Bright Mountain Media, Inc. - Quarter Report: 2013 June (Form 10-Q)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

(MARK ONE)

FORM 10-Q

OR

Bright Mountain Holdings, Inc.

(Name of registrant as specified in its charter)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

¨ Yes ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

¨ Yes ¨ No

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act)

o Yes þ No

As of August 12, 2013 the issuer had 31,977,000 shares of its common stock issued and outstanding.

TABLE OF CONTENTS

i

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

Various statements in this report contain or may contain forward-looking statements that are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements were based on various factors and were derived from utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. These factors include, but are not limited to:

·

our ability to raise sufficient working capital necessary to continue to implement our business plan and satisfy our obligations as they become due,

·

our ability to continue as a going concern,

·

our ability to develop revenue producing operations,

·

our ability to establish our brand and effectively compete in our target market, and

·

risks associated with the external factors that impact our operations, including economic and leisure trends.

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

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this report the terms “Bright Mountain", the “Company,” "we", "us", "our" and similar terms refer to Bright Mountain Holdings, Inc., a Florida corporation, and our subsidiaries. In addition, when used in this report, “second quarter of 2013” refers to the three months ended June, 2013, “second quarter of 2012” refers to the three months ended June 30, 2012, “2013” refers to the year ending December 31, 2013 and “2012” refers to the year ended December 31, 2012.

ii

PART 1 - FINANCIAL INFORMATION

ITEM 1.

FINANCIAL STATEMENTS.

BRIGHT MOUNTAIN HOLDINGS, INC. AND SUBSIDIARIES

(a development stage company)

CONSOLIDATED BALANCE SHEETS

See accompanying notes to unaudited consolidated financial statements

1

BRIGHT MOUNTAIN HOLDINGS, INC. AND SUBSIDIARIES

(a development stage company)

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

See accompanying notes to unaudited consolidated financial statements

2

BRIGHT MOUNTAIN HOLDINGS, INC. AND SUBSIDIARIES

(a development stage company)

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)

FOR THE PERIOD FROM MAY 20, 2010 (INCEPTION) TO JUNE 30, 2013

(Unaudited)

See accompanying notes to unaudited consolidated financial statements

3

BRIGHT MOUNTAIN HOLDINGS, INC. AND SUBSIDIARIES

(a development stage company)

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

See accompanying notes to unaudited consolidated financial statements

4

BRIGHT MOUNTAIN HOLDINGS INC. AND SUBSIDIARIES

(a development stage company)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(Unaudited)

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

Organization and Nature of Operations

Bright Mountain Holdings, Inc. (“BMHI” or the “Company,” “we,” “us,” “our”, “Bright Mountain”) is a Florida corporation formed on May 20, 2010. Its wholly owned subsidiaries, Bright Mountain LLC, and Five Peaks LLC, were formed as Florida limited liability companies in May 2011.

Bright Mountain is developing a personal website “portal” designed to attract and retain Internet audiences whose main purpose is to be a starting point when connecting to or searching the World Wide Web (Web), with a special emphasis on consumer needs, original news, original content, and giving back. The Bright Mountain mission is to help people in need by developing a profitable enterprise and giving back a portion of revenues to veterans and first responders, including law enforcement, firemen and ems.

The website, www.thebright.com, has it’s own unique characteristics including design elements like colors, shapes, layout and typefaces, as well as certain dynamic or interactive elements such as boxes, buttons and menus. The “look and feel” of Bright Mountain can be described in terms such as “colorful”, “quality”, “fun” “user friendly” and “trustworthy”. It contains in a number of sections a vast amount of consumer oriented information including aggregated and originally written news content, financial markets information and data, blogs, shopping, and mission group information.  Bright Mountain also owns the following websites:

Wardocumentaryfilms.com

Bootcamp4me.com

Bootcamp4me.org

360fire.com

Basis of Presentation

The interim unaudited consolidated financial statements included herein have been prepared by the Company, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). In the opinion of the Company’s management, all adjustments necessary to present fairly the consolidated results of operations and cash flows for the three and six months ended June 30, 2013, and the financial position as of June 30, 2013 have been made. The results of operations for such interim period is not necessarily indicative of the operating results expected for the full year.

