☑
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
For the quarterly period ended March 31, 2018
|
☐
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
|
Florida
|
27-2977890
|
(State or other jurisdiction of incorporation or
organization)
|
(I.R.S. Employer Identification No.)
|
6400 Congress Avenue, Suite 2050, Boca Raton, Florida
|
33487
|
(Address of principal executive offices)
|
(Zip 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)
|
Large accelerated filer
|
☐
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☑
|
|
|
Emerging growth company
|
☑
|
|
|
Page No.
|
|
PART I - FINANCIAL INFORMATION
|
|
|
|
|
ITEM 1.
|
FINANCIAL STATEMENTS.
|
4
|
|
|
|
ITEM 2.
|
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
|
|
|
|
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK.
|
29
|
|
|
|
ITEM 4.
|
CONTROLS AND PROCEDURES.
|
29
|
|
|
|
|
PART II - OTHER INFORMATION
|
|
|
|
|
ITEM 1.
|
LEGAL PROCEEDINGS.
|
31
|
|
|
|
ITEM 1A.
|
RISK FACTORS.
|
31
|
|
|
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF
PROCEEDS.
|
31
|
|
|
|
ITEM 3.
|
DEFAULTS UPON SENIOR SECURITIES.
|
31
|
|
|
|
ITEM 4.
|
MINE SAFETY DISCLOSURES.
|
31
|
|
|
|
ITEM 5.
|
OTHER INFORMATION.
|
31
|
|
|
|
ITEM 6.
|
EXHIBITS.
|
33
|
|
March
31,
|
December
31,
|
|
2018
|
2017
|
|
(unaudited)
|
|
ASSETS
|
|
|
Current assets
|
|
|
Cash
and Cash Equivalents
|
$166,267
|
$140,022
|
Accounts
Receivable, net
|
878,879
|
879,770
|
Inventories,
net
|
511,925
|
611,468
|
Prepaid
Expenses and Other Current Assets
|
109,001
|
145,732
|
Total current
assets
|
1,666,072
|
1,776,992
|
Property and Equipment, net
|
84,186
|
89,500
|
Website
Acquisition Assets, net
|
332,795
|
393,417
|
Intangible
Assets, net
|
915,673
|
967,774
|
Goodwill
|
446,426
|
446,426
|
Other
Assets
|
46,588
|
44,608
|
Total Assets
|
$3,491,740
|
$3,718,717
|
|
|
|
LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
|
Current Liabilities
|
|
|
Accounts
Payable
|
$1,098,766
|
$1,172,827
|
Accrued
Expenses
|
85,185
|
90,000
|
Premium
Finance Loan Payable
|
40,909
|
63,133
|
Deferred
Rent - Short Term
|
3,779
|
2,468
|
Deferred
Revenues
|
8,236
|
9,735
|
Long Term Debt, Current Portion
|
769,527
|
767,071
|
Total Current
Liabilities
|
2,006,402
|
2,105,234
|
|
|
|
Long
term Deferred Rent
|
15,184
|
16,418
|
Long
Term Debt to Related Parties, net
|
1,249,100
|
1,198,893
|
Long
Term Debt, net
of current portion
|
-
|
54,950
|
Total Liabilities
|
3,270,686
|
3,375,495
|
Commitments and contingencies
|
|
|
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, 1,875,000 and
|
|
|
1,375,000
issued and outstanding
|
18,750
|
13,750
|
Common
Stock, par value $0.01, 324,000,000 shares authorized,
|
|
|
47,941,364
and 44,901,531 issued and outstanding
|
479,414
|
461,689
|
Additional
Paid-in Capital
|
12,585,594
|
11,685,685
|
Accumulated
Deficit
|
(12,863,704)
|
(11,818,902)
|
Total
Shareholders' Equity
|
221,054
|
343,222
|
Total Liabilities and Shareholders' Equity
|
$3,491,740
|
$3,718,717
|
|
For the Three Months Ended
|
|
|
March 31,
|
|
|
2018
|
2017
|
Revenues
|
|
|
Product
|
$375,286
|
$551,355
|
Advertising
|
683,058
|
109,743
|
Total
revenues
|
1,058,344
|
661,098
|
|
|
|
Cost
of revenue
|
|
|
Products
|
291,565
|
372,546
|
Advertising
|
510,704
|
3,510
|
Total
Cost of revenue
|
802,269
|
376,056
|
Gross
profit
|
256,075
|
285,042
|
|
|
|
Selling,
general and administrative expenses
|
1,185,954
|
884,203
|
|
|
|
Loss
from operations
|
(929,879)
|
(599,161)
|
|
|
|
Other
income (expense)
|
|
|
Interest
income
|
288
|
82
|
Interest
expense
|
(15,353)
|
(35,160)
|
Interest
expense - related party
|
(99,858)
|
(49,008)
|
Total
other income (expense)
|
(114,923)
|
(84,086)
|
|
|
|
|
|
|
Net
Loss
|
(1,044,802)
|
(683,247)
|
|
|
|
Preferred
stock dividends
|
|
|
Series
A and Series E preferred stock
|
14,763
|
1,973
|
|
|
|
Net
loss attributable to common shareholders
|
$(1,059,565)
|
$(685,220)
|
|
|
|
|
|
|
Basic
and diluted net loss per share
|
$(0.02)
|
$(0.02)
|
|
|
|
Weighted
average shares O/S - basic and diluted
|
45,807,289
|
44,913,531
|
|
|
|
|
|
Additional
|
|
Total
|
|
Preferred Stock
|
Common Stock
|
Paid-in
|
Accumulated
|
Shareholders'
|
||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Deficit
|
Equity
|
Balance -
December 31, 2017
|
1,475,000
|
$14,750
|
46,168,864
|
$461,689
|
$11,685,685
|
$(11,818,902)
|
$343,222
|
|
|
|
|
|
|
|
|
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
|
Series E 10%
preferred stock dividend
|
|
|
|
|
(14,763)
|
|
(14,763)
|
Stock option
vesting expense
|
|
|
|
|
7,344
|
|
7,344
|
Warrants
issued for services
|
|
|
|
|
95,552
|
|
95,552
|
Units issued
for cash ($0.40/share)
|
|
|
1,762,500
|
17,625
|
616,876
|
|
634,501
|
Net loss for
the three months ended March 31, 2018
|
|
|
|
|
|
(1,044,802)
|
(1,044,802)
|
Balance -
March 31, 2018
|
1,975,000
|
$19,750
|
47,941,364
|
$479,414
|
$12,585,594
|
$(12,863,704)
|
$221,054
|
|
For
the Three months ended
|
|
|
March
31, 2018
|
|
|
2018
|
2017
|
Cash flows from operating activities:
|
|
|
Net
loss
|
$(1,044,802)
|
$(683,247)
|
Adjustments
to reconcile net loss to net cash and cash equivalents used in
operations:
|
|
|
Depreciation
|
6,339
|
5,489
|
Amortization
of debt discount
|
47,712
|
28,887
|
Amortization
|
112,723
|
75,806
|
Stock
option compensation expense
|
7,344
|
38,259
|
Common
stock and warrants issued for services
|
95,552
|
3,060
|
Provision
for bad debts
|
(26,281)
|
—
|
Changes in operating assets and liabilities:
|
|
|
Accounts
receivable
|
27,172
|
88,667
|
Inventories
|
99,543
|
(82,021)
|
Prepaid
expenses and other current assets
|
36,731
|
63,077
|
Other
assets
|
(1,980)
|
(36,332)
|
Accounts
payable and accrued expense
|
(78,876)
|
42,105
|
Deferred
rents
|
77
|
11,192
|
Deferred
revenues
|
(1,499)
|
—
|
Net
cash used in operating activities
|
(720,245)
|
(445,058)
|
|
|
|
Cash flows from investing activities:
|
|
|
Purchase
of property and equipment
|
(1,023)
|
(8,035)
|
Net
cash used in investing activities
|
(1,023)
|
(8,035)
|
|
|
|
Cash flows from financing activities:
|
|
|
