securities laws provide a safe harbor for forward-looking statements made by a public company that files reports under the federal securities laws, this safe harbor is not available to issuers of penny stocks. As a result, we will not have the benefit of this particular safe harbor protection in the event of any claim that the material provided by us contained a material misstatement of fact or was misleading in any material respect because of our failure to include any statements necessary to make the statements not misleading.

 

Because our Board of Directors does not intend to pay dividends on our common stock in the foreseeable future, stockholders may have to sell their shares of our common stock to realize a return on their investment in the company.

 

Holders of our common stock are entitled to receive dividends when, as and if declared by our Board of Directors out of funds legally available. To date, we have paid no dividends. Our Board of Directors does not intend to declare any dividends in the foreseeable future, but instead intends to retain all earnings, if any, for use in our business operations. Accordingly, a return on an investment in shares of our common stock may be realized only through a sale of such shares, if at all.

 

We have outstanding convertible debt, which, if repaid will require a significant amount of capital, or if converted into our common stock could have a material adverse effect on our stock price.

 

As of December 31 , 2017, we had convertible notes outstanding with a cumulative outstanding principal balance of $ 1,165,300 which, if not converted into our common stock, require repayment at a premium to the outstanding balance, resulting in the need for approximately $ 2,500 ,000 in liquid capital. If, rather than repay these notes, we allow them to convert into our common stock, the conversions would be done at a discount to the market price of our common stock. The potential dilutive effects of these conversions at various conversion prices below our most recent market price of $0. 05 per share is as follows:

 

      100%     75%     50%     25%
      $0. 05     $0. 375     $0.0 2 5     $0.0 1 25
                         
Potential dilutive shares     23,306 ,000     31,074,667     4 6,612 ,000     93,224 ,000

 

  9  

 

 

The issuance and sale of common stock upon conversion of outstanding convertible notes may depress the market price of our common stock.

 

As sequential conversions of our convertible notes with conversion prices tied to the trading price of our common stock are effected, and sales of the shares issued on conversion occur, the price of our common stock may decline, and as a result, the holder of these notes will be entitled to receive an increasing number of shares in connection with its conversions, which shares could then be sold in the market, triggering further price declines and conversions for even larger numbers of shares, to the detriment of our investors. The shares of common stock which the convertible notes are convertible into may be sold without restriction pursuant to Rule 144 provided the notes were held for at least six months. As a result, the sale of these shares may adversely affect the market price of our common stock.

 

In addition, the common stock issuable upon conversion of these convertible notes may represent overhang that may also adversely affect the market price of our common stock. As described above, overhang occurs when there is a greater supply of a company’s stock in the market than there is demand for that stock. When this happens the price of the company’s stock will decrease, and any additional shares which stockholders attempt to sell in the market will only further decrease the share price. We have issued various convertible notes that are convertible into shares of our common stock at a discount to market, which provides the holders with the ability to sell their common stock at or below market and still make a profit. In the event of such overhang, the note holder will have an incentive to sell their common stock as quickly as possible. If the share volume of our common stock cannot absorb the discounted shares, then the value of our common stock will likely decrease.

 

The continuously adjustable conversion price feature of our convertible notes may encourage short selling of our common stock, which could have a depressive effect on the price of our common stock.

 

The significant downward pressure on the price of our common stock as the holder of the convertible notes converts and sells material amounts of our common stock could encourage investors to short sell our common stock. This could place further downward pressure on the price of our common stock. In addition, not only the sale of shares issued upon conversion of the convertible notes, but also the mere perception that these sales could occur, may adversely affect the market price of our common stock.

 

Market volatility has significantly affected our stock price and is likely to effect the value of your shares.

 

The market price for our common stock has been and is likely to continue to be extremely volatile. In addition, the market price of our common stock may fluctuate significantly in response to a number of factors, most of which we cannot control, including, among others:

 

  ●  fluctuations in stock market prices and trading volumes of similar companies;
  ●  regulatory or legal developments;
  ●  general market conditions and overall fluctuations in U.S. equity markets;
  ●  variations in our quarterly operating results;
  ●  changes in accounting principles;
  ●  our ability to raise additional capital and the terms on which we can raise it;
  ●  sales of large blocks of our common stock, including sales by our executive officers, directors and significant stockholders;
  ●  announcements of new products, brands, services, commercial relationships, acquisitions or other events by us or our competitors;
  ●  additions or departures of key personnel;
  ●  discussion of us or our stock price by the press or in online investor communities; and
  ●  other risks and uncertainties described in these risk factors.

 

Risks Relating to Our Agreements with Kodiak Capital Group, LLC

 

The sale of our common stock to Kodiak may cause dilution, and the sale of the shares of common stock acquired by Kodiak, or the perception that such sales may occur, could cause the price of our common stock to fall.

 

Pursuant to the Purchase Agreement, as amended, Kodiak has committed to purchase up to an aggregate of 37,500,000 shares of our common stock. The shares that may be sold pursuant to the Purchase Agreement in the future may be sold by us to Kodiak at our discretion from time to time, commencing after the SEC has declared effective the registration statement that includes this prospectus and concluding on March 31, 2019. The per share purchase price for the shares that we may sell to Kodiak under the Purchase Agreement will fluctuate based on the price of our common stock, and will be equal to 80% of the lowest daily volume weighted average price of our common stock during the three trading days following our delivery of the applicable Put Notice to Kodiak to purchase the shares. Closings from time to time under the Purchase Agreement will only occur if the lowest daily volume weighted average price of the Company’s common stock during the applicable valuation period is greater than or equal to $0.14 per share, unless otherwise agreed to by Kodiak and us. Depending on market liquidity at the time, sales of shares of common stock to Kodiak may cause the trading price of our common stock to fall.

 

  10  

 

 

We generally have the right to control the timing and amount of any sales of our shares to Kodiak, except that, pursuant to the Purchase Agreement, we may not sell shares to Kodiak if the sale would result in its beneficial ownership of more than 9.99% of our the outstanding common stock. Kodiak may ultimately purchase all, some or none of the shares of our common stock that may be sold pursuant to the Purchase Agreement and, after it has acquired shares, Kodiak may sell all, some or none of those shares. Therefore, sales to Kodiak by us could result in substantial dilution to the interests of other holders of our common stock. Additionally, the sale of a substantial number of shares of our common stock to Kodiak, or the anticipation of such sales, could make it more difficult for us to sell equity or equity-related securities in the future at a time and at a price that we might otherwise wish to effect sales.

 

Kodiak will pay less than the then-prevailing market price for our common stock for purchases under the Purchase Agreement.

 

The common stock to be issued to Kodiak pursuant to the Purchase Agreement may be purchased at a 20% discount to the daily volume weighted average price of the Company’s common stock during the three trading days following the delivery of the applicable Put Notice. Kodiak has a financial incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between the discounted price and the market price. If Kodiak sells the shares, the price of our common stock could decrease. If our stock price decreases, Kodiak may have a further incentive to sell the shares of our common stock that it holds. These sales may have a further impact on our stock price.

 

We may not be able to put to Kodiak all 37,500,000 shares available under the Purchase Agreement.

 

The Purchase Agreement provides for the purchase by Kodiak of up to 37,500,000 shares of our common stock, which at the minimum purchase price of $0.14 per share under the Purchase Agreement would result in gross proceeds to us of $5,250,000. Our ability to draw down funds and sell shares under the Purchase Agreement requires the satisfaction of a number of conditions, including that the registration statement of which this prospectus is a part be declared effective by the SEC and continue to be effective at the time of the put, as well as Kodiak’s compliance with its obligations under the Purchase Agreement.   Accordingly, there can be no guarantee that that we will be able to draw down all or any portion of the $5,250,000 available to us under the Purchase Agreement.

 

USE OF PROCEEDS

 

The Shares offered by this prospectus will be sold by the selling stockholders. We will not receive any proceeds from the sale of common stock by the selling stockholders. However, we will receive proceeds from the sale of shares of our common stock to Kodiak under the Purchase Agreement, and upon the exercise of warrants held by the selling stockholders. These proceeds would be used for general working capital purposes and for the expansion of Green Leaf’s cultivation facilities.

 

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SELLING STOCKHOLDERS

 

This prospectus relates to the possible resale from time to time by the selling stockholders of our common stock, including all shares of common stock that may be issued by us to Kodiak under the Purchase Agreement and upon exercise of the warrant held by Kodiak. Except for the transactions contemplated by the Purchase Agreement, including our obligations under the related Registration Rights Agreement pursuant to which we have filed the registration statement of which this prospectus is a part, Kodiak has not had any material relationship with us within the past three years. We also have not had any material relationship with any other selling stockholder listed below.

 

The table below presents information regarding the selling stockholders and the shares of common stock that they may offer from time to time under this prospectus. This table is prepared based on information supplied to us by the selling stockholders, and reflects holdings as of April 23 , 2018. As used in this prospectus, the term “selling stockholder” includes the selling stockholders named below and any donees, pledgees, transferees or other successors in interest selling shares received after the date of this prospectus from the selling stockholders as a gift, pledge, or other non-sale related transfer. The number of shares in the column “Maximum Number of Shares of common stock to be Offered Pursuant to this prospectus” represents all of the shares of common stock that the selling stockholders may offer under this prospectus. The selling stockholders may sell some, all or none of its shares in this Offering. We do not know how long the selling stockholders will hold the shares before selling them, and we currently have no agreements, arrangements or understandings with the selling stockholders regarding the sale of any of the shares.

 

Beneficial ownership is determined in accordance with Rule 13d-3(d) promulgated by the SEC under the Exchange Act, and includes shares of common stock with respect to which the selling stockholders has voting and investment power. The percentage of shares of common stock beneficially owned by the selling stockholders prior to the Offering shown in the table below is based on an aggregate of 589,994,130 shares of our common stock outstanding on April 23 , 2018. The fourth column assumes the sale of all of the shares offered by the selling stockholders pursuant to this prospectus.

 

    Beneficially Owned Prior to Offering           Beneficially Owned After Offering  
Selling Stockholder   Number of Shares     Percent     Number of Shares Being Offered by Selling Stockholder in Offering     Number of Shares(1)     Percent  
Kodiak Capital Group LLC (2)     37,900,000 (3)     4.99 % (3)     75,400,000       -0-       0.00 %
Black Mountain Equities, Inc. (4)     6,500,000 (5)     1. 09 %     4,300,000       2,200,000       *  
Gemini Master Fund, Ltd (6)     7,257,576 (7)     1. 22 %     4,300,000       2,957,576       *  
Emunah Funding, LLC (8)    

4,761,465

(9)     *       -0-      

-0-

      *  
Fourth Man, LLC (10)     4,761,465 (11)     *      

-0-

     

-0-

      *  

 

 

* Less than one percent.
   
(1) Assumes the sale of all shares being offered pursuant to this prospectus.  
   
(2) The business address of Kodiak is c/o Kodiak Capital Partners, LLC, Kodiak Capital Group, LLC, 260 Newport Center Drive, Newport Beach, CA 92660. Kodiak’s principal business is that of a private investment firm. We have been advised that Kodiak is not a member of FINRA, or an independent broker-dealer, and that neither Kodiak nor any of its affiliates is an affiliate or an associated person of any FINRA member or independent broker-dealer. We have been further advised that Ryan Hodson is the Managing Member of Kodiak, and that Mr. Hodson has definitive power to vote or to direct the vote and definitive power to dispose or to direct the disposition of all securities owned directly by Kodiak.
   
