World Internet Usage and Population Statistics June 30, 2012

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While certainly impressive, there continues to be tremendous opportunities for growth.  According to Cisco Systems ¹ , global mobile data traffic will quadruple from 2009 to 2014.  Additionally, global mobile Internet traffic, is expected to grow at a compound annual growth rate of 66% from 2012 to 2017.  This traffic is driven by a wide range of applications including online video, social networking, gaming as well as increased penetration of smartphones and tablets.

Web Portals

Today, most daily Internet users access the World Wide Web through their own personal favorite web portal.  These portals provide a whole host of information and services.  Most can be “customized” to provide the user with information or news that is of particular interest to him or her.  Users rarely have to pay for portal services.

The costs associated with providing users with free content, reliable delivery and sales and marketing efforts to attract users has made it much more difficult to generate profits from advertising alone. Over reliance on single revenue sources can ultimately prove to be a risky proposition. This had led portals to develop additional sources of revenue through their websites as a way to provide additional services and features to their users and a way to generate profitability. In the end, a portfolio of revenue generating sources appears a potential way to move forward, and portal operators are starting to realize the need for new business models.

TheBright.com

Website Overview

The website, www.TheBright.com, is owned and operated by Bright Mountain and management believes that it has its own unique characteristics including design elements like colors, shapes, layout and typefaces, as well as certain dynamic or interactive elements such as boxes, buttons and menus.  The “look and feel” of TheBright.com can, in management’s opinion, be described in terms such as “colorful”, “quality”, “fun” and “trustworthy”.  It contains in a number of sections a vast amount of consumer oriented information including:

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News content including national and international news, sports, entertainment, weather, and business news from Associated Press and McClatchy newspapers.

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Original content news stories exclusive to TheBright.com and written only for TheBright.com which has begun in November 2012.

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Financial Markets information, data, and news; visitors will be able to track their personal stock portfolios and research information on thousands of publicly traded companies.

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Free original content financial research reports written by TheBright.com that focus on value, income and speculative investments.

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Blog section, consisting of all original content, written by independent writers devoted to many different subjects and topics. We currently have seven active bloggers.

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Coupon section where visitors, each day, can print out directly from TheBright.com website hundreds of money-saving coupons to be used at a variety of stores and for a number of different products.

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Shopping section contains thousands of products specifically targeted to Internet users including books, electronics, house and home goods, outdoor gear, sporting goods, watches, and many others.

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Classifieds section is extensive and includes:

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Classified Home Page with 12 featured ads.

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Search Classifieds Page.

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Search Jobs Page with 4 featured ad spots and over 750,000 jobs to search plus a “ tool box ” of career tools and resources.

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Search Resume Page with 4 featured ad spots, over 4 million resumes to search and a set of tools and resources for recruiters and human resource managers.

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¹ Cisco Systems, Inc. Visual Networking Index: Global Mobile Data Traffic Forecast Update, 2012 – 2017 dated February 6, 2013

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A Trading Post available to individuals seeking to buy and sell their “ stuff ” .

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Military Page, as part of the Jobs Page, with a military to civilian job search function, career, education, training and resource tools.

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Directory Page with 12 featured ad spots and a business and residential lookup feature.

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TheBright.com is developing a US Military Veteran honor roll where website users can list all living and deceased US Veterans. Access to this can be found on the Military Resources part of the Jobs page.

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A section of the website is devoted to “ Giving Back ” to a number of local, national and international charities, outlining their mission and objectives and enabling easy access for those wanting to make donations to help others in need.  The key part of the TheBright.com mission is not only to provide a conduit for charitable giving, but also to give 10% of all of TheBright.com pre-tax operating profits equally to the charities shown in the “Giving Back” section. Presently Bright Mountain does not have any operating income to give to these charities.

Finally, upon registration by its users, the TheBright.com home page is customizable based on individual interests. It has links to social media websites and enables Internet search directly from its header section from all website pages.

Business Strategy

Growth and retention of user traffic is paramount to TheBright.com success and specific efforts to develop this user traffic will include:

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Development of TheBright.com news.

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Exclusive TheBright.com news articles will be provided daily to its users. With five news writers at this time, management is planning for this service to be the source of several hundred original content articles that will be published monthly with other aggregated news sources such as the Associated Press and McClatchy newspapers.

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Blogs and other original content, such as periodic financial research reports written by TheBright.com staff, and by independent writers are currently being published. Management believes that frequently published original content is one of the keys to growing and maintaining our user base.

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

Management believes TheBright.com website will facilitate consumers and businesses to conveniently shop and advertise utilizing its shopping and classified ad sections. TheBright.com shopping intends to provide consumers with a number of unique and interesting products that are often not available through mass-market websites.  The classified ad section of the TheBright.com website enables both businesses and consumers to sell their products or promote their business through a highly developed yet easy-to-use platform. Additionally, the Jobs Section, a separate area, has available over 750,000 job openings from companies all over the US, both large and well known, as well as small and local.

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Development of a Social Media Platform focused on Military Veterans and others that “ protect us ” , is being planned for TheBright.com website. Special public relations events in concert with and for the benefit of certain Veteran groups will be an integral part of TheBright.com initiative. Of note, TheBright.com sponsored an event on September 11, 2012 that featured a group of professional mountain climbers and disabled Veterans that climbed to the summit of the Grand Tetons in Wyoming.

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Strategic Acquisition Program: all of the programs and efforts to develop organic website traffic and bring users and consumers to TheBright.com website would be enhanced through potential strategic acquisition of other small Internet companies. TheBright.com management is committed to adding to its website platform or bringing under its umbrella, a number of Internet properties that will fit strategically into the company’s business objectives. As of this writing, we have not yet contacted any potential internet acquisitions.

