What changed in this filing

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Item 1. Financial Statements

2020-11-24 compared with 2020-08-19 · 1078 added, 822 removed, 1084 unchanged (64% of the section changed)

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CONSOLIDATED BALANCE SHEETS

June 30, 2020

December 31, 2019

and cash equivalents

receivable, net

expenses and other current assets

assets - discontinued operations

Current Assets

Cash and cash equivalents

Accounts receivable, net

Note receivable, net

Prepaid expenses and other current assets

Current assets - discontinued operations

Total Current Assets

Property and equipment, net

Website acquisition assets, net

Intangible assets, net

Prepaid services/consulting agreements - long term

Right of use asset

LIABILITIES AND SHAREHOLDERS’

and equipment, net

acquisition assets, net

services/consulting agreements - long term

AND SHAREHOLDERS’

interest to related party

finance loan payable

term debt, current portion

lease liability, current portion

liabilities - discontinued operations

Current Liabilities

Accounts payable

Accrued expenses

Accrued interest to related party

Premium finance loan payable

Deferred revenues

Long term debt, current portion

Operating lease liability, current portion

Current liabilities - discontinued operations

Total Current Liabilities

Long term debt to related parties, net

Long term debt

Deferred tax liability

Operating lease liability, net of current portion

Total Liabilities

Commitments and Contingencies

term debt to related parties, net

tax liability

lease liability, net of current portion

and Contingencies

Shareholders’

Convertible preferred stock, par value $0.01, 20,000,000 shares authorized,

Series A-1, 2,000,000 shares designated, 1,200,000 and 1,200,000 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Series B-1, 6,000,000 shares designated, 0 and 0 shares issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Series E, 2,500,000 shares designated, issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Series F, 4,344,017 shares designated, issued and outstanding at June 30, 2020 and December 31, 2019, respectively

Common stock, par value $0.01, 324,000,000 shares authorized, 110,257,860 and 100,244,312 issued and 89,937,733 and 78,063,531 outstanding at June 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

Accumulated deficit

(27,009,356 )

(20,444,989 )

Total shareholders’

Total Liabilities and Shareholders’

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

A-1, 2,000,000 shares designated, 1,200,000 and 1,200,000 shares issued and outstanding at September 30, 2020 and December

31, 2019, respectively

B-1, 6,000,000 shares designated, 0 and 0 shares issued and outstanding at September 30, 2020 and December 31, 2019, respectively

E, 2,500,000 shares designated, issued and outstanding at September 30, 2020 and December 31, 2019, respectively

F, 4,344,017 shares designated, issued and outstanding at September 30, 2020 and

December 31, 2019, respectively

stock, par value $0.01, 324,000,000 shares authorized, 114,564,060 and 100,244,312 issued and 114,013,943 and 78,063,531 outstanding

at September 30, 2020 and December 31, 2019, respectively

paid-in capital

Stock at cost 550,117 shares at September 30, 2020

shareholders’

Liabilities and Shareholders’

accompanying notes to unaudited condensed consolidated financial statements

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CONSOLIDATED STATEMENTS OF OPERATIONS

For the Three Months Ended

For the Six Months Ended

June 30, 2020

June 30, 2019

June 30, 2020

June 30, 2019

the Three Months Ended

the Nine Months Ended

Cost of revenue

Selling, general and administrative expenses

Loss from operations

Other income (expense)

Interest (expense) income, net

Gain on settlement of liability

Other income (expense)

Interest expense - related party

Total other (expense) income

Net loss from continuing operations

general and administrative expenses

from operations

income (expense)

(expense) income, net

on settlement

(53,996,544 )

of contingent consideration

income (expense)

expense - related party

other (expense) income

(54,064,960 )

(54,140,489 )

loss from continuing operations

(56,748,877 )

(63,567,985 )

(loss) from discontinued operations

Net loss before tax

Income tax benefit

Preferred stock dividends

Series A, Series E, and Series F preferred stock

Net loss attributable to common shareholders

loss before tax

(56,748,877 )

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(56,571,788 )

Basic and diluted net loss for continuing operations per share

Basic and diluted net loss for discontinued operations per share

Basic and diluted net loss per share

Weighted average shares outstanding - basic and diluted

(63,136,155 )

stock dividends

A, Series E, and Series F preferred stock

loss attributable to common shareholders

$ (56,751,910 )

$ (2,089,215 )

$ (63,583,524 )

$ (3,652,155 )

and diluted net loss for continuing operations per share

and diluted net income (loss) for discontinued operations per share

and diluted net loss per share

average shares outstanding - basic and diluted

accompanying notes to unaudited condensed consolidated financial statements

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CONSOLIDATED STATEMENTS OF CHANGE IN SHAREHOLDERS’

the Six Months Ended June 30, 2020 and 2019

Preferred Stock

the Nine Months Ended September 30, 2020 and 2019

Shareholders’

Balance - December 31, 2019

- December 31, 2019

$ (20,444,989 )

Series A-1, E, and F preferred stock dividend

Stock option vesting expense

Units consisting of one share of common stock and one warrant issued for cash, net of costs

Stock issued to Spartan Capital for acquisitions completed

Common stock issued for services rendered

Net loss for the three months ended March 31, 2020

Balance - March 31, 2020

A-1, E, and F preferred stock dividend

option vesting expense

consisting of one share of common stock and one warrant issued for cash, net of costs

issued to Spartan Capital for acquisitions completed

stock issued for services rendered

loss for the three months ended March 31, 2020

- March 31, 2020

$ (23,904,009 )

Series A-1, E, and F preferred stock dividend

Stock option vesting expense

Units consisting of one share of common stock and one warrant issued for cash

Stock issued for acquisition

Net loss for the three months ended June 30, 2020

Balance –

A-1, E, and F preferred stock dividend

option vesting expense

consisting of one share of common stock and one warrant issued for cash

issued for acquisition

loss for the three months ended June 30, 2020

June 30, 2020

$ (27,009,356 )

Preferred Stock

A-1, E and F preferred stock dividend

option vesting expense

option exercise

consisting of one share of common stock and one warrant issued for cash

loss for the three months ended September 30, 2020

(56,571,788 )

September 30, 2020

$ (1,155,246 )

$ (83,581,144 )

Shareholders’

Balance - December 31, 2018

- December 31, 2018

$ (17,042,966 )

Series E and F preferred stock dividend

Stock option vesting expense

Units consisting of one share of common stock and one warrant issued for cash, net of costs

Net loss for the three months ended March 31, 2019

Balance - March 31, 2019

E and F preferred stock dividend

option vesting expense

consisting of one share of common stock and one warrant issued for cash, net of costs

loss for the three months ended March 31, 2019

- March 31, 2019

(17,753,228 )

Series E and F preferred stock dividend

Stock option vesting expense

Common Stock issued for services-cancelled

Units consisting of one share of common stock and one warrant issued for cash, net of costs

Units consisting of one share of common stock and two warrants issued for cash, net of costs

Net loss for the three months ended June 30, 2019

Balance –

E and F preferred stock dividend

option vesting expense

Stock issued for services-cancelled

consisting of one share of common stock and one warrant issued for cash, net of costs

consisting of one share of common stock and two warrants issued for cash, net of costs

loss for the three months ended June 30, 2019

June 30, 2019

$ (18,457,104 )

A-1, E and F preferred stock dividend

option vesting expense

stock issued for services

of Series A-1 preferred stock

consisting of one share of common stock and two warrants issued for cash

stock issued in acquisition of Slutsky & Winshman

loss for the three months ended September 30, 2019

September 30, 2019

$ (20,493,637 )

accompanying notes to unaudited condensed consolidated financial statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

Cash flows from operating activities:

the Nine Months Ended September 30,

flows from operating activities:

$ (63,136,155 )

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loss attributable to discontinued operations

Adjustments to reconcile net loss to net cash used in operations:

Amortization of debt discount

Gain on settlement of liability

Stock option compensation expense

Stock issued for services rendered

Non-cash acquisition fee

Change in deferred taxes

Provision for bad debt

Changes in operating assets and liabilities:

Accounts receivable

Prepaid expenses and other current assets

Prepaid services/consulting agreements

Right of use asset and lease liability

Accounts payable

Accrued expenses

Accrued interest –

to reconcile net loss to net cash used in operations:

of debt discount

of intangibles

on settlement

option compensation expense

issued for services rendered

settlement of contingent consideration

in deferred taxes

in operating assets and liabilities:

expenses and other current assets

services/consulting agreements

of use asset and lease liability

interest –

related party

Deferred revenues

Net cash (used in) continuing operations for operating activities

Net cash (used in) discontinued operations

Net cash (used in) operating activities

Cash flows from investing activities:

Purchase of property and equipment

Cash acquired from Wild Sky

Cash paid for website acquisition

Net cash provided by (used in) investing activities

Cash flows from financing activities:

Proceeds from issuance of common stock, net

Payments of premium finance loan payable

Dividend payments

Principal payments received (funded) for notes receivable

Note receivable funded

Note payable funded

Net cash provided by financing activities

Net increase (decrease) in cash and cash equivalents including cash and cash equivalents

classified within assets related to continuing operations

Net decrease in cash and cash equivalents classified within assets related to discontinued operations

Net increase in cash and cash equivalents

Cash and cash equivalents at the beginning of period

Cash and cash equivalents at end of period

cash (used in) continuing operations for operating activities

cash (used in) discontinued operations

cash (used in) operating activities

flows from investing activities:

of property and equipment

received in acquisition

collected on notes receivable

receivable funded

acquired from Wild Sky

paid for website acquisition

cash provided by (used in) investing activities

flows from financing activities:

from issuance of common stock, net

of premium finance loan payable

payments received for notes receivable

from issuance of preferred stock

payment on notes payable

cash provided by financing activities

on foreign exchange rates on cash

increase (decrease) in cash and cash equivalents including cash and cash equivalents classified within assets related to continuing

Net (decrease) in cash

related to discontinued operations

Net increase (decrease)

in cash and cash equivalents

and cash equivalents at the beginning of period

and cash equivalents at end of period

accompanying notes to unaudited condensed consolidated financial statements

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CONSOLIDATED STATEMENTS OF CASH FLOWS

For the Six Months Ended June 30,

Supplemental disclosure of cash flow information

Cash paid for

Non-cash investing and financing activities

Premium finance loan payable recorded as prepaid

Issuance of common stock payable to Spartan Capital for consulting services

Accrued consulting fees withheld from offering proceeds

Notes receivable for the sale of Black Helmet

Recognition of right of use asset and lease liability

Stock dividend

Non-cash acquisition of Wild Sky net assets

Non-cash acquisition of Wild Sky net liabilities

Non-cash intangible assets of Wild Sky

the Nine Months Ended September 30,

disclosure of cash flow information

investing and financing activities

acquisition of Slutsky & Winshman net liabilities

acquisition of intangible assets of Slutsky & Winshman

acquisition of right of use asset

acquisition of goodwill

finance loan payable recorded as prepaid

of liability with Daily Engage Media Group, LLC

receivable for the sale of Black Helmet

issued for prepaid services and consulting agreements to Spartan Capital

of right of use asset and lease liability for S&W

acquisition of assets of Wild Sky

$ (4,111,956 )

Common stock issued for acquisition

Long term debt from acquisition

acquisition of intangible assets of Wild Sky

$ (7,246,300 )

acquisition of goodwill of Wild Sky

$ (10,814,559

acquisition of liabilities of Wild Sky

stock issued for acquisition

term debt from acquisition

of debt in accordance with legal settlement

accompanying notes to unaudited condensed consolidated financial statements

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F/K/A Daily Engage Media Group, LLC (“DEM”) was formed as a New Jersey limited liability company in February 2015.