Recapitalization

Our Board of Directors approved a 1.8 for 1 forward stock split of our common shares on June 26, 2013, which became effective for shareholders of record on June 26, 2013. The Company also amended its articles of incorporation to increase its authorized common stock to 324,000,000 shares.  All share and per share amounts (including quantities and prices) in our accompanying consolidated financial statements and notes to consolidated financial statements have been retroactively restated to reflect the 1.8 for 1 forward stock split and change in outstanding shares.  This means that each original share quantity has been multiplied by 1.8 and each original share price has been divided by 1.8.  For example, the price per share of $0.50 originally paid for by an investor is now reflected as $0.2778, while a quantity of 100 shares is now reflected as 180 shares.

Principles of Consolidation

The consolidated financial statements include the accounts of BMHI and its wholly owned subsidiaries, Bright Mountain LLC and Five Peaks LLC. All significant inter-company balances and transactions have been eliminated in consolidation.

5

BRIGHT MOUNTAIN HOLDINGS INC. AND SUBSIDIARIES

(a development stage company)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(Unaudited)

Development Stage Company

The Company has been in the development stage from inception to June 30, 2013.  Activities during the development stage have been principally devoted to organizational activities, raising capital, software development and evaluating operational activities and business opportunities. Since its formation, the Company has had minimal revenues from its planned operations.

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 the valuation of inventory, valuation of intangible assets, estimates of amortization period for intangible assets, valuation of equity based transactions, and the valuation allowance on deferred tax assets.

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 (ASC 820). The adoption did not have a material impact on our results of operations, financial position or liquidity. 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:

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

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

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

6

BRIGHT MOUNTAIN HOLDINGS INC. AND SUBSIDIARIES

(a development stage company)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(Unaudited)

Revenue Recognition

The Company recognizes revenue on our products in accordance with ASC 605-10, “Revenue Recognition in Financial Statements”. Under these guidelines, revenue is recognized on sales transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of product has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured. The Company has several revenue streams generated directly from its website and specific revenue recognition criteria for each revenue stream is as follows:

·

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

·

Advertising revenue is received directly form companies who pay the Company a monthly fee for advertising space.

·

Advertising revenues are generated by users “clicking” on website advertisements utilizing several ad network partners: Revenues are recognized, on a net basis, upon receipt of payment by the ad network partner since the revenue is not determinable until it is received.

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

Cost of Sales

Components of costs of sales include product costs, shipping costs to customers and any inventory adjustments.

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.

Warranty Reserve Policy

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

Stock-Based Compensation

The Company accounts for stock-based instruments issued to employees for services in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. The value of the portion of an employee award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC Topic 505-50, “Equity-Based Payments to Non-Employees”. The Company estimates the fair value of stock options by using the Black-Scholes option-pricing model.

7

BRIGHT MOUNTAIN HOLDINGS INC. AND SUBSIDIARIES

(a development stage company)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(Unaudited)

Advertising, Marketing and Promotion

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 six months ended June 30, 2013 and the six months ended June 30, 2012, advertising, marketing and promotion expense was $31,845 and $33,056 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 percent 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 June 30, 2013, tax years 2012, 2011 and 2010 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 June 30, 2013 there were 1,152,000 common stock equivalent shares outstanding as stock options. Equivalent shares are not utilized when 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 does not have any operating segments as of June 30, 2013.

Recent Accounting Pronouncements

Recent accounting standards that have been issued or proposed by FASB (Financial Accounting Standards Board) that do not require adoption until a future date are not expected to have a material impact on the financial statements upon adoption.

8

BRIGHT MOUNTAIN HOLDINGS INC. AND SUBSIDIARIES

(a development stage company)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(Unaudited)

NOTE 2 - GOING CONCERN

The accompanying 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 net losses of $732,696 and used cash in operating activities of $629,817 for the six months ended June 30, 2013. The Company had an accumulated deficit of $2,410,040 at June 30, 2013.  These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company’s continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from related parties to sustain its current level of operations.

Management plans to continue to raise additional capital through its existing Private Placement Memorandum and is exploring additional avenues for future fund-raising through both public and private sources.

The 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.

NOTE 3 – INVENTORIES

Inventories consisted of the following:

NOTE 4– FIXED ASSETS

Fixed assets consists of the following:

Depreciation expense was $3,818 for the six months ended June 30, 2013.