(3)

Includes 400,000 shares of common stock issued to Kodiak for entering into the Purchase Agreement and shares of common stock issuable upon exercise of the Warrant to purchase 37,500,000 shares of common stock, subject to the limitation therein described below. In accordance with Rule 13d-3(d) under the Exchange Act, we have excluded from the number of shares beneficially owned prior to the Offering all of the shares that Kodiak may be required to purchase under the Purchase Agreement, because the issuance of such shares is solely at our discretion and is subject to certain conditions, the satisfaction of all of which are outside of Kodiak’s control, including the Registration Statement of which this prospectus is a part becoming and remaining effective. Furthermore, under the terms of the Purchase Agreement, we may not issue shares of our common stock to Kodiak to the extent that Kodiak or any of its affiliates would, at any time, beneficially own more than 9.99% of our outstanding common stock, and under the terms of the warrant Kodiak may not exercise the warrant to the extent that Kodiak or any of its affiliates would, at any time, either beneficially own more than 4.99% of our outstanding shares of common stock or together with shares issuable under the Purchase Agreement beneficially own in excess of 9.99% of our outstanding shares of common stock. Notwithstanding the foregoing, if all 75,400,000 shares subject to this prospectus were included as beneficially owned by Kodiak stockholders as of April 23, 2018, Kodiak would beneficially own approximately 11.3% of our outstanding shares of common stock.

 

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(4) The business address of Black Mountain is Black Mountain Equities, Inc. is 13366 Greenstone Ct., San Diego, CA 92131. Black Mountain’s principal business is that of a private investment firm. We have been advised that Black Mountain is not a member of FINRA, or an independent broker-dealer, and that neither Black Mountain nor any of its affiliates is an affiliate or an associated person of any FINRA member or independent broker-dealer. We have been further advised that Adam Baker is the Managing Member of Black Mountain, and that Mr. Baker has definitive power to vote or to direct the vote and definitive power to dispose or to direct the disposition of all securities owned directly by Black Mountain.
   
(5) Consists of 2,800,000 shares that may be acquired on exercise of warrants to purchase common stock at an exercise price of $0.075 per share, 1,500,000 shares that may be acquired on exercise of warrants to purchase common stock at an exercise price of $0.14 per share, and 2,200,000 shares that may be acquired on conversion of a promissory note in the principal amount of $165,000 at a conversion price of $0.075 per share. This prospectus relates only to the shares that may be acquired upon exercise of the warrants.  Black Mountain acquired these securities from the Company in the transactions described in Liquidity and Capital Resources in this prospectus.
   
(6) The business address of Gemini is Gemini Master Fund, Ltd., 1075 Valleyside Lane, Encinitas, CA 92024. Gemini’s principal business is that of a private investment firm. We have been advised that Gemini is not a member of FINRA, or an independent broker-dealer, and that neither Gemini nor any of its affiliates is an affiliate or an associated person of any FINRA member or independent broker-dealer. We have been further advised that Steven Winters is the Managing Member of Gemini, and that Mr. Winters has definitive power to vote or to direct the vote and definitive power to dispose or to direct the disposition of all securities owned directly by Gemini.
   
(7) Consists of 2,800,000 shares that may be acquired on exercise of warrants to purchase common stock at an exercise price of $0.075 per share, 1,500,000 shares that may be acquired on exercise of warrants to purchase common stock at an exercise price of $0.14 per share, and 2,200,000 shares that may be acquired on conversion of a promissory note in the principal amount of $165,000 at a conversion price of $0.075 per share. This prospectus relates only to the shares that may be acquired upon exercise of the warrants.  Gemini Master Fund acquired these securities from the Company in the transactions described in Liquidity and Capital Resources in this prospectus.
   
(8) The business address of Emunah Funding, LLC is 395 Pearsall Avenue, Unit D, Cedarhurst, NY 11516. We have been advised that Emunah is not a member of FINRA, or an independent broker-dealer, and that neither Emunah nor any of its affiliates is an affiliate or an associated person of any FINRA member or independent broker-dealer. We have been further advised that Charles Gabriel Berkowitz and Andrew Avitan have definitive power to vote or to direct the vote and definitive power to dispose or to direct the disposition of all securities owned directly by Emunah.
   
(9) Consists of 3,036,437 shares that may be acquired on exercise of a Class A Warrant to purchase common stock at an exercise price of $0.0494 per share, 227,733 shares that may be acquired on exercise of a Class B Warrant to purchase common stock at an exercise price of $0.0494 per share, and 1,497,295 shares that may be acquired on conversion of a promissory note in the principal amount of $76,500 at a conversion price of $0.0525 per share. This prospectus relates only to the shares that may be acquired upon exercise of the Class A Warrant.  Emunah acquired these securities from the Company in a private placement.
   
(10) The business address of Fourth Man, LLC is 2522 Chambers Road, Suite 100, Tustin, CA 92780. We have been advised that Fourth Man is not a member of FINRA, or an independent broker-dealer, and that neither Fourth Man nor any of its affiliates is an affiliate or an associated person of any FINRA member or independent broker-dealer. We have been further advised that Edward H. Deese and Kenneth G. Hall have definitive power to vote or to direct the vote and definitive power to dispose or to direct the disposition of all securities owned directly by Fourth Man.
   
(11) Consists of 3,036,437 shares that may be acquired on exercise of a Class A Warrant to purchase common stock at an exercise price of $0.0494 per share, 227,733 shares that may be acquired on exercise of a Class B Warrant to purchase common stock at an exercise price of $0.0494 per share, and 1,497,295 shares that may be acquired on conversion of a promissory note in the principal amount of $76,500 at a conversion price of $0.0525 per share. This prospectus relates only to the shares that may be acquired upon exercise of the Class A Warrant.  Fourth Man acquired these securities from the Company in a private placement.

 

This prospectus also covers any additional shares of our common stock which become issuable in connection with the shares being registered by reason of any stock dividend, stock split, recapitalization or other similar transaction effected without the receipt of consideration which results in an increase in the number of our outstanding shares of common stock.

 

PLAN OF DISTRIBUTION

 

This prospectus relates to the resale of up to 93,522,930 shares of our common stock by the selling stockholders.

 

The selling stockholders and any of their pledgees, assignees and successors-in-interest may, from time to time, sell any or all of the shares covered hereby on any stock exchange, market or trading facility on which our common stock is traded or in private transactions. These sales may be at fixed or negotiated prices. The selling stockholders may use any one or more of the following methods when selling shares:

 

  ●  ordinary brokerage transactions and transactions in which the broker dealer solicits purchasers;
  block trades in which the broker dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
  purchases by a broker dealer as principal and resale by the broker dealer for its account;
  an exchange distribution in accordance with the rules of the applicable exchange;
  privately negotiated transactions;
  settlement of short sales entered into after the effective date of the registration statement of which this prospectus is a part;
  in transactions through broker dealers that agree with the selling stockholders to sell a specified number of shares at a stipulated price per security;
  through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
  a combination of any such methods of sale; or
  any other method permitted pursuant to applicable law.

 

  13  

 

 

The selling stockholders other than Kodiak may also sell Shares under Rule 144 under the Securities Act, if available, rather than under this prospectus.

 

Broker dealers engaged by the selling stockholders may arrange for other brokers dealers to participate in sales. Broker dealers may receive commissions or discounts from the selling stockholders (or, if any broker dealer acts as agent for the purchaser of shares, from the purchaser) in amounts to be negotiated, but, except as set forth in a supplement to this prospectus, in the case of an agency transaction not in excess of a customary brokerage commission in compliance with FINRA Rule 2440; and in the case of a principal transaction a markup or markdown in compliance with FINRA IM-2440.

 

In connection with the sale of the shares or interests therein, the selling stockholders may enter into hedging transactions with broker-dealers or other financial institutions, which may in turn engage in short sales of the shares in the course of hedging the positions they assume. The selling stockholders may also enter into option or other transactions with broker-dealers or other financial institutions or create one or more derivative securities which require the delivery to such broker-dealer or other financial institution of shares offered by this prospectus, which shares such broker-dealer or other financial institution may resell pursuant to this prospectus (as supplemented or amended to reflect such transaction).

 

Kodiak is an “underwriter” within the meaning of the Securities Act and any broker-dealers or agents that are involved in selling the shares may be deemed to be “underwriters” within the meaning of the Securities Act in connection with such sales. In such event, any commissions received by such broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. Kodiak has informed us that it does not have any written or oral agreement or understanding, directly or indirectly, with any person to distribute the shares. In no event shall any broker-dealer receive fees, commissions and markups which, in the aggregate, would exceed eight percent (8%).

 

The selling stockholders may from time to time pledge or grant a security interest in some or all of the shares owned by them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell the shares from time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as selling stockholders under this prospectus.

 

The selling stockholders also may transfer the shares in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling beneficial owners for purposes of this prospectus and may sell the shares from time to time under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending the list of selling stockholders to include the pledgee, transferee or other successors in interest as Selling Stockholders under this prospectus.

 

Kodiak has agreed to pay us $25,000 for legal fees incurred in connection with the filing of the registration statement of which this prospectus is a part on the date the registration statement is declared effective by the SEC. Subject to such reimbursement, we will pay all fees and expenses incurred by us incident to the registration of the shares.

 

Because Kodiak is an “underwriter” within the meaning of the Securities Act, they will be subject to the prospectus delivery requirements of the Securities Act including Rule 172 thereunder.

 

We intend to keep this prospectus effective until such time as all of the shares have been sold pursuant to this prospectus or Rule 144 under the Securities Act or any other rule of similar effect.

 

Under applicable rules and regulations under the Exchange Act, any person engaged in the distribution of the shares may not simultaneously engage in market making activities with respect to the common stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the selling stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of our securities by the selling stockholders or any other person. We will make copies of this prospectus available to the selling stockholders and have informed them of the need to deliver a copy of this prospectus to each purchaser at or prior to the time of the sale (including by compliance with Rule 172 under the Securities Act).

 

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MARKET FOR OUR COMMON STOCK

 

Our common stock is quoted on the OTCQB tier of OTC Markets under the symbol “PNTV”. The following table sets forth the high and low bid prices for each quarter within the last two fiscal years and the subsequent interim periods. The source of these quotations is the OTCQB Trade Activity Report. The quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.

 

    COMMON STOCK  
    MARKET PRICE  
    HIGH     LOW  
FISCAL YEAR ENDED DECEMBER 31, 2017:            
Fourth Quarter   $ 0.1299     $ 0.0520  
Third Quarter   $ 0.2310     $ 0.0712  
Second Quarter   $ 0.1699     $ 0.0316  
First Quarter   $ 0.0435     $ 0.0146  
FISCAL YEAR ENDED DECEMBER 31, 2016:                
Fourth Quarter   $ 0.0295     $ 0.0089  
Third Quarter   $ 0.0141     $ 0.0023  
Second Quarter   $ 0.0050     $ 0.0022  
First Quarter   $ 0.0041     $ 0.0016  
FISCAL YEAR ENDED DECEMBER 31, 2015                
Fourth Quarter   $ 0.0029     $ 0.0013  
Third Quarter   $ 0.0053     $ 0.0012  
Second Quarter   $ 0.0239     $ 0.0022  
First Quarter   $ 0.0268     $ 0.0081  

 

The closing price for our common stock on April 23 , 2018, as reported by the OTCQB, was $0. 051 per share. As of April 23 , 2018, there were approximately 35 4 holders of record of our common stock. ClearTrust, LLC (telephone: (813) 235-4490; facsimile: (813) 388-4549) is the registrar and transfer agent for our common stock.

 

DIVIDEND POLICY

 

We have never declared or paid cash dividends on our common stock and do not anticipate paying any cash dividends on our common stock in the foreseeable future. Any future determination to pay cash dividends will be at the discretion of the Board of Directors and will be dependent upon our consolidated financial condition, results of operations, capital requirements and such other factors as the Board of Directors deems relevant.

