Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2018 | Aug. 20, 2018 | |
Document And Entity Information | ||
Entity Registrant Name | Bright Mountain Media, Inc. | |
Entity Central Index Key | 1,568,385 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 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 | 51,003,864 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2,018 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Current assets | ||
Cash and Cash Equivalents | $ 377,779 | $ 140,022 |
Accounts Receivable, net | 824,028 | 879,770 |
Inventories | 409,977 | 611,468 |
Prepaid Expenses and Other Current Assets | 60,328 | 145,732 |
Total current assets | 1,672,112 | 1,776,992 |
Property and Equipment, net | 76,510 | 89,500 |
Website Acquisition Assets, net | 279,421 | 393,417 |
Intangible Assets, net | 868,596 | 967,774 |
Goodwill | 446,426 | 446,426 |
Other Assets | 40,833 | 44,608 |
Total Assets | 3,383,899 | 3,718,717 |
Current Liabilities | ||
Accounts Payable | 901,517 | 1,172,827 |
Accrued Expenses | 108,420 | 90,000 |
Accrued Interest – Related Party | 16,550 | 0 |
Premium Finance Loan Payable | 21,639 | 63,133 |
Deferred Rent - Short Term | 4,231 | 2,468 |
Deferred Revenues | 7,187 | 9,735 |
Long Term Debt, Current Portion | 577,420 | 767,071 |
Total Current Liabilities | 1,636,964 | 2,105,234 |
Long term Deferred Rent | 14,455 | 16,418 |
Long Term Debt to Related Parties, net | 1,299,863 | 1,198,893 |
Long Term Debt, net of current portion | 0 | 54,950 |
Total Liabilities | 2,951,282 | 3,375,495 |
Commitments and contingencies | ||
Shareholders' Equity | ||
Common Stock, par value $0.01, 324,000,000 shares authorized, 47,941,364 and 44,901,531 issued and outstanding | 510,039 | 461,689 |
Additional Paid-in Capital | 13,603,663 | 11,685,685 |
Accumulated Deficit | (13,702,210) | (11,818,902) |
Total Shareholders' Equity | 432,617 | 343,222 |
Total Liabilities and Shareholders' Equity | 3,383,899 | 3,718,717 |
Series A Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred Stock, par value $0.01, 20,000,000 shares authorized | 1,000 | 1,000 |
Series B Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred Stock, par value $0.01, 20,000,000 shares authorized | 0 | 0 |
Series C Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred Stock, par value $0.01, 20,000,000 shares authorized | 0 | 0 |
Series D Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred Stock, par value $0.01, 20,000,000 shares authorized | 0 | 0 |
Series E Preferred Stock [Member] | ||
Shareholders' Equity | ||
Preferred Stock, par value $0.01, 20,000,000 shares authorized | $ 0 | $ 0 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Jun. 30, 2018 | Dec. 31, 2017 |
Preferred stock, par value per share | $ .01 | $ .01 |
Preferred stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, par value per share | $ .01 | $ .01 |
Common stock, shares authorized | 324,000,000 | 324,000,000 |
Common stock, shares issued | 51,003,864 | 44,901,531 |
Common stock, shares outstanding | 51,003,864 | 44,901,531 |
Series A Preferred Stock [Member] | ||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 100,000 | 100,000 |
Preferred stock, shares outstanding | 100,000 | 100,000 |
Series B Preferred Stock [Member] | ||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series C Preferred Stock [Member] | ||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series D Preferred Stock [Member] | ||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Series E Preferred Stock [Member] | ||
Preferred stock, shares authorized | 2,500,000 | 2,500,000 |
Preferred stock, shares issued | 2,012,500 | 1,375,000 |
Preferred stock, shares outstanding | 2,012,500 | 1,375,000 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues | ||||
Product | $ 318,765 | $ 572,931 | $ 694,051 | $ 1,124,286 |
Advertising | 291,276 | 93,890 | 974,334 | 203,633 |
Total revenues | 610,041 | 666,821 | 1,668,385 | 1,327,919 |
Cost of revenue | ||||
Product | 238,953 | 365,411 | 530,518 | 737,957 |
Advertising | 182,865 | 0 | 693,569 | 3,510 |
Total Cost of revenue | 421,818 | 365,411 | 1,224,087 | 741,467 |
Gross profit | 188,223 | 301,410 | 444,298 | 586,452 |
Selling, general and administrative expenses | 1,011,510 | 1,064,765 | 2,101,912 | 1,948,968 |
Loss from operations | (823,287) | (763,355) | (1,657,614) | (1,362,516) |
Other income (expense) | ||||
Interest income | 729 | 137 | 1,017 | 219 |
Interest expense | (9,851) | (34,591) | (25,204) | (69,751) |
Interest expense - related party | (101,650) | (76,124) | (201,507) | (125,132) |
Total other income (expense) | (110,772) | (110,578) | (225,694) | (194,664) |
Net Loss | (934,059) | (873,933) | (1,883,308) | (1,557,180) |
Preferred stock dividends | ||||
Series A and Series E preferred stock | 18,742 | 754 | 33,505 | 2,727 |
Total preferred stock dividends | 18,742 | 754 | 33,505 | 2,727 |
Net loss attributable to common shareholders | $ (952,801) | $ (874,687) | $ (1,916,813) | $ (1,559,907) |
Basic and diluted net loss per share | $ (0.02) | $ (0.02) | $ (0.04) | $ (0.03) |
Weighted average shares outstanding - basic and diluted | 48,192,461 | 44,936,196 | 48,192,461 | 44,925,043 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CHANGE IN SHAREHOLDERS' EQUITY (Unaudited) - 6 months ended Jun. 30, 2018 - USD ($) | Preferred Stock [Member] | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Balance at Dec. 31, 2017 | $ 14,750 | $ 461,689 | $ 11,685,685 | $ (11,818,902) | $ 343,222 |
Balance, shares at Dec. 31, 2017 | 1,475,000 | 46,168,864 | |||
Common stock issued for 10% dividend payment pursuant to Series A preferred stock Subscription Agreements | $ 100 | (100) | |||
Common stock issued for 10% dividend payment pursuant to Series A preferred stock Subscription Agreements, shares | 10,000 | ||||
Issuance of Series E preferred Stock ($0.40/share) | $ 6,375 | 248,625 | 255,000 | ||
Issuance of Series E preferred Stock ($0.40/share), shares | 637,500 | ||||
Series E 10% preferred stock dividend | (33,505) | (33,505) | |||
Stock option vesting expense | 14,208 | 14,208 | |||
Units issued for cash ($0.40/share) | $ 48,250 | 1,688,750 | 1,737,000 | ||
Units issued for cash ($0.40/share), shares | 4,825,000 | ||||
Net loss | (1,883,308) | (1,883,308) | |||
Balance at Jun. 30, 2018 | $ 21,125 | $ 510,039 | $ 13,603,663 | $ (13,702,210) | $ 432,617 |
Balance, shares at Jun. 30, 2018 | 2,112,500 | 51,003,864 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 6 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (1,883,308) | $ (1,557,180) |
Adjustments to reconcile net loss to net cash and cash equivalents used in operations: | ||
Depreciation | 12,852 | 12,148 |
Amortization of debt discount | 106,425 | 67,268 |
Amortization of intangibles | 213,174 | 151,542 |
Stock option compensation expense | 14,208 | 73,838 |