Proceeds
from issuance of common units, net
|
634,501
|
—
|
Proceeds
from issuance of preferred stock
|
200,000
|
—
|
Repayments
on insurance premium notes payable
|
(22,224)
|
(25,242)
|
Dividend
payments
|
(14,763)
|
—
|
Principal
payment on long-term debt - Non-Related party
|
(50,000)
|
—
|
Long-term
debt - Related parties
|
—
|
350,000
|
Net
cash provided by financing activities
|
747,513
|
324,758
|
|
|
|
Net
increase (decrease) in cash
|
26,245
|
(128,335)
|
Cash
and cash equivalents at beginning of period
|
140,022
|
162,795
|
Cash
and cash equivalents at end of period
|
$166,267
|
$34,460
|
|
|
|
Supplemental disclosure of cash flow information
|
|
|
Cash
paid for:
|
|
|
Interest
|
$51,647
|
$20,216
|
Income
taxes
|
$—
|
$—
|
|
|
|
Non-cash investing and financing activities
|
|
|
Premium
finance loan payable recorded as prepaid
|
$66,131
|
$28,401
|
Debt
discount on convertible notes payable
|
$—
|
$245,000
|
Tangible
assets acquired
|
$361,770
|
Liabilities
assumed
|
(562,006)
|
Net
liabilities assumed
|
$(200,236)
|
|
|
Exchange
platform
|
$50,000
|
Tradename
|
150,000
|
Customer
relationships
|
250,000
|
Non-compete
agreements
|
192,000
|
Goodwill
|
446,426
|
Total
purchase price
|
$1,088,426
|
|
Three Months Ended
|
|
March 31, 2017
|
Total
revenue
|
$1,224,716
|
Total
expenses
|
(1,871,679)
|
Preferred
stock dividend
|
(1,973)
|
Net
loss attributable to common shareholders
|
$(648,936)
|
Basic
and diluted net loss per share
|
$(0.01)
|
|
March 31,
2018
|
December 31,
2017
|
Product
inventory: clocks and watches
|
$351,361
|
$453,852
|
Product
inventory: other inventory
|
183,012
|
180,064
|
Total
inventory balance
|
534,373
|
633,916
|
Less:
Inventory allowance for slow moving
|
(22,448)
|
(22,448)
|
Total
inventory balance, net
|
$511,925
|
$611,468
|
|
March
31,
2018
|
December
31,
2017
|
Prepaid
rent
|
$39,877
|
$50,417
|
Prepaid
insurance
|
66,131
|
92,322
|
Prepaid
inventory
|
2,993
|
2,993
|
Prepaid
expenses and other current assets
|
$109,001
|
$145,732
|
|
Useful Lives
|
March 31, 2018
|
December 31, 2017
|
Furniture
and fixtures
|
3-5
years
|
$79,993
|
$78,994
|
Computer
equipment
|
3
years
|
59,510
|
59,511
|
Leasehold
improvements
|
5
years
|
39,385
|
39,384
|
Total
fixed assets
|
|
178,888
|
177,889
|
Less:
accumulated depreciation
|
|
(94,702)
|
(88,389)
|
Total
fixed assets, net
|
|
$84,186
|
$89,500
|
|
March 31,
2018
|
December 31,
2017
|
Website
Acquisition Assets
|
$1,417,189
|
$1,417,189
|
Less:
accumulated amortization
|
(873,197)
|
(812,575)
|
Less:
accumulated impairment loss
|
(211,197)
|
(211,197)
|
Website
Acquisition Assets, net
|
$332,795
|
$393,417
|
|
Useful Lives
|
March 31, 2018
|
December 31, 2017
|
Tradename
|
5
years
|
$300,000
|
$300,000
|
Customer
relationships
|
5
years
|
502,000
|
502,000
|
Non-compete
agreements
|
5-8
years
|
312,000
|
312,000
|
Total
Intangible Assets
|
|
$1,114,000
|
$1,114,000
|
Less:
accumulated amortization
|
|
(148,100)
|
(95,999)
|
Less:
accumulated impairment loss
|
|
(50,227)
|
(50,227)
|
Intangible
assets, net
|
|
$915,673
|
$967,774
|
|
As of and for the three months ended
|
As of and for the three months ended
|
||||
|
March 31, 2018
|
March 31, 2017
|
||||
|
Products
|
Services
|
Total
|
Products
|
Services
|
Total
|
Revenues
|
$375,286
|
$683,058
|
$1,058,344
|
$551,355
|
$109,743
|
$661,098
|
Website
amortization
|
26,615
|
86,108
|
112,723
|
—
|
75,806
|
75,806
|
Depreciation
|
2,248
|
4,091
|
6,339
|
4,578
|
911
|
5,489
|
Loss
from operations
|
(336,815)
|
(593,064)
|
(929,879)
|
(461,912)
|
(137,249)
|
(599,161)
|
Segment
assets
|
1,128,652
|
2,363,088
|
3,491,740
|
1,438,646
|
1,306,714
|
2,745,360
|
Purchase
of assets
|
$—
|
$1,023
|
$1,023
|
$8,035
|
$—
|
$8,035
|
|
Number of
Options
|
Weighted Average
Exercise
Price
|
Weighted Average
Remaining
Contractual
Term
|
Aggregate
Intrinsic
Value
|
Balance
Outstanding, December 31, 2017
|
2,027,000
|
$0.37
|
6.8
|
$73,770
|
Granted
|
—
|
—
|
—
|
—
|
Exercised
|
—
|
—
|
—
|
—
|
Forfeited
|
—
|
—
|
—
|
—
|
Expired
|
—
|
—
|
—
|
—
|
Balance
Outstanding, March 31, 2018
|
2,027,000
|
$0.37
|
5.2
|
$82,735
|
Exercisable
at March 31, 2018
|
1,801,500
|
$0.31
|
3.8
|
|
|
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
|
1.0
|
$0.14
|
720,000
|
$0.14
|
1.1
|
0.25 - 0.49
|
351,000
|
0.9
|
$0.28
|
351,000
|
$0.28
|
1.6
|
0.50 - 0.85
|
956,000
|
3.3
|
$0.67
|
730,500
|
$0.66
|
1.2
|
|
2,027,000
|
5.2
|
|
1,801,500
|
|
3.8
|
|
Three months ended
March 31,
2018
|
Three months ended
March 31,
2017
|
% Change
|
Product
sales revenue
|
$375,286
|
$551,355
|
(32)
|
Advertising
revenue
|
683,058
|
109,743
|
522
|
Total
revenues
|
$1,058,344
|
$661,098
|
60
|
Cost
of
revenue – products
|
291,565
|
372,546
|
(22)
|
Cost
of
revenue - products as a percentage of product
sales
|
78%
|
68%
|
|
Cost
of
revenue - advertising
|
510,704
|
3,510
|
|
Cost
of
revenue – advertising as a percent of advertising
revenue
|
75%
|
3%
|
|
Gross
profit
|
$256,075
|
$285,042
|
(10)
|
Gross
profit as a percentage of total revenues
|
24%
|
43%
|
|
Selling,
general and administrative expenses
|
$1,185,954
|
$884,203
|
34
|
(Loss)
from operations
|
$(929,879)
|
$(599,161)
|
55
|
|
|
|
|
|
For
the three months ended
|
For
the three months ended
|
||||
|
March
31, 2018
|
March
31, 2017
|
||||
|
Products
|
Services
|
Total
|
Products
|
Services
|
Total
|
Revenue
|
$375,286
|
$683,058
|
$1,058,344
|
$551,355
|
$109,743
|
$661,098
|
Cost
of Revenue
|
291,565
|
510,704
|
802,269
|
372,546
|
3,510
|
376,056
|
Gross
Profit
|
$83,721
|
$172,354
|
$256,075
|
$178,809
|
$106,233
|
$285,042
|
|
For
the Three Months Ended
|
|
|
March
31,
|
|
unaudited
|
2018
|
2017
|
Net
(loss)
|
$(1,044,802)
|
$(683,247)
|
plus:
|
|
|
Stock
compensation expense
|
7,344
|
38,259
|
Stock
issued for services
|
95,552
|
3,060
|
Adjusted
net (loss):
|
$(941,906)
|
$(641,928)
|
Depreciation
expense
|
6,339
|
5,489
|
Amortization
expense
|
112,723
|
75,806
|
Amortization
on debt discount
|
47,712
|
28,887
|
Interest
Expense
|
12,347
|
55,281
|
Adjusted
EBITDA:
|
(762,785)
|
$(476,465)
|
No.