 

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table presents information, to the best of our knowledge, about the beneficial ownership of our common stock on April 23 , 2018, held by those persons known to beneficially own more than 5% of our capital stock and by our directors and executive officers.

 

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes (unless footnoted) shares of common stock that the stockholder has a right to acquire within 60 days through the exercise of any option, warrant or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of our common stock. Unless otherwise indicated, the address of each listed stockholder is c/o Players Network, 1771 E. Flamingo Road, #201-A, Las Vegas, NV 89119.

 

          Series A     Series C        
    common stock     Preferred Stock (10)     Preferred Stock (11)        
Name of Beneficial Owner (1)   Number of Shares     % of Class (2)     Number of Shares     % of Class (3)     Number of Shares     % of Class (4)     Total Voting Power  
Officers and Directors:                                                        
Mark Bradley, CEO and Director (5)     94,526,652       15.5 %     1,000,000       50 %     12,000,000       100 %     56.3 %
Michael Berk, President of Programming and Director (6)(7)     10,630,527       1.8 %     1,000,000       50 %     -       -       2.7 %
Brett Pojunis, Director (8)     15,800,000       2.7 %     -       -       -       -       *  
Geoffrey Lawrence, Chief Financial Officer (9)     4,120,291       *       -       -       -       -       *  
Directors and Officers as a Group (4 persons)     125,077,470       20.4 %     2,000,000       100 %     12,000,000       100 %     60.4 %
5% Holders:                                                        
N/A     -       -       -       -       -       -       -  

 

* less than 1%

 

(1) Except as indicated in the footnotes to this table and pursuant to applicable community property laws, the persons named in the table have sole voting and investment power with respect to all shares of common stock, Series A Preferred Stock or Series C Preferred Stock owned by such person.

 

(2) Percentage of beneficial ownership is based upon 589,994,130 shares of common stock outstanding as of April 23 , 2018.

 

(3) Percentage of beneficial ownership is based upon 2,000,000 shares of Series A Preferred Stock outstanding.

 

(4) Percentage of beneficial ownership is based upon 12,000,000 shares of Series C Preferred Stock outstanding.

 

(5) Includes stock options and warrants to purchase 23,750,000 shares of common stock and 25,000 shares held for the benefit of Mr. Bradley’s minor daughter.

 

(6) Includes 38,000 shares held by MJB Productions, which is 100% owned by Mr. Berk.

 

(7) Excludes (i) 125,000 shares held by Mr. Berk’s ex-wife, and (ii) 125,000 shares by Mr. Berk’s adult son, and includes options to acquire 2,750,000 shares of common stock.

 

(8) Includes stock options to purchase 5,000,000 shares of common stock.

 

(9) Includes stock options to purchase 2,000,000 shares of common stock.

 

(10) Series A Preferred Stock carries preferential voting power of 25:1. Both Mr. Bradley and Mr. Berk hold 1 million shares of Series A Preferred Stock.

 

(11) Series C Preferred Stock carries preferential voting power of 50:1.

 

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MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

Overview

 

Players Network is actively pursuing the cultivation and processing of medical and recreational marijuana in North Las Vegas pursuant to two medical marijuana establishments (MME) licenses that were granted by the city of North Las Vegas for cultivation and production to its majority-owned subsidiary, Green Leaf Farms Holdings LLC, in which the Company holds an 85.4% interest. We also distribute content relating to the cannabis industry at WeedTV.com.

 

Green Leaf Cannabis Business

 

Green Leaf was granted two Medical Marijuana Establishment (MME) licenses by the City of North Las Vegas and State of Nevada; one for cultivation, and one for production of extracts, along with cultivation and production licenses for recreational cannabis that went into effect on July 1, 2017.

 

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. The sale of cannabis in Nevada for medical purposes has been legal since 2015, and on July 1, 2017, the recreational use of cannabis became legal in the State of Nevada.

 

It is estimated that there are approximately 43,000 Nevada State issued medical marijuana cardholders. Nevada also 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 were 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 Nevada’s adult recreational marijuana market.

 

Green Leaf offers the following products and services:

 

  Premium organic medical cannabis sold wholesale to licensed retailers
  Recreational marijuana cannabis products sold wholesale to distributors and retailers
  Extraction products such as oils and waxes derived from in-house cannabis production
  Processing and extraction services for licensed medical cannabis cultivators in Nevada
  High quality cannabis strains in the form of vegetative cuttings for sale to licensed medical cannabis cultivators in Nevada

 

Media Content Distribution; Weed TV

 

Historically, we have distributed video and other media content over cable television channels and a wide variety of internet enabled devices, focusing primarily on the gaming industry and Las Vegas lifestyle. Our current media operations are focused on our recently launched Web site WeedTV.com, and its related social media presence.

 

Weed TV is a source of informational entertainment, products and services for people who relate to the marijuana lifestyle and social community. Weed TV content is currently available at www.weedtv.com . We plan to continuously add features and content to Weed TV, including a directory of businesses that cater to the marijuana business, such as dispensaries, smoke shops, doctors, financial institutions, manufacturers and more.

 

Critical Accounting Policies

 

Segment Reporting

 

Under FASB ASC 280-10-50, the Company operates as a single segment and will evaluate additional segment disclosure requirements as it expands its operations.

 

Use of Estimates

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

Fair Value of Financial Instruments

 

Under FASB ASC 820-10-05, the Financial Accounting Standards Board establishes a framework for measuring fair value in generally accepted accounting principles and expands disclosures about fair value measurements. This Statement reaffirms that fair value is the relevant measurement attribute. The adoption of this standard did not have a material effect on the Company’s financial statements as reflected herein. The carrying amounts of cash, accounts payable and accrued expenses reported on the balance sheets are estimated by management to approximate fair value primarily due to the short term nature of the instruments. In addition, the Company had debt instruments that required fair value measurement on a recurring basis.

 

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Cash and Cash Equivalents

 

We maintain cash balances in non-interest-bearing transaction accounts, which do not currently exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. There were no cash equivalents on hand at December 31, 201 7 and 201 6 .

 

Allowance for Doubtful Accounts

 

We generate the majority of our revenues and corresponding accounts receivable from video production services on a project basis and subscriptions for video content. We evaluate the collectability of our accounts receivable considering a combination of factors. In circumstances where we are aware of a specific customer’s inability to meet its financial obligations to us, we record a specific reserve for bad debts against amounts due in order to reduce the net recognized receivable to the amount we reasonably believe will be collected. For all other customers, we recognize reserves for bad debts based on past write-off experience and the length of time the receivables are past due. We had no debts expense during the years ended December 31, 201 7 and 201 6 , respectively.

 

Cost Method of Accounting for Investments

 

Investee companies not accounted for under the consolidation or the equity method of accounting are accounted for under the cost method of accounting. Under this method, the Company’s share of the earnings or losses of such Investee companies is not included in the Balance Sheet or Statement of Operations. However, impairment charges are recognized in the Statement of Operations. If circumstances suggest that the value of the Investee Company has subsequently recovered, such recovery is not recorded. Our investments which are accounted for on the cost method of accounting have been completely impaired previously, and no impairment expense was recognized during the years ended December 31, 2017 or 2016.

 

Inventory

 

Inventories are stated at the lower of cost or market. Cost is determined on a standard cost basis that approximates the first-in, first-out (FIFO) method. Market is determined based on net realizable value. Appropriate consideration is given to obsolescence, excessive levels, deterioration, and other factors in evaluating net realizable value. Our cannabis products consist of prepackaged purchased goods ready for resale, and cannabis flower grown in-house under our cultivation license, along with produced edibles and extracts developed under our production license.

 

Fixed Assets

 

Fixed assets are stated at the lower of cost or estimated net recoverable amount. The cost of property, plant and equipment is depreciated using the straight-line method based on the lesser of the estimated useful lives of the assets or the lease term based on the following life expectancy:

 

Software 3 years
Office equipment and website development costs 5 years
Furniture and fixtures 7 years

 

Repairs and maintenance expenditures are charged to operations as incurred. Major improvements and replacements, which have extend the useful life of an asset, are capitalized and depreciated over the remaining estimated useful life of the asset. When assets are retired or sold, the cost and related accumulated depreciation and amortization are eliminated and any resulting gain or loss is reflected in operations.

 

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Impairment of Long-Lived Assets

 

Long-lived assets held and used by the Company are reviewed for possible impairment whenever events or circumstances indicate the carrying amount of an asset may not be recoverable or is impaired. Recoverability is assessed using undiscounted cash flows based upon historical results and current projections of earnings before interest and taxes. Impairment is measured using discounted cash flows of future operating results based upon a rate that corresponds to the cost of capital. Impairments are recognized in operating results to the extent that carrying value exceeds discounted cash flows of future operations. The Company did not recognize any impairment losses on the disposal of fixed assets during the years ended December 31, 201 7 and 201 6 .

 

Construction in Progress

 

The Company is constructing a grow house in its leased facility, which became operational during the first quarter of 201 8 , at which time depreciation commenced. The Company incurred and capitalized within Construction in Progress a total of $408,812 and $239,220 , respectively. The estimated cost to be incurred to complete construction of the grow house is approximately $1.7 million. The construction will be completed in phases and the portion of the $1.7 million incurred after the facility is initially operational will be capitalized separately as separate leasehold improvements, while the costs incurred to get the facility operational will begin to be depreciated upon commencement of operations.

 

Deferred Rent Obligation

 

The Company has entered into operating lease agreements for its corporate office which contains provisions for future rent increases. In accordance with generally accepted accounting principles, the Company records monthly rent expense equal to the total of the payments due over the lease term, divided by the number of months of the lease terms. The difference between rent expense recorded and the amount paid is credited or charged to “Deferred rent obligation,” which is reflected as a separate line item in the accompanying Balance Sheets.

 

Revenue Recognition

 

Revenue is primarily generated through our subsidiary, Green Leaf Holdings, LLC. Green Leaf recognizes revenue from the sale of the following cannabis products and services to licensed dispensaries within the state of Nevada:

 

  Premium organic medical cannabis sold wholesale to licensed retailers
  Recreational marijuana cannabis products sold wholesale to distributors and retailers
  Extraction products such as oils and waxes derived from in-house cannabis production
  Processing and extraction services for licensed medical cannabis cultivators in Nevada
  High quality cannabis strains in the form of vegetative cuttings for sale to licensed medical cannabis cultivators in Nevada

 

Revenue from the sale of our cannabis products is recognized by our subsidiary at the point of sale, at which time payment is received. Management estimates an allowance for sales returns.

 

The Company also intends to recognize 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.

 

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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.

 

Advertising Costs

 

The Company expenses the cost of advertising and promotions as incurred. Advertising and promotions expense was $ 111,416 and $ 11,571 for the years ended December 31, 2017 and 2016, respectively.

 

Basic and Diluted Loss Per Share

 

The basic net loss per common share is computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted net loss per common share is computed by dividing the net loss adjusted on an “as if converted” basis, by the weighted average number of common shares outstanding plus potential dilutive securities. For 2017 and 2016 , potential dilutive securities had an anti-dilutive effect and were not included in the calculation of diluted net loss per common share.

 

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Stock-Based Compensation

 

Under FASB ASC 718-10-30-2, all share-based payments to employees, including grants of employee stock options, to be recognized in the income statement based on their fair values. Pro forma disclosure is no longer an alternative. Stock and stock options issued for services and compensation totaled $ 2,744,884 and $ 431,500 for the years ended December 31, 2017 and 2016, respectively.

 

Income Taxes

 

PNTV recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax basis of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. PNTV provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets to be more likely than not.