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Revenue Sources

Through the year ended December 31, 2012, the Company has earned revenues of approximately $60,000 from the sale of a number of products on the TheBright.com including watches, books, electronics and other items. A nominal amount of revenue (less than $1,000) has been earned from advertisements on TheBright.com, while the other potential sources of revenue below (exclusive of shopping) have yet to earn any revenues. As potential additional capital is raised and our business plan implemented, management projects that it will generate revenues from all of the potential sources of revenues listed below over the next 12 to 24 months as traffic to TheBright.com increases:

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Advertising. TheBright.com website has advertising locations available throughout for paid advertising.  These locations include high valued banner ads as well as strategically placed text and image ads throughout the website.  The initial population of ads for the TheBright.com website will be accomplished pursuant to agreements with Google Adsense and News Distribution Network, Inc. who, for a percent of the ad revenue will provide video, image, and text advertising via software programming to the TheBright.com website. The Company expects to receive approximately 25% to 68% of any ad revenue earned with the balance going to either Google Adsense or News Distribution Network, Inc., respectively, who are providing the services. The agreement with News Distribution Network, Inc. is for an initial term of one year and renews automatically unless either party seeks to terminate. The agreement with Google Adsense is terminable by either party at any time . From inception revenue from these services has been approximately $850.

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Financial Research.  TheBright.com Special Situation investment research reports will be offered to subscribers for $99 per annum. These reports will focus on specific investment opportunities that become available due to special events that occur in the marketplace or are triggered by world events. Special Situations research is written by TheBright.com.

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Shopping.  TheBright.com Shopping section is a fully active web based “ store ” whereby shoppers can purchase a variety of products including watches, books, electronics, house and home goods, outdoor gear, sporting goods, and many other products. The Company maintains inventory on books and watches, which at December 31, 2012, was approximately $40,000. All other products for sale through TheBright.com are purchased from and are shipped directly to our customers from the supplier of these products at the time of the order. This is commonly known as “Drop Shipping”. There are no fees or revenue sharing associated with this service. The Company pays the supplier the wholesale price plus shipping cost for the item purchased by the customer. The supplier then ships the order directly to the customer from their inventory. TheBright.com currently uses several Drop Ship suppliers for products for sale on TheBright.com website. Some of these suppliers are the actual manufacturers of the products provided, while others are licensed wholesale distributors. We have agreements with Atlantic Publishing Group Inc. and WYNIT Distribution, LLC who are both Drop Ship suppliers. Presently there are over 1,600 products for sale on TheBright.com website that are provided by WYNIT, Inc. Customers that purchase products from TheBright.com “store” pay the Company directly in a fully enabled payment and checkout process that permits payments for purchases using credit cards or utilization of the Internet-based payment processing service PayPal.

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Classifieds.  TheBright.com Classifieds is an entire section of the website whereby customers can purchase directly from the website and post to the website a classified ad. Customers can choose a specific section of the website to post a classified ad, including those looking to buy or sell products, business opportunities or services. The classified ads range in price from a free basic ad to those priced up to $499 per month. Classified ad purchasers use the fully integrated software built into the website to design and post their ad and pay for their ad using a credit card or utilization of the Internet based payment processing service PayPal directly on the website. TheBright.com Classifieds includes a Yellow Pages directory, which is free to all users.

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Jobs.  Over 750,000 jobs are listed on TheBright.com. and there is no charge to anyone wanting to search through the jobs. Prospective jobseekers may post their own resume directly on TheBright.com website using a built-in interactive feature that makes this task easy. The posting of a resume costs between $0 for basic resumes up to $89.99 per month for resumes with extended features. Additionally, TheBright.com has acquired from Active Hire, Inc. pursuant to a Service Reseller Agreement and has made available on its website over 4,000,000 resumes for viewing.  Employers or recruiters can access this large database for $299 per month. For each monthly membership we sell to employers or recruiters we pay Active Hire, Inc. $60 or 50% of the fee, whichever is greater.

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Coupons. TheBright.com Coupons section provides easy access to hundreds of coupons enable website visitors to save money on everyday items including food products, health care goods, apparel and many other items.  There is no cost for this service to either the visitor or the Company.  Consumers simply electronically “clip” on a coupon from TheBright.com and print it out for presentation at the super market or other outlet. Coupons are provided by Coupons.com at no cost to us and we are paid by Coupons.com approximately 3 to 4 cents each time a visitor prints out a coupon from its website.

Competition

The Internet and industries that operate through it are intensely competitive. We compete with other companies that have significantly greater financial, technical, marketing, and distribution resources. Our competitors include Yahoo and AOL for our homepage; Huffington Post and Foxnews.com for our news pages; Amazon.com for Shopping; Craig's List for classifieds; and Monster.com and Career Builder for Jobs.

We believe that we can be competitive because TheBright.com will be a website whose mission is to give back 10% of all pre-tax profits to charity. Although our competition is formidable, management believes in the positive force of goodwill throughout America, and that all things being equal, people will visit, read, and shop in an environment of "giving back" vs. a similar one that does not give back, especially when the product, price, and terms are the same.

Management also believes that the 10% extra cost (giving back) of doing business is a meaningful barrier to entry, particularly for mature companies whose cost structure is well established. However, this may not hinder new companies who build the 10% cost into their business models.

Employees

At March 20, 2013, we have five full-time employees.  There are no collective bargaining agreements covering any of our employees.

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ITEM 1A.

RISK FACTORS.

An investment in our common stock involves a significant degree of risk. You should not invest in our common stock unless you can afford to lose your entire investment. You should consider carefully the following risk factors and other information in this registration statement before deciding to invest in our common stock.

General Business Risk Factors

Risks Related to the Early Stage of our Company

We are a development stage company and our success is subject to the substantial risks inherent in the establishment of a new business venture.

The implementation of our business strategy is in a very early stage. Our business and operations should be considered to be in an early stage and subject to all of the risks inherent in the establishment of a new business venture. Accordingly, our intended business and operations may not prove to be successful in the near future, if at all. Any future success that we might enjoy will depend upon many factors, several of which may be beyond our control, or which cannot be predicted at this time, and which could have a material adverse effect upon our consolidated financial condition, business prospects and operations and the value of an investment in our company.

We have a very limited operating history and our business plan is unproven and may not be successful.

Our company was formed in May 2010 but we have not yet begun full-scale operations. We have not sold any substantial amount of products through our websites and do not have any definitive agreements to do so. We have not proven that our business model will allow us to generate a profit.

We have suffered operating losses since inception and we may not be able to achieve profitability.