Common stock and warrants issued for the brokers | 0 | 25,860 |
Gain on sale of fixed assets | (749) | 0 |
Provision for bad debts | 49,139 | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (12,922) | 33,499 |
Inventory | 201,491 | 60,497 |
Prepaid expenses and other current assets | 85,404 | 52,848 |
Other assets | 3,775 | 108,903 |
Accounts payable and accrued expense | (275,511) | (63,416) |
Accrued interest | 18,420 | 62,847 |
Accrued interest - related party | 16,550 | 6,858 |
Deferred rents | (201) | 15,976 |
Deferred revenues | (2,548) | 0 |
Net cash used in operating activities | (1,453,801) | (948,512) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (1,213) | (14,305) |
Cash received for sale of property and equipment | 2,100 | 0 |
Net cash provided by (used in) investing activities | 887 | (14,305) |
Cash flows from financing activities: | ||
Proceeds from issuance of preferred stock | 255,000 | 0 |
Proceeds from issuance of common stock, net of commissions | 1,737,000 | 0 |
Repayments on insurance premium notes payable | (41,494) | (48,949) |
Dividend payments | (33,505) | 0 |
Principal payment on Notes Payable | (226,330) | 0 |
Long-term debt - Related parties | 0 | 950,000 |
Net cash provided by financing activities | 1,690,671 | 901,051 |
Net increase (decrease) in cash | 237,757 | (61,766) |
Cash and cash equivalents at beginning of period | 140,022 | 162,795 |
Cash and cash equivalents at end of period | 377,779 | 101,029 |
Supplemental disclosure of cash flow information | ||
Cash paid for: Interest | 104,710 | 52,400 |
Non-cash investing and financing activities | ||
Premium finance loan payable recorded as prepaid | 0 | 42,362 |
Debt discount on convertible notes payable | 0 | 522,500 |
Valuation of common stock warrants issued to Spartan | 161,407 | 0 |
Accounts receivable charged against notes payable - Daily Engage Media | $ 19,525 | $ 0 |
NATURE OF OPERATIONS AND SUMMAR
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 6 Months Ended |
Jun. 30, 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 its wholly owned subsidiary 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 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 fourth 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 in September 2017, the Company has acquired the software and expertise to scale this side of the business. Two of our websites operate as e-commerce 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 and six months ended June 30, 2018 and 2017 have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) applicable to interim financial information and the requirements of Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. In the opinion of management, such condensed consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of the condensed consolidated financial position and the condensed consolidated results of operations. The condensed consolidated results of operations for periods presented are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet information as of December 31, 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, as filed with the SEC on April 2, 2018. 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 June 30, 2018 consolidated balance sheet presentation. Use of Estimates Our consolidated financial statements are prepared in accordance with 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 Fair Value 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. 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. 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 ● 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 from companies who pay the Company a monthly fee for advertising space and; ● Advertising revenues are generated by users “clicking” on website advertisements utilizing several ad network partners. Revenues are recognized net of their fees for Company owned websites upon receipt of payment by the ad network partner since the revenue is not determinable until it is received. Our advertising revenue generated from the Daily Engage and Bright Mountain 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 a range of 18% to 20% of the gross revenues on these contractual agreements. 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 revenue generating event. The Company becomes obligated to make the revenue share payments in the period the advertising impressions, click throughs, actions or lead-based information are delivered or occur. The Daily Engage Media 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 revenue generating event. The Company becomes obligated to make the revenue share payments in the period the advertising impressions, click throughs, actions or lead-based information are delivered or occur. Shipping and Handling Costs The Company includes shipping and handling fees billed to customers as revenues and shipping and handling costs for shipments to customers as cost of revenues. Sales Return Reserve Policy Our return policy generally allows our end users to return purchased products for refund or in exchange for new products. We estimate a reserve for sales returns, if any, and record that reserve amount as a reduction of sales and as a sales return reserve liability. Sales to consumers on our web site generally may be returned within a reasonable period of time. 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 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 and six months ended June 30, 2018 and 2017, all platform and website development costs have been expensed. Amortization and Impairment of Long-Lived Assets Amortization and impairment of long-lived assets are non-cash expenses relating primarily to intangible assets. The Company accounts for long-lived assets in accordance with the provisions of ASC 360-10 “ Accounting for the Impairment or Disposal of Long-Lived Assets Website acquisition costs are amortized over three years and intangible assets are amortized over up to eight 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 Equity-Based Payments to Non-Employees 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 and six months ended June 30, 2018 and 2017, advertising, marketing and promotion expense was $74,964 and $72,945 and $135,887 and $165,233, 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. As of June 30, 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 Segment Information In accordance with the provisions of ASC 280-10, “ Disclosures about Segments of an Enterprise and Related Information Recent Accounting Pronouncements May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606) In July 2015, FASB issued ASU No. 2015-11 , “Inventory (Topic 330): Simplifying the Measurement of Inventory . In February 2016, the FASB issued ASU 2016-02 “ Leases In April 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments” In June 2016, the FASB issued ASU 2016-13 “Financial Instruments – Credit Losses” 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 statement s. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows –Restricted Cash” In January 2017, the FASB issued 2017-04, Intangibles - Goodwill and Other |