 

Uncertain Tax Positions

 

In accordance with ASC 740, “Income Taxes” (“ASC 740”), the Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be capable of withstanding examination by the taxing authorities based on the technical merits of the position. These standards prescribe a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. These standards also provide guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure, and transition.

 

Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.

 

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

 

Various taxing authorities periodically audit the Company’s income tax returns. These audits include questions regarding the Company’s tax filing positions, including the timing and amount of deductions and the allocation of income to various tax jurisdictions. In evaluating the exposures connected with these various tax filing positions, including state and local taxes, the Company records allowances for probable exposures. A number of years may elapse before a particular matter, for which an allowance has been established, is audited and fully resolved. The Company has not yet undergone an examination by any taxing authorities.

 

The assessment of the Company’s tax position relies on the judgment of management to estimate the exposures associated with the Company’s various filing positions.

 

Recent Accounting Pronouncements

 

In May 2017, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ASU”) No. 2017-09 , Compensation — Stock Compensation (Topic 718): Scope of Modification Accounting. ASU 2017-09, which provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in Topic 718. Per ASU 2017-9, an entity should account for the effects of a modification unless all the following are met: (1) the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the modified award is the same as the fair value (or calculated value or intrinsic value, if such an alternative measurement method is used) of the original award immediately before the original award is modified. If the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification, (2) the vesting conditions of the modified award are the same as the vesting conditions of the original award immediately before the original award is modified, and (3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The current disclosure requirements in Topic 718 apply regardless of whether an entity is required to apply modification accounting under the amendments in ASU 2017-9. ASU 2017-9 is effective for public business entities for annual and interim periods in fiscal years beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period, for (1) public business entities for reporting periods for which financial statements have not yet been issued and (2) all other entities for reporting periods for which financial statements have not yet been made available for issuance. The amendments in this ASU should be applied prospectively to an award modified on or after the adoption date. The adoption of ASU 2017-9 is not expected to have a material impact on the Company’s financial statements or related disclosures.

 

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In March 2017, the FASB issued 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 year ended December 31, 2017, have had or are expected to have a significant impact on the Company’s financial statements.

 

Results of Operations

 

Years Ended December 31, 2017 and 2016:

 

    For the Years Ended        
    December 31,     Increase /  
    2017     2016     (Decrease)  
             
Revenue   $ 87,913     $ 135,234     $ (47,321 )
Cost of Goods Sold     60,816       -       60,816  
Gross Profit     27,097       135,234       (108,137 )
                         
Direct Operating Costs     499,799       145,324       354,475  
General and A dministrative     3,941,394       1,078,409       2,862,985  
Officer S alaries     650,786       175,673       475,113  
Depreciation and A mortization     71,920       24,084       47,836  
                         
Total Operating Expenses     5,163,899       1,423,490       3,740,409  
                         
Net Operating (Loss)     (5,136,802 )     (1,288,256 )     3,848,546  
                         
Total other Income (Expense)     (8,946,081 )     (475,552 )     8,470,529  
                         
Net Loss   $ (14,082,883 )   $ (1,763,808 )   $ 12,319,075  

 

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Revenues:

 

During the years ended December 31 , 2017 and 2016 , we received revenues from the sale of cannabis products , in-home media, advertising fees and the recognition of deferred revenues on content development. Aggregate revenues for the year ended December 31, 2017 were $87,913, compared to revenues of $135,234 in the year ended December 31, 2016, a decrease in revenues of $47,321, or 35%. During the year ended December 31, 2017, our sales consisted of $70,165 from the resale of raw materials that we previously purchased from other licensed production and cultivation facilities and resold to licensed dispensaries as we progressed in the development of our facility, and $17,748 from advertising fees. We launched the second phase of construction at our growing facility in the first quarter of 2018, and have begun to grow our first crop. Our revenues decreased primarily due to the absence of the recognition of a total of $135,000 from deferred revenues on pilot videos and a series of webisodes recognized in the prior year.

 

Cost of Goods Sold

 

Cost of sales for the year ended December 31, 2017 were $60,816, compared to $-0- during the year ended December 31, 2016, an increase of $60,816. Cost of sales consists primarily of labor, depreciation and maintenance on cultivation and production equipment, in addition to raw materials sold and consumed in our cultivation and production operations. The increased cost of sales in the current period was due to the commencement of operations in the current year. Our gross margins were approximately 31%. We expect gross margins to increase along with revenues as we realize efficiencies and economies of scale and increase our pricing as demand continues to increase with the legalization of recreational cannabis in Nevada.

 

Direct Operating Costs:

 

Direct operating costs were $ 499,799 for the year ended December 31 , 2017, compared to $ 145,324 for the year ended December 31 , 2016, an increase of $ 354,475 , or 244 %. Our direct operating costs increased primarily due to the launch of WeedTV.

 

General and Administrative:

 

General and administrative expenses were $ 3,941,394 for the year ended December 31 , 2017, compared to $ 1,078,409 for the year ended December 31 , 2016, an increase of $2, 862,985 , or 265 %. General and administrative expense increased primarily due to the issuance of stock and options resulting in $ 2,319,498 of stock-based compensation as we significantly ramped up efforts to get our cannabis facility operational and launch WeedTV during the year ended December 31 , 2017.

 

Officer Salaries:

 

Officer salaries expense totaled $ 650,786 for the year ended December 31 , 2017, compared to $ 175,673 for the year ended December 31 , 2016, an increase of $ 475,113 , or 270%. The increase in officer salaries was primarily due to non-cash , stock based compensation bonuses issued to our officers during the year ended December 31, 2017, consisting of a total of 2,657,091 shares of common stock with a fair value of $114,260, and common stock options valued at $425,386 that were not present during the comparative year ended December 31, 2016.

 

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Depreciation and Amortization:

 

Depreciation and amortization expense was $ 71,920 for the year ended December 31 , 2017, compared to $ 24,084 for the year ended December 31 , 2016, an increase of $ 47,836 , or 199%. The increase in depreciation and amortization was primarily due to placing our leasehold improvements and other equipment purchases into service during 2017. We expect depreciation and amortization to increase in 2018, as we place additional fixed asset additions in service and our construction in process is completed.

 

Net Operating Loss:

 

Net operating loss for the year ended December 31 , 2017 was $ 5,136,802 , or ($0.01) per share compared to a net operating loss of $ 1,288,256 , or ($0.00) per share for the year ended December 31, 2016 , an increase of $ 3,848,546 , or 299%. Net operating loss increased primarily due to increased stock-based compensation as we significantly ramped up efforts to get our cannabis facility operational and we launched WeedTV during the year ended December 31 , 2017.

 

Other Income (Expense):

 

Other expense, on a net basis, was $ 8,946,081 for the year ended December 31 , 2017, compared to other expense, on a net basis , of $ 475,552 for the year ended December 31 , 2016, an increase of $ 8,470,529 , or 1,781 %. Other expense increased on a net basis primarily due to the increased loss on derivative liability of $ 7,362,617 , or 3,180 %, and by a decreased gain on debt extinguishment of $ 228,256, and increased interest expense on debt financing of $ 1,014,895 , or 248%, as diminished by a $135,239 of other income, consisting primarily of a settlement gain, net of legal fees , during the year ended December 31 , 2017, compared to the year ended December 31 , 2016.

 

Net Loss:

 

The net loss for the year ended December 31 , 2017 was $ 14,082,883 , or ($0. 03 ) per share, compared to a net loss of $ 1,763,808 , or ($0.00) per share, for the year ended December 31 , 2016, an increased net loss of $ 12,319,075 , or 698 %. Net loss increased primarily due to increased non-cash stock-based compensation and the increased costs of readying our cannabis production facility, in addition to increased interest expense and losses on derivative costs associated with debt financing costs as we financed those efforts.

 

Liquidity and Capital Resources

 

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

 

    December 31 ,     December 31,     Increase /  
    2017     2016     (Decrease)  
                   
Total Assets   $ 1, 209,773     $ 498,617     $ 711,156  
                         
Total Liabilities   $ 11,860,997     $ 1,401,644     $ 10,459,353  
                         
Accumulated (Deficit)   $ (44,597,401 )   $ (30,639,417 )   $ 13,957,984  
                         
Stockholders’ Equity (Deficit)   $ (10,651,224 )   $ (903,027 )   $ 9,748,197  
                         
Working Capital (Deficit)   $ (11,456,491 )   $ (1,131,646 )   $ 10,324,845  

 

Sources and Uses of Cash

 

Our principal source of operating capital has been provided from debt financing, including in a reduced capacity, convertible debt financing, private sales of our common stock, and revenues from operations. At December 31, 2017, we had a negative working capital position of $(11,456,491). As we continue the shift in our business focus and attempt to expand operational activities, we expect to continue to experience net negative cash flows from operations in amounts not now determinable, and will be required to obtain additional financing to fund operations through debt borrowings and common stock offerings to the extent necessary to provide working capital. We have and expect to continue to have substantial capital expenditure and working capital needs. We do not now have funds sufficient to fund our operations at their current level for the next twelve months. We need to raise additional cash to fund our operations and implement our business plan. We expect that the additional financing will (if available) take the form of debt financing, although we may be able to obtain additional equity financing in lieu thereof. We are maintaining an on-going effort to locate sources of additional funding, without which we will not be able to remain a viable entity. If we are able to obtain the financing required to remain in business, eventually achieving operating profits will require substantially increasing revenues or drastically reducing expenses from their current levels, or both. If we are able to obtain the required financing to remain in business, future operating results depend upon a number of factors that are outside of our control.

 

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Debt Instruments, Guarantees, and Related Covenants

 

Kodiak Equity Purchase Agreement

 

On August 14, 2017, we entered into an Equity Purchase Agreement and a Registration Rights Agreement with Kodiak Capital Group, LLC, and issued Kodiak a Common Stock Purchase Warrant under which Kodiak may purchase up to 37,500,000 shares of our common stock.

 

Pursuant to the Purchase Agreement, as amended on January 5, 2018, subject to the filing of the registration statement which includes this prospectus and it becoming effective under the Securities Act of 1933, Kodiak has committed to purchase up to 37,500,000 shares of common stock upon delivery by us to Kodiak of “Put Notices” from time to time, at a price equal to the greater of (i) $0.14 per share and (ii) 80% of the lowest daily volume weighted average price of our common stock during the three trading days following the delivery of the applicable Put Notice (the “VWAP Price”), but in no event at a price greater than $0.50 per share. Notwithstanding the foregoing, Kodiak will not be required to purchase common stock under a Put Notice if the VWAP Price during the applicable valuation period is less than $0.14 per share, unless otherwise agreed to by Kodiak and us. Kodiak’s commitment to purchase common stock under the Purchase Agreement will terminate on March 31, 2019. The Purchase Agreement also provides that Kodiak shall not be required to purchase common stock to the extent that following such purchase, Kodiak would beneficially own in excess of 9.99% of the outstanding shares of common stock.

 

We issued to Kodiak and its designee an aggregate of 500,000 shares of common stock upon the execution of the Purchase Agreement in consideration for Kodiak’s commitment to purchase shares of common stock thereunder. In accordance with the terms of the Registration Rights Agreement, we agreed to prepare and file the registration statement that includes this prospectus with the Securities and Exchange Commission covering the 400,000 shares of common stock we issued to Kodiak upon the execution of the Purchase Agreement and the shares of common stock that may be purchased by Kodiak under the Purchase Agreement.

 

In connection with the Purchase Agreement, we issued Kodiak the warrant, which is exercisable for a three-year period and has an initial exercise price that will be equal to 140% of the initial purchase price paid by Kodiak under the Purchase Agreement. The warrant restricts Kodiak from exercising the warrant to the extent that following such exercise, Kodiak would either beneficially own in excess of 4 .99% of the outstanding shares of common stock or together with shares issuable under the Purchase Agreement would beneficially own in excess of 9 .99% of the outstanding shares of common stock.

