UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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



		For the quarterly period ended ~~September 30, 2017~~

	March 31, 2020
¨
		or

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



		For the transition period from ~~__________________~~___________ to ~~__________________~~

~~Commission file number: 000-54887~~ ___________

Commission File Number 000-54887

Bright Mountain Media, Inc.

(Exact ~~name~~Name of ~~registrant~~Registrant as ~~specified~~Specified in its ~~charter)~~Charter)

Florida

27-2977890

~~Florida~~

~~27-2977890~~

(State or ~~other jurisdiction~~Other Jurisdiction of ~~incorporation~~

Incorporation or ~~organization)~~Organization

(I.R.S. Employer

Identification No.)


6400 Congress Avenue, Suite 2050, Boca Raton, ~~Florida~~ FL		33487
(Address of ~~principal executive offices)~~ Principal Executive Offices	(	Zip ~~Code)~~ Code

561-998-2440

Registrant’s Telephone Number, Including Area Code

Not applicable

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
~~561-998-2440~~ None
~~(Registrant's telephone number, including area code)~~

~~not applicable~~

(~~Former name, former address and former fiscal year, if changed since last report)~~

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. þYes ¨[X] No [ ]

Indicate by check mark whether the registrant has submitted electronically ~~and posted on its corporate Website, if any,~~ every Interactive Data File required to be submitted ~~and posted~~ pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit ~~and post~~ such files). þYes ¨[X] No [ ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 [ ]	o	Accelerated filer	o [ ]
	Non-accelerated filer [X]	o	Smaller reporting company	þ [X]
		Emerging growth company	þ [X]

If an emerging growth company, indicate by ~~checkmark~~check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨[ ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the ~~Exchange~~ Act)o. Yes þ[ ] No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of ~~November 20, 2017 the issuer had 46,168,864~~June 29, 2020 there were 107,757,860 shares of ~~its~~the issuer’s common stock issued and outstanding.

TABLE OF CONTENTS

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

~~Various statements in this~~This report ~~contain or may contain~~includes forward-looking statements that ~~are subject~~relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors ~~which~~that may cause our actual results, levels of activity, performance or achievements to bediffer materially ~~different~~ from any future results, levels of activity, performance or achievements expressed or implied by ~~such~~these forward-looking statements. ~~These~~Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements ~~were based~~largely on ~~various factors~~our current expectations and ~~were derived from utilizing numerous assumptions~~future events and ~~other factors~~financial trends that ~~could cause~~we believe may affect our ~~actual~~financial condition, results ~~to differ materially from those in the forward-looking statements. These factors~~of operation, business strategy and financial needs. Forward-looking statements include, but are not limited ~~to:~~to, statements about risks associated with:


●	·	our history of losses, ~~and~~our declining gross profit margins, our ability to raise additional capital and continue as a going concern;
	· ●	our ability to ~~successfully integrate~~fully develop the ~~operations of the Black Helmet Apparel business;~~ Bright Mountain digital media services platform;
	· ●	the impact of COVID-19 on internet advertising;
	●	our ability to ~~successfully integrate the Daily Engage Media acquisition~~manage and ~~launch the Bright Mountain Media Ad Network;~~ expand our relationships with publishers;
	· ●	~~a failure to successfully transition to primarily advertising based revenue model;~~
	·	the impact of seasonal fluctuations on our revenues;
	· ●	~~once established, our failure to detect advertising fraud;~~
	·	~~our dependence on our relationships with Amazon and PayPal;~~
	·	~~our dependence on a limited number of vendors;~~
	·	~~our dependence on our relationship with Google AdSense;~~
	·	acquisitions of new businesses and our ability to integrate those businesses into our operations;
	· ●	online security breaches;
	· ●	failure to effectively promote our ~~brand;~~ brand and attract advertisers;
	· ●	our ability to protect our content;
	· ●	our ability to protect our intellectual property ~~rights and our proprietary content;~~ rights;
	· ●	the success of our technology development efforts;
	· ●	additional competition resulting from our business expansion strategy;


	· ●	our dependence on third party service providers;
	●	our ability to detect advertising fraud;
	●	liability related to content which appears on our websites;
	· ●	regulatory ~~risks;~~ risks and compliance with privacy laws;
	· ●	dependence on executive officers and certain key employees and consultants;
	· ●	our ability to hire qualified personnel;
	· ●	~~third party content;~~
	·	possible problems with our network infrastructure;
	· ●	ongoing material weaknesses in our disclosure controls and internal control over financial reporting;
	●	the ~~historic~~impact on available working capital resulting from the payment of cash dividends to our affiliates;
	●	dilution to existing shareholders upon the conversion of outstanding preferred stock and convertible notes and/or the exercise of outstanding options and warrants, including warrants with cashless exercise rights;
	●	the illiquid nature of our common stock;
	· ●	risks associated with securities litigation;
	· ●	~~material weaknesses in our internal control over financial reporting;~~
	·	~~the lack of cash dividends on our common stock;~~
	·	provisions of our charter and Florida law which may have anti-takeover effects;
	·	~~control of our company by our management;~~ and
	·	~~the dilutive effect of conversion of our 10% Series A and Series E convertible preferred stock and/or the payment of stock and cash dividends on those shares to our common shareholders.~~

Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report, including the Part II, Item 2, our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019, as filed with the Securities and Exchange Commission on May 14, 2020 and our other filings with the Securities and Exchange Commission in their entirety. Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this report the terms “Bright Mountain”, the “Company,” “we”, “us”, “our” and similar terms refer to Bright Mountain Media, Inc., a Florida corporation, and its ~~subsidiaries, and "Daily Engage Media" refers to Daily Engage Media Group LLC, a New Jersey limited liability company and wholly owned subsidiary of the Company.~~subsidiaries. In addition, when used in this report, ~~“third~~“first quarter of ~~2017”~~2020” refers to the three months ended ~~September 30, 2017, "third~~March 31, 2020, “first quarter of ~~2016"~~2019” refers to the three months ended ~~September 30, 2016, “2017”~~March 31, 2019, “2020” refers to the year ending December 31, ~~2017~~2020 and ~~“2016”~~“2019” refers to the year ended December 31, ~~2016.~~

~~Unless specifically set forth to the contrary, the~~2019. The information which appears on our website at www.brightmountainmedia.com is not part of this report.

PART 1 -– FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

~~FINANCIAL STATEMENTS.~~

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30

December 31,

2017

2016

(unaudited)

ASSETS

Current assets

Cash

$
123,292

$
162,795

Accounts Receivable, net

223,396

157,013

Prepaid Expenses and Other Current Assets

71,727

132,950

Inventories

984,522

1,127,072

Total current assets

1,402,937

1,579,830

Fixed Assets, net

94,382

99,001

Intangible Assets, net

1,231,776

967,114

Goodwill

502,823

—

Tradenames

300,000

150,000

Other Assets

49,497

184,400

Total Assets

$
3,581,415

$
2,980,345

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities

Accounts Payable and Accrued Expense

$
525,308

$
654,140

Accrued Interest

50,347

11,111

Accrued Interest to Related Party

16,550

5,592

Premium Finance Loan Payable

—

53,643

Deferred Rent

16,692

—

Other Current Liabilities

16,237

—

Notes Payable

926,766

500,000

Total Current Liabilities

1,551,900

1,224,486

Long Term Debt to Related Parties, net of debt discount of $887,855 and $389,095

1,147,145

185,905

Total Liabilities

2,699,045

1,410,391

Commitments and contingencies (See Note 9)

Shareholders' Equity

Preferred stock, par value $0.01, 20,000,000 shares authorized,

600,000 and 100,000 shares issued and outstanding

Series A, 2,000,000 shares designated, 100,000 and

100,000 shares issued and outstanding

1,000

1,000

Series B, 1,000,000 shares designated, 0 and

0 shares issued and outstanding

—

—

Series C, 2,000,000 shares designated, 0 and

0 shares issued and outstanding

—

—

Series D, 2,000,000 shares designated, 0 and

0 shares issued and outstanding

—

—

Series E, 2,500,000 shares designated

5,000

—

500,000 and 0 issued and outstanding

Common stock, par value $0.01, 324,000,000 shares authorized,

46,168,864 issued and outstanding and 44,901,531 issued

and outstanding, respectively

461,689

449,016

Additional paid-in capital

11,343,468

9,944,744

Accumulated Deficit

(10,928,787
)

(8,824,806
)
Total shareholders' equity

882,370

1,569,954

Total liabilities and shareholders' equity

$
3,581,415

$
2,980,345

	March 31, 2020			December 31, 2019
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	1,270,023		$	957,013
Accounts receivable, net		3,207,560			3,997,475
Note receivable, net		38,329			63,812
Prepaid expenses and other current assets		485,074			752,975
Current assets - discontinued operations		-			1,705

Total Current Assets		5,000,986			5,772,980

Property and equipment, net		25,413			30,666
Website acquisition assets, net		35,316			48,928
Intangible assets, net		18,671,791			19,610,801
Goodwill		53,646,856			53,646,856
Prepaid services/consulting agreements - long term		775,000			913,182
Right of use asset		348,721			397,912
Other assets		94,672			35,823
Total Assets	$	78,598,755		$	80,457,148

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities
Accounts payable	$	8,152,462		$	8,358,442
Accrued expenses		893,540			3,228,328
Accrued interest to related party		8,652			6,629
Premium finance loan payable		125,453			179,844
Deferred revenues		18,609			6,651
Long term debt, current portion		165,163			165,163
Operating lease liability, current portion		215,004			211,744
Current liabilities - discontinued operations		-			591
Total Current Liabilities		9,578,883			12,157,392

Long term debt to related parties, net		29,179			25,689
Deferred tax liability		516,941			581,440
Operating lease liability, net of current portion		130,979			198,232
Total Liabilities		10,255,982			12,962,753
Commitments and Contingencies
Shareholders’ Equity
Convertible preferred stock, par value $0.01, 20,000,000 shares authorized,
Series A-1, 2,000,000 shares designated, 1,200,000 and 1,200,000 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		12,000			12,000
Series B-1, 6,000,000 shares designated, 0 and 0 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively		-			-
Series E, 2,500,000 shares designated, issued and outstanding at March 31, 2020 and December 31, 2019, respectively		25,000			25,000
Series F, 4,344,017 shares designated, issued and outstanding at March 31, 2020 and December 31, 2019, respectively		43,440			43,440
Common stock, par value $0.01, 324,000,000 shares authorized, 106,732,860 and 100,244,312 issued and 84,491,031 and 78,063,531 outstanding at March 31, 2020 and December 31, 2019, respectively		1,067,329			1,002,444
Additional paid-in capital		91,099,013			86,856,500
Accumulated deficit		(23,904,009	)		(20,444,989	)
Total shareholders’ equity		68,342,773			67,494,395
Total Liabilities and Shareholders’ Equity	$	78,598,755		$	80,457,148

See accompanying notes to unaudited condensed consolidated financial statements

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

~~(Unaudited)~~

														For the Three Months Ended March 31,
	For the Three Months Ended						For the Nine Months Ended							2020				2019
	September 30,						September 30,
Revenues
Advertising													$	2,270,186			$	1,085,456
	2017			2016			2017			2016

Product Sales	$	589,402		$	292,235		$	1,713,688		$	976,056
Revenues from Advertising		131,223			113,502			334,856			313,266
Total revenues		720,625			405,737			2,048,544			1,289,322

Cost of sales - Product		387,360			229,391			1,116,465			732,536
Cost of Revenues - Advertising		4,396			826			16,758			5,202
Cost of revenue
Advertising														1,823,082				885,696
Gross profit		328,869			175,520			915,321			551,584				447,104				199,760

Selling, general and administrative expenses		801,307			686,802			2,750,275			2,205,855				3,979,378				915,954
Loss from operations		(472,438	)		(511,282	)		(1,834,954	)		(1,654,271	)

Loss from continuing operations														(3,532,274	)			(716,194	)

Other income (expense)
Interest income		232			11			451			21				10,993				6,006
Gain on settlement of liability														-				122,500
Other expense														(215	)			-
Interest expense		20,883			—			(48,868	)		—				-				(909	)
Interest expense - related party		(95,478	)		(297,130	)		(220,610	)		(335,015	)			(2,023	)			(6,201	)
Total other income (expense)		(74,363	)		(297,119	)		(269,027	)		(334,994	)
Total other income														8,755				121,396

Net loss before income taxes		(546,801	)		(808,401	)		(2,103,981	)		(1,989,265	)
Income taxes		—			—			—			—
Net loss from continuing operations before tax														(3,523,519	)			(594,798	)

Loss from discontinued operations														-				(115,464	)

Net loss before tax														(3,523,519	)			(710,262	)

Income tax benefit														64,499				-

Net loss		(546,801	)		(808,401	)		(2,103,981	)		(1,989,265	)			(3,459,020	)			(710,262	)

Preferred stock dividends
Series A, Series B, Series C, Series D, and Series E preferred stock		1,122			60,339			3,849			278,525
Total preferred stock dividends		1,122			60,339			3,849			278,525
Series A-1, Series E, and Series F preferred stock														(118,252	)			(74,171	)

Net loss attributable to common shareholders	$	(547,923	)	$	(868,740	)	$	(2,107,830	)	$	(2,267,790	)		$	(3,577,272	)		$	(784,433	)


Basic and diluted net loss from continuing operations per share													$	(0.03	)		$	(0.01	)
Basic and diluted net loss from discontinued operations per share													$	0.00			$	(0.00	)
Basic and diluted net loss per share	$	(0.01	)	$	(0.02	)	$	(0.05	)	$	(0.06	)		$	(0.03	)		$	(0.01	)

Weighted average shares outstanding - basic and diluted		45,126,811			40,848,279			44,973,345			38,220,591				106,098,560				62,900,662

See accompanying notes to unaudited condensed consolidated financial statements

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN ~~SHAREHOLDERS'~~SHAREHOLDERS’ EQUITY

For the ~~Nine~~Three Months Ended ~~September 30, 2017~~March 31, 2020 and 2019

(Unaudited)

Additional

Total

Preferred Stock

Common Stock

Paid-in

Accumulated

Shareholders'

Shares

Amount

Shares

Amount

Capital

Deficit

Equity

Balance – December 31, 2016

100,000

$
1,000

44,901,531

$
449,016

$
9,944,744

$
(8,824,806
)

$
1,569,954

Common stock issued for services ($0.850/share)

—

—

3,600

36

3,024

—

3,060

Common stock issued for 10% dividend payment pursuant to Series A preferred stock Subscription Agreements

—

—

10,000

100

(100
)

—

—

Issuance of Series E preferred Stock ($0.40/share)

500,000

5,000

—

—

195,000

—

200,000

Stock option compensation expense

—

—

—

—

95,821

—

95,821

Common stock issued as compensation

—

—

28,500

285

22,515

—

22,800

Beneficial conversion feature

—

—

—

—

615,625

—

615,625

Common stock issued for cash ($0.40/share)

—

—

125,000

1,250

48,750

—

50,000

Common stock issued in acquisition

1,100,233

11,002

418,089

—

429,091

Net loss for the nine months ended September 30, 2017

—

—

—

—

—

(2,103,981
)

(2,103,981
)
Balance – September 30, 2017

600,000

$
6,000

46,168,864

$
461,689

$
11,343,468

$
(10,928,787
)

$
882,370

	Preferred Stock				Common Stock				Additional Paid-in			Accumulated			Total Shareholders’
	Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance - December 31, 2019		8,044,017	$	80,440		100,244,312	$	1,002,444	$	86,856,500		$	(20,444,989	)	$	67,494,395
Series A-1, E, and F preferred stock dividend		-		-		-		-		(118,252	)		-			(118,252	)
Stock option vesting expense		-		-		-		-		36,595			-			36,595
Units consisting of one share of common stock and one warrant issued for cash, net of costs		-		-		5,117,500		51,175		2,123,762			-			2,174,937
Stock issued to Spartan Capital for consulting services		-		-		1,310,000		13,100		2,109,300			-			2,122,400
Common stock issued for services rendered		-		-		61,048		610		91,108			-			91,718
Net loss for the three months ended March 31, 2020		-		-		-		-		-			(3,459,020	)		(3,459,020	)
Balance - March 31, 2020		8,044,017	$	80,440		106,732,860	$	1,067,329	$	91,099,013		$	(23,904,009	)	$	68,342,773

	Preferred Stock				Common Stock					Additional Paid-in			Accumulated			Total Shareholders’
	Shares		Amount		Shares			Amount		Capital			Deficit			Equity
Balance - December 31, 2018		6,844,017	$	68,440		62,125,114		$	621,252	$	19,775,753		$	(17,042,966	)	$	3,422,479
Series E and F preferred stock dividend		-		-		-			-		(74,171	)		-			(74,171	)
Stock option vesting expense		-		-		-			-		3,213			-			3,213
Common stock issued for services - cancelled		-		-		(3,000	)		-		-			-			-
Units consisting of one share of common stock and one warrant issued for cash, net of costs		-		-		1,943,750			19,437		854,513			-			873,950
Net loss for the three months ended March 31, 2019		-		-		-			-		-			(710,262	)		(710,262	)
Balance – March 31, 2019		6,844,017	$	68,440		64,065,864		$	640,689	$	20,559,308		$	(17,753,228	)	$	3,515,209

See accompanying notes to unaudited condensed consolidated financial statements

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

~~(Unaudited)~~March 31, 2020

For the Nine Months Ended

September 30,

2017

2016

Cash flows from operating activities:

Net loss

$
(2,103,981
)

$
(1,989,265
)
Adjustments to reconcile net loss to net cash used in operations:

Depreciation

18,925

10,025

Amortization of debt discount

116,863

305,115

Amortization

227,418

186,007

Stock option compensation expense

95,821

107,193

Common stock issued for services

25,860

64,110

Product refund reserve

—

12,642

Changes in operating assets and liabilities:

Accounts receivable

35,663

(34,485
)
Inventory

142,550

7,842

Prepaid expenses and other current assets

102,751

1,446

Accounts payable and accrued expense

(194,163
)

53,679

Accrued interest

39,236

—

Accrued interest - related party

10,958

—

Other current liabilities

(557
)

—

Deferred rents

16,692

—

Other assets

93,375

(118,436
)
Net cash used in operating activities

(1,372,589
)

(1,394,127
)

Cash flows from investing activities:

Purchase of fixed assets

(14,305
)

(35,036
)
Purchase of websites

—

(142,925
)
Cash paid for acquisition, net of cash received

(199,573
)

—

Net cash used in investing activities

(213,878
)

(177,961
)

Cash flows from financing activities:

Proceeds from issuance of common and preferred stock

250,000

800,000

Repayments on insurance premium notes payable

(53,643
)

(41,758
)
Repayment of Notes Payable

(109,393
)

—

Long-term debt - Related parties

1,460,000

500,000

Net cash provided by financing activities

1,546,964

1,258,242

Net decrease in cash

(39,503
)

(313,846
)
Cash at beginning of period

162,795

416,187

Cash at end of period

$
123,292

$
102,341

(Unaudited)

	For the Three Months Ended March 31,
	2020			2019
Cash flows from operating activities:
Net loss	$	(3,459,020	)	$	(710,262	)
Add back: loss attributable to discontinued operations		-			115,464
Adjustments to reconcile net loss to net cash used in operations:
Depreciation		5,253			2,352
Amortization of debt discount		3,490			3,452
Amortization		952,622			35,813
Gain on settlement of liability		-			(122,500	)
Stock option compensation expense		36,595			3,213
Stock issued for services rendered		91,718			-
Non-cash acquisition fee		275,000			-
Change in deferred taxes		(64,499	)		-
Provision for bad debt		-			4,034
Changes in operating assets and liabilities:
Accounts receivable		789,915			(375,928	)
Prepaid expenses and other current assets		314,015			29,361
Prepaid services/consulting agreements		93,182			127,500
Other assets		(58,849	)		(4,703	)
Right of use asset and lease liability		(14,802	)		-
Accounts payable		(205,980	)		360,393
Accrued expenses		(141,893	)		(26,538	)
Accrued interest – related party		2,023			-
Deferred revenues		11,958			2,485
Net cash (used in) continuing operations for operating activities		(1,369,272	)		(555,864	)
Net cash (used in) discontinued operations		-			(73,589	)
Net cash (used in) operating activities		(1,369,272	)		(629,453	)

Cash flows from investing activities:
Cash paid for website acquisition		-			(8,000	)
Net cash (used in) investing activities		-			(8,000	)

Cash flows from financing activities:
Proceeds from issuance of common stock, net		1,734,937			873,950
Payments of premium finance loan payable		(54,391	)		(32,331	)
Dividend payments		(23,747	)		(74,171	)
Principal payments received (funded) for notes receivable		25,483			(64,681	)
Note receivable funded		-			(375,303	)
Net cash provided by financing activities		1,682,282			327,464

Net increase (decrease) in cash and cash equivalents including cash and cash equivalents classified within assets related to continuing operations		313,010			(309,989	)
Net decrease in cash and cash equivalents classified within assets related to discontinued operations		-			(4,943	)
Net increase (decrease) in cash and cash equivalents		313,010			(314,932	)
Cash and cash equivalents at the beginning of period		957,013			1,042,457
Cash and cash equivalents at end of period	$	1,270,023		$	727,525

See accompanying notes to unaudited condensed consolidated financial statements

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS ~~(CONTINUED)~~

~~(Unaudited)~~March 31, 2020

For the Nine Months Ended

September 30,

2017

2016

Supplemental disclosure of cash flow information

Cash paid for:

Interest

$
92,783

$
25,367

Income taxes

$
—

$
—

Non-cash investing and financing activities

Premium finance loan payable recorded as prepaid

$
18,885

$
43,402

Payable for purchase of website

$
—

$
150,000

Conversion of convertible notes payable and accrued interest into common stock

$
—

$
603,600

Beneficial conversion of debt discount to additional paid-in capital

$
615,625

$
289,000

Discount recognized relative to website acquisition payable

$
—

$
32,732

Common stock issued for acquisition of Daily Engage Media

$
429,091

$
—

Notes payable issued for acquisition of Daily Engage Media

$
380,000

$
—

(Unaudited)

~~During the nine months ended September 30, 2016 the Company issued 809,475 shares of its common stock as dividends to the holders of its Series A, Series B, Series C, and Series D Stock.~~

	For the Three Months Ended March 31,
	2020		2019
Supplemental disclosure of cash flow information
Cash paid for
Interest	$	2,023	$	2,749

Non-cash investing and financing activities
Premium finance loan payable recorded as prepaid	$	125,987	$	71,845
Issuance of common stock payable to Spartan Capital for consulting services	$	2,122,400	$	-
Accrued consulting fees withheld from offering proceeds	$	165,000	$	-
Notes receivable for the sale of Black Helmet	$	-	$	155,000
Recognition of right of use asset and lease liability	$	-	$	245,540

During the nine months ended September 30, 2016 the Company issued 5,100,000 shares of its common stock to the holders of its Series A, Series B, Series C, and Series D convertible preferred stock for conversion of 5,100,000 shares of its convertible preferred stock Series A, Series B, Series C, and Series D.

~~During the nine months ended September 30,2017 the Company issued 10,000 shares of its common stock as a dividend to the holder of its Series A convertible preferred stock.~~

See accompanying notes to unaudited condensed consolidated financial statements

BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER 30, 2017~~March 31, 2020

(Unaudited)

NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

Organization and Nature of Operations

Bright Mountain Media, Inc. is a Florida corporation formed on May 20, 2010. Its wholly owned subsidiaries, Bright Mountain LLC, ~~and The Bright Insurance Agency, LLC, were formed as Florida limited liability companies in May 2011. Its wholly owned subsidiary, Bright Watches, LLC~~ was formed as a Florida limited liability company in ~~December 2015, and~~May 2011. Its wholly owned subsidiary, Bright Mountain, LLC (“BMLLC”) F/K/A Daily Engage Media Group, LLC (“~~Daily Engage Media”~~DEM”) was formed as a New Jersey limited liability company in February 2015. In August 2019 Bright Mountain Israel Acquisition, an Israeli company was formed and acquired the wholly owned subsidiary Slutzky & Winshman Ltd. (“S&W”) which then changed its name to Oceanside Media, see Note 4. Further, on November 18, 2019, Bright Mountain Media, Inc., through its wholly owned subsidiary BMTM2, Inc., a Florida corporation, merged with News Distribution Network, Inc., a Delaware company, which then changed its name to MediaHouse, Inc. When used herein, the terms ~~"BMTM, "~~“BMTM, the ~~"Company," "we," "us," "our"~~“Company,” “we,” “us,” “our” or ~~"Bright Mountain"~~“Bright Mountain” refers to Bright Mountain Media, Inc. and its subsidiaries.

