Bright Mountain Media, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2024. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the period ended December 31, 2024, our disclosure controls and procedures were effective to provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures. Management's Annual Report on Internal Control over Financial Reporting Our senior management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our Board, senior management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. We continue to review our internal control over financial reporting and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business. Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). As the Company continues to improve its accounting staff and processes, internal controls are at the forefront of our efforts to produce accurate and complete financial statements. The Company has provided standard operating procedures to ensure each process is both functioning and performed correctly. This allows for documented updates and improvements. The implementation of the month end close software also elevated our internal controls and documentation. Management does recognize that without updated systems, the manual processes will allow for possible material weaknesses in the future. Notwithstanding the significant deficiencies described below, based on the Company’s continued improvements in its accounting staff and processes described above, the Company’s Chief Executive Officer and Chief Financial Officer evaluated our internal controls and concluded that as of the period ended December 31, 2024, they were effective, and that our consolidated financial statements included in this Form 10-K fairly represent, in all material respects, our financial condition and results of operations as of and for the year ended December 31, 2024. Outlined below are the significant deficiencies identified by management, along with the remedial actions planned. Significant Deficiency A significant deficiency or a combination of deficiencies in internal control over financial reporting that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of the Company’s financial reporting. The presence of such a deficiency does not mean that a material misstatement has occurred, but it indicates the possibility of such an occurrence in the future. As the Company continues to update and integrate its accounting and project systems, we have identified deficiencies in our overall internal controls, specifically as identified below: • Inadequate controls related to revenue recognition and cost of revenue processes leading to the possibility of the misstatement of material transactions impacting financial statements. • Ineffectiveness of the Company’s information technology systems and controls concerning financial information. 44 Table of Contents • Inadequate controls related to share cancellation processes leading to the possibility of misstatement of transactions impacting financial statements. To address these weaknesses, the Company has initiated a remediation plan comprising the following measures: • Updating the information technology general controls ("ITGC") risk assessment to ensure reliability, integrity, security, and confidentiality of the Company’s infrastructure and data. • Examination of information technology systems to ascertain necessary updates to support the financial reporting process. • Implementing the compliance option in Floqast to identify and document key controls. This will create a key control matrix to establish and document controls related to revenue recognition, cost of sales, equity, and other processes to enhance internal controls over financial reporting. • In the year ended December 31, 2024, the accounting and finance department has improved with the hiring of an experienced operational Controller and Accounting Manager as well as the VP of Finance. These positions will compliment and collaborate with the existing SEC Reporting Manager. We believe this will strengthen our department as we work towards strong internal controls and provide guidance beyond the finance functions for those we rely on to provide information to support our financial reporting process. We will continue to monitor and evaluate the effectiveness of our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary. This Annual Report on Form 10-K does not include an attestation report of the Company’s registered independent public accounting firm on management’s assessment regarding internal controls over financial reporting due to the exemption from such requirements established by rules of the SEC for smaller reporting companies. Changes in Internal Control over Financial Reporting Other than the matters set forth above, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the year ended December 31, 2024 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Limitations on Effectiveness of Controls and Procedures In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs. ITEM 9B. OTHER INFORMATION None . ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS Not applicable. 45 Table of Contents PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Directors Our Board currently consists of five members. Each director is elected at our annual meeting of shareholders and holds office until the next annual meeting of shareholders, or until his or her successor is elected and qualified. If any director resigns, dies or is otherwise unable to serve out his or her term, or if the board increases the number of directors, the board may fill any vacancy by a vote of a majority of the directors then in office. A director elected to fill a vacancy shall serve for the unexpired term of his or her predecessor. The following table sets forth the names, ages and positions of our directors: Name Age Position Matthew Drinkwater 51 Interim Chairman of the Board and Chief Executive Officer Elaine Riddell 69 Director Joseph Pergola 50 Director and Chairman of Audit Committee Thomas Triscari 55 Director and Chairman of Compensation Committee Jeff Hirsch 66 Director and Chairman of Governance Committee Matthew Drinkwater has been a member of our Board since January 2022 and was appointed Chief Executive Officer in December 2021. He was appointed Interim Chairman of the Board on August 8, 2024. Mr. Drinkwater has an extensive track record of adding value to the companies he has worked for over his professional career in several key senior executive and sales roles at companies such as Buzzfeed Inc. (NASDAQ: BZFD), Twitter Inc., Groupon Inc. (NASDAQ: GRPN), Yahoo and America Online (AOL). Mr. Drinkwater is a digital executive with extensive, progressively advancing leadership experience at iconic high tech brands. Mr. Drinkwater was a member of Revenue Collective, a private organization for commercial growth operators, from 2020 to 2021. Mr. Drinkwater served as the Senior Vice President, International from 2017 to 2019 and General Manager, International from 2019 to 2020 for Buzzfeed Inc. He also was in Agency Development and Global Accounts at Twitter from 2015 to 2017 and head of Twitter’s Global Online Sales in San Paolo, Brazil from 2013 to 2015. Mr. Drinkwater served as Vice President of Groupon East Coast from 2011 to 2013 and Senior Director of Sales, New England and Canada at Yahoo from 2009 to 2011. Mr. Drinkwater holds a B.A. in Economics from College of the Holy Cross. We believe that Mr. Drinkwater possesses attributes that qualify him to serve as a member of our Board, including his experience serving in key management roles and extensive knowledge of the tech industry. Elaine Riddell has been a member of our Board since September 2024. Ms. Riddell has over 15 years of experience as a CEO at leading firms such as NOPWorld Health, TNS Healthcare, and Kantar Health (now Oracle LifeSciences). She currently serves as Managing Director at Oaklins DeSilva + Phillips, a leading investment bank specializing in M&A advisory within the marketing and media services sector. In addition to her advisory work, Ms. Riddell serves as a board director for the Executive Forum, a network of top executives dedicated to advancing business growth. She served as Vice President from 2012-2016 and 2018-2024 and was Chair of the Advisory Board for Themis Analytics from 2016 to its acquisition in 2017. Ms. Riddell is a McGill University alumna and holds dual Canadian and American citizenship. We believe that Ms. Riddell possesses attributes that qualify her to serve as a member of our Board, including her distinguished history of transforming established global data, analytics, and consulting firms into high-performing market leaders. Joseph Pergola has been a member of our Board since September 2024. Mr. Pergola currently serves as the Chief Financial Officer of Truckstop, a leading digital marketplace for freight. With over 25 years in the industry, Mr. Pergola has held key roles at Amazon, Criteo, The Weather Company, Yahoo, and Time Warner. As CFO of Integral Ad Science, he was instrumental in the company’s successful IPO in 2021, valued at $3.8 billion. Mr. Pergola holds a B.S. in Business Management from Saint Peter’s University and an MBA in Finance and Media and Communications from Fordham Gabelli School of Business. We believe that Mr. Pergola possesses attributes that qualify him to serve as a member of our Board, including his distinguished track record of leading and transforming finance, accounting, mergers and acquisitions, corporate development, business and sales operations, and real estate for multiple Fortune 500 Media and Ad Tech companies. 46 Table of Contents Thomas Triscari has been a member of our Board since September 2024. Mr. Triscari currently serves as a Senior Advisor at Landmark Ventures and is the founder of the Forensic AdTech Collective Thinktank (FACT), an initiative to pioneer new standards in the industry. His extensive advisory and non-executive board roles include positions at WasteNot, Br1dge, Adfidence, and Compliant. He serves as a non-executive board member at Adslot and has made significant contributions as the Founder of the Quo Vadis Newsletter, a respected resource in AdTech. Previously, Mr. Triscari held influential roles at Yahoo! EMEA, where he participated in sales operations, planning, and strategy, and at Criteo, where he served as Director of Publisher Marketplace and Business Intelligence. As an entrepreneur, Mr. Triscari founded Labmatik, a consultancy specializing in programmatic advertising, and led Yieldr, a demand-side platform (DSP) as CEO. He holds a B.A. in Economics from UCLA and an MBA in Finance and Entrepreneurship from the University of Notre Dame Mendoza College of Business. We believe that Mr. Triscari possess attributes that qualify him to serve as a member of our Board, including his extensive experience and deep understanding of the AdTech and media industries. Jeff Hirsch has been a member of our Board since August 2023. Mr. Hirsch has over 25 years in technology, business, and sales organization development, brand strategy, and investor relations. Since April 2023, he has served as a consultant and as the Managing Partner of Aperiam, a firm that invests in ad tech. From July 2016 to April 2023, he held various leadership roles at PubMatic (NASDAQ: PUBM), a digital marketing company, including serving as Chief Commercial Officer from 2019 until April 2023. He also held prior executive roles as President of CPXi (now Digital Remedy), Chief Executive Officer of AudienceScience, Chief Marketing Officer of SundaySky, SVP of ValueClick, and was a founder and Chief Revenue Officer of Fastclick (NASDAQ: FSTC). Mr. Hirsch graduated from the University of California Santa Barbara with a B.A. in