Our company has generated operating losses of $1,677,344 since inception through December 31, 2012 and we expect to incur significant developmental expenses in the foreseeable future related to the completion of development and commercialization of our websites. As a result, we are sustaining substantial operating and net losses, and it is possible that we will never be able to sustain or develop the revenue levels necessary to attain profitability or generate positive cash flows.

Our Independent Registered Public Accounting Firm has issued a “going concern” opinion which is cautionary to potential shareholders.

In our most recent audit our Independent Registered Public Accounting Firm expressed an opinion commonly called the “Going Concern Opinion”,  in which they indicate substantial doubt that our company can continue due to lack of capital and revenues.  This should indicate to potential investors that our business could fail in its current condition.

We may have difficulty raising additional capital, which could deprive us of necessary revenues.

We expect to continue to devote significant capital resources to fund research and development. In order to support the initiatives envisioned in our business plan, we will need to raise additional funds through public or private debt or equity financing, collaborative relationships or other arrangements. Our ability to raise additional financing depends on many factors beyond our control, including the state of the capital markets, the market price of our common stock and the development or prospects for development of competitive technology by others. Sufficient additional financing many not be available to us or may be available only on terms that would result in further dilution to the current owners of our common stock.

We expect to raise additional capital during 2013 but we do not have any firm commitments for funding. If we are unsuccessful in raising additional capital, or the terms of raising such capital are unacceptable, we may have to modify our business plan and/or significantly curtail our planned activities and other operations.

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There are substantial doubts about our ability to continue as a going concern and if we are unable to continue our business, our shares may have little or no value.

The company’s ability to become a profitable operating company is dependent upon its ability to generate revenues and/or obtain financing adequate to fulfill its research and market introduction activities, and achieving a level of revenues adequate to support our cost structure has raised substantial doubts about our ability to continue as a going concern. We plan to attempt to raise additional equity capital by selling our shares through one or more private placement or public offerings. However, the doubts raised, relating to our ability to continue as a going concern, may make our shares an unattractive investment for potential investors. These factors, among others, may make it difficult to raise any additional capital.

Failure to effectively manage our growth could place strains on our managerial, operational and financial resources and could adversely affect our business and operating results.

If our business grows, we will be required to manage multiple relationships. Any further growth by us or our subsidiaries, or an increase in the number of our strategic relationships will increase this strain on our managerial, operational and financial resources. This strain may inhibit our ability to achieve the rapid execution necessary to implement our business plan, and could have a material adverse effect upon our financial condition, business prospects and operations and the value of an investment in our company.

By opting in to Section 107(b) of the Jobs Act, our financial statements may not be comparable to companies that comply with public company effective dates.

We have elected to use the extended transition period for complying with new or revised accounting standards under Section 107(b)(2), which allows us to delay the adoption of new or revised accounting standards that have different effective dates for public and private companies until those standards apply to private companies. As a result of this election our financial statements may not be comparable to companies that comply with public company effective dates.

Risks Related to Bright Mountain’s Business and Industry

Bright Mountain expects to rely upon trademark, copyright and trade secret laws to protect its proprietary rights, which might not provide Bright Mountain with adequate protection.

Bright Mountain’s success and ability to compete depend to a significant degree upon the protection of Bright Mountain’s intellectual property rights, including without limitation its trademarks, trade names and trade secrets. Bright Mountain might not be successful in protecting Bright Mountain’s intellectual property, and Bright Mountain’s intellectual property rights might not provide Bright Mountain with a meaningful competitive advantage. To protect Bright Mountain’s intellectual property, Bright Mountain expects to rely on a combination of trademark, copyright and trade secret laws, each of which affords only limited protection. Any inability to protect Bright Mountain’s intellectual property rights could seriously harm Bright Mountain’s business, operating results and financial condition. In addition, the laws of some foreign countries do not protect Bright Mountain’s proprietary rights in Bright Mountain’s products to the same extent, as do the laws of the United States. Despite the measures taken by Bright Mountain, it may be possible for a third party to copy or otherwise obtain and use Bright Mountain’s intellectual property without authorization.

Policing unauthorized use of Bright Mountain’s intellectual property rights is difficult, and litigation could become necessary in the future to enforce Bright Mountain’s intellectual property rights. Any litigation could be time consuming and expensive to prosecute or resolve, result in substantial diversion of management attention and resources, and materially harm Bright Mountain’s business, financial condition and results of operations.

Claims that Bright Mountain infringes upon third parties’ intellectual property rights could be costly to defend or settle.

Bright Mountain may, from time to time, encounter disputes over rights and obligations concerning intellectual property. Such claims may be with or without merit. Any litigation to defend against claims of infringement or invalidity could result in substantial costs and diversion of resources. Furthermore, a party making such a claim could secure a judgment that requires Bright Mountain to pay substantial damages. A judgment could also include an injunction or other court order that could prevent Bright Mountain from selling its products. Bright Mountain’s business, consolidated operating results and financial condition could be harmed if any of these events occurred.

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Bright Mountain could incur substantial costs in defending itself against infringement claims. In the event of a claim of infringement, Bright Mountain might be required to obtain one or more licenses from third parties. Bright Mountain might be unable to obtain necessary licenses from third parties at a reasonable cost, if at all. Defense of any lawsuit or failure to obtain any such required licenses could harm Bright Mountain’s business, consolidated operating results and consolidated financial condition.

Bright Mountain depends on the services of our Chairman.

Our success largely depends on the efforts, reputation and abilities of W. Kip Speyer. Bright Mountain intends to leverage his experience and reputation to develop and launch its products and services. As such, the loss of the services of Mr. Speyer could materially harm Bright Mountain business. In addition, we do not presently maintain a key-man life insurance policy on Mr. Speyer.

Bright Mountain’s failure to retain and attract qualified personnel could harm Bright Mountain’s business.

Bright Mountain’s success depends on Bright Mountain’s ability to attract, train and retain qualified personnel. Competition for qualified personnel is intense and Bright Mountain may not be able to hire sufficient personnel to achieve Bright Mountain’s goals or support the anticipated growth in Bright Mountain’s business. The market for the personnel Bright Mountain requires is competitive. If Bright Mountain fails to attract and retain qualified personnel, Bright Mountain’s business will suffer.