9

BRIGHT MOUNTAIN HOLDINGS INC. AND SUBSIDIARIES

(a development stage company)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(Unaudited)

NOTE 5 – LONG TERM DEBT TO RELATED PARTIES AND PREMIUM FINANCE LOAN PAYABLE

Notes Payable - Related Parties

Notes payable, classified as both short-term and long-term at June 30, 2013 and December 31, 2012, consists of the following:

On August 1, 2012 the Company borrowed funds and issued notes to its majority shareholder and CEO in the amount of $100,000, and to other shareholders in the amounts of $100,000 and $50,000 respectively. Each of the notes contain the same terms: maturity date, August 1, 2022, bear an interest rate of 10%, and are to be repaid, principal and interest monthly, based on a ten-year amortization schedule. The notes are secured by substantially all assets of the Company.

On November 1, 2012, the majority shareholder and CEO loaned the Company another $50,000. The maturity date is November 1, 2022, bears an interest rate of 10%, and is to be repaid, principal and interest monthly, based on a ten-year amortization schedule. The note is secured by substantially all assets of the Company.

On May 31, 2013 the Company entered into an agreement with the respective shareholders to convert the remaining $286,000 principal debt balance to equity by issuing 1,029,600 shares of the Company common stock to the respective shareholders. The majority shareholder and CEO was issued 516,600 shares of common stock for the principal debt balance of $143,500. Other shareholders were issued 513,000 shares of common stock for the principal debt balance of $142,500.

As of June 30, 2013, the Company does not have any long-term debt outstanding to related parties.

Premium Finance Loan Payable

Premium finance loans payable related to the financing of the Company’s Error & Omission (E&O) insurance coverage for the period September 6, 2012 through September 6, 2013. The Company financed $15,659 of the total policy premium of $20,643 (including interest of $602) from Flatiron Capital. The terms of the loan are nine equal payments of $1,740 per month beginning October 6, 2012. The balance due was $3,062 at June 30, 2013.

10

BRIGHT MOUNTAIN HOLDINGS INC. AND SUBSIDIARIES

(a development stage company)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(Unaudited)

NOTE 6 – ACCRUED EXPENSES

The major components of accrued expenses are summarized as follows:

NOTE 7 – COMMITMENTS AND CONTINGENCIES

Legal

From time-to-time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of June 30, 2013, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations.

Lease Commitment

Leases

On January 3, 2011, the Company entered into a lease of approximately 2,000 square feet for a term of 39 months in Boca Raton, Florida at a base rent of approximately $4,000 per month. Rent is all-inclusive and includes electricity during normal business hours, heat, air-conditioning, and water.

Future anticipated minimum lease payments total $23,952 for the remainder of 2013, and $11,976 for the three-month period ending March 31, 2014.

Rent expense for the six months ended June 30, 2013 and 2012 was $21,518 and $23,532 respectively.

Other Commitments

The Company entered into various contracts or agreements in the normal course of business, which may contain commitments. During the six months ended June 30, 2013 and during 2012 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.

On March 1, 2013 the Company entered into an agreement with First Market, LLC (Consultant) that shall remain in effect until cancelled by either party upon 15 days written notice. Consultant to perform such services as directed or assigned by Company’s Chief Executive Officer. The Company agreed to pay Consultant a fee of $10,000 for the first month during the term of the agreement and $5,000 per month thereafter. Additionally, the Company agreed to pay the Consultant an initial signing bonus of 180,000 shares of the Company common stock and an additional 180,000 shares payable in two installments due on the 60^th and 90^th days of the agreement. As of June 30, 2013 the Company has issued Consultant 360,000 shares of common stock and has paid the corresponding monthly fees.

11

BRIGHT MOUNTAIN HOLDINGS INC. AND SUBSIDIARIES

(a development stage company)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(Unaudited)

On May 31, 2013, the Company entered into an agreement with The Law Offices of James G. Dodrill II, P.A. (Attorney) that may be cancelled at any time. Attorney to serve as securities counsel in connection with the preparation of a registration statement on Regulation D, Rule 506 private placement memorandum. The Company agreed to pay the Attorney $15,000. Additionally, the Company agreed to issued 27,000 shares of Company common stock. As of June 30, 2013 the Company has issued Attorney 27,000 shares of Company common stock and made the first payment of $7,500 with the balance being due upon completion of the private placement memorandum.