Experimental Psychology. We believe that Mr. Hirsch possesses attributes that qualify him to serve as a member of our Board, including his extensive experience in management, strategy, and investor relations in our industry. Director Independence Our Board has determined that Ms. Riddell, Mr. Pergola, Mr. Triscari, and Mr. Hirsch qualify as “independent” directors within the meaning of the NYSE listing standards. The NYSE independence definition includes a series of objective tests regarding a director’s independence and requires that the Board make an affirmative determination that a director has no relationship with us that would interfere with such director’s exercise of independent judgment in carrying out the responsibilities of a director. There are currently no family relationships among any of our directors or executive officers. Executive Officers Below are the names, ages, and positions of our current executive officers: Name Age Position Matthew Drinkwater 51 Interim Chairman of the Board and Chief Executive Officer Ethan Rudin 50 Chief Financial Officer The following is certain biographical information describing the business experience of Mr. Rudin, who does not serve as a director. The biography of Mr. Drinkwater appears earlier in this section. See “Directors” above. Ethan Rudin has served as our Chief Financial Officer since October 2023. Prior to joining us, Mr. Rudin served as the Chief Financial Officer of Boundless Network, a private equity-backed promotional products distribution platform since November 2022. Mr. Rudin previously served as the Chief Financial Officer of BuildDirect Technologies, an online building materials retailer, from January 2021 to September 2022. Prior to joining BuildDirect Technologies, Mr. Rudin served as the Chief Financial Officer of Greenlane Holdings Inc., a distribution platform for premium vaporization products, from February 2019 to August 2020. Prior to joining Greenlane Holdings Inc., Mr. Rudin served in various roles at Napster/Rhapsody International Inc., an online music streaming platform, from August 2013 to December 2017, including as a special advisor to the Chief Executive Officer and as the Chief Financial Officer, Global Head of Label Relations & Business Development. Mr. Rudin earned his Bachelor of Arts in Economics from Tufts University in 1996 and his Masters of Business Administration from Columbia University Business School in 2022. 47 Table of Contents Code of Business Conduct and Ethics In order to clearly set forth our commitment to conduct our operations in accordance with our high standards of business ethics and applicable laws and regulations, our Board adopted a Code of Business Conduct and Ethics (the “Code of Conduct”), which is applicable to all directors, officers and employees. The Code of Conduct includes our insider trading policies and procedures. A copy of the Code of Conduct is available on our website under the Investor Relations tab at www.brightmountainmedia.com . You may also obtain a printed copy of our Code of Conduct, without charge, by sending a written request to our principal offices at 6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487. Amendments or waivers of the Code of Conduct will be provided on our website within four business days following the date of the amendment or waiver. Audit Committee. We have a separately designated standing audit committee of the Board (the “Audit Committee”) established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The current members of the Audit Committee are Joseph Pergola (chair) and Thomas Triscari. All members of the Audit Committee have been determined by the Board to be independent within the meaning of the NYSE corporate governance standards. The Board has determined that Mr. Pergola qualifies as an “audit committee financial expert,” as defined in Item 407 of Regulation S-K. The Audit Committee assists the Board with fulfilling its oversight responsibility relating to: • the integrity of the Company’s consolidated financial statements and financial reporting process; • the Company’s systems of internal controls; • the performance of the Company’s accounting function and independent auditors; and • the independent auditor’s qualifications and independence. Delinquent Section 16(a) Reports Section 16(a) of the Securities Exchange Act of 1934 requires that the Company’s directors, officers and persons who beneficially own 10% or more of the Company’s common stock file with the SEC initial reports of ownership and reports of changes in ownership of our stock and our other equity securities. To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended December 31, 2024 and for prior fiscal years, all such filing requirements applicable to any person who served as a director, officer, or greater than 10% beneficial owner during the year ended December 31, 2024 were complied with other than as follows: (i) a late Form 3 and two late Form 4s were filed for Matthew Drinkwater to report his appointment as an officer and director, and to report three transactions; (ii) a Form 3 and a Form 4 were due but have not yet been filed for Jeff Hirsch to report his appointment as a director and to report three transactions; (iii) a late Form 4 was filed for Elaine Riddell to report one transaction; (iv) a late Form 3 and late Form 4 were filed for Thomas Triscari to report his appointment as director and one transaction; (v) a late Form 4 was filed for Joseph Pergola to report one transaction; and (vi) Centre Lane Partners Master Credit Fund II, L.P. failed to file a Form 3 upon becoming a 10% shareholder. 48 Table of Contents ITEM 11. EXECUTIVE COMPENSATION Our named executive officers for the fiscal year ended December 31, 2024 (the “named executive officers”) are: • Matthew Drinkwater, Interim Chairman of the Board and Chief Executive Officer; and • Ethan Rudin, Chief Financial Officer. Summary Compensation Table The following table summarizes the compensation paid to our named executive officers for the years ended December 31, 2024, and 2023: Name and Principal Position Year Salary Bonus Option Awards (1) Total Matthew Drinkwater (2) 2024 400,000 200,000 * 600,000 Chief Executive Officer 2023 317,500 200,000 * 517,500 Ethan Rudin (3) 2024 325,000 81,250 * 406,250 Chief Financial Officer 2023 67,708 20,300 * 88,008 * Indicates that the grant date fair value of the option grant was less than one dollar. (1) The amounts included in the Option Awards column reflects the aggregate fair market value of stock options to purchase our common stock on the grant date pursuant to FASB ASC Topic 718. All stock options were granted with an exercise price equal to the fair market value of the common stock on the date of the grant. (2) Mr. Drinkwater's annual base salary was increased to $400,000 effective June 1, 2023. He agreed to a 10% reduction in his base salary between September 2023 and December 31, 2023, which was contemporaneous with temporary salary reductions for Wild Sky Media employees. (3) Mr. Rudin was appointed Chief Financial Officer effective October 18, 2023. Outstanding Equity Awards at Fiscal Year End The following table sets forth the outstanding equity awards held by our named executive officers as of December 31, 2024. Option Awards Name Number of Securities Underlying Unexercised Options Exercisable Number of Securities Underlying Unexercised Options Unexercisable Option Exercise Price Option Expiration Date Matthew Drinkwater 500,000 - (1) $ 0.010 December 1, 2031 125,000 125,000 (2) $ 0.010 May 26, 2032 - 125,000 (3) $ 0.035 November 14, 2034 Ethan Rudin 81,250 243,750 (4) $ 0.010 October 28, 2033 (1) On December 1, 2021, Mr. Drinkwater was granted options to purchase 500,000 shares of common stock. These options vested 25% on each of December 1, 2021, December 1, 2022, December 1, 2023, and December 1, 2024. (2) On May 26, 2022, Mr. Drinkwater was granted options to purchase 250,000 shares of common stock. These options (i) vested 25% on May 26, 2023 and May 26, 2024, and (ii) will vest 25% on each of May 26, 2025, and May 26, 2026. (3) On November 14, 2024, Mr. Drinkwater was granted options to purchase 125,000 shares of common stock. These options will vest 25% on each of November 14, 2025, November 14, 2026, November 14, 2027, and November 14, 2028. (4) On October 28, 2023, Mr. Rudin was granted options to purchase 325,000 shares of common stock. These options (i) vested 25% on October 28, 2024, and (ii) will vest 25% on each of October 28, 2025, October 28, 2026, and October 28, 2027. 49 Table of Contents Executive Employment Agreements and Other Arrangements Matthew Drinkwater Effective December 1, 2024, we entered into an Executive Employment Agreement with Matthew Drinkwater, our Chief Executive Officer. His employment contract's term is for three years, subject to successive one-year automatic extensions, unless either party provides notice of its intent not to renew the Employment Agreement at least 120 days prior to the then-current expiration date. His annual base salary is $400,000, and he is entitled to an annual bonus of up to $600,000 based on the achievement of certain performance targets by the Company. In addition to his base salary and annual bonus, Mr. Drinkwater will be eligible to participate in all of the Company’s benefit plans offered to employees of the Company from time to time, subject to satisfying eligibility requirements. Additionally, Mr. Drinkwater was granted 125,000 options to purchase an equal number of shares of the Company's common stock at an exercise price of $0.035 per share. The options will vest over four years and otherwise be subject to the terms of the Bright Mountain Media, Inc. 2022 Stock Option Plan. Pursuant to the terms of the Employment Agreement, Mr. Drinkwater is bound by customary non-competition and non-solicitation covenants during his period of employment. In the event that Mr. Drinkwater is terminated without cause, which includes a termination by Mr. Drinkwater for Good Reason (as defined in the Employment Agreement), or the Employment Agreement is terminated by way of non-renewal on the part of the Company, Mr. Drinkwater will be entitled to (i) any accrued but unpaid benefits under the Employment Agreement, (ii) any earned but unpaid annual bonus amounts, and (iii) monthly severance payments for a period of 12 months equal to between 100% and 150% of his base monthly salary at the time of termination, depending on the conditions of the termination. In the event that Mr. Drinkwater is terminated with cause or the Employment Agreement is terminated by way of non-renewal on the part of Mr. Drinkwater, Mr. Drinkwater will be entitled to any accrued but unpaid benefits under the Employment Agreement. Further, notwithstanding the foregoing, if Mr. Drinkwater is terminated without cause, including a termination by Mr. Drinkwater for Good Reason, within three months before or within one year following a change in control of the Company, Mr. Drinkwater will be entitled to monthly severance payments for a period of 12 months equal to 150% of his base monthly salary at the time of termination. If Mr. Drinkwater is terminated for cause or Mr. Drinkwater terminates the Employment Agreement for any reason, Mr. Drinkwater will be bound by such non-competition covenants for a period of one year after the date his employment with the Company terminates. Mr. Drinkwater will be bound by such non-solicitation covenants for a period of two years after the date his employment with the Company terminates regardless of the reason for such termination. Additionally, pursuant to the terms of the Employment Agreement, Mr. Drinkwater is bound by certain customary non-disclosure covenants during the period of his