|
|
Description
|
|
Letter dated
April 25, 2018 from Liggett & Webb, P.A. (incorporated by
reference to the Current Report on Form 8-K as filed on April 26,
2018).
|
|
|
Rule
13a-14(a)/ 15d-14(a) Certification of Chief Executive Officer
*
|
|
|
Rule
13a-14(a)/ 15d-14(a) Certification of principal financial and
accounting officer*
|
|
|
Section 1350
Certification of Chief Executive Officer and principal financial
and accounting 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 *
|
|
BRIGHT MOUNTAIN MEDIA, INC.
|
|
|
|
|
May 21, 2018
|
By:
|
/s/ W. Kip Speyer
|
|
|
W. Kip Speyer, Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
1.
|
I have
reviewed this Quarterly Report on Form 10-Q for the period ended
March 31, 2018 of Bright Mountain Media, Inc.
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
|
4.
|
The
registrant’s other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
|
|
(d)
|
Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
|
5.
|
The
registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
|
May 21,
2018
|
By:
|
/s/
W. Kip
Speyer
|
|
|
|
W. Kip
Speyer,
Chief Executive
Officer, principal executive officer
|
|
1.
|
I have
reviewed this Quarterly Report on Form 10-Q for the period ended
March 31, 2018 of Bright Mountain Media, Inc.
|
2.
|
Based
on my knowledge, this report does not contain any untrue statement
of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which
such statements were made, not misleading with respect to the
period covered by this report;
|
3.
|
Based
on my knowledge, the financial statements, and other financial
information included in this report, fairly present in all material
respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in
this report;
|
4.
|
The
registrant’s other certifying officer(s) and I are
responsible for establishing and maintaining disclosure controls
and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) and internal control over financial reporting (as
defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
registrant and have:
|
|
(a)
|
Designed
such disclosure controls and procedures, or caused such disclosure
controls and procedures to be designed under our supervision, to
ensure that material information relating to the registrant,
including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in
which this report is being prepared;
|
|
(b)
|
Designed
such internal control over financial reporting, or caused such
internal control over financial reporting to be designed under our
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles;
|
|
(c)
|
Evaluated
the effectiveness of the registrant's disclosure controls and
procedures and presented in this report our conclusions about the
effectiveness of the disclosure controls and procedures, as of the
end of the period covered by this report based on such evaluation;
and
|
|
(d)
|
Disclosed
in this report any change in the registrant’s internal
control over financial reporting that occurred during the
registrant’s most recent fiscal quarter (the
registrant’s fourth fiscal quarter in the case of an annual
report) that has materially affected, or is reasonably likely to
materially affect, the registrant’s internal control over
financial reporting; and
|
5.
|
The
registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant's auditors and the audit
committee of the registrant's board of directors (or persons
performing the equivalent functions):
|
|
(a)
|
All
significant deficiencies and material weaknesses in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant's ability to
record, process, summarize and report financial information;
and
|
|
(b)
|
Any
fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
control over financial reporting.
|
May 21,
2018
|
By:
|
/s/
W. Kip
Speyer
|
|
|
|
W. Kip
Speyer,
principal financial
and accounting officer
|
|
1.
|
The
Report fully complies with the requirements of Section 13(a) or
15(d) of the Securities Exchange Act of 1934, as amended,
and
|
2.
|
The
information contained in the Report fairly presents, in all
material respects, the financial conditions and results of
operations of the Company.
|
May
21, 2018
|
By:
|
/s/
W.
Kip Speyer
|
|
|
|
W.
Kip Speyer,
Chief
Executive Officer, principal executive officer, principal financial
and accounting officer
|
|
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end
Document and Entity Information - shares |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
May 15, 2018 |
|
Document And Entity Information | ||
Entity Registrant Name | Bright Mountain Media, Inc. | |
Entity Central Index Key | 0001568385 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer | No | |
Is Entity a Voluntary Filer | No | |
Is Entity's Reporting Status Current | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 47,941,364 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2018 |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Revenues | ||
Product | $ 375,286 | $ 551,355 |
Advertising | 683,058 | 109,743 |
Total revenues | 1,058,344 | 661,098 |
Cost of revenue | ||
Product | 291,565 | 372,546 |
Advertising | 510,704 | 3,510 |
Total Cost of revenue | 802,269 | 376,056 |
Gross profit | 256,075 | 285,042 |
Selling, general and administrative expenses | 1,185,954 | 884,203 |
Loss from operations | (929,879) | (599,161) |
Other income (expense) | ||
Interest income | 288 | 82 |
Interest expense | (15,353) | (35,160) |
Interest expense - related party | (99,858) | (49,008) |
Total other income (expense) | (114,923) | (84,086) |
Net Loss | (1,044,802) | (683,247) |
Preferred stock dividends | ||
Series A and Series E preferred stock | 14,763 | 1,973 |
Net loss attributable to common shareholders | $ (1,059,565) | $ (685,220) |
Basic and diluted net loss per share | $ (0.02) | $ (0.02) |
Weighted average shares outstanding - basic and diluted | 45,807,289 | 44,913,531 |
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3 Months Ended | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2018 | |||||||||||||
Accounting Policies [Abstract] | |||||||||||||
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 Daily Engage Media Group LLC (“Daily Engage Media”) was formed as a New Jersey limited liability company in February 2015. When used herein, the terms "BMTM, " the "Company," "we," "us," "our" or "Bright Mountain" refers to Bright Mountain Media, Inc. and its subsidiaries.
Bright Mountain Media is a digital media holding company whose primary focus is connecting brands with consumers as a full advertising services platform. The Company’s assets include an ad network, an ad exchange platform and 25 websites (owned and/or managed) that provide content, services and products. In addition, the Bright Mountain Media Ad Exchange Network will be fully developed and implemented in the third quarter of 2018. The websites are primarily geared for a young, male audience with several that focus on active, reserve and retired military audiences as well as law enforcement and first responders. With the acquisition of Daily Engage Media, the Company has acquired the software, expertise and human resources to scale this side of the business. Two of our websites operate as eCommerce platforms, one of which, Bright Watches, is non strategic to the current direction of our business.