All expenses and liabilities relating to such contracts were recorded in accordance with GAAP during all periods presented in the accompanying consolidated financial statements.

NOTE 8 – RELATED PARTIES

A related party founder was issued 18,000,000 common shares as founder shares for $100,000 cash in 2010, and related parties were issued 2,880,000 common shares in a private placement in 2010 for $400,000 (included in the 7,128,000 common shares sold for $990,000 cash in 2010).

In 2011, related party officers were granted 360,000 stock options (see Note 9).

In 2012, a director purchased 36,000 common shares for $10,000 and a related party purchased 180,000 common shares pursuant to an Access Letter dated December 1, 2011 for $50,000

During the six months ended June 30, 2013, a related party was issued 1,643,400 common shares for $456,500. During the six months ended June 30, 2013, a director purchased 180,000 common shares for $50,000. During the six months ended June 30, 2013, an employee was issued 9,000 common stock shares in lieu of a semi annual $2,500 bonus.

In 2013, as described in Note 5, certain related parties loaned funds to the Company in 2012, which were subsequently converted to equity on May 31, 2013.

NOTE 9– SHAREHOLDERS’ EQUITY

Preferred Stock

The Company authorized 20,000,000 shares of preferred stock with a par value of $0.01; none have been issued as of June 30, 2013 and December 31, 2012.

Common Stock

The Company has authorized 324,000,000 shares of common stock and issued 18,000,000 to the Company’s related party founder in July 2010 for $100,000 in cash at $.0056 per share. Subsequently, in 2010 and 2011, the Company raised additional capital through the issuance of common stock pursuant to a Private Placement Memorandum Dated September 1, 2010, whereby $790,000 and $200,000 in capital was raised through the issuance of 5,688,000 and 1,440,000 shares of common stock at $.1389 per share in 2010 and 2011, respectively. In 2012, the Company raised additional capital through the issuance of common stock pursuant to an Access Letter Dated December 1, 2011, whereby $615,000 in capital was raised through the issuance of 2,214,000 shares of common stock at $.2778 per share.

Additionally, during 2012, the Company issued 72,000 shares of its common stock to three individuals for services rendered. The Company valued these common shares based on the price recent investors paid for common shares pursuant to an Access Letter Dated December 1, 2011, or $.2778 per share. The total value for these shares is $20,000.

12

BRIGHT MOUNTAIN HOLDINGS INC. AND SUBSIDIARIES

(a development stage company)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(Unaudited)

During the six months ended June 30, 2013, the Company raised additional capital through the issuance of common stock pursuant to an Access Letter Dated December 1, 2011, whereby $165,000 in capital was raised through the issuance of 594,000 shares of common stock at $.2778 per share.

During the six months ended June 30, 2013, the Company raised additional capital through issuance of common stock pursuant to a Private Placement whereby $676,500 in capital was raised through the issuance of 2,435,400 shares of common stock at $.2778 per share.

During the six months ended June 30, 2013, the Company issued 387,000 shares of its common stock in connection with consulting agreements. The Company valued these common shares at $107,500 based on the price recent investors paid for common shares pursuant to an Access Letter Dated December 1, 2011, or $.2778 per share, which was all recognized since services were completed as of June 30, 2013. Additionally, during the six months ended June 30, 2013, the Company converted principal related party debt balance of $286,000 to equity by issuing 1,029,600 shares of common stock. The Company valued these common shares based on the price recent investors paid for common shares pursuant to a Private Placement, or $.2778 per share.

On June 10, 2013, the Company entered into an agreement with an attorney to issue 108,000 shares of Company common stock at $.2778 per share, or $30,000, for services rendered. The Company valued these common shares based on the price recent investors paid for common shares pursuant to a Private Placement and recognized as expense immediately.

On June 21, 2013, the Company entered into an agreement with an employee, wherein the employee elected to receive 9,000 shares of Company common stock at $.2778 per share, or $2,500, in lieu of semi-annual bonus. The Company valued these common shares based on the price recent investors paid for common shares pursuant to a Private Placement and therefore there was no gain or loss.