employment and after the date his employment with the Company terminates. Ethan Rudin On October 4, 2023, we entered into an Executive Employment Agreement with Ethan Rudin, our Chief Financial Officer. Pursuant to his employment contract, his annual base salary is $325,000, and he has a discretionary bonus target equivalent to 25% of his base salary subject to the achievement of certain performance metrics. In addition to his base salary and bonus, Mr. Rudin is eligible to participate in all of the Company's benefit plans offered from time to time, subject to satisfying eligibility requirements. Additionally, Mr. Rudin was granted options to purchase 325,000 shares of the Company's common stock with an exercise price equal to $0.09, the fair market value of our common stock on the date of grant. The options will vest over four years and otherwise be subject to the terms of the Bright Mountain Media, Inc. 2022 Stock Option Plan. If Mr. Rudin is terminated without cause, subject to complying with certain conditions, he is entitled to severance equal to his annual salary payable in six equal monthly installments. Pursuant to the terms of the employment agreement, Mr. Rudin is bound by customary non-competition and non-solicitation covenants during his period of employment and for a period of one year after the date his employment with the Company terminates. Additionally, pursuant to the terms of the employment agreement, Mr. Rudin is bound by certain customary non-disclosure covenants during the period of his employment and after the date his employment with the Company terminates. On March 7, 2025, effective January 1, 2025, we entered into an amendment to Mr. Rudin’s Executive Employment Agreement to (i) increase the target bonus he is eligible to receive for 2025 to 50% of his base salary, based on the Company’s performance and as determined by the Company’s board of directors in its sole discretion; and (ii) grant him an option to purchase 125,000 shares of the Company’s common stock that vest at a rate of 25% per year beginning on March 7, 2026 at an exercise price equal to the fair market value of our common stock on the date of grant. 50 Table of Contents Director Compensation Table On August 15, 2023, our Board of Directors adopted a new compensation policy for the directors of the board. Under the terms of the director compensation policy, independent directors receive quarterly cash compensation of $10,000 for service as a director and additional cash compensation of $5,000 for service as chair of one or more of the Board's committees. The cash compensation payments were effective April 1, 2023 with payments commencing in October 2023. Commencing January 1, 2024, independent directors receive, on an annual basis, options to purchase 100,000 shares of our common stock at an exercise price equal to the fair market value of our common stock on the first business day of the year. Such options will vest in full on December 31 of the same year. Additionally, the Company reimburses each director for fees, travel, and expenses related to their attendance of Board and Committee meetings, if and when incurred. The following table summarizes the compensation earned by our directors for their services as members of our Board for the year ended December 31, 2024. The information in the following table excludes any reimbursement of out-of-pocket travel and lodging expenses which we may have paid. Name Fees Earned Option Awards (1) All Other Compensation Total W. Kip Speyer (2) 30,000 * 60,000 90,000 Pamela Parizek (3) 2,967 * - 2,967 Harry D. Schulman (4) 30,000 * 15,000 45,000 Jeff Hirsch 60,000 * - 60,000 Elaine Riddell (5) 15,761 * - 15,761 Joseph Pergola (6) 23,641 * - 23,641 Thomas Triscari (7) 23,641 * - 23,641 * Indicates that the grant date fair value of the option grant was less than one dollar. (1) The amounts included in the Option Awards column reflect the aggregate fair market value of stock options to purchase our common stock on the grant date pursuant to FASB ASC Topic 718. (2) Mr. Speyer's tenure as Chairman of the Board ended on June 30, 2024. The amount listed for Mr. Speyer in the All Other Compensation column represents an amount owed to Mr. Speyer as part of a separation agreement. (3) Ms. Parizek resigned from the Board of Directors effective January 18, 2024. As of December 31, 2024, Ms. Parizek held 229,370 shares that she received as director compensation. The shares have vested. (4) Mr. Schulman resigned from the Board of Directors effective June 30, 2024. The amount listed for Mr. Schulman in the All Other Compensation column represents an amount owed to Mr. Schulman as part of a separation agreement. At December 31, 2024, Mr Schulman held 265,000 shares and options to purchase 107,500 shares of common stock that he received as director compensation. The shares and options have vested. (5) Ms. Riddell was appointed a member of the Board of Directors effective August 8, 2024. (6) Mr. Pergola was appointed a member of the Board of Directors effective August 8, 2024. (7) Mr. Triscari was appointed a member of the Board of Directors effective August 8, 2024. 51 Table of Contents ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS Securities Authorized for Issuance Under Equity Compensation Plan The following table provides information as of March 4, 2025 with respect to all of our compensation plans under which equity securities are authorized for issuance: Plan Category Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants, and Rights (a) Weighted Average Exercise Price of Outstanding Options, Warrants, and Rights (1) Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excl. securities reflected in column a) Equity compensation plans approved by shareholders - $ - - Equity compensation plans not approved by shareholders (2) 10,459,033 $ 0.10 12,040,967 10,459,033 $ 0.10 12,040,967 (1) This number reflects the weighted-average exercise price of outstanding options and has been calculated exclusive of outstanding restricted stock unit awards issued under our stock option plans. (2) The table below shows stock option plans not approved by stockholders under which grants remain outstanding. Stock Option Plan Outstanding Options 2013 Stock Option Plan 215,000 No further grants can be made on this plan 2015 Stock Option Plan 266,000 No further grants can be made on this plan 2019 Stock Option Plan 633,227 No further grants can be made on this plan 2022 Stock Option Plan 9,344,806 Current plan 10,459,033 2022 Stock Option Plan On April 14, 2022, the Board of Directors of the Company and the Compensation Committee of the Board adopted and approved the 2022 Bright Mountain Media Stock Option Plan (the “Stock Option Plan”). The Stock Option Plan provides for the grant of awards to eligible employees, directors and consultants in the form of stock options. The purpose of the Stock Option 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. The Stock Option Plan has a term of 10 years and authorizes the issuance of up to 22,500,000 shares of the Company’s common stock. As of December 31, 2024, 12,040,967 shares were remaining under the Stock Option Plan for future issuance. Security Ownership of Certain Beneficial Owners and Management Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. In accordance with the SEC rules, shares of our common stock that may be acquired upon exercise or vesting of equity awards within 60 days of the date of the table below are deemed beneficially owned by the holders of such options and are deemed outstanding for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage of ownership of any other person. 52 Table of Contents As of March 4, 2025, 177,515,227 shares of our common stock were issued and 175,965,052 shares were outstanding. The following table sets forth information with respect to the beneficial ownership of our common stock as of March 4, 2025 by (i) each of our directors and named executive officers, (ii) all of our directors and executive officers as a group, and (iii) each shareholder known by us to be the beneficial owner of more than 5% of our common stock. To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of common stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. To our knowledge, there is no arrangement, including any pledge by any person of our securities or any of our parents, the operation of which may at a subsequent date result in a change in control of our company. Unless otherwise noted below, the address of each person listed on the table is c/o Bright Mountain Media, Inc., 6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487. Beneficial Owner (1) Amount and Nature of Beneficial Ownership Percentage of Outstanding Common Stock Owned (2) Matthew Drinkwater (3 ) 645,432 * Ethan Rudin (4 ) 81,250 * Jeffrey Hirsch (5 ) 138,082 * Elaine Riddell (4 ) 39,891 * Thomas Triscari (4 ) 39,891 * Joseph Pergola (4 ) 39,891 * All executive officers and directors as a group (6 persons) (6 ) 984,437 * Beneficial ownership of 5% or more: W. Kip Speyer (7 ) 31,580,657 17.9 % 10th Lane Partners, LP (8 ) 41,553,984 23.6 % Centre Lane Partners Master Credit Fund II, LP (9 ) 15,150,000 8.6 % BV Agency, LLC (10 ) 26,403,984 15.0 % Andrew Handwerker (11 ) 10,730,998 6.1 % * Represents beneficial ownership of less than 1%. (1) Except as otherwise indicated, the address of each beneficial owner is c/o Bright Mountain Media, Inc. 6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487. (2) The percentage of beneficial ownership of the Company is calculated based on 175,965,052 shares of common stock outstanding as of March 4, 2025. (3) Includes (i) 20,432 shares of common stock held directly by Mr. Drinkwater; and (ii) 625,000 shares underlying exercisable options to purchase shares of common stock. (4) Represents shares underlying exercisable options to purchase shares of common stock. (5) Includes (i) 38,082 shares of common stock held directly by Mr. Hirsch; and (ii) 100,000 shares underlying exercisable options to purchase shares of common stock. (6) Includes (i) 58,514 shares of common stock directly held by directors and a named executive officer; and (ii) 925,923 shares underlying exercisable options to purchase shares of common stock. (7) Includes 250,000 shares underlying exercisable options to purchase common stock. (8) Based on a Schedule 13G/A filed on May 10, 2023 by 10th Lane Partners, LP and Centre Lane Partners Master Credit Fund II, L.P., consists of 21,401,993 shares held of record by BV Agency, LLC and 15,150,000 shared held of record by Centre Lane Partners Master Credit Fund II, LP. 10th Lane Partners, LP is the Investment Adviser for these funds and has sole voting and dispositive power of these shares. The total number of shares held has been adjusted to include 5,001,991 shares issued to BV Agency, LLC on December 26, 2024. The address for 10th Lane Partners, LP is 60 East 42nd Street, Suite 2220, New York, New York 10165. (9) Based on a Schedule 13G/A filed on May 10, 2023 by 10th Lane Partners, LP and Centre Lane Partners Master Credit Fund II, L.P., Centre Lane Partners Master Credit Fund II LP is the record holder of 15,150,000 shares but disclaims ownership of these shares as 10th Lane Partners LP is the Investment Adviser for this fund and has sole voting and dispositive power of these shares. The address for 10th Lane Partners, LP is 60 East 42nd Street, Suite 2220, New York, New York 10165. (10) Based on a Schedule 13G/A filed on May 10, 2023 by 10th Lane Partners, LP and Centre Lane Partners Master Credit Fund II, L.P., BV Agency, LLC is the record holder of 21,401,993 shares. 