Additionally, companies whose employees accept positions with competitors often claim that such competitors have engaged in unfair hiring practices. Bright Mountain may receive such claims in the future as Bright Mountain seeks to hire qualified employees. Bright Mountain could incur substantial costs in defending against any such claims.

Bright Mountain may have difficulty managing any future growth.

To implement Bright Mountain’s business objectives, it may need to grow rapidly in the future and Bright Mountain expects that such growth would lead to increased responsibility for both existing and new management personnel. To help manage future growth effectively Bright Mountain must maintain and enhance its financial and accounting systems and controls, hire and integrate new personnel and manage expanded operations. The growth in business, headcount and relationships with customers and other third parties is expected to place a significant strain on Bright Mountain’s management systems and resources. Bright Mountain will need to continue to improve its operational, managerial and financial controls, reporting systems and procedures, and will need to continue to expand, train and manage its work force. Bright Mountain’s failure to manage its future growth successfully would have a material adverse effect on the quality of its products and technology, its ability to retain customers and key personnel and its operating results and financial condition.

Bright Mountain’s current management must manage transition to a reporting company, which may put it at a competitive disadvantage.

Bright Mountain’s management team may not successfully or efficiently manage our transition into a public company that will be subject to significant regulatory oversight and reporting obligations under federal securities laws. In particular, these new obligations will require substantial attention from our executive officers and may divert their attention away from the day-to-day management of our business, which would materially and adversely impact our business operations. Bright Mountain intends to hire additional executive level employees, but there can be no assurance that our current or future management team will be able to implement and affect programs and policies in an effective and timely manner that adequately respond to such increased legal, regulatory compliance, and reporting requirements. Our failure to do so could lead to penalties, loss of trading liquidity, and regulatory actions and further result in the deterioration of our business through the redirection of resources.

Bright Mountain may not be successful at marketing our website or the underlying products.

We may not be able to market our website or the underlying products and any financial or research efforts we exert to develop, commercialize or promote our website and products many not result in any revenue or earnings.

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We may lose out to larger and better-established competitors.

The Internet and industries that operate through it are intensely competitive. Most of our competitors have significantly greater financial, technical, marketing and distributions resources as well as greater experience in the industry than we have. Our website may not be competitive with other technologies. If this happens, our sales and revenues will likely decline. In addition, our current and potential competitors may establish cooperative relationships with larger companies, to gain access to greater development or marketing resources. Competition may results in price reductions, reduced gross margins and loss of market share. Our website may be displaced by newer technology.

The Internet is undergoing significant and rapidly growing technological change.

Third parties may succeed in developing or marketing technologies or products that are more effective than those developed or marketed by us, or that would make our technology and website obsolete or non-competitive. Accordingly, our success will depend, in part, on our ability to respond quickly to technological changes through the development and introduction of website changes and products. We may not have the resources to do this. If our website becomes obsolete and we do not develop a new website or secure and develop new products, our revenues may decline.

The acquisition of new businesses is costly and these acquisitions may not enhance our financial condition.

A significant element of our growth strategy is to acquire companies, which complement our business. The process to undertake a potential acquisition can be time-consuming and costly. We expect to expend significant resources to undertake business, financial and legal due diligence on our potential acquisition targets and there is no guarantee that we will acquire the company after completing due diligence. The process of identifying and consummating an acquisition could result in the use of substantial amounts of cash and exposure to undisclosed or potential liabilities of acquired companies. In addition, even if we are successful in acquiring additional companies, there are no assurances that the operations of these businesses will enhance our future financial condition. To the extent that a business we acquire does not meet the performance criteria used to establish a purchase price, some or all of the goodwill related to that acquisition could be charged against our future earnings, if any.

Our management may be unable to effectively integrate our acquisitions and to manage our growth and we may be unable to fully realize any anticipated benefits of these acquisitions.

We are subject to various risks associated with our growth strategy, including the risk that we will be unable to identify and recruit suitable acquisition candidates in the future or to integrate and manage the acquired companies. Acquired companies ’ histories, the geographical location, business models and business cultures will be different from ours in many respects. Successful integration of these acquisitions is subject to a number of challenges, including:

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the diversion of management time and resources and the potential disruption of our ongoing business;

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difficulties in maintaining uniform standards, controls, procedures and policies;

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unexpected costs and time associated with upgrading both the internal accounting systems as well as educating each of their staff as to the proper methods of collecting and recording financial data;

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potential unknown liabilities associated with acquired businesses;

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the difficulty of retaining key alliances on attractive terms with partners and suppliers; and

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the difficulty of retaining and recruiting key personnel and maintaining employee morale.

There can be no assurance that our efforts to integrate the operations of any acquired assets or companies will be successful, that we can manage our growth or that the anticipated benefits of these proposed acquisitions will be fully realized.

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Technological problems may impact our operations and any capacity constraints or system disruptions could have a material adverse effect.

We rely heavily on technology to sell and deliver our products. Our ability to attract and retain customers, compete and operate effectively depends in part on a reliable and easy to use technology infrastructure. Any disruption to the Internet or our technology infrastructure, including those affecting our websites and computer systems, may cause a decline in our customer satisfaction, impact our sales volumes or result in increased costs. Although we continue to invest in our technology, if we are unable to continually add software and hardware, effectively manage and upgrade our systems and network infrastructure, and develop effective system availability, disaster recovery plans and protection solutions, our business may be adversely affected which could negatively impact our results of operations in future periods.

We may need additional capital, which, if obtained, could result in dilution or significant debt service obligations. We may not be able to obtain additional capital on commercially reasonable terms, which could adversely affect our liquidity and financial position.

We may require additional cash resources due to changed business conditions or other future developments. If our current sources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain a credit facility. The sale of convertible debt securities or additional equity securities could result in additional dilution to our shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in operating and financing covenants that would restrict our operations and liquidity. In addition, our ability to obtain additional capital on acceptable terms is subject to a variety of uncertainties. We cannot assure you that financing will be available in amounts or on terms acceptable to us, if at all. Any failure to raise additional funds on favorable terms could have a material adverse effect on our liquidity and financial condition.