~~The~~Discontinued Operations

Effective December 31, 2018 the Company discontinued the E-Commerce operations, the Products segment, as of December 31, 2018 per the determination of Management and the Board of Directors. Accordingly, the Company determined that the assets and liabilities of this reportable segment met the discontinued operations criteria in Accounting Standards Codification 205-20-45 and were classified as discontinued operations at December 31, 2018. See Discontinued Operations Note 5.

Continuing Operations

Bright Mountain Media, Inc. is aan end-to-end digital media ~~holding company~~and advertising services platform, connecting brands with targeted consumer demographics. Bright Mountain Media connects brands with targeted consumer demographics while maximizing revenue to publishers. Bright Mountain Media’s assets include the Bright Mountain, LLC ad network, MediaHouse (f/k/a NDN), Oceanside (f/k/a S&W Media), Wild Sky Media and 24 owned and/or managed websites.

We generate revenue sales of advertising services which generate revenue from advertisements (ad impressions) placed on our owned and managed sites, as well as from advertisements we place on partner websites, for ~~online assets targeting~~which we earn a share of the revenue. We also generate advertising services revenue from facilitating the real-time buying and ~~servicing~~selling of advertisements at scale between networks of buyers, often called DSPs (Demand Side Platforms) and sellers, often called SSPs (Supply Side Platforms).

During the military and public safety markets. The Company owns and manages 24 websites which are customized to provide our niche users, including active, reserve and retired military, law enforcement, first responders and other public safety employees with information and news that we believe may be of interest to them. Coupled with its recently acquired wholly owned subsidiary, Daily Engage Media,past several years the Company has evolved to place its emphasis on not only providing quality content on ~~its~~our websites to drive traffic increases, ~~so that it can monetize these visits through advertising revenue. We generate revenues from two segments, product sales and advertising. The advertising segment consists primarily of~~but to increase the advertising revenue we generate from companies and brands looking to reach our audiences. Our platform connects general advertisers with over 1,000 digital publications worldwide. Bright Mountain’s platform features timely, proprietary, and aggregated content covering current events and a ~~small amount~~variety of ~~subscription~~subjects that are targeted to specific demographics of the individual website. Our business strategy requires us to continue to provide this quality content to our markets as we grow our business, operations, and ~~service revenue.~~revenues.

On ~~December 16, 2016, with an effective date of December~~August 15, ~~2016,~~2019, under the terms of ~~an Asset Purchase~~the Share Exchange Agreement ~~the Company acquired the assets, constituting the Black Helmet Apparel business (“Black Helmet Apparel”), from Sostre Enterprises, Inc. Assets acquired included various website properties~~ and ~~content, social media content, inventory and other intellectual property rights. The Black Helmet Apparel line~~Plan of ~~apparel features clothing and accessories focused on first responders.~~

~~On September 19, 2017, under the terms of an Amended and Restated Membership Interest Purchase Agreement~~Merger with ~~Daily Engage Media,~~S&W and its members, the Company acquired 100% of the membership interests of ~~Daily Engage Media.~~S&W. Launched in ~~2015, Daily Engage Media is an ad network~~2015. S&W provided digital performance-based marketing services to customers which include primarily advertisers and advertising agencies that ~~connects advertisers~~promote or sell products and/or services to consumers through digital media.

On November 18, 2019, under the terms of the Share Exchange Agreement and Plan of Merger with ~~approximately 200 digital publications worldwide.~~NDN and its shareholders, the Company acquired 100% of the ownership interests of NDN. Launched in 2019 as a spin-off from Inform, Inc. NDN which was rebranded as MediaHouse partners with content producers and online news market websites to distribute video and banner advertisements throughout the United States of America.

~~Basis of Presentation~~

NOTE 2 - GOING CONCERN.

The ~~interim unaudited condensed~~accompanying consolidated financial statements ~~included herein~~ have been prepared byon a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company sustained a net loss of $3,459,020 and used net cash in operating activities of $1,369,272 for the three months ended March 31, 2020. The Company had an accumulated deficit of $23,904,009 at March 31, 2020. These factors raise substantial doubt about the ability of the Company ~~pursuant~~to continue as a going concern for a reasonable period. The Company’s continuation as a going concern is dependent upon its ability to generate revenues, control its expenses and its ability to continue obtaining investment capital and loans from related parties and outside investors to sustain its current level of operations.

Management continues raising capital through private placements and is exploring additional avenues for future fund-raising through both public and private sources. The Company is not currently involved in any binding agreements to raise public or private capital.

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

(Unaudited)

��

NOTE 2 – GOING CONCERN (continued).

The consolidated financial statements do not include any adjustments relating to the ~~rules~~recoverability and ~~regulations~~classification of recorded asset amounts or the ~~Securities~~amounts and ~~Exchange Commission (the “SEC”). In~~classification of liabilities that might be necessary should the ~~opinion of the Company’s management, all adjustments necessary~~Company be unable to ~~present fairly the consolidated results of operations and cash flows for the nine months ended September 30, 2017 and the consolidated financial position~~continue as ~~of September 30, 2017 have been made. The results of operations for such interim period are not necessarily indicative of the operating results expected for the full year.~~a going concern.

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

Principles of Consolidation and Basis of Presentation

The ~~interim unaudited~~ condensed consolidated financial statements include the accounts of the Company and all of its ~~wholly owned~~wholly-owned subsidiaries. All ~~significant~~ intercompany ~~transactions~~accounts and ~~balances~~transactions have been eliminated in ~~consolidation.~~the condensed consolidated financial statements. The accompanying unaudited financial statements for the three months ended March 31, 2020 and 2019 have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) applicable to interim financial information and the requirements of Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. In the opinion of management, such condensed consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of the condensed consolidated financial position and the condensed consolidated results of operations. The condensed consolidated results of operations for periods presented are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet information as of December 31, 2019 was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on May 14, 2020. The interim condensed consolidated financial statements should be read in conjunction with that report.

Revenue Recognition

On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2014-09, “Revenue from Contracts with Customers (Topic 606)” (“Topic 606”) using the “modified retrospective” method, meaning the standard is applied only to the most current period presented in the financial statements. Furthermore, we elected to apply the standard only to those contracts which were not completed as of the date of the adoption. Results for reporting periods beginning on the date of adoption are presented under Topic 606, while prior period amounts have not been adjusted and continue to be reported in accordance with accounting standards in effect for those periods. Following the adoption of Topic 606, the Company will continue to recognize revenue at a point-in-time when control of services is transferred to the customer. This is consistent with the Company’s previous revenue recognition accounting policy.

To determine revenue recognition for arrangements that the Company determines are within the scope of Topic 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that Company will collect the consideration it is entitled to in exchange for the advertising services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the advertising services promised within each contract and determines those that are performance obligations and assesses whether each promised advertising service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation based on relative fair values, when (or as) the performance obligation is satisfied.

The Company recognizes revenue from its own advertising platform, ad network partners and websites (“Ad Network”) through its publishing advertiser impressions and pay-for-click services. the Company’s owned and operated sites, our ad network, or platforms. Invalid traffic on the Ad Network may impact the amount collected and adjusted by our Ad Network.

The Company has one revenue stream generated directly from publishing advertisements, whether on the Company’s owned and operated sites, our ad network, or platforms. The revenue is earned when the website visitors view or click the published website advertisements. Specific revenue recognition criteria for the advertising revenue stream is as follows:

	●	Advertising revenues are generated by website visitors viewing or “clicking” on website advertisements utilizing direct-sold campaigns or several ad network partners.
	●	Revenues are recognized net of adjustments based on the traffic generated and is billed monthly. The Company subsequently settles these transactions with publishers at which time adjustments for invalid traffic may impact the amount collected.

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

(Unaudited)

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

Leases

In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both lessees and lessors. On January 1, 2019, the Company adopted the new lease standard using the optional transition method under which comparative financial information has not been restated and will continue to apply the provisions of the previous lease standard in its annual disclosures for the comparative periods. In addition, the new lease standard provides a number of optional practical expedients in transition. The Company elected the package of practical expedients. As such, the Company did not have to reassess whether expired or existing contracts are or contain a lease and did not have to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases.

The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize right of use (“ROU”) assets or lease liabilities, and this includes not recognizing ROU assets or lease liabilities for existing short-term leases. The Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (office building).

The Company determines if an arrangement is a lease at inception. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the remaining lease terms as of January 1, 2019. Since the Company’s lease agreements does not provide an implicit rate, the Company estimated an incremental borrowing rate based on the information available at January 1, 2019 in determining the present value of lease payments. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as operating costs and property taxes are expensed as incurred.

On January 1, 2019, the Company recognized a ROU asset and a lease liability of approximately $235,000. In connection with the acquisition of S&W in August 2019 a ROU asset and lease liability of approximately $353,000 was recognized on the consolidated balance sheet.

Use of Estimates

Our consolidated financial statements are prepared in accordance with ~~Accounting Principles Generally Accepted in the United States (“GAAP”).~~US GAAP. These accounting principles require management to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of our consolidated financial statements as well as reported amounts of revenue and expenses during the periods presented. Our consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by US GAAP and does not require ~~management's~~management’s judgment in its application. There are also areas in which ~~management's~~management’s judgment in selecting any available alternative would not produce a materially different result. Significant estimates included in the accompanying consolidated financial statements include revenue recognition, the fair value of acquired assets for purchase price allocation in business combinations, valuation of ~~inventory, valuation of~~ intangible assets, estimates of amortization period for intangible assets, estimates of depreciation period for fixed assets and the valuation of ~~equity based transactions.~~

~~BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2017~~

~~(Unaudited)~~equity-based transactions, and the valuation allowance on deferred tax assets.

~~NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).~~

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents.

Fair Value of Financial Instruments and Fair Value Measurements

FASB ASC 820 “Fair Value Measurement and Disclosures: (“ASU 820”) defines fair value as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. ASC 820 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s level within the fair value hierarchy is based on the lowest level of input significant to the fair value measurement.

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

(Unaudited)

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

The Company measures its financial assets and liabilities in accordance with GAAP. For certain of our financial instruments, including cash, accounts payable, accrued expenses, and the short-term portion of long-term debt, the carrying amounts approximate fair value due to their short maturities.

We adopted accounting guidance for ~~financial~~fair values measurements and ~~non-financial assets and liabilities in accordance with Accounting Standards Codification (“ASC”) 820 “~~~~Fair Value Measurements and Disclosures~~.” This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost)disclosures (ASC 820). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels:


	Level 1:	Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities.

	Level 2:	Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active.

	Level 3:	Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use.

Financial instruments recognized in the consolidated balance sheets consist of cash, accounts receivable, prepaid expenses and other current assets, note receivable, accounts payable, accrued expenses and premium finance loan payable. The Company believes that the carrying value of its current financial instruments approximates their fair values due to the short-term nature of these instruments. The carrying value of long-term debt to related parties and long-term debt to others approximates the current borrowing rate for similar debt instruments.

The following are the major categories of liabilities measured at fair value on a recurring basis for the three months ended March 31, 2020, using significant unobservable inputs (Level 3):

Fair Value measurement using Level 3

Balance at December 31, 2019	$	245,163
Long term debt additions during 2020		-
Principal reductions/payments during 2020		-
Adjustment to fair value		-
Balance at March 31, 2020	$	245,163

Off balance sheet arrangements

Notes Payable and related potential liabilities are excluded from the balance sheet when there are significant uncertainties associated with the likelihood that the liabilities will be paid in full or until such time that the amount of the liability can be reasonably determined or estimated.

Due to uncertainties associated with certain Notes Payable resulting from the acquisition of S&W, see Note 4, the Company has not included the value of those Notes Payable within the purchase price and/or related assets acquired in the acquisition. These off-balance sheet arrangements are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors.

Accounts Receivable

Accounts receivable are recorded at fair value on the date revenue is recognized. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to repay their obligation. If the financial condition of the ~~Company's~~Company’s customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions. If market conditions decline, actual collection experience may not meet expectations and may result in decreased cash flows and increased bad debt expense.

The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 6030 or net 9060 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made.

~~Inventories~~

~~Inventories consist~~ As of ~~finished goods~~March 31, 2020 and ~~are stated at~~December 31, 2019, the ~~lower~~Company has recorded an allowance for doubtful accounts of ~~cost or market using the first in, first out (FIFO) method. Provisions have been made to reduce excess or obsolete inventories to their net realizable value.~~

~~BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2017~~

~~(Unaudited)~~$472,986 and $505,401, respectively.

~~NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).~~

~~Revenue Recognition~~

~~The Company recognizes revenue on our products in accordance with ASC 605, “~~~~Revenue Recognition~~.” Under these guidelines, revenue is recognized on sales transactions when all of the following exist: persuasive evidence of an arrangement did exist; delivery of the product or advertising has occurred; the sales price to the buyer is fixed or determinable; and collectability is reasonably assured. The Company has several revenue streams generated directly from its website and specific revenue recognition criteria for each revenue stream is as follows:


	·	Sale of merchandise directly to consumers: The Company's product sales are recognized either FOB shipping point or FOB destination, dependent on the customer. Revenues are therefore recognized at point of ownership transfer, accordingly;

	·	~~Advertising revenue is received directly form companies who pay the Company a monthly fee for advertising space and;~~

	·	Advertising revenues are generated by users “clicking” on website advertisements utilizing several ad network partners. Revenues are recognized net of their fees for Company owned websites upon receipt of payment by the ad network partner since the revenue is not determinable until it is received; and

~~The Company follows the guidance of ASC 605-50-25, “~~~~Revenue Recognition, Customer Payments~~.” Accordingly, any incentives received from vendors are recognized as a reduction of the cost of products included in inventories. Promotional products or samples given to customers or potential customers are recognized as a cost of goods sold.

Our Daily Engage Media subsidiary is an Advertising Exchange Company that matches advertisers with publishers. Revenue is generated and recognized when ads appear and are viewed on websites in the Company’s portfolio.

~~Cost of Sales and Cost of Revenues~~

Components of costs of sales for the products segment include product costs, shipping costs to customers and any inventory adjustments for product sales. Cost of revenue for the advertising segment consists of revenue share payments to media providers and website publishers that are directly related to a revenue-generating event. The Company becomes obligated to make the revenue share payments in the period the advertising impressions, click-throughs, actions or lead-based information are delivered or occur.

~~Shipping and Handling Costs~~

~~The Company includes shipping and handling fees billed to customers as revenues and shipping and handling costs for shipments to customers as cost of revenues.~~

~~Sales Return Reserve Policy~~

Our return policy generally allows our end users to return purchased products for refund or in exchange for new products. We estimate a reserve for sales returns, if any, and record that reserve amount as a reduction of sales and as a sales return reserve liability. Sales to consumers on our web site generally may be returned within a reasonable period of time.

~~Product Warranty Reserve Policy~~

~~The Company is a retail distributor of products and warranties are the responsibility of the manufacturer. Therefore, the Company does not record a reserve for product warranty~~

Property and Equipment

Property and equipment is recorded at cost. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets of three - five ~~to seven~~ years for office furniture and ~~equipment,~~fixtures, and ~~five~~three years for computer equipment. Leasehold improvements are amortized over the lesser of the lease term or the useful life of the improvements. ~~Expenditures for maintenance and repairs along with fixed assets with a purchase price below our capitalization threshold of $500 are expensed as incurred.~~

~~BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2017~~

~~(Unaudited)~~

~~NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).~~

Website Development Costs

The Company accounts for its website development costs in accordance with ASC 350-50, “~~Website~~“Website Development ~~Costs~~~~” (“ASC 350-50”)~~Costs”. These costs, if any, are included in intangible assets in the accompanying consolidated financial ~~statements or expensed immediately if the Company cannot support recovery of these costs from positive future cash flows.~~statements.

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

(Unaudited)

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

ASC 350-50 requires the expensing of all costs of the preliminary project stage and the training and application maintenance stage and the capitalization of all internal or external direct costs incurred during the application and infrastructure development stage. Upgrades or enhancements that add functionality are capitalized while other costs during the operating stage are expensed as incurred. The Company amortizes the capitalized website development costs over an estimated life of five years.

AsFor the three months ended March 31, 2020 and 2019, $0 and $8,000 was capitalized for the purchase of ~~September 30, 2017 and 2016, all website development costs have been expensed.~~a Facebook page, respectively.

Amortization and Impairment of Long-Lived Assets

Amortization and impairment of long-lived assets are non-cash expenses relating primarily to ~~intangible assets.~~website acquisitions. The Company accounts for long-lived assets in accordance with the provisions of ASC ~~360-10 “~~~~Accounting for the Impairment or Disposal of Long-Lived Assets~~360, “Property, Plant and Equipment”.” This ~~statement~~ requires that long-lived assets and certain identifiable intangibles be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Website acquisition costs ~~including related customer relationships and non-compete agreements,~~ are amortized over ~~three to~~ five years. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. If such assets are ~~considered to be~~ impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or fair value less costs to sell.

While it is likely that we will have significant amortization expense as we continue to acquire websites, we believe that intangible assets represent costs incurred by the acquired website to build value prior to acquisition and the related amortization and impairment charges of assets, if applicable, are not ongoing costs of doing business. Non-cash amortization loss is included in selling, general and administrative expenses on the accompanying statement of operations. For the three months ended September 30, 2017 and 2016, non-cash amortization expense was $75,876 and $61,582, respectively. For the nine months ended September 30, 2017 and 2016, non-cash amortization expense was $227,418 and $186,007, respectively.

Stock-Based Compensation

The Company accounts for stock-based instruments issued to employees for services in accordance with ASC ~~718 “~~~~Compensation – Stock Compensation~~.”Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other ~~equity based~~equity-based compensation issued to employees. The value of the portion of an employee award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC Topic 505-50, “Equity-Based Payments to ~~Non-Employees~~Non-Employees”..” The Company estimates the fair value of stock options by using the Black-Scholes option-pricing model. ~~Non- cash~~Non-cash stock-based stock option compensation is expensed over the requisite service period and are included in selling, general and administrative expenses on the accompanying ~~condensed consolidated~~ statement of operations. For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, non-cash stock-based stock option compensation expense was ~~$21,983~~$36,595 and ~~$30,069,~~$3,213, respectively. ~~For the nine months ended September 30, 2017 and 2016, non-cash stock-based stock option compensation expense was $95,821 and $107,193, respectively.~~

~~BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2017~~

~~(Unaudited)~~

~~NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).~~

Advertising, Marketing and Promotion Costs

Advertising, marketing and promotion expenses are expensed as incurred and are included in selling, general and administrative expenses on the accompanying statement of operations. For the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, advertising, marketing and promotion expense was ~~$66,436~~$11,856 and ~~$3,050,~~$6,000, respectively for continuing operations and $0 and $6,002 for discontinued operations, respectively. ~~For~~

Foreign currency translation

Assets and liabilities of the ~~nine~~Company’s Israeli subsidiary are translated from Israeli shekels to United States dollars at exchange rates in effect at the balance sheet date. Income and expenses are translated at the exchange rates for the weighted average rates for the period. The translation adjustments for the reporting period will be included in our statements of comprehensive income. Based on the timing of the acquisition of the Israeli subsidiary, see Note 4, the impact of the currency exchange is immaterial for the three months ended ~~September 30, 2017 and 2016, advertising, marketing and promotion expense was $231,669 and $15,156, respectively.~~March 31, 2020.

Income Taxes

We use the asset and liability method to account for income taxes. Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and ~~laws.~~laws in the period those differences are expected to reverse. A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized.

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020

(Unaudited)

NOTE 3 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

The Company follows the provisions of ASC ~~740-10“~~740-10, “~~Accounting for Uncertain~~ Income ~~Tax Positions.~~Taxes – Overall”.” When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statementsin the period during which, based on all available evidence, management believes it is more likely than not that the position will besustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset oraggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largestamount of tax benefit that is more than ~~50%~~50 percent likely of being realized upon settlement with the applicable taxing authority. Theportion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected asa liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that wouldbe payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax expenses are recognized as tax expenses in the Statement of Operations.

As of ~~September 30, 2017,~~March 31, 2020, tax years ~~2016, 2015,~~2019, 2018, and ~~2014~~2017 remain open for ~~IRS~~Internal Revenue Service (“IRS”) audit. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years.

Concentrations

The Company generates revenues from through Ad Exchange Networks and through our Owned and Operated Ad Exchange Network. There were two large customers which account for approximately 10.9% and 10.3% of the Ad Exchange Network Revenue for the three months ended March 31, 2020. None of the customers accounted for accounts receivable in excess of 10% at March 31, 2020. There is one large vendor who is owed approximately 12% of the accounts payable due.

Credit Risk

The Company minimizes the concentration of credit risk associated with its cash by maintaining its cash with high quality federally insured financial institutions. However, cash balances in excess of the FDIC insured limit of $250,000 are at risk. At March 31, 2020 and December 31, 2019, the Company had approximately $250,000 and $0, respectively, in cash balances above the FDIC insured limit. The Company performs ongoing evaluations of its trade accounts receivable customers and generally does not require collateral.

Concentration of Funding

During the three months ended March 31, 2020 a large portion of the Company’s funding was provided through the sale of shares of the Company’s common stock with related warrants.

Basic and Diluted Net Earnings (Loss) Per Common Share

In accordance with ASC 260-10 “~~Earnings~~, “Earnings Per ~~Share~~Share”,,” basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. As of ~~September 30, 2017~~March 31, 2020 and ~~2016,~~2019, there were ~~approximately 2,187,000~~2,017,727 and ~~2,267,000~~1,797,000 common stock equivalent shares outstanding as stock options, respectively; 27,726,170 and 16,319,875 common stock equivalent shares outstanding from warrants to purchase common shares, respectively, ~~600,000~~8,044,017 and ~~100,000~~6,844,017 common stock equivalents from the conversion of preferred stock, ~~respectively,~~respectively; and ~~4,300,000~~80,000 and ~~200,000~~0 common stock equivalents from the conversion of notes payable, respectively. Equivalent shares were not utilized as the effect is anti-dilutive.

Segment Information

~~In accordance with the provisions of ASC 280-10, “~~~~Disclosures about Segments of an Enterprise and Related Information~~~~”, the Company is required to report financial and descriptive information about its reportable operating segments.~~ The Company ~~has two identifiable operating segments based on the activities of the company~~currently operates in accordance with the ASC 280-10 The Company's two segments are product sales and advertising as of September 30, 2017. The product sales segment sells merchandise directly to customers thorough e-commerce distributor portals such as Amazon and eBay and through our proprietary websites and retail location. The advertisingone reporting segment. This segment is focused on producing advertising revenue generated by users ~~viewing~~“clicking” on website advertisements utilizing several ad network partners and direct advertisers and subscription revenue generated by the sale of access to ~~premium versions of our websites and to~~ career postings on one of our websites.

BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

~~SEPTEMBER 30, 2017~~March 31, 2020

(Unaudited)

NOTE 13 – ~~NATURE OF OPERATIONS AND~~ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

Recent Accounting Pronouncements

In June ~~2014, FASB issued Accounting Standards Update (“ASU”) No. 2014-09, “~~~~Revenue from Contracts with Customers~~.”The update gives entities a single comprehensive model to use in reporting information about the amount and timing of revenue resulting from contracts to provide goods or services to customers. The proposed ASU, which would apply to any entity that enters into contracts to provide goods or services, would supersede the revenue recognition requirements in ASC 605 "~~Revenue Recognition~~~~," and most industry-specific guidance throughout the Industry Topics of the Codification. Additionally, the update would supersede some cost guidance included in Subtopic 605-35 "~~~~Revenue Recognition – Construction-Type and Production-Type Contracts~~." The update removes inconsistencies and weaknesses in revenue requirements and provides a more robust framework for addressing revenue issues and more useful information to users of financial statements through improved disclosure requirements. In addition, the update improves comparability of revenue recognition practices across entities, industries, jurisdictions, and capital markets and simplifies the preparation of financial statements by reducing the number of requirements to which an entity must refer. The update is effective for annual reporting periods beginning after December 15, 2018, and interim reporting periods within annual reporting periods beginning after December 15, 2019. All other entities may apply the guidance in ASU No. 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, including interim reporting periods within that reporting period. All other entities also may apply the guidance in Update 2014-09 earlier as of an annual reporting period beginning after December 15, 2016, and interim reporting periods within annual reporting periods beginning one year after the annual reporting period in which the entity first applies the guidance in ASU No. 2014-09. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

~~In August 2014,~~ the FASB issued ASU ~~No. 2014-15, “~~~~Presentation~~2016-13 “Financial Instruments – Credit Losses” which replaces the incurred loss model with a current expected credit loss (“CECL”) model. The CECL model applies to financial assets subject to credit losses and measured at amortized cost and certain off-balance sheet exposures. Under current U.S. GAAP, an entity reflects credit losses on financial assets measured on an amortized cost basis only when losses are probable and have been incurred, generally considering only past events and current conditions in making these determinations. ASU 2016-13 prospectively replaces this approach with a forward-looking methodology that reflects the expected credit losses over the lives of ~~Financial Statements - Going Concern~~,”financial assets, starting when such assets are first acquired. Under the revised methodology, credit losses will be measured based on past events, current conditions and reasonable and supportable forecasts that affect the collectability of financial assets.