10th Lane Partners LP is the Investment Adviser for this fund and has sole voting and dispositive power of these shares. The total number of shares held has been adjusted to include 5,001,991 shares issued to BV Agency, LLC on December 26, 2024. The address for 10th Lane Partners, LP is 60 East 42nd Street, Suite 2220, New York, New York 10165. (11) Mr. Handwerker has sole voting and dispositive power with respect to 4,078,388 shares and shared voting and dispositive power with respect to 4,732,000 shares. This information is based on a Schedule 13G/A filed on April 9, 2018, but has been adjusted to exclude 250,000 shares of underlying warrants that were exercisable at the time the Schedule 13G/A was filed but have since expired according to the Company's records. The address for Andrew Handwerker is 4399 Pine Tree Drive, Boynton Beach, Florida 33436. 53 Table of Contents ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Related Party Transaction Policy Under its written charter, the Audit Committee of our Board of Directors is responsible for reviewing and approving related party transactions (as defined in Item 404 of Regulation S-K). Our management is responsible for bringing any such transaction to the attention of the Audit Committee. In approving or rejecting any such transaction, the Audit Committee considers the relevant facts and circumstances, including the material terms of the transaction, risks, benefits, costs, availability of other comparable services or products and, if applicable, the impact on a director’s independence. Preferred Stock Purchases No cash dividends were paid during the year ended December 31, 2024 and 2023. At December 31, 2024, accrued unpaid preference dividends on the preferred stock were $691,000. This amount is payable to Mr. W. Kip Speyer, a former director of the Company. Convertible Notes On November 30, 2018, the Company issued 10% convertible promissory notes ("Convertible Notes") in the amount of $80,000 to our then Chairman of the Board, a related party. The Convertible Notes were unsecured and matured five years from issuance and were convertible at the option of the holder into shares of common stock at any time prior to maturity at a conversion price of $0.40 per share. A beneficial conversion feature existed on the date the Convertible Notes were issued whereby the fair value of the underlying common stock into which the Convertible Notes was convertible was in excess of the face value of the Convertible Notes of $80,000. On July 1, 2024, the Company repaid the outstanding principal of $80,000 and outstanding interest of $43,000 on the Convertible Notes due to its former Chairman of the Board. Centre Lane Partners Centre Lane Partners Master Credit Fund II, L.P. ("Centre Lane Partners"), who sold the Wild Sky business to the Company in June 2020 and beneficially owns more than 5% of the common stock of the Company, partnered and assisted the Company from a liquidity perspective during the year ended December 31, 2024. This relationship has been determined to qualify as a related party. A related party is a party that can exercise significant influence over the Company in making financial and/or operating decisions. Through December 31, 2024, the Company has entered into twenty-one amendments to the Amended and Restated Senior Secured Credit Agreement between it and Centre Lane Partners (the “Credit Agreement”). The highest total amount of related party debt including fees and interest paid in kind capitalized owed to Centre Lane Partners was $78.8 million at December 31, 2024. Interest paid during the year was $539,000 in cash, and $9.4 million paid in kind. Employment Matters Effective as of June 29, 2024, the Company entered into a Separation and Release Agreement (the “Separation Agreement”) with W. Kip Speyer, the Company’s former Chairman of the Board, pursuant to which, among other things, the Company agreed to make the following payments to Mr. Speyer: • within two business days of June 29, 2024, the Company would pay (a) 100% of the principal and interest owed to Mr. Speyer pursuant to (1) the 10% Convertible Promissory Note issued by the Company to Mr. Speyer on November 12, 2018 and (2) the 10% Convertible Promissory Note issued by the Company to Mr. Speyer on November 20, 2018 and (b) $15,000 to Mr. Speyer for his services as a director of the Company for the quarter ended June 30, 2024; and • twelve monthly payments of $5,000 each commencing on July 1, 2024 and ending on June 1, 2025, for an aggregate payment over the twelve-month period of $60,000. The Company also agreed to accelerate vesting of 125,000 unvested stock options held by Mr. Speyer, such that 100% of such options would be fully vested on June 30, 2024. Further, the Company agreed to cooperate with Mr. Speyer to lift any restrictions on the sale of any shares of Common Stock held by Mr. Speyer, subject to certain conditions. 54 Table of Contents In exchange for the foregoing, Mr. Speyer agreed to release and waive certain claims he may have had against the Company related to his employment with the Company and certain securities he owned in the Company. Mr. Speyer also agreed to assist the Company in any legal matters arising from his employment with the Company or made by or against a third party. Mr. Speyer also agreed to certain non-disparagement, non-solicitation, and confidentiality provisions. In connection with the Separation Agreement, the Company and Mr. Speyer also entered into a piggyback registration rights agreement, pursuant to which Mr. Speyer is entitled to certain piggyback registration rights with respect to any proposed registrations of Common Stock to be made by the Company, aside from those to be made on Form S-4, those made on Form S-8, those made in connection with the resale of Common Stock issued pursuant to a PIPE investment or equity line of credit, or those made in connection with the issuance of securities of the Company in a non-underwritten registered direct offering that serves as an equivalent to a PIPE investment. ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES Principal Accountant Fees and Services WithumSmith+Brown, PC ("Withum") has served as the Company's independent registered public accounting firm since 2021. The following table sets forth the fees for professional audit services and other services rendered by Withum for the years ended December 31, 2024 and 2023, respectively. Year Ended December 31, 2024 December 31, 2023 Audit fees (1) $ 832,900 $ 790,261 Audit-related fees (2) 40,705 32,319 Tax fees (3) 30,739 37,704 All other fees (4) - - $ 904,344 $ 860,284 (1) Audit Fees. Audit Fees include fees of audits for our annual financial statements, reviews of the related quarterly financial statements, and services that are normally provided by the independent accountants in connection with statutory and regulatory filings or engagements, including reviews of documents filed with the SEC. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements. (2) Audit-Related Fees. Audit Related Fees include assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements or acquisition audits and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission and other accounting consulting. (3) Tax Fees. Tax Fees consist of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice. The Company’s tax return for the year ended December 31, 2024 has not been completed as of the date of this filing. (4) All Other Fees. All Other Fees consist of fees for professional services or costs not otherwise reported in Audit Fees, Audit-Related Fees or Tax Fees. No such fees were incurred during the years ended December 31, 2024 and 2023. Policy for Approval of Audit and Permitted Non-Audit Services Our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Audit Committee of the Board approves the engagement letter with respect to audit, tax, and review services. Other fees are subject to pre-approval by the Audit Committee. The fees paid to the auditors with respect to 2024 and 2023 were pre-approved by the Audit Committee. 55 Table of Contents PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES (a)(1) Financial Statements The financial statements and notes are listed in the Index to Consolidated Financial Statements on page F-1 of this Annual Report on Form 10-K and are included in Part II, Item 8 of this Annual Report on Form 10-K. (a)(2) Financial Statement Schedules All financial statement schedules are omitted because they are not applicable or the required information is included in the Consolidated Financial Statements or notes thereto listed in the Index to Consolidated Financial Statements , starting on page F-1 of this Annual Report on Form 10-K. (a)(3) Exhibits The following exhibits listed in the Exhibit Index below are filed as part of, and incorporated by reference into, this Annual Report on Form 10-K. EXHIBIT INDEX Incorporated by Reference Filed or Furnished No. Exhibit Description Form Date Filed Number Herewith 2.1 Share Exchange Agreement and Plan of Merger dated July 31, 2019 by and among Bright Mountain Media, Inc., Bright Mountain Israel Acquisition Ltd. (a to be formed entity), Slutzky & Winshman Ltd. and the shareholders of Slutzky & Winshman, Ltd. 8-K 8/1/19 2.1 2.2 Merger Agreement and Plan of Merger dated November 8, 2019 by and among Bright Mountain Media, Inc. BMTMZ, and News Distribution Network, Inc. 8-K 11/21/19 2.1 3.1 Amended and Restated Articles of Incorporation, filed March 11, 2013 10-K 4/1/24 3.1 3.2 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed July 9, 2013 8-K 7/9/13 3.3 3.3 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed November 21, 2013 8-K 11/16/13 3.4 3.4 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed December 27, 2013 8-K 12/30/13 3.4 3.5 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed February 25, 2014 10-K 3/31/14 3.5 3.6 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed July 10, 2014 8-K 7/28/14 3.6 3.7 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed September 24, 2014 10-K/A 4/1/15 3.5 3.8 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed March 20, 2015 10-K 4/1/24 3.8 3.9 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed October 27, 2015 8-K 12/4/15 3.7 3.10 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed September 16, 2016 10-K 4/1/24 3.10 56 Table of Contents 3.11 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed September 6, 2017 10-K 4/1/24 3.11 3.12 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed September 29, 2017 10-K 4/1/24 3.12 3.13 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed November 5, 2018 8-K 11/13/18 3.10 3.14 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed July 31, 2019 10-K 4/1/24 3.14 3.15 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed September 3, 2019 10-K 4/1/24 3.15 3.16 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed December 23, 2019 10-K 4/1/24 3.16 3.17 Amended and Restated Bylaws 10 1/31/13 3.2 4.1 Specimen common stock certificate 10-K 5/14/20 4.3 4.2 Description of Securities 10-K 4/1/24 4.6 4.3 Registration Rights Agreement by and between the Company and W. Kip Speyer, executed June 28, 2024 10-Q 8/14/24 4.1 10.1 2013 Stock Option Plan 10-Q 11/13/13 10.18 10.2 201 5 Stock Option Plan 8-K 5/27/15 10.36 10.3 201 9 Stock Option Plan 10-K 12/23/21 10.4 10.4 2022 Stock Option Plan 8-K 4/20/22 10.3 10.5 Lease Agreement dated August 27, 2014 for registrant's principal executive offices (contained in Exhibit 10.7) X 10.6 Amendment to Lease Agreement dated August 8, 2018 for registrant’s principal executive offices 10-Q 11/20/18 10.1 10.7 Amendment to Lease Agreement dated June 14, 2022 for registrant's principal executive offices X 10.8 Sublease Agreement dated May 31, 2024 for registrant's principal executive office, suite 2050 X 10.9 Sublease Agreement dated May 31, 2024 for registrant's principal executive office, suite 2200 X 10.10 Membership Interest Purchase Agreement dated June 5, 2020 between Centre Lane Partners Master Credit Fund II and Bright Mountain Media, Inc. 8-K 6/8/20 10.1 10.11 Credit Agreement dated as of June 5, 2020 by and among CL Media Holdings, LLC, as the Borrower, the Financial Institutions thereto and Centre Lane Partners Master Fund II, L.P. as Agent 8-K 6/8/20 10 10.12 First Amendment to an Amended and Restated Senior Credit Agreement dated April 26, 2021. 