In December 2016, we 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.
On September 19, 2017, under the terms of an Amended and Restated Membership Interest Purchase Agreement with Daily Engage Media, and its members, the Company acquired 100% of the membership interests of Daily Engage Media. Launched in 2015, Daily Engage Media is an ad network that connects advertisers with approximately 200 digital publications worldwide.
Principles of Consolidation and Basis of Presentation
The condensed consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. The accompanying unaudited financial statements for the three months ended March 31, 2018 and 2017 have been prepared in accordance with generally accepted accounting principles applicable to interim financial information and the requirements of Form 10-Q and Article 10 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, 2017 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, 2017. The interim condensed consolidated financial statements should be read in conjunction with that report.
Reclassification
Certain reclassifications have been made to the December 31, 2017 consolidated balance sheet to conform to the March 31, 2018 consolidated balance sheet presentation.
Use of Estimates
Our consolidated financial statements are prepared in accordance with Accounting Principles Generally Accepted in the United States (“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 GAAP and does not require management's judgment in its application. There are also areas in which 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.
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
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 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). 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:
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 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 60 or net 90 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made.
The determination of past due status for the Daily Engage Media customers is based on the contractual payment terms of each customer, which are generally net 60, net 90, or net 120 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. It is common in this industry to have accounts receivable invoices age 60 to 90 days past the customer terms. This is the result of the generally smaller size customers that we have and they usually have to wait until they get paid for them to issue payment to us. We work closely with all of our customers and monitor the aging of the receivables on a weekly basis to ensure our comfort that we will get paid. This is a time consuming process, as we have to evaluate and analyze most customers on an individual basis due to different circumstances and relationships we have with each of them.
Inventories
Inventories consist of finished goods and are stated at the lower 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.
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:
Our advertising revenue generated from the Daily Engage and Bright Mountain Media businesses are consistent with the above section. However, the two scenarios that arise from revenue generation and recognition include our owned and operated website advertising revenue which requires little to no cost of revenue, as well as advertising on non-owned websites which creates costs to those website owners and the Company makes approximately 20% gross profit.
Cost of Revenues
Components of costs of revenues 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 revenuegenerating event. The Company becomes obligated to make the revenue share payments in the period the advertising impressions, clickthroughs, actions or leadbased information are delivered or occur. The Daily Engage portion of the advertising segment cost of revenue consists of revenue share payments to media providers and website publishers that are directly related to a revenuegenerating event. The Company becomes obligated to make the revenue share payments in the period the advertising impressions, clickthroughs, actions or leadbased 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.
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 five to seven years for office furniture and equipment, and five 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.
Website Development Costs
The Company accounts for its website development costs in accordance with ASC 350-50, “Website Development Costs” (“ASC 350-50”). 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.
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.
For the three months ended March 31, 2018 and 2017, all platform and website development costs have been expensed.
Amortization and Impairment of Long-Lived Assets
Amortization and impairment of longlived assets are noncash expenses relating primarily to intangible assets. The Company accounts for longlived assets in accordance with the provisions of ASC 360-10 “Accounting for the Impairment or Disposal of LongLived Assets.” This statement requires that longlived 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 are amortized over three years and intangible assets are amortized over 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. Amortization expense is included in selling, general and administrative expenses on the accompanying condensed consolidated statement of operations.
Stock-Based Compensation
The Company accounts for stock-based instruments issued to employees for services in accordance with ASC 718 “Compensation – Stock Compensation.” ASC 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other 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 505-50, “Equity-Based Payments to Non-Employees.” The Company estimates the fair value of stock options by using the Black-Scholes option-pricing model. 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 March 31, 2018 and 2017, non-cash stock-based stock option compensation expense was $7,344 and $38,259, respectively.
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 March 31, 2018 and 2017, advertising, marketing and promotion expense was $60,923 and $92,288, respectively.
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. 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.
The Company follows the provisions of ASC 740-10 “Accounting for Uncertain Income Tax Positions.” 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 statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
As of March 31, 2018, tax years 2017, 2016, and 2015 remain open for IRS audit. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years.
Basic and Diluted Net Earnings (Loss) Per Common Share
In accordance with ASC 260-10 “Earnings Per 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 March 31, 2018 and 2017, there were approximately 2,072,000 and 2,281,000 common stock equivalent shares outstanding as stock options, respectively, 1,475,000 and 100,000 common stock equivalents from the conversion of preferred stock, respectively, and 4,070,000 and 1,850,000 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 in accordance with the ASC 280-10 The Company's two segments are product sales and advertising as of March 31, 2018. 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 our retail location. The advertising segment is focused on producing advertising revenue generated by users “clicking on” and/or viewing 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. The subscription revenues are about .66% of the total advertising segment revenue.
Recent Accounting Pronouncements
May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606).” ASU 2014-09, which has been modified on several occasions, provides new guidance designed to enhance the comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The core principle of the new guidance is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new guidance also requires disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We are currently reviewing the provisions of this ASU and subsequent updates and evaluating the potential impact on our results of operations, cash flows or financial condition as well as related disclosures. As an emerging growth company, we have elected to adopt this guidance under the private company guidelines, which will go into effect on January 1, 2019.
In July 2015, FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory”. 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 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 the 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 financial condition.
In June 2016, the FASB issued ASU 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 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 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 the purchase price, with subsequent changes to the allowance recorded as a credit loss expense. ASU 2016-13 also expands disclosure requirements regarding an entity’s assumptions, models and methods for estimating the allowance for credit losses. The amendments of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted as of January 1, 2019. The Company is currently evaluating the impact the adoption of this new standard will have on its consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows –Restricted Cash” which requires entities to present the changes in total cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The new guidance also requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet if restricted cash and restricted cash equivalents are presented in a different line item in the balance sheet. The amendments of this Update, which should be applied using a retrospective transition method to each period presented, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The adoption of this standard is not expected to have an impact on our statement of cash flows.
In January 2017, the FASB issued 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill 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 adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.
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GOING CONCERN |
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Mar. 31, 2018 | |
GOING CONCERN [Abstract] | |
GOING CONCERN |
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 the normal course of business. The Company sustained a net loss of $1,044,802 and used net cash in operating activities of $720,245 for the three months ended March 31, 2018. The Company had an accumulated deficit of $12,863,704 at March 31, 2018. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The Company's continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving investment capital 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 to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
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ACQUISITIONS |
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Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
ACQUISITIONS |
On September 19, 2017 the parties entered into an Amended and Restated Membership Interest Purchase Agreement under which the Company acquired 100% of the membership interests of Daily Engage Media in exchange for common stock, promissory notes and the satisfaction of certain debt obligations of the acquired entity totaling approximately $1,088,000.
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:
The preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair values was as follows:
The final accounting for the acquisition is expected to be completed in the third quarter of 2018
Pro forma results
The following table sets forth a summary of the unaudited pro forma results of the Company as if the acquisition of the assets constituting the Daily Engage Media business, which was closed in September 2017, had taken place on the first day of the periods presented. These combined results are not necessarily indicative of the results that may have been achieved had the assets been acquired as of the first day of the periods presented.