In August 2019 Bright Mountain Israel Acquisition, an Israeli company was formed and acquired the wholly owned subsidiary Slutzky & Winshman Ltd.

In August 2019 Bright Mountain Israel Acquisition, an Israeli company was formed and acquired the wholly owned subsidiary Slutzky

& Winshman Ltd.

(“S&W”) which then changed its name to Oceanside Media, see Note 4.

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Network, Inc., a Delaware company, which then changed its name to MediaHouse, Inc.

1, 2020, Bright Mountain Media, Inc.

acquired the wholly owned subsidiary CL Media

Holdings, LLC D/B/A “Wild Sky”.

When used herein, the terms “BMTM, the “Company,”

On June 1, 2020, Bright Mountain Media, Inc.

acquired the wholly owned subsidiary CL Media Holdings, LLC D/B/A “Wild Sky”.

When used herein, the terms “BMTM,

the “Company,”

“we,”

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or “Bright Mountain”

refers to Bright Mountain Media, Inc.

refers to Bright

Mountain Media, Inc.

and its subsidiaries.

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Mountain Media, Inc.

is an end-to-end digital media and advertising services platform, connecting brands with targeted consumer

demographics, while maximizing revenue to publishers.

Bright Mountain Media owns and operates digital websites which are focused

on providing relevant content to certain demographics valued by brands and ad agencies.

Bright Mountain Media’s assets include

the Bright Mountain, LLC ad network, MediaHouse (f/k/a NDN), Oceanside (f/k/a S&W Media), and Wild Sky Media including 24

owned and/or managed websites and 15 Connected TV apps.

enable placement of multiple forms of advertising products which generate revenue from these advertisements (ad impressions) placed

on our owned and managed sites, as well as from advertisements placed on partner websites, for which we earn a percentage of the

We also generate advertising services revenue from facilitating the real-time buying and selling of advertisements at

scale between networks of buyers, often called DSPs (Demand Side Platforms) and sellers, often called SSPs (Supply Side Platforms).

the past several years the Company has evolved to place its emphasis on not only providing quality content on our websites to

drive traffic increases, but to increase the advertising revenue we generate from companies and brands looking to reach our audiences.

Our platform connects general advertisers with over 1,000 digital publications worldwide.

is engaged in operating a proprietary, end-to-end digital media and advertising services platform designed

to connect brand advertisers with demographically-targeted consumers –

both large audiences and more granular segments –

across digital, social and connected television (CTV) publishing formats.

We define “end-to-end”

as our process for

taking ad buying from beginning to end, delivering a complete functional solution, usually without requiring any involvement from

a third party.

acquisitions and organic software development initiatives, we have consolidated and plan to further condense key elements of

the prevailing digital advertising supply chain through the elimination of industry “middlemen”

and/or costly

redundancy of services via our ad exchange network.

Our aim is to enable and support a streamlined, end-to-end advertising model that addresses both

demand (ad buy side) and supply (media sell side) for both direct sales teams and programmatic sales and publishing of

digital advertisements that reach specific target audiences based on what, where, when and how that specific target audience

elects to access certain web and/or streaming video content.

Programmatic advertising relies on computer programs to use data

and proprietary algorithms to select which ads to buy and for what price, while direct sales involves traditional

interpersonal contact between ad buyers and advertising sales representative(s).

selling advertisements on our current portfolio of 25 owned and operated websites and 20 CTV apps, coupled with acquisition or

development of other niche web properties in the future, we are building depth in specific demographic verticals that allow us

to package audiences into targeted consumer categories valued by advertisers.

August 15, 2019, under the terms of the Share Exchange Agreement and Plan of Merger with Oceanside Media and its members, the

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100% of the membership interests of CL Media Holdings, LLC (“Wild Sky Media”).

Wild Sky Media owns and operates

a collection of websites that offer significant global reach through its content and niche audiences and has become

a wholly-owned subsidiary of the Company.

Wild Sky Media owns and operates a

collection of websites that offer significant global reach through its content and niche audiences and has become a wholly-owned

subsidiary of the Company.

Wild Sky Media is the home to parenting and lifestyle brands.

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The Company sustained a net loss of $63,136,155

and used net cash in operating activities of $2,905,615 for the six months ended June 30, 2020.

The Company had an

accumulated deficit of $27,009,356 at June 30, 2020.

These factors raise substantial doubt about the ability of the Company

to continue as a going concern for a reasonable period.

The Company’s continuation as a going concern is dependent upon

its ability to generate revenues, control its expenses and its ability to continue obtaining investment capital and loans from

related parties and outside investors to sustain its current level of operations.

and used net cash in operating activities of $4,957,486 for the nine months ended September 30, 2020.

The Company had

an accumulated deficit of $83,581,144 at September 30, 2020.

These factors raise substantial doubt about the ability of

the Company to continue as a going concern for a reasonable period.

The Company’s continuation as a going concern is dependent

upon its ability to generate revenues, control its expenses and its ability to continue obtaining investment capital and loans

from related parties and outside investors to sustain its current level of operations.

continues raising capital through private placements and is exploring additional avenues for future fund-raising through both

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The Company is not currently involved in any binding agreements to raise public or private capital.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

GOING CONCERN (continued).

consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded

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as a going concern.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES.

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The accompanying

unaudited financial statements for the three and six months ended June 30, 2020 and 2019 have been prepared in accordance with

unaudited financial statements for the three and nine months ended September 30, 2020 and 2019 have been prepared in accordance

generally accepted accounting principles (“GAAP”) applicable to interim financial information and the requirements

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is satisfied.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

Company recognizes revenue from its own advertising platform, ad network partners and websites (“Ad Network”) through

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transactions with publishers at which time adjustments for invalid traffic may impact the amount collected.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”, which sets out the principles for the recognition,

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of S&W in August 2019 a ROU asset and lease liability of approximately $353,000 was recognized on the consolidated balance

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

consolidated financial statements are prepared in accordance with US GAAP.

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debt instruments.

following are the major categories of liabilities measured at fair value on a recurring basis for the six months ended June 30,

following are the major categories of liabilities measured at fair value on a recurring basis for the nine months ended September

30, 2020, using significant unobservable inputs (Level 3):

Value measurement using Level 3

Balance at December 31, 2019

Long term debt additions during 2020

Principal reductions/payments during 2020

Adjustment to fair value

Balance at June 30, 2020

at December 31, 2019

term debt additions during 2020

reductions/payments during 2020

to fair value

at September 30, 2020

balance sheet arrangements

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determined or estimated.

to uncertainties associated with certain Notes Payable resulting from the acquisition of S&W, see Note 4, the Company has

not included the value of those Notes Payable within the purchase price and/or related assets acquired in the acquisition.

off-balance sheet arrangements are reasonably likely to have a current or future effect on our financial condition, changes in

financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are

material to investors.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

receivable are recorded at fair value on the date revenue is recognized.

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off uncollectible receivables is made.

As of June 30, 2020 and December 31, 2019, the Company has recorded an allowance for doubtful

accounts of $773,944 and $505,401, respectively.

As of September 30, 2020 and December 31, 2019, the Company has recorded an allowance for

doubtful accounts of $906,970 and $505,401, respectively.

and Equipment

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costs, if any, are included in intangible assets in the accompanying consolidated financial statements.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

350-50 requires the expensing of all costs of the preliminary project stage and the training and application maintenance stage

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The Company amortizes the capitalized website development costs over an estimated life of five years.

the three and six months ended June 30, 2020 and 2019, $0 and $8,000 was capitalized for the purchase of a Facebook page, respectively.

the three and nine months ended September 30, 2020 and 2019, $0 and $8,000 was capitalized for the purchase of a Facebook page,

respectively.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

and Impairment of Long-Lived Assets

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at the lower of the carrying amount or fair value less costs to sell.

During the nine months ended September 30, 2020, the

Company recorded impairment expense of $42,444,971 related to goodwill and $11,551,573 related to intangibles.

it is likely that we will have significant amortization expense as we continue to acquire websites, we believe that intangible

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and administrative expenses on the accompanying statement of operations.

For the three months

ended June 30, 2020 and 2019, non-cash stock-based stock option compensation expense was $41,499 and $9,898, respectively.

For the six months ended June 30, 2020 and 2019, non-cash stock-based stock option compensation expense was $78,094 and

$13,111, respectively.

For the three months ended September 30, 2020 and 2019,

non-cash stock-based stock option compensation expense was $51,011 and $15,963, respectively.

For the nine months ended

September 30, 2020 and 2019, non-cash stock-based stock option compensation expense was $129,105 and $29,074, respectively.

Marketing and Promotion Costs

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the accompanying statement of operations.

For the three months ended June 30, 2020 and 2019, advertising, marketing and promotion

For the three months ended September 30, 2020 and 2019, advertising, marketing and promotion

expense was $12,527 and $110,342, respectively for continuing operations and $0 and $0 for discontinued operations, respectively.

For the six months ended June 30, 2020 and 2019, advertising, marketing and promotion expense was $23,850 and $6,000, respectively

for continuing operations and $0 and $6,888 for discontinued operations, respectively.