We have all of the risk of new untested venture, and investors could lose their investment as a result of any of such risks.

We are a development stage business.  We have a limited history of operation and no history of earnings.  As a new development stage business, we will be subject to all of the difficulties associated with establishing a new business enterprise, including the following: hiring and retaining skilled employees or contractors; licensing, permitting, and operating problems; competing with established operators; and implementing the business infrastructure and support systems to effectively carryout the business plan.

Risk Factors Relating to our Common Stock

There may not be sufficient liquidity in the market for our securities in order for investors to sell their securities.

Currently there is not a public market for our common stock. We intend to seek a listing for our common stock on the OTC Bulletin Board.  Once listed, as to which there are no assurances, there can be no assurance that a trading market will develop or be maintained in the future.  

The market price of our common stock may be volatile.

The market price of our common stock, once listed, will likely be highly volatile, as is the stock market in general, and the market for OTC Bulletin Board quoted stocks in particular. Some of the factors that may materially affect the market price of our common stock are beyond our control, such as changes in financial estimates by industry and securities analysts, conditions or trends in the industry in which we operate or sales of our common stock. These factors may materially adversely affect the market price of our common stock, regardless of our performance. In addition, the public stock markets have experienced extreme price and trading volume volatility. This volatility has significantly affected the market prices of securities of many companies for reasons frequently unrelated to the operating performance of the specific companies. These broad market fluctuations may adversely affect the market price of our common stock.

Our Common Stock is considered “penny stock.”

The SEC has adopted regulations, which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share, subject to specific exemptions. The market price of our common stock may become less than $5.00 per share and therefore a “penny stock.” Brokers and dealers effecting transactions in “penny stock” must disclose certain information concerning the transaction, obtain a written agreement from the purchaser and determine that the purchaser is reasonably suitable to purchase the securities. These rules may restrict the ability of brokers or dealers to sell our common stock and may affect your ability to sell shares.

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FINRA sales practice requirements may also limit a stockholders ability to buy and sell our stock.

In addition to the penny stock rules promulgated by the SEC, which are discussed in the immediately preceding risk factor, FINRA rules require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative, low-priced securities to their non-institutional customers, broker-dealers must have reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, FINRA believes that there is a high probability that speculative low-priced securities will not be suitable for at least some customers. FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit the ability to buy and sell our stock and have an adverse effect on the market value for our shares.

An investor’s ability to trade our common stock may be limited by trading volume.

A consistently active trading market for our common stock may not occur on the OTCBB. A limited trading volume may prevent our shareholders from selling shares at such times or in such amounts, as they may otherwise desire. The company’s shares may never be quoted on the OTC Bulletin Board or listed on an exchange.

Our company has a concentration of stock ownership and control, which may have the effect of delaying, preventing, or deterring a change of control

Our common stock ownership is highly concentrated. Through ownership of shares of our common stock, one shareholder, W. Kip Speyer, Chairman, beneficially owns approximately 55% of our total outstanding shares of common stock. As a result of the concentrated ownership of the stock, this stockholder, acting alone, will be able to control all matters requiring stockholder approval, including the election of directors and approval of mergers and other significant corporate transactions. This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our company. It would also deprive our stockholders of an opportunity to receive a premium for their shares as part of a sale of our company and it may affect the market price of our common stock.

We have not voluntarily implemented various governance measures, in the absence of which, shareholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.

Recent federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements; other have been adopted by companies in response to the requirements; others have been adopted by companies in response to the requirements of national securities exchanges, such as NYSE or the NASDAQ Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges and NASDAQ, are those that address the board of director’s independence, audit committee oversight and the adoption of a code of ethics. It is possible that if we were to adopt some or all of these corporate governance measures, shareholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees, may be made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should bear in mind our current lack of corporate governance measures in formulating their investment decisions.

Because we will not pay dividends in the foreseeable future, stockholders will only benefit from owning common stock if it appreciates.

We have never paid dividends on our common stock and we do not intend to do so in the foreseeable future. We intend to retain any future earnings to finance our growth. Accordingly, any potential investor who anticipates the need for current dividends from his investment should not purchase our common stock.

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ITEM 2.

FINANCIAL INFORMATION.

The following discussion is intended to provide an analysis of our consolidated financial condition and should be read in conjunction with our consolidated financial statements and the notes thereto set forth herein. The matters discussed in these sections that are not historical or current facts deal with potential future circumstances and developments.  Our actual results could differ materially from the results discussed in the forward-looking statements.  Factors that could cause or contribute to such differences include those discussed below.

Overview

We are a development stage company organized in May 2010. Bright Mountain is developing a personal website “portal” designed to attract and retain Internet audiences whose main purpose is to be a starting point when connecting to or searching the World Wide Web (Web), with a special emphasis on consumer needs, original news, original content, employment opportunities and giving back. Our website seeks to fulfill its mission to help people in need by developing a profitable enterprise and giving back a portion of pre-tax operating profits to charity.

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

Basis of Presentation - Development Stage Company

We have only earned nominal revenues from limited operations. Accordingly, our activities have been accounted for as those of a “development stage enterprise” as set forth in Financial Accounting Standards Board Accounting Standard Codification (“FASB ASC”) 915. Among the disclosures required by FASB ASC are that our consolidated financial statements be identified as those of a development stage company, and that the statements of operations, shareholders’ equity (deficit) and cash flows disclose activity since the date of our inception.

Critical Accounting Policies

We have identified the policies below as critical to our business operations and the understanding of our results from operations.  The impact and any associated risks related to these policies on our business operations are discussed throughout this Financial Information section where such policies affect our reported and expected financial results.  For a detailed discussion on the application of these and other accounting policies, see Note (1) in the Notes to the Consolidated Financial Statements beginning on page F-1 of this document. Note that our preparation of this document requires us to make estimates and assumptions that may affect the reported amount of assets and liabilities, disclosure of contingent assets and liabilities at the date of our financial statements, and the reported amounts of revenue and expenses during the reporting period.

Application of Section 107(b) of Jobs Act.

The Company is an emerging growth company; therefore, we have elected to use the extended transition period to comply with new or revised accounting standards under Section 107(b)(2)(B) of the Jobs Act. As a result of this election, our consolidated financial statements may not be comparable to companies that comply with public company effective dates.