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INVENTORIES |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
INVENTORIES | At March 31, 2018 and December 31, 2017 inventories consisted of the following:
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PREPAID COSTS AND EXPENSES |
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Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
PREPAID COSTS AND EXPENSES | At March 31, 2018 and December 31, 2017, prepaid expenses and other current assets consisted of the following:
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PROPERTY AND EQUIPMENT |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PROPERTY AND EQUIPMENT | At March 31, 2018 and December 31, 2017, property and equipment consisted of the following:
Depreciation expense for the three months ending March 31, 2018 and 2017, was $6,339 and $5,489, respectively.
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WEBSITE ACQUISITION AND INTANGIBLE ASSETS |
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WEBSITE ACQUISITION AND INTANGIBLE ASSETS |
At March 31, 2018 and December 31, 2017, respectively, website acquisitions, net consisted of the following:
At March 31, 2018 and December 31, 2017, respectively, intangible assets, net consisted of the following:
Amortization expense for the three month periods ending March 31, 2018 and 2017 was $112,723 and $75,806, respectively, related to both the website acquisition costs and the intangibles.
The company performed an analysis based on accounting guidance, industry standards, as well as input from management to calculate the useful lives of our websites and intangible assets. With the exception of a few of our smaller websites that do not require frequent updates, the company uses a standard three year useful life for amortization purposes. Based on historical information and the relationships we have built with our customer base we felt that a five year useful life is the most accurate estimate for these intangible assets to be amortized over. The useful lives used in the non-compete agreements are based on contractual obligations and terms set forth in those agreements. |
SEGMENT INFORMATION |
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Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
SEGMENT INFORMATION | The Company has two identifiable segments as of March 31, 2018; products and advertising. The products 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 advertising segment is focused on producing advertising revenue generated by users “clicking on” and/or viewing 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. The subscription revenues are about 0.7% of the total advertising segment revenue The following information represents segment activity for the three month periods ended March 31, 2018 and 2017.
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NOTES PAYABLE |
3 Months Ended |
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Mar. 31, 2018 | |
Notes Payable [Abstract] | |
NOTES PAYABLE |
Long Term Debt to Related Parties
Between September 2016 and August 2017, the Company issues a series of convertible notes payable to the Chairman of the Board of Directors. The notes mature five years from issuance at which time all principle and interest are payable. Interest rates on the notes range from 6% to 12% and the notes are convertible at any time prior to maturity at conversion prices ranging from $0.40 to 0.50 per share. The Company recognized a beneficial conversion feature when the fair value of the underlying common stock to which the note is convertible into was in excess of the face value of the note. For notes payable under this criteria, the intrinsic value of the beneficial conversion features was recorded as a debt discount with a corresponding amount to additional paid in capital. The debt discount is being amortized to interest over the five year life of the note using the effective interest method.
The principal balance of these notes payable was $2,035,000 at March 31, 2018 and December 31, 2017 and discounts recognized upon respective origination dates as a result of the beneficial conversion feature total $1,018,125. As of March 31, 2018 and December 31, 2017, the total convertible notes payable to related party net of discounts was $1,249,100 and $1,198,893, respectively.
Amortization of debt discount totaled $50,207 and $26,159 at March 31, 2018 and 2017, respectively. There was no accrued interest expense as of March 31, 2018 and December 31, 2017. Interest expense on the convertible notes payable was $49,651 and $22,849, for the periods ended March 31, 2018 and 2017 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 and carries an interest rate of 10% per annum and matures on June 30, 2018. 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. During March 2018 the Company made a payment of $50,000, reducing the note balance to $450,000.
In connection with the acquisition of Daily Engage Media, the Company issued promissory notes totaling $380,000. The notes have no stated interest rate and mature on September 19, 2018. The balance of the notes payable at March 31, 2018 and December 31, 2017 was $254,687.
The Company has a note payable originating from a prior website acquisition. At the time of the acquisition, the Company agreed to pay $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 a discount of $32,732. The present value was calculated at a discount rate of 12% using the estimate future revenues. The balance of the note payable at March 31, 2018 and December 31, 2017, was $73,932 and $67,895 net of discounts of $9,092 and $11,820 respectively.
Interest expense on notes payable was $15,353 and $35,160 for the periods ended March 31, 2018 and 2017, respectively. |
COMMITMENTS AND CONTINGENCIES |
3 Months Ended |
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Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES |
The Company leases its corporate offices at 6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487 under a long-term non-cancellable lease agreement expiring on March 14, 2019. The lease terms required base rent payments of approximately $9,000 per month for the first twelve months commencing in October 2014, with a 3% escalation each year. An additional security deposit of $2,500 was required. Rent is all-inclusive and includes electricity, heat, air-conditioning, and water.
The Company leases retail space for its product sales division at 4900 Linton Boulevard, Bay 17A, Delray Beach, FL 33445 under a two long-term, non-cancellable lease agreement, which contain renewal options. The leases commenced in January 2017 and are in effect for a period of five years. Minimum base rentals total approximately $6,000 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 $39,877 and $50,417 at March 31, 2018 and December 31, 2017, respectively.
The Company leases a warehouse facility in Orlando, Florida consisting of approximately 2,667 square feet. The lease commenced in April 2016, expiring in April 2018 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 March 31, 2018 and 2017 was $64,090 and $60,676, respectively.
Legal
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 three months ended March 31, 2018 and 2017, 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.
Total payments for the three month periods ended March 31, 2018 and 2017 were $52,500 and $52,500, respectively.
Effective June 1, 2014, the Company entered into an employment agreement with its Chief Executive Officer. The agreement calls for current base salary of $165,000 per year plus bonuses as awarded by the Board of Director’s. The agreement terminates upon the CEO’s death or disability in the event of which, the Company is obliged to pay one year salary and in the event of death, any unpaid bonuses. Both the Company and the CEO can terminate the agreement and in the case of termination without cause on the part of the Company, the CEO will be entitled to twice his salary plus unpaid bonuses earned.
On April 1, 2017, we entered into an amendment to his employment agreement which extended the term for an additional three years, set his base compensation at $165,000 per annum and provided the ability to earn a performance bonus beginning for 2017 based upon annual revenues above $3,000,000 per year and the certain earnings before interest, taxes and depreciation, or “EBITDA,” goals as follows: (i) for annual revenues of $3,000,000 to $3,500,000, a bonus of 25% of his then base salary; (ii) for annual revenues of $3,500,001 to $4,000,000 and a minimum EBITDA of $100,000, a bonus of 40% of his then base salary; (iii) for annual revenues of $4,000,0001 to $4,500,000 and a minimum EBITDA of $150,000, a bonus of 65% of his then base salary; and (iv) for annual revenues of $4,500,001 or greater and a minimum EBITDA of $175,000, a bonus of 80% of this then base salary.
Mr. Speyer earned a performance bonus of $41,250 for 2017.
In connection with the Daily Engage Media acquisition, the Company entered into three year employment agreements with two former members of the entity. Under the two agreements the Company is 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. |
SHAREHOLDERS' EQUITY |
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SHAREHOLDERS' EQUITY | Preferred Stock
The Company has authorized 20,000,000 shares of preferred stock with a par value of $0.01 (the "Preferred Stock"), issuable in such series and with such designations, rights and preferences as the board of directors may determine. The Company's board of directors has previously designated five series of preferred stock, consisting of 10% Series A Convertible Preferred Stock ("Series A Stock"), 10% Series B Convertible Preferred Stock ("Series B Stock"), 10% Series C Convertible Preferred Stock ("Series C Stock"), 10% Series D Convertible Preferred Stock ("Series D Stock") and 10% Series E Convertible Preferred Stock ("Series E Stock"). At March 31, 2018, there were 100,000 shares of Series A Stock and 1,875,000 shares of Series E Stock issued and outstanding. There are no shares of Series B Stock, Series C Stock or Series D Stock issued and outstanding.