For the nine months ended September 30, 2020 and 2019, advertising, marketing and promotion expense was $36,377 and $116,342,

respectively for continuing operations and $0 and $6,888 for discontinued operations, respectively.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

currency translation

Assets and liabilities

of the Company’s Israeli subsidiary are translated from Israeli shekels to United States dollars at exchange rates in effect

at the balance sheet date.

Assets and liabilities of the Company’s Thailand subsidiary are translated from Thai baht

to United States dollars at exchange rates in effect at the balance sheet date.

Income and expenses are translated at the

exchange rates for the weighted average rates for the period.

The translation adjustments for the reporting period will be included

in our statements of comprehensive income.

and liabilities of the Company’s Israeli subsidiary are translated from Israeli shekels to United States dollars at exchange

rates in effect at the balance sheet date.

Assets and liabilities of the Company’s Thailand subsidiary are translated from

Thai baht to United States dollars at exchange rates in effect at the balance sheet date.

Income and expenses are translated at

the exchange rates for the weighted average rates for the period.

The translation adjustments for the reporting period will be

included in our statements of comprehensive income.

use the asset and liability method to account for income taxes.

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to the amount that, based on available evidence, is more likely than not to be realized.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

Company follows the provisions of ASC 740-10, “

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tax expenses are recognized as tax expenses in the Statement of Operations.

of June 30, 2020, tax years 2019, 2018, and 2017 remain open for Internal Revenue Service (“IRS”) audit.

has received no notice of audit or any notifications from the IRS for any of the open tax years.

of September 30, 2020, tax years 2019, 2018, and 2017 remain open for Internal Revenue Service (“IRS”) audit.

Company has received no notice of audit or any notifications from the IRS for any of the open tax years.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued).

Concentrations

Company generates revenues from through our websites and our Ad Exchange Network.

There was one customer

which accounted for approximately 18% of the revenues for the three months ended June 30, 2020.

There were no customers

which represented more than 10% of revenues for the six months ended June 30, 2020.

There were two customers which accounted

for accounts receivable of approximately 11% and 12%, respectively, at June 30, 2020.

There was one vendor who

is owed approximately 11% of the accounts payable due at June 30, 2020.

Company generates revenues from through our owned and operated websites and CTV apps along with our ad exchange

There was one customer which accounted for approximately 19% of the revenues for the three months ended September

There were no customers which represented more than 10% of revenues for the nine months ended September 30, 2020.

were two customers which accounted for accounts receivable of approximately 17% and 12%, respectively, at September 30, 2020.

There was one vendor who is owed approximately 14% of the accounts payable due at September 30, 2020.

Company minimizes the concentration of credit risk associated with its cash by maintaining its cash with high quality federally

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Concentration

the three and six months ended June 30, 2020 a large portion of the Company’s funding was provided through the sale of shares

of the Company’s common stock with related warrants.

the three and nine months ended September 30, 2020 a large portion of the Company’s funding was provided through the sale

of shares of the Company’s common stock with related warrants.

and Diluted Net Earnings (Loss) Per Common Share

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shares outstanding during the period.

As of June 30, 2020 and 2019, there were 2,092,727 and 1,797,000 common stock equivalent

As of September 30, 2020 and 2019, there were 2,142,727 and 1,897,000 common stock equivalent

shares outstanding as stock options, respectively;

28,908,470 and 21,441,000 common stock equivalent shares outstanding from warrants

to purchase common shares, respectively, 8,044,017 and 6,844,017 common stock equivalents from the conversion of preferred stock,

respectively;

36,552,558 and 22,618,240 common stock equivalent shares outstanding

from warrants to purchase common shares, respectively, 8,044,017 and 6,844,017 common stock equivalents from the conversion

of preferred stock, respectively;

and 80,000 and 0 common stock equivalents from the conversion of notes payable, respectively.

Equivalent shares

were not utilized as the effect is anti-dilutive.

Equivalent shares were not utilized as the effect is anti-dilutive.

Company currently operates in one reporting segment.

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The adoption of this guidance did not have an impact on our consolidated Financial Statements.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

July 31, 2019, the Company executed a Share Exchange Agreement and Plan of Merger (the “Merger Agreement”) with Slutzky & Winshman Ltd., an Israeli company (“S&W”) and the shareholders of S&W (the “Shareholders”).

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stock units held in escrow for future vested stock options valued at $185,722.

As of June 30, 2020, we are unable to quantify

the likelihood of determining if the objectives will be met for payment of the first closing note.

the time of the acquisition until early September 2020, there were various unresolved matters related to the offsets.

parties were unable to work-out an agreement for the payment of the first tranche of the Notes.

Therefore, no amount or

payment was agreed upon as of August 15, 2020.

Based on the unresolved differences, the fair value of the liability at the

acquisition date and the 1 year anniversary remeasurement date for the purchase price determination in accordance with ASC 805

was not reasonably determined or estimated.

Accordingly, the Notes associated with the acquisition of S&W have not been

included within the purchase price calculation with regards to the valuation of the intangible assets and goodwill recognized

in the acquisition.

late September 2020, a new agreement was reached, in principle, by the parties whereby the payment due dates of the Notes, as

well as the unresolved disagreements were stricken, and the Company agreed to pay the full amounts of the notes at future dates.

This agreement supersedes all prior agreements.

The Company has recognized a liability of $750,000, which represents the fair value of the

settlement of contingent consideration in the current period.

The first payment of the notes for $375,000 will be

made upon the closing of a significant capital raise.

The second payment of $375,000 is scheduled for August 15, 2021.

upon the Closing, we agreed to pay Spartan Capital Securities (“Spartan Capital”) a broker-dealer and member of FINRA

3 unchanged sentences

The amounts due were included in the accrued expenses as of December

In accordance with ASC

805 “Business Combinations”

the measurement period for the acquisition is for one year during which the Company may

re-evaluate the assets acquired, liabilities assumed and the goodwill resulting from the transaction as well as the change in

amortization as a result of changes in the provisional amounts as if the accounting had been completed at the acquisition date.

The Company recognized a deferred tax liability associated with the intangible assets acquired.

accordance with ASC 805 “Business Combinations”

the measurement period for the acquisition is for one year during

which the Company may re-evaluate the assets acquired, liabilities assumed and the goodwill resulting from the transaction as

well as the change in amortization as a result of changes in the provisional amounts as if the accounting had been completed at

the acquisition date.

The re-evaluation performed did not result in a change in the values recorded for the assets acquired,

liabilities assumed or resulting goodwill.

As discussed further in Note 15, the Company recognized a deferred tax liability

associated with the intangible assets acquired.

As discussed above, the $750,000 contingent Closing Notes, which will be paid

in full have not been included in the evaluation of the acquired assets, liabilities assumed or resulting goodwill from the transaction.

allocation of the purchase price to the assets acquired and liabilities assumed based on management’s estimate of fair values

at the date of acquisition as follows:

August 15, 2019

Tangible assets acquired

assets acquired

tax liability

liabilities assumed

Deferred tax liability

Net liabilities assumed

Tradename –

IP/Technology

Customer relationships

Non-compete agreements

Total purchase price

relationships

purchase price

MOUNTAIN MEDIA, INC.

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table below summarizes the value of the total consideration given in the transaction:

Shares issued to owners

Shares issued for vested options

Shares issued to employees

Preliminary purchase price

Restricted stock units held in escrow

Closing notes

Total consideration

issued to owners

issued for vested options

issued to employees

purchase price

stock units held in escrow

consideration

November 18, 2019, the Company executed a Merger Agreement which merged Bright Mountain Media, Inc., a Florida corporation (“Bright

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it pertains to outstanding promissory notes and other obligations payable to NDN, Bridge notes in the current principal amount

of $776,000 were convert into shares of Bright Mountain’s common stock at a conversion price of $0.50 per share, with one

common stock warrant exercisable at $0.75 per share and one common stock warrant exercisable at $1.00 per share issued for each

conversion share.

The principal of the bridge notes was converted into shares of Bright Mountain’s common stock at a conversion

price of $1.75 per share, and all accrued but unpaid interest were forgiven by the noteholders.

Also of note is the open line

of credit of approximately $660,000 due Mr.

Greg Peters, NDN’s Chief Executive Officer, was converted into shares of Bright

Mountain’s common stock at a conversion price of $0.50 per share, with one common stock warrant exercisable at $.75 per

share and one common stock warrant exercisable at $1.00 per share issued for each conversion share.

of $776,000 were converted into shares of Bright Mountain’s common stock at a conversion price of $0.50 per share,

with one common stock warrant exercisable at $0.75 per share and one common stock warrant exercisable at $1.00 per share issued

for each conversion share.

The principal of the bridge notes was converted into shares of Bright Mountain’s common stock

at a conversion price of $1.75 per share, and all accrued but unpaid interest were forgiven by the noteholders.

Also of note is

the open line of credit of approximately $660,000 due Mr.

Greg Peters, NDN’s Chief Executive Officer, was converted into

shares of Bright Mountain’s common stock at a conversion price of $0.50 per share, with one common stock warrant exercisable

at $.75 per share and one common stock warrant exercisable at $1.00 per share issued for each conversion share.

Total Consideration Shares are subject to lock up restrictions on resale as determined by Bright Mountain and 25% percent of the

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The value of the shares were included in the accrued expenses as of December 31, 2019.

accordance with ASC 805 “Business Combinations”

the measurement period for the acquisition is for one year during

which the Company may re-evaluate the assets acquired, liabilities assumed and the goodwill resulting from the transaction

as well as the change in amortization as a result of changes in the provisional amounts as if the accounting had been completed

at the acquisition date.

As discussed further in Note 15, the Company recognized a deferred tax liability associated with the

intangible assets acquired.

MOUNTAIN MEDIA, INC.

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at the date of acquisition as follows:

November 18, 2019

Tangible assets acquired

assets acquired

tax liability

liabilities assumed

Deferred tax liability

Net liabilities assumed

Tradename –

IP/Technology

Customer relationships

Non-compete agreements

Total purchase price

relationships

purchase price

accordance with ASC 350, the finite lived intangible assets associated with MediaHouse were tested for valuation based on indicators

of impairment noted by management, including decreased revenues.

The year 2020 has been

marked by the COVID-19 Global pandemic when many companies in various industries were forced to restructure their advertising

budgets and spending.

The fair value of the respective assets was determined based on the projected future cash flows associated

with the respective assets.