 

Debt Financing

 

On December 15, 2017, the Company received net proceeds of $120,000 in exchange for an unsecured convertible promissory note that carries a 10% interest rate with a face value of $122,400 (“Third Group Ten Note”), which matures on December 15, 2018. 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 two lowest closing traded prices of the Company’s common stock over the fifteen (15) trading days preceding the conversion date.

 

On November 7, 2017, the Company received net proceeds of $120,000 in exchange for an unsecured convertible promissory note with a face value of $122,400 (“First Group Ten Note”), which matures on November 7, 2018. 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 two lowest closing traded prices of the Company’s common stock over the fifteen (15) trading days preceding the conversion date.

 

On October 27, 2017, the Company received net proceeds of $73,000 in exchange for an unsecured convertible promissory note that carries an 8% interest rate with a face value of $76,500 (“First Fourth Man Note”), which matures on October 27, 2018. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to seventy five percent (75%) of the lowest traded price of the Company’s common stock over the fifteen (15) trading days preceding the conversion date.

 

On October 27, 2017, the Company received net proceeds of $73,000 in exchange for an unsecured convertible promissory note that carries an 8% interest rate with a face value of $76,500 (“First Emunah Note”), which matures on October 27, 2018. The principal and interest is convertible into shares of common stock at the discretion of the note holder at a price equal to seventy five percent (75%) of the lowest traded price of the Company’s common stock over the fifteen (15) trading days preceding the conversion date.

 

On September 19, 2017, the Company entered issued a $50,000 unsecured promissory note to SK L-58, LLC bearing interest at a rate of 5% per annum, with a maturity date of November 3, 2017. Upon an event of default, the Company is required to issue to lender warrants to acquire one million shares at an exercise price of $0.05 per share every 30 days the note is unpaid. Each warrant issued as a result of an Event of Default hereunder shall become and remain exercisable for the four (4) complete calendar month period beginning on the first day of the thirty second (32nd) month following an Event of Default. This note is currently in default.

 

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On September 14, 2017, the Company entered into a Securities Purchase Agreement with Black Mountain Equities, Inc. and Gemini Master Fund, Ltd. (the “Investors”), pursuant to which the Company sold to each Investor, for a purchase price of $150,000, (i) a Promissory Note (a “Note”) in the principal amount of $158,000, and (ii) a Warrant exercisable until May 31, 2022 to purchase 1,500,000 shares of the Company’s common at a price of $0.14 per share (a “Warrant”), resulting in aggregate gross proceeds to the Company of $300,000. Each Note matures on March 14, 2018, bears interest at a rate of 10% per annum payable at maturity, and is subject to acceleration in the event the Company becomes delinquent in its reporting obligation with the Securities and Exchange Commission and upon other customary events of default set forth in the Notes.

 

On May 8, 2017, the Company entered into a Securities Purchase Agreement with Black Mountain Equities, Inc. and Gemini Master Fund, Ltd. (the “Investors”), pursuant to which the Company sold to each Investor, for a purchase price of $150,000, (i) a Promissory Note (a “Note”) in the principal amount of $165,000, and (ii) a Warrant exercisable until May 31, 2022 to purchase 1,500,000 shares of the Company’s common at a price of $0.14 per share (a “Warrant”), resulting in aggregate gross proceeds to the Company of $300,000. Each Note matures on November 8, 2017, bears interest at a rate of 10% per annum payable at maturity. Pursuant to the terms of the Warrant and the Note, as a result of a subsequent sale of our securities below the exercise price of the Warrants, each Investor’s Warrant is now exercisable to purchase 2,800,000 shares of common stock at a purchase price of $0.075 per share, and each Note is convertible into shares of common stock at a conversion price of $0.075 per share.

 

On April 21, 2017, the Company entered into an unsecured promissory note with SK L-43, LLC bearing interest at a rate of 5% per annum, with a maturity date of July 20, 2017. In accordance with the default provisions, the principal balance of the note and unpaid interest shall be converted into common stock at $0.04 per share, along with an equal number of warrants, exercisable at $0.08 per share with a call feature entitling the borrower to require exercise if the average stock price over the 30 preceding trading days following the six month anniversary of the warrant date exceeds $0.16 per share.

 

On April 5, 2017, the Company entered into an unsecured promissory note with SK L-43, LLC bearing interest at a rate of 5% per annum, with a maturity date of July 5, 2017. In accordance with the default provisions, the principal balance of the note and unpaid interest shall be converted into common stock at $0.04 per share, along with an equal number of warrants, exercisable at $0.08 per share with a call feature entitling the borrower to require exercise if the average stock price over the 30 preceding trading days following the six month anniversary of the warrant date exceeds $0.16 per share.

 

Convertible Debenture Repayment and Settlements

 

On July 20, 2017, a promissory note went into default and the default provisions called for the automatic conversion into shares of common stock at a conversion rate of $0.04 per share, along with the issuance of the same number of warrants, exercisable at $0.08 per share. The warrants vest on April 30, 2019, and are exercisable for 4 months thereafter. On July 1, 2017, the note was assigned to three different parties. Pursuant to the conversion, the note holders received an aggregate 632,706 shares in satisfaction of $25,000 of principal and $308 of interest on the debt. The shares were subsequently issued on October 2, 2017.

 

On July 5, 2017, a promissory note went into default and the default provisions called for the automatic conversion into shares of common stock at a conversion rate of $0.04 per share, along with the issuance of the same number of warrants, exercisable at $0.08 per share. The warrants vest on April 30, 2019, and are exercisable for 4 months thereafter. Pursuant to the conversion, the note holder received 1,265,411 shares in satisfaction of $50,000 of principal and $616 of interest on the debt. The shares were subsequently issued on October 2, 2017.

 

During the year ended December 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 satisfied in full with the issuance of 2,009,419 shares of stock on April 18, 2017.

 

Common Stock Sales

 

On September 21, 2017, the Company sold 200,000 units at $0.17 per unit, consisting of 200,000 shares of common stock and 200,000 warrants exercisable at $0.17 per share over the following 3 years to an individual investor for proceeds of $22,000.

 

On September 7, 2017, the Company sold 300,000 units at $0.07 per unit, consisting of 300,000 shares of common stock and 300,000 warrants exercisable at $0.11 per share over the following 3 years, along with another 300,000 warrants exercisable at $0.15 per share over the following 3 years, to an individual investor for proceeds of $21,000.

 

On September 6, 2017, the Company sold 500,000 units at $0.11 per unit, consisting of 500,000 shares of common stock and 500,000 warrants exercisable at $0.17 per share over the following 3 years to an individual investor for proceeds of $55,000.

 

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On August 21, 2017, the Company sold 1,000,000 units at $0.11 per unit, consisting of 1,000,000 shares of common stock and 1,000,000 warrants exercisable at $0.17 per share over the following 3 years to an individual investor for proceeds of $110,000.

 

On August 8, 2017, the Company sold 208,333 units at $0.12 per unit, consisting of 208,333 shares of common stock and 208,333 warrants exercisable at $0.18 per share over the following 3 years to an individual investor for proceeds of $25,000.

 

On July 17, 2017, the Company sold 1,875,000 units at $0.16 per unit, consisting of 1,875,000 shares of common stock and 1,875,000 warrants exercisable at $0.21 per share over the following 3 years, along with another 1,875,000 warrants exercisable at $0.24 per share over the following 3 years, to an individual investor for proceeds of $300,000.

 

On June 29, 2017, the Company sold 500,000 units at $0.10 per unit, consisting of 500,000 shares of common stock and 500,000 warrants exercisable at $0.15 per share over the following 3 years, to an individual investor for proceeds of $50,000.

 

On June 23, 2017, a warrant holder exercised warrants to purchase 2,500,000 shares of common stock at $0.04 per share for proceeds of $100,000.

 

On June 21, 2017, the Company sold 1,000,000 units at $0.10 per unit, consisting of 1,000,000 shares of common stock and 1,000,000 warrants exercisable at $0.15 per share over the following 3 years, to an individual investor for proceeds of $100,000.

 

On June 13, 2017, the Company sold 1,000,000 units at $0.05 per unit, consisting of 1,000,000 shares of common stock and 1,000,000 warrants exercisable at $0.15 per share over the following 3 years, along with another 1,000,000 warrants exercisable at $0.20 per share over the following 3 years, to an individual investor for proceeds of $50,000.

 

On June 13, 2017, the Company sold 1,000,000 units at $0.075 per unit, consisting of 1,000,000 shares of common stock and 1,000,000 warrants exercisable at $0.15 per share over the following 3 years, along with another 1,000,000 warrants exercisable at $0.20 per share over the following 3 years, to another individual investor for proceeds of $75,000.

 

On June 9, 2017, a warrant holder exercised warrants to purchase 1,500,000 shares of common stock at $0.05 per share for proceeds of $75,000.

 

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 cannabis 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 year ended December 31 , 2017, the Company granted a total of $ 2,744,884 of stock-based compensation, consisting of 7, 657,091 shares of common stock valued at $ 200,760 , and options valued at $1,252,411, as bonuses to our officers and directors, as well as an aggregate 10,785,000 shares of common stock valued at $ 966,279 , and options valued at $325,434, to other service providers, compared to a total of $ 37,900 ,000 shares of common stock and 6,250,000 shares of preferred stock valued at an aggregate of $431,500 in lieu of cash payments to employees and outside consultants during the year ended December 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 201 8 .

 

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Satisfaction of Our Cash Obligations for the Next 12 Months

 

As of December 31, 2017, our cash on hand was $65,840. We believe we cannot satisfy our cash requirements for the next twelve months with our current cash on hand. Our operations are subject to attaining adequate financing. We cannot assure investors that adequate financing will be available. In the absence of such financing, we may be unable to proceed with our operations.

 

We anticipate that our operational, and general & administrative expenses for the next 12 months will total approximately $3,000,000, of which we expect a portion will be satisfied with the issuance of stock based compensation in lieu of cash. We anticipate the purchase of a significant amount of equipment necessary to implement our medical marijuana operations. Should we be able to commence operations pursuant to our plans to enter into the medical marijuana business, we will also need to either, purchase or lease, a warehouse facility to produce marijuana pursuant to the license we were awarded by the City of North Las Vegas. We also would expect a significant addition to the number of employees. We have not yet begun to develop a facility to commence our medical marijuana operations, and are not now in a position to determine an approximate amount that would be necessary. The foregoing represents our best estimate of our cash needs based on current planning and business conditions. The exact allocation, purposes and timing of any monies raised in subsequent private financings may vary significantly depending upon the exact amount of funds raised and our progress with the execution of our planned operations. Our plan for satisfying our cash requirements for the next twelve months, in addition to our revenues from our Enterprise Technology Platform, is through convertible debt financing, the sale of shares of our common stock, third party financing, and/or traditional debt financing. We may continue to pay for services with shares of common stock in lieu of cash if financing is unavailable.

 

In the event we are not successful in obtaining financing, we may not be able to proceed with our business plan for the commercialization of our products and further research and development of new products. We anticipate that we will incur operating losses in the foreseeable future. Therefore, our auditors have raised substantial doubt about our ability to continue as a going concern.

 

Off-Balance Sheet Arrangements

 

As of December 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.

 

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DESCRIPTION OF OUR BUSINESS

 

Players Network was incorporated in the State of Nevada in March of 1993. We are actively pursuing the cultivation and processing of medical and recreational marijuana in North Las Vegas pursuant to two medical marijuana establishments (MME) licenses that were granted by the city of North Las Vegas for cultivation and production to our majority-owned subsidiary, Green Leaf Farms Holdings LLC, in which we hold an 85.4% interest. Green Leaf commenced operations on May 31, 2017. We also distribute content relating to the cannabis industry at WeedTV.com.