GOING CONCERN
GOING CONCERN | 6 Months Ended |
Jun. 30, 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 ($1,883,308) and used net cash in operating activities of ($1,453,801) for the six months ended June 30, 2018. The Company had an accumulated deficit of ($13,702,210) at June 30, 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. |
ACQUISITIONS
ACQUISITIONS | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
ACQUISITIONS | On September 19, 2017 the Company, Daily Engage Media, and the owners of the membership interests in Daily Engage Media entered into an Amended and Restated Membership Interest Purchase Agreement (the “Daily Engage 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 $888,000. 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: ● if Daily Engage Media's revenues are at least $20,228,954, and it has operating income of at least $3,518,623 (the "Year-One Daily Engage Target") during the first 12 months following the closing date (the "Year-One Earn out Period") as determined by us in accordance with GAAP, we agreed to pay former members and executives collectively an additional $500,000 in cash and issue an additional 1,008,547 shares of our common stock (the "Year-One Earn out Shares"); ● if Daily Engage Media's revenues are at least $60,385,952, and operating income of at least $11,380,396 (the "Year-Two Daily Engage Target") during the first 12 months following the Year-One Earnout Period (the "Year-Two Earnout Period") as determined by us in accordance with GAAP, we agreed to pay the pay former members and executives an additional $500,000 in cash and issue an additional 796,221 shares of our common stock (the "Year-Two Earnout Shares"). In addition, if the Year-Two Daily Engage Target is met, at the time of payment of the Year-Two Earnout Shares and the year-two earnout cash, the former members and executives collectively will also be entitled to receive the Year-One Earnout Shares and the year-one earnout cash to the extent not previously received; and ● if Daily Engage Media's revenues are at least $96,512,204, and it has operating income of at least $18,524,967 (the "Year-Three Daily Engage Target") during the 12 months following the Year-Two Earnout Period (the "Year-Three Earnout Period") as determined by us in accordance with GAAP, we agreed to pay former members and executives an additional $550,000 in cash and issue an additional 723,523 shares of our common stock (the "Year-Three Earnout Shares"). In addition, if the Year-Three Daily Engage Target is met, at the time of payment of the Year-Three Earnout Shares and the year-three earnout cash, the pay former members and executives collectively will also be entitled to receive the Year-One Earnout Shares, the year-one earnout cash, the Year-Two Earnout Shares and the year-two earnout cash, to the extent not previously received. The preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on the estimated fair values was as follows: 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 Unallocated purchase price 446,426 Total purchase price $ 1,088,426 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 Daily Engage Media, 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 business been acquired as of the first day of the periods presented. Three Months Ended Six Months Ended June 30, 2017 June 30, 2017 Total revenue $ 1,141,444 $ 2,366,160 Total expenses (2,159,054 ) (4,030,733 ) Preferred stock dividend (754 ) (2,727 ) Net loss attributable to common shareholders $ (1,018,364 ) $ (1,667,300 ) Basic and diluted net loss per share $ (0.02 ) $ (0.04 ) |
INVENTORIES
INVENTORIES | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | At June 30, 2018 and December 31, 2017 inventories consisted of the following: June 30, 2018 December 31, 2017 Product inventory: clocks and watches $ 235,834 $ 453,852 Product inventory: other inventory 196,591 180,064 Total inventory balance 432,425 633,916 Less: inventory allowance for slow moving (22,448 ) (22,448 ) Total inventory balance, net $ 409,977 $ 611,468 |
PREPAID EXPENSES AND OTHER CURR
PREPAID EXPENSES AND OTHER CURRENT ASSETS | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
PREPAID COSTS AND EXPENSES | At June 30, 2018 and December 31, 2017, prepaid expenses and other current assets consisted of the following: June 30, 2018 December 31, 2017 Prepaid rent $ 18,686 $ 50,417 Prepaid insurance 39,941 92,322 Prepaid inventory 1,701 2,993 $ 60,328 $ 145,732 |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
PROPERTY AND EQUIPMENT | At June 30, 2018 and December 31, 2017, property and equipment consisted of the following: Useful Lives June 30, 2018 December 31, 2017 Furniture and fixtures 3-5 years $ 78,856 $ 78,994 Computer equipment 3 years 59,511 59,511 Leasehold improvements 5 years 39,384 39,384 Total property and equipment 177,751 177,889 Less: accumulated depreciation (101,241 ) (88,389 ) Total property and equipment, net $ 76,510 $ 89,500 Depreciation expense for the three and six months ending June 30, 2018 and 2017, was $6,513 and $6,659 and $12,852 and $12,148, respectively. |
WEBSITE ACQUISITION AND INTANGI
WEBSITE ACQUISITION AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2018 | |
Website Acquisition And Intangible Assets | |
WEBSITE ACQUISITION AND INTANGIBLE ASSETS | At June 30, 2018 and December 31, 2017, respectively, website acquisitions, net consisted of the following: June 30, 2018 December 31, 2017 Website Acquisition Assets $ 1,417,189 $ 1,417,189 Less: accumulated amortization (926,571 ) (812,575 ) Less: accumulated impairment loss (211,197 ) (211,197 ) Website Acquisition Assets, net $ 279,421 $ 393,417 At June 30, 2018 and December 31, 2017, respectively, intangible assets, net consisted of the following: Useful Lives June 30, 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 (195,177 ) (95,999 ) Less: accumulated impairment loss (50,227 ) (50,227 ) Intangible assets, net $ 868,596 $ 967,774 Amortization expense for the three and six month periods ending June 30, 2018 and 2017 was $100,317 and $75,806 and $213,174 and $151,542, respectively, related to both the website acquisition costs and the intangibles. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | The Company has two identifiable segments as of June 30, 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 and six month periods ended June 30, 2018 and 2017. For the three months ended For the three months ended June 30, 2018 June 30, 2017 Products Advertising Total Products Advertising Total Revenues $ 318,765 $ 291,276 $ 610,041 $ 572,931 $ 93,890 $ 666,821 Intangible amortization $ 41,732 $ 58,585 $ 100,317 $ — $ 75,806 $ 75,806 Depreciation $ 3,099 $ 3,414 $ 6,513 $ 5,707 $ 952 $ 6,659 Loss from operations $ (342,487 ) $ (480,800 ) $ (823,287 ) $ (445,896 ) $ (317,459 ) $ (763,355 ) Segment assets $ 1,127,473 $ 2,256,426 $ 3,383,899 $ 1,728,881 $ 784,566 $ 2,513,447 Purchase of assets $ 1,213 $ — $ 1,213 $ 14,305 $ — $ 14,305 For the six months ended For the six months ended June 30, 2018 June 30, 2017 Products Advertising Total Products Advertising Total Revenues $ 694,051 $ 974,334 $ 1,668,385 $ 1,124,286 $ 203,633 $ 1,327,919 Intangible amortization $ 63,526 $ 149,648 $ 213,174 $ — $ 151,542 $ 151,542 Depreciation $ 5,346 $ 7,506 $ 12,852 $ 10,285 $ 1,863 $ 12,148 Loss from operations $ (689,571 ) $ (968,043 ) $ (1,657,614 ) $ (845,275 ) $ (517,241 ) $ (1,362,516 ) Segment assets $ 1,127,473 $ 2,256,426 $ 3,383,899 $ 1,728,881 $ 784,566 $ 2,513,447 Purchase of assets $ 1,213 $ — $ 1,213 $ 14,305 $ — $ 14,305 |
NOTES PAYABLE
NOTES PAYABLE | 6 Months Ended |
Jun. 30, 2018 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | Long Term Debt to Related Parties Between September 2016 and August 2017, the Company issued a series of convertible notes payable to an executive officer and member of our board of directors. The notes mature five years from issuance at which time all principal 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 June 30, 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 June 30, 2018 and December 31, 2017, the total convertible notes payable to related party net of discounts was $1,299,863 and $1,198,893, 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, and the parties have agreed to extend the maturity to December 31,2018. 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 the six month period ended June 30, 2018 the Company made payments of $205,000, reducing the note balance to $295,000. The Company and the lender have reached an oral agreement, whereby the lender will extend the maturity date to December 31, 2018 and the Company will pay the lender $150,000 in the third quarter of 2018 and the remaining balance plus accrued interest by December 31, 2018. The Company paid $50,000 in July 2018, in accordance with this agreement. 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 June 30, 2018 and December 31, 2017 was $225,162 and $254,687, respectively. The Company applied payments made on behalf of the former company for the year ended December 31, 2017 of $125,313 and $19,525 for the six months ended June 30, 2018. In April 2018 the Company paid principal payments of $2,500 to the four note holders, totaling $10,000 and in July 2018, the Company paid $25,000. 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 June 30, 2018 and December 31, 2017, was $56,172 and $67,895 net of discounts of $6,364 and $11,820 respectively. Interest expense on notes payable was $9,851 and $34,591 and $25,204 and $69,751 for the three and six month periods ended June 30, 2018 and 2017, respectively. Amortization of the debt discount of $2,727 and $5,455 and $106,425 and $67,268 for the three and six months ended June 30, 2018 and 2017, respectively. Interest expense on notes payable – related party was $101,650 and $76,124 and $201,507 and $125,132 for the three and six month periods ended June 30, 2018 and 2017, respectively, inclusive of amortization of debt discount totaled $50,763 and $41,109 and $100,970 and $67,268, respectively. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 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 $18,686 and $50,417 at June 30, 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 2021 with an initial base rental rate of $1,641 per month, and escalating at approximately 3% per year thereafter. Rent expense for the three and six months ended June 30, 2018 and 2017 was $73,836 and $57,249 and $137,926 and $117,925, 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. See Subsequent Events Note 13 for further discussion and Part II, Item 1. Legal Proceedings. Other Commitments The Company entered into various contracts or agreements in the normal course of business, which may contain commitments. During the three and six months ended June 30, 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 and six month periods ended June 30, 2018 and 2017 were $80,877 and $37,500 and $112,810 and $90,000, respectively. Effective June 1, 2014, the Company entered into an employment agreement with its Chief Executive Officer (“CEO”). 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 these 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. See Subsequent Events Note 13 for further discussion. |
SHAREHOLDERS' EQUITY
SHAREHOLDERS' EQUITY | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
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 June 30, 2018, there were 100,000 shares of Series A Stock and 2,012,500 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. In January 2018 the Company paid 10,000 shares of common stock dividends 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, an executive officer and member of our board of directors, 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 six months ended June 30, 2018 periods, Mr. W. Kip Speyer, an executive officer and member of our board of directors, purchased an aggregate of 637,500 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 June 2018, the Company sold an aggregate of 4,825,000 units of its securities to 28 accredited investors in a private placement resulting in gross proceeds to the Company of $1,930,000. 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 (“Spartan”), 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 commissions totaling $193,000, included in the Company’s condensed consolidated statement of changes in shareholders’ equity for the six months ended June 30, 2018. In, addition, the Company issued Spartan five-year placement agent warrants to purchase an aggregate of 482,500 shares of the Company's common stock at an exercise price of $0.65 per share. During the period January 2018 to March 2018, warrants to purchase an aggregate of 176,250 of the Company's common stock were valued at $95,552 using the Black-Scholes model to value the warrants based on a risk-free rate of l 0% based on recent borrowing costs and a volatility of 214%. The Company recorded the warrants as professional fees in the condensed consolidated statement of operations however management subsequently determined that based on the services specified in the agreement, the fees incurred from the warrant issuance were solely for the purpose of raising capital in connection with the private placement discussed above. As a result, the fees are considered an offering cost and should have been reflected as a component of shareholders' equity for the period ended June 30, 2018. The net impact of this adjustment on the interim period financials statements was not significant. During the 2nd quarter of 2018, upon reviewing similar companies in our industry, management determined that the volatility and risk-free rate utilized was significantly higher than our peers. The Company used a 2% risk-free interest rate and a volatility of approximately 62% for the valuation of the warrants issued during the period. Based on this, during the period from April 2018 to June 2018, warrants to purchase an aggregate of 306,250 of the Company's common stock were valued at $100,256. Management believes the current assumptions are more in-line with our peer group and closer to our anticipated results. 