These fair values were compared with the carrying values of the respective assets to determine if

an impairment of the respective assets was warranted.

It was determined that the finite lived intangible assets associated with

MediaHouse were deemed impaired based on an analysis of the carrying values and fair values of the assets.

During the three and

nine months ended September 30, 2020, the Company recorded an impairment expense of $11,551,573 within Impairment Expense on the

Statement of Operations.

table below summarizes the value of the total consideration given in the transaction:

Shares issued to owners

Warrants issued

Total consideration

On June 1, 2020, Bright

Mountain Media, Inc.

(“Bright Mountain”) entered into a membership interest purchase agreement (the “Purchase

Agreement”) with Centre Lane Partners Master Credit Fund II, L.P.

(“Centre Lane”) to purchase 100% of the membership

interests of CL Media Holdings, LLC (“Wild Sky Media”).

The purchase was completed on a debt-free, cash-free basis,

free and clear of any liens and encumbrances.

Bright Mountain issued 2,500,000 shares of its restricted common stock to Centre

Lane and Centre Lane issued a first lien senior secured credit facility of $16,416,905.

Per the credit facility with Center

Lane, our loan payments begin December 1, 2021.

issued to owners

consideration

June 1, 2020, Bright Mountain Media, Inc.

(“Bright Mountain”) entered into a membership interest purchase agreement

(the “Purchase Agreement”) with Centre Lane Partners Master Credit Fund II, L.P.

(“Centre Lane”) to purchase

100% of the membership interests of CL Media Holdings, LLC (“Wild Sky Media”).

The purchase was completed on a debt-free,

cash-free basis, free and clear of any liens and encumbrances.

Bright Mountain issued 2,500,000 shares of its restricted common

stock to Centre Lane and Centre Lane issued a first lien senior secured credit facility of $16,416,905.

Per the credit facility

with Center Lane, our loan payments begin December 1, 2021.

There is no prepayment penalty associated with this credit facility.

Certain future capital raises do require partial or full prepayments of the credit facility.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ACQUISITIONS (continued).

Agreement provides for a senior secured five-year loan in the initial principal amount of $16,416,905.

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The loan balance can be prepaid with no penalty.

The loan is guaranteed by Bright Mountain and certain of its domestic

subsidiaries of which became party to a Guarantee Agreement dated as of the Effective Date and each domestic subsidiary that,

subsequent to the Effective Date, becomes a subsidiary.

The Credit Agreement contains negative covenants that, subject to certain

exceptions, limits the ability of Bright Mountain and its subsidiaries to, among other things, incur debt, engage in new lines

of business, incur liens, engage in mergers, consolidations, liquidations and dissolutions, dispose of assets of Bright Mountain

and its subsidiaries, make investments, loans, advances, guarantees and acquisitions.

Any equity raised up to $15,000,000 in

the first one-hundred eighty days from the Credit Agreement is excluded from the loan balance prepayment requirements.

accordance with ASC 805 “Business Combinations”

the measurement period for the acquisition is for one year during

which the Company may re-evaluate the assets acquired, liabilities assumed and the goodwill resulting from the transaction

as well as the change in amortization as a result of changes in the provisional amounts as if the accounting had been completed

at the acquisition date.

As discussed further in Note 15, the Company recognized a deferred tax liability associated with the

intangible assets acquired.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ACQUISITIONS (continued).

The loan is guaranteed by Bright Mountain and certain of its domestic subsidiaries

of which became party to a Guarantee Agreement dated as of the Effective Date and each domestic subsidiary that, subsequent to

the Effective Date, becomes a subsidiary.

The Credit Agreement contains negative covenants that, subject to certain exceptions,

limits the ability of Bright Mountain and its subsidiaries to, among other things, incur debt, engage in new lines of business,

incur liens, engage in mergers, consolidations, liquidations and dissolutions, dispose of assets of Bright Mountain and its subsidiaries,

make investments, loans, advances, guarantees and acquisitions.

Any equity raised up to $15,000,000 in the first one-hundred eighty

days from the Credit Agreement is excluded from the loan balance prepayment requirements.

allocation of the purchase price to the assets acquired and liabilities assumed based on management’s estimate of fair values

at the date of acquisition as follows:

Tangible assets acquired

Liabilities assumed

Deferred tax liability

Net assets assumed

Tradename –

assets acquired

tax liability

assets assumed

IP/Technology

Customer relationships

Total purchase price

relationships

purchase price

table below summarizes the value of the total consideration given in the transaction:

Shares issued

Total consideration

consideration

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

ACQUISITIONS (continued).

following table sets forth a summary of the unaudited pro forma results of the Company as if the acquisitions of Oceanside, MediaHouse,

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had the business been acquired as of the first day of the period presented.

June 30, 2019

June 30, 2020

Total revenue

Total expenses

(83,909,439 )

(44,986,351 )

Preferred stock dividend

Net loss attributable to common shareholders

stock dividend

loss attributable to common shareholders

$ (69,420,738 )

$ (18,535,489 )

Basic and diluted net loss per share

and diluted net loss per share

DISCONTINUED OPERATIONS.

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retail location.

prior to December 31, 2018, with the appropriate level of authority, determined to discontinue the operations of Bright Mountain

Watches effective December 31, 2018.

The decisions to exit all components of our product segment will result in these businesses

being accounted for as discontinued operations.

The Company has determined that the exit of the Bright Mountain Watches business

requires the Company to liquidate the inventory and settle all obligations to wind down the business unit.

The Company sold the

remaining inventory during 2019.

Accordingly, the Company determined that the assets and liabilities of this reportable segment

met the discontinued operations criteria in Accounting Standards Codification 205-20-45, as such the results have been classified

as discontinued operations.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DISCONTINUED OPERATIONS (continued).

prior to December 31, 2018, with the appropriate level of authority, determined to discontinue the operations of Bright

Mountain Watches effective December 31, 2018.

The decisions to exit all components of our product segment will result in these

businesses being accounted for as discontinued operations.

The Company has determined that the exit of the Bright Mountain Watches

business requires the Company to liquidate the inventory and settle all obligations to wind down the business unit.

sold the remaining inventory during 2019.

Accordingly, the Company determined that the assets and liabilities of this reportable

segment met the discontinued operations criteria in Accounting Standards Codification 205-20-45, as such the results have been

classified as discontinued operations.

March 8, 2019 the Black Helmet Apparel E-Commerce business was sold for $175,000.

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approximately $180,000 of inventory was considered held for sale and included in discontinued operations.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

DISCONTINUED OPERATIONS (continued).

March 22, 2019 the Company sold the remaining Bright Watches inventory for approximately $7,000.

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inventory, written down to fair market value, was considered held for sale and included in discontinued operations.

the six months ended June 30, 2020, the Company settled the discontinued assets and liabilities and assumed the

remaining cash.

The detail of the consolidated balance sheet, the consolidated statement of operations and consolidated cash flow

for the discontinued operations is as stated below:

December 31, 2019

Accounts receivable

Total current assets

Total assets - discontinued operations

Accounts payable

Total current liabilities - discontinued operations

Net assets discontinued operations

Cost of revenues

Selling, general and administrative expenses

Loss from discontinued operations

Basic and fully diluted net loss per share

Cash (used in) operations for discontinued operations:

Loss from discontinued operations

Write-off of fixed assets

Loss on sale of business unit

Accounts payable

Deferred rents

Cash (used in) discontinued operations

Net decrease in cash and cash equivalents from discontinued operations

the nine months ended September 30, 2020, the Company settled the discontinued assets and liabilities and assumed the remaining

The detail of the consolidated balance sheet, the consolidated statement of operations and consolidated cash flow for the

discontinued operations is as stated below:

current assets

assets - discontinued operations

current liabilities - discontinued operations

assets discontinued operations

general and administrative expenses

from discontinued operations

and fully diluted net loss per share

(used in) operations for discontinued operations:

from discontinued operations

of fixed assets

on sale of business unit

(used in) discontinued operations

decrease in cash and cash equivalents from discontinued operations

MOUNTAIN MEDIA, INC.

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PREPAID COSTS AND EXPENSES.

June 30, 2020 and December 31, 2019, prepaid expenses and other current assets consisted of the following:

June 30, 2020

December 31, 2019

Prepaid insurance

Prepaid VAT fees

Prepaid expenses –

Current portion of prepaid service agreements

Prepaid expenses and other current assets

September 30, 2020 and December 31, 2019, prepaid expenses and other current assets consisted of the following:

expenses –

portion of prepaid service agreements

expenses and other current assets

PROPERTY AND EQUIPMENT.

June 30, 2020 and December 31, 2019, property and equipment consisted of the following:

June 30, 2020

December 31,2019

Furniture and fixtures

Leasehold improvements

Computer equipment

Total property and equipment

September 30, 2020 and December 31, 2019, property and equipment consisted of the following:

property and equipment

accumulated depreciation

Total property and equipment, net

expense for the three months ending June 30, 2020 and 2019, was $4,926 and $1,766, respectively.

expense for the six months ending June 30, 2020 and 2019, was $10,179 and $4,118, respectively.

property and equipment, net

expense for the three months ending September 30, 2020 and 2019, was $19,437 and $3,121, respectively.

expense for the nine months ending September 30, 2020 and 2019, was $29,616 and $5,613, respectively.

WEBSITE ACQUISITION AND INTANGIBLE ASSETS.

June 30, 2020 and December 31, 2019, respectively, website acquisitions, net consisted of the following:

June 30, 2020

December 31, 2019

Website Acquisition Assets

September 30, 2020 and December 31, 2019, respectively, website acquisitions, net consisted of the following:

Acquisition Assets

accumulated amortization

cumulative impairment loss

Website Acquisition Assets, net

June 30, 2020 and December 31, 2019, respectively, intangible assets, net consisted of the following:

June 30, 2020

December 31, 2019

Customer relationships

Acquisition Assets, net

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

WEBSITE ACQUISITION AND INTANGIBLE ASSETS (continued).

September 30, 2020 and December 31, 2019, respectively, intangible assets, net consisted of the following:

relationships

IP/Technology

Non-compete agreements

Total Intangible Assets

Intangible Assets

accumulated amortization

Intangible assets, net

expense for the three months ended June 30, 2020 and 2019 was $1,047,292 and $31,046, respectively, related to both the

expense for the three months ended September 30, 2020 and 2019 was $1,289,416 and $101,709, respectively, related to both the

website acquisition costs and the intangible assets.