ASU 2016-13 also revises the approach to recognizing credit losses for available-for-sale securities by replacing the direct write-down approach with the allowance approach and limiting the allowance to the amount at which ~~requires management~~the security’s fair value is less than the amortized cost. In addition, ASU 2016-13 provides that the initial allowance for credit losses on purchased credit impaired financial assets will be recorded as an increase to ~~evaluate, at each annual and interim reporting period, whether there are conditions or events that raise substantial doubt about~~ the ~~entity’s ability~~purchase price, with subsequent changes to ~~continue~~the allowance recorded as a ~~going concern within one year after~~credit loss expense. ASU 2016-13 also expands disclosure requirements regarding an entity’s assumptions, models and methods for estimating the ~~date the financial statements~~allowance for credit losses. The amendments of this Update are ~~issued and provide related disclosures. ASU 2014-15 is~~ effective for ~~annual periods ending after December 15, 2016~~fiscal years, and interim periods ~~thereafter. Early application was permitted. The adoption of ASU 2014-15 did not have a material effect on our condensed consolidated financial statements.~~

~~In July 2015, FASB issued ASU No. 2015-11~~~~, “Inventory (Topic 330): Simplifying the Measurement of Inventory~~” more closely align the measurement of inventory in GAAP with the measurement of inventory in International Financial Reporting Standards (IFRS). The amendments in this ASU do not apply to inventory that is measured using last-in, first-out (LIFO) or the retail inventory method. The amendments apply to all other inventory, which includes inventory that is measured using first-in, first-out (FIFO) or average cost. An entity should measure inventory within the scope of this Update at the lower of cost and net realizable value. Net realizable value is the estimated selling prices in the ordinary course of business, less reasonably predictable costs of completion, disposal, and transportation. Subsequent measurement is unchanged for inventory measured using LIFO or the retail inventory method.~~For public business entities, this ASU is effective for~~those fiscal years, beginning after December 15, 2016, including interim periods within those fiscal years. For all other entities, this ASU is effective for fiscal years beginning after December 15, 2016, and interim periods within fiscal years beginning after December 15, 2017. The amendments in this ASU should be applied prospectively with earlier application permitted as of the beginning of an interim or annual reporting period.The adoption of ASU No. 2015-11 did not have a material effect on our condensed consolidated financial statements.

~~In February 2016, the FASB issued ASU 2016-02 “~~~~Leases~~,” which will amend current lease accounting to require lessees to recognize (i) a lease liability, which is a lessee’s obligation to make lease payments arising from a lease, measured on a discounted basis, and (ii) a right-of-use asset, which is an asset that represents the lessee’s right to use, or control the use of, a specified asset for the lease term. ASU 2016-02 does not significantly change lease accounting requirements applicable to lessors; however, certain changes were made to align, where necessary, lessor accounting with the lessee accounting model. This standard will be effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

~~BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2017~~

~~(Unaudited)~~

~~NOTE 1 – NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).~~

~~In March 2016, the FASB issued ASU 2016-09,~~~~Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting~~, which relates to the accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including: (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification on the statement of cash flows. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years.2019. The adoption of ~~ASU No. 2016-9~~this guidance did not ~~have a material effect on our condensed consolidated financial statements.~~

~~In April 2016, the FASB issued ASU 2016–10~~~~“Revenue from Contract with Customers~~~~(ASC 606):~~~~Identifying Performance Obligations and Licensing.”~~The amendments in this Update do not change the core principle of the guidance in ASC 606. Rather, the amendments in this Update clarify the following two aspects of ASC 606: identifying performance obligations and the licensing implementation guidance, while retaining the related principles for those areas. ASC 606 includes implementation guidance on (a) contracts with customers to transfer goods and services in exchange for consideration and (b) determining whether an entity’s promise to grant a license provides a customer with either a right to use the entity’s intellectual property (which is satisfied at a point in time) or a right to access the entity’s intellectual property (which is satisfied over time). The amendments in this Update are intended render more detailed implementation guidance with the expectation to reduce the degree of judgement necessary to comply with ASC 606. We are currently reviewing the provisions of this ASU to determine if there will be any impact on our results of operations, cash flows or financial condition.

~~In April 2016, the FASB issued ASU No. 2016-15,~~~~“Classification of Certain Cash Receipts and Cash Payments”~~ASU 2016- provides guidance regarding the classification of certain items within the statement of cash flows. ASU 2016-15 is effective for annual periods beginning after December 15, 2017 with early adoption permitted. We do not believe this ASU will have an impact on ~~our results of operation, cash flows, other than presentation, or~~the consolidated financial ~~condition.~~statements.

In January 2017, the FASB issued 2017-04, “Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill ~~Impairment.~~Impairment”. The amendments in this ASU simplify the subsequent measurement of goodwill by eliminating Step 2 from the goodwill impairment test and eliminating the requirement for a reporting unit with a zero or negative carrying amount to perform a qualitative assessment. Instead, under this pronouncement, an entity would perform its annual, or interim, goodwill impairment test by comparing the fair value of a reporting unit with its carrying amount and would recognize an impairment change for the amount by which the carrying amount exceeds the reporting unit’s fair value; however, the loss recognized is not to exceed the total amount of goodwill allocated to that reporting unit. In addition, income tax effects will be considered, if applicable. This ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. ~~Early~~The adoption ~~is permitted. The Company is currently evaluating the impact~~ of this ~~ASU~~guidance did not have an impact on ~~its~~the consolidated financial statements and related disclosures.

In August 2018, the FASB issued ASU 2018-13, “Fair Value Measurement (Topic 820), - Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement,” which makes a number of changes meant to add, modify or remove certain disclosure requirements associated with the movement amongst or hierarchy associated with Level 1, Level 2 and Level 3 fair value measurements. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. The adoption of this guidance did not have an impact on our consolidated Financial Statements.

NOTE ~~2 - GOING CONCERN.~~4 – ACQUISITIONS

~~The accompanying condensed consolidated financial statements have been prepared on~~On July 31, 2019, the Company executed a ~~going concern basis, which contemplates the realization~~Share Exchange Agreement and Plan of ~~assets~~Merger (the “Merger Agreement”) with Slutzky & Winshman Ltd., an Israeli company (“S&W”) and the ~~satisfaction~~shareholders of ~~liabilities in the normal course of business.~~S&W (the “Shareholders”). The ~~Company sustained a net loss of $2,103,981~~merger closed on August 15, 2019, and used cash in operating activities of $1,372,589 for the nine months ended September 30, 2017. The Company had an accumulated deficit of $10,928,787 at September 30, 2017. These factors raise substantial doubt about the abilitywe acquired all of the ~~Company to continue as a going concern for a reasonable period~~outstanding shares of time. The Company's continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from related parties to sustain its current level of operations.

~~Management plans to continue to raise additional capital through private placements and is exploring additional avenues for future fund-raising through both public and private sources.~~

~~The condensed consolidated financial statements do not include any adjustments relating~~S&W. Subsequent to the ~~recoverability~~transaction, the company was renamed and ~~classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable~~rebranded as Oceanside Media. Pursuant to ~~continue as a going concern.~~

~~BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~

~~SEPTEMBER 30, 2017~~

~~(Unaudited)~~

~~NOTE 3 – ACQUISITIONS.~~

On January 2, 2016, the Company closed the acquisition of warisboring.com pursuant to the terms and conditions of the Website Asset Purchase Agreement dated December 4, 2015 for an aggregate purchase price of $250,000. The purchase price consisted of a cash payment of $100,000 at the January 4, 2016 closing and the balance of $150,000, payable monthly in an amount equal to 30% of the net revenues from the website, when collected, with the total amount of the earn out to be paid by January 4, 2019. The Company recorded the future monthly payments totaling $150,000 at a present value of $117,268, net of discount of $32,732. The present value was calculated at a discount rate of 12% (which is the Company’s then most recent borrowing rate) using the estimated future revenues from the website to estimate the payment dates. The estimated future revenues from the website were based on the average historical monthly revenues from the website prior to the Company’s acquisition. During the nine months ended September 30, 2017 and 2016, the Company amortized $8,183 and $8,184, respectively, of this discount. The acquisition was accounted following ASC 805 “~~Business Combinations~~.” Under the purchase method of accounting, the transaction was valued for accounting purposes at $217,268, which was the fair value of warisboring.com. The Company has initially determined there was only two amortizable intangible assets. The acquisition date estimated fair value of the consideration transferred consisted of the following:

Customer and related relationships

$
39,578

Website

177,690

Total

$
217,268

The above estimated fair value of the intangible assets is based on a preliminary purchase price allocation prepared by management. As a result, during the preliminary purchase price allocation period, which may be up to one year from the business combination date, we may record adjustments to the asset acquired, with the corresponding offset to website. After the preliminary purchase price allocation period, we record adjustments to assets acquired subsequent to the purchase price allocation period in our operating results in the period in which the adjustments were determined. In the year following this transaction, we did not record any adjustments to our initial allocations.

~~On February 2, 2016, the Company entered into a Website Asset Purchase Agreement with unrelated third parties for a purchase price of $15,000 in cash. The acquisition was accounted for following ASC~~~~805 "Business Combinations."~~ The operations of the website prior to the Company's acquisition were immaterial; therefore, pro forma information was not presented. There were no costs of acquisition incurred as a result of this purchase.

~~On December 16, 2016, with an effective date of December 15, 2016 under~~ the terms of the ~~Asset Purchase~~Merger Agreement, we ~~acquired~~issued 12,130,799 shares valued at $19,409,278 to owners and employees of Oceanside Media, contingent consideration of $750,000 paid through the ~~assets constituting~~delivery of unsecured, interest free, one and two year promissory notes (the “Closing Notes”), and 223,841 restricted stock units held in escrow for future vested stock options valued at $185,722. As of March 31, 2020, we are unable to quantify the ~~Black Helmet Apparel business from Sostre Enterprises, Inc., including various website properties~~likelihood of determining if the objectives will be met for payment of the first closing note.
Effective upon the Closing, we agreed to pay Spartan Capital Securities (“Spartan Capital”) a broker-dealer and ~~content, social media content, inventory and other intellectual property rights. The consideration for the acquisition consisted~~member of ~~$250,000 in cash, 200,000~~FINRA a finder’s fee equal to issue 650,000 shares of our common stock valued at ~~$170,000, the assumption of $40,000~~$1,040,000 and $650,000 cash. The shares were issued in ~~liabilities~~February 2020 and the ~~forgiveness~~$165,000 was paid in March 2020. The amounts due were included in the accrued expenses as of ~~working capital advances we~~December 31, 2019.
In accordance with ASC 805 “Business Combinations” the measurement period for the acquisition is for one year during which the Company may re-evaluate the assets acquired, liabilities assumed and the goodwill resulting from the transaction as well as the change in amortization as a result of changes in the provisional amounts as if the accounting had ~~previously made~~been completed at the acquisition date. As further discussed in Note 15, the Company recognized a deferred tax liability associated with the intangible assets acquired.
The allocation of the purchase price to the ~~seller totaling $200,000.~~

~~A summary of~~ assets acquired isand liabilities assumed based on management’s estimate of fair values at the date of acquisition as follows:

Inventory

$
58,000

Intangibles – website

80,000

Intangibles – trade name

150,000

Intangibles – customer relationships

252,000

Intangibles – non-compete agreements

120,000

Total assets acquired

$
660,000

August 15, 2019
Tangible assets acquired $ 3,234,754
Liabilities assumed (3,402,999 )
Deferred tax liability (744,960 )
Net liabilities assumed (913,205 )

Tradename – Trademarks 1,207,400
IP/Technology 1,883,000
Customer relationships 738,000
Non-compete agreements 827,300
Goodwill 15,666,783
Total purchase price $ 19,409,278

15

13

BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~March 31, 2020
(Unaudited)

NOTE 34 – ACQUISITIONS (continued).

~~Pro forma results~~The table below summarizes the value of the total consideration given in the transaction:

Amount

Shares issued to owners $ 19,185,524
Shares issued for vested options 127,757
Shares issued to employees 96,000
Preliminary purchase price 19,409,281
Restricted stock units held in escrow 185,719
Closing notes 750,000
Total consideration $ 20,345,000
On November 18, 2019, the Company executed a Merger Agreement which merged Bright Mountain Media, Inc., a Florida corporation (“Bright Mountain Media”), through its wholly-owned subsidiary BMTM2, Inc., a Florida corporation with News Distribution Network, Inc. a Delaware Company (“NDN”). The subsidiary then changed its name to MediaHouse. Bright Mountain agreed to issue 22,180,761 shares of its common stock. Each share of NDN’s outstanding Series A-1 Preferred Stock and common stock, were cancelled and extinguished and converted into the right to receive shares of Bright Mountain’s common stock based upon a paid-in capital basis, and subject to a $1.75 conversion price of our common stock. For every $1.75 of paid-in capital by an NDN stockholder, the NDN stockholder received one share of Bright Mountain common stock. Moreover, All NDN warrants and options outstanding at the Effective Time of the Merger Agreement terminated and were cancelled unless exercised prior to the Effective Time of the Merger Agreement.
As it pertains to outstanding promissory notes and other obligations payable to NDN, Bridge notes in the current principal amount of $776,000 were convert into shares of Bright Mountain’s common stock at a conversion price of $0.50 per share, with one common stock warrant exercisable at $0.75 per share and one common stock warrant exercisable at $1.00 per share issued for each conversion share. The principal of the bridge notes was converted into shares of Bright Mountain’s common stock at a conversion price of $1.75 per share, and all accrued but unpaid interest were forgiven by the noteholders. Also of note is the open line of credit of approximately $660,000 due Mr. Greg Peters, NDN’s Chief Executive Officer, was converted into shares of Bright Mountain’s common stock at a conversion price of $0.50 per share, with one common stock warrant exercisable at $.75 per share and one common stock warrant exercisable at $1.00 per share issued for each conversion share.
The Total Consideration Shares are subject to lock up restrictions on resale as determined by Bright Mountain and 25% percent of the Total Consideration Shares were placed in escrow to satisfy certain obligations including, but not limited to, (i) the delivery of NDN audited financial statements, (ii) NDN having accounts receivable of at least $1,100,000 and (iii) certain NDN liabilities not to exceed $4,000,000. Effective upon the Closing, we agreed to pay Spartan Capital Securities LLC (“Spartan Capital”) a broker-dealer and member of FINRA a finder’s fee equal to issue 660,000 shares of our common stock valued at $1,082,400. The shares were issued in February 2020. The value of the shares were included in the accrued expenses as of December 31, 2019.
In accordance with ASC 805 “Business Combinations” the measurement period for the acquisition is for one year during which the Company may re-evaluate the assets acquired, liabilities assumed and the goodwill resulting from the transaction as well as the change in amortization as a result of changes in the provisional amounts as if the accounting had been completed at the acquisition date. As discussed further in Note 15, the Company recognized a deferred tax liability associated with the intangible assets acquired.
The allocation of the purchase price to the assets acquired and liabilities assumed based on management’s estimate of fair values at the date of acquisition as follows:
November 18, 2019
Tangible assets acquired $ 1,193,313
Liabilities assumed (4,228,722 )
Deferred tax liability (3,383,754 )
Net liabilities assumed (6,419,163 )

Tradename – Trademarks 923,600
IP/Technology 4,930,000
Customer relationships 8,690,000
Non-compete agreements 837,100
Goodwill 36,991,147
Total purchase price $ 45,952,684
The table below summarizes the value of the total consideration given in the transaction:
Amount

Shares issued to owners $ 36,376,448
Warrants issued 9,576,236
Total consideration $ 45,952,684
The following table sets forth a summary of the unaudited pro forma results of the Company as if the ~~acquisition~~acquisitions of ~~the assets constituting the Black Helmet Apparel business~~S&W and NDN, which was closed in ~~December 2016~~August 2019 and ~~the acquisition of Daily Engage Media which closed in September 2017,~~November 2019, respectively, had taken place on the first day of the ~~periods presented.~~2019. These combined results are not necessarily indicative of the results that may have been achieved had the ~~assets~~business been acquired as of the first day of the ~~periods~~period presented.

Three Months
Ended

Nine Months
Ended

September 30,

September 30,

2016

2016

March 31, 2019
Total revenue

$
925,691

$
2,416,562

$ 3,012,119
Total expenses

1,989,494

5,064,116

(3,517,064 )
Preferred stock dividend

60,339

278,525

(74,171 )
Net loss attributable to common shareholders

$
(1,124,142
)

$
(2,926,079
)
(579,116 )
Basic and diluted net loss per share

$
(0.03
)

$
(0.07
)
$ (0.01 )

~~At September 30, 2017 and~~
NOTE 5 – DISCONTINUED OPERATIONS.
Management, prior to December 31, ~~2016, respectively, intangible assets consisted~~2018 with the appropriate level or authority, determined to exit, effective December 31, 2018, its Black Helmet business line as a result of, among other things, the change in our strategic direction to a focus solely in our advertising segment. Historically revenues from our product sales segment including revenues from two of our websites that operate as e-commerce platforms, included Bright Watches and Black Helmet, as well as Bright Mountain Watches’ retail location.
Management, prior to December 31, 2018, with the appropriate level of authority, determined to discontinue the operations of Bright Mountain Watches effective December 31, 2018. The decisions to exit all components of our product segment will result in these businesses being accounted for as discontinued operations. The Company has determined that the exit of the ~~following:~~

September 30,

December 31,

2017

2016

Intangible Assets

$
2,040,239

$
1,739,179

Less: Accumulated Amortization

(617,443
)

(581,045
)
Less: Impairment Loss

(191,020
)

(191,020
)
Intangible Assets, net

$
1,231,776

$
967,114

~~Non-cash amortization expense for the three and nine month periods ending September 30, 2017 and 2016 was $75,876 and $61,582, respectively and $227,418 and $186,007, respectively.~~

~~In connection with the acquisition of the Black Helmet Apparel~~Bright Mountain Watches business requires the Company ~~recognized $150,000 attributable~~ to ~~tradenames acquired.~~

~~On March 3, 2017~~liquidate the inventory and settle all obligations to wind down the business unit. The Company sold the remaining inventory during 2019. Accordingly, the Company ~~entered into a Membership Interest Purchase Agreement with Daily Engage Media,~~determined that the assets and ~~its members Harry G. Pagoulatos, George G. Rezitis and Angelos Triantafillou (collectively,~~liabilities of this reportable segment met the ~~"Members"). On September 19, 2017~~discontinued operations criteria in Accounting Standards Codification 205-20-45, as such the ~~parties entered into an Amended and Restated Membership Interest Purchase Agreement which modified certain terms of the original agreement. The original agreement,~~results have been classified as amended, is referred to as the "Daily Engage Purchase Agreement." Following the execution of the amendment, on September 19, 2017 the parties closed the transaction pursuant to which the Company acquired 100% of the membership interests of Daily Engage Media in exchange for the following consideration:discontinued operations.

16
·
~~$380,000 paid through the delivery of unsecured, interest free, one year promissory notes (the "Closing Notes");~~

·
~~an aggregate of 1,100,223 shares of our common stock valued at $429,091 (the "Consideration Shares"); and~~

·
~~the forgiveness of $204,411 in working capital we had previously advanced Daily Engage Media.~~

14

BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~March 31, 2020
(Unaudited)

NOTE 5 – DISCONTINUED OPERATIONS (continued).
~~NOTE 3 – ACQUISITIONS (continued).~~

On March 8, 2019 the Black Helmet Apparel E-Commerce business was sold for $175,000. The Company received $20,000 at the closing and issued a 6% promissory note for $155,000 payable in twelve monthly payments of principal and interest. At December 31, 2018, approximately $180,000 of inventory was considered held for sale and included in discontinued operations.
On March 22, 2019 the Company sold the remaining Bright Watches inventory for approximately $7,000. At December 31, 2018 $7,454 of inventory, written down to fair market value, was considered held for sale and included in discontinued operations.
During the ~~request~~quarter ended March 31, 2020, the Company settled the discontinued assets and liabilities and assumed the remaining cash. The detail of the ~~Members~~consolidated balance sheet, the consolidated statement of operations and included as part of the Closing Notes and Consideration Shares, a portion of the closing consideration, including an $80,000 principal amount Closing Note together with 275,058 Consideration Shares, were issued to Mr. Vinay Belani, a third party with whom Daily Engage Media has a business relationship and are included in the above figures

~~Under the terms of the Daily Engage Purchase Agreement, upon Daily Engage Media achieving certain revenue and operating income tests, we agreed to issue additional consideration as follows:~~

·
if Daily Engage Media's revenues are at least $20,228,954, and it has operating income of at least $3,518,623 (the "Year-One Daily Engage Target") during the first 12 months following the closing date (the "Year-One Earn out Period") as determined by us in accordance with GAAP, we agreed to pay the Members and Mr. Belani collectively an additional $500,000 inconsolidated cash ~~and issue an additional 1,008,547 shares of our common stock (the "Year-One Earn out Shares");~~

·
if Daily Engage Media's revenues are at least $60,385,952, and operating income of at least $11,380,396 (the "Year-Two Daily Engage Target") during the first 12 months following the Year-One Earnout Period (the "Year-Two Earnout Period") as determined by us in accordance with GAAP, we agreed to pay the Members and Mr. Belani an additional $500,000 in cash and issue an additional 796,221 shares of our common stock (the "Year-Two Earnout Shares"). In addition, if the Year-Two Daily Engage Target is met, at the time of payment of the Year-Two Earnout Shares and the year-two earnout cash, the Members and Mr. Belani collectively will also be entitled to receive the Year-One Earnout Shares and the year-one earnout cash to the extent not previously received; and

·
if Daily Engage Media's revenues are at least $96,512,204, and it has operating income of at least $18,524,967 (the "Year-Three Daily Engage Target") during the 12 months following the Year-Two Earnout Period (the "Year-Three Earnout Period") as determined by us in accordance with GAAP, we agreed to pay the Members and Mr. Belani an additional $550,000 in cash and issue an additional 723,523 shares of our common stock (the "Year-Three Earnout Shares"). In addition, if the Year-Three Daily Engage Target is met, at the time of payment of the Year-Three Earnout Shares and the year-three earnout cash, the Members and Mr. Belani collectively will also be entitled to receive the Year-One Earnout Shares, the year-one earnout cash, the Year-Two Earnout Shares and the year-two earnout cash, to the extent not previously received.

~~The final accounting~~flow for the acquisition of Daily Engage Media has not been completed and will be completed during the first quarter of 2018. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair valuesdiscontinued operations is as ~~follows:~~stated below:

Tangible assets acquired

$
106,534

Liabilities assumed

(237,855
)
Exchange platform

50,000

Tradename

150,000

Customer relationships

250,000

Non-compete agreements

192,000

Goodwill

502,823

Total purchase price

$
1,013,502

~~At this time we do not expect that goodwill will be tax deductible.~~
December 31, 2019

Cash $ 791
Accounts receivable 914
Total current assets 1,705
Fixed assets, net -
Other assets -
Total other assets - discontinued operations -
Total assets - discontinued operations 1,705
Accounts payable 591
Deferred rents -
Total current liabilities - discontinued operations 591
Net assets discontinued operations $ 1,114

December 31, 2019
Revenues $ 102,999
Cost of revenues 55,844
Gross profit 47,155

Selling, general and administrative expenses 212,798

Loss from discontinued operations (165,643 )

Other income 28,909
Loss from discontinued operations $ (136,734 )

Basic and fully diluted net loss per share $ 0.00

Cash (used in) operations for discontinued operations:
Loss from discontinued operations $ (136,734 )
Write-off of fixed assets 59,797
Inventory 262,318
Accounts receivable (914 )
Other assets 11,123
Accounts payable (155,811 )
Deferred rents (16,417 )
Cash (used in) discontinued operations $ (23,362 )
Net decrease in cash and cash equivalents from discontinued operations $ (15,956 )
17

15

BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~March 31, 2020
(Unaudited)

~~NOTE 4 – INVENTORIES.~~

~~At September 30, 2017 and December 31, 2016 inventories consisted of the following:~~

September 30,

December 31,

2017

2016

Product inventory: clocks and watches

$
788,851

$
982,283

Product inventory: Black Helmet Apparel and GoPoliceBlotter.com

195,671

144,789

Total inventory balance

$
984,522

$
1,127,072

NOTE 56 – PREPAID COSTS AND EXPENSES.

At ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, prepaid expenses and other current assets consisted of the following:

September 30,

December 31,

2017

2016

Prepaid rent

$
27,199

$
46,523

Prepaid insurance

18,885

84,825

Prepaid expense

15,529

—

Prepaid inventory

10,114

1,602

Prepaid Expenses and Other Current Assets

$
71,727

$
132,950

March 31, 2020 December 31, 2019
Prepaid insurance $ 125,987 $ 205,656
Prepaid VAT fees 30,474 199,596
Prepaid expenses – other 18,613 37,723
Current portion of prepaid service agreements 310,000 310,000
Prepaid expenses and other current assets $ 485,074 $ 752,975

NOTE 67 – PROPERTY AND EQUIPMENT.