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 $26,195 stock compensation for the three months ended June 30, 2018 and 2017 and $14,208 and $53,653 for the six months ended June 30, 2018 and 2017, respectively. The stock compensation expense has been recognized as a component of selling, general and administrative expenses in the accompanying unaudited condensed consolidated financial statements. As of June 30, 2018 there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $21,599 to be recognized through August 2020. A summary of the Company's stock option activity during the six months ended June 30, 2018 is presented below: 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 5.4 $ 543,626 Granted — — — — Exercised — — — — Forfeited — — — — Expired — — — — Balance Outstanding, June 30, 2018 2,027,000 $ 0.37 4.9 $ 654,446 Exercisable at June 30, 2018 1,801,500 $ 0.38 4.6 $ 643,871 Summarized information with respect to options outstanding under the three option plans at June 30, 2018 is as follows: Options Outstanding Options Exercisable Range or Exercise Price Number Outstanding Remaining Average Contractual Life (In Years) Weighted Average Exercise Price Number Exercisable Weighted Average Exercise Price Remaining Average Conversion Life (In Years) 0.14 - 0.24 720,000 0.9 $ 0.14 720,000 $ 0.14 1.0 0.25 - 0.49 351,000 0.8 $ 0.28 351,000 $ 0.28 .09 0.50 - 0.85 956,000 3.2 $ 0.67 730,500 $ 0.66 2.7 2,027,000 4.9 1,801,500 4.6 |
CONCENTRATIONS
CONCENTRATIONS | 6 Months Ended |
Jun. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATIONS | The Company has historically purchased a substantial amount of its products from two vendors; Citizens Watch Company of America, Inc., and Bulova Corporation. During the six months ended June 30, 2018, purchases from Botta, Citizens, Bulova and Pierre Laurent accounted for approximately 17%, 15%,19% and 11%, of the watch products purchased, respectively, as compared to 57% and 19%, for Citizens and Bulova, respectively, for the six months ended June 30, 2017. Three Black Helmet Apparel vendors have been identified as having a high concentration. During the six months ended June 30, 2018 purchases from Pukka, Enemy Ink, and TSF Sportswear, LLC accounted for 10%, 27%, and 25% 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 and six months ended June 30, 2018, PayPal and Amazon accounted for 77% and 23% and 75% and 25%, respectively, of our total product sales as compared to 41% and 44% and 41% and 53% in the three and six months ended June 30, 2017, respectively. The Company replaced the DriveCMS software with Shopify in May 2018 to the Black Helmet website and the revenues attributable to this relationship were 30% for the three months ended June 30, 2018. 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 June 30, 2018 and December 31, 2017, respectively, the Company had no cash balances in excess of the FDIC insured limit. Concentration of Funding During the six months ended June 30, 2018, the Company's funding was provided primarily through the sale of 4,825,000 units of our securities to 28 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 $1,930,000. 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, a broker-dealer and member of FINRA, served as placement agent for us in this offering. As compensation for its services, we paid Spartan cash commissions totaling $193,000 and issued five-year placement agent warrants to purchase an aggregate of 482,500 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 June 2018, Mr. W. Kip Speyer, an executive officer and member of our board of directors, an aggregate of 637,500 shares of our 10% Series E convertible preferred stock, resulting in gross proceeds to us of $255,000. 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
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2018 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | On July 13, 2018 and August 15, 2018 Mr. W. Effective July 18, 2018 we terminated the employment agreements with each of Messrs. Harry G. Pagoulatos and George G. Rezitis for cause. Messrs. Pagoulatos and Rezitis had been employed by us as chief operating officer and chief technology officer, respectively, of our Daily Engage Media subsidiary since our acquisition of that company in September 2017. Mr. We In connection with the matters which lead to our termination for cause of Messrs. Pagoulatos and Rezitis, in July 2018 we filed a verified complaint for injunctive relief and damages against Messrs. Pagoulatos and Rezitis in the Circuit Court of the 15th Judicial Circuit in and for Palm Beach County, Florida alleging their failure, among other things, to provide us with certain login codes and passwords as well as reporting other current information about Daily Engage Media’s business. In this matter, we are seeking an injunction and monetary damages and intend to aggressively pursue our remedies. In July 2018 Messrs. Pagoulatos and Rezitis, along with a third party who had been a minority owner in Daily Engage Media prior to our acquisition of that company, filed a complaint in the U.S. District Court, District of New Jersey, against the Company and our CEO, seeking compensatory and punitive damages and attorneys’ fees, among other items, and alleging, among other items, fraud and breach of contract. While we vehemently deny all allegations in the complaint and deem them to be baseless, we will immediately pursue a change of venue to Palm Beach County, Florida, the venue specified in both the acquisition agreement for the Daily Engage Media transaction as well as the employment agreements with Messrs. Pagoulatos and Rezitis. At the appropriate juncture, we also intend to serve a Rule 11 Motion for sanctions based upon the fact that the complaint contains frivolous arguments and/or arguments with no evidentiary support. The Company intends to evaluate the intangible assets specifically related to the non-compete for the above individuals during the third quarter of 2018. The Company does not intend to accrue any liability for severance compensation to these individuals under their employment agreements, as they were “terminated for cause” within the terms of their respective employment agreements. In July 2018, the Company paid $25,000 to four noteholders related to our acquisition of Daily Engage Media prior to the terminations discussed above. Three of the four promissory notes issued in the acquisition are not anticipated to be settled pending the settlement of, conclusion of, litigation described under Part II, Item 1 Legal Matters and Note 10. On July 12, 2018 the Company paid $50,000 the $500,000 Promissory Note accordance with the oral agreement extend the Note December 31, 2018. The oral agreement stipulates that the Company will pay the lender $150,000 the quarter 2018 and the remaining balance plus accrued interest the maturity date. |