8-K 4/30/21 10.1 10.13 Second Amendment to an Amended and Restated Senior Credit Facility Agreement dated May 26, 2021. 8-K 6/2/21 10.1 10.14 Third Amendment to Amended and Restated Senior Credit Facility Agreement dated December 20, 2021 8-K 8/18/21 10.1 10.15 Fourth Amendment to Amended and Restated Senior Secured Credit Agreement dated August 31, 2021 8-K 9/7/21 10.1 10.16 Fifth Amendment to Amended and Restated Senior Secured Credit Agreement dated October 8, 2021 8-K 10/8/21 10.1 57 Table of Contents 10.17 Sixth Amendment to Amended and Restated Senior Secured Credit Agreement dated November 5, 2021 8-K 11/5/21 10.1 10.18 Seventh Amendment to an Amended and Restated Senior Secured Credit Agreement dated December 23, 2021 8-K 12/29/21 10.1 10.19 Eighth Amendment to an Amended and Restated Senior Secured Credit Agreement dated January 26, 2022 8-K 1/20/22 10.1 10.20 Ninth Amendment to an Amended and Restated Senior Secured Credit Agreement dated February 11, 2022 8-K 2/17/22 10.1 10.21 Annex A to the Credit Agreement dated February 11, 2022 8-K 2/17/22 10.2 10.22 Tenth Amendment to an Amended and Restated Senior Secured Credit Agreement dated March 11, 2022 8-K 3/16/22 10.1 10.23 Annex A to the Credit Agreement dated March 11, 2022 8-K 3/16/22 10.2 10.24 Eleventh Amendment to an Amended and Restated Senior Secured Credit Agreement dated March 25, 2022 8-K 3/31/22 10.1 10.25 Annex A to the Credit Agreement dated March 25, 2022 8-K 3/31/22 10.2 10.26 Twelfth Amendment to an Amended and Restated Senior Secured Credit Agreement dated April 15, 2022 8-K 4/20/22 10.1 10.27 Annex A to the Credit Agreement dated April 15, 2022 8-K 4/20/22 10.2 10.28 Thirteenth Amendment to an Amended and Restated Senior Secured Credit Agreement dated May 10, 2022 8-K 5/16/22 10.1 10.29 Annex A to the Credit Agreement dated May 10, 2022 8-K 5/16/22 10.2 10.30 Fourteenth Amendment to an Amended and Restated Senior Secured Credit Agreement dated June 10, 2022 8-K 6/16/22 10.1 10.31 Annex A to the Credit Agreement dated June 10, 2022 8-K 6/16/22 10.2 10.32 Fifteenth Amendment to an Amended and Restated Senior Secured Credit Agreement dated July 8, 2022 8-K 7/13/22 10.1 10.33 Annex A to the Credit Agreement dated July 8, 2022 8-K 7/13/22 10.2 10.34 Sixteenth Amendment to an Amended and Restated Senior Secured Credit Agreement dated February 10, 2023 8-K 2/16/23 10.1 10.35 Annex A to the Credit Agreement dated February 10, 2023 8-K 2/16/23 10.2 10.36 Seventeenth Amendment to Amended and Restated Senior Secured Credit Agreement, dated April 20, 2023 8-K 4/23/23 10.1 10.37 Eighteenth Amendment to Amended and Restated Senior Secured Credit Agreement, dated July 28, 2023 10-K 4/1/24 10.34 10.38 Nineteenth Amendment to Amended and Restated Senior Secured Credit Agreement, dated July 28, 2023 8-K 8/3/23 10.1 10.39 Annex A to the Credit Agreement, dated July 28, 2023 8-K 8/3/23 10.2 10.40 Twentieth Amendment to Amended and Restated Senior Secured Credit Agreement, dated June 30, 2024 10-Q 8/14/24 10.1 10.41 Annex A to the Credit Agreement, dated June 30, 2024 10-Q 8/14/24 10.2 10.42 Twenty-First Amendment to Amended and Restated Senior Secured Credit Agreement, dated December 26, 2024 X 10.43 Annex A to the Credit Agreement, dated December 26, 2024 X 10.44 Employment Agreement dated October 2, 2023 by and between the Company and Ethan Rudin 10-K 4/1/24 10.37 10.45 Employment Agreement dated December 1, 2024 by and between the Company and Matthew Drinkwater X 58 Table of Contents 10.46 Separation Agreement by and between the Company and W. Kip Speyer, executed June 29, 2024 10-Q 8/14/24 10.3 10.47 Separation Agreement by and between the Company and Harry Schulman, executed June 30, 2024 10-Q 8/14/24 10.4 14.1 Code of Ethics X 19.1 Insider Trading Policies and Procedures (contained in Exhibit 14.1) X 21.1 List of subsidiaries 10-K 4/1/24 21.1 23.1 Consent of WithumSmith+Brown, PC X 31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) X 31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) X 32.1* Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to Section 1350 X 32.2* Certification of the Chief Financial Officer and Principal Financial and Accounting Officer pursuant to Section 1350 X 101.INS Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document X 101.SCH Inline XBRL Taxonomy Extension Schema with Embedded Linkbase Documents X 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) X * This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference. 59 Table of Contents SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. BRIGHT MOUNTAIN MEDIA, INC. Date: March 10, 2025 By: /s/ Matthew Drinkwater Matthew Drinkwater Interim Chairman of the Board and Chief Executive Officer (Principal Executive Officer) Date: March 10, 2025 By: /s/ Ethan Rudin Ethan Rudin Chief Financial Officer (Principal Financial and Accounting Officer) Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: March 10, 2025 By: /s/ Matthew Drinkwater Matthew Drinkwater Interim Chairman of the Board and Chief Executive Officer Date: March 10, 2025 By: /s/ Elaine Riddell Elaine Riddell Director Date: March 10, 2025 By: /s/ Joseph Pergola Joseph Pergola Director Date: March 10, 2025 By: /s/ Thomas Triscari Thomas Triscari Director Date: March 10, 2025 By: /s/ Jeff Hirsch Jeff Hirsch Director 60 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID #100) F - 2 Consolidated balance sheets at December 31, 2024 and 2023 F - 7 Consolidated statements of operations and comprehensive loss for the years ended December 31, 2024 and 2023 F - 8 Consolidated statements of changes in stockholders’ deficit for the years ended December 31, 2024 and 2023 F - 9 Consolidated statements of cash flows for the years ended December 31, 2024 and 2023 F - 10 Notes to the consolidated financial statements F - 11 F- 1 Table of Contents Report of Independent R egistered Public Accounting Firm Board of Directors and Shareholders of Bright Mountain Media, Inc. Opinion on the Consolidated Financial Statements We have audited the accompanying consolidated balance sheets of Bright Mountain Media, Inc. (the “Company”) as of December 31, 2024 and 2023, and the related consolidated statements of operations and comprehensive loss, change in stockholders’ deficit and cash flows for each of the years ended December 31, 2024 and 2023, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of Bright Mountain Media, Inc. as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the period ended,in conformity with accounting principles generally accepted in the United States of America. Substantial Doubt Regarding the Company’s Ability to Continue as a Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a net capital deficiency that raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to Bright Mountain Media, Inc. in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Bright Mountain Media, Inc. is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. Critical Audit Matters The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate. Revenue Recognition – Refer to Note 2 and Note 14 to the financial statements Critical Audit Matter Description The Company derives revenue from five revenue streams which include (i) digital advertisements on its owned and managed sites and on partner website, (ii) fees for facilitating exchange of advertisements, (iii), planning and execution of creative and media marketing campaigns, (iv) provision of creative and media services to advertisers, and (v), providing primary and secondary research, intelligence, and insights to address strategic issues by providing an integrated service for such research. F- 2 Table of Contents The Company recognizes the first and second revenue stream at a point in time as advertisements are delivered. The Company recognizes the third and fourth revenue stream as services are rendered over time based on the signed contract terms which includes the service period. The Company recognizes the fifth revenue stream as services are rendered by applying the percentage of completion method on a cost-to-cost basis to measure progress toward satisfaction of performance obligation. Progress toward satisfaction of the performance obligation is measured based on costs incurred to-date relative to the total estimated costs expected to be incurred in providing services. In determining revenue recognition for these customer agreements, the Company performs the following five steps: (i) identify the contract with customer (ii) identify the performance obligation in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when the Company satisfies a performance obligation. We identified revenue recognition as a critical audit matter due to significant management estimates and judgments inherently required in determining revenue to be recognized. This in turn led to an especially high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the reasonableness of management’s significant estimates and assumptions surrounding revenue recognition. How the Critical Audit Matter Was Addressed in the Audit Our principal audit procedures related the Company’s revenue recognition for these revenue streams included the following: • Digital Publishing and Advertising Technology o We performed a walkthrough of the design effectiveness and implementation of internal controls with respect to the Company’s revenue and cash receipts cycle. o We selected a sample of customer agreements and performed the following procedures: ▪ Obtained and read a sample of contract source documents for each selection as well as amendments thereto. ▪ We obtained an understanding of the performance obligations associated with the Company’s revenue contracts, such as number of ads displayed, consumer clicks on the ads, or consumer actions that were required by the contract. ▪ We tested the transaction price within the contract, which was represented by the amount of impressions that must be delivered by the Company. ▪ We determine that the allocation of the transaction price was to a single performance obligation. ▪ We obtained the amount of impressions delivered by the Company to the customer from the third party ad server data to test the appropriateness of recognized revenue with the terms of the contract. o We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements. • Creative and Media Services o We performed a walkthrough of the design effectiveness and implementation of internal controls with respect to the Company’s revenue and cash receipts cycle. o We selected a sample of customer agreements and performed the following procedures: ▪ Obtained and read the contract source documents for each selection as well as amendments thereto. ▪ We obtained an understanding of the performance obligations associated with the Company’s revenue contracts. ▪ We tested the transaction price within the contract, which was represented by the total value for creative and media services that must be delivered by the Company. ▪ We determine that the allocation of the transaction price was to a single performance obligation. ▪ We tested the appropriateness of recognized revenue with the terms of the contract. o We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements. • Consumer Insights F- 3 Table