At ~~September 30, 2017~~March 31, 2020 and December 31, ~~2016,~~2019, property and equipment consisted of the following:

September 30,

December 31,

Depreciable Life

2017

2016

(Years)

Furniture and Fixtures

$
76,671

$
70,108

7

Computer Equipment

59,511

56,142

5

Leasehold Improvements

39,385

35,011

10

Total Fixed Assets

175,567

161,261

Less: Accumulated Depreciation

(81,185
)

(62,260
)

Total Fixed Assets, net

$
94,382

$
99,001

Useful Lives March 31, 2020 December 31,2019
Furniture and fixtures 3-5 years $ 39,696 $ 39,696
Leasehold improvements 3 years 704 1,388
Computer equipment 3 years 76,966 79,188
Total property and equipment 117,366 120,272
Less: accumulated depreciation (91,953 ) (89,606 )
Total property and equipment, net $ 25,413 $ 30,666

~~Non-cash depreciation~~Depreciation expense for the three ~~and nine~~ months ending ~~September 30, 2017,~~March 31, 2020 and 2019, was $5,253 and $2,352, respectively.
NOTE 8 – WEBSITE ACQUISITION AND INTANGIBLE ASSETS.
At March 31, 2020 and December 31, 2019, respectively, website acquisitions, net consisted of the following:
Useful Lives March 31, 2020 December 31, 2019
Website Acquisition Assets 3-5 years $ 1,124,846 $ 1,124,846
Less: accumulated amortization (889,134 ) (875,522 )
Less: cumulative impairment loss (200,396 ) (200,396 )
Website Acquisition Assets, net $ 35,316 $ 48,928
At March 31, 2020 and ~~was $6,777 and $18,925 and $3,346 and $10,025~~December 31, 2019, respectively, intangible assets, net consisted of the following:
Useful Lives March 31, 2020 December 31, 2019
Trade name 5 years $ 2,131,000 $ 2,131,000
Customer relationships 5 years 9,615,000 9,615,000
IP/Technology 5 years 6,813,000 6,813,000
Non-compete agreements 3-5 years 1,742,400 1,742,400
Total Intangible Assets $ 20,301,400 $ 20,301,400
Less: accumulated amortization (1,629,609 ) (690,599 )
Intangible assets, net $ 18,671,791 $ 19,610,801
Goodwill $ 53,646,856 $ 53,646,856
Amortization expense for the three ~~and nine~~ months ended ~~September 30, 2016, respectively.~~March 31, 2020 and 2019 was $952,622 and $35,813, respectively, related to both the website acquisition costs and the intangible assets.

~~NOTE 7 – SEGMENT INFORMATION.~~During 2019, the Company rebranded Daily Engage to Bright Mountain and wrote off the $32,000 tradename asset of Daily Engage.

~~The~~During 2019, the Company ~~has two identifiable segments as~~acquired S&W in which finite lived intangible assets of ~~September 30, 2017; products~~$4,655,700 and ~~advertising. The products segment sells merchandise directly to customers thorough e-commerce distributor portals such as Amazon~~Goodwill of $15,666,783 were recognized, see Note 4.
During 2019, the Company acquired NDN in which finite lived intangible assets of $15,380,700 and eBay and through our proprietary websites and retail location. The advertising segment is focused on producing advertising revenue generated by users “clicking” on website advertisements utilizing several ad network partners and direct advertisers. The following information represents segment activity for the three and nine month periods ended September 30, 2017 and 2016.Goodwill of $36,991,147 were recognized, see Note 4.

For the three months ended
September 30, 2017

For the three months ended
September 30, 2016

Products

Advertising

Total

Products

Advertising


Total

Revenues

$
589,402

$
131,233

$
720,625

$
292,235

$
113,502

$
405,737

Intangible assets amortization

$
—

$
75,876

$
75,876

$
—

$
61,582

$
61,582

Depreciation

$
6,440

$
337

$
6,777

$
2,426

$
920

$
3,346

Income/(Loss) from operations

$
(541,619
)

$
69,181

$
(472,438
)

$
(300,803
)

$
(210,479
)

$
(511,282
)
Segment assets

$
1,429,824

$
2,151,591

$
3,581,415

$
1,352,158

$
856,317

$
2,208,475

Purchase of assets

$
—

$
199,573

$
199,573

$
29,415

$
11,688

$
41,103

18

16

BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~March 31, 2020
(Unaudited)

NOTE 9 – ACCRUED EXPENSES.
At March 31, 2020 and December 31, 2019, respectively, accrued expenses consisted of the following:
March 31, 2020 December 31, 2019
(unaudited)
Accrued dividends $ 253,471 $ 158,966
Accrued professional fees 130,387 62,887
Other accrued expenses 196,232 377,075
Accrued compensation 313,450 342,000
Accrued service/consulting agreements - 2,287,400
Total accrued expenses $ 893,540 $ 3,228,328
The accrued consulting fees on December 31, 2019 included $2,122,400 representing cash due of $165,000 and common stock of 650,000 and 660,000 shares to be issued to Spartan Capital Securities, LLC in the acquisition of S&W and MediaHouse, respectively. This liability including the share issuance and cash payment was settled during the three months ended March 31, 2020.
19
BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
(Unaudited)
NOTE ~~7 – SEGMENT INFORMATION (continued).~~

For the nine months ended
September 30, 2017

For the nine months ended
September 30, 2016

Products

Advertising

Total

Products

Advertising


Total

Revenues

$
1,713,688

$
334,856

$
2,048,544

$
976,056

$
313,266

$
1,289,322

Intangible assets amortization

$
—

$
227,418

$
227,418

$
—

$
186,007

$
186,007

Depreciation

$
16,725

$
2,200

$
18,925

$
8,299

$
1,726

$
10,025

Loss from operations

$
(1,386,894
)

$
(448,060
)

$
(1,834,954
)

$
(988,648
)

$
(665,623
)

$
(1,654,271
)
Segment assets

$
1,429,824

$
2,151,591

$
3,581,415

$
1,352,158

$
856,317

$
2,208,475

Purchase of assets

$
14,305

$
199,573

$
213,878

$
35,036

$
142,925

$
177,961

~~NOTE 8~~10 – NOTES ~~PAYABLE.~~PAYABLE

~~Long Term Debt~~Long-term debt to ~~Related Parties, net~~related parties

~~Following the conversion of outstanding notes in August 2016,~~During November 2018, the Company issued ~~a series of 12%,~~ 10%~~, and 6%~~ convertible promissory notes ~~that have conversion prices that create a beneficial conversion~~in the amount of $80,000 to a related party, ~~who is~~to our Chief Executive Officer. ~~These~~The notes mature five years from issuance and ~~are~~is convertible at the option of the holder into shares of common stock at any time prior to maturity at a conversion ~~prices~~price of $0.40 ~~or $0.50~~ per share. A beneficial conversion feature exists on the date athe convertible ~~note is~~notes were issued ~~when~~whereby the fair value of the underlying common stock to which the ~~note is~~notes are convertible into is in excess of the face value of the ~~note. In accordance with this guidance, the intrinsic value~~note of $70,000.
The principal balance of these notes payable was $80,000 and $80,000 at March 31, 2020 and December 31, 2019, respectively and discounts recognized upon respective origination dates as a result of the beneficial conversion ~~features~~feature total $50,821 and $54,311. At March 31, 2020 and December 31, 2019, the total convertible notes payable to related party net of discounts was $29,179 and $25,689, respectively.
Interest expense for note payable to related party was $2,023 and $2,749 at March 31, 2020 and March 31, 2019, respectively and discount amortization was $3,490 and $3,452, respectively.
Long-term debt
In connection with the acquisition of BMLLC, the Company issued promissory notes totaling $380,000. The notes have no stated interest rate and matured on September 19, 2018 and the Company is ~~recorded as a debt discount with a corresponding amount to additional paid~~ in ~~capital. The debt discount is amortized to interest over~~default pending the ~~five-year life~~final outcome of the legal matters. The balance of the notes payable at March 31, 2020 and December 31, 2019 were $165,163 and $165,163, respectively. This note ~~using~~was not paid off by the ~~effective interest method.~~maturity date due to pending litigation. See further discussion in Note 11, under Legal.

AAt March 31, 2020 and December 31, 2019 a summary of ~~these note issuances to a related party~~the Company’s debt is as follows:
March 31, 2020 December 31, 2019
Non-interest bearing Promissory Note issued for the BMLLC acquisition on September 19, 2017 which matured on September 19, 2018. The original note was $380,000 of which $35,000 was reclassified in 2018 to the Service Agreement listed below.
Total Debt $ 165,163 $ 165,163
Less Short Term Debt 165,163 165,163
Long Term Debt $ — $ —
The minimum annual principal payments of notes payable at March 31, 2020 were:
2020 $ 165,163
Premium Finance Loan Payable
The Company generally finances its annual insurance premiums through the use of short-term notes, payable in 10 equal monthly installments. Coverages financed include Directors and Officers and Errors and Omissions with premiums financed in 2020 and 2019 of $194,592 and $179,844, respectively.
Total Premium Finance Loan Payable balance for the Company’s policies was $125,453 at March 31, 2020 and $179,844 at December 31, ~~2016 and September 30, 2017 is as follows:~~2019.

Issuance Date

Maturity Date

Principal

Discount
Recognized

Amortization
Expense
2016

Carry
Amount at
December 31,
2016

Amortization
Nine Months
Ended
September 30,
2017

Carry
Amount at
September 30,
2017

09/26/16

09/26/21

$
100,000

$
70,000

$
3,692

$
33,692

$
10,500

$
44,192

10/14/16

10/14/21

100,000

70,000

3,024

33,024

10,500

43,524

10/31/16

10/31/21

100,000

70,000

2,372

32,372

10,500

42,872

11/03/16

11/03/21

50,000

35,000

1,120

16,120

5,250

21,370

11/11/16

11/11/21

100,000

70,000

1,934

31,934

10,500

42,434

11/21/16

11/21/21

50,000

35,000

775

15,775

5,250

21,025

12/15/16

12/15/21

75,000

52,500

488

22,988

7,874

30,864

01/19/17

01/19/22

100,000

70,000

—

—

9,823

39,823

02/06/17

02/06/22

100,000

70,000

—

—

9,061

39,061

02/24/17

02/24/22

50,000

35,000

—

—

3,708

18,708

03/07/17

03/07/22

100,000

70,000

—

—

7,941

37,941

04/03/17

04/03/22

75,000

45,000

—

—

4,500

34,500

04/10/17

04/10/22

75,000

45,000

—

—

4,250

34,250

04/19/17

04/19/22

50,000

30,000

—

—

2,683

22,683

05/01/17

05/01/22

50,000

30,000

—

—

2,500

22,500

05/11/17

05/11/22

75,000

22,500

—

—

1,742

54,242

05/24/17

05/24/22

75,000

45,000

—

—

3,484

33,484

06/08/17

06/08/22

100,000

30,000

—

—

1,883

71,883

06/27/17

06/27/22

100,000

30,000

—

—

1,567

71,567

07/12/17

07/12/22

50,000

5,000

—

—

220

45,220

17

~~BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~
~~(Unaudited)~~

~~NOTE 8 – NOTES PAYABLE (continued).~~

Issuance Date

Maturity Date

Principal

Discount
Recognized

Amortization
Expense
2016

Carry
Amount at
December 31,
2016

Amortization
Nine Months
Ended
September 30,
2017

Carry
Amount at
September 30,
2017

07/26/17

07/26/22

135,000

50,625

—

—

1,851

86,226

07/27/17

07/27/22

25,000

9,375

—

—

338

15,963

08/01/17

08/01/22

75,000

28,125

—

—

938

47,813

08/10/17

08/10/22

25,000

—

—

—

—

25,000

08/23/17

08/23/22

50,000

—

—

—

—

50,000

08/28/17

08/28/22

75,000

—

—

—

—

75,000

08/30/17

08/30/22

75,000

—

—

—

—

75,000

$
1,525,000

$
925,000

$
13,405

$
185,905

$
116,863

$
1,147,145

~~Amortization of debt discount totaled $116,863 and $305,115 at September 30, 2017 and 2016, respectively.~~

~~Notes Payable~~

On November 30, 2016, the Company entered into a promissory note agreement with an unaffiliated party in the principal amount of $500,000. The note is unsecured, carries an interest rate of 25% per annum payable in arrears at maturity. The note matures November 30, 2017 and may be prepaid at any time without notice or prepayment penalty. In the event of default of any loan provision, the lender can declare all or any portion of the unpaid principal and interest immediately due and payable.

On September 30,2017, the note was amended, extending the maturity to December 31,2017 and reducing the interest rate to 10%. In addition, the note holder reduced the accrued interest due under the note from approximately $106,000 to $50,000 at September 20,2017. This reduction in accrued interest of approximately $56,000 was taken in the third quarter of 2017. Accrued interest on this note totaled $50,347 at September 30, 2017.

As a part of the acquisition of Daily Engage Media the Company assumed two Notes Payable to Gibraltar Capital Advances, LLC and Complete Business Solutions Group, Inc. in the amounts of $26,618 and $20,148, respectively. The Company also issued promissory notes in the amount of $380,000 payable to three Daily Engage Media members and a third party, with whom they have a business relationship. The notes mature on September 19, 2018.

NOTE 911 – COMMITMENTS AND CONTINGENCIES.

~~Leases~~

The Company leases its corporate offices at 6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487 under a long-term non-cancellable operating lease agreement ~~which contains renewal options.~~expiring on October 31, 2021. The lease which was entered into on August 25, 2014 was amended on July 30, 2015 to increase the original approximate 2,014 square feet to approximately 4,450 square feet. The term of the lease was extended and will terminate on March 14, 2019 at a currentterms require base rent ~~of for a term~~payments of approximately ~~$8,978~~$7,260 plus sales tax per month for the first twelve months commencing in September 2018, with a 3% escalation each year. ~~An additional~~Included in other assets is a required security deposit of ~~$2,500 was required.~~$18,100. Rent is all-inclusive and includes electricity, heat, air-conditioning, and water. ~~The original rent commencement date was October 11, 2014 and will expire on March 14, 2019.~~

The Company leases ~~retail~~office space ~~for its product sales division at 4900 Linton Boulevard, Bay 17A, Delray Beach, FL 33445~~in Hertsliya, Israel under a long-term non-cancellable operating lease agreement ~~which contains renewal options.~~expiring on December 18, 2021. The lease ~~which was entered into on August 25, 2014, is for approximately 2,150 square feet for a term of 36 months in Delray Beach, Florida at a~~terms require base rent payments of approximately ~~$2,329 per month for the first twelve months with~~$10,896. Included in other assets is a ~~3% escalation each year. A~~required security deposit of $3,865, first month's prepaid rent of $3,865, and last month's prepaid rent of $4,015 was paid upon lease execution. The lease is a triple net lease. Common area maintenance is approximately $1,317 per month for the first twelve months with annual escalations not to exceed 4%. The rent commencement date was October 1, 2014 and was initially set to expire on September 30, 2017. In January 2017, this lease was modified and extended concurrent with the expansion of our retail space in the same location.$58,651.

20
18

BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~March 31, 2020
(Unaudited)

NOTE 911 – COMMITMENTS AND CONTINGENCIES (continued).

~~In January 2017,~~The right of use asset and lease liability is as follows as of March 31, 2020 and December 31, 2019:
March 31, 2020 December 31, 2019
Assets
Operating lease right of use asset $ 348,721 $ 397,912

Liabilities
Operating lease liability, current $ 215,004 $ 211,744
Operating lease liability, net of current portion 130,979 198,232
Total operating lease liabilities $ 345,983 $ 409,976
The Company’s non-lease components are primarily related to property maintenance and other operating services, which varies based on future outcomes and is recognized in rent expense when incurred and not included in the measurement of the lease liability. The Company ~~entered into an additional~~did not have any variable lease and modified and extended our existing lease for our retail site. The new lease agreement provides for an additional 2,720 square feet adjacent to our existing Delray Beach FL location commencing February 1, 2017, and expiring January 31, 2022. This lease provides for one month’s free rent, an initial monthly base rental of $1,757, representing a one-half reduction in rental payments for the first year as an accommodation. Minimum base rental for year two is $3,513 per month, escalating 3% per year thereafter. The Company also provided a $10,000 security deposit and prepaid $96,940 in future rents on the facility through the funding of certain leasehold improvements. Prepaid rent totaled $56,199 at September 30, 2017. Simultaneously, the Company modified our existingits operating lease ~~on the initial space, extending this lease to coincide with the new space, expiring January 31, 2022, at an initial base rental of $2,471 per month, escalating 3% per year thereafter.~~

On December 16, 2016, with an effective date of December 15, 2016 under the terms of the Asset Purchase Agreement, we acquired the assets constituting the Black Helmet Apparel business including various website properties and content, social media content, inventory and other intellectual property rights. (See Note 3) We also acquired the right to assume the lease of their warehouse facility consisting of approximately 2,667 square feet. The lease was renewed for a three-year term in April 2016 with an initial base rental rate of $1,641 per month, and escalating at approximately 3% per year thereafter.

~~Rent expense~~ for the three months ended ~~September 30, 2017 and 2016 was $72,155 and $32,053, respectively and~~March 31, 2020.
The maturity of the Company’s operating lease liability for the ~~nine~~12 months ended ~~September 30, 2017~~March 31:
2021 $
215,004

2022
130,979

Total net lease liabilities $
345,983

The following summarizes additional information related to the operating lease:
March 31, 2020
Weighted-average remaining lease term 1.83 years
Weighted-average discount rate 5.50 %
For the three months ended March 31, 2020 and ~~2016~~2019, rent expense in continuing operations was ~~$190,080~~$160,631 and ~~$112,785,~~$29,409, respectively. For the three months ended March 31, 2020 and 2019, rent expense included in discontinued operations was $0 and $37,042, respectively.

21
~~Legal~~BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
(Unaudited)
NOTE 11 – COMMITMENTS AND CONTINGENCIES (continued).
Legal
Effective July 18, 2018 we terminated the employment agreements with each of Messrs. Harry G. Pagoulatos and George G. Rezitis for cause. Messrs. Pagoulatos and Rezitis had been employed by us as chief operating officer and chief technology officer, respectively, of our DEM subsidiary since our acquisition of that company in September 2017. Mr. Todd Speyer, our Vice President, Digital and a member of our board of directors, has assumed operating responsibilities for DEM. While the malfeasance of Messrs. Harry G. Pagoulatos and George G. Rezitis giving rise to their for-cause termination adversely affected our results of operations for the second and third quarters, we do not expect that these terminations will result in any material, long-term change in the operations of DEM.
In July of 2018, Messrs. Pagoulatos and Rezitis, along with a third party who had been a minority owner in DEM prior to our acquisition of that company, filed a Complaint in the U.S. District Court, District of New Jersey (case number 2: l 8-cv-11357-ES-SCM) against our Company and our Chief Executive Officer, seeking compensatory and punitive damages and attorneys’ fees, among other items, and alleging, among other items, fraud and breach of contract. We vehemently deny all allegations in the complaint and believe them to be without merit. We filed a Motion to Dismiss this case for a multitude of reasons including, but not restricted to, failure to state a cause of action and jurisdictional and venue arguments as the acquisition and employment agreements provides that any dispute should be heard in either the state or local courts of Palm Beach County, Florida. This Motion to Dismiss has been pending a decision since October 2018. At the appropriate juncture, we also intend to serve a Rule 11 Motion for Sanctions based upon the fact that the Complaint contains frivolous arguments or arguments with no evidentiary support. The parties also agreed to settle all claims through the exchange of shares from Messrs. Harry G. Pagoulatos and George G. Rezitis for payment of $165,163. The payment for the shares will be made as Messrs. Harry G. Pagoulatos and George G. Rezitis shares are resold by the Company.
In connection with the BMLLC acquisition, the Company entered into three-year employment agreements with two former members of the entity. Under these agreements, the Company was obliged to pay base salaries of $65,000 and $70,000, respectively to the employees with an increase to $75,000 each in the second year of the agreement as well as bonuses to be paid at the discretion of the board of directors.
From time-to-time, we may be involved in litigation or be subject to claims arising out of our operations or content appearing on our websites in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, we currently believe that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Regardless of the outcome, litigation can have an adverse impact on our company because of defense and settlement costs, diversion of management resources and other factors.

Other Commitments

~~The Company entered into various contracts or agreements in the normal course of business, which may contain commitments. During the nine months ended~~On September 30, 2017 and 2016, the Company entered into agreements with third party vendors to supply website content and data, website software development, advertising, public relations, and legal services. All of these commitments contain provisions whereby either party may terminate the agreement with specified notice, normally 30 days, and with no further obligation on the part of either party.

During the years ended December 31, 2016 and 2015, the Company entered into agreements with third parties related to websites acquired during the respective periods as further discussed in Note 3. In connection with the two acquisitions made in 2016,5, 2018 the Company entered into a ~~management agreement associated~~Master Services Agreement with Kubient, Inc. pursuant to which it will provide its programmatic technology platform to us on a nonexclusive basis for the purpose of managing our programmatic business partners. The Company has not paid anything to Kubient, Inc. for the three months ended March 31, 2020 for its platform. The Company has ceased advertising services with Kubient and at March 31, 2020 the Company is owed $125,387 and a note receivable of $75,000 plus interest, and we have reserved a total of $136,000 against these balances.
On September 6, 2017 Bright Mountain Media, Inc. entered into a five-year Consulting Agreement with the ~~WarIsBoring website at $5,000 per month through November 18,~~Spartan Capital Securities, LLC (“Spartan Capital”), a broker-dealer and member of FINRA, which under its terms would not become effective until the closing of the private placement in which Spartan Capital served as placement agent as described below. The Consulting Agreement became effective on September 28, 2018 and, ~~two service agreements~~accordingly, Spartan Capital was engaged to provide advisory services including, but not limited to advice and input with respect to raising capital, assisting us with strategic introductions, and assisting management with enhancing corporate and shareholder value.
On September 6, 2017 we also entered into a five-year M&A Advisory Agreement with Spartan Capital which became effective on September 28, 2018 upon completion of the private placement for sixty months. Under the terms of the agreement, Spartan Capital will provide consulting services to us related to potential mergers or acquisitions, including candidates, valuations and transaction terms and structures.
Consulting fees consisting of $300,000 in ~~connection~~cash and 1,000,000 shares of common stock valued at $750,000 as well as the ~~Black Helmet Apparel acquisition at $6,250 per month, each, through December 15, 2019, plus~~$500,000 M&A advisory fee are considered prepaid expenses. Total prepaid service/consulting fees, were $1,035,000, of which $260,000 is considered short-term and is included in prepaid expenses and other current assets as of March 31, 2020. These prepaid expenses are being amortized over 60 months, the ~~ability to earn bonuses ranging from $50,000~~term of the respective agreements. The amortization expense was $77,500 and $77,500 for the ~~year ending December~~three months ended March 31, 2017 to $100,000 for the year ending December 31, 2019 each based upon the satisfaction of certain revenue and gross margin targets. These agreements may be terminated with six months written notice. Future contingent milestone payments under the acquisitions made in 2015 totaled approximately $210,000 and $210,000 for 2017 and 2016, respectively.

~~Total payments for the nine month periods ended September 30, 2017 and 2016 were $112,500 and $0, respectively.~~

~~Contractual commitments remaining under various acquisition related agreements total: $245,000 in 2017; $205,000 in 2018; $144,000 in 2019 and $0 for~~ 2020 and ~~2021,~~2019, respectively.

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BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~March 31, 2020
(Unaudited)

NOTE 911 – COMMITMENTS AND CONTINGENCIES (continued).