Revenue recognition

Revenue is recognized on an accrual basis after services have been performed or products sold under contract terms, the price to the client is fixed or determinable, and collectability is reasonably assured.

Inventory Policy

Inventories are stated at the lower of cost or market, with cost determined using a first-in, first-out method.

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Long-Lived Assets

The Company regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that may suggest impairment.  If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the Company if the carrying amount of a long-lived asset exceeds its fair value.

Stock-Based Compensation

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

Plan of Operations

We recently commenced our website operations. As a development stage company, we are engaged in ongoing website development and branding, marketing, advertising and promotion.

As of December 31, 2012, our operating activities have been funded by the private sale of the Company’s common stock in the amount of $1,725,000 (includes $20,000 of stock issued for services rendered) as well as by shareholder long-term loans in the amount of $300,000. At December 31, 2012, we had cash of $336,684 compared to our cash balance of $328,749 as of December 31, 2011. In order to be able to continue current operations and fully implement our business strategy it is projected that we will need to raise additional capital.  While we believe that we can raise $1 million as a private company, we believe any additional financing beyond $1 million will require that there is a trading market for our common stock.  Accordingly, at such time as the staff of the SEC has no further comments on this registration statement, we intend to seek a market maker to file an application for the quotation of our common stock on the OTC Bulletin Board.  Thereafter, we will seek to raise an additional $3 million from the sale of equity, convertible debt or a combination of equity and convertible debt.

We expect to initially seek to raise proceeds of $1 million through a private placement to finance our operations over the next 12 months.  During that period of time we intend to use the proceeds to help achieve our strategic goals of increasing visitors to TheBright.com and to increase quarterly revenues. We will attempt to achieve these goals by:

·

Hiring additional writers and bloggers to increase the amount of original content on TheBright.com.

·

Engage celebrity spokes people who will write articles, blogs, and submit videos for publication on TheBright.com.

·

Lease a small warehouse facility to allow the company to properly inventory and ship products to continue to grow TheBright.com “ shopping ” business.

·

Hire programmers to develop TheBright.com social network for “ those that protect us ” including military veterans, active duty military, first responders, firemen and police.

Management believes that these actions will result in monthly unique visitor traffic of 100,000 or more and quarterly revenue increases to $60,000 after year one.

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The proceeds of a $1 million financing is expected to be used in the following manner:

The actual use of the proceeds of any funds raised will be determined at the sole discretion of management at the time the offering is closed and based upon what management believes will be the most effective use of the funds to further the development of the business. We cannot be sure we will achieve the goals listed above.

Following the first twelve months and assuming the closing of the private offering, our priorities for the next 24 months will be to:

·

Continue to hire additional writers of original content

·

Look for small to midsize websites for acquisitions that fit our strategic goals.

·

Engage additional celebrity bloggers to continue driving traffic to TheBright.com.

·

Advertise TheBright.com shopping section.

·

Continue to develop the social network for “ those that protect ” .

·

Promote the classifieds and jobs sections.

Management believes that these actions will result in growth of monthly unique visitors to 250,000 and quarterly sales revenues to $150,000 after year two. There can be no assurances that we will achieve these goals.

Assuming we are successful in raising the $3 million in equity, convertible debt or a combination of both, the proceeds will be used over a 24-month period as follows:

Certain of the above expenditures involve expansion of the Company’s current facility or the addition of other corporate facilities, hiring of additional personnel, and the identification of strategic Internet businesses that will complement our existing website or represent a valuable partner in our overall business strategy.  There are no assurances that we will be able to identify and secure new facilities, personnel or partners.  The level of these future activities will be dependent on the amount and timing of funds raised.

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Results of Operations

For the year ended December 31, 2012 compared to the year ended December 31, 2011

Revenue: The Company’s revenues increased from zero during the twelve months ended December 31, 2011 to $65,089 for the twelve months ended December 31, 2012. This reflects the early development of revenues from the sale of Company products, including approximately $61,000 from the sale of watches, $1,300 from the sale of electronics and $1,700 from the sale of books and jewelry.

Operating Expenses: The Company’s operating expenses increased from $685,001 during the twelve months ended December 31, 2011 to $930,009 for the twelve months ended December 31, 2012. The increase in operating expenses can be attributed to ongoing implementation of the Company’s business plan as well as incurring certain operating expenses during 2012 that were new compared to 2011. These expenses include payroll expense totaling $398,869 in 2012 vs. $382,429 in 2011 plus the hiring of three additional part-time workers in 2012 at a cost of 27,631 vs. $4,104 in 2011. The Company ramped up development of its website during 2012 and incurred the following expenses: software development expenses totaled $123,262 during 2012 vs. $51,955 in 2011; website content expenses totaled $64,608 in 2012 vs. $12,745 in 2011; search engine optimization (SEO) expenses totaled $8,708 during 2012 vs. $750 in 2011; errors and omissions (E&O) insurance for website operations increased during 2012 to $19,841 vs. $6,468 in 2011; and, website advertising and marketing expenses totaled $95,330 during 2012 vs. $33,406 in 2011. The Company incurred audit fees of $26,086 during 2012 vs. $0 in 2011 while all other general and administrative expenses excluding E&O insurance and audit fees decreased during 2012 to $165,674 from $193,144 in 2011.

Interest Expense: The Company’s interest expense increased from $0 for the twelve months ended December 31, 2011 to $11,145 for the twelve months ended December 31, 2012 due to the issuance of Notes to Related Parties in the total amount of $300,000 dated August 1, 2012 and November 1, 2012, and interest related to an insurance premium finance loan payable.

Net loss from operations: The Company’s net loss from operations increased from $685,001 during the twelve months ended December 31, 2011 to $920,730 for the twelve months ended December 31, 2012 due primarily to the increase in operating expenses attendant to the implementation of its business plan.