Stock Incentive Plan and Stock Option Grants to Employees and Directors

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

Stock Incentive Plan and Stock Option Grants to Employees and Directors (continued)

On January 3, 2011, the Company granted, pursuant to the 2011 Plan, ten-year stock options to purchase 720,000 common shares of the Company, of which (i) 180,000 are exercisable on January 3, 2012 at $0.1389 per share, (ii) 180,000 are exercisable on January 3, 2013 at $0.1389 per share, (iii) 180,000 are exercisable on January 3, 2014 at $0.1389 per share and (iv) 180,000 are exercisable on January 3, 2015 at $0.1389 per share.

13

BRIGHT MOUNTAIN HOLDINGS INC. AND SUBSIDIARIES

(a development stage company)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(Unaudited)

The total fair value of stock option awards granted to employees during the year ended December 31, 2011 was $68,880, which is being recognized over the respective vesting periods. The Company recorded compensation expense of $35,560 for the year ended December 31, 2011.

On February 17, 2012, the Company granted 54,000 ten-year stock options, which have an exercise price of $0.2778 per share and cliff vest annually over three years starting February 17, 2013, to an employee. The fair value was computed at $10,302 or $0.1908 per option.

On April 16, 2012, the Company granted 18,000 ten-year stock options, which have an exercise price of $0.2778 and cliff vest annually over three years starting on April 16, 2013, to a non-employee. The fair value was computed at $3,432 or $0.1908 per option.

The total fair value of stock option awards granted to employees during the year ended December 31, 2012 was $13,728, which is being recognized over the respective vesting periods. The Company recorded compensation expense of $25,884 for the year ended December 31, 2012.

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

Between April 9, 2013 and June 24, 2013, the Company granted 360,000 ten-year stock options, which have an exercise price of $0.2778 and cliff vest annually over four years starting in April to June 2013, to two employees and one director. The aggregate fair value of these option was computed at $68,645 or $0.1907 per option, which is being recognized over the requisite service period, which is the vesting period.

The Company recorded $10,159 and $12,199 compensation expense for the six months ended June 30, 2013 and 2012, respectively, in connection with all the option grants in all periods.

As of June 30, 2013, 540,000 shares were remaining under the 2013 Plan for future issuance.

The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of our stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. The Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors, which are subject to ASC Topic 718 requirements. These amounts are estimates and thus may not be reflective of actual future results, nor amounts ultimately realized by recipients of these grants. The Company recognizes share-based compensation expense on a straight-line basis over the requisite service period for each award.

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BRIGHT MOUNTAIN HOLDINGS INC. AND SUBSIDIARIES

(a development stage company)

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

JUNE 30, 2013

(Unaudited)

The expected life is computed using the simplified method, which is the average of the vesting term and the contractual term. The expected volatility is based on an average of similar public companies historical volatility, as the Company does not currently trade on the open market. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected term of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.

A summary of the Company’s stock option activity during the six months ended June 30, 2013, 2013 is presented below:

As of June 30, 2013 there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $79,651 to be recognized through June 2017.

NOTE 10 – CONCENTRATIONS

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to a concentration of credit risk, consist principally of temporary cash investments. The Company places its temporary cash investments with financial institutions not insured by the FDIC. There have been no losses in these accounts through June 30, 2013.

Concentration of Funding

During the six months ended June 30, 2013 a large portion of the Company’s funding was provided by the sale of additional shares of the Company’s common stock.

NOTE 11 – SUBSEQUENT EVENTS

The Company entered into an agreement on July 15, 2013 to purchase a website, namely, coastguardnews.com for the sum of $7,000.

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ITEM 2.

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

The following discussion of our financial condition and results of operations for the three and six months ended June 30, 2013 and 2012 should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this report. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth in our Registration Statement on Form 10. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could,” and similar expressions to identify forward-looking statements.

Overview

We are a development stage company organized in May 2010. Bright Mountain is developing a personal website “portal” designed to attract and retain Internet audiences whose main purpose is to be a starting point when connecting to or searching the World Wide Web (Web), with a special emphasis on consumer needs, breaking news, original content, employment opportunities and giving back. Our website seeks to fulfill its mission to help people in need by developing a profitable enterprise and giving back a portion of revenues to affiliated groups of veterans and first responders including law enforcement, police and ems.

Our website, www.TheBright.com, has its own unique characteristics including design elements like colors, shapes, layout and typefaces, as well as certain dynamic or interactive elements such as boxes, buttons and menus. Management believes that the “look and feel” of Bright Mountain can be described in terms such as “colorful”, “quality”, “fun”, “user friendly”, and “trustworthy”. It contains in a number of sections a vast amount of consumer oriented information including aggregated and original news content, financial markets information and data, blogs, shopping, and partners.