Amortization expense for the six months ended June 30, 2020 and 2019 was

$1,999,914 and $66,859, respectively, related to both the website acquisition costs and the intangible assets.

Amortization expense for the nine months ended September 30, 2020 and 2019

was $3,289,330 and $131,409, respectively, related to both the website acquisition costs and the intangible assets.

2019, the Company rebranded Daily Engage to Bright Mountain and wrote off the $32,000 tradename asset of Daily Engage.

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recognized, see Note 4.

During 2020, the Company

acquired Wild Sky Media in which finite lived intangible assets of $7,246,300 and Goodwill of $10,814,559 were recognized,

2020, the Company acquired Wild Sky Media in which finite lived intangible assets of $7,246,300 and Goodwill of $10,948,162

were recognized, see Note 4.

accordance with ASC 350, the finite lived intangible assets associated with Oceanside and MediaHouse were tested for valuation

based on indicators of impairment noted by management, including decreased revenues.

The year 2020

has been marked by the COVID-19 Global pandemic when many companies in various industries were forced to restructure their advertising

budgets and spending.

The fair value of the respective assets was determined based on the projected future cash flows associated

with the respective assets.

These fair values were compared with the carrying values of the respective assets to determine if

an impairment of the respective assets was warranted.

It was determined that the carrying values of the finite lived intangible

assets associated with Oceanside did not exceed the respective fair values of the assets, therefore no revaluation associated

with these assets has been recognized.

It was determined that the finite lived intangible assets associated with MediaHouse were

deemed impaired based on an analysis of the carrying values and fair values of the assets.

During the three and nine months ended

September 30, 2020, the Company recorded an impairment expense of $11,551,573 within Impairment Expense on the Statement of Operations.

MOUNTAIN MEDIA, INC.

1 unchanged sentence

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

WEBSITE ACQUISITION AND INTANGIBLE ASSETS (continued).

Company categorizes Goodwill into two reporting units, Owned & Operated and Ad Network.

In accordance with ASC 350, Goodwill

is tested for impairment at least annually and based on the acquisition dates of Oceanside and MediaHouse, this test was performed

as part of the current quarter.

ASC 350 deems an impairment to have occurred when the carrying value of the Goodwill associated

with the reporting unit exceeds the implied value of the Goodwill associated with the reporting unit.

The year 2020

has been marked by the COVID-19 Global pandemic when many companies in various industries were forced to restructure their advertising

budgets and spending.

This caused a significant contraction of economic activity at the beginning in the first months of the year

and has continued.

Although there are recent signs of improvement with significant GDP gains, many companies have yet to reinstate

their advertising budgets and/or have changed the way they are spending these budgets.

Many advertisers have moved away from direct

ad buys in favor of programmatic distribution with its lower costs.

The fair value of the respective reporting units was

determined based on both the Income Approach (Discount Cash Flows) and the Market Multiples Approach.

As of September 30, 2020,

it was determined that the carrying value of the Goodwill associated with the Owned & Operated reporting unit was not deemed

impaired in accordance with ASC 350.

It was determined that the recorded Goodwill associated with the Ad Network exceeded the

fair value of the Goodwill and during the three and nine months ended September 30, 2020, the Company recorded an impairment expense

of $42,444,971 within Impairment Expense on the Statement of Operations.

ACCRUED EXPENSES.

June 30, 2020 and December 31, 2019, respectively, accrued expenses consisted of the following:

June 30, 2020

December 31, 2019

Accrued dividends

Accrued professional fees

Other accrued expenses

Accrued compensation

Accrued service/consulting agreements

Total accrued expenses

September 30, 2020 and December 31, 2019, respectively, accrued expenses consisted of the following:

professional fees

accrued expenses

service/consulting agreements

accrued expenses

accrued consulting fees on December 31, 2019 included $2,122,400 representing cash due of $165,000 and common stock of 650,000

11 unchanged sentences

in excess of the face value of the note of $70,000.

principal balance of these notes payable was $80,000 and $80,000 at June 30, 2020 and December 31, 2019, respectively and discounts

recognized upon respective origination dates as a result of the beneficial conversion feature total $47,330 and $54,311.

30, 2020 and December 31, 2019, the total convertible notes payable to related party net of discounts was $32,670 and $25,689,

respectively.

expense for note payable to related party was $2,023 and $2,023 for the three months ended June 30, 2020 and 2019, respectively

principal balance of these notes payable was $80,000 and $80,000 at September 30, 2020 and December 31, 2019, respectively and

discounts recognized upon respective origination dates as a result of the beneficial conversion feature total $43,801 and $57,840.

At September 30, 2020 and December 31, 2019, the total convertible notes payable to related party net of discounts was $36,199

and $22,160, respectively.

unsecured and interest free Closing Notes of $750,000 as identified in Note 4 had various unresolved matters related to the offsets.

The parties were unable to work-out an agreement for the payment of the first tranche of the Notes.

Therefore, no amount

or payment was agreed upon as of August 15, 2020.

Based on the unresolved differences, the fair value of the liability at

the acquisition date and the 1 year anniversary remeasurement date for the purchase price determination in accordance with ASC

805 was not reasonably determined or estimated.

late September 2020, a new agreement was reached, in principle, by the parties whereby the payment due dates of the Notes, as

well as the unresolved disagreements were stricken, and the Company agreed to pay the full amounts of the notes at future dates.

This agreement supersedes all prior agreements.

The Company has recognized the recording of the liability as a settlement

of contingent consideration to be recognized in the current period.

The first payment of the notes for $375,000 will be

made upon the closing of a significant capital raise.

The second payment of $375,000 is scheduled for August 15, 2021.

expense for note payable to related party was $2,045 and $2,045 for the three months ended September 30, 2020 and 2019, respectively

and discount amortization was $3,529 and $3,529, respectively.

Interest expense for note payable to related party for the six

months ended June 30, 2020 and 2019 was $4,046 and $4,772, respectively and discount amortization was $6,981 and $6,943,

Interest expense for note payable to related party for the nine

months ended September 30, 2020 and 2019 was $6,091 and $6,393, respectively and discount amortization was $10,510 and $10,472,

respectively.

connection with the acquisition of BMLLC, the Company issued promissory notes totaling $380,000.

The notes have no stated interest

rate and matured on September 19, 2018 and the Company is in default pending the final outcome of the legal matters.

of the notes payable at June 30, 2020 and December 31, 2019 were $165,163 and $165,163, respectively.

This note was not paid off

by the maturity date due to pending litigation.

See further discussion in Note 11, under Legal.

The notes had no stated

interest rate and matured on September 19, 2018 and the Company was in default prior to a settlement reached on July 8, 2020.

Effective July 8, 2020, the Company executed a Settlement Agreement and Release with Harry G.

Pagoulatos, George Rezitis, and

Angelo Triantafillou whereby they relinquish their Bright Mountain common stock shares and the Company pays them full and final

settlement of $385,000 within 12 months from the date the shares are delivered to Bright Mountain Media.

The Company had previously

made payments against the notes resulting in a recorded liability due to the parties of $165,163.

The settlement increased the

liability to a final settlement amount of $385,000, requiring an additional liability of $219,837 which was recognized by the

The balance of the notes payable at September 30, 2020 and December 31, 2019 were $385,000 and $165,163, respectively.

The notes are payable one year from the surrender of the note holders common stock of the Company, which is included in treasury

See further discussion in Notes 11, under Legal and Note 13, under Treasury Stock.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES PAYABLE (continued).

April 24, 2020, Bright Mountain Media, Inc.

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Loan in whole or in part.

June 1, 2020, the Company acquired Wild Sky Media and assumed the $1,706,735 loan received under the Paycheck Protection

Program (the “PPP”).

The PPP Loan is evinced by a promissory note (the “Promissory Note”) with Holbomb

Bank and has a two-year term and bears interest at a rate of 1.0% per annum.

Monthly principal and interest payments are deferred

for six months after the date of disbursement.

June 1, 2020, the Company acquired Wild Sky Media and assumed the $1,706,735 loan received under the Paycheck Protection Program

(the “PPP”).

The PPP Loan is evinced by a promissory note (the “Promissory Note”) with Holbomb Bank and

has a two-year term and bears interest at a rate of 1.0% per annum.

Monthly principal and interest payments are deferred for six

months after the date of disbursement.

The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties.

4 unchanged sentences

will obtain forgiveness of the PPP Loan in whole or in part.

Effective June 1, 2020,

we entered into a membership interest purchase agreement to acquire 100% of Wild Sky Media.

The seller issued a first lien

senior secured credit facility which consisted of $15,000,000 of initial indebtedness, repayment of Wild Sky Media’s

June 1, 2020, we entered into a membership interest purchase agreement to acquire 100% of Wild Sky Media.

The seller issued a

first lien senior secured credit facility which consisted of $15,000,000 of initial indebtedness, repayment of Wild Sky Media’s

existing accounts receivable factoring facility of approximately $900,000 and $500,000 of expenses totaling $16,416,905.

note bears interest at a rate of 6.0% per annum.

bears interest at a rate of 6.0% per annum.

Per the credit facility with the seller, our loan payments begin December 1, 2021.

There is no prepayment penalty associated with this credit facility.

Certain future capital raises do require partial

or full prepayments of the credit facility.

BRIGHT MOUNTAIN MEDIA, INC.

Certain future capital raises do require partial or full

prepayments of the credit facility.

September 30, 2020 and December 31, 2019 a summary of the Company’s debt is as follows:

bearing BMLLC acquisition debt

bearing notes issued as settlement of contingent consideration

Sky acquisition debt

Short Term Debt

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2020

NOTE 10 –

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTES PAYABLE (continued).

June 30, 2020 and December 31, 2019 a summary of the Company’s debt is as follows:

June 30, 2020

December 31, 2019

Non-interest bearing Promissory Note issued for the BMLLC acquisition on September 19, 2017 which matured on September 19, 2018.

Wild Sky acquisition debt

Less Short Term Debt

Long Term Debt

expense for the three months ended June 30, 2020 and 2019 were $82,085 and $0, respectively.

Interest expense for the six months

ended June 30, 2020 and 2019 were $82,085 and $0, respectively.

minimum annual principal payments of notes payable at June 30, 2020 were:

expense for the three months ended September 30, 2020 and 2019 were $246,255 and $0, respectively.