NATURE OF OPERATIONS AND SUMM20
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 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 its wholly owned subsidiary 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 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 fourth 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 in September 2017, the Company has acquired the software and expertise to scale this side of the business. Two of our websites operate as e-commerce 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 and six months ended June 30, 2018 and 2017 have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) applicable to interim financial information and the requirements of Form 10-Q and Article 8 of Regulation S-X of the SEC. Accordingly, they do not include all of the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. In the opinion of management, such condensed consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of the condensed consolidated financial position and the condensed consolidated results of operations. The condensed consolidated results of operations for periods presented are not necessarily indicative of the results to be expected for the full year. The condensed consolidated balance sheet information as of December 31, 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, as filed with the SEC on April 2, 2018. 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 June 30, 2018 consolidated balance sheet presentation. |
Use of Estimates | Our consolidated financial statements are prepared in accordance with 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 Fair Value 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. |
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. |
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 ● 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 from companies who pay the Company a monthly fee for advertising space and; ● Advertising revenues are generated by users “clicking” on website advertisements utilizing several ad network partners. Revenues are recognized net of their fees for Company owned websites upon receipt of payment by the ad network partner since the revenue is not determinable until it is received. Our advertising revenue generated from the Daily Engage and Bright Mountain 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 a range of 18% to 20% of the gross revenues on these contractual agreements. |
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 revenue generating event. The Company becomes obligated to make the revenue share payments in the period the advertising impressions, click throughs, actions or lead-based information are delivered or occur. The Daily Engage Media 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 revenue generating event. The Company becomes obligated to make the revenue share payments in the period the advertising impressions, click throughs, actions or lead-based information are delivered or occur. |
Shipping and Handling Costs | The Company includes shipping and handling fees billed to customers as revenues and shipping and handling costs for shipments to customers as cost of revenues. |
Sales Return Reserve Policy | Our return policy generally allows our end users to return purchased products for refund or in exchange for new products. We estimate a reserve for sales returns, if any, and record that reserve amount as a reduction of sales and as a sales return reserve liability. Sales to consumers on our web site generally may be returned within a reasonable period of time. |
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 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 and six months ended June 30, 2018 and 2017, all platform and website development costs have been expensed. |
Amortization and Impairment of Long-Lived Assets | Amortization and impairment of long-lived assets are non-cash expenses relating primarily to intangible assets. The Company accounts for long-lived assets in accordance with the provisions of ASC 360-10 “ Accounting for the Impairment or Disposal of Long-Lived Assets Website acquisition costs are amortized over three years and intangible assets are amortized over up to eight 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 Equity-Based Payments to Non-Employees |
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 and six months ended June 30, 2018 and 2017, advertising, marketing and promotion expense was $74,964 and $72,945 and $135,887 and $165,233, 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. As of June 30, 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 |
Segment Information | In accordance with the provisions of ASC 280-10, “ Disclosures about Segments of an Enterprise and Related Information |
Recent Accounting Pronouncements | May 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-09, "Revenue from Contracts with Customers (Topic 606) In July 2015, FASB issued ASU No. 2015-11 , “Inventory (Topic 330): Simplifying the Measurement of Inventory . In February 2016, the FASB issued ASU 2016-02 “ Leases In April 2016, the FASB issued ASU No. 2016-15, “Classification of Certain Cash Receipts and Cash Payments” In June 2016, the FASB issued ASU 2016-13 “Financial Instruments – Credit Losses” 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 statement s. In November 2016, the FASB issued ASU 2016-18, “Statement of Cash Flows –Restricted Cash” In January 2017, the FASB issued 2017-04, Intangibles - Goodwill and Other |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
Schedule of Discounted Fair Value of Consideration Transferred | 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 Unallocated purchase price 446,426 Total purchase price $ 1,088,426 |