Additional Bright Mountain websites are:

Wardocumentaryfilms.com

Bootcamp4me.com

Bootcamp4me.org

360fire.com

Growth and retention of user traffic is paramount to our company’s future success. We expect to undertake specific efforts to develop this user traffic, including:

·

development of TheBright.com news. We expect to provide exclusive TheBright.com news articles daily to our users. With fifteen news writers at this time, management is planning for this service to be the source of several hundred original content articles that will be published monthly with other aggregated news sources such as the Associated Press and McClatchy newspapers,

·

cultivation of celebrity spokes people to write blogs for Bright Mountain. TheBright.com is in early conversations with possible celebrity bloggers but no agreement has been reached at this time.

·

development of a social media platform focused on military veterans and others that “protect us”, is being planned for TheBright.com website, and

·

acquiring of websites that are related to the Company’s core mission to give back to veterans, firemen, police and ems –“those that protect us”.  Website acquisitions in the second quarter 2013 include:

Wardocumentaryfilms.com on April 6, 2013

Bootcamp4me.com on May 21, 2013

Bootcamp4me.org on May 21, 2013

360fire.com on June 21, 2013

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Going Concern

We have incurred net losses of $2,410,040 since inception (May 20, 2010) through June 30, 2013. The report of our independent registered public accounting firm on our consolidated balance sheets at December 31, 2012 and 2011, and the related consolidated statements of operations, changes in shareholders’ equity, and cash flows for each of the two years in the period ended December 31, 2012 and for the period from May 20, 2010 (inception) to December 31, 2012 contains an explanatory paragraph regarding substantial doubt of our ability to continue as a going concern based upon our net losses, cash used in operations and accumulated deficit.  These factors, among others, raise substantial doubt about our ability to continue as a going concern. Our consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. There are no assurances we will be successful in our efforts to generate revenues or report profitable operations or to continue as a going concern, in which event investors would lose their entire investment in our company.

Results of Operations for the three and six months ended June 30, 2013 compared to the three and six months ended June 30, 2012

Revenue: The Company’s revenues for the three months ended June 30, 2013 of $103,146 increased 3,065% as compared to the three months ended June 30, 2012 of $3,256 and revenue for the six months ended June 30, 2013 of $173,715 increased 5,235% as compared to the six months ended June 30, 2012 of $3,256.  The increase in our sales reflects the impact of expanded product inventory.

Operating Expenses: The Company’s operating expenses of $89,328 for the three months ended June 30, 2012 increased to $434,110 for the three months ended June 30, 2013.  The Company’s operating expenses increased from $377,542 during the six months ended June 30, 2012 to $754,869 for the six months ended June 30, 2013. The increase in operating expenses can be attributed to ongoing implementation of the Company’s business plan as well as incurring certain operating expenses during 2013 that were new compared to 2012, such as expenses related to a consulting agreement, SEC counsel and audit and Edgar fees. The operating expenses that were new in 2013 compared to 2012 include $75,000 to a consultant for financial advisory services, $38,950 paid to SEC and trademark counsel, and $31,913 for audit and Edgar filing fees. Additionally, the following expenses increased in 2013 compared to 2012; PR ad agency fees by $2,073; payroll, payroll taxes and employee medical expense increased by $52,782; part-time worker expenses increased by $3,146; insurance expense increased by $7,077; stock compensation increased by $67,659 of which $57,500 was to outside consultants; and lastly, website content, software development, domain registration, and server hosting fees increased by approximately $51,095.

Interest Expense: The Company’s interest expense increased from $0 for the three months ended June 30, 2012 to $4,798 for the three months ended June 30, 2013.  The Company’s interest expense increased from $0 for the six months ended June 30, 2012 to $12,093 for the six months ended June 30, 2013 due to the issuance of Notes to Related Parties in the total amount of $300,000.  The Notes were converted to equity on May 31, 2013.

Net loss from operations: The Company’s net loss from operations increased from $288,214 for the three months ended June 30, 2012 to $412,906 for the three months ended June 30, 2012.  The Company’s net loss from operations increased from $376,939 during the six months ended June 30, 2012 to $720,614 for the six months ended June 30, 2013 due primarily to the increase in operating expenses related to the implementation of its business plan.