Interest expense for the nine

months ended September 30, 2020 and 2019 were $328,340 and $0, respectively.

minimum annual principal payments of notes payable at September 30, 2020 were:

Finance Loan Payable

2 unchanged sentences

and $110,200, respectively.

Premium Finance Loan Payable balance for the Company’s policies was $71,062 at June 30, 2020 and $179,844 at December 31,

Premium Finance Loan Payable balance for the Company’s policies was $16,671 at September 30, 2020 and $179,844 at December

COMMITMENTS AND CONTINGENCIES.

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COMMITMENTS AND CONTINGENCIES (continued).

right of use asset and lease liability is as follows as of June 30, 2020 and December 31, 2019:

June 30, 2020

December 31, 2019

Operating lease right of use asset

Operating lease liability, current

Operating lease liability, net of current portion

Total operating lease liabilities

right of use asset and lease liability is as follows as of September 30, 2020 and December 31, 2019:

lease right of use asset

lease liability, current

lease liability, net of current portion

operating lease liabilities

Company’s non-lease components are primarily related to property maintenance and other operating services, which varies

based on future outcomes and is recognized in rent expense when incurred and not included in the measurement of the lease liability.

The Company did not have any variable lease payments for its operating lease for the three and six months ended June 30, 2020.

maturity of the Company’s operating lease liability for the 12 months ended June 30:

Total net lease liabilities

The Company did not have any variable lease payments for its operating lease for the three and nine months ended September 30,

maturity of the Company’s operating lease liability for the 12 months ended September 30:

net lease liabilities

following summarizes additional information related to the operating lease:

June 30, 2020

Weighted-average remaining lease term

Weighted-average discount rate

the three months ended June 30, 2020 and 2019, rent expense in continuing operations was $61,923 and $5,518, respectively.

the three months ended June 30, 2020 and 2019, rent expense included in discontinued operations was $0 and $33,382, respectively.

For the six months ended June 30, 2020 and 2019, rent expense in continuing operations was $222,554 and $34,927 respectively.

For the six months ended June 30, 2019 and 2018, rent expense included in discontinued operations was $0 and $70,424, respectively.

Weighted-average

remaining lease term

Weighted-average

discount rate

the three months ended September 30, 2020 and 2019, rent expense in continuing operations was $192,717 and $28,199, respectively.

For the three months ended September 30, 2020 and 2019, rent expense included in discontinued operations was $0 and $0, respectively.

For the nine months ended September 30, 2020 and 2019, rent expense in continuing operations was $415,271 and $81,376,

respectively.

For the nine months ended September 30, 2020 and 2019, rent expense included in discontinued operations was $0 and

$70,424, respectively.

MOUNTAIN MEDIA, INC.

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that any dispute should be heard in either the state or local courts of Palm Beach County, Florida.

This Motion to Dismiss has

been pending a decision since October 2018.

At the appropriate juncture, we also intend to serve a Rule 11 Motion for Sanctions

based upon the fact that the Complaint contains frivolous arguments or arguments with no evidentiary support.

The parties also

agreed to settle all claims through the exchange of shares from Messrs.

Pagoulatos and George G.

Rezitis for payment

The payment for the shares will be made as Messrs.

The parties agreed to settle

all claims through the exchange of shares from Messrs.

Pagoulatos and George G.

Rezitis shares are resold by

the Company, see Note 16.

On July 8, 2020, the

Company executed a Settlement Agreement and Release with the Harry G.

Pagoulatos, George Rezitis, and Angelo Triantafillou whereby

they relinquish their Bright Mountain common stock shares and the Company pays them full and final settlement within 12 months

from the date the shares are delivered to Bright Mountain Media.

As with all transactions, this transaction will be recorded based

on the fair value of the shares as of the transaction date of July 8, 2020.

The shares will be held as Treasury Stock by the Company

and will be resold at later dates.

connection with the BMLLC acquisition, the Company entered into three-year employment agreements with two former members of the

Under these agreements, the Company was obliged to pay base salaries of $65,000 and $70,000, respectively to the employees

with an increase to $75,000 each in the second year of the agreement as well as bonuses to be paid at the discretion of the board

of directors.

Rezitis for payment of $165,163.

July 8, 2020, due to the shares not being exchanged and the change in the share value, the Company executed another Settlement

Agreement and Release with the Harry G.

Pagoulatos, George Rezitis, and Angelo Triantafillou whereby they will relinquish their

Bright Mountain common stock shares and the Company will pay them a full and final settlement of $385,000 within 12 months from

the date the shares are delivered to Bright Mountain Media.

As with all transactions, this transaction has been recorded based

on the fair value of the shares as of the transaction settlement date of July 8, 2020.

As of September 30, 2020, the parties have

provided the Company with 550,117 of their total 825,175 shares.

Based on the price per share of $2.10 as of July 8, the value

of the shares provided to the Company was $1,155,246.

As the Company had previously recorded the liability due to the parties

of $165,163, which increased to the final settlement amount of $385,000, an additional liability of $219,837 was recognized along

with a gain on the transaction of $935,408.

The shares will be held as Treasury Stock by the Company and will be resold at later

See Notes 10, under Long Term Debt and 13, under Treasury Stock.

time-to-time, we may be involved in litigation or be subject to claims arising out of our operations or content appearing on our

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The Company has not paid anything to Kubient, Inc.

during six months ended June 30, 2020 for its platform.

The Company has ceased

advertising services with Kubient and at June 30, 2020 the Company is owed $125,387 and a note receivable of $71,625 plus interest,

and we have reserved a total of $136,000 against these balances.

during nine months ended September 30, 2020 for its platform.

The Company has

ceased advertising services with Kubient and prior to September 30, 2020 the Company reached a settlement agreement related to

accounts receivable and note receivable balances.

As of September 30, 2020 the full amount due under the settlement agreement

was received by the Company, and no further balances remain open.

BRIGHT MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

September 30, 2020

NOTE 11 –

COMMITMENTS AND CONTINGENCIES (continued).

September 6, 2017 Bright Mountain Media, Inc.

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Total prepaid service/consulting fees, were $1,035,000, of which $310,000 is considered short-term

and is included in prepaid expenses and other current assets as of June 30, 2020.

These prepaid expenses are being amortized over

60 months, the term of the respective agreements.

and is included in prepaid expenses and other current assets as of September 30, 2020.

These prepaid expenses are being amortized

over 60 months, the term of the respective agreements.

The amortization expense was $77,500 and $77,500 for the three months ended

June 30, 2020 and 2019, respectively.

The amortization expense was $155,000 and $155,00 for the six months ended June 30, 2020

September 30, 2020 and 2019, respectively.

The amortization expense was $232,500 and $232,500 for the nine months ended September

30, 2020 and 2019, respectively.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES (continued).

the 36 months from the final closing of this private placement, Spartan Capital has certain rights of first refusal if we decide

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other than selling expenses of the holders.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMMITMENTS AND CONTINGENCIES (continued).

December 11, 2018 we entered into an Uplisting Advisory and Consulting Agreement with Spartan Capital pursuant to which Spartan

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base salary in accordance with normal payroll practices through the end of his Employment Period, without renewal.

BRIGHT MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

September 30, 2020

NOTE 11 –

COMMITMENTS AND CONTINGENCIES (continued).

financial performance and operating results may be materially and adversely affected by the outbreak of the novel coronavirus

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cannot be predicted.

NOTE 12 –

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-1 Convertible Preferred Stock (“Series

A-1 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”).

On November 20, 2019

we filed Articles of Amendment to our Amended and Restated Articles of Incorporation, as amended, which returned 2,000,000 shares

of previously designated 10% Series B Convertible Preferred Stock, 2,000,000 shares of previously designated 10% Series C Convertible

Preferred Stock and 2,000,000 shares of previously designated 10% Series D Convertible Preferred Stock to the status of authorized

but undesignated and unissued shares of our blank check preferred stock as there were no shares of any of these series outstanding

and no intention to issue any such shares in the future.

The returned series were replaced by 6,000,000 shares of 5% Series B-1

Convertible Preferred Stock.

At September 30, 2020,

there were 1,200,000 shares of Series A-1 Stock and 2,500,000 shares of Series E Stock and 4,344,017 shares of Series F Stock

issued and outstanding.

There are no shares of Series B-1 Stock issued and outstanding.

The Series A-1 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-1 Stock are entitled to the payment of a 10% dividend payable in shares of the Company’s common stock at a rate

of one share of common stock for each 10 shares of Series A-1 Stock, payable annually the 10th business day of January.

of Series A-1 Stock are redeemable at the Company’s option upon 20 days’

notice for an amount equal to the amount

of capital invested.

On the 10th business day of January 2018 there were 10,000 shares of common stock dividends owed and payable

to the Series A-1 Stockholder of record as dividends on the Series A-1 Stock.

These preferred shares automatically converted into

common shares on December 30, 2018 as defined above.

MOUNTAIN MEDIA, INC.

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

PREFERRED STOCK.

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-1 Convertible Preferred

Stock (“Series A-1 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”).

November 20, 2019 we filed Articles of Amendment to our Amended and Restated Articles of Incorporation, as amended, which returned

2,000,000 shares of previously designated 10% Series B Convertible Preferred Stock, 2,000,000 shares of previously designated

10% Series C Convertible Preferred Stock and 2,000,000 shares of previously designated 10% Series D Convertible Preferred Stock

to the status of authorized but undesignated and unissued shares of our blank check preferred stock as there were no shares of

any of these series outstanding and no intention to issue any such shares in the future.

The returned series were replaced by

6,000,000 shares of 5% Series B-1 Convertible Preferred Stock.

June 30, 2020, there were 1,200,000 shares of Series A-1 Stock and 2,500,000 shares of Series E Stock and 4,344,017 shares of

Series F Stock issued and outstanding.

There are no shares of Series B-1 Stock issued and outstanding

Series A-1 Stock is senior to all other classes of the Company’s securities and has a stated value of $0.50 per share.

of shares of Series A-1 Stock are entitled to the payment of a 10% dividend payable in shares of the Company’s common stock

at a rate of one share of common stock for each 10 shares of Series A-1 Stock, payable annually the 10th business day of January.

The shares of Series A-1 Stock are redeemable at the Company’s option upon 20 days’

notice for an amount equal to

the amount of capital invested.

On the 10th business day of January 2018 there were 10,000 shares of common stock dividends owed

and payable to the Series A-1 Stockholder of record as dividends on the Series A-1 Stock.

These preferred shares automatically

converted into common shares on December 30, 2018 as defined above.