The Series A Stock is senior to all other classes of the Company's securities and has a stated value of $0.50 per share. Holders of shares of Series A 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 A Stock, payable annually the 10th business day of January. The shares of Series A Stock are redeemable at the 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 10,000 shares of common stock dividends owed and payable to the Series A Stockholder of record as dividends on the Series A Stock.
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 A 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 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.
In September 2017, Mr. W. Kip Speyer, the Company’s Chairman and Chief Executive Officer, purchased an aggregate of 500,000 shares of Series E Stock at a purchase price of $0.40 per share. The Company used the proceeds from these sales for working capital.
During the January 1, 2018 to March 31, 2018 period, Mr. W. Kip Speyer, the Company’s Chairman and Chief Executive Officer, purchased an aggregate of 500,000 shares of Series E Stock at a purchase price of $0.40 per share. The Company used the proceeds from these sales for working capital.
Stock issued for cash
In August 2017 the Company issued 125,000 shares of its common stock for $50,000 or $0.40 per share to a private investor.
Between January 2018 and March 2018 the Company sold an aggregate of 1,762,500 units of its securities to 10 accredited investors in a private placement resulting in gross proceeds to the Company of $705,000. 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. Spartan Capital Securities, LLC, a broker-dealer and member of FINRA, served as placement agent for the Company in this offering. As compensation for its services, the Company paid Spartan Capital Securities, LLC cash commissions totaling $70,500 and issued it five year placement agent warrants to purchase an aggregate of 147,000 shares of the Company’s common stock at an exercise price of $0.65 per share. These warrants were valued, in aggregate, at $95,552 using the Black-Scholes model. The five-year exercise period was used as the term and a 10% interest rate was used in the valuation. The historical volatility of approximately 214% was based on a term of approximately four years, which was a look-back to the earliest stock price information available.
Stock issued for services
On January 16, 2017, the Company issued to a consultant 3,600 shares of its common stock at $0.85 per share, or $3,060, for services rendered. The Company valued these common shares based on the fair value at the date of grant.
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.
Stock issued for dividends
In January 2018, the Company issued 10,000 shares of its common stock as dividends to the holder of its Series A preferred stock.
Stock issued for acquisition
On September 19, 2017, the Company issued 1,100,233 shares of its common stock with a fair value of $429,091 for the acquisition of Daily Engage Media.
Stock Incentive Plan and Stock Option Grants to Employees and Directors
The Company recorded $7,344 and $38,259 stock compensation for the three months ended March 31, 2018 and 2017, respectively. The stock compensation expense has been recognized as a component of general and administrative expenses in the accompanying unaudited condensed consolidated financial statements.
As of March 31, 2018 there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $27,745 to be recognized through August 2020.
A summary of the Company's stock option activity during the three months ended March 31, 2018 is presented below:
Summarized information with respect to options outstanding under the three option plans at March 31, 2018 is as follows:
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CONCENTRATIONS |
3 Months Ended |
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Mar. 31, 2018 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS |
The Company has historically purchases a substantial amount of its products from two vendors; Citizens Watch Company of America, Inc., and Bulova Corporation. During the three months ended March 31, 2018, purchases from Citizens and Bulova accounted for less than 10% of the watch products purchased as compared to 25% and 16%, respectively, for the three months ended March 31, 2017.
Three Black Helmet Apparel vendors have been identified as having a high concentration. During the three months ended March 31, 2018 purchases from AlphaBroder, Enemy Ink, and TSF Sportswear, LLC accounted for 23%, 31%, and 17% of the Black Helmet products purchased, respectively.
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 three 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 March 31, 2018, Paypal and Amazon accounted for 25% and 0.1%, respectively, of our total product sales as compared to 43% and 44% in the three months ended March 31, 2017.
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, 2018 and December 31, 2017, respectively, the Company had no cash balances in excess of the FDIC insured limit.
Concentration of Funding
During the three months ended March 31, 2018, the Company's funding was provided primarily through the sale of 1,762,500 units of our securities to 10 accredited investors in a private placement exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) of the act and Rule 506(b) of Regulation D, resulting in gross proceeds to us of $705,000. 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. Spartan Capital Securities, LLC, a broker-dealer and member of FINRA, served as placement agent for us in this offering. As compensation for its services, we paid Spartan Capital Securities, LLC cash commissions totaling $70,500 and issued it five year placement agent warrants to purchase an aggregate of 147,000 shares of our common stock at an exercise price of $0.65 per share. After payment of our offering expenses including legal, accounting, printing and other related expenses, we are using the net proceeds for working capital.
Between January 2018 and March 2018, Mr. W. Kip Speyer, an executive officer and member of our board of directors, an aggregate of 500,000 shares of our 10% Series E convertible preferred stock, resulting in gross proceeds to us of $200,000. We did not pay any commissions or finders fees, and the sales were made to Mr. Speyer, an accredited investor, in transactions exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) of that act. |
SUBSEQUENT EVENTS |
3 Months Ended |
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Mar. 31, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS |
On April 2, 2018, April 20, 2018, and May 10, 2018 the Company sold an aggregate of 1,437,500 units of its securities to 6 accredited investors in a private placement resulting in gross proceeds to the Company of $575,000. 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. Spartan Capital Securities, LLC, a broker-dealer and member of FINRA, served as placement agent for the Company in this offering. As compensation for its services, the Company paid Spartan Capital Securities, LLC cash commissions totaling $57,500 and issued it five year placement agent warrants to purchase an aggregate of 143,750 shares of the Company’s common stock at an exercise price of $0.65 per share.
On April 13, 2018 Mr. W. Kip Speyer, the Company’s Chairman and Chief Executive Officer, purchased an aggregate of 62,500 shares of Series E Stock at a purchase price 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.
On April 24, 2018 we made a principle payment of $25,000 on the promissory note agreement with an unaffiliated party, further reducing the outstanding note balance to $425,000.
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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) |
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Mar. 31, 2018 | |||||||
Accounting Policies [Abstract] | |||||||
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 Daily Engage Media Group LLC (“Daily Engage Media”) was formed as a New Jersey limited liability company in February 2015. When used herein, the terms "BMTM, " the "Company," "we," "us," "our" or "Bright Mountain" refers to Bright Mountain Media, Inc. and its subsidiaries.
Bright Mountain Media is a digital media holding company whose primary focus is connecting brands with consumers as a full advertising services platform. The Company’s assets include an ad network, an ad exchange platform and 25 websites (owned and/or managed) that provide content, services and products. In addition, the Bright Mountain Media Ad Exchange Network will be fully developed and implemented in the third quarter of 2018. The websites are primarily geared for a young, male audience with several that focus on active, reserve and retired military audiences as well as law enforcement and first responders. With the acquisition of Daily Engage Media, the Company has acquired the software, expertise and human resources to scale this side of the business. Two of our websites operate as eCommerce platforms, one of which, Bright Watches, is non strategic to the current direction of our business.
In December 2016, we 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.