Liquidity and Capital Resources

Net cash flows used in operating activities was $629,817 for the six months ended June 30, 2013 as compared to $385,822 used in operating activities for the six months ended June 30, 2012, primarily due to ongoing implementation of the Company’s business plan as well as incurring certain operating expenses during 2013 that were new compared to 2012.  

Net cash used in investing activities was $2,478 for the six months ended June 30, 2013 as compared to $0 used in investing activities for the six months ended June 30, 2012, due to the purchase of fixed assets.  

Net cash flows provided from financing activities was $826,817 for the six months ended June 30, 2012 as compared to $155,000 for the six months ended June 30, 2012.

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Net cash increase for the six months ended June 30, 2013 was $194,522 compared to net cash decrease of $230,822 for the six months ended June 30, 2012.

Cash as of June 30, 2013 was $531,206 compared to $97,927 as of June 30, 2012.

Since inception, May 10, 2010, through June 30, 2013, we had a net loss of $2,410,040 and at June 30, 2013, we had working capital of $606,534. These development stage losses have been funded through the sale of our common stock and shareholder loans. Cash proceeds from the sale of our common stock totaled $2,546,500 through June 30, 2013. Shareholder loans received during 2012 totaled $300,000 with a balance outstanding at June 30, 2013 of $0 as a result of the mutual agreement in May 2013 between the Company and the Lender(s) to the conversion of the outstanding principal balance of $286,000 from debt to equity through the issuance of 1,029,600 shares of Company Common Stock. While we generated nominal revenues during the six months ended June 30, 2013, we do not anticipate that we will generate sufficient income to fund our operations for at least the next 12 months. During that period of time we will need to obtain additional equity or debt financing of $800,000 as to which, at this time, we have no assurances of its availability, and if available, its terms.

Presently, our monthly operating overhead is approximately $125,000 of which, approximately $114,000 is cash operating overhead. We intend to increase this $114,000 cash operating overhead to $127,000 if we are able to raise additional capital with the initial proceeds being used for an increase in general and administrative expenses, branding, marketing, advertising and promotion, ongoing website development and operation and inventory. In the absence of additional funding, we will need to decrease our expenses, which will adversely impact on our plan of operations.

Capital Resources have also been used for the acquisition and further development of the following websites, which were acquired during the three month period ending June 30, 2013:

Wardocumentaryfilms.com on April 6, 2013

Bootcamp4me.com on May 21, 2013

Bootcamp4me.org on May 21, 2013

360fire.com on June 21, 2013

Critical Accounting Policies

Certain accounting policies, which are critical to our consolidated financial statement presentation, are described under Note 1 of the Notes to Consolidated Financial Statements appearing in this report.

Recent Accounting Pronouncements

The recent accounting standards that have been issued or proposed by the Financial Accounting Standards Board (FASB) or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on the consolidated financial statements upon adoption.

Off Balance Sheet Arrangements

As of the date of this report, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

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ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable for a smaller reporting company.

ITEM 4.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. In designing and evaluating our disclosure controls and procedures, our management recognized that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Based on his evaluation as of the end of the period covered by this report, our Chief Executive Officer and our Chief Financial Officer concluded that our disclosure controls and procedures were not effective such that the information relating to our company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure. This was due to deficiencies that existed in the design or operation of our internal control over financial reporting that adversely affected our internal controls and that taken together may be considered to be a material weakness.

A material weakness is a deficiency, or combination of deficiencies, that results in more than a remote likelihood that a material misstatement of annual or interim financial statements will not be prevented or detected. In connection with the assessment described above, management identified the following control deficiencies that represent material weaknesses at June 30, 2013:

The Company has only one employee who is responsible for handling the cash and making deposits, posting cash receipts, writing and mailing checks, and posting cash disbursements.

Management believes that the material weaknesses set forth in above did not have an effect on the Company's financial reporting for the six months ended June 30, 2013.  However, management believes that the lack of a functioning audit committee and lack of a majority of outside directors on the Company's board of directors can adversely affect reporting in the future years, when our operations become more complex and less transparent and require higher level of financial expertise from the overseeing body of the Company.