of Contents o We performed a walkthrough of the design effectiveness and implementation of internal controls with respect to the Company’s revenue and cash receipts cycle. o We selected a sample of customer agreements and performed the following procedures: ▪ Obtained and read a sample of contract source documents for each selection as well as amendments thereto. ▪ We obtained an understanding of the performance obligations associated with the Company’s revenue contracts. ▪ We tested the transaction price within the contract, which was represented by the total value for consumer insights that must be delivered by the Company. ▪ We determine that the allocation of the transaction price was to a single performance obligation. ▪ We tested the properness of recognized revenue with the terms of the contract by evaluating the underlying budgeted costs and actual costs that drive the percent of the total contract value recognized during the year. o To evaluate the completeness and accuracy of the underlying reports utilized to calculate costs incurred by project we performed the following procedures: ▪ Obtained the third-party vendor and payroll costs and agreed them to the general ledger. ▪ Tested the cost allocation by verifying the third-party vendor invoice details to project details. ▪ Compared the internal tracking system to the general ledger and recalculated the labor rate applied to projects utilizing the third-party payroll report, which was tested separately. ▪ Analyzed both the system generated and management updated percentages of completion from the reports obtained. ▪ Traced and agreed accrued amounts from the reports to the general ledger. o We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements. Valuation of Intangible Assets and Goodwill - Refer to Notes 2, 6, and 7 to the financial statements Critical Audit Matter Description As reflected in the Company’s financial statements at December 31, 2024 the Company’s intangible assets and goodwill were approximately $13.4m and $7.8m, respectively. As disclosed in Note 2 to the financial statements, the Company tests intangible assets at the asset group level and goodwill at the reporting unit level for impairment on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, which are determined through a qualitative assessment. A qualitative assessment includes consideration of the economic, industry and market conditions in addition to the overall financial performance of the Company and these assets. If the qualitative assessment does not conclude that it is more likely than not that the estimated fair value of the reporting unit is greater than the carrying value, the Company performs a quantitative analysis. In a quantitative test, the fair value of a reporting unit is determined based on a discounted cash flow analysis and further analyzed using other methods of valuation. A discounted cash flow analysis requires the Company to make various assumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s long-term projections. Assumptions used in the Company’s impairment testing are consistent with the Company’s internal forecasts and operating plans. The Company’s discount rate is based on the Company’s debt structure, adjusted for current market conditions. If the fair value of the reporting unit exceeds its carrying amount, there is no impairment. To the extent the carrying amount exceeds its fair value, an impairment charge of the reporting unit’s intangible assets and goodwill would be necessary. F- 4 Table of Contents We identified the evaluation of the Company’s impairment test of goodwill and intangible assets as a critical audit matter due to significant management estimates and judgments inherently required in determining the fair value estimates. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the reasonableness of management’s significant estimates and assumptions, several of which extend many years into the future. Additionally, the audit effort involved the use of professionals with specialized skill and knowledge. How the Critical Audit Matter Was Addressed in the Audit We read and evaluated the impairment analysis summary report, prepared by the Company's external valuation specialists that assessed the fair value of the Company's intangible assets and goodwill as of December 31, 2024. We performed a walk-through of the design effectiveness and implementation of internal controls related to financial reporting of the intangible assets and goodwill. Additional procedures included testing management's process for developing their impairment estimate, which included evaluating the appropriateness of the method used by the Company to develop cash flow projections for intangible assets and goodwill, as well as testing the completeness and accuracy of the underlying data used in the estimates. In addition, we evaluated the reasonableness of significant assumptions including future sales, long-term growth rates, and future economic conditions and performed sensitivity testing on some assumptions. We evaluated these assumptions for their reasonableness considering (i) historical performance; (ii) industry and economic forecast and (iii) whether the assumptions were consistent with evidence obtained in other areas of the audit. Along with the procedures previously described, we performed the following procedures: • We utilized the knowledge, experience, and expertise of our internal valuation specialists to execute the planned audit procedures related to the valuation by assessing the reasonableness of the methodologies employed to value the intangible assets and goodwill. • We reviewed the professional qualifications and objectivity/independence of the external valuation specialist. • We tested the underlying assumptions presented in the impairment assessment as it relates to projections. Accounting and Valuation for Debt Modifications and Extinguishment - Refer to Note 10 to the financial statements Critical Audit Matter Description During the year ended December 31, 2024, the Company entered into various amendments to the credit facility for additional loans used for working capital. Part of the amendments include fees that would be added and capitalized into the principal amount of the original loan. The Company is required to perform an analysis of the change in each amendment to determine whether the change is a modification or an extinguishment of debt. Under a modification, no gain or loss is recorded, and a new effective interest rate is established based on the carrying value of the debt and revised cash flow. If the debt is extinguished, the old debt is derecognized and the new debt is recorded as fair value, which becomes the new carrying value. We identified the evaluation of the Company's accounting for debt modification and the valuation of the debt as a critical audit matter due to due to significant complex calculations inherently required in determining proper accounting treatment and the fair value of debt. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the reasonableness of management’s assumptions and calculations. Additionally, the audit effort involved the use of professionals with specialized skill and knowledge. How the Critical Audit Matter Was Addressed in the Audit We read and evaluated the debt modification and extinguishment analysis report, prepared by the Company's external valuation specialist that assessed each amendment to the credit agreement. There was a total of two amendments that were executed during the year. For each of the amendments, the external valuation specialist calculated the present value of the cash flows under the terms of each amendment and determined if it was considered substantially different by at least a 10% difference from the present value of the remaining cash flow of the debt instrument subsequent to the extinguishment that took place during the year ended December 31, 2023. We performed a walk-through of the design effectiveness and implementation of internal controls related to financial reporting of the debt cycle. Along with the procedures previously described, we performed the following procedures: • We agreed data from the authorized amendments to the analysis performed by the external valuation specialist. • We tested the external valuation analysis for clerical accuracy and completeness. F- 5 Table of Contents • We utilized the knowledge, experience, and expertise of our internal valuation specialists to assess the reasonableness of the methodologies employed to value the calculate the present values of the debt instrument under the amended terms and terms subsequent to the extinguishment that took place during the year-ended December 31, 2023. • We reviewed the professional qualifications and objectivity/independence of the external valuation specialist. • We independently performed a calculation of the present value of the debt instrument under the new terms from each of the amendments and the terms subsequent to the extinguishment that took place during the year-ended December 31, 2023. of the debt instrument to evaluate whether the external valuation specialist’s conclusion were reasonable and consistent with our conclusion. /s/ WithumSmith+Brown, PC We have served as the Company's auditor since 2021. New York, New York March 10, 2025 PCAOB ID Number 100 F- 6 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. CONSOLIDATE D BALANCE SHEETS (in thousands, except share and per share data) December 31, 2024 December 31, 2023 Assets Current assets: Cash and cash equivalents $ 2,546 $ 4,001 Restricted cash 1,861 - Accounts receivable, net 15,033 14,679 Prepaid expenses and other current assets 859 1,057 Total current assets 20,299 19,737 Property and equipment, net 69 199 Intangible assets, net 13,406 15,234 Goodwill 7,785 7,785 Operating lease right-of-use assets 253 306 Other long-term assets 158 156 Total assets $ 41,970 $ 43,417 Liabilities and Stockholders' Deficit Current liabilities: Accounts payable and accrued expenses $ 22,667 $ 17,497 Other current liabilities 4,401 3,025 Interest payable - 10 % convertible promissory notes - related party - 39 Interest payable - Centre Lane senior secured credit facility - related party 21 - Deferred revenue 2,883 4,569 Note payable - 10 % convertible promissory notes, net of discount - related party - 80 Note payable - Centre Lane senior secured credit facility - related party (current) 3,808 5,592 Total current liabilities 33,780 30,802 Other long-term liabilities 169 325 Note payable - Centre Lane senior secured credit facility - related party (long-term) 71,043 58,674 Finance lease liabilities 20 42 Operating lease liabilities 185 239 Total liabilities 105,197 90,082 Stockholders' deficit: Convertible preferred stock, par value $ 0.01 , 20,000,000 shares authorized, no shares issued or outstanding at December 31, 2024 and December 31, 2023, respectively - - Common stock, par value $ 0.01 , 324,000,000 shares authorized, 177,464,827 and 172,103,134 issued, and 176,114,652 and 171,277,959 outstanding at December 31, 2024 and December 31, 2023, respectively 1,775 1,721 Treasury stock at cost, 1,350,175 and 825,175 shares at December 31, 2024 and December 31, 2023, respectively ( 220 ) ( 220 ) Additional paid-in capital 101,798 101,405 Accumulated deficit ( 166,857 ) ( 149,833 ) Accumulated other comprehensive income 277 262 Total stockholders' deficit $ ( 63,227 ) $ ( 46,665 ) Total liabilities and stockholders' deficit $ 41,970 $ 43,417 See accompanying notes to consolidated financial statements. F- 7 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. CONSOLIDATED STATEMENTS OF OPER ATIONS AND COMPREHENSIVE LOSS (in thousands, except share and per share data) Year Ended December 31, 2024 December 31, 