 

Green Leaf Cannabis Business Overview

 

Green Leaf was granted two Medical Marijuana Establishment (MME) licenses by the City of North Las Vegas and State of Nevada; one for cultivation, and one for production of extracts, along with cultivation and production licenses for recreational cannabis that went into effect on July 1, 2017.

 

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. The sale of cannabis in Nevada for medical purposes has been legal since 2015, and on July 1, 2017, the recreational use of cannabis became legal in the State of Nevada.

 

It is estimated that there are approximately 43,000 Nevada State issued medical marijuana cardholders. Nevada also 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 were 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 Nevada’s adult recreational marijuana market.

 

Green Leaf offers the following products and services;

 

Premium organic medical cannabis sold wholesale to licensed retailers
Recreational marijuana cannabis products sold wholesale to distributors and retailers
Extraction products such as oils and waxes derived from in-house cannabis production
High quality cannabis strains in the form of vegetative cuttings for sale to licensed medical cannabis cultivators in Nevada

 

Media Content Distribution; Weed TV

 

Historically, we have distributed video and other media content over cable television channels and a wide variety of internet enabled devices, focusing primarily on the gaming industry and Las Vegas lifestyle. Our current media operations are focused on our recently launched Web site WeedTV.com, and its related social media presence.

 

Weed TV is a source of informational entertainment, products and services for people who relate to the marijuana lifestyle and social community. Weed TV content is currently available at www.weedtv.com . We plan to continuously add features and content to Weed TV, including a directory of businesses that cater to the marijuana business, such as dispensaries, smoke shops, doctors, financial institutions, manufacturers and more. WeedTV.com may generate revenues through advertising, cross selling with other companies and premium membership subscriptions. We estimate our advertising market for Weed TV to be in excess of 70,000 businesses and will continue to grow as more states legalize MME businesses. However, to date, we have generated only approximately $25,000 of revenue from Weed TV.

 

Market Opportunity for Media Platform

 

The digital revolution has rapidly changed the way consumers’ access television content. Instead of scheduled programming, video can now be viewed “On Demand” through digital cable television and satellite networks, broadband internet, and by downloading content to mobile and wireless devices such as smart phones and tablets.

 

Each new network we create is expected to become an integrated channel destination that will include VOD television and a social community to complete and complement a vertical distribution and marketing strategy. Each network is expected to command a new audience and generate advertisement revenues tied to the amount of monthly viewers. We plan on integrating our website destinations with social media elements in order to create communities and increase memberships.

 

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Media Distribution

 

We intend to heavily market and cross-promote Weed TV and are actively exploring additional relationships through social media networks. We also intend to use our website to develop cannabis communities, then offer the members of these communities live video events, information services, discounts, travel, internet based commerce, etc., as well as instant messaging, chat, comments, reviews and perspectives from consumers on a variety of topical subjects.

 

Content/Programming

 

The development of our programming is led by Michael Berk, a successful Hollywood television producer. Michael Berk has created over 500 hours of network television that includes five television series. Mr. Berk is best known for his series “Baywatch”, for which he was the Executive Producer for twelve years. Baywatch is distributed in 144 countries and is in the Guinness Book of World Records as the most watched television show in history.

 

Our Weed TV brand recently began developing original content as well as acquiring the rights to other marijuana related programming that includes documentaries, cooking shows, concerts, travel shows, growing shows, medical shows, political shows, financial shows and more. We have produced an aggregated of over 450 original short video segments to feature documentaries that we own or have rebroadcast rights for.

 

Competition

 

Cannabis

 

Green Leaf’s cannabis business is subject to intense and increasing competition. Some of our competitors have substantially greater capital resources, facilities and infrastructure then we have, which enable them to compete more effectively in this market. These competitors include subsidiaries of TerraTech Corp., which is a public company, and numerous other local businesses engaged in the cultivation and production of cannabis, and the operation of dispensary facilities in Nevada. Numerous companies not currently operating were also granted MME licenses, and, therefore, we anticipate that Green Leaf will face competition with these other companies especially those with locations near Green Leaf’s facilities.

 

Media

 

Weed TV faces intense competition from a variety of other companies. In addition to other Web sites that provide content focused on the cannabis industry, we face competition from other media businesses, as well as other media, such as newspapers, magazines, television, direct mail, mobile devices, satellite radio, Internet-based services and live entertainment. Our competitors may develop technology, services or advertising media that are equal or superior to those we provide or that achieve greater market acceptance and brand recognition than we achieve.

 

Intellectual Property

 

We have a library of over 1,800 gaming and cannabis lifestyle videos. We own the intellectual property rights in the programming and content that we produce. Moreover, the slogans, “WeedTV.com”, “Everybody wants to be a player” and “The only game in town” are trademarks we have registered with the United States Patent and Trademark Office (the “PTO”). “Players Network” is also a registered trademark with the PTO.

 

Governmental Approval and Regulation

 

Cannabis Business

 

As of December 2017, 29 states and the District of Columbia have passed legislation legalizing medicinal cannabis, and eight of those states and the District of Columbia have legalized the recreational use of cannabis. These state laws are in direct conflict with the United States Federal Controlled Substances Act, under which cannabis is classified as a Schedule I drug, which is viewed as having a high potential for abuse, with no currently-accepted use for medical treatment in the U.S. State laws vary, but generally exempt patients who use medicinal cannabis under a physician’s supervision from state criminal penalties.

 

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The conflict between federal and state laws has also limited the access to banking and other financial services by marijuana businesses. Recently the U.S. Department of Justice and the U.S. Department of Treasury issued guidance for banks considering conducting business with marijuana dispensaries in states where those businesses are legal, pursuant to which banks must now file a Marijuana Limited Suspicious Activity Report that states the marijuana business is following the government’s guidelines with regard to revenue that is generated exclusively from legal sales. However, since the same guidance noted that banks could still face prosecution if they provide financial services to marijuana businesses, it has led to the widespread refusal of the banking industry to offer banking services to marijuana businesses operating within state and local laws.

 

On August 29, 2013, United States Deputy Attorney General James Cole issued the Cole Memo to United States Attorneys guiding them to prioritize enforcement of Federal law away from the cannabis industry operating as permitted under state law, so long as:

 

cannabis is not being distributed to minors and dispensaries are not located around schools and public buildings;
the proceeds from sales are not going to gangs, cartels or criminal enterprises;
cannabis grown in states where it is legal is not being diverted to other states;
cannabis-related businesses are not being used as a cover for sales of other illegal drugs or illegal activity;
there is not any violence or use of fire-arms in the cultivation and sale of marijuana;
there is strict enforcement of drugged-driving laws and adequate prevention of adverse health consequences; and
cannabis is not grown, used, or possessed on Federal properties.

 

The Cole Memo was meant only as a guide for United States Attorneys and did not alter in any way the Department of Justice’s Federal authority to enforce Federal law, including Federal laws relating to cannabis, regardless of state law.

 

On January 4, 2018, United States Attorney General Jefferson Sessions issued a Memorandum to United States Attorneys rescinding the Cole Memo, stating that prosecutors should follow well-established principles in effect prior to the issuance of the Cole Memo that govern all federal prosecutions in deciding which activities to prosecute under existing federal laws. The federal government’s enforcement of current federal laws could cause significant financial damage to us.

 

Media Business

 

We do not believe that any governmental approvals are required to distribute our media products or services. The Communications Act of 1934, as amended by the Cable Communications Policy Act of 1984, the Cable Television Consumer Protection and Competition Act of 1992 and the Telecommunications Act of 1996, govern the distribution of video programming by cable, satellite or over-the-air technology, through regulation by the Federal Communications Commission (“FCC”). However, because our media distribution systems do not use any public rights of way, they are not classified as cable systems and are subject to minimal regulation. Thus, the FCC does not directly regulate our programming.

 

Although the FCC generally does not directly regulate the services provided by us, the regulation of media distribution and communications services is subject to the political process and has been in constant flux over the past decade. Further material changes in the law and regulatory requirements must be anticipated and there can be no assurance that our business will not be adversely affected by future legislation or new regulations.

 

Employees

 

We currently have 2 full-time employees: our chief executive officer, Mark Bradley, and our chief financial officer Geoffrey Lawrence. In addition, we currently have engaged approximately 20 outside consultants to cover needed support such as business affairs, programming and technology design, cultivation and deployment supported by independent contractors on an as needed basis.

 

DESCRIPTION OF PROPERTY

 

Our executive offices are located at 1771 E. Flamingo Road, #201-A, Las Vegas, Nevada 89119. Our office space consists of approximately 2,800 square feet leased pursuant to a three-year lease that expired on August 31, 2016, and is now on a month-to-month basis at a monthly payment of $3,191.

 

  31  
 

 

We also leased a commercial building that originated on April 17, 2016 for our medical marijuana production and cultivation business in North Las Vegas. The five-year operating lease expires on April 16, 2021 and is renewable for another five year term, required a $50,000 security deposit and includes an option to purchase the building for $3.8 million during the third, fourth and fifth years of the lease. The lease provides for increases in future minimum annual rental payments based on defined annual increases beginning with monthly payments of $26,786 and culminating in a monthly payment of $30,148 in 2021.

 

These properties are in good condition, well maintained and adequate for our current and immediately foreseeable operating needs.

 

LEGAL PROCEEDINGS

 

Michael Pratter

 

On November 3, 2016, Michael S. Pratter commenced an action in the Eighth Judicial District Court, Clark County, Nevada, against Players Network, Green Leaf Farms Holdings, and our Chief Executive Officer. In his complaint, Pratter asserts several causes of action, including for breach of contract and fraud, relating to his claim that he provided consulting services to us for which he was not fully paid. We are defending ourselves vigorously in this matter and believe that Pratter’s claims are without merit, and that in fact we over-paid Pratter. In November 2017 we filed a Counterclaim against Mr. Pratter in this proceeding in which we asserted ten causes of action, which relate in part to Mr. Pratter’s representations that he would provide us with legal services when in fact he was not licensed to practice law in the State of Nevada and had been disbarred by the California State Bar. Among other relief, our Counterclaim seeks disgorgement of all amounts paid to Mr. Pratter during his engagement by us, including the return of 1.5 million shares of our Common Stock we had issued to him. Previously, in August 2017, following our motion and our posting of treasury shares with the Clerk of the Court as security, the Court approved our application for a temporary restraining order and preliminary injunction under which Mr. Pratter is prohibited from transferring the 1.5 million shares of Common Stock we had issued to him, until further order of the Court.

 

LG Capital Funding

 

We are a defendant in case pending in the Supreme Court of the State of New York, Kings County, that was commenced by LG Capital Funding LLC, in February 2015, in which LG Capital asserts that we are in default of our obligations to honor its conversion rights under a $35,000 promissory note, due to a typographical error in the note. LG Capital seeks declaratory relief as to conversion formula under the promissory note and monetary damages in the amount of principal and accrued interest under the promissory note. This case is currently in the preliminary discovery stages. We believe LG Funding’s claims are without merit.

 

DESCRIPTION OF CAPITAL STOCK

 

The following is a brief description of our capital stock. This summary does not purport to be complete in all respects. This description is subject to and qualified entirely by the terms of our certificate of incorporation and bylaws, copies of which have been filed with the SEC, and by Nevada law.

 

We currently have authorized 1,200,000,000 shares of common stock, 2,000,000 shares of Series A preferred stock and 12,000,000 Series C preferred stock. As of April 23 , 2018, there were 589,994,130 shares of common stock outstanding, 2,000,000 shares of Series A preferred stock outstanding and 12,000,000 Series C preferred stock outstanding. The shares of Series A Preferred Stock and Series C Preferred Stock are all held by Michael Bradley and Michael Berk, who are directors and officers of ours.