Liquidity and Capital Resources

Since inception, May 10, 2010, through December 31, 2012, we had a net loss of $1,677,344 and at December 31, 2012, we had working capital of $345,377. These development stage losses have been funded through the sale of our common stock and shareholder loans. Cash proceeds from the sale of our common stock is $1,705,000 through December 31, 2012. Shareholder loans received during 2012 totaled $300,000 with a balance outstanding at December 31, 2012, of $293,305 (including the current portion of $19,104.While we generated nominal revenues during 2012, we do not anticipate that we will generate sufficient income to fund our operations for at least the next 12 months. During that period of time we will need to obtain additional equity or debt financing of $1 million as to which, at this time, we have no assurances of its availability, and if available, its terms.

Presently, our monthly operating overhead is approximately $70,000. We intend to increase this overhead to $100,000 if we are able to raise additional capital with the initial proceeds being used for an increase in general and administrative expenses, branding, marketing, advertising and promotion, ongoing website development and operation and inventory. In the absence of additional funding, we will need to decrease our expenses, which will adversely impact on our plan of operations.

Going Concern

The independent registered public accounting firm's report on the Company's consolidated financial statements as of December 31, 2012 and 2011 includes a “going concern” explanatory paragraph that describes substantial doubt about the Company's ability to continue as a going concern.

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The Company is dependent on raising additional equity and/or, debt to fund any negotiated settlements with its outstanding creditors and meet its ongoing operating expenses. There is no assurance that the Company will be able to raise the necessary equity and/or debt that the Company will need to be able to negotiate acceptable settlements with its outstanding creditors or fund its ongoing operating expenses.  The Company cannot make any assurances that the Company will be able to raise funds through such activities.

ITEM 3.

PROPERTIES.

Our principal mailing address is 6400 Congress Avenue, Suite 2250, Boca Raton, FL  33487, and the telephone number is (561) 998-2440; and the facsimile number is (561) 998-2660.

We lease approximately 2,000 square feet under a lease expiring on April 3, 2014. Our annual rental for this facility is approximately $45,000 for 2013 and $12,000 for the period January 2014 through March 31, 2014.

ITEM 4.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

The following table sets forth information with respect to the beneficial ownership of our Company's outstanding common stock by:

·

each person who is known by us to be the beneficial owner of five percent (5%) or more of our common stock;

·

Our chief executive officer, its other executive officers, and each director as identified in the “ Management -- Executive Compensation ” section; and

·

all of the Company's directors and executive officers as a group.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities.  Shares of common stock and options, warrants and convertible securities that are currently exercisable or convertible within 60 days of the date of this document into shares of our common stock are deemed to be outstanding and to be beneficially owned by the person holding the options, warrants or convertible securities for the purpose of computing the percentage ownership of the person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.

The information below is based on the number of shares of our common stock that we believe was beneficially owned by each person or entity as of December 31, 2012 based on 15,230,000 shares of common stock issued and outstanding.

(1)

Except as noted above the business address for all listed individuals or entities is Bright Mountain Holdings, Inc., 6400 Congress Avenue, Suite 2250, Boca Raton, FL  33487.

(2)

Does not include options to purchase 100,000 shares at $0.25 per share granted January 3, 2011, which vest annually over four years.

(3)

Does not include options to purchase 100,000 shares at $0.25 per share granted January 3, 2011, which vest annually over four years.

(4)

Does not include options to purchase 30,000 shares at $0.50 per share granted February 17, 2012, which vest annually over three years.

(5)

Of these shares, 1,600,000 are owned jointly with Barbara Handwerker, his wife.

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Rule 13d-3 under the Securities Exchange Act of 1934 governs the determination of beneficial ownership of securities.  That rule provides that a beneficial owner of a security includes any person who directly or indirectly has or shares voting power and/or investment power with respect to such security.  Rule 13d-3 also provides that a beneficial owner of a security includes any person who has the right to acquire beneficial ownership of such security within sixty days, including through the exercise of any option, warrant or conversion of a security.  Any securities  not  outstanding  which are subject to such options, warrants or conversion  privileges are deemed to be outstanding  for the purpose of computing the percentage of outstanding securities of the class owned by such person.  Those securities are not deemed to be outstanding for the purpose of computing the percentage of the class owned by any other person.  Included in this table are only those derivative securities with exercise prices that we believe have a reasonable likelihood of being “in the money” within the next sixty days.

Biographical Information

W. Kip Speyer has been our CEO, President and Chairman since May 2010. From 2005 to 2009 Mr. Speyer served as a director, the president and chief executive officer of Speyer Door and Window, LLC, which was sold to Haddon Windows, LLC (SecuraSeal, LLC, AccuWeld Corporation) in December 2009. From October 2002 to May 2005 Mr. Speyer had been a private investor. Mr. Speyer was president and chief executive officer of Intelligent Systems Software, Inc. (ISSI) from October 2000 through June 2002, whereby Mr. Speyer became chief executive officer of ICAD, Inc. (ICAD: Nasdaq) which was a combination of ISSI and Howtek, Inc. (HOWT:Nasdaq). Mr. Speyer was the president and chief executive officer of Galileo Corporation (GAEO: Nasdaq) from 1998 to 1999. Galileo Corporation changed its name to NetOptix (OPTX: Nasdaq) and was merged with Corning Corporation (GLW: NYSE) in a stock purchase in May 2000. From 1996 to 1998 Mr. Speyer was the president of Leisegang Medical Group, three medical device companies owned by Galileo Corporation. Prior to joining Galileo Corporation, Mr. Speyer founded Leisegang Medical, Inc. and served as its president and chief executive officer from 1986 to 1996. Leisegang Medical, Inc. was a company specializing in medical devices for women’s health. From 1982 to 1985 Mr. Speyer served as president of Hays Medical Companies, a six-company multi-national and part of the Hays Group. Mr. Speyer is a graduate of Northeastern University, Boston, Massachusetts, where he earned a Bachelor of Science Degree in Business Administration in 1972.  Mr. Speyer was chosen as a director for his experience as CEO and Chairman of other public and private companies.