2023 Revenue $ 56,681 $ 44,546 Cost of revenue 40,221 31,766 Gross margin 16,460 12,780 General and administrative expenses 21,378 22,522 Impairment of goodwill and intangible assets - 17,070 Loss from operations ( 4,918 ) ( 26,812 ) Financing and other expense: Other income 547 437 Interest expense - 10 % convertible promissory notes - related party ( 4 ) ( 20 ) Interest expense - Centre Lane senior secured credit facility - related party ( 12,610 ) ( 9,142 ) Other interest expense ( 39 ) ( 27 ) Total financing and other expense, net ( 12,106 ) ( 8,752 ) Net loss before income tax ( 17,024 ) ( 35,564 ) Income tax provision - - Net loss $ ( 17,024 ) $ ( 35,564 ) Foreign currency translation 15 145 Comprehensive loss $ ( 17,009 ) $ ( 35,419 ) Net loss per common share: Basic $ ( 0.10 ) $ ( 0.22 ) Diluted $ ( 0.10 ) $ ( 0.22 ) Weighted average shares outstanding: Basic 171,199,036 164,845,671 Diluted 171,199,036 164,845,671 See accompanying notes to consolidated financial statements. F- 8 Table of Contents Bright Mountain Media, Inc. Consolidated Statements of Changes in Stockhold ers' Deficit (in thousands, except share and per share data) Common Stock Treasury Stock Additional Paid-in Accumulated Accumulated Other Comprehensive Total Stockholders' Shares Amount Shares Amount Capital Deficit Income Deficit Balance at December 31, 2022 150,444,636 $ 1,504 ( 825,175 ) $ ( 220 ) $ 98,797 $ ( 114,269 ) $ 117 $ ( 14,071 ) Net loss - - - - - ( 35,564 ) - ( 35,564 ) Adjustment to common stock for Oceanside acquisition ( 23,495 ) - - - - - - - Common stock issued for options exercised 90,000 1 - - - - - 1 Stock-based compensation - - - - 196 - - 196 Common stock issued to Centre Lane Partners 21,401,993 214 - - 1,712 - - 1,926 Common stock issued for services rendered 190,000 2 - - 29 - - 31 Extinguishment of Centre Lane Credit Facility - - - - 671 - - 671 Adjustment from foreign currency translation, net - - - - - - 145 145 Balance at December 31, 2023 172,103,134 1,721 ( 825,175 ) ( 220 ) 101,405 ( 149,833 ) 262 ( 46,665 ) Net loss - - - - - ( 17,024 ) - ( 17,024 ) Common stock issued for options exercised 80,250 1 - - 1 - - 2 Common stock issued to Centre Lane Partners 5,001,991 50 - - 125 - - 175 Common stock issued for services rendered 279,452 3 - - 13 - - 16 Treasury stock - - ( 525,000 ) - - - - - Stock-based compensation - - - - 254 - - 254 Adjustment from foreign currency translation, net - - - - - - 15 15 Balance at December 31, 2024 177,464,827 $ 1,775 ( 1,350,175 ) $ ( 220 ) $ 101,798 $ ( 166,857 ) $ 277 $ ( 63,227 ) See accompanying notes to consolidated financial statements. F- 9 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. CONSOLIDATED STATEME NTS OF CASH FLOWS (in thousands, except share and per share data) December 31, 2024 December 31, 2023 Cash flows from operating activities: Net loss $ ( 17,024 ) $ ( 35,564 ) Adjustments to reconcile net loss to net cash used in operations: Depreciation expense 127 125 Interest paid-in-kind on Centre Lane senior secured credit facility - related party 9,353 6,656 Amortization of operating lease right-of-use assets 67 61 Amortization of debt discount 2,697 2,074 Amortization of intangible assets 1,924 2,490 Impairment of goodwill and intangible assets - 17,070 Stock-based compensation 254 196 Common stock issued for services rendered 16 31 Provision for credit losses 15 58 Changes in operating assets and liabilities: Accounts receivable ( 369 ) 1,325 Prepaid expenses and other assets 198 360 Operating lease liabilities ( 53 ) ( 54 ) Accounts payable and accrued expenses 5,176 735 Other liabilities 1,201 472 Interest payable - Centre Lane senior secured credit facility - related party 21 - Interest payable - 10 % convertible promissory notes - related party ( 39 ) 8 Deferred revenue ( 1,686 ) ( 701 ) Net cash provided by (used in) operating activities 1,878 ( 4,658 ) Cash flows from investing activities: Purchase of property and equipment ( 14 ) ( 14 ) Capitalization of website development ( 96 ) - Net cash used in investing activities ( 110 ) ( 14 ) Cash flows from financing activities: Proceeds from stock option exercises 1 1 Principal payments on finance lease liabilities ( 18 ) ( 4 ) Proceeds from Centre Lane senior secured credit facility - related party 1,861 8,626 Repayment of principal on Centre Lane senior secured credit facility - related party ( 3,125 ) ( 270 ) Repayment of principal on 10 % convertible promissory notes - related party ( 80 ) - Net cash (used in) provided by financing activities ( 1,361 ) 8,353 Effect of foreign exchange rates on cash ( 1 ) 4 Net increase in cash, cash equivalents, and restricted cash 406 3,685 Cash, cash equivalents, and restricted cash at the beginning of the period 4,001 316 Cash, cash equivalents, and restricted cash at the end of the period $ 4,407 $ 4,001 Reconcilation of cash, cash equivalents, and restricted cash to the consolidated balance sheet: Cash and cash equivalents 2,546 4,001 Restricted cash 1,861 - Total cash, cash equivalents, and restricted cash $ 4,407 $ 4,001 Supplemental disclosure of cash flow information: Cash paid for interest 539 425 Interest paid-in-kind on Centre Lane senior secured credit facility - related party 9,353 6,656 Supplemental disclosure of non-cash investing and financing activities: Recognition of right-of-use assets and operating lease liabilities - 64 Agency and exit fees to Centre Lane for debt financing 505 917 Annual administration fee to Centre Lane for debt financing 35 35 Issuance of common stock to Centre Lane for debt financing 175 1,926 Issuance of debt to finance acquisition of Big Village Entities - 19,874 Extinguishment of Centre Lane credit facility - 671 See accompanying notes to consolidated financial statements. F- 10 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDA TED FINANCIAL STATEMENTS NOTE 1 – DESCRIPTION OF BUSINESS Organization and Nature of Operations Bright Mountain Media, Inc. (together with its wholly-owned subsidiaries, the “Company,” “Bright Mountain” or “we”) is an end-to-end digital media and advertising services company that efficiently connects brands with targeted consumer demographics. We focus on digital publishing, advertising technology, consumer insights, and creative services, and media services. During the year ended December 31, 2023, the Company completed the acquisition of two business units of Big Village (Big Village Insights, Inc., and Big Village Agency LLC (together, referred to as the "Big Village Entities")), in an all-cash transaction funded by the Centre Lane senior secured credit facility (the "Big Village Acquisition"). Digital Publishing Our digital publishing division focuses on developing content that attracts an audience and monetizes that audience through advertising. The current portfolio of owned and operated websites is focused on moms, parenting, families, and more broadly, women. The portfolio consists of popular websites including Mom.com, Cafemom.com, LittleThings.com, and MamasLatinas.com. This demographic is highly sought after by brands and their advertising agencies. We use internal and external technologies to constantly improve the effectiveness and efficiency of the content we create. Our publishing division monetizes its audiences through both direct and programmatic advertising sales. Advertising Technology Our advertising technology division focuses on delivering targeted ads to audiences on owned and operated sites as well as third-party publishers in a cost-effective manner through the deployment of proprietary technologies. By developing our own proprietary technology stack, we are able to pass along efficiencies to both the demand and supply side of the ecosystem. Our goal is to enable and support a streamlined, end-to-end advertising model that addresses both demand (buy side) and publisher supply (sell side) programmatic sales and delivery of digital advertisements using an array of audience targeting tools and advertising formats (display, audio, video, CTV, in-app). Programmatic advertising relies on software programs that leverage data and proprietary algorithms to match the optimal selection of an ad with a bid price offered by advertisers. Consumer Insights Our consumer insights division focuses on providing primary and secondary research and competitive intelligence to address customers' strategic issues. We provide cutting-edge and dynamic research, offering clients a comprehensive perspective on their consumers. This insight extends to strategic guidance on the optimal timing and channels to effectively connect with target audiences. Our cutting-edge approach combines advanced data analytics, artificial intelligence, and comprehensive market research, to uncover actionable insights that drive informed decision-making. Creative Services Our creative services division transforms data into award-winning campaigns. We are uniquely able to leverage insights teams with highly strategic media planning and buying teams to ensure brands not only position their advertising precisely, but also yield impactful business results. Our goal is to combine data-driven decisions with creativity fueled by a deep understanding of modern culture. Media Services Our media services division focuses on advertisers and agencies by providing access to premium inventory, leveraging data to optimize programmatic campaigns. Our aim is to empower clients to access the most sought-after advertising spaces across diverse platforms tailored to their specific needs and preferences. Our data-driven approach aims to ensure that ad placements are not only well-targeted, but also continuously optimized for maximum efficiency and ROI. Our commitment to combining premium inventory access with data-driven programmatic campaign optimization makes us a valuable partner in the success of our clients' advertising and marketing endeavors. F- 11 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The Company generates revenue through: • the selling of advertisements placed on our owned and managed sites and on partner websites where we earn a share of the revenue; • fees for facilitating the seamless, real-time exchange of advertisements on a large scale, bridging networks of buyers (referred to as "DSPs") and networks of sellers (referred to as "SSPs"); • serving advertisers through providing access to premium resources and leveraging data to optimize programmatic campaigns, where revenue is derived from the planning and execution of creative and media marketing campaigns; • providing primary and secondary research, competitive intelligence, and expert insights to address customers' strategic issues, where revenue is primarily derived from providing a single integrated service for such research; and • provision of creative and media services to advertisers. NOTE 2 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) and include the accounts of the Company and all its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation, including revenue and cost of revenue for services performed by a subsidiary company. Going Concern and Liquidity Historically, the Company has incurred losses, which has resulted in an accumulated deficit of approximately $ 166.9 million as of December 31, 2024. Cash flows provided by (used in) operating activities were $ 1.9 million and $( 4.7 ) million for the years ended December 31, 2024 and 2023, respectively. As of December 31, 2024, the Company had a working capital deficit of approximately $ 13.5 million inclusive of $ 2.5 million in cash and cash equivalents and $ 1.9 million in restricted cash. The Company’s ability to continue as a going concern is dependent upon its ability to meet its liquidity needs through a combination of factors. The Company is currently exploring several strategic alternatives, including restructuring or refinancing its debt, or seeking additional debt, including borrowing under the Centre Lane Senior Secured Credit Facility or raising equity capital. The ability to access the capital markets is also dependent upon the stock volume and market price of the Company's stock, which cannot be assured. Other measures include reducing or delaying certain business activities, reducing general and administrative expenses, including a reduction in headcount. The ultimate success of these plans is not guaranteed. The Company's current cash and working capital is not expected to be sufficient to fund its anticipated level of operations over the next twelve months. As a result, such matters create a substantial doubt regarding the Company’s ability to meet its financial needs and continue as a going concern. The accompanying consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about the Company’s ability to continue as a going concern. Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when acquired, to be cash equivalents. The Company maintains its cash with various commercial banks in the U.S. and other foreign countries in which the Company operates. As of December 31, 2024 , the Company exceeded the federally insured limits of $ 250,000 for interest and non-interest-bearing accounts. The Company held a cash balance with a single financial institution in excess of the FDIC insured limit in the amount of $ 2.3 million as of December 31, 2024. The Company held a cash balance with a single financial institution in excess of the FDIC insured limit in the amount of $ 3.7 million as of December 31, 2023. As of December 31, 2023, the Company exceeded the insurance li mit of $ 29,000 for o ne of its international bank accounts by $ 31,000 . The Company did not exceed the insurance limit of its international bank accounts as of December 31, 2024. F- 12 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows. At December 31, 2024, and 2023, the Company had $ 2.5 million and $ 4.0 million , respectively, in cash and cash equivalents. Restricted Cash The Company considers cash to be restricted when withdrawal or general use is legally restricted. The Company reports restricted cash as a separate item in the consolidated balance sheets. At December 31, 2024, the Company had $ 1.9 million in restricted cash, consisting of cash restricted for settlement of judgment purposes. See Note 17, Commitments and Contingencies, to the consolidated financial statements. At December 31, 2023, the Company did no t have restricted cash. Accounts Receivable and Allowances Accounts receivable represent receivables from customers in the ordinary course of business and are recorded in accordance with FASB Accounting Standards Codification No. 310, Receivables, (ASC 310) . Receivables are recorded at the invoice amount on the date revenue is recognized and are presented net of the allowance for current expected credit losses in the accompanying consolidated balance sheets. Certain receivables are subject to adjustments from traffic settlements that are deducted from open invoices. Our receivables are not interest bearing and are not collateralized. Unbilled receivables are the results of timing differences between billings to clients and are included in accounts receivable. The allowance for current expected credit losses is based on our assessment of the collectability of customer accounts. We regularly review our receivables that remain outstanding past their applicable payment terms and establish an allowance for potential write-offs by considering factors including historical experience, credit quality, age of the accounts receivable balances, and current and forecasted economic conditions that may affect a customer’s ability to pay. The allowance for current expected credit losses is accounted for in line with ASC 310. The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company are exhausted, the determination for charging off uncollectible receivables is made. Expected credit losses are recorded as general and administrative expenses on our consolidated statements of operations and comprehensive loss. Property and Equipment, net Property and equipment are recorded at cost, less accumulated depreciation in accordance with FASB Accounting Standards Codification No. 360, Property, Plant and Equipment, (ASC 360) . Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets. Leasehold improvements and assets under finance lease are amortized over the lesser of the lease term or the useful life of the improvements. When assets are sold or retired, the applicable cost and accumulated depreciation or amortization are removed from the accounts. The resulting gains or losses are reflected in the combined statements of operations and comprehensive loss. Goodwill We account for goodwill under FASB Accounting Standards Codification No. 350, Goodwill and Other, (ASC 350). Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. We allocate goodwill to reporting units based on the expected benefit from a business combination. The Company categorizes goodwill into three reporting units: “Owned & Operated”, “Ad Network” and “Insights”. Goodwill is tested for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, which are determined through a qualitative assessment. F- 13 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS A qualitative assessment includes consideration of the economic, industry, and market conditions in addition to the overall financial performance of the Company and these assets. If our qualitative assessment does not conclude that it is more likely than not that the estimated fair value of the reporting unit is greater than the carrying value, we perform a quantitative analysis. In a quantitative test, the fair value of a reporting unit is determined based on a discounted cash flow analysis and further analyzed using other methods of valuation. A discounted cash flow analysis requires us to make various assumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on our long-term projections. Assumptions used in our impairment testing are consistent with our internal forecasts and operating plans. Our discount rate is based on our debt structure, adjusted for current market conditions. If the fair value of the reporting unit exceeds its carrying amount, there is no impairment. To the extent the carrying amount exceeds its fair value, an impairment charge of the reporting unit’s goodwill would be necessary. See Note 7, Goodwill, to the consolidated financial statements for details regarding goodwill impairment. Intangible Assets We account for intangibles under FASB Accounting Standards Codification No. 350, Goodwill and Other, (ASC 350). Intangible assets acquired in a business combination or an asset acquisition are recorded at fair value on the date of acquisition and amortized over their estimated useful lives. Intangible assets include trade name, customer relationships, IP/technology and non-compete agreements. The Company’s trade name is amortized on a straight-line basis over a useful life of 2 years to 10 years. Customer relationships are amortized on a straight-line basis over a useful life of 5 years to 10 years. IP/technology is amortized on a straight-line basis over a useful life of 10 years. Non-compete agreements are amortized on a straight-line basis over the length of each agreement, typically between 3 years to 5 years. The Company reviews for impairment indicators of finite-lived intangibles and other long-lived assets as described below in “Amortization and Impairment of Long-Lived Assets.” Amortization and Impairment of Long-Lived Assets Long-lived assets, such as property, equipment, right-of-use assets, and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted future net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management’s estimates, depending upon the nature of the assets. See Note 6, Intangible Assets, Net, to the consolidated financial statements for details regarding impairment of intangibles. Leases The Company determines whether an arrangement contains a lease at inception in accordance with FASB Accounting Standards Codification No. 842, Leases, (ASC 842) . A contract is, or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration. Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We do not include options to extend or terminate the lease term unless it is reasonably certain that we will exercise any such options. We recognize rent expense under our operating leases on a straight-line basis, variable lease costs such as operating costs and property taxes are expensed as incurred. For finance leases, we record interest expense on the lease liability in addition to amortizing the right-of-use asset (generally straight-line) over the shorter of the lease term or the useful life of the right-of-use asset. Finance leases are included in property and equipment, net and finance lease liabilities on our consolidated balance sheets. F- 14 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Revenue Recognition The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification No. 606, Revenue from Contracts with Customers, (ASC 606) . The Company recognizes revenue at a point in time when control is transferred to the customer or over time as a percentage of completion or otherwise in accordance with the terms of the contract. Cash received by the Company prior to when control of services is transferred to the customer is recorded as deferred revenue. To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the Company satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it provides to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the services promised within each contract and determines those that are performance obligations and assesses whether each promised service is distinct. The Company then recognizes revenue when (or as) the performance obligation is satisfied. The Company generates revenue through: • the selling of advertisements placed on our owned and managed sites and on partner websites where we earn a share of the revenue; • fees for facilitating the seamless, real-time exchange of advertisements on a large scale, bridging networks of buyers (referred to as "DSPs") and networks of sellers (referred to as "SSPs"); • serving advertisers through providing access to premium resources and leveraging data to optimize programmatic campaigns, where revenue is derived from the planning and execution of creative and media marketing campaigns; • providing primary and secondary research, competitive intelligence, and expert insights to address customers' strategic issues, where revenue is primarily derived from providing a single integrated service for such research; and • provision of creative and media services to advertisers. Digital publishing and advertising technology revenues are generated by audiences seeing or clicking on digital advertisements utilizing several advertising partners. The Company recognizes revenue once the performance obligation is satisfied at a point in time, on a gross basis net of adjustments based on the number of advertisements delivered. Customers are billed monthly or billing is generated via custom content production and extensions on our social media platforms. Consumer insights revenues are generated by providing primary and secondary research, competitive intelligence, and expert insight to address customers' strategic issues. The Company recognizes revenue as the services are rendered, by applying the percentage of completion method on a cost-to-cost basis to measure progress toward satisfaction of the performance obligation. Progress toward satisfaction of the performance obligation is