For the 36 months from the final closing of this private placement, Spartan Capital has certain rights of first refusal if we decide to undertake a future private or public offering or if we decide to engage an investment banking firm.
The Company granted the purchasers in the offering demand and piggy-back registration rights with respect to the shares of our common stock included in the Units and the shares of common stock issuable upon the exercise of the Private Placement Warrants. In addition, the Company agreed to file a resale registration statement within 120 days following the final closing of this offering covering the shares of common stock issuable upon the exercise of the Private Placement Warrants included in the Units. If the Company should fail to timely file this resale registration statement, then within five business days of the end of month we will pay the holders an amount in cash, as partial liquidated damages, equal to 2% of the aggregate purchase price paid by the holder for each 30 days, or portion thereof, until the earlier of the date the deficiency is cured or the expiration of six months from filing deadline. The Company will keep any such registration statement effective until the earlier of the date upon which all such securities may be sold without registration under Rule 144 promulgated under the Securities Act or the date which is six months after the expiration date of the Private Placement Warrants. We are obligated to pay all costs associated with this registration statement, other than selling expenses of the holders.
On December 11, 2018 we entered into an Uplisting Advisory and Consulting Agreement with Spartan Capital pursuant to which Spartan Capital will provide (i) advice and input with respect to strategies to accomplish an uplisting of our common stock to the Nasdaq Capital Market or NYSE American LLC or another national securities exchange, and the implementation of such strategies and making introductions to facilitate the uplisting, (ii) advice and input with respect to special situation and restructuring services, including debtor and creditor advisory services, and (iii) sell-side advisory services with respect to the sale and disposition of non-core businesses and assets, including facilitating due diligence and identifying potential buyers and strategic partners and positioning these businesses and assets to maximize value.
In conjunction with the intent to facilitate the uplisting, the Company agreed to compensate the law firm engaged for this service $70,000 to be paid in common stock upon the successful outcome of the uplisting. The fees associated with this service are considered a cost of the uplisting and will be considered part of the expenses associated with the transaction at such time.
The Company entered into an Executive Employment Agreement with our Chief Executive Officer, with an effective date of June 1, 2014. Under the ~~initial~~ terms of this agreement, the Company ~~would~~will compensate the Chief Executive Officer with a base salary of $75,000 annually, and he is entitled to receive discretionary bonuses as may be awarded by the ~~Company's~~Company’s board of directors from time to time. The initial term of the agreement is three years, and the Company may extend it for an additional one-year period upon written notice at least 180 days prior to the expiration of the term. The Company amended this agreement April 1, 2017 for an additional term of three years. The Chief Executive ~~Officer's~~Officer’s base annual salary was increased to ~~$77,500 in January 2015, $96,000 in July 2015, and to $125,000 effective October 1, 2015~~$165,000 upon recommendation of the Compensation Committee of the board of directors. ~~In May 2016 the Chief Executive Officer suggested and orally agreed to a voluntary reduction in his base salary to $95,000 per annum.~~

The agreement will terminate upon the Chief Executive Officer's death or disability. In the event of a termination upon his death, the Company is obligated to pay his beneficiary or estate an amount equal to one year base salary plus any earned bonus at the time of his death. In the event the agreement is terminated as a result of his disability, as defined in the agreement, he is entitled to continue to receive his base salary for a period of one year. The Company is also entitled to terminate the agreement either with or without case, and the Chief Executive Officer is entitled to voluntarily terminate the agreement upon one year's notice to the Company. In the event of a termination by the Company for cause, as defined in the agreement, or voluntarily by the Chief Executive Officer, the Company is obligated to pay him the base salary through the date of termination. In the event the Company terminates the agreement without cause, the Company is obligated to give him one years' notice of the Company's intent to terminate and, at the end of the one year period, pay an amount equal to two times his annual base salary together with any bonuses which may have been earned as of the date of termination. A constructive termination of the agreement will also occur if the Company materially breaches any term of the agreement or if a successor company to the Company fails to assume the Company's obligations under the employment agreement. In that event, the Chief Executive Officer will be entitled to the same compensation as if the Company terminated the agreement without cause. The employment agreement contains customary non-compete and confidentiality provisions. The Company also agreed to indemnify the Chief Executive Officer pursuant to the provisions of the ~~Company's~~Company’s Amended and Restated Articles of Incorporation and Amended and Restated By-laws.

On ~~April 1, 2017~~March 25, 2020, the ~~Company entered into the First Amendment to the Executive~~Board approved a new Employment Agreement with our Chief Executive Officer. Under the terms of the amendment, the term of his employment was extended to April 1, 2020, which may be further extended for additional one year periods upon 180 day’s notice by us to him. Under the terms of the amendment, Mr. Speyer's base salary was increased to $165,000 annually and he is entitled to earn annual performance bonuses, beginning with the year ending December 31, 2017, ranging from 25% to 80% of his base salary upon our achievement of certain annual revenue and EBITDA targets. All other terms and conditions of his employment agreement remain in full force.

On September 19, 2017 in connection with the closing of the acquisition of Daily Engage Media, we entered into three-year employment agreements with Messrs. Harry G. Pagoulatos and George G. Rezitis, two of the members. Mr. Pagoulatos and Mr. Rezitis will serve as chief operating officer and chief technology officer, respectively, of our Daily Engage Media Group. The terms of the employment agreements are identical except for the amount of base salary each individual will receive. We agreed to pay Mr. Pagoulatos an annual base salary of $60,000 during the first year of the term of his employment agreement, which increases to $75,000 annually for the remainder of the term. We agreed to pay Mr. Rezitis an annual base salary of $70,000 during the first year of the term of his employment agreement, which increases to $75,000 annually for the remainder of the term. Both employees are entitled to receive a discretionary bonus as may be awarded by our board of directors in their sole discretion, as well as participation in executive benefit programs we may offer, paid vacation and reimbursement for business expenses. The employment agreements may be terminated upon the death or disability of the employee, by us with or without cause or by the employee. If the employment agreement is terminated upon the employee's death or disability, we are obligated to continuing paying the base salary for a period of 60 days following termination. If the employment agreement is terminated by us for cause (as defined in the agreement) or by the employee, the employee is not entitled to receive any severance or other compensation after the date of termination. If we terminate the employment agreement without cause, we are obligated to pay the base salary and executive benefits for one year following the date of termination. The employment agreements contain customary confidentiality, non-compete and indemnification provisions.

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~~BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~
~~(Unaudited)~~

~~NOTE 10 – RELATED PARTIES.~~

As discussed more fully in Note 8, section titled “Long Term Debt to Related Parties, net”, in 2017 and 2016, the Company issued a series of convertible promissory notes to our Chief Executive Officer totaling $1,460,000 and $575,000, respectively. These notes have a conversion price ranging from $0.50 per share to $0.40 per share and resulted in the recognition of a beneficial conversion feature recorded as a debt discount. These notes payable, net of debt discount, total $1,147,145 and $185,905 at September 30, 2017 and December 31, 2016, respectively and mature five years from issuance and are convertible at the option of the holder into shares of common stock at any time prior to maturity at a conversion price of $0.50 per share. A beneficial conversion feature exists on the date a convertible note is issued when the fair value of the underlying common stock to which the note is convertible into is in excess of the face value of the note. In accordance with this guidance, the intrinsic value of the beneficial conversion features is recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is amortized to interest over the five-year life of the note using the effective interest method. The notes are reported net of their unamortized debt discount of $887,855 and $389,095 as of September 30, 2017 and December 31, 2016, respectively.

~~In September 2017, Mr.~~ W. Kip Speyer, the Company’s Chairman and Chief Executive ~~Officer, purchased an aggregate of 500,000 shares~~Officer. The Employment Agreement is to take effect on April 1, 2020. The Employment Agreement has a 3 year-term and will automatically renew for one-year periods unless either party notifies the other party, in writing, at least 90 days prior to the end of the ~~Company’s Series E Convertible Preferred Stock at a purchase price of $0.40 per share. The designations, rights and preferences of Series E Stock are described in Note 11.~~Employment Period or the Renewal Period that the Agreement will not be renewed. The Company will pay Mr. Speyer an annual base salary of $325,000. Mr. Speyer may also receive an annual bonus in an amount to be determined by the Company’s Compensation Committee in their sole discretion. Mr. Speyer is entitled to participate in the Company benefit programs and he is entitled to reimbursement of out-of-pocket business expenses, including a monthly automobile allowance of $800. In the event that Mr. Speyer is terminated by the Company without cause, the Company will continue to pay his base salary in accordance with normal payroll practices through the end of his Employment Period, without renewal.
On March 25, 2020, the Board approved a new Employment Agreement with Greg Peters the Company’s President and Chief Operating Officer. The Employment Agreement is to take effect on April 1, 2020. The Employment Agreement has a year-term and will automatically renew for a one-year period unless either party notifies the other party, in writing, at least 90 days prior to the end of the Employment Period or the Renewal Period that the Agreement will not be renewed. The Company will pay Mr. Peters an annual base salary of $325,000. Mr. Peters may also receive an annual bonus in an amount to be determined by the Company’s Compensation Committee in their sole discretion. Mr. Peters is entitled to participate in the Company benefit programs and he is entitled to reimbursement of out-of-pocket business expenses, including reimbursement for mileage used during Company business in the ~~proceeds from these sales~~automobile he owns or leases. In the event that Mr. Peters is terminated by the Company without cause, the Company will continue to pay his base salary in accordance with normal payroll practices through the end of his Employment Period, without renewal.
Our financial performance and operating results may be materially and adversely affected by the outbreak of the novel coronavirus (“COVID-19”). The recent global outbreak of COVID-19 has had an unfavorable impact on our business operations. The COVID-19 pandemic has caused disruptions in the services we provide. In addition, the COVID-19 pandemic has resulted in many states and countries imposing orders resulting in the closure of non-essential businesses – including many companies which advertise digitally. We cannot foresee whether the outbreak of COVID-19 will be effectively contained, nor can we predict the severity and duration of its impact on our business and our financial results. If the outbreak of COVID-19 is not effectively and timely controlled, our business operations, financial condition, and liquidity may be materially and adversely affected as a result of prolonged disruptions in consumer spending, a lack of demand for ~~working capital.~~our services, and other factors that we cannot foresee. The extent to which COVID-19 will impact our business and our financial results will depend on future developments which are highly uncertain and cannot be predicted.

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BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
(Unaudited)
NOTE 1112 – ~~SHAREHOLDERS’ EQUITY.~~PREFERRED STOCK.

~~Preferred Stock~~

The Company has authorized 20,000,000 shares of preferred stock with a par value of $0.01 (the ~~"Preferred Stock"~~“Preferred Stock”), issuable in such series and with such designations, rights and preferences as the board of directors may determine. The ~~Company's~~Company’s board of directors has previously designated five series of preferred stock, consisting of 10% Series AA-1 Convertible Preferred Stock ("(“Series ~~A Stock"~~A-1 Stock”), 10% Series B Convertible Preferred Stock ("(“Series B ~~Stock"~~Stock”), 10% Series C Convertible Preferred Stock ("(“Series C ~~Stock"~~Stock”), 10% Series D Convertible Preferred Stock ("(“Series D ~~Stock"~~Stock”) and 10% Series E Convertible Preferred Stock ("(“Series E ~~Stock"~~Stock”). ~~At September 30, 2017,~~
On November 20, 2019 we filed Articles of Amendment to our Amended and Restated Articles of Incorporation, as amended, which returned 2,000,000 shares of previously designated 10% Series B Convertible Preferred Stock, 2,000,000 shares of previously designated 10% Series C Convertible Preferred Stock and 2,000,000 shares of previously designated 10% Series D Convertible Preferred Stock to the status of authorized but undesignated and unissued shares of our blank check preferred stock as there were ~~100,000~~no shares of any of these series outstanding and no intention to issue any such shares in the future. The returned series were replaced by 6,000,000 shares of 5% Series B-1 Convertible Preferred Stock.
At March 31, 2020, there were 1,200,000 shares of Series AA-1 Stock and ~~500,000~~2,500,000 shares of Series E Stock and 4,344,017 shares of Series F Stock issued and outstanding. There are no shares of Series ~~B Stock, Series C Stock or Series D~~B-1 Stock issued and ~~outstanding.~~outstanding

The Series AA-1 Stock is senior to all other classes of the ~~Company's~~Company’s securities and has a stated value of $0.50 per share. Holders of shares of Series AA-1 Stock are entitled to the payment of a 10% dividend payable in shares of the Company’s common stock at a rate of one share of common stock for each 10 shares of Series AA-1 Stock, payable annually the 10th business day of January. The shares of Series AA-1 Stock are redeemable at the ~~Company's~~Company’s option upon 20 days’ notice for an amount equal to the amount of capital invested. On ~~August 18, 2016, Series A Stockholders converted 1,800,000 shares of Series A Stock into 1,800,000 shares of common stock, leaving 100,000 Series A Stock outstanding. On~~ the 10th business day of January 2018 there were ~~7,205~~10,000 shares of common stock dividends owed and payable to the Series AA-1 Stockholder of record as dividends on the Series AA-1 Stock. These preferred shares automatically converted into common shares on December 30, 2018 as defined above.

On September 6, 2017, the board of directors designated 2,500,000 shares of Preferred Stock as Series E Stock, which such designation was amended on September 29, 2017. Holders of shares of Series E Stock are entitled to 10% dividends, payable monthly as may be permitted under Florida law out of funds legally available therefor. The shares of Series E Stock rank senior to any other class of our equity securities, except for the Series A Stock, have a liquidation preference of $0.40 per share and are not redeemable.

The remaining designations, rights and preferences of each of the Series AA-1 Stock and Series E Stock are identical, including (i) shares do not have voting rights, except as may be permitted under Florida law, (ii) are convertible into shares of our common stock at the ~~holder's~~holder’s option on a one for one basis, (iii) are entitled to a liquidation preference equal to a return of the capital invested, and (iv) each share will automatically convert into shares of common stock five years from the date of issuance or upon a change in control. Both the voluntary and automatic conversion formulas are subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events.

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~~BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~
~~(Unaudited)~~

~~NOTE 11 – SHAREHOLDERS’ EQUITY (continued).~~

In ~~September 2017,~~2019, Mr. W. Kip Speyer, the Company’s Chairman and Chief Executive Officer, purchased an aggregate of ~~500,000~~1,200,000 shares of Series A-1 Stock at a purchase price of $0.50 per share.
In 2018, Mr. W. Kip Speyer, the Company’s Chairman and Chief Executive Officer, purchased an aggregate of 1,125,000 shares of Series E Stock at a purchase price of $0.40 per share. ~~The Company used~~
Dividends paid for Series A-1, E and F Convertible Preferred Stock paid to Mr. W. Kip Speyer were $23,747 during the ~~proceeds from these sales~~three months ended March 31, 2020 and for ~~working capital.~~Series E and F Convertible Preferred Stock were $74,171 during the three months ended March 31, 2019.

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BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
(Unaudited)
NOTE 13 – COMMON STOCK.
A) Stock issued for ~~cash~~Cash

During the first quarter of 2020, the Company sold an aggregate of 5,117,500 units of its securities to 57 accredited investors in a private placement exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $2,558,750. Each unit, which was sold at a purchase price of $0.50, consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.75 per share. Spartan Capital, served as placement agent for the Company in this offering. As compensation for its services, Spartan Capital held back $383,813 for commissions, $165,000 to pay the accrued finder’s fee for the Oceanside acquisition, and $275,000 in other consulting fees, resulting in net cash received by the Company of $1,734,937. The Company issued Spartan Capital Placement Agents Warrants to purchase an aggregate of 511,750 shares of our common stock, including the cash commission and Placement Agent Warrants issued pursuant to the final closing on March 16, 2020 included in the Company’s consolidated statement of changes in shareholders’ equity for the three months ended March 31, 2020.
During 2019, the Company sold an aggregate of 163,750 units of its securities to 1 accredited investor in a private placement exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $58,950. Each unit, which was sold at a purchase price of $0.40, consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.65 per share. Spartan Capital, served as placement agent for the Company in this offering. As compensation for its services, the Company paid Spartan Capital commissions and other fees totaling $6,550, and issued Spartan Capital Placement Agents Warrants to purchase an aggregate of 16,375 shares of our common stock, including the cash commission and Placement Agent Warrants issued pursuant to the final closing on January 9, 2019 included in the Company’s consolidated statement of changes in shareholders’ equity for the three months ended December 31, 2019.
During 2019, the Company sold an aggregate of 2,570,860 units of its securities to 20 accredited investors in two private placements exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $1,285,530. A total of 1,270,000 units were sold under the first private placement dated February 14, 2019 at a purchase price of $0.50 per share resulting in gross proceeds of $635,000. Each unit was sold at a purchase price of $0.50, and consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.75 per share. On April 22, 2019 the Company amended the private placement to include a second warrant to purchase one share of common stock at an exercise price of $1.00 per share. 970,500 units were sold at a purchase price of $0.50 per unit resulting in gross proceeds of $485,250. We used $1,008,225 of the proceeds to issue 6% promissory notes to Inform, Inc as a part of the potential acquisition. On July 15, 2019 these two offerings were terminated and replaced with a private placement offering units at a purchase price of $0.50 consisting of one share of common stock, one five-year warrant to purchase one share of common stock at an exercise price of $0.75 per share, and a second warrant to purchase one share of common stock at an exercise price of $1.00 per share. A total of 330,360 units were sold under the private placement dated July 15, 2019 units at a purchase price of $0.50 per share resulting in gross proceeds of $165,280. We used $148,662 of the proceeds to issue 6% promissory notes to Inform, Inc as a part of the potential acquisition. The investors in the first offering dated February 14, 2019 were required to subscribe for the second warrant offered in the April 22, 2019 amendment in a private placement dated July 11, 2019 which terminated on July 31, 2019 with no ability to extend. A total of 980,000 warrants were issued to eleven investors in the first private placement who subscribed for the second warrant. Three investors did not subscribe for the second warrant.
During 2019, the Company sold an aggregate of 750,000 units of its securities to 3 accredited investors in a private placement exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $300,000. Each unit, which was sold at a purchase price of $0.40, consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.65 per share.
B) Stock issued for services
In ~~August 2017~~February 2019, the Company issued ~~125,000~~7,000 shares of our common stock to consultants for services rendered based on the fair value of the date of grant, or $1.00 a share valued at $7,000.
In July 2019, the Company issued 22,167 shares of our common stock to a consultant for services rendered based on the fair value of the date of grant, or $1.79 a share valued at $39,750.
In November 2019, the Company issued 63,000 shares of our common stock to a consultant for services rendered based on the fair value of the date of grant, or $1.50 a share valued at $94,455.
In February 2020, the Company issued 650,000 shares of our common stock to Spartan Capital for services rendered during 2019 based on the fair value of date of service, or $1.60 a share valued at $1,040,000.
In February 2020, the Company issued 660,000 shares of our common stock to Spartan Capital for services rendered during 2019 based on the fair value of date of service, or $1.64 a share valued at $1,082,400.
In March 2020, the Company issued 60,000 shares of our common stock to MZHCI, Inc for services rendered during 2020 based on the fair value of date of service, or $1.50 a share valued at $90,000.
C) Stock issued for acquisitions
On August 15, 2019, the Company issued 12,354,640 shares of its common stock ~~for $50,000~~in connection to the acquisition of Oceanside Media. The common shares were values at $19,409,278 or ~~$0.40~~$1.57 per ~~share to a private investor.~~share.

~~Stock issued for services~~

On ~~January 16, 2017,~~November 18, 2019, the Company ~~issued~~acquired MediaHouse and agreed to ~~a consultant 3,600~~issue 22,180,781 shares of ~~its~~ common stock in the transaction. Although the transaction was recorded as of November 18, 2019, due to complications associated with the identification of the shareholders to receive the shares, the shares were not issued prior to December 31, 2019 and were issued in 2020. Accordingly, the shares are included within the shares outstanding, but not as issued as of December 31, 2019. The shares are valued at ~~$0.85~~$45,952,684 or $1.64 per ~~share, or $3,060, for services rendered. The Company valued these common shares based on the fair value at the date of grant.~~share.

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~~On April 25, 2017 the Company issued 28,500 shares of its common stock with a fair value of $22,800 on the date of issuance for compensation to employees and officers.~~

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES
~~Stock issued for dividends~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2020
~~In January 2017, the Company issued 10,000 shares of its common stock as dividends to the holder of its Series A preferred stock.~~(Unaudited)

~~Stock issued for acquisition~~NOTE 13 – COMMON STOCK (continued).

~~On September 19, 2017, the Company issued 1,100,233 shares of its common stock with a fair value of $429,091 for acquisition of Daily Engage Media.~~

~~Stock Incentive Plan and~~ Stock Option ~~Grants to Employees and Directors~~Compensation

The Company accounts for stock option compensation issued to employees for services in accordance with ASC Topic 718, “~~Compensation~~“Compensation – Stock ~~Compensation~~”Compensation”. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other ~~equity based~~equity-based compensation issued to employees. The value of the portion of an employee award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ~~ASC Topic 505-50,~~ ASU No. 2018- 07, “~~Equity-Based Payments~~Compensation – Stock Compensation (Topic 718): Improvements to ~~Non-Employees~~Nonemployee Share-Based Payment Accounting.”..” The Company estimates the fair value of stock options by using the Black-Scholes option-pricing model.

Stock options issued to consultants and other non-employees as compensation for services provided to the Company are accounted for based on the fair value of the services provided or the estimated fair market value of the option, whichever is more reliably measurable in accordance with FASB ASC ~~505“Equity”~~505, Equity, and FASB ASC 718,, including related amendments and interpretations. The related expense is recognized over the period the services are provided.

On April 20, 2011, the Company’s board of directors and majority stockholder adopted the 2011 Stock Option Plan (the “2011 Plan”), to be effective on January 3, 2011. The Company has reserved for issuance an aggregate of 900,000 shares of common stock under the 2011 Plan. The maximum aggregate number of shares of Company stock that shall be subject to Grants made under the Plan to any individual during any calendar year shall be 180,000 shares. On April 1, 2013, the Company’s board of directors and majority stockholder adopted ~~three~~the 2013 Stock Option Plan (the “2013 Plan”), to be effective on April 1, 2013. The Company has reserved for issuance an aggregate of 900,000 shares of common stock ~~option plans,~~under the ~~terms~~2013 Plan. As of ~~which are substantially identical.~~ March 31, 2020, 9,000 shares were remaining under the 2011 Plan for future issuance. As of March 31, 2020, 25,000 shares were remaining under the 2013 Plan for future issuance.
On May 22, 2015, the Company’s board of directors and majority stockholder adopted the 2015 Stock Option Plan (the “2015 Plan”), to be effective on May 22, 2015. The Company has reserved for issuance an aggregate of 1,000,000 shares of common stock under the 2015 Plan. As of March 31, 2020, 420,000 shares were remaining under the 2015 Plan for the future issuance.
On November 7, 2019, the Company’s board of directors and majority stockholder adopted the 2019 Stock Option Plan (the “2019 Plan”), to be effective on November 7, 2019. The Company has reserved for issuance an aggregate of 5,000,000 shares of common stock under the 2019 Plan. As of March 31, 2020, 4,884,273 shares were remaining under the 2015 Plan for the future issuance.
The purpose of ~~each plan is~~the 2011 Plan, 2013 Plan, 2015 Plan, and 2019 Plan (the “Plans” are to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under ~~each plan,~~the 2015 Plan, the Company is authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long-term incentive awards. The ~~Compensation Committee of the Company's~~Company’s board of directors ~~administers each plan.~~will administer the 2011 Plan until such time as such authority has been delegated to a committee of the board of directors. The material terms of each option ~~which may be~~ granted ~~under each plan will~~pursuant to the 2011 Plan by the Company shall contain the following terms: (i) that the purchase price of each share purchasable under an incentive option shall be determined by the Committee at the time of grant, (ii) the term of each option shall be fixed by the Committee, but no option shall be exercisable more than 10 years after the date such option is granted and (iii) in the absence of any option vesting periods designated by the Committee at the time of grant, options shall vest and become exercisable in terms and conditions, consistent with the ~~plan,~~Plan, as may be determined by the Committee and specified in the ~~grant instrument.~~

22

~~BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~
~~(Unaudited)~~Grant Instrument.

~~NOTE 11 – SHAREHOLDERS’ EQUITY (continued).~~

~~Stock Option Plans~~

On April 20, 2011, the Company's board of directors and majority stockholder adopted the 2011 Stock Option Plan (the “2011 Plan”) under which the Company reserved for issuance an aggregate of 900,000 shares of common stock for grants to be made under the 2011 Plan. The maximum aggregate number of shares of common stock that shall be subject to grants made under the 2011 Plan to any individual during any calendar year is 180,000 shares. As of September 30, 2017, 27,000 shares were remaining under the 2011 Plan for future issuance.

On April 1, 2013, the Company's board of directors and majority stockholder adopted the 2013 Stock Option Plan (the “2013 Plan”) under which the Company reserved for issuance an aggregate of 900,000 shares of common stock for grants to be made under the 2013 Plan. The maximum aggregate number of shares of common stock that shall be subject to grants made under the 2013 Plan to any individual during any calendar year is 180,000 shares. As of September 30, 2017, 134,000 shares were remaining under the 2013 Plan for future issuance.

On May 22, 2015, the Company's board of directors adopted the 2015 Stock Option Plan (the “2015 Plan”) under which the Company reserved for issuance an aggregate of 1,000,000 shares of common stock for grants to be under the 2015 Plan. The majority shareholders of the Company ratified the adoption of the 2015 Plan on June 17, 2015. The maximum aggregate number of shares of common stock that shall be subject to grants made under the 2015 Plan to any individual during any calendar year is 100,000 shares. As of September 30, 2017, 439,000 shares were remaining under the 2015 Plan for future issuance.

On March 22, 2016 the Company granted 100,000 ten-year stock options, which have an exercise price of $0.695 per share to an executive officer and director. The aggregate fair value of these options was computed at $39,901 or $0.3990 per option.