Pro Forma results | Three Months Ended Six Months Ended June 30, 2017 June 30, 2017 Total revenue $ 1,141,444 $ 2,366,160 Total expenses (2,159,054 ) (4,030,733 ) Preferred stock dividend (754 ) (2,727 ) Net loss attributable to common shareholders $ (1,018,364 ) $ (1,667,300 ) Basic and diluted net loss per share $ (0.02 ) $ (0.04 ) |
INVENTORIES (Tables)
INVENTORIES (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | June 30, 2018 December 31, 2017 Product inventory: clocks and watches $ 235,834 $ 453,852 Product inventory: other inventory 196,591 180,064 Total inventory balance 432,425 633,916 Less: inventory allowance for slow moving (22,448 ) (22,448 ) Total inventory balance, net $ 409,977 $ 611,468 |
PREPAID EXPENSES AND OTHER CU23
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Schedule of Prepaid Costs and Expenses | June 30, 2018 December 31, 2017 Prepaid rent $ 18,686 $ 50,417 Prepaid insurance 39,941 92,322 Prepaid inventory 1,701 2,993 $ 60,328 $ 145,732 |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Property and Equipment | Useful Lives June 30, 2018 December 31, 2017 Furniture and fixtures 3-5 years $ 78,856 $ 78,994 Computer equipment 3 years 59,511 59,511 Leasehold improvements 5 years 39,384 39,384 Total property and equipment 177,751 177,889 Less: accumulated depreciation (101,241 ) (88,389 ) Total property and equipment, net $ 76,510 $ 89,500 |
WEBSITE ACQUISITION AND INTAN25
WEBSITE ACQUISITION AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Website Acquisition And Intangible Assets Tables Abstract | |
Schedule of intangible assets | June 30, 2018 December 31, 2017 Website Acquisition Assets $ 1,417,189 $ 1,417,189 Less: accumulated amortization (926,571 ) (812,575 ) Less: accumulated impairment loss (211,197 ) (211,197 ) Website Acquisition Assets, net $ 279,421 $ 393,417 Useful Lives June 30, 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 (195,177 ) (95,999 ) Less: accumulated impairment loss (50,227 ) (50,227 ) Intangible assets, net $ 868,596 $ 967,774 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Schedule of segment activity | For the three months ended For the three months ended June 30, 2018 June 30, 2017 Products Advertising Total Products Advertising Total Revenues $ 318,765 $ 291,276 $ 610,041 $ 572,931 $ 93,890 $ 666,821 Intangible amortization $ 41,732 $ 58,585 $ 100,317 $ — $ 75,806 $ 75,806 Depreciation $ 3,099 $ 3,414 $ 6,513 $ 5,707 $ 952 $ 6,659 Loss from operations $ (342,487 ) $ (480,800 ) $ (823,287 ) $ (445,896 ) $ (317,459 ) $ (763,355 ) Segment assets $ 1,127,473 $ 2,256,426 $ 3,383,899 $ 1,728,881 $ 784,566 $ 2,513,447 Purchase of assets $ 1,213 $ — $ 1,213 $ 14,305 $ — $ 14,305 For the six months ended For the six months ended June 30, 2018 June 30, 2017 Products Advertising Total Products Advertising Total Revenues $ 694,051 $ 974,334 $ 1,668,385 $ 1,124,286 $ 203,633 $ 1,327,919 Intangible amortization $ 63,526 $ 149,648 $ 213,174 $ — $ 151,542 $ 151,542 Depreciation $ 5,346 $ 7,506 $ 12,852 $ 10,285 $ 1,863 $ 12,148 Loss from operations $ (689,571 ) $ (968,043 ) $ (1,657,614 ) $ (845,275 ) $ (517,241 ) $ (1,362,516 ) Segment assets $ 1,127,473 $ 2,256,426 $ 3,383,899 $ 1,728,881 $ 784,566 $ 2,513,447 Purchase of assets $ 1,213 $ — $ 1,213 $ 14,305 $ — $ 14,305 |
SHAREHOLDERS' EQUITY (Tables)
SHAREHOLDERS' EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2018 | |
Stockholders' Equity Note [Abstract] | |
Summary of Stock Option Activity | 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 5.4 $ 543,626 Granted — — — — Exercised — — — — Forfeited — — — — Expired — — — — Balance Outstanding, June 30, 2018 2,027,000 $ 0.37 4.9 $ 654,446 Exercisable at June 30, 2018 1,801,500 $ 0.38 4.6 $ 643,871 |
Schedule of options outstanding under the option plans | 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 0.9 $ 0.14 720,000 $ 0.14 1.0 0.25 - 0.49 351,000 0.8 $ 0.28 351,000 $ 0.28 .09 0.50 - 0.85 956,000 3.2 $ 0.67 730,500 $ 0.66 2.7 2,027,000 4.9 1,801,500 4.6 |
NATURE OF OPERATIONS AND SUMM28
NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Accounting Policies [Abstract] | ||||
Non-cash amortization expense | $ 100,317 | $ 75,806 | $ 213,174 | $ 151,542 |
Stock-based compensation expense | 7,340 | 58,379 | 14,208 | 73,838 |
Advertising, marketing and promotion expense | $ 74,964 | $ 72,945 | $ 135,887 | $ 165,233 |
GOING CONCERN (Details Narrativ
GOING CONCERN (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
GOING CONCERN [Abstract] | |||||
Net loss | $ 934,059 | $ 873,933 | $ 1,883,308 | $ 1,557,180 | |
Net cash used in operating activities | 1,453,801 | $ 948,512 | |||
Accumulated deficit | $ 13,702,210 | $ 13,702,210 | $ 11,818,902 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Unallocated purchase price | $ 446,426 | $ 446,426 |
Daily Engage Media [Member] | ||
Tangible assets acquired | 361,770 | |
Liabilities assumed | (562,006) | |
Net liabilities assumed | (200,236) | |
Unallocated purchase price | 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)
ACQUISITIONS (Details 1) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Preferred stock dividend | $ (33,505) | |||
Net loss attributable to common shareholders | $ (952,801) | $ (874,687) | $ (1,916,813) | $ (1,559,907) |
Basic and diluted net loss per share | $ (0.02) | $ (0.02) | $ (0.04) | $ (0.03) |
Daily Engage Media [Member] | ||||
Total revenue | $ 1,141,444 | $ 2,366,160 | ||
Total expenses | (2,159,054) | (4,030,733) | ||
Preferred stock dividend | (754) | (2,727) | ||
Net loss attributable to common shareholders | $ (1,018,364) | $ (1,667,300) | ||
Basic and diluted net loss per share | $ (0.02) | $ (0.04) |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Inventory, gross | $ 432,425 | $ 633,916 |
Less: inventory allowance for slow moving | (22,448) | (22,448) |
Inventory, net | 409,977 | 611,468 |
Product inventory: clocks and watches [Member] | ||
Inventory, gross | 235,834 | 453,852 |
Product inventory: other [Member] | ||
Inventory, gross | $ 196,591 | $ 180,064 |
PREPAID EXPENSES AND OTHER CU33
PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Prepaid rent | $ 18,686 | $ 50,417 |
Prepaid insurance | 39,941 | 92,322 |
Prepaid inventory | 1,701 | 2,993 |
Prepaid Expenses and Other Current Assets | $ 60,328 | $ 145,732 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) | Jun. 30, 2018 | Dec. 31, 2017 |
Total property and equipment | $ 177,751 | $ 177,889 |
Less: Accumulated Depreciation | (101,241) | (88,389) |
Total property and equipment, net | 76,510 | 89,500 |
Furniture and Fixtures [Member] | ||
Total property and equipment | 78,856 | 78,994 |
Computer Equipment [Member] | ||
Total property and equipment | 59,511 | 59,511 |
Leasehold Improvements [Member] | ||
Total property and equipment | $ 39,384 | $ 39,384 |
PROPERTY AND EQUIPMENT (Detai35