We are committed to improving our financial organization. As part of this commitment, we will, as soon as funds are available to the Company (1) appoint one or more outside directors to our board of directors who shall be appointed to the audit committee of the Company resulting in a fully functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures; (2) create a position to segregate duties consistent with control objectives and will increase our personnel resources; and (3) hire independent third parties to provide expert advice.

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

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

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PART II - OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

None.

ITEM 1A.

RISK FACTORS.

Not applicable for a smaller reporting company.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

On March 1, 2013 the Company issued First Market LLC 180,000 shares of its common stock valued at $50,000 as partial compensation for services to be rendered under the consulting agreement described in Item 5. On May 1, 2013 we issued an additional 90,000 shares of our common stock valued at $25,000 as additional compensation for services under the agreement.  

On June 1, 2013 we issued an additional 90,000 shares of our common stock valued at $25,000 as final compensation for services under the agreement. The recipient was an accredited investor and the issuance was exempt from registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(2) of that act.

On May 31, 2013, the Company issued James G. Dodrill II 27,000 shares of its common stock valued at $7,500 as compensation for services to be rendered under the consulting agreement described in item 5.

On June 1, 2013, the Company issued Pearlman Schneider LLC 108,000 shares of its common stock valued at $30,000 as compensation for services rendered as described in item 5.

On June 21, 2013, the Company issued Susan J. Manwaring (Employee) 9,000 shares of its common stock valued at $2,500 in lieu of semi-annual bonus.  

Between January 1, 2013 through June 30, 2013 the Company issued and sold 594,000 shares of its common stock pursuant to the Access Letter Dated December 1, 2011 resulting in gross proceeds of $165,000. Of the 594,000 shares issued, 198,000 shares were issued to the Company’s Chief Executive Officer as described in the paragraph below.  The Company did not pay any commissions or finder’s fees in this transaction and is using the proceeds for working capital.  The investors were accredited investors and the issuance was exempt form registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(2) of that act.

Between April 1, 2013 through June 30, 2013 the Company issued and sold an additional 1,445,400 shares of its common stock to the Company’s Chief Executive Officer, pursuant to the terms of a subscription agreement, resulting in gross proceeds to us of $456,500. The Company did not pay any commissions or finder’s fees in these transactions and is using the proceeds for working capital. The recipient was an accredited investor and the issuances were exempt form registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(2) of that act.

Between January 1, 2013 through June 30, 2013 the Company issued and sold 990,000 shares of its common stock pursuant to a Subscription Agreement resulting in gross proceeds of $275,000. The Company did not pay any commissions or finder’s fees in this transaction and is using the proceeds for working capital.  The investors were accredited investors and the issuance was exempt form registration under the Securities Act of 1933 in reliance on an exemption provided by Section 4(2) of that act.

On May 31, 2013, the Company converted principal debt balance of $286,000 to equity by issuing 1,029,600 shares of common stock.

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ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.

MINE SAFETY DISCLOSURES.

Not applicable to our company’s operations.

ITEM 5.

OTHER INFORMATION.

On March 1, 2013 the Company entered into an agreement with First Market, LLC (Consultant) that shall remain in effect until cancelled by either party upon 15 days written notice. Consultant to perform such services as directed or assigned by Company’s Chief Executive Officer. The Company agreed to pay Consultant a monthly fee of $10,000 for the first month during the term of the agreement and $5,000 per month thereafter. Additionally, the Company agreed to pay the Consultant an initial signing bonus of 180,000 shares of the Company common stock and an additional 180,000 shares payable in two installments due on the 60^th and 90^th days of the agreement.

On May 22, 2013 the Company entered into an agreement with The Law Offices of James G. Dodrill II, P.A. (Attorney) that may be cancelled at any time.  Attorney to serve as securities counsel in connection with the preparation of a registration statement on Regulation D, Rule 506 private placement memorandum.  The Company agreed to pay the Attorney $15,000.  Additionally, the Company agreed to issued 27,000 shares of Company common stock.  As of June 30, 2013 the Company has issued Attorney 27,000 shares of Company common stock and made the first payment of $7,500 with the balance being due upon completion of the private placement memorandum.

On June 1, 2013, the Company issued Pearlman Schneider LLC 108,000 shares of its common stock valued at $30,000 as compensation for legal services rendered.

ITEM 6.

EXHIBITS.

———————

*

filed herewith

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SIGNATURES

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

22