On September 19, 2017, under the terms of an Amended and Restated Membership Interest Purchase Agreement with Daily Engage Media, and its members, the Company acquired 100% of the membership interests of Daily Engage Media. Launched in 2015, Daily Engage Media is an ad network that connects advertisers with approximately 200 digital publications worldwide.
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Principles of Consolidation and Basis of Presentation | The condensed consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. The accompanying unaudited financial statements for the three months ended March 31, 2018 and 2017 have been prepared in accordance with generally accepted accounting principles applicable to interim financial information and the requirements of Form 10-Q and Article 10 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, 2017 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, 2017. The interim condensed consolidated financial statements should be read in conjunction with that report. |
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Use of Estimates | Our consolidated financial statements are prepared in accordance with Accounting Principles Generally Accepted in the United States (“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 GAAP and does not require management's judgment in its application. There are also areas in which 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.
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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. |
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Fair Value of Financial Instruments and Fair Value Measurements | 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 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). 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:
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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 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 60 or net 90 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made.
The determination of past due status for the Daily Engage Media customers is based on the contractual payment terms of each customer, which are generally net 60, net 90, or net 120 days. Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. It is common in this industry to have accounts receivable invoices age 60 to 90 days past the customer terms. This is the result of the generally smaller size customers that we have and they usually have to wait until they get paid for them to issue payment to us. We work closely with all of our customers and monitor the aging of the receivables on a weekly basis to ensure our comfort that we will get paid. This is a time consuming process, as we have to evaluate and analyze most customers on an individual basis due to different circumstances and relationships we have with each of them. |
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Inventories | Inventories consist of finished goods and are stated at the lower 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.
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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:
Our advertising revenue generated from the Daily Engage and Bright Mountain Media businesses are consistent with the above section. However, the two scenarios that arise from revenue generation and recognition include our owned and operated website advertising revenue which requires little to no cost of revenue, as well as advertising on non-owned websites which creates costs to those website owners and the Company makes approximately 20% gross profit. |
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Cost of Revenues |
Components of costs of revenues 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 revenuegenerating event. The Company becomes obligated to make the revenue share payments in the period the advertising impressions, clickthroughs, actions or leadbased information are delivered or occur. The Daily Engage portion of the advertising segment cost of revenue consists of revenue share payments to media providers and website publishers that are directly related to a revenuegenerating event. The Company becomes obligated to make the revenue share payments in the period the advertising impressions, clickthroughs, actions or leadbased information are delivered or occur. |
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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.
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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.
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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 five to seven years for office furniture and equipment, and five 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.
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Website Development Costs |
The Company accounts for its website development costs in accordance with ASC 350-50, “Website Development Costs” (“ASC 350-50”). 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.
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.
For the three months ended March 31, 2018 and 2017, all platform and website development costs have been expensed. |
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Amortization and Impairment of Long-Lived Assets |
Amortization and impairment of longlived assets are noncash expenses relating primarily to intangible assets. The Company accounts for longlived assets in accordance with the provisions of ASC 360-10 “Accounting for the Impairment or Disposal of LongLived Assets.” This statement requires that longlived 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 are amortized over three years and intangible assets are amortized over 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. Amortization expense is included in selling, general and administrative expenses on the accompanying condensed consolidated statement of operations. |
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Stock-Based Compensation | The Company accounts for stock-based instruments issued to employees for services in accordance with ASC 718 “Compensation – Stock Compensation.” ASC 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other 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 505-50, “Equity-Based Payments to Non-Employees.” The Company estimates the fair value of stock options by using the Black-Scholes option-pricing model. 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 March 31, 2018 and 2017, non-cash stock-based stock option compensation expense was $7,344 and $38,259, respectively. |
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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 March 31, 2018 and 2017, advertising, marketing and promotion expense was $60,923 and $92,288, respectively.
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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. 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.
The Company follows the provisions of ASC 740-10 “Accounting for Uncertain Income Tax Positions.” 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 statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50% likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination.
As of March 31, 2018, tax years 2017, 2016, and 2015 remain open for IRS audit. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years.
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Basic and Diluted Net Earnings (Loss) Per Common Share | In accordance with ASC 260-10 “Earnings Per 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 March 31, 2018 and 2017, there were approximately 2,072,000 and 2,281,000 common stock equivalent shares outstanding as stock options, respectively, 1,475,000 and 100,000 common stock equivalents from the conversion of preferred stock, respectively, and 4,070,000 and 1,850,000 common stock equivalents from the conversion of notes payable, respectively. Equivalent shares were not utilized, as the effect is anti-dilutive. |
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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 in accordance with the ASC 280-10 The Company's two segments are product sales and advertising as of March 31, 2018. 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 our retail location. The advertising segment is focused on producing advertising revenue generated by users “clicking on” and/or viewing 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. The subscription revenues are about .66% of the total advertising segment revenue.
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Recent Accounting Pronouncements |
May 2014, the FASB issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606).” ASU 2014-09, which has been modified on several occasions, provides new guidance designed to enhance the comparability of revenue recognition practices across entities, industries, jurisdictions and capital markets. The core principle of the new guidance is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods and services. The new guidance also requires disclosures about the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts with customers. We are currently reviewing the provisions of this ASU and subsequent updates and evaluating the potential impact on our results of operations, cash flows or financial condition as well as related disclosures. As an emerging growth company, we have elected to adopt this guidance under the private company guidelines, which will go into effect on January 1, 2019.
In July 2015, FASB issued ASU No. 2015-11, “Inventory (Topic 330): Simplifying the Measurement of Inventory”. 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 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 the 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 financial condition.
In June 2016, the FASB issued ASU 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 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 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 the purchase price, with subsequent changes to the allowance recorded as a credit loss expense. ASU 2016-13 also expands disclosure requirements regarding an entity’s assumptions, models and methods for estimating the allowance for credit losses. The amendments of this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted as of January 1, 2019. The Company is currently evaluating the impact the adoption of this new standard will have on its consolidated financial statements.
In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows –Restricted Cash” which requires entities to present the changes in total cash, cash equivalents, restricted cash and restricted cash equivalents in the statement of cash flows. The new guidance also requires a reconciliation of the totals in the statement of cash flows to the related captions in the balance sheet if restricted cash and restricted cash equivalents are presented in a different line item in the balance sheet. The amendments of this Update, which should be applied using a retrospective transition method to each period presented, are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. Early adoption is permitted. The adoption of this standard is not expected to have an impact on our statement of cash flows.
In January 2017, the FASB issued 2017-04, Intangibles - Goodwill and Other (Topic 350): Simplifying the Test for Goodwill 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 adoption is permitted. The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.