 

Common Stock

 

Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Stockholders do not have preemptive rights to purchase shares in any future issuance of our common stock.

 

Preferred Stock

 

Holders of our Series A preferred stock are entitled to 25 votes for each share on all matters submitted to a stockholder vote. Holders of our Series C Preferred Stock are entitled to 50 votes for each share on all matters submitted to a stockholder vote. The Series A Preferred Stock and Series C Preferred Stock participate with our common stock in all dividends and distributions (including upon a liquidation) on a share-for-share basis with our common stock, except that in the event of a dividend on our common stock payable in additional shares of common stock, holder of our Series A Preferred Stock and Series C Preferred Stock will receive dividends payable in shares of such Preferred Stock. Each share of Series A Preferred Stock and Series C Preferred Stock is convertible into one share of common stock at the option of the holder at any time, and automatically upon a transfer to an unrelated party. Management’s ownership of our Series A Preferred Stock and Series C Preferred Stock helps enable them to maintain their positions with us and thus control of our business and affairs.

 

  32  
 

 

MANAGEMENT

 

The following table sets forth the names and positions of our executive officers and directors. Directors serve for one year or until their successors are elected. Officers are elected by the Board and their terms of office are, except to the extent governed by employment contract, at the discretion of the Board.

 

Name   Age   Position
Mark Bradley   55   Chief Executive Officer and Chairman
Michael Berk   71   President of Programming and Director
Brett Pojunis   38   Director
Geoffrey Lawrence   36   Chief Financial Officer

 

Mark Bradley founded the Company and has been its Chief Executive Officer and a director since 1993. Mr. Bradley was a staff producer/director at United Artists where he produced original programming and television commercials. In 1985 he created the Real Estate Broadcast Network that was the first 24-hour real estate channel. In 1993 he founded Players Network. Mr. Bradley is a graduate of the Producers Program at the University of California Los Angeles. Under his direction, Players Network became the first user of a digital broadcast system for television programming and the first private label gaming network. Mr. Bradley pioneered, developed and executive produced Players Network’s gaming-centric programming. Mr. Bradley graduated from the UCLA producer’s program and became a producer/director at United Artists, where he produced original programming, television commercials, multi-camera music videos, live-to-tape sports and a variety show and was studio manager and postproduction supervisor with United Cable Television in Los Angeles. In this capacity he engaged in the production, packaging and syndication of television and film productions for such media venues as HBO, Nickelodeon, Prime Ticket and MTV. As an independent producer/director, Mr. Bradley created and promoted live pay-per-view events, negotiated entertainment programming distribution deals, budgeted and packaged TV programming. As a founder and Chief Executive Officer of the Company, Mr. Bradley has extensive media production expertise as well as deep knowledge and relationships in the Las Vegas, Nevada entertainment industry. Mr. Bradley’s experience with the Company from its founding also offers the Board insight to the evolution of the Company, including from execution, cultural, operational, and competitive and industry points of view.

 

Michael Berk has been a director since 2000 and was appointed as the Company’s president of programming on March 22, 2005. He created and executive produced “Baywatch,” the most popular series in television history, and produced the 2017 “Baywatch” feature film for DreamWorks. Mr. Berk wrote and produced the first three-hour movie ever made for television, “The Incredible Journey of Dr. Meg Laurel,” the highest-rated movie of the year, averaging a 42 share over three hours, “The Ordeal of Dr. Mudd,” another three-hour movie that received two Emmy Awards, “The Haunting Passion,” winner of the Venice Film Festival Award and “The Last Song,” recipient of the Edgar Allan Poe Award for Mystery Writing. Mr. Berk is also a significant figure in the Las Vegas community. He was a founding Board Member and President of the highly acclaimed “CineVegas” Film Festival, now in its sixth year at the Palms Hotel, and was recognized with the prestigious Las Vegas Chamber of Commerce Community Achievement Award in the category of Entertainment. He also received the Nevada Film Office/Las Vegas Film Critics Society Silver Spike Award for his contributions to the film and television industry in Nevada. Mr. Berk maintains offices both in Hollywood and in Las Vegas. Mr. Berk’s extensive experience and contacts in the media and entertainment industry provides the Company and the Board a unique perspective on this industry and insight into the Company’s business.

 

Brett Pojunis has been a member of the Board of Directors of the Company since March of 2016. Mr. Pojunis has served as the Chairman of the Libertarian Party of Nevada since November 2013 and previously served as Secretary. From December 2011 through June 2014, Mr. Pojunis served on the Libertarian National Committee in multiple positions. Mr. Pojunis has worked in Libertarian politics since 2010 in multiple capacities including activism, event production, fundraising, technology and working on candidate campaigns during 2012 and 2014. From 2007 through 2010, Mr. Pojunis was Co-Founder and CEO of Dealguys Network, Inc., a financial media holding company focused on developing exclusive communities within the financial industry. Mr. Pojunis has been involved in finance and the public markets since 1999 as a consultant to many start-up companies including high-tech Internet to traditional brick and mortar companies. Mr. Pojunis served in the US ARMY and was awarded the Outstanding American award twice, the second time with honorable mention. Mr. Pojunis studied Environmental Liberal Arts at Green Mountain College and Entrepreneurship classes at the Simon School of Business at the University of Rochester. Mr. Pojunis also attended elective International Business and Finance classes at Rochester Institute of Technology. Mr. Pojunis’s business and political experience and contacts make him a valuable member of our Board of Directors .

 

Geoffrey Lawrence has been the Company’s Chief Financial Officer since July 1, 2017. Mr. Lawrence is an economist, accountant, and financial analyst with more than a decade of experience in the public and private sectors. Mr. Lawrence served as the Assistant Controller for the State of Nevada’s State Controller’s Office from March 2015 until his appointment as the Company’s Chief Financial Officer. Prior to that, from January 2015 until March 2015, he was the Policy Director for the Nevada Legislature, Assembly Majority Leadership, and from October 2008 to December 2014, Mr. Lawrence was the Director of Research and Legislative Affairs at the Nevada Policy Research Institute.

 

  33  
 

 

EXECUTIVE COMPENSATION

 

The following table sets forth certain information relating to all compensation of our named executive officers for services rendered in all capacities to the Company during the years ended December 31, 2017 and 2016:

 

Summary Compensation Table

             

Name and                                  
Principal             Stock     Option              
Position   Year   Salary     Awards     Awards     All Other     Total  
(a)   (b)   (c)     (e) (1)     (f) (1)     Compensation     Compensation  
Mark Bradley,   2017   $ 96,826     $ 34,600     $ 246,621     $ -0-     $ 378,047  
Chief Executive Officer   2016   $ 54,923     $ 309,000     $ -0-     $ -0-     $ 363,923  
                                             
Geoffrey Lawrence   2017   $ 46,524     $ 79,660     $ 178,765     $ -0-     $ 304,949  
Chief Financial Officer   2016   $ -0-     $ -0-     $ -0-     $ -0-     $ -0-  
                                             
Michael Berk,   2017   $ -0-     $ 34,600     $ 299,163     $ -0-     $ 333,763  
President of Programming   2016   $ -0-     $ 15,000     $ -0-     $ -0-     $ 15,000  

 

  (1) The amounts in columns (e) and (f) reflect the dollar amount recognized for financial statement reporting purposes for the years ended December 31, 2017 and 2016, in accordance with FASB ASC 718-10 of awards of stock and stock options. Assumptions used in the calculation of this amount are included in the footnotes to our audited financial statements for the fiscal year ended December 31, 2016, included in Part II, Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

 

Employment Agreements

 

Mark Bradley, Chief Executive Officer

 

On July 17, 2015, the Company entered into a new employment agreement with Mr. Bradley that replaced his prior employment agreement. Pursuant to the terms of the new employment agreement, Mr. Bradley serves as the Company’s CEO and Chairman. The employment agreement has a term of five years and six months, commencing July 1, 2015. Under the employment agreement Mr. Bradley is entitled to an annual base salary of $175,000 or such greater amount as may be determined by the Board of Directors in connection with a performance review to be performed at least once annually. In the event that the Board determines that we cannot afford to pay Mr. Bradley any portion of his base salary, Mr. Bradley may, at his sole option, elect one of the following:

 

●     Defer receipt of his base salary until such time as the Company has the funds to pay him. In the event that Mr. Bradley elects this option, the unpaid salary shall be paid with no interest.

 

●     Elect to convert all, or a portion of the unpaid salary into Series C Preferred Stock at an exchange rate equal to the closing price of the Company’s common stock on the date immediately preceding each election.

 

Mr. Bradley is also entitled to an annual bonus, subject to meeting mutually agreed upon annual performance criteria mutually established by the Company and Mr. Bradley.

 

In the event that Mr. Bradley’s employment is terminated by the Company for any reason (other than as a result of the termination for cause or by death) or terminated by Mr. Bradley as a result of a material breach of the employment agreement by the Company (any of the foregoing, an “Involuntary Termination”), Mr. Bradley is entitled to continue to receive his base salary and all benefits for the remainder of the term of the employment agreement as if it had not been terminated. In addition, Mr. Bradley would receive from the Company, on the effective date of the Involuntary Termination, a lump sum amount equal to two times Mr. Bradley’s then current base salary. In addition, all stock options that Mr. Bradley would be eligible though the natural term of the employment agreement will immediately become fully vested. In the event Mr. Bradley or his family is ineligible under the terms of any insurance to continue to be covered, the Company shall provide Mr. Bradley and his family with substantially equivalent coverage through other sources or will provide Mr. Bradley with a lump sum payment equal to the agreed upon value of the continuation of such insurance coverage to which Mr. Bradley is entitled under the employment agreement.

 

  34  
 

 

In the event of Mr. Bradley’s death during the term of the employment agreement, the Company will pay to Mr. Bradley’s designated beneficiary 100% of Mr. Bradley’s then current base salary for a period of 12 months following Mr. Bradley’s death.

 

The Company has the right to terminate Mr. Bradley’s employment for Cause upon written notice to Mr. Bradley. The term “Cause” means Mr. Bradley must have (i) been willful, gross or persistent in his inattention to his duties or Mr. Bradley committed acts which constitute willful or gross misconduct and, after written notice of the same has been given to Mr. Bradley and he has been given an opportunity to cure the same within 30 days after such notice; or (ii) committed fraud against the Company. If Mr. Bradley’s employment is terminated for Cause and Mr. Bradley does not consent to such termination, such termination shall not be considered effective and Mr. Bradley’s rights under the employment agreement shall continue until the existence of Cause has been determined by an independent arbitrator appointed by the American Arbitration Association and either party’s rights to petition a court of law for a decision in the matter have been exhausted.

 

Mr. Bradley is subject to a nondisclosure provision that continues for a period of one year following his termination of employment, and a noncompete agreement during the term of his employment with the Company.

 

Michael Berk, President of Programming

 

We are not currently a party to an employment with Mr. Berk and do not pay him cash compensation for his services to the Company.

 

Geoffrey Lawrence, Chief Financial Officer

 

On August 8, 2017, we entered into an employment agreement with Mr. Lawrence under which we employed Mr. Lawrence as our Chief Financial Officer and Chief Compliance Officer for a two-year term at an annual base salary of $100,800. The employment agreement also provides for the issuance to Mr. Lawrence of (i) $12,960 of shares of the Company’s common stock on a quarterly basis, with the first such issuance on October 1, 2017, whereby the number of shares shall be determined based on the most recent closing traded price on October 1 st , January 1 st , April 1 st and July 1st, as applicable, (ii) 250,000 shares of common stock on July 4, 2017, as a signing bonus, and (iii) an option to purchase 2,000,000 shares of common stock, vesting ratably on a monthly basis over a one-year period beginning on August 8, 2017, at an exercise price of $0.17 per share.