PROPERTY AND EQUIPMENT (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Property, Plant and Equipment [Abstract] | ||||
Non-cash depreciation expense | $ 6,513 | $ 6,659 | $ 12,852 | $ 12,148 |
WEBSITE ACQUISITION AND INTAN36
WEBSITE ACQUISITION AND INTANGIBLE ASSETS (Details) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Website Acquisition And Intangible Assets Details Abstract | ||
Website Acquisition Assets | $ 1,417,189 | $ 1,417,189 |
Less: accumulated amortization | (962,571) | (812,575) |
Less: accumulated impairment loss | (211,197) | (211,197) |
Website Acquisition Assets, net | $ 279,421 | $ 393,417 |
WEBSITE ACQUISITION AND INTAN37
WEBSITE ACQUISITION AND INTANGIBLE ASSETS (Details 1) - USD ($) | 6 Months Ended | 12 Months Ended |
Jun. 30, 2018 | Dec. 31, 2017 | |
Intangible assets | $ 1,114,000 | $ 1,114,000 |
Less: accumulated amortization | (195,177) | (95,999) |
Less: accumulated impairment loss | (50,227) | (50,227) |
Intangible assets, net | 868,596 | 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)
SEGMENT INFORMATION (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Revenues | $ 610,041 | $ 666,821 | $ 1,668,385 | $ 1,327,919 |
Intangible amortization | 100,317 | 75,806 | 213,174 | 151,542 |
Depreciation | 6,513 | 6,659 | 12,852 | 12,148 |
Loss from operations | (823,287) | (763,355) | (1,657,614) | (1,362,516) |
Segment assets | 3,383,899 | 2,513,447 | 3,383,899 | 2,513,447 |
Purchase of assets | 1,213 | 14,305 | 1,213 | 14,305 |
Products [Member] | ||||
Revenues | 318,765 | 572,931 | 694,051 | 1,124,286 |
Intangible amortization | 41,732 | 0 | 63,526 | 0 |
Depreciation | 3,099 | 5,707 | 5,346 | 10,285 |
Loss from operations | (342,487) | (445,896) | (689,571) | (845,275) |
Segment assets | 1,127,473 | 1,728,881 | 1,127,473 | 1,728,881 |
Purchase of assets | 1,213 | 14,305 | 1,213 | 14,305 |
Advertising [Member] | ||||
Revenues | 291,276 | 93,890 | 974,334 | 203,633 |
Intangible amortization | 58,585 | 75,806 | 149,648 | 151,542 |
Depreciation | 3,414 | 952 | 7,506 | 1,863 |
Loss from operations | (480,800) | (317,459) | (968,043) | (517,241) |
Segment assets | 2,256,426 | 784,566 | 2,256,426 | 784,566 |
Purchase of assets | $ 0 | $ 0 | $ 0 | $ 0 |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Notes Payable [Abstract] | |||||
Amortization of debt discount | $ 50,763 | $ 41,109 | $ 106,425 | $ 67,268 | |
Interest expense on the convertible notes payable | 9,851 | 34,591 | 25,204 | 69,751 | |
Notes payable | 225,162 | 225,162 | $ 254,687 | ||
Interest expense on notes payable | $ 101,650 | $ 76,124 | $ 201,507 | $ 125,132 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Commitments And Contingencies | |||||
Prepaid rent | $ 18,686 | $ 18,686 | $ 50,417 | ||
Rent expense | $ 73,836 | $ 57,249 | $ 137,926 | $ 117,925 |
SHAREHOLDERS' EQUITY (Details)
SHAREHOLDERS' EQUITY (Details) | 6 Months Ended |
Jun. 30, 2018USD ($)$ / sharesshares | |
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 | 0 |
Exercised | $ / shares | 0 |
Forfeited | $ / shares | 0 |
Expired | $ / shares | 0 |
Balance Outstanding, Ending | $ / shares | 0.37 |
Exercisable, Ending | $ / shares | $ 0.38 |
Weighted Average Remaining Contractual Term | |
Outstanding, Beginning | 5 years 4 months 24 days |
Outstanding, Ending | 4 years 10 months 24 days |
Exercisable, Ending | 4 years 7 months 6 days |
Aggregate Intrinsic Value | |
Outstanding, Beginning | $ | $ 543,626 |
Outstanding, Ending | $ | $ 654,446 |
SHAREHOLDERS' EQUITY (Details 1
SHAREHOLDERS' EQUITY (Details 1) | 6 Months Ended |
Jun. 30, 2018$ / sharesshares | |
Options Outstanding | |
Number Outstanding | 2,027,000 |
Options Exercisable | |
Number Exercisable | 1,801,500 |
Remaining Average Contractual Life (In Years) | 4 years 7 months 6 days |
0.14 - 0.24 [Member] | |
Options Outstanding | |
Number Outstanding | 720,000 |
Remaining Average Contractual Life (In Years) | 10 months 24 days |
Weighted Average Exercise Price | $ / shares | $ 0.14 |
Options Exercisable | |
Number Exercisable | 720,000 |
Weighted Average Exercise Price | $ / shares | $ 0.14 |
Remaining Average Contractual Life (In Years) | 1 year |
0.25 - 0.49 [Member] | |
Options Outstanding | |
Number Outstanding | 351,000 |
Remaining Average Contractual Life (In Years) | 9 months 18 days |
Weighted Average Exercise Price | $ / shares | $ 0.28 |
Options Exercisable | |
Number Exercisable | 351,000 |
Weighted Average Exercise Price | $ / shares | $ 0.28 |
Remaining Average Contractual Life (In Years) | 1 month 2 days |
0.50 - 0.85 [Member] | |
Options Outstanding | |
Number Outstanding | 956,000 |
Remaining Average Contractual Life (In Years) | 3 years 2 months 12 days |
Weighted Average Exercise Price | $ / shares | $ 0.67 |
Options Exercisable | |
Number Exercisable | 730,500 |
Weighted Average Exercise Price | $ / shares | $ 0.66 |
Remaining Average Contractual Life (In Years) | 2 years 8 months 12 days |
SHAREHOLDERS' EQUITY (Details N
SHAREHOLDERS' EQUITY (Details Narrative) - USD ($) | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | Dec. 31, 2017 | |
Preferred stock, par value per share | $ .01 | $ .01 | $ .01 | ||
Preferred stock, shares authorized | 20,000,000 | 20,000,000 | 20,000,000 | ||
Share based compensation expense | $ 7,344 | $ 26,195 | $ 14,208 | $ 53,653 | |
Unrecognized compensation cost | $ 27,745 | $ 27,745 | |||
Series A Preferred Stock [Member] | |||||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 | ||
Preferred stock, shares issued | 100,000 | 100,000 | 100,000 | ||
Preferred stock, shares outstanding | 100,000 | 100,000 | 100,000 | ||
Series B Preferred Stock [Member] | |||||
Preferred stock, shares authorized | 1,000,000 | 1,000,000 | 1,000,000 | ||
Preferred stock, shares issued | 0 | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 | 0 | ||
Series C Preferred Stock [Member] | |||||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 | ||
Preferred stock, shares issued | 0 | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 | 0 | ||
Series D Preferred Stock [Member] | |||||
Preferred stock, shares authorized | 2,000,000 | 2,000,000 | 2,000,000 | ||
Preferred stock, shares issued | 0 | 0 | 0 | ||
Preferred stock, shares outstanding | 0 | 0 | 0 | ||
Series E Preferred Stock [Member] | |||||
Preferred stock, shares authorized | 2,500,000 | 2,500,000 | 2,500,000 | ||
Preferred stock, shares issued | 2,012,500 | 2,012,500 | 1,375,000 | ||
Preferred stock, shares outstanding | 2,012,500 | 2,012,500 | 1,375,000 |
CONCENTRATIONS (Details Narrati
CONCENTRATIONS (Details Narrative) - Revenue [Member] | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Jun. 30, 2018 | Jun. 30, 2017 | |
Paypal [Member] | ||||
Concentration Risk, Percentage | 77.00% | 41.00% | 75.00% | 44.00% |
Amazon [Member] | ||||
Concentration Risk, Percentage | 23.00% | 41.00% | 25.00% | 53.00% |