PREFERRED STOCK (continued).

September 6, 2017, the board of directors designated 2,500,000 shares of Preferred Stock as Series E Stock, which such designation

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of Series E Stock at a purchase price of $0.40 per share.

the three months ended June 30, 2020 and 2019 we paid cash dividends on the outstanding shares of the Company’s Series E

and F Preferred Stock of $31,261 and $75,818, respectively held by affiliates of the Company.

For the six months

ended June 30, 2020 and 2019 we paid cash dividends on the outstanding shares of the Company’s Series E and F Preferred

Stock of $55,007 and $149,989, respectively held by affiliates of the Company.

the three months ended September 30, 2020 and 2019 we paid cash dividends on the outstanding shares of the Company’s Series

E and F Preferred Stock of $3,760 and $27,765, respectively held by affiliates of the Company.

For the nine months ended September

30, 2020 and 2019 we paid cash dividends on the outstanding shares of the Company’s Series E and F Preferred Stock of $58,767

and $224,984, respectively held by affiliates of the Company.

NOTE 13 –

COMMON STOCK.

A) Stock issued

For the nine months

ended September 30, 2020, the Company sold an aggregate of 10,398,700 units of its securities to 167 accredited investors in a

private placement exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and

Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $5,199,350.

Each unit, which was sold at a purchase

price of $0.50, consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise

price of $0.75 per share.

Spartan Capital, served as placement agent for the Company in this offering.

As compensation for its

services, Spartan Capital held back $779,903 for commissions, providing cash to the Company of $4,419,447.

From this amount, Spartan

Capital deducted $165,000 to pay the accrued finder’s fee for the Oceanside acquisition, and $275,000 in other consulting

fees, and $401,750 in success and escrow fees resulting in net cash received by the Company of $3,577,698.

The Company issued

Spartan Capital Placement Agents Warrants to purchase an aggregate of 1,039,870 shares of our common stock, including the cash

commission and Placement Agent Warrants issued pursuant to the closings included in the Company’s consolidated statement

of changes in shareholders’

equity for the nine months ended September 30, 2020.

MOUNTAIN MEDIA, INC.

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TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMMON STOCK.

Stock issued for Cash

For the six months ended

June 30, 2020, the Company sold an aggregate of 6,142,500 units of its securities to 66 accredited investors in a private placement

exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation

D resulting in gross proceeds to the Company of $3,071,250.

Each unit, which was sold at a purchase price of $0.50, consisted

of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.75 per

Spartan Capital, served as placement agent for the Company in this offering.

As compensation for its services, Spartan

Capital held back $460,688 for commissions, providing cash to the Company of $2,610,562.

From this amount, Spartan Capital

deducted $165,000 to pay the accrued finder’s fee for the Oceanside acquisition, and $275,000 in other consulting fees,

resulting in net cash received by the Company of $2,170,562.

The Company issued Spartan Capital Placement Agents Warrants

to purchase an aggregate of 511,750 shares of our common stock, including the cash commission and Placement Agent Warrants

issued pursuant to the closings included in the Company’s consolidated statement of changes in shareholders’

for the six months ended June 30, 2020.

COMMON STOCK (continued).

the nine months ended September 30, 2020, a former employee exercised 50,000 stock options for $6,950.

2019, the Company sold an aggregate of 163,750 units of its securities to 1 accredited investor in a private placement exempt

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$1.64 per share.

June 1, 2020, the Company issued 2,500,000 shares of its common stock in connection with the acquisition of Wild Sky

The common shares were valued at $3,725,000 or $1.49 per share.

June 1, 2020, the Company issued 2,500,000 shares of its common stock in connection with the acquisition of Wild Sky Media.

common shares were valued at $3,725,000 or $1.49 per share.

MOUNTAIN MEDIA, INC.

2 unchanged sentences

COMMON STOCK (continued).

July 8, 2020, the Company executed a Settlement Agreement and Release with the Harry G.

Pagoulatos, George Rezitis, and Angelo

Triantafillou whereby they relinquish their Bright Mountain common stock shares and the Company will pay a final settlement of

$385,000 within 12 months from the date the shares are delivered to Bright Mountain Media.

This transaction has been recorded

based on the fair value of the shares as of the transaction settlement date of July 8, 2020.

As of September 30, 2020, the parties

have provided the Company with 550,117 of their total 825,175 shares.

Based on the price per share of $2.10 as of July 8, the

value of the shares provided to the Company was 1,155,246.

As the Company had previously recorded the liability due to the parties

of $165,163, which increased to the final settlement amount of $385,000, an additional liability of $219,837 was recognized along

with a gain on the transaction of $935,408.

The shares will be held as Treasury Stock by the Company and will be resold at later

Option Compensation

16 unchanged sentences

is recognized over the period the services are provided.

On April 20, 2011, the

Company’s board of directors and majority stockholder adopted the 2011 Stock Option Plan (the “2011 Plan”),

to be effective on January 3, 2011.

The Company has reserved for issuance an aggregate of 900,000 shares of common stock under

the 2011 Plan.

The maximum aggregate number of shares of Company stock that shall be subject to Grants made under the Plan to

any individual during any calendar year shall be 180,000 shares.

On April 1, 2013, the Company’s board of directors and

majority stockholder adopted the 2013 Stock Option Plan (the “2013 Plan”), to be effective on April 1, 2013.

has reserved for issuance an aggregate of 900,000 shares of common stock under the 2013 Plan.

As of June 30, 2020, 9,000

April 20, 2011, the Company’s board of directors and majority stockholder adopted the 2011 Stock Option Plan (the “2011

Plan”), to be effective on January 3, 2011.

The Company has reserved for issuance an aggregate of 900,000 shares of common

stock under the 2011 Plan.

The maximum aggregate number of shares of Company stock that shall be subject to Grants made under

the Plan to any individual during any calendar year shall be 180,000 shares.

On April 1, 2013, the Company’s board of directors

and majority stockholder adopted the 2013 Stock Option Plan (the “2013 Plan”), to be effective on April 1, 2013.

Company has reserved for issuance an aggregate of 900,000 shares of common stock under the 2013 Plan.

As of September 30, 2020,

9,000 shares were remaining under the 2011 Plan for future issuance.

As of June 30, 2020, 25,000 shares were remaining under

As of September 30, 2020, 25,000 shares were remaining under

the 2013 Plan for future issuance.

BRIGHT MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

September 30, 2020

NOTE 13 –

COMMON STOCK (continued).

May 22, 2015, the Company’s board of directors and majority stockholder adopted the 2015 Stock Option Plan (the “2015

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stock under the 2015 Plan.

As of June 30, 2020, 420,000 shares were remaining under the 2015 Plan for the future issuance.

As of September 30, 2020, 420,000 shares were remaining under the 2015 Plan for the future issuance.

November 7, 2019, the Company’s board of directors and majority stockholder adopted the 2019 Stock Option Plan (the “2019

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stock under the 2019 Plan.

As of June 30, 2020, 4,804,273 shares were remaining under the 2019 Plan for the future issuance.

As of September 30, 2020, 4,704,273 shares were remaining under the 2019 Plan for the future issuance.

purpose of the 2011 Plan, 2013 Plan, 2015 Plan, and 2019 Plan (the “Plans”

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by the Committee and specified in the Grant Instrument.

BRIGHT MOUNTAIN MEDIA, INC.

The Company estimates

the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables

such as the expected option term, expected volatility of our stock price over the expected option term, expected risk-free interest

rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture

The Company believes

this valuation methodology is appropriate for estimating the fair value of stock options granted to employees and directors, which

is subject to ASC Topic 718 requirements.

These amounts are estimates and thus may not be reflective of actual future results,

nor amounts ultimately realized by recipients of these grants.

The Company recognizes share-based compensation expense on a straight-

line basis over the requisite service period for each award.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

June 30, 2020

NOTE 13 –

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

COMMON STOCK (continued).

Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent

upon several variables such as the expected option term, expected volatility of our stock price over the expected option term,

expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and

an estimate of expected forfeiture rates.

Company believes this valuation methodology is appropriate for estimating the fair value of stock options granted to employees

and directors, which is subject to ASC Topic 718 requirements.

These amounts are estimates and thus may not be reflective of actual

future results, nor amounts ultimately realized by recipients of these grants.

The Company recognizes share-based compensation

expense on a straight- line basis over the requisite service period for each award.

expected life is computed using the simplified method, which is the average of the vesting term and the contractual term.

6 unchanged sentences

would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased.

Company recorded $41,499 and $9,898 of stock option expense for the three months ended June 30, 2020 and 2019, respectively.

The Company recorded $78,094 and $13,111 of stock option expense for the six months

ended June 30, 2020 and 2019 respectively The stock option expense for the three and six months ended June 30, 2020 and

2019, respectively has been recognized as a component of general and administrative expenses in the accompanying consolidated

financial statements.

of June 30, 2020, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements

of $270,094 to be recognized through June 2024.

in the recognized and unrecognized compensation costs are 75,000 options issued to an employee during the six months ended

June 30, 2020.

The value of these options was calculated using the Black Scholes Option Pricing Model with the following inputs:

Exercise price $1.70, Stock price $1.70, Term 6.25 years, Volatility 126%, Dividends 0.00%, and Risk free rate 0.40%, resulting

in a total fair value of the grant of $112,985.

Company recorded $51,011 and $15,963 of stock option expense for the three months ended September 30, 2020 and 2019, respectively.

The Company recorded $129,105 and $29,074 of stock option expense for the nine months ended September 30, 2020 and 2019

respectively The stock option expense for the three and nine months ended September 30, 2020 and 2019, respectively has been recognized

as a component of general and administrative expenses in the accompanying consolidated financial statements.

of September 30, 2020, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements

of $405,707 to be recognized through September 2024.

in the recognized and unrecognized compensation costs are 100,000 options issued to an employee during the nine months ended

September 30, 2020.

The value of these options was calculated using the Black Scholes Option Pricing Model with the following

Exercise price $2.10, Stock price $2.10, Term 6.25 years, Volatility 127%, Dividends 0.00%, and Risk free rate 0.31%,

resulting in a total fair value of the grant of $139,968.

A summary of the Company’s

stock option activity during the nine months ended September 30, 2020 is presented below:

Number of Options

Weighted Average Exercise

Weighted Average Remaining

Contractual Term

Aggregate Intrinsic Value

Balance Outstanding, December 31, 2019

Balance Outstanding, September 30, 2020

Exercisable at September 30, 2020

MOUNTAIN MEDIA, INC.