On March 22, 2016 the Company granted 46,000 ten-year stock options, which have an exercise price of $0.695 per share to a director. The aggregate fair value of these options was computed at $18,354 or $0.3990 per option.

On September 1, 2017 the Company granted 10,000 ten-year stock options, which have an exercise price of $0.50 per share. The aggregate fair value of these options was computed at $1,840 or $0.184 per option.

The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of our stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates.

The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors, which is subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes share-based compensation expense on a ~~straight-line~~straight- line basis over the requisite service period for each award. ~~The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted during the nine months ended September 30, 2017 and 2016:~~

Nine Months Ended
September 30,

Assumptions:

2017

2016

Expected term (years)

6.25

6.25

Expected volatility

52
%

63
%
Risk-free interest rate

1.99
%

0.38
%
Dividend yield

0
%

0
%
Expected forfeiture rate

0
%

0
%

23

~~BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES~~
~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS~~
~~SEPTEMBER 30, 2017~~
~~(Unaudited)~~

~~NOTE 11 – SHAREHOLDERS’ EQUITY (continued).~~

The expected life is computed using the simplified method, which is the average of the vesting term and the contractual term. The expected volatility is based on an average of similar public company’s historical ~~volatility.~~volatility, as the Company’s common stock is quoted in the over the counter market on the OTCQB Tier of the OTC Markets, Inc. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected term of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.

The Company recorded ~~$21,983~~$36,595 and ~~$30,069~~$3,213 of stock option expense for the three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively and $95,821 and $107,193~~2019, respectively. The stock option expense for the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 and ~~2016, respectively. The non-cash stock option expense~~2019, respectively has been recognized as a component of general and administrative expenses in the accompanying ~~unaudited condensed~~ consolidated financial statements.

As of ~~September 30, 2017~~March 31, 2020, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of ~~$104,051~~$320,161 to be recognized through ~~August 2020.~~March 2024.

A summary of the ~~Company's~~Company’s stock option activity during the ~~nine~~three months ended ~~September 30, 2017~~March 31, 2020 is presented below:

Number of
Options

Weighted Average
Exercise
Price

Weighted Average
Remaining
Contractual
Term

Aggregate
Intrinsic
Value

Balance Outstanding, December 31, 2016

2,281,000

$
0.47

6.8

$
795,185

Granted

10,000

—

—

—

Exercised

—

—

—

—

Forfeited

(104,000
)

—

—

—

Expired

—

—

—

—

Balance Outstanding, September 30, 2017

2,187,000

$
0.45

5.9

$
220,174

Exercisable at September 30, 2017

1,640,000

$
0.31

3.8

26

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2020
(Unaudited)
NOTE 13 – COMMON STOCK (continued).

Number of
Options

Weighted
Average
Exercise
Price

Weighted
Average
Remaining
Contractual
Term

Aggregate
Intrinsic
Value

Balance Outstanding, December 31, 2019 2,017,727 $ 0.58 4.5 $ 2,764,286
Granted — — — —
Exercised — — — —
Forfeited — — — —
Expired — — — —
Balance Outstanding, March 31, 2020 2,017,727 $ 0.583 4.5 $ 2,259,854
Exercisable at March 31, 2020 1,755,500 $ 0.43 4.2 $ 2,229,485
Summarized information with respect to options outstanding under the ~~three~~two option plans at ~~September 30, 2017~~March 31, 2020 is as follows:

Options Outstanding

Options Exercisable
Range or
Exercise Price

Number
Outstanding

Remaining
Average
Contractual Life (In Years)

Weighted
Average
Exercise
Price

Number
Exercisable

Weighted
Average
Exercise
Price

Remaining Average Conversion Life (In Years)
0.14 - 0.24

720,000

1.1

$
0.14

720,000

$
0.14

1.1
0.25 - 0.49

351,000

1.7

$
0.28

351,000

$
0.28

1.6
0.50 - 0.85

1,116,000

3.1

$
0.69

569,000

$
0.60

1.2

2,187,000

5.9

$
0.45

1,640,000

$
0.31

3.8
Options Outstanding
Range or
Exercise Price

Number
Outstanding

Weighted
Average
Exercise
Price

Remaining
Average
Contractual Life
(In Years)

Number
Exercisable

Weighted
Average
Exercise
Price

$ 0.14 - $0.24 540,000 $ 0.14 1.0 540,000 $ 0.14
0.25 - 0.49 351,000 0.28 2.9 351,000 0.28
0.50 - 0.85 906,000 0.68 5.2 864,500 0.68
1.64 - 1.75 220,727 1.71 9.7 — —
2,017,727 $ 0.58 4.2 1,755,500 $ 0.43

NOTE 14 – RELATED PARTIES.
24

On November 7, 2018 the Company entered into a Note Exchange Agreement with Mr. W. Kip Speyer, our CEO and member of our Board of Directors, pursuant to which we exchanged our convertible notes for three new series of preferred stock. See further discussion in Note 8 Notes Payable for more details regarding the Note Exchange Agreement and Exchange Transaction.
During November 2018, Mr. W. Kip Speyer, the Company’s Chairman and Chief Executive Officer, entered into two convertible note agreements with the company totaling $80,000. These notes have a conversion price of $0.40 per share and resulted in the recognition of a beneficial conversion feature recorded as a debt discount. These notes payable total $29,179 and $25,689 at March 31, 2020 and December 31, 2019. The notes are reported net of their unamortized debt discount of $50,821 and $54,311 as of March 31, 2020 and December 31, 2019, respectively.
During 2018, Mr. W. Kip Speyer, the Company’s Chairman and Chief Executive Officer, purchased an aggregate of 1,125,500 shares of the Company’s Series E Convertible Preferred Stock at a purchase price of $0.40 per share. The designations, rights and preferences of Series E Stock are described in Note 12.
During the three months ended March 31, 2020 and 2019 we paid cash dividends on the outstanding shares of the Company’s Series E and F Preferred Stock of $23,747 and $74,170, respectively held by affiliates of the Company.
NOTE 15 – INCOME TAXES.
At March 31, 2020 and December 31, 2019, the Company had no unrecognized tax benefits, no accrued interest and penalties, and no significant uncertain tax positions. No interest and penalties were recognized during the three months ended March 31, 2020 and 2019.
At March 31, 2020 and December 31, 2019, the Company had unused net operating loss (“NOL”) carry-forwards of $5,360,570 and $4,181,797, respectively. The valuation allowance associated with the deferred tax asset increased $1,471,912 during the three months ended March 31, 2020. The Company’s remaining unused NOLs that were generated prior to the operations and acquisitions in 2019 are subject to limitations under Section 382 of the Internal Revenue Code and are limited in the amount that can be utilized in any one year.
The deferred tax liability balance was $516,941 and $581,440 as of March 31, 2020 and December 31, 2019, respectively. The change in the balance of $64,499 represents the after tax impact of the amortization of the international intangible assets and the benefit of the tax loss .
In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment.
27
BRIGHT MOUNTAIN MEDIA, INC., AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
~~SEPTEMBER 30, 2017~~March 31, 2020
(Unaudited)

~~NOTE 12 – CONCENTRATIONS.~~

The Company has historically purchases a substantial amount of its products from two vendors; Citizens Watch Company of America, Inc., and Bulova Corporation. The following table provides information on the percentage of purchases in during the three and nine months ended September 30, 2017 and 2016 from these vendors:

Three Months Ended
September 30,

Nine Months Ended
September 30,

2017

2016

2017

2016

Citizens

52
%

37
%

58
%

40
%
Bulova

17
%

18
%

18
%

18
%

Although we continue to add additional product vendors and we continue to expand our product line and vendor relationships, due to continued high concentration and reliance on these two vendors, the loss of one of these two vendors could adversely affect the Company's operations.

The Company generates revenues from two segments: product sales and advertising. The sharp increase in PayPal/eBay concentration is due to our acquisition of the Black Helmet Apparel business in December 2016. Due to high concentration and reliance on these portals, the loss of a working relationship with either of these two portals could adversely affect the Company's operations. In addition, a substantial amount of payments for our products sold are processed through PayPal and Amazon. A disruption in PayPal or Amazon payment processing could have an adverse effect on the Company's operations and cash flow. During the three months ended September 30, 2017 these two portals accounted for 52% and 47%, respectively, of our total product sales as compared to 7% and 92% in the three months ended September 30, 2016.   During the nine months September 30, 2017 these two portals accounted for 51% and 48%, respectively, of our total product sales as compared to 7% and 90% in the nine months ended September 30, 2016.

~~Credit Risk~~

The Company minimizes the concentration of credit risk associated with its cash by maintaining its cash with high quality federally insured financial institutions. However, cash balances in excess of the FDIC insured limit of $250,000 are at risk. At September 30, 2017 and December 31, 2016, respectively, the Company had no cash balances in excess of the FDIC insured limit.

~~Concentration of Funding~~

During the nine months ended September 30, 2017, the Company's funding was provided primarily through the issuance of $950,000 in convertible notes and the sale of Series E Stock to an officer and director of the Company. See Notes 8 and 10.

NOTE 1316 – SUBSEQUENT EVENTS.

~~Subsequent~~During the period from April 1, 2020 through June 29, 2020 Bright Mountain Media, Inc. sold 1,025,000 units of our securities to ~~September 30, 2017, Mr. W. Kip Speyer,~~19 accredited investors in a private placement exempt from registration under the ~~Company’s Chairman~~Securities Act in reliance on exemptions provided by Section 4(a)(2) and ~~Chief Executive Officer, purchased~~Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $512,500. Each unit was sold at $0.50 and consisted of one share of common stock and one five- year warrant to purchase one share of common stock at an ~~aggregate~~exercise price of ~~625,000 shares~~$0.75 per share. Spartan Capital Securities, LLC is serving as the Placement Agent for the Company in this offering. As compensation for services the Company has paid Spartan $51,250 commissions at 10% of ~~Series E Stock~~the proceeds, $25,625 non-accountable expense at 5% of the proceeds. A total of 1,025,000 five-year warrants were issued to the investors to purchase one share of our common stock, exercisable at a $0.65 share price. The Placement Agent was issued a total of 102,500 five-year warrants to purchase ~~price~~one share of ~~$0.40 per share. The designations, rights and preferences of Series E Stock as described in Note 11. The Company used the proceeds from these sales for working capital.~~our common stock, exercisable at a $1.00 share price.

On ~~November 14, 2017,~~April 24, 2020, Bright Mountain Media, Inc. (the “Company”) received loan proceeds of $464,800 (the “PPP Loan”) under the ~~Company entered into an Amendment~~Paycheck Protection Program (the “PPP”). The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration. The PPP Loan is evinced by a promissory note (the “Promissory Note”) with Regions Bank and has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The PPP Loan may be prepaid at any time prior to ~~the Amended and Restated Membership Interest Purchase Agreement dated September 19, 2017 by and among our company, Daily Engage Media and the members~~maturity with no prepayment penalties. The Promissory Note contains customary events of ~~Daily Engage Media which modified the terms of the escrow arrangement for the earnout shares.~~default provisions. Under the terms of the ~~amendment, instructions~~CARES Act, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. No assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.
On May 14, 2020, the Company granted 75,000 stock options to ~~our transfer agent have been deposited~~an employee in ~~escrow in lieu of certificates representing the earnout shares. In~~ connection ~~therewith, the parties~~with his employment.
On June 1, 2020, Bright Mountain Media, Inc. (“Bright Mountain”) entered into ~~an Amended~~a membership interest purchase agreement (the “Purchase Agreement”) with Centre Lane Partners Master Credit Fund II, L.P. (“Centre Lane”) to purchase 100% of the membership interests of CL Media Holdings, LLC (“Wild Sky Media”). The purchase was completed on a debt-free, cash-free basis, free and ~~Restated Escrow Agreement.~~clear of any liens and encumbrances. Bright Mountain issued 2,500,000 shares of its restricted common stock to Centre Lane and Centre Lane issued a first lien senior secured credit facility which consisted of $15.0 million of initial indebtedness, repayment of Wild Sky Media’s Fast Pay existing credit facility of approximately $900,000 and $500,000 expenses totaling $16,416,905. Per the credit facility with the seller, our loan payments begin 18 months from the time of the acquisition. There is no prepayment penalty associated with this credit facility. Certain future capital raises do require partial or full prepayments of the credit facility.

28

ITEM 2.
~~MANAGEMENT'S~~ MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion of our unaudited condensed consolidated financial condition and results of operations for the three ~~and nine~~ months ended ~~September 30, 2017~~March 31, 2020 and ~~2016~~2019 should be read in conjunction with the unaudited condensed consolidated financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth later in this report under Part II, Item 1A. in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, ~~2016~~2019 as filed with the Securities and Exchange ~~Commission.~~Commission on May 14, 2019 (the “2019 10-K”) and our other filings with the SEC. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements. All information in this section for the three months ended March 31, 2020 and 2019 is unaudited and derived from the unaudited condensed consolidated financial statements appearing elsewhere in this report; unless otherwise noted, all information for the year ended December 31, 2019 is derived from our audited consolidated financial statements appearing in the 2019 10-K.

Executive Overview of First Quarter 2020 Results

Our key user metrics and financial results for the first quarter of 2020, for the three months ended March 31, 2020, which include certain charges related to our financing with Spartan Capital, are more fully discussed and described herein and should be read in context with the disclosure on this page. The first quarter results are as follows:
User metrics:
● Quarterly ad impressions delivered were approximately 1.5 billion in the first quarter of 2020 and approximately 1 billion for the three months ended March 31, 2019;
First quarter 2020 financial results:
● Advertising revenue increased 109% in the three months ended March 31, 2020 from the same period of 2019;
● Gross profit increased 124% in the three months ended March 31, 2020 from the same period of 2019;
● Advertising revenue was negatively impacted by the emergence of COVID-19 during the quarter, while our operating expenses were not materially impacted;
● Selling, general and administrative expenses increased 334% in the three months ended March 31, 2020 from the same period of 2019;
●
Included within the expenses for the three months ended March 31, 2020 are $952,622 of non-cash amortization of the intangible assets, $442,500 of non-cash expenses associated with the equity raise, and $281,618 of acquisition related audit and consulting fees, and $36,595 of stock based compensation;
● Net cash used in operating activities was $(1,369,272) for the first three months of 2020 as compared to $(629,453) for the three months of 2019.
Overview
Bright Mountain Media, Inc. is aan end-to-end digital media ~~holding company for online assets targeting~~ and ~~servicing~~advertising services platform, efficiently connecting brands with targeted consumer demographics. Through the military and public safety markets. Last year, we connected over 315 million relevant advertisements with approximately 57 million visitors within our targeted demographics. Our websites are dedicated to providing “~~those that keep us safe~~” places to go online where they can do everything from stay current on news and events affecting them, look for jobs, share information, communicate with the public, and purchase products. We own and manage 24 websites which are customized to provide our niche users, including active, reserve and retired military, law enforcement, first responders and other public safety employees with information, news and entertainment across various platforms that has proven to beremoval of interest and engaging to them. Now coupled with our recently acquired wholly owned subsidiary Daily Engage Media, we have evolved to place our emphasis on not only providing quality content on our websites to drive traffic increases, but to increasemiddlemen in the advertising services process, Bright Mountain Media efficiently connects brands with targeted consumer demographics while maximizing revenue ~~we generate from companies and brands looking~~ to ~~reach our audiences. Daily Engage Media is an~~publishers. Bright Mountain Media’s assets include the Bright Mountain, LLC ad network, ~~that connects advertisers with approximately 200 digital publications worldwide. Our websites feature timely, proprietary~~MediaHouse (f/k/a NDN), Oceanside (f/k/a S&W Media), Wild Sky Media and ~~aggregated content covering current events and a variety~~24 owned and/or managed websites.
We generate revenue sales of additional subjects targeted to the specific demographics of the individual website. Our business strategy requires us to continue to provide this quality content to our niche markets as we integrate Daily Engage Media’s experience and expertise in connecting digital readers and advertisers to grow our business, operations and revenues. Presently, weadvertising services which generate revenue from two segments: product sales and advertising. Our focus at this time is to launch a full-scale ad services platform, the Bright Mountain Media Ad Network. We believe that this new platform will become our core business and will have a significant impactadvertisements (ad impressions) placed on our ~~future business~~owned and ~~operations.~~

~~A key component~~managed sites, as well as from advertisements we place on partner websites, for which we earn a share of ~~our growth is our transition to an ad network. Our ad network creates~~the revenue. We also generate advertising services revenue from ~~other publisher’s content in our market in~~facilitating the ~~form~~real-time buying and selling of ~~a revenue share based on ad impressions we deliver. For this reason, the managerial focus~~advertisements at scale between networks of buyers, often called DSPs (Demand Side Platforms) and sellers, often called SSPs (Supply Side Platforms).
29
When fully developed Bright Mountain’s full suite of advertising solutions will be in increasing our total impressions delivered to grow our total advertising revenue. From the fourth quarter in 2016 to the third quarter of 2017, we experienced an 171% increase in the number of total ad impressions delivered including impressions from Daily Engage Media from September 19, 2017 to September 30, 2017. Ad impression growth over the past four consecutive quarters is conveyed in the following graph:include:

The following graph provides information on the quarterly traffic to our proprietary and managed websites over the respective quarterly periods presented. As a result of our acquisition of Daily Engage Media during the third quarter of 2017, and our shifting focus to increasing the advertising revenue we generate from companies and brands looking to reach our audiences, we do not expect to provide the following information in future periods. The total traffic for the third quarter including Daily Engage Media for the period September19, 2017 through September 30, 2017 would be approximately 17,057,797.

~~The Bright Mountain Media Ad Network includes a real-time bidding Ad Exchange. This new platform is expected to have capabilities including the following:~~

●
·
~~server integration with several ad exchanges, making~~The ability for ~~extremely quick ad deployments;~~
advertisers to purchase advertising space on a variety of digital publications;
·
●
~~leading~~Leading targeting technology, allowing advertisers to pinpoint their marketing efforts to reach ~~the military and public safety~~geo-targeted, specific demographics across desktop, tablet, and mobile devices;
·
●
~~capable of handling~~The ability to handle any ad format, including video, display, and native ~~ads; and~~
advertisements;
·
●
adAd serving and self-service features for publishers and ~~advertisers.~~
advertisers; and
● Server-to-server integration with other advertiser and publisher platforms for extremely quick transactions and ad deployments.

This ~~Ad Exchange~~Bright Mountain’s platform will be a ~~trading desk~~marketplace for publishers and advertisers where they will be able to ~~login and~~ choose from various features to maximize their earning potential. Advertisers have the ability to directly target desired demographics on publishers sites through our platform. Publishers will be able to select a variety of ad units for their video, mobile, display and native advertisements, and ~~also~~ have the ability to create their own unique ad formats. ~~Advertisers will be able to choose where their ads will be seen using our filters or by connection directly~~
We have begun expansion with the ~~publisher~~recent acquisition of Wild Sky Media. Wild Sky Media offers massive global reach through ~~our platform.~~hyper-engaging content and multicultural audiences. This is achieved through their six websites focused on the female demographic. The websites include Mom.com, Cafemom.com, LittleThings.com, mamaslatinas.com, revelist.com, and babynamewizard.com.

Key initiatives
Our ~~niche market~~growth strategy is based upon:
● completing and launching the Bright Mountain Media advertising solutions marketplace;
● expanding our sales revenues through organic growth;
● continuing to pursue acquisition candidates that are strategic our business plan;
● evaluating expenses attributed to our non-strategic business lines; and
● continuing to automate our processes and reduce overhead where possible without impacting our customer experience
Results of operations
Revenues, Cost of Revenue, and Gross Profit Margins
For the Three Months Ended March 31,
2020 2019 Change % Change

Advertising revenues $ 2,270,186 $ 1,085,456 $ 1,184,730 109.1 %
Total cost of revenue $ 1,823,082 $ 885,696 $ 937,386 105.8 %
Gross Profit $ 447,104 $ 199,760 $ 247,344 123.8 %
Gross profit margin as a percentage of advertising revenues 19.7 % 18.4 %
Our advertising revenue for the ~~military and public safety sectors consists~~first quarter of ~~a targeted U.S. demographic~~2020 was 109.1% higher than the comparable period in 2019. Approximately $1,238,000 of ~~in excess of 40 million users including their spouses. Adding their parents and other family members increases~~ the U.S. targeted market to approximately 100 million users. We also believe there are another estimated 100-plus million military and public safety personnel and their families and veterans internationally.

~~As a homogeneous group, our user profile should be attractive to local, national and international companies whose advertising budgets are shifting from print media, radio and television~~2020 revenue is attributable to the ~~internet. We believe that~~acquisitions of Oceanside Media and approximately $373,000 of 2020 revenue is attributable to the ~~market for the military and public safety providers is fragmented, and that we have an opportunity~~acquisition of MediaHouse. Our legacy revenues decreased approximately $200,000 due to ~~become a leading player~~decreased advertising in the ~~market through~~industry due to the emergence of the COVID-19 virus mid-quarter.
We incur costs of sales associated with the advertising revenue. These costs include revenue share payments to media providers and website publishers.
Selling, General and Administrative Expenses
For the Three Months Ended March 31,
2020 2019 $ Change % Change

Selling, general and administrative expense $ 3,979,378 $ 915,954 $ 3,063,424 334.5 %
Selling, general and administrative as a percentage of total revenue 175.3 % 84.4 %
Selling, general and administrative costs increased approximately $1,786,000 due to the operating activities of Oceanside Media and MediaHouse, which are not reflected in the prior period expenses. The Company also has increased its expenses associated with amortization of intangibles of approximately $917,000 with the Oceanside Media acquisition and the acquisition of MediaHouse, which closed subsequent to the end of the third quarter of 2019.
Selling, general and administrative expenses are expected to increase as we execute our planned growth ~~consolidation~~strategy of launching and operating the Bright Mountain Media ~~Ad Network~~ad exchange network which will ~~be specifically targeted~~include additional administrative support. Subject to ~~our niche demographics.~~

~~Our ability to fully implement this strategy and launch~~ the Bright Mountain Media Ad Network is dependent upon our ability to raise additional sufficient capital. Historically we have been dependent upon loans and equity purchases from our Chief Executive Officer and, to a lesser extent in prior years from other accredited investors, to provide sufficient funds to meet our working capital needs. During the nine months ended September 30, 2017 we raised $1,460,000availability of ~~working capital from our Chief Executive Officer. While we estimate that we need a minimum of $1,800,000 in~~ additional working capital, the Company also intends to add administrative staff to its accounting department to improve controls over its accounting and reporting processes. As the Company expands the size of the accounting department, the use of consultants is expected to decrease.
30
Discontinued Operations
The Company discontinued its E-commerce business in the fourth quarter of 2018. The loss on discontinued operations was $0 and $115,464 for the three months ended March 31, 2020 and 2019, respectively. Revenues from discontinued operations significantly decreased during the period, from $98,000 in 2019 to $0 for the same period in 2020, Selling, general and administrative expenses related to these operations decreased from $131,000 in 2019 to $0 for the three months ended March 31, 2020.
Non-GAAP financial measure
We report adjusted EBITDA from continuing operations as a supplemental measure to U.S. generally accepted accounting principles (“GAAP”). This measure is one of the primary metrics by which we evaluate the performance of our business, on which our internal budgets are based. We believe that investors have access to, and we are obligated to provide, ~~sufficient funds~~the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to ~~pay~~results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results. We endeavor to compensate for the limitations of the non-GAAP measure presented by providing the comparable GAAP measure with equal or greater prominence and description of the reconciling items, including quantifying such items to derive the non-GAAP measure. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measure.
Our adjusted EBITDA from continuing operations is defined as operating income/loss excluding:
● non-cash stock option compensation expense;
● depreciation;
● equity raise expenses;
● professional fees;
● acquisition-related items consisting of amortization expense and impairment expense;
● interest; and
● amortization on debt discount.
We believe this measure is useful for analysts and investors as this measure allows a more meaningful year-to-year comparison of our ~~operating expenses~~performance. Moreover, our management uses this measure internally to evaluate the performance of our business as a whole. The above items are excluded from adjusted EBITDA measure because these items are non-cash in nature, and ~~fund our development over the next 12 months,~~ we believe that ifby excluding these items, adjusted EBITDA corresponds more closely to the cash operating income/loss generated from our business. Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statement of operations of certain expenses
Non-GAAP financial measure (continued)
The following is an unaudited reconciliation of net (loss) to adjusted net (loss) and Adjusted EBITDA for the periods presented:

For the Three Months Ended
March 31,

2020 2019

Net loss from continuing operations $ (3,523,519 ) $ (594,798 )
plus:
Stock compensation expense 36,595 3,213
Depreciation expense 5,253 2,352
Amortization expense 952,622 35,813
Gain on settlement of liability - (122,500 )
Amortization on debt discount 3,490 3,452
Interest expense – related party 2,023 3,658
$ (2,523,536 ) $ (668,810 )
31
Liquidity and capital resources
Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. The following table summarized total current assets, total current liabilities and working capital (deficit) at March 31, 2020 as compared to December 31, 2019.
March 31, 2020 December 31, 2019
Total current assets $ 5,000,986 $ 5,772,980
Total current liabilities 9,578,883 12,157,392
Working capital $ (4,577,897 ) $ (6,384,412 )
The increase in cash and increase in the working capital is a result of cash proceeds from the sale of equity securities in a private placement during the three months ended March 31, 2020. The decrease in our current assets is mostly reflective of decreases in accounts receivable and prepaid expenses.
As we continue our efforts to grow our business, we expect that our monthly cash operating overhead will continue to increase as we add personnel, although at a lesser rate, and we are not able at this time to quantify the amount of this expected increase. In 2020 we implemented policies and procedures around cash collections to prevent the aging of accounts receivables that was experienced in 2019. Cash collection efforts have been successful, and we feel that we have appropriately reserved for uncollectible amounts at March 31, 2020.
Our financial performance and operating results may be materially and adversely affected by the ~~anticipated revenues from Daily Engage Media will have a significant~~outbreak of the novel coronavirus (“COVID-19”). The recent global outbreak of COVID-19 has had an unfavorable impact on our ~~revenues~~business operations. The COVID-19 pandemic has caused disruptions in the services we provide. In addition, the COVID-19 pandemic has resulted in many states and countries imposing orders resulting in the closure of non-essential businesses – including many companies which advertise digitally. We cannot foresee whether the outbreak of COVID-19 will be effectively contained, nor can we predict the severity and duration of its impact on our business and our financial results. If the outbreak of COVID-19 is not effectively and timely controlled, our business operations, financial condition, and liquidity may be materially and adversely affected as a result of prolonged disruptions in consumer spending, a lack of demand for our services, and other factors that we cannot foresee. The extent to which COVID-19 will impact our business and our financial results will depend on future developments which are highly uncertain and cannot be predicted.
On April 24, 2020, the Company received loan proceeds of ~~operations~~$464,800 (the “PPP Loan”) under the Paycheck Protection Program (the “PPP”). The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration. The PPP Loan is evinced by a promissory note (the “Promissory Note”) with Regions Bank and has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Promissory Note contains customary events of default provisions. Under the terms of the CARES Act, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. No assurance is provided that the Company will obtain forgiveness of the PPP Loan in ~~future periods. While~~whole or in part.
Effective June 1, 2020, we ~~have engaged~~entered into a ~~placement agent~~membership interest purchase agreement to ~~assist us in raising capital privately~~acquire 100% of CL Media Holdings, LLC (“Wild Sky Media”). Wild Sky Media was acquired on a ~~best efforts~~debt-free, cash-free basis, ~~we do not have~~free and clear of any ~~firm commitments for this capital~~liens and ~~any delay in raising sufficient funds will delay the implementation~~encumbrances. We issued 2,500,000 shares of our ~~business strategy~~restricted common stock to the seller and ~~could adversely impact~~the seller issued a first lien senior secured credit facility which consisted of $15,000,000 of initial indebtedness, repayment of Wild Sky’s existing accounts receivable factoring facility of approximately $900,000 and $500,000 of expenses totaling $16,416,905. Per the credit facility with the seller, our ~~ability to significantly increase our revenues in future periods. In addition, if we are unable to raise~~loan payments begin 18 months from the ~~necessary additional working capital, absent a significant increase in our revenues, most particularly from Daily Engage Media,~~time of ~~which there~~the acquisition. There is no ~~assurance, we will be unable to continue to grow our company~~prepayment penalty associated with this credit facility. Certain future capital raises do require partial or full prepayments of the credit facility.
Going concern and ~~may be forced to reduce certain operating expenses~~management’s liquidity plans
The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in ~~an effort to conserve our working capital.~~

~~Going Concern~~

~~For~~ the ~~nine months ended September 30, 2017, we reported~~normal course of business. The Company sustained a net loss of ~~$(2,103,981),~~($3,459,020) and used net cash ~~used~~ in operating activities of ~~$1,372,589 and we~~$(1,369,272) for the three months ended March 31, 2020. The Company had an accumulated deficit of ~~$(10,928,787)~~($23,904,009) at ~~September 30, 2017.~~ March 31, 2020.
The report of our independent registered public accounting firm on our audited consolidated financial statements at December 31, ~~2016~~2019 and ~~2015~~2018 and for the years then ended contains an explanatory paragraph regarding substantial doubt of our ability to continue as a going concern based upon our net losses, cash used in operations and accumulated deficit. These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our unaudited condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to generate revenues or report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.

~~Results~~Our ability to fully implement the Bright Mountain Media Ad Exchange Network and maximize the value of ~~operations~~

Third Quarter
2017

Third Quarter
2016

% Change

Product sales

$
589,402

$
292,235

102

Revenues from advertising

131,223

113,502

16

Total revenues

$
720,625

$
405,737

78

Cost of sales – products

387,360

229,391

70

Cost of sales - products as a percentage of product sales

65.7
%

78.5
%

Cost of sales - advertising

4,396

826

Cost of sales – adversting as a percent of advertising revenue

3.4
%

0.72
%

Gross profit

$
328,869

$
175,520

78

Gross profit as a percentage of total revenues

45.6
%

43.3
%

Selling, general and administrative expenses

$
801,307

$
686,802

17

(Loss) from operations

$
(472,438
)

$
(511,282
)

-8

Nine Months Ended
September 30,
2017

Nine Months Ended
September 30,
2016

% Change

Product sales

$
1,713,688

$
976,056

76

Revenues from advertising

334,856

313,266

7

Total revenues

$
2,048,544

$
1,289,322

59

Cost of sales – products

1,116,465

732,536

54

Cost of sales - products as a percentage of product sales

65.2
%

75.1
%

Cost of sales - advertising

16,758

5,202

Cost of sales – adversting as a percent of advertising revenue

5.0
%

1.7
%

Gross profit

$
915,321

$
551,584

66

Gross profit as a percentage of total revenues

44.7
%

42.8
%

Selling, general and administrative expenses

2,750,275

2,202,855

25

(Loss) from operations

$
(1,834,954
)

$
(1,654,271
)

11

~~Revenue~~

~~Presently,~~our assets are dependent upon our ability to raise additional capital sufficient for our short-term and long-term growth plans. Historically we ~~generate revenue~~have been dependent upon loans and equity purchases from ~~two segments: product sales~~Mr. W. Kip Speyer, an executive officer and ~~advertising which includes advertising revenue~~member of our board of directors and subscriptions. Revenues related to product sales increased during both the three and nine months ended September 30, 2017 from the comparable period in 2016 which are attributable to our acquisition of the Black Helmet Apparel business in mid-December 2016. Sales by our Black Helmet Apparel business totaled $279,162 and $784,861 during the three and nine months ended September 30, 2017, respectively, compared to their pre-acquisition sales of ~~$226,164 and $692,214 for the comparable periods in 2016, as included in~~equity securities to accredited investors, to provide adequate funds to meet our ~~pro-forma disclosure in Note 3 – Acquisitions. While there can be no assurance, we expect a similar increase quarter-over-quarter during the fourth quarter of 2017 resulting from this acquisition.~~

Advertising revenues increased 16% for the third quarter of 2017 and 7% for the nine months ended September 30, 2017 over the comparable periods in 2016 which is attributable to Daily Engage Media for the period of September 19, 2017 through September 30, 2017 following our acquisition of it in mid-September 2017. Sales by Daily Engage business totaled $1,030,476 during the first nine months of 2017 compared to their pre-acquisition sales of $435,026 for the first nine months of 2016, as included in our pro-forma disclosure in Note 3 – Acquisitions. Daily Engage Media sales totaling $32,539 for the period from the date of acquisition through September 30,2017 are included in our results for the three and nine months ended September 30,2017. While there can be no assurance, we expect similar an increase quarter-over-quarter during the remainder of 2017 resulting from this acquisition.

~~Cost of Sales~~

Cost of sales as a percentage of product sales remained relatively steady during the third quarter 2017 and the nine months then ended compared to the comparable periods of the prior year. Historically, we did not recognize any cost of sales for our services segment, which has now been renamed Advertising following our acquistion of Daily Engage Media during mid-September 2017. We now incur costs of sales associated with this segment which includes revenue share payments to media providers and website publishers.

~~Selling, General and Administrative Expenses~~

Selling, general and administrative expenses increased by approximately 17% and approximately 25% for the three and nine months ended September 30, 2017 from the comparable periods in 2016. Our selling, general and administrative expenses were 111% and 134% of our total revenues for the three and nine months ended September 30, 2017, respectively, as compared to 169% and 171% for the comparable periods in 2016.

A significant portion of our selling, general and administrative expenses between periods was attributable to non-cash expenses recognized during the nine months ended September 30, 2017 and 2016 including amortization expense attributable to intangible assets acquired and amortization of debt discounts of $227,418 and $116,863, respectively. In addition, stock options compensation expense totaled $95,821 and $107,193 in the first nine months 2017 and 2016, respectively.working capital needs. During the 2017 periods we have increased our staffing, including in connection with our acquisition of Black Helmet Apparel, which has increased our employee costs. Advertising and marketing expenses increased sharply between the periods which is attributable to our acquisition of Black Helmet Apparel business during the fourth quarter 2016. For the three months ended ~~September 30, 2017 and 2016, advertising, marketing and promotion expense was $66,436 and $3,050, respectively. For~~March 31, 2020 we raised $2,558,750 through the nine months ended September 30, 2017 and 2016, advertising, marketing and promotion expense was $231,669 and $15,156, respectively. The business model for Black Helmet Apparel relies heavily on on-line promotionsale of products offered. We anticipate these quarter-over-quarter increases to continue as the Company focuses on expanding the Black Helmet Apparel customer base and promoting anticipated newly introduced products.

~~Selling, general and administrative expenses are expected to continue to increase~~our securities in one private placement. While we estimate that we need a ~~controlled manor as we execute our planned growth strategy~~minimum of ~~increasing website visits both organically and through targeted acquisitions and providing the needed administrative support for the increased level of activities. Subject to the availability of~~$3 million in additional working capital ~~the Company also intends~~ to ~~add administrative staff to its accounting department to improve controls over its accounting and reporting processes.~~
~~Total other income (expense)~~

Total other income (expense) primarily reflects interest expense associated with our borrowings under a non-convertible and several convertible notes. Our Chief Executive Officer loaned the Company an additional $1,460,000 during the first nine months 2017 under a series of 6% to 12% convertible notes bringing the total notes payable to him at September 30, 2017 to $1,147,145 net of the related note discount. Interest under these notes totaled $95,478 and $220,610, inclusive of $49,597 and $116,863 in amortization of the related debt discount, for the three and nine months ended September 30, 2017. In addition, the Company recorded interest of $23,611 and $39,236 during the three and nine months ended September 30, 2017 on a $500,000 25% note payable issued in November 2016 which matures in November 2017. On September 30, 2017, the note was amended, extending the maturity to December 31, 2017 and reducing the interest rate at 10.0%.

~~Non-GAAP financial measure~~

We report adjusted net (loss) to measure our overall results because we believe it better reflects our net results by excluding the impact of non-cash equity based compensation. We use Adjusted EBITDA to measure our operations by excluding interest and certain additional non-cash expenses. These measures are one of the primary metrics by which we evaluate the performance of our business, on which our internal budgets are based. We believe the presentation of adjusted net (loss) and Adjusted EBITDA enhances our investors' overall understanding of the financial performance of our business.

We believe that investors have access to the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP, but should not be considered a substitute for or superior to GAAP results.

We believe these measures are useful for analysts and investors as the measures allows a more meaningful year-to-year comparison of our performance. The items below are excluded from the Adjusted EBITDA measure because these items are non-cash in nature, and we believe that by excluding these items, Adjusted EBITDA corresponds more closely to the cash operating income/loss generated from our business. Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statement of operations of certain expenses.

~~The following is an unaudited reconciliation of net (loss) to adjusted net (loss) and Adjusted EBITDA for the periods presented:~~

For the Three Months Ended
September 30,

For the Nine Months Ended
September 30,

(unaudited)

2017

2016

2017

2016

Net (loss)

$
(546,801
)

$
(808,401
)

$
(2,103,981
)

$
(1,989,265
)
plus:



Stock compensation expense

21,983

30,069

95,821

107,193

Stock issued for services

—

9,180

25,860

64,110

Adjusted net (loss):

(524,818
)

(769,152
)

$
(1,982,300
)

$
(1,817,962
)
Depreciation expense

6,777

3,346

18,925

10,025

Amortization expense

75,876

61,582

227,418

186,007

Amortization on debt discount

49,597

—

116,863

305,115

Interest expense

24,766

297,130

152,164

29,900

Adjusted EBITDA:

$
(367,802
)

$
(407,094
)

$
(1,466,930
)

$
(1,286,915
)

~~Liquidity and capital resources~~

Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. As of September 30, 2017 the Company had a balance of cash and cash equivalents of $123,292 and working capital of $148,963 as compared to cash and cash equivalents of $162,795 and working capital of $355,344 at December 31, 2016. Our current assets decreased 11% at September 30, 2017 from December 31, 2016 which reflects the decrease in cash, accounts receivable, prepaid expenses and inventories. Our current liabilities increased 26.7% at September 30, 2017 from December 31, 2016 which primarily reflects a decrease in accounts payable and premium finance loan payable, offset by increases in accrued interest, including to a related party, and notes payable. We do not have any external sources of liquidity and are dependent upon loans from our Chief Executive Officer as described elsewhere herein. In addition to the amounts owed Mr. Speyer, in November 2016 we borrowed $500,000 from an unrelated third party under a promissory note which matures in November 2017. On September 30, 2017, the note was amended, extending the maturity to December 31, 2017 and reducing the interest rate at 10.0%. Presently, we do not have sufficient funds to satisfy this unsecured obligation when it becomes due.

~~Our operations do not~~ provide ~~sufficient cash to pay our cash operating expenses. If we are unable to increase our revenues to a level which provides~~ sufficient funds to pay our operating expenses ~~without relying upon loans~~and fund our development over the next 12 months, we believe that if we are successful the anticipated revenues from our advertising segment will have a significant impact on our revenues and results of operations in future periods. This estimated additional working capital need is exclusive of acquisition related ~~party, as well as~~and debt burden expenditures. While we have engaged a placement agent to ~~pay~~assist us in raising capital, the placement agent is acting on a best efforts basis and there are no assurances we will be successful in raising additional capital during 2020 through the sale of our ~~obligations as they become due,~~securities. Any delay in raising sufficient funds will delay the implementation of our business strategy and could adversely impact our ability to ~~continue~~significantly increase our revenues in future periods. In addition, if we are unable to ~~leverage~~raise the necessary additional working capital, absent a significant increase in our ~~resources and implement~~revenues, most particularly from our ~~plans for continued growth are in jeopardy. During 2017 and 2016 our average monthly negative cash flow was approximately $150,000. As~~advertising segment, of which there is no assurance, we will be unable to continue ~~our efforts~~ to grow our ~~business we expect that~~company and may be forced to reduce certain operating expenses to conserve our ~~monthly cash operating overhead will continue to increase as we add personnel, although~~working capital.
Following the emergence of COVID-19, the Company applied for and received loan proceeds of $464,800 (the “PPP Loan”) under the Paycheck Protection Program (the “PPP”). The PPP was established under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) and is administered by the U.S. Small Business Administration. The PPP Loan is evinced by a promissory note (the “Promissory Note”) with Regions Bank and has a two-year term and bears interest at a ~~lesser~~ rate of 1.0% per annum. Monthly principal and weinterest payments are ~~not able at this time to quantify~~deferred for six months after the ~~amount~~date of ~~this expected increase.~~disbursement. Under the terms of the CARES Act, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. No assurance is provided that the Company will obtain forgiveness of the PPP Loan in whole or in part.

32
~~Cash flows~~

~~Net~~Summary of cash flows ~~used in operating activities totaled $1,372,589 and $1,394,127 for the nine month periods ending September 30, 2017 and 2016, respectively.~~
March 31,
2020 2019
Net cash (used in) operating activities $ (1,369,272 ) $ (629,453 )
Net cash (used in) provided by investing activities $ - $ (8,000 )
Net cash provided by financing activities $ 1,682,282 $ 327,464
During the ~~six~~three months ended ~~September 30, 2017,~~March 31, 2020, we used cash primarily to fund our net loss of ~~$2,103,981~~$3,459,020 for the ~~period as well as increases in accrued interest, including to a related party. Cash used during~~period.
During the ~~nine~~three months ended ~~September 30, 2016 was primarily attributable to operational losses during the period.~~

Net cash flows used in investing activities totaled $213,878 and $177,961 for the first nine months of 2017 and 2016, respectively. Cash used included the purchase of fixed assets in 2017 of $14,305 and cash used in the acquisition of Daily Engage Media of $199,573 and in 2016, $142,925 attributable to the purchase of two websites and $35,036 attributable to the purchase of fixed assets.

Net cash flows provided from financing activities totaled $1,546,964 and $1,258,242 during the nine month periods ending September 30, 2017 and 2016, respectively. During the first nine months of 2017,March 31, 2020 the Company ~~received $1,460,000 under~~raised $1,734,937 through the sale of equity securities in a ~~series~~private placement memorandum and $25,483 from payments on a note receivable. The Company paid dividends of ~~6%, 10%,~~$23,747 and ~~12% 5-year convertible~~made payments against notes ~~issued to our Chief Executive Officer. This figure was reduced by the repayments~~payable of $53,643 in insurance premium financing notes. During the first nine months of 2016, the Company sold $500,000 in debt and issued $300,000 in 12%, 5-year convertible notes issued to our Chief Executive Officer. This figure was reduced by the repayments of $41,758 in insurance premium financing notes.$54,391.

Critical accounting policies

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of revenue and expenses during the reported periods. The more critical accounting estimates include estimates related to revenue recognition and accounts receivable allowances. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in Note 1 to our unaudited condensed consolidated financial statements appearing elsewhere in this report.

Recent accounting pronouncements

The recent accounting standards that have been issued or proposed by the FASB or other standards-setting bodies as described in Note 1 appearing earlier in this report that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

All other newly issued accounting pronouncements, but not yet effective, have been deemed either immaterial or not applicable.

Off balance sheet arrangements

As of the date of this report, we dohave off balance sheet debt of $750,000 due to the previous shareholders of S&W. During 2019, the company acquired S&W for a combination of common stock and notes payable. Due to uncertainties associated with the Notes Payable resulting from the acquisition of S&W, see Note 4, the Company has not ~~have any~~included the value of the Notes Payable within the purchase price and/or related assets acquired in the acquisition. These off-balance sheet arrangements ~~that have or~~ are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term “off-balance sheet arrangement” generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable for a smaller reporting company.

ITEM 4.
CONTROLS AND PROCEDURES.
Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under Securities Exchange Act of 1934 (the “Exchange Act”). In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

33
Based on ~~their~~his evaluation as of the end of the period covered by this report, ~~our Chief Executive Officer and~~ our Chief Financial Officer, concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of continuing material weaknesses in our internal control over financial reporting as described in our Annual Report on Form 10-K for the year ended December 31, ~~2016.~~2019. A material weakness is a deficiency, or combination of deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected.

We have implemented changes and will continue to monitor ~~and evaluate the effectiveness of~~ our internal control over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. We do not, however, expect that the material weaknesses in our disclosure controls will be remediated until such time as we have added to our accounting and administrative staff allowing improved internal control over financial reporting.

Changes in Internal Control over Financial Reporting.~~There~~ We have ~~been no~~begun implementing changes in our internal control over financial reporting during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1.
LEGAL PROCEEDINGS.

~~None.~~None, except as previously disclosed.

ITEM 1A.
RISK FACTORS.

~~Not applicable for a smaller reporting company.~~We incorporate by reference the risk factors disclosed in Part I, Item 1A of our 2019 Form 10-K subject to the new or modified risk factors appearing below that should be read in conjunction with the risk factors disclosed in such Form 10-K, including those set forth below:
34

ITEM 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

~~Between September 2017 and November 13, 2017 Mr. W. Kip Speyer, an executive officer and director, purchased 1,125,500 shares~~During the period from January 1, 2020 through March 31, 2020 Bright Mountain Media, Inc. sold 5,117,500 units of our ~~Series E Stock at a purchase price of $0.40 per share for an aggregate purchase price of $450,000~~securities to 57 accredited investors in a ~~series of~~ private transactions. The designations, rights and preferences of our Series E Preferred are described earlier in this report under Note 3. We did not pay any commissions or finders fees and the proceeds were used by us for working capital. Mr. Speyer is an accredited investor and the purchases wereplacement exempt from registration under the Securities Act ~~of 1933, as amended~~ in reliance on ~~an exemption~~exemptions provided by Section 4(a)(2) and Rule 506(b) of ~~that act.~~
~~Between January 2017~~Regulation D resulting in gross proceeds to the Company of $2,558,750. Each unit was sold at $0.50 and ~~August 2017 Mr. W. Kip Speyer,~~consisted of one share of common stock and one five- year warrant to purchase one share of common stock at an ~~officer and director, lent us an aggregate~~exercise price of ~~$950,000 under~~$0.75 per share. Spartan Capital Securities, LLC is serving as the ~~terms of convertible promissory notes. The notes are unsecured, carry an interest rate ranging from 6% to 12%, mature five years from date of issuance and are convertible~~Placement Agent for the Company in this offering. As compensation for services the Company has paid Spartan a $25,000 engagement fee, $255,875 commissions at ~~any time at the option~~10% of the ~~holder into~~proceeds, $127,938 non-accountable expense at 5% of the proceeds, $250,000 for the sixty-month Amended M&A Advisory Agreement, and $165,000 for the Finder’s Agreement Amendment. A total of 5,117,500 five-year warrants were issued to the investors to purchase one share of our common stock, ~~art conversion prices ranging from $0.50~~exercisable at a $0.65 share price. The Placement Agent was issued a total of 511,750 five-year warrants to ~~$0.40 per share.~~

We do not pay any commissions or finders fees and the proceeds were used by us for working capital. The recipient is an accredited investor and the issuances were exempt from registration under the Securities Actpurchase one share of ~~1933, as amended (The “Securities Act”) in reliance on an exemption provided by Section 4(a)(2) of that act.~~our common stock, exercisable at a $1.00 share price.

ITEM 3.
DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.
MINE SAFETY DISCLOSURES.

~~Not applicable to our company’s operations.~~None.

ITEM 5.
OTHER INFORMATION.

On September 1, 2017 our board of directors designated a series of our blank check preferred stock, consisting of 2,500,000 shares, as 10% Series E Convertible Preferred Stock (the "Series E Stock"). The designations, rights and preferences of the Series E Stock, as amended, is as follows:None.

·
~~the shares have no voting rights, except as may be provided by Florida law;~~
·
~~the stock has a stated value of $0.40 per share and ranks senior to all other classes of our securities, except for our 10% Series A Convertible Preferred Stock;~~
·
~~in the event of a liquidation or winding up of our Company, the holders of the Series E Stock are entitled to a liquidation preference equal to a return of the capital invested;~~
·
the holders of Series E Stock are entitled to receive dividends out of funds legally available for the payment of dividends, at the rate of 10% per annum which are cumulative and payable in cash, payable monthly in arrears within 15 days after the end of each month beginning on the month following the issuance of the shares of Series E Stock. Dividends will accrue regardless of whether the Company has earnings, whether there are funds legally available therefor and/or whether declared. No interest shall be payable with respect to any dividend payment that may be in arrears;
35

·
the shares of Series E Stock are convertible into shares of our common stock on a one for one basis at the option of the holder, subject to automatic conversion by us upon either the five-year anniversary of the date of issuance or in the event of a change of control of our Company as defined in the designations. The conversion formula is subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events; and
·
~~the shares are redeemable at our option upon 20 days’ notice for an amount equal to the amount of capital invested.~~

As described in Part II, Item 2 of this report, we have issued and sold an aggregate of 1,062,500 shares of our Series E Stock to Mr. Kip Speyer, our Chief Executive Officer. The description of the designations, rights and preferences of the Series E Stock is qualified in its entirety by reference to the Articles of Amendment to the Amended and Restated Articles of Incorporation which is filed as Exhibit 3.10 to this report.

In November 2016, we borrowed $500,000 from a third party and issued an unsecured one year promissory note which bore interest at the rate of 25% per annum. On September 30,2017, the note was amended, extending the maturity to December 31,2017 and reducing the interest rate to 10%. In addition, the note holder reduced the accrued interest due under the note from approximately $106,000 to $50,000 at September 20,2017.