Gregory J. Stepic has been our CFO and Secretary since May 2010. He has had extensive and diverse experience in start-up situations. From 2005 to 2009 Mr. Stepic served as vice president and CFO of Speyer Door and Window, Inc. where he oversaw all financial aspects of the company and also was in charge of Human Resources. Mr. Stepic also teamed with Mr. Speyer in June 2001 and helped lead Intelligent Systems Software, Inc. through the development of its initial business structure and systems. Mr. Stepic teamed with Mr. Speyer in the merger with Howtek, Inc., which led to the formation of ICAD, Inc., which is presently trading on NASDAQ under the symbol ICAD. From June 2002 until September 2003 Mr. Stepic served as director of finance of ICAD. After ICAD, Mr. Stepic joined DT&F LLC, a yacht brokerage business, as chief financial officer. Mr. Stepic’s early career in the New York area began in public accounting and eventually led to his joining start-up National Realty & Development Corp. in Greenwich, CT. Mr. Stepic directed all financial operations for this company from 1978 through 1996 and helped build it from a small team of five into a major real estate development and management company in the Northeast. Mr. Stepic holds an undergraduate degree from the University of Notre Dame, South Bend, Indiana and an MBA from New York University, New York, New York. Mr. Stepic is also a certified public accountant licensed in the State of New York. Mr. Stepic was chosen as a director for his experience as a CFO and extensive experience in start-up situations.

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Todd F. Speyer has been our director and the Director of Business Development and Website Manager since January 2011. Prior to joining Bright Mountain Holdings Inc., Mr. Speyer was the marketing and product manager for Speyer Door and Window from 2005 to 2009. He was responsible for developing all the company’s websites, from product conception in 2005 through the sale of the company in 2009, including writing copy and initiating animations on the website to illustrate product concept prior to prototype completion. Additionally, he was responsible for market research, pricing, design, feature and studying distribution characteristics of other companies in the door and window space. His input was felt in product design areas including, pricing, colors, appearance, features, performance and overall perceived salability. Mr. Speyer created the Speyer Seven product features as the most important customer buying attributes based on customer feedback. Mr. Speyer graduated from Florida State University in 2004 with a BA in English Literature.  Mr. Todd Speyer was chosen as a director because of his prior experience in developing websites.

Todd F. Davenport has been a director since February 17, 2012. Mr. Davenport is an accomplished executive with significant domestic and international marketing, sales and general managerial experience. He is currently President and CEO of Oxira Medical, Inc., Boca Raton, FL and has been since 2008. Oxira Medical, Inc., formerly known as Breeze Medical, Inc., is a pre-commercialization stage company targeting the development of catheter-based medical products to be used in the treatment of coronary arteries. Mr. Davenport was recruited by the board of Cardio Optics, Inc. to be its President and CEO, where he worked from 2005 to 2007. Prior to that he was President, CEO and co-founder of Viacor, Inc. from 2000 to 2004. During this time he was the co-inventor of eight issued U.S. patents. Mr. Davenport’s early career began in 1972 where he worked as a Sales Rep for C.R. Bard, Inc., a major international medical device company.  Additional work experience included Vice President of Sales and Marketing for the Cordis Corporation from 1974 to 1986, Vice President and GM for Abiomed, Inc. from 1986 to 1990, Vice President of Marketing and Sales at Baxter International, Inc. from 1990 to 1992, President, International Division, St. Jude Medical, Inc. from 1992 to 1995.  Mr. Davenport served on the boards of the World Medical Manufacturing Corporation from 1995 to 1996 and Net Optix, Inc. from 1997 to 2000.  Mr. Davenport was chosen as a director because of his marketing, sales and executive experience.

Terms of Officers and Directors

Our directors hold office until the next special meeting of the shareholders and until their successors have been duly elected and qualified.  Our officers are elected at the special meeting of the Board of Directors and hold office until their successors are chosen and qualified or until their death, resignation, or removal.

Annual Meeting

Our annual meeting of our stockholders is expected to be held at a future date. This will be an annual meeting of stockholders for the election of directors. The annual meeting will be held at our principal office or at such other place as permitted by the laws of the State of Florida and on such date as may be fixed from time to time by resolution of our board of directors.

Committees of the Board of Directors

Our Company is managed under the direction of its board of directors.  Our board of directors plans to establish an audit committee as soon as practicable.

Audit Committee

We currently do not have an audit committee.  When formed, the audit committee will be comprised solely of directors who are independent and financially literate, as required by the Securities Exchange Act of 1934, as amended.  At least one member of the committee will have accounting or related financial management expertise.

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ITEM 6.

EXECUTIVE COMPENSATION.

The following table sets forth the officer compensation received during the last two fiscal years, including salary, bonus and certain other compensation.

Employment Agreement

We do not have employment agreements with our executive officers. Annual base salary is presently $65,000 for Messrs. Speyer and Stepic. Subject to the availability of funding, the base salaries may be increased.

Director Compensation

We have not established standard compensation arrangements for our directors and the compensation payable to each director for services on the Board is determined by the Board. No director compensation was paid in 2012.

2011 Stock Option Plan

On April 20, 2011, the Company’s board of directors and majority stockholder adopted the 2011 Stock Option Plan (the “2011 Plan”), to be effective on January 3, 2011.  The purpose of the 2011 Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2011 Plan, the Company is authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long-term incentive awards. The Company has reserved for issuance an aggregate of 500,000 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 100,000 shares. The 2011 Plan will be administered by the Company’s board of directors until such time as such authority has been delegated to a committee of the board of directors.

The material terms of each option granted pursuant to the 2011 Plan by the Company shall contain the following terms: (i) that the purchase price of each share purchasable under an incentive option shall be determined by the Committee at the time of grant, (ii) the term of each option shall be fixed by the Committee, but no option shall be exercisable more than 10 years after the date such option is granted and (iii) in the absence of any option vesting periods designated by the Committee at the time of grant, options shall vest and become exercisable in terms and conditions, consistent with the Plan, as may be determined by the Committee and specified in the Grant Instrument.

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On January 3, 2011, the Company granted, pursuant to the 2011 Plan, ten-year stock options to purchase 400,000 common shares of the Company, of which (i) 100,000 are exercisable on January 3, 2012 at $0.25 per share, (ii) 100,000 are exercisable on January 3, 2013 at $0.25 per share, (iii) 100,000 are exercisable on January 3, 2014 and (iv) 100,000 are exercisable on January 3, 2015 at $0.25 per share.