2 unchanged sentences

COMMON STOCK (continued).

summary of the Company’s stock option activity during the six months ended June 30, 2020 is presented below:

Balance Outstanding, December 31, 2019

Balance Outstanding, June 30, 2020

Exercisable at June 30, 2020

information with respect to options outstanding under the two option plans at June 30, 2020 is as follows:

information with respect to options outstanding under the two option plans at September 30, 2020 is as follows:

RELATED PARTIES.

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of a beneficial conversion feature recorded as a debt discount.

These notes payable total $32,670 and $25,689 at June 30, 2020

These notes payable total $36,199 and $25,689 at September 30,

2020 and December 31, 2019.

The notes are reported net of their unamortized debt discount of $47,330 and $54,311 as of June 30, 2020

The notes are reported net of their unamortized debt discount of $43,801 and $54,311 as of September

30, 2020 and December 31, 2019, respectively.

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paid for Series A-1, E and F Convertible Preferred Stock paid to Mr.

Kip Speyer were $30,000 and $66,503 for the three

months ended June 30, 2020 and 2019, respectively.

Dividends paid for Series A-1, E and F Convertible Preferred Stock paid to

Kip Speyer were $52,500 and $149,989 for the six months ended June 30, 2020 and 2019, respectively.

BRIGHT MOUNTAIN MEDIA, INC.

Kip Speyer were $2,500 and $26,504 for the three months

ended September 30, 2020 and 2019, respectively.

Dividends paid for Series A-1, E and F Convertible Preferred Stock paid to Mr.

Kip Speyer were $55,000 and $126,630 for the nine months ended September 30, 2020 and 2019, respectively.

The unsecured and interest

free Closing Notes of $750,000 as identified in Note 4 had various unresolved matters related to the offsets.

were unable to work-out an agreement for the payment of the first tranche of the Notes.

Therefore, no amount or payment

was agreed upon as of August 15, 2020.

MOUNTAIN MEDIA, INC.

AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL

June 30, 2020

TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14 –

RELATED PARTIES (continued).

In late September 2020,

a new agreement was reached, in principle, by the parties whereby the payment due dates of the Notes, as well as the unresolved

disagreements were stricken, and the Company agreed to pay the full amounts of the notes at future dates.

This agreement

supersedes all prior agreements.

The Company has recognized the recording of the liability as a settlement of contingent

consideration to be recognized in the current period.

The first payment of the notes for $375,000 will be made upon the

closing of a significant capital raise.

The second payment of $375,000 is scheduled for August 15, 2021.

INCOME TAXES.

June 30, 2020 and December 31, 2019, the Company had no unrecognized tax benefits, no accrued interest and penalties, and no significant

uncertain tax positions.

No interest and penalties were recognized during the six months ended June 30, 2020 and 2019.

June 30, 2020 and December 31, 2019, the Company had unused net operating loss (“NOL”) carry-forwards of $9,978,521

September 30, 2020 and December 31, 2019, the Company had no unrecognized tax benefits, no accrued interest and penalties, and

no significant uncertain tax positions.

No interest and penalties were recognized during the nine months ended September 30, 2020

September 30, 2020 and December 31, 2019, the Company had unused net operating loss (“NOL”) carry-forwards of $6,403,181

and $4,181,797, respectively.

The valuation allowance associated with the deferred tax asset increased $5,495,663 during the six

months ended June 30, 2020.

The increase for both the NOL and valuation allowance for the six months ended June 30, 2020 is primarily

attributed to the acquisition of Wild Sky Media as discussed below.

The Company’s remaining unused NOLs that were generated

prior to the operations and acquisitions in 2019 are subject to limitations under Section 382 of the Internal Revenue Code and

are limited in the amount that can be utilized in any one year.

deferred tax liability balance was $433,955 and $581,440 as of June 30, 2020 and December 31, 2019, respectively.

The change in

the balance of $147,485 represents the after-tax impact of the amortization of the international intangible assets and the benefit

of the tax loss, along with the impacts stemming from the acquisition of Wild Sky Media.

connection with the acquisition of Wild Sky Media, the Company recorded an additional deferred tax asset of $3,920,425 for estimated

NOLs incurred by Wild Sky Media prior to the acquisition, which was offset by a deferred tax liability of $155,709 related to

the difference between the book and tax basis in the intangibles at Wild Sky.

In addition, a valuation allowance of $4,182,760

was recorded against Wild Sky Media’s deferred tax assets due to limitations on the ability to utilize their NOLs stemming

the timing of the reversals of the deferred tax liabilities from the intangibles.

The net impact of the above adjustments, which

totaled a net DTL of $620,834 was recorded as an adjustment to goodwill in acquisition accounting.

The valuation allowance associated with the deferred tax asset increased $8,988,627 during

the nine months ended September 30, 2020.

The increase for both the NOL and valuation allowance for the nine months ended September

30, 2020 is primarily attributed to the acquisition of Wild Sky Media as discussed below.

The Company’s remaining unused

NOLs that were generated prior to the operations and acquisitions in 2019 are subject to limitations under Section 382 of the

Internal Revenue Code and are limited in the amount that can be utilized in any one year.

goodwill and intangible impairments recorded during the period ending September 30, 2020 (see Note 8) are non-deductible for tax

As the Company does not have any tax basis in the impaired goodwill, in accordance with ASC 740, there was historically

no deferred taxes recorded for the goodwill basis difference, therefore, the goodwill impairment charge will be a permanent difference

and a reconciling item for our effective tax rate for the year.

The Company has maintained a deferred tax liability on the basis

difference related the intangibles, therefore, the impairment will have the effect of reducing the existing deferred tax liabilities

offset with a change in the Company’s valuation allowance, which results in no net change to our deferred tax liability

position on the balance sheet.

deferred tax liability balance was $283,213 and $581,440 as of September 30, 2020 and December 31, 2019, respectively.

The change in the balance of $298,227 represents the after-tax impact of the amortization of the international intangible

assets and the benefit of the tax loss, along with the impacts stemming from the acquisition of Wild Sky Media.

connection with the acquisition of Wild Sky Media, the Company recorded an additional deferred tax asset of $5,722,857

for estimated NOLs incurred by Wild Sky Media prior to the acquisition, which was offset by a deferred tax liability of $1,851,547

related to the difference between the book and tax basis in the intangibles at Wild Sky.

In addition, a valuation allowance

of $3,871,310 was recorded against Wild Sky Media’s deferred tax assets due to limitations on the ability to utilize

their NOLs stemming the timing of the reversals of the deferred tax liabilities from the intangibles.

The net impact of the above

adjustments, which totaled a net DTL of $133,603 was recorded as an adjustment to goodwill in acquisition accounting.

NOTE 15 –

INCOME TAXES (continued).

in connection with the acquisition, as a result of the net deferred tax liability from Wild Sky Media, the Company was able to

release a portion of its historical valuation allowance in the amount by the same amount as the Wild Sky Media net deferred tax

The release of the valuation allowance was recorded as a benefit in the tax provision for the three months ending June

The release of the valuation allowance was recorded as a benefit in the tax provision for the nine months ending

September 30, 2020.

assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion

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SUBSEQUENT EVENTS.

the period of July 1, 2020 through August 12, 2020 Bright Mountain Media, Inc.

sold 2,066,200 units of our

securities to 9 accredited investors in a private placement exempt from registration under the Securities Act in reliance

on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $1,033,100.

Each unit was sold at $0.50 and consisted of one share of common stock and one five-year warrant to purchase one share of

common stock at an exercise price of $0.75 per share.

Spartan Capital Securities, LLC is serving as the Placement Agent for the

Company in this offering.

As compensation for services the Company has paid Spartan $103,310 in commissions at 10% of the

proceeds, $51,655 of non-accountable expense at 5% of the proceeds.

A total of 2,066,200 five-year warrants were

issued to the investors to purchase one share of our common stock, exercisable at a $0.75 share price.

The Placement Agent

was issued a total of 206,620 five-year warrants to purchase one share of our common stock, exercisable at a $1.00 share

July 8, 2020, the Company executed a Settlement Agreement and Release with the Harry G.

Pagoulatos, George Rezitis, and Angelo

Triantafillou whereby they relinquish their Bright Mountain common stock shares and the Company pays them full and final settlement

within 12 months from the date the shares are delivered to Bright Mountain Media.

This transaction will be recorded based on the

fair value of the shares as of the receipt date.

The 825,175 shares valued at $2.10 per share will be held as Treasury

Stock by the Company and will be resold at later dates.

August 12, 2020, the Company was notified by Spartan Capital of their election to exercise warrants for 1,217,250 shares of the

Company’s common stock.

The exercise of the warrants will be conducted via cashless exercise in accordance with the terms

of the warrants.

of the availability of these financial statements, no material transactions or events have occurred requiring disclosure.

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

following discussion of our unaudited condensed consolidated financial condition and results of operations for the three and

six months ended June 30, 2020 and 2019 should be read in conjunction with the unaudited condensed consolidated financial

statements and the notes to those statements that are included elsewhere in this report.

Our discussion includes forward-looking

statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and

Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements

as a result of a number of factors, including those set forth later in this report under Part II, Item 1A.

following discussion of our unaudited condensed consolidated financial condition and results of operations for the three and nine

months ended September 30, 2020 and 2019 should be read in conjunction with the unaudited condensed consolidated financial statements

and the notes to those statements that are included elsewhere in this report.

Our discussion includes forward-looking statements

based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.

Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as

a result of a number of factors, including those set forth later in this report under Part II, Item 1A.

in our Annual Report on Form 10-K for the year ended December 31, 2019 as filed with the Securities and Exchange Commission on

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and similar expressions to identify forward-looking statements.

All information in this section for the three and six months ended

June 30, 2020 and 2019 is unaudited and derived from the unaudited condensed consolidated financial statements appearing elsewhere

in this report;

unless otherwise noted, all information for the year ended December 31, 2019 is derived from our audited consolidated

financial statements appearing in the 2019 10-K.

All information in this section for the three and nine months

ended September 30, 2020 and 2019 is unaudited and derived from the unaudited condensed consolidated financial statements appearing

elsewhere in this report;

unless otherwise noted, all information for the year ended December 31, 2019 is derived from our audited

consolidated financial statements appearing in the 2019 10-K.