On November 14, 2017 we entered into an Amendment to the Amended and Restated Membership Interest Purchase Agreement dated September 19, 2017 by and among our company, Daily Engage Media and the members of Daily Engage Media which modified the terms of the escrow arrangement for the earnout shares. Under the terms of the amendment, instructions to our transfer agent have been deposited in escrow in lieu of certificates representing the earnout shares. In connection therewith, the parties entered into an Amended and Restated Escrow Agreement. The foregoing descriptions of the terms and conditions of the Amendment to the Amended and Restated Membership Interest Purchase Agreement and the Amended and Restated Escrow Agreement are qualified in their entirety by reference to the agreements which are filed as Exhibits 10.10 and 10.11, respectively, to this report.

ITEM 6. EXHIBITS.
~~EXHIBITS.~~
No. Exhibit Description Form Date Filed Number Herewith

2.1 Agreement and Plan of Merger dated June 10, 2019 by and among Bright Mountain Media, Inc., BMTM2 and Inform, Inc. f/k/a News Distribution Network 8-K 6/14/19 2.1

2.2 Share Exchange Agreement and Plan of Merger dated July 31, 2019 by and among Bright Mountain Media, Inc., Bright Mountain Israel Acquisition Ltd. (a to be formed entity), Slutzky & Winshman Ltd. and the shareholders of Slutzky & Winshman, Ltd. 8-K 8/1/19 2.1

3.1 Amended and Restated Articles of Incorporation Form 10 3/31/13 3.3

3.2 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 7/9/13 3.3

3.3 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 11/16/13 3.4

3.4 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 12/30/13 3.4

3.5 Articles of Amendment to the Amended and Restated Articles of Incorporation 10-K 3/31/14 3.5

3.6 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 7/28/14 3.6

3.7 Articles of Amendment to the Amended and Restated Articles of Incorporation 10-K/A 4/1/15 3.5

3.8 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 12/4/15 3.7

3.9 Amended and Restated Bylaws Form 10 3/31/13 3.2

3.10 Articles Amendment to the Amended and Restated Articles of Incorporation 8-K 11/13/18 3.10

3.11 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 8/5/19 3.1

4.1 Form of Series B-1 Warrant Filed

10.1 Amended and Restated M&A Advisory Agreement dated July 31, 2019 by and between Bright Mountain Media, Inc. and Spartan Capital Securities, LLC 8-K 8/7/19 10.1

10.2 Amendment dated July 31, 2019 to Finder’s Fee Agreement by and between Bright Mountain Media, Inc. and Spartan Capital Securities, LLC 8-K 8/7/19 10.2

10.3 Promissory Note dated August 15, 2019 due to Joey Winshman 8-K 8/16/19 10.1

10.4 Promissory Note dated August 15, 2019 to Nadav Slutzky 8-K 8/16/19 10.2

10.5 Promissory Note dated August 15, 2019 to Eli Desatnik 8-K 8/16/19 10.3

10.6 Escrow Agreement dated August 15, 2019 by and among Bright Mountain Media, Inc., the shareholders of Slutzky & Winshman Ltd. and Pearlman Law Group LLP 8-K 8/16/19 10.4

10.7 Converted RSU Escrow Agreement dated August 15, 2019 by and among Bright Mountain Media, Inc., Slutzky & Winshman Ltd. and Pearlman Law Group LLP 8-K 8/16/19 10.5

10.8 Form of Lock Up Leak Out Agreement 8-K 8/16/19 10.6

10.9 Affiliate Lock Up Leak Out Agreement 8-K 8/16/19 10.7

10.10 Employment Agreement dated August 15, 2019 by and between Slutzky & Winshman Ltd. and Joey Winshman 8-K 8/16/19 10.8

10.11 Consulting Agreement dated August 15, 2019 by and between Bright Mountain Media, Inc., Slutzky & Winshman Ltd. and Nadav Slutzky 8-K 8/16/19 10.9

31.1 Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer Filed

31.2 Rule 13a-14(a)/15d-14(a) certification of principal financial and accounting officer Filed

32.1 Section 1350 certification of Chief Executive Officer and principal financial and accounting officer Filed

101.INS XBRL Instance Document Filed

101.SCH XBRL Taxonomy Extension Schema Document Filed

101.CAL XBRL Taxonomy Extension Calculation Linkbase Document Filed

101.DEF XBRL Taxonomy Extension Definition Linkbase Document Filed

101.LAB XBRL Taxonomy Extension Label Linkbase Document Filed

101.PRE XBRL Taxonomy Extension Presentation Linkbase Document Filed

~~No.~~
~~Description~~
~~3.10~~
Articles of Amendment to the Amended and Restated Articles of Incorporation *
~~10.1~~
Amended and Restated Membership Interest Purchase Agreement dated September 19, 2017 by and among Bright Mountain Media, Inc., Daily Engage Media Group LLC and Harry G. Pagoulatos, George G. Rezitis and Angelos Triantafillou (incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K as filed on September 25, 2017)
~~10.2~~
~~Letter agreement dated September 19, 2017 with Vinay Belani (incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K as filed on September 25, 2017)~~
~~10.3~~
Escrow Agreement dated September 19, 2017 by and among Bright Mountain Media, Inc., Harry G. Pagoulatos, George G. Rezitis, Angelos Triantafillou, Vinay Belani and Pearlman Law Group LLP, as escrow agent (incorporated by reference to Exhibit 10.3 to the Current Report on Form 8-K as filed on September 25, 2017)
~~10.4~~
~~Employment Agreement by and between Bright Mountain Media, Inc. and Harry G. Pagoulatos (incorporated by reference to Exhibit 10.4 to the Current Report on Form 8-K as filed on September 25, 2017)~~
~~10.5~~
~~Employment Agreement by and between Bright Mountain Media, Inc. and George G. Rezitis (incorporated by reference to Exhibit 10.5 to the Current Report on Form 8-K as filed on September 25, 2017)~~
~~10.6~~
Promissory Note in the principal amount of $100,000 dated September 19, 2017 payable to Harry G. Pagoulatos (incorporated by reference to Exhibit 10.6 to the Current Report on Form 8-K as filed on September 25, 2017)
~~10.7~~
Promissory Note in the principal amount of $100,000 dated September 19, 2017 payable to George G. Rezitis (incorporated by reference to Exhibit 10.7 to the Current Report on Form 8-K as filed on September 25, 2017)
~~10.8~~
Promissory Note in the principal amount of $100,000 dated September 19, 2017 payable to Angelos Triantafillou (incorporated by reference to Exhibit 10.8 to the Current Report on Form 8-K as filed on September 25, 2017)
~~10.9~~
Promissory Note in the principal amount of $80,000 dated September 19, 2017 payable to Vinay Belani (incorporated by reference to Exhibit 10.9 to the Current Report on Form 8-K as filed on September 25, 2017)
~~10.10~~
Amendment to Amended and Restated Membership Interest Purchase Agreement dated November 14, 2017 by and among Bright Mountain Media, Inc., Daily Engage Media Group LLC, Harry G. Pagoulatos, George G. Rezitis and Angelos Triantafillou *
36

SIGNATURES
~~10.11~~

Amended and Restated Escrow Agreement dated November 14, 2017 by and among Bright Mountain Media, Inc., Harry G. Pagoulatos, George G. Rezitis, Angelos Triantafillou, Vinay Belani and Pearlman Law Group LLP, as escrow agent *
~~31.1~~
Rule 13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer *
~~31.2~~
Rule 13a-14(a)/ 15d-14(a) Certification of Chief Financial Officer *
~~32.1~~
Section 1350 Certification of Chief Executive Officer and Chief Financial Officer*
~~101.INS~~
XBRL Instance Document *
~~101.PRE~~
XBRL Taxonomy Extension Presentation Linkbase *
~~101.LAB~~
XBRL Taxonomy Extension Label Linkbase *
~~101.DEF~~
XBRL Taxonomy Extension Definition Linkbase *
~~101.SCH~~
XBRL Taxonomy Extension Schema *
~~101.CAL~~
XBRL Taxonomy Extension Calculation Linkbase *
~~———————~~
*
~~filed herewith~~

~~SIGNATURES~~

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

BRIGHT MOUNTAIN MEDIA, INC.
~~November 20, 2017~~
June 29, 2020
By:
/s/ W. Kip Speyer
W. Kip Speyer, Chief Executive Officer
~~November 20, 2017~~
By:
/s/ ~~Dennis W. Healey~~
Alan Bergman
~~Dennis W. Healey,~~Alan Bergman, Chief Financial Officer

37

36

			Page No.
		~~Page No.~~
	PART I - FINANCIAL INFORMATION

ITEM 1.	FINANCIAL STATEMENTS.	1 4

ITEM 2.	~~MANAGEMENT'S~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.	26 29

ITEM 3.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.	32 33

ITEM 4.	CONTROLS AND PROCEDURES.	32 33

	PART II - OTHER INFORMATION

ITEM 1.	LEGAL PROCEEDINGS.	33 34

ITEM 1A.	RISK FACTORS.	33 34

ITEM 2.	UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.	33 35

ITEM 3.	DEFAULTS UPON SENIOR SECURITIES.	33 35

ITEM 4.	MINE SAFETY DISCLOSURES.	33 35

ITEM 5.	OTHER INFORMATION.	33 35

ITEM 6.	EXHIBITS.	34 36


	September 30			December 31,
	2017			2016
	*(unaudited)*
ASSETS
Current assets
Cash	$	123,292		$	162,795
Accounts Receivable, net		223,396			157,013
Prepaid Expenses and Other Current Assets		71,727			132,950
Inventories		984,522			1,127,072
Total current assets		1,402,937			1,579,830
Fixed Assets, net		94,382			99,001
Intangible Assets, net		1,231,776			967,114
Goodwill		502,823			—
Tradenames		300,000			150,000
Other Assets		49,497			184,400
Total Assets	$	3,581,415		$	2,980,345

LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities
Accounts Payable and Accrued Expense	$	525,308		$	654,140
Accrued Interest		50,347			11,111
Accrued Interest to Related Party		16,550			5,592
Premium Finance Loan Payable		—			53,643
Deferred Rent		16,692			—
Other Current Liabilities		16,237			—
Notes Payable		926,766			500,000
Total Current Liabilities		1,551,900			1,224,486

Long Term Debt to Related Parties, net of debt discount of $887,855 and $389,095		1,147,145			185,905
Total Liabilities		2,699,045			1,410,391
Commitments and contingencies (See Note 9)
Shareholders' Equity
Preferred stock, par value $0.01, 20,000,000 shares authorized,
600,000 and 100,000 shares issued and outstanding
Series A, 2,000,000 shares designated, 100,000 and
100,000 shares issued and outstanding		1,000			1,000
Series B, 1,000,000 shares designated, 0 and
0 shares issued and outstanding		—			—
Series C, 2,000,000 shares designated, 0 and
0 shares issued and outstanding		—			—
Series D, 2,000,000 shares designated, 0 and
0 shares issued and outstanding		—			—
Series E, 2,500,000 shares designated		5,000			—
500,000 and 0 issued and outstanding
Common stock, par value $0.01, 324,000,000 shares authorized,
46,168,864 issued and outstanding and 44,901,531 issued
and outstanding, respectively		461,689			449,016
Additional paid-in capital		11,343,468			9,944,744
Accumulated Deficit		(10,928,787	)		(8,824,806	)
Total shareholders' equity		882,370			1,569,954
Total liabilities and shareholders' equity	$	3,581,415		$	2,980,345


									Additional						Total
	Preferred Stock				Common Stock				Paid-in			Accumulated			Shareholders'
	Shares		Amount		Shares		Amount		Capital			Deficit			Equity
Balance – December 31, 2016		100,000	$	1,000		44,901,531	$	449,016	$	9,944,744		$	(8,824,806	)	$	1,569,954

Common stock issued for services ($0.850/share)		—		—		3,600		36		3,024			—			3,060
Common stock issued for 10% dividend payment pursuant to Series A preferred stock Subscription Agreements		—		—		10,000		100		(100	)		—			—
Issuance of Series E preferred Stock ($0.40/share)		500,000		5,000		—		—		195,000			—			200,000
Stock option compensation expense		—		—		—		—		95,821			—			95,821
Common stock issued as compensation		—		—		28,500		285		22,515			—			22,800
Beneficial conversion feature		—		—		—		—		615,625			—			615,625
Common stock issued for cash ($0.40/share)		—		—		125,000		1,250		48,750			—			50,000
Common stock issued in acquisition						1,100,233		11,002		418,089			—			429,091
Net loss for the nine months ended September 30, 2017		—		—		—		—		—			(2,103,981	)		(2,103,981	)
Balance – September 30, 2017		600,000	$	6,000		46,168,864	$	461,689	$	11,343,468		$	(10,928,787	)	$	882,370


Customer and related relationships	$	39,578
Website		177,690
Total	$	217,268


Inventory	$	58,000
Intangibles – website		80,000
Intangibles – trade name		150,000
Intangibles – customer relationships		252,000
Intangibles – non-compete agreements		120,000
Total assets acquired	$	660,000

	August 15, 2019
Tangible assets acquired	$	3,234,754
Liabilities assumed		(3,402,999	)
Deferred tax liability		(744,960	)
Net liabilities assumed		(913,205	)

Tradename – Trademarks		1,207,400
IP/Technology		1,883,000
Customer relationships		738,000
Non-compete agreements		827,300
Goodwill		15,666,783
Total purchase price	$	19,409,278

	Amount

Shares issued to owners	$	19,185,524
Shares issued for vested options		127,757
Shares issued to employees		96,000
Preliminary purchase price		19,409,281
Restricted stock units held in escrow		185,719
Closing notes		750,000
Total consideration	$	20,345,000

	November 18, 2019
Tangible assets acquired	$	1,193,313
Liabilities assumed		(4,228,722	)
Deferred tax liability		(3,383,754	)
Net liabilities assumed		(6,419,163	)

Tradename – Trademarks		923,600
IP/Technology		4,930,000
Customer relationships		8,690,000
Non-compete agreements		837,100
Goodwill		36,991,147
Total purchase price	$	45,952,684

	Amount

Shares issued to owners	$	36,376,448
Warrants issued		9,576,236
Total consideration	$	45,952,684


	Three Months Ended			Nine Months Ended
	September 30,			September 30,
	2016			2016			March 31, 2019
Total revenue	$	925,691		$	2,416,562		$	3,012,119
Total expenses		1,989,494			5,064,116			(3,517,064	)
Preferred stock dividend		60,339			278,525			(74,171	)
Net loss attributable to common shareholders	$	(1,124,142	)	$	(2,926,079	)		(579,116	)
Basic and diluted net loss per share	$	(0.03	)	$	(0.07	)	$	(0.01	)


Tangible assets acquired	$	106,534
Liabilities assumed		(237,855	)
Exchange platform		50,000
Tradename		150,000
Customer relationships		250,000
Non-compete agreements		192,000
Goodwill		502,823
Total purchase price	$	1,013,502

	December 31, 2019
Revenues	$	102,999
Cost of revenues		55,844
Gross profit		47,155

Selling, general and administrative expenses		212,798

Loss from discontinued operations		(165,643	)

Other income		28,909
Loss from discontinued operations	$	(136,734	)

Basic and fully diluted net loss per share	$	0.00

Cash (used in) operations for discontinued operations:
Loss from discontinued operations	$	(136,734	)
Write-off of fixed assets		59,797
Inventory		262,318
Accounts receivable		(914	)
Other assets		11,123
Accounts payable		(155,811	)
Deferred rents		(16,417	)
Cash (used in) discontinued operations	$	(23,362	)
Net decrease in cash and cash equivalents from discontinued operations	$	(15,956	)

	March 31, 2020		December 31, 2019
Prepaid insurance	$	125,987	$	205,656
Prepaid VAT fees		30,474		199,596
Prepaid expenses – other		18,613		37,723
Current portion of prepaid service agreements		310,000		310,000
Prepaid expenses and other current assets	$	485,074	$	752,975


	September 30,			December 31,			Depreciable Life
	2017			2016			(Years)
Furniture and Fixtures	$	76,671		$	70,108		7
Computer Equipment		59,511			56,142		5
Leasehold Improvements		39,385			35,011		10
Total Fixed Assets		175,567			161,261
Less: Accumulated Depreciation		(81,185	)		(62,260	)
Total Fixed Assets, net	$	94,382		$	99,001

	Useful Lives	March 31, 2020			December 31,2019
Furniture and fixtures	3-5 years	$	39,696		$	39,696
Leasehold improvements	3 years		704			1,388
Computer equipment	3 years		76,966			79,188
Total property and equipment			117,366			120,272
Less: accumulated depreciation			(91,953	)		(89,606	)
Total property and equipment, net		$	25,413		$	30,666


	For the three months ended September 30, 2017								For the three months ended September 30, 2016
	Products			Advertising		Total			Products			Advertising			Total
Revenues	$	589,402		$	131,233	$	720,625		$	292,235		$	113,502		$	405,737
Intangible assets amortization	$	—		$	75,876	$	75,876		$	—		$	61,582		$	61,582
Depreciation	$	6,440		$	337	$	6,777		$	2,426		$	920		$	3,346
Income/(Loss) from operations	$	(541,619	)	$	69,181	$	(472,438	)	$	(300,803	)	$	(210,479	)	$	(511,282	)
Segment assets	$	1,429,824		$	2,151,591	$	3,581,415		$	1,352,158		$	856,317		$	2,208,475
Purchase of assets	$	—		$	199,573	$	199,573		$	29,415		$	11,688		$	41,103


	For the nine months ended September 30, 2017									For the nine months ended September 30, 2016
	Products			Advertising			Total			Products			Advertising			Total
Revenues	$	1,713,688		$	334,856		$	2,048,544		$	976,056		$	313,266		$	1,289,322
Intangible assets amortization	$	—		$	227,418		$	227,418		$	—		$	186,007		$	186,007
Depreciation	$	16,725		$	2,200		$	18,925		$	8,299		$	1,726		$	10,025
Loss from operations	$	(1,386,894	)	$	(448,060	)	$	(1,834,954	)	$	(988,648	)	$	(665,623	)	$	(1,654,271	)
Segment assets	$	1,429,824		$	2,151,591		$	3,581,415		$	1,352,158		$	856,317		$	2,208,475
Purchase of assets	$	14,305		$	199,573		$	213,878		$	35,036		$	142,925		$	177,961

	March 31, 2020		December 31, 2019
Non-interest bearing Promissory Note issued for the BMLLC acquisition on September 19, 2017 which matured on September 19, 2018. The original note was $380,000 of which $35,000 was reclassified in 2018 to the Service Agreement listed below.
Total Debt	$	165,163	$	165,163
Less Short Term Debt		165,163		165,163
Long Term Debt	$	—	$	—


Issuance Date	Maturity Date	Principal		Discount Recognized		Amortization Expense 2016		Carry Amount at December 31, 2016		Amortization Nine Months Ended September 30, 2017		Carry Amount at September 30, 2017

09/26/16	09/26/21	$	100,000	$	70,000	$	3,692	$	33,692	$	10,500	$	44,192
10/14/16	10/14/21		100,000		70,000		3,024		33,024		10,500		43,524
10/31/16	10/31/21		100,000		70,000		2,372		32,372		10,500		42,872
11/03/16	11/03/21		50,000		35,000		1,120		16,120		5,250		21,370
11/11/16	11/11/21		100,000		70,000		1,934		31,934		10,500		42,434
11/21/16	11/21/21		50,000		35,000		775		15,775		5,250		21,025
12/15/16	12/15/21		75,000		52,500		488		22,988		7,874		30,864
01/19/17	01/19/22		100,000		70,000		—		—		9,823		39,823
02/06/17	02/06/22		100,000		70,000		—		—		9,061		39,061
02/24/17	02/24/22		50,000		35,000		—		—		3,708		18,708
03/07/17	03/07/22		100,000		70,000		—		—		7,941		37,941
04/03/17	04/03/22		75,000		45,000		—		—		4,500		34,500
04/10/17	04/10/22		75,000		45,000		—		—		4,250		34,250
04/19/17	04/19/22		50,000		30,000		—		—		2,683		22,683
05/01/17	05/01/22		50,000		30,000		—		—		2,500		22,500
05/11/17	05/11/22		75,000		22,500		—		—		1,742		54,242
05/24/17	05/24/22		75,000		45,000		—		—		3,484		33,484
06/08/17	06/08/22		100,000		30,000		—		—		1,883		71,883
06/27/17	06/27/22		100,000		30,000		—		—		1,567		71,567
07/12/17	07/12/22		50,000		5,000		—		—		220		45,220

	March 31, 2020
Weighted-average remaining lease term		1.83 years
Weighted-average discount rate		5.50	%


	Nine Months Ended September 30,
Assumptions:	2017			2016
Expected term (years)	6.25				6.25
Expected volatility		52	%		63	%
Risk-free interest rate		1.99	%		0.38	%
Dividend yield		0	%		0	%
Expected forfeiture rate		0	%		0	%


	Number of Options			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance Outstanding, December 31, 2016		2,281,000		$	0.47		6.8	$	795,185
Granted		10,000			—		—		—
Exercised		—			—		—		—
Forfeited		(104,000	)		—		—		—
Expired		—			—		—		—
Balance Outstanding, September 30, 2017		2,187,000		$	0.45		5.9	$	220,174
Exercisable at September 30, 2017		1,640,000		$	0.31		3.8

	Number of Options		Weighted Average Exercise Price		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
Balance Outstanding, December 31, 2019		2,017,727	$	0.58		4.5	$	2,764,286
Granted		—		—		—		—
Exercised		—		—		—		—
Forfeited		—		—		—		—
Expired		—		—		—		—
Balance Outstanding, March 31, 2020		2,017,727	$	0.583		4.5	$	2,259,854
Exercisable at March 31, 2020		1,755,500	$	0.43		4.2	$	2,229,485


	Options Outstanding				Options Exercisable
Range or Exercise Price	Number Outstanding	Remaining Average Contractual Life (In Years)	Weighted Average Exercise Price		Number Exercisable	Weighted Average Exercise Price		Remaining Average Conversion Life (In Years)
0.14 - 0.24	720,000	1.1	$	0.14	720,000	$	0.14	1.1
0.25 - 0.49	351,000	1.7	$	0.28	351,000	$	0.28	1.6
0.50 - 0.85	1,116,000	3.1	$	0.69	569,000	$	0.60	1.2
	2,187,000	5.9	$	0.45	1,640,000	$	0.31	3.8


	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016

Citizens		52	%		37	%		58	%		40	%
Bulova		17	%		18	%		18	%		18	%

	●	Advertising revenue increased 109% in the three months ended March 31, 2020 from the same period of 2019;

	●	Gross profit increased 124% in the three months ended March 31, 2020 from the same period of 2019;

	●	Advertising revenue was negatively impacted by the emergence of COVID-19 during the quarter, while our operating expenses were not materially impacted;

	●	Selling, general and administrative expenses increased 334% in the three months ended March 31, 2020 from the same period of 2019;

	●	Included within the expenses for the three months ended March 31, 2020 are $952,622 of non-cash amortization of the intangible assets, $442,500 of non-cash expenses associated with the equity raise, and $281,618 of acquisition related audit and consulting fees, and $36,595 of stock based compensation;

	●	Net cash used in operating activities was $(1,369,272) for the first three months of 2020 as compared to $(629,453) for the three months of 2019.


●	·	~~server integration with several ad exchanges, making~~The ability for ~~extremely quick ad deployments;~~ advertisers to purchase advertising space on a variety of digital publications;

	· ●	~~leading~~Leading targeting technology, allowing advertisers to pinpoint their marketing efforts to reach ~~the military and public safety~~geo-targeted, specific demographics across desktop, tablet, and mobile devices;

	· ●	~~capable of handling~~The ability to handle any ad format, including video, display, and native ~~ads; and~~ advertisements;

	· ●	adAd serving and self-service features for publishers and ~~advertisers.~~ advertisers; and

	●	Server-to-server integration with other advertiser and publisher platforms for extremely quick transactions and ad deployments.

	●	completing and launching the Bright Mountain Media advertising solutions marketplace;

	●	expanding our sales revenues through organic growth;

	●	continuing to pursue acquisition candidates that are strategic our business plan;

	●	evaluating expenses attributed to our non-strategic business lines; and

	●	continuing to automate our processes and reduce overhead where possible without impacting our customer experience

	●	non-cash stock option compensation expense;
	●	depreciation;
	●	equity raise expenses;
	●	professional fees;
	●	acquisition-related items consisting of amortization expense and impairment expense;
	●	interest; and
	●	amortization on debt discount.

	For the Three Months Ended March 31,
	2020			2019

Net loss from continuing operations	$	(3,523,519	)	$	(594,798	)
plus:
Stock compensation expense		36,595			3,213
Depreciation expense		5,253			2,352
Amortization expense		952,622			35,813
Gain on settlement of liability		-			(122,500	)
Amortization on debt discount		3,490			3,452
Interest expense – related party		2,023			3,658
	$	(2,523,536	)	$	(668,810	)