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ACQUISITIONS (Tables) |
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Business Combinations [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Discounted Fair Value of Consideration Transferred |
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Pro Forma results |
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INVENTORIES (Tables) |
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Inventory Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Inventories |
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PREPAID COSTS AND EXPENSES (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Prepaid Costs and Expenses |
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PROPERTY AND EQUIPMENT (Tables) |
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Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment |
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WEBSITE ACQUISITION AND INTANGIBLE ASSETS (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Website Acquisition And Intangible Assets Tables | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of intangible assets |
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SEGMENT INFORMATION (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of segment activity |
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SHAREHOLDERS' EQUITY (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stockholders' Equity Note [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Stock Option Activity |
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Schedule of options outstanding under the option plans |
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NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Accounting Policies [Abstract] | ||
Non-cash amortization expense | $ 112,723 | $ 75,806 |
Non-cash stock-based stock option compensation | 7,344 | 38,259 |
Advertising, marketing and promotion expense | $ 60,923 | $ 92,288 |
GOING CONCERN (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
GOING CONCERN [Abstract] | |||
Net loss | $ 1,044,802 | $ 683,247 | |
Net cash used in operating activities | 720,245 | $ 445,058 | |
Accumulated deficit | $ 12,863,704 | $ 11,818,902 |
ACQUISITIONS (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Goodwill | $ 446,426 | $ 446,426 |
Daily Engage Media [Member] | ||
Tangible assets acquired | 361,770 | |
Liabilities assumed | (562,006) | |
Net liabilities assumed | (200,236) | |
Goodwill | 446,426 | |
Total purchase price | 1,088,426 | |
Daily Engage Media [Member] | Exchange Platform [Member] | ||
Intangible assets | 50,000 | |
Daily Engage Media [Member] | Trade name [Member] | ||
Intangible assets | 150,000 | |
Daily Engage Media [Member] | Customer Relationships [Member] | ||
Intangible assets | 250,000 | |
Daily Engage Media [Member] | Non compete agreements [Member] | ||
Intangible assets | $ 192,000 |
ACQUISITIONS (Details 1) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Net loss attributable to common shareholders | $ (1,059,565) | $ (685,220) |
Basic and diluted net loss per share | $ (0.02) | $ (0.02) |
Daily Engage Media [Member] | ||
Total revenue | $ 1,224,716 | |
Total expenses | (1,871,679) | |
Preferred stock dividend | (1,973) | |
Net loss attributable to common shareholders | $ (648,936) | |
Basic and diluted net loss per share | $ (0.01) |
INVENTORIES (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Inventory, gross | $ 534,373 | $ 633,916 |
Less: Inventory allowance for slow moving | (22,448) | (22,448) |
Inventory, net | 511,925 | 611,468 |
Product inventory: clocks and watches [Member] | ||
Inventory, gross | 351,361 | 453,852 |
Product inventory: other [Member] | ||
Inventory, gross | $ 183,012 | $ 180,064 |
PREPAID COSTS AND EXPENSES (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid rent | $ 39,877 | $ 50,417 |
Prepaid insurance | 66,131 | 92,322 |
Prepaid inventory | 2,993 | 2,993 |
Prepaid Expenses and Other Current Assets | $ 109,001 | $ 145,732 |
PROPERTY AND EQUIPMENT (Details) - USD ($) |
Mar. 31, 2018 |
Dec. 31, 2017 |
---|---|---|
Total Fixed Assets | $ 178,888 | $ 177,889 |
Less: Accumulated Depreciation | (94,702) | (88,389) |
Total Fixed Assets, net | 84,186 | 89,500 |
Furniture and Fixtures [Member] | ||
Total Fixed Assets | 79,993 | 78,994 |
Computer Equipment [Member] | ||
Total Fixed Assets | 59,510 | 59,511 |
Leasehold Improvements [Member] | ||
Total Fixed Assets | $ 39,385 | $ 39,384 |
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Property, Plant and Equipment [Abstract] | ||
Non-cash depreciation expense | $ 6,339 | $ 5,489 |
WEBSITE ACQUISITION AND INTANGIBLE ASSETS (Details) - USD ($) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Website Acquisition And Intangible Assets Details | ||
Website Acquisition Assets | $ 1,417,189 | $ 1,417,189 |
Less: accumulated amortization | (873,197) | (812,575) |
Less: accumulated impairment loss | (211,197) | (211,197) |
Website Acquisition Assets, net | $ 332,795 | $ 393,417 |
WEBSITE ACQUISITION AND INTANGIBLE ASSETS (Details 1) - USD ($) |
3 Months Ended | 12 Months Ended |
---|---|---|
Mar. 31, 2018 |
Dec. 31, 2017 |
|
Intangible assets | $ 1,114,000 | $ 1,114,000 |
Less: accumulated amortization | (148,100) | (95,999) |
Less: accumulated impairment loss | (50,227) | (50,227) |
Intangible assets, net | 915,673 | 967,774 |
Tradename | ||
Intangible assets | 300,000 | 300,000 |
Customer relationships | ||
Intangible assets | 502,000 | 502,000 |
Non-compete agreements | ||
Intangible assets | $ 312,000 | $ 312,000 |
SEGMENT INFORMATION (Details) - USD ($) |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Revenues | $ 1,058,344 | $ 661,098 |
Website amortization | 112,723 | 75,806 |
Depreciation | 6,339 | 5,489 |
Loss from operations | (929,879) | (599,161) |
Segment assets | 3,491,740 | 2,745,360 |
Purchase of assets | 1,023 | 8,035 |
Products [Member] | ||
Revenues | 375,286 | 551,355 |
Website amortization | 26,615 | 0 |
Depreciation | 2,248 | 4,578 |
Loss from operations | (336,815) | (461,912) |
Segment assets | 1,128,652 | 1,438,646 |
Purchase of assets | 0 | 8,035 |
Advertising [Member] | ||
Revenues | 683,058 | 109,743 |
Website amortization | 86,108 | 75,806 |
Depreciation | 4,091 | 911 |
Loss from operations | (593,064) | (137,249) |
Segment assets | 2,363,088 | 1,306,714 |
Purchase of assets | $ 1,023 | $ 0 |
NOTES PAYABLE (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Notes Payable [Abstract] | |||
Amortization of debt discount | $ 47,712 | $ 28,887 | |
Interest expense on the convertible notes payable | 49,651 | 22,849 | |
Notes payable | 254,687 | $ 254,687 | |
Interest expense on notes payable | $ 15,353 | $ 35,160 |
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) |
3 Months Ended | ||
---|---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
Dec. 31, 2017 |
|
Commitments And Contingencies Details Narrative | |||
Prepaid rent | $ 39,877 | $ 50,417 | |
Rent expense | $ 64,090 | $ 60,676 |
SHAREHOLDERS' EQUITY (Details) |
3 Months Ended |
---|---|
Mar. 31, 2018
USD ($)
$ / shares
shares
| |
Number of Options | |
Balance Outstanding, Beginning | shares | 2,027,000 |
Granted | shares | 0 |
Exercised | shares | 0 |
Forfeited | shares | 0 |
Expired | shares | 0 |
Balance Outstanding, Ending | shares | 2,027,000 |
Exercisable, Ending | shares | 1,801,500 |
Weighted Average Exercise Price | |
Balance Outstanding, Beginning | $ / shares | $ 0.37 |
Granted | $ / shares | .00 |
Exercised | $ / shares | .00 |
Forfeited | $ / shares | .00 |
Expired | $ / shares | .00 |
Balance Outstanding, Ending | $ / shares | 0.37 |
Exercisable, Ending | $ / shares | $ .31 |
Weighted Average Remaining Contractual Term | |
Outstanding, Beginning | 6 years 9 months 18 days |
Outstanding, Ending | 5 years 2 months 12 days |
Exercisable, Ending | 3 years 9 months 18 days |
Aggregate Intrinsic Value | |
Outstanding, Beginning | $ | $ 73,770 |
Outstanding, Ending | $ | $ 82,735 |
CONCENTRATIONS (Details Narrative) - Revenue [Member] |
3 Months Ended | |
---|---|---|
Mar. 31, 2018 |
Mar. 31, 2017 |
|
Paypal [Member] | ||
Concentration Risk, Percentage | 25.00% | 43.00% |
Amazon [Member] | ||
Concentration Risk, Percentage | 0.10% | 44.00% |
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