 

Outstanding Equity Awards at Fiscal Year End

 

The following table sets forth information with respect to the value of all unexercised options previously awarded to the Named Executive Officers at the fiscal year ended December 31, 2017.

 

Name
(a)
  Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b)
    Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(c)
    Option
Exercise
Price ($)
(e)
    Option
Expiration
Date
(f)
  Number
of Shares
or Units
of Stock
That
Have Not
Vested (#)
(f)
    Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested ($)
(g)
 
Mark Bradley     1,750,000       -0-     $ 0.04     July 4, 2020     -0-     $ -0-  
                                             
Geoffrey Lawrence     2,000,000       -0-     $ 0.17     August 7, 2020     -0-     $ -0-  
                                             
Michael Berk     1,000,000       -0-     $ 0.07     May 1, 2020     -0-     $ -0-  
      1,750,000       -0-     $ 0.17     July 4, 2020     -0-     $ -0-  

 

  35  
 

 

Director Compensation

 

The table below summarizes the compensation paid, or accrued to non-employee directors for the year ended December 31, 2017.

 

    Fees Earned     Stock     Option     All Other        
    or Paid     Awards     Awards     Compensation     Total  
Name   in Cash     ($)     ($)     ($)     ($)  
(a)   (b)     (c) (1)     (d) (2)     (g)     (h)  
Brett Pojunis   $ 114,937     $ 51,900     $ 527,862     $ -0-     $ 694,699  

 

The amounts in columns (c) and (d) reflect the fair value dollar amount recognized for financial statement reporting purposes for the year ended December 31, 2017, in accordance with FASB ASC 718-10-30-2 of awards of stock and stock options and thus include amounts from awards granted in and prior to 2016. Assumptions used in the calculation of this amount are included in the footnotes to our audited financial statements for the year ended December 31, 2016 included in Part II, Item 8, Financial Statements and Supplementary Data of this Annual Report on Form 10-K.

 

(1) Represents issuance on January 22, 2017 of 3,000,000 shares of common stock for services as a director.
(2) Represents options to acquire 2,000,000 shares at $0.07 over a three year period awarded on May 1, 2017 and options to acquire 1,750,000 shares at $0.17 over a three year period awarded on July 4, 2017 for services as a director.

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

On January 26, 2017, we sold 14,000,000 units, consisting of 14,000,000 shares of common stock and 14,000,000 two-year warrants exercisable at $0.05 per share, to Mark Bradley, our Chief Executive Officer for cash proceeds of $350,000.

 

We are not currently subject to corporate governance standards of listed companies, which require, among other things, that the majority of the Board of Directors be independent and define the independence of directors. However, we have chosen to define an “independent” director in accordance with the NASDAQ Global Market’s requirements for independent directors. Under those requirement, our Board of Directors has determined that only Mr. Pojunis is an “independent” director.

 

DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES LIABILITIES

 

Our articles of incorporation have eliminated our directors’ and officers’ personal liability for damages for breaches of fiduciary duty but do not eliminate or limit the liability of a director officer for (a) acts or omissions which involve intentional misconduct, fraud or a knowing violation of the law, or (b) the payment of dividends in violation of applicable law. The effect of this provision of our articles of incorporation is to eliminate our rights and those of our stockholders to recover damages against a director or officer for breach of the fiduciary duty of care as a director or officer (including breaches resulting from negligent or grossly negligent behavior), except as provided above or under certain situations defined by statute. We believe that the indemnification provisions in our articles of incorporation are necessary to attract and retain qualified persons as directors and officers.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.

 

LEGAL MATTERS

 

Certain legal matters relating to the validity of our securities offered by this prospectus will be passed upon for us by Fox Rothschild LLP, New York, York.

 

EXPERTS

 

Our consolidated financial statements as of December 31, 201 7 and 201 6 and for the years then ended included in this prospects have been audited by M&K CPAS, PLLC, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

 

  36  
 

 

AVAILABLE INFORMATION

 

We are filing with the SEC this registration statement on Form S-1 under the Securities Act with respect to the common stock offered hereby. This prospectus, which constitutes part of the registration statement, does not contain all of the information set forth in the registration statement and the exhibits and schedule thereto, certain parts of which are omitted in accordance with the rules and regulations of the SEC. For further information regarding our common stock and our company, please review the registration statement, including exhibits, schedules and reports filed as a part thereof. Statements in this prospectus as to the contents of any contract or other document filed as an exhibit to the registration statement, set forth the material terms of such contract or other document but are not necessarily complete, and in each instance reference is made to the copy of such document filed as an exhibit to the registration statement, each such statement being qualified in all respects by such reference.

 

We file annual, quarterly, and current reports, proxy statements and other information with the SEC. Our SEC filings are available to the public over the Internet at the SEC’s web site at www.sec.gov and on the investor relations page of our website at www.playersnetwork.com . Information on our web site is not part of this prospectus. You may also read and copy any document we file with the SEC at its public reference facilities at 100 F Street N.E., Washington, D.C. 20549. You can also obtain copies of the documents upon the payment of a duplicating fee to the SEC. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities.

 

  37  
 

 

Index to Consolidated Financial Statements

 

Report of Independent Registered Public Accounting Firm   F-1
     
Consolidated Balance Sheets as of December 31, 2017 and 2016   F-2
     
Consolidated Statements of Operations for the Years Ended December 31, 2017 and 2016   F-3
     
Consolidated Statement of Stockholders’ Equity (Deficit) for the Years Ended December 31, 2017 and 2016   F-4
     
Consolidated Statements of Cash Flow for the Years Ended December 31, 2017 and 2016   F-5
     
Notes to Financial Statements   F-6

 

  38  
 

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and

Stockholders of Players Network

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Players Network (the Company) as of December 31, 2017 and 2016, and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for each of the years in the two-year period ended December 31, 2017, and the related notes and schedules (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for each of the years in the two-year period ended December 31, 2017, in conformity with accounting principles generally accepted in the United States of America.

 

Basis for Opinion

 

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.

 

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

 

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

/s/ M&K CPAS, PLLC

 

We have served as the Company’s auditor since 2010.

 

Houston, Texas

April 17, 2018

 

  F- 1  

 

 

PLAYERS NETWORK

CONSOLIDATED BALANCE SHEETS

 

    December 31, 2017     December 31, 2016  
Assets                
                 
Current assets:                
Cash   $ 65,840     $ 145,119  
Other current assets     83,180       85,150  
Inventory     255,486       -  
Total current assets     404,506       230,269  
                 
Fixed assets, net     396,455       29,128  
Construction in progress     408,812       239,220  
                 
Total Assets   $ 1,209,773     $ 498,617  
                 
Liabilities and Stockholders’ (Deficit)                
                 
Current liabilities:                
Accounts payable   $ 702,865     $ 298,861  
Accrued expenses     448,538       293,418  
Deferred rent obligations     28,809       15,656  
Settlements payable     -       70,000  
Convertible debentures, net of discounts of $790,621 and $241,634 at December 31, 2017 and 2016, respectively     374,679       58,366  
Short term debt, net of discounts of $432,190 and $60 at December 31, 2017 and 2016, respectively     775,810       142,940  
Derivative liabilities     9,530,296       482,674  
Total current liabilities     11,860,997       1,361,915  
                 
Long term debt, net of discounts of $-0- and $885,271 at December 31, 2017 and 2016, respectively     -       39,729  
Total Liabilities     11,860,997       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; 580,716,669 and 524,394,239 shares issued and outstanding at December 31, 2017 and 2016, respectively     580,717       524,394  
Additional paid-in capital     33,753,106       29,463,343  
Subscriptions payable, consisting of -0- and 1,000,000 shares at December 31, 2017 and 2016, respectively     -       11,400  
Accumulated (deficit)     (44,597,401 )     (30,639,417 )
      (10,249,578 )     (626,280 )
Noncontrolling Interest     (401,646 )     (276,747 )
Total Stockholders’ (Deficit)     (10,651,224 )     (903,027 )
                 
Total Liabilities and Stockholders’ (Deficit)   $ 1,209,773     $ 498,617  

 

 

The accompanying notes are an integral part of these consolidated financial statements.

 

  F- 2  

 

 

PLAYERS NETWORK

STATEMENTS OF OPERATIONS

 

    For the Years Ended  
    December 31,  
    2017     2016  
             
Revenue:   $ 87,913     $ 135,234  
Cost of goods sold     60,816       -  
Gross profit     27,097       135,234  
                 
Expenses:                
Direct operating costs     499,799       145,324  
General and administrative     3,941,394       1,078,409  
Officer salaries     650,786       175,673  
Depreciation and amortization     71,920       24,084  
Total operating expenses     5,163,899       1,423,490  
                 
Operating loss     (5,136,802 )     (1,288,256 )
                 
Other income (expense):                
Other income     135,239       -  
Gain (loss) on debt extinguishment, net     (62,641 )     165,615  
Interest expense, net     (1,424,543 )     (409,648 )
Change in derivative liabilities     (7,594,136 )     (231,519 )
Total other income (expense)     (8,946,081 )     (475,552 )
                 
Net loss   $ (14,082,883 )   $ (1,763,808 )
Less: Net loss attributable to the noncontrolling interest     124,899       61,998  
Net loss attributable to Players Network   $ (13,957,984 )   $ (1,701,810 )
                 
Weighted average number of common shares outstanding - basic and fully diluted     558,393,739       428,311,253  
                 
Net loss per share - basic and fully diluted   $ (0.02 )   $ (0.00 )

 

The accompanying notes are an integral part of these consolidated financial statements.

 

  F- 3  

 

 

PLAYERS NETWORK

CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

 

                                                                Total  
    Series A     Series C                 Additional                       Stockholders'  
    Preferred Stock     Preferred Stock     Common Stock     Paid-in     Subscriptions     Accumulated     Noncontrolling     Equity  
    Shares     Amount     Shares     Amount     Shares     Amount     Capital     Payable     (Deficit)     Interest     (Deficit)  
                                                                   
Balance, December 31, 2015     2,000,000     $ 2,000       5,750,000     $ 5,750       351,827,400     $ 351,827     $ 26,703,900     $ -     $ (28,937,607 )   $ (214,749 )   $ (2,088,879 )
                                                                                         
Shares issued for cash     -       -       -       -       56,250,000       56,250       242,600       -       -       -       298,850  
                                                                                         
Shares issued for services     -       -       -       -       8,500,000       8,500       72,600       11,400       -       -       92,500  
                                                                                         
Shares issued for services, related parties     -       -       6,250,000       6,250       29,400,000       29,400       303,350       -       -       -       339,000  
                                                                                         
Shares issued for conversion of debts     -       -       -       -       78,416,839       78,417       142,769       -       -       -       221,186  
                                                                                         
Contributed capital, debt settlement payment     -       -       -       -       -       -       14,000       -       -       -       14,000  
                                                                                         
Warrants issued for debt financing     -       -       -       -       -       -       931,996       -       -       -       931,996  
                                                                                         
Adjustments to derivative liability due to debt conversions     -       -       -       -       -       -       1,052,128       -       -       -       1,052,128  
                                                                                         
Net loss for the year ended December 31, 2016                                                     (1,701,810 )     (61,998 )     (1,763,808 )
                                                                                         
Balance, December 31, 2016     2,000,000     $ 2,000       12,000,000     $ 12,000       524,394,239     $ 524,394     $ 29,463,343     $ 11,400     $ (30,639,417 )   $ (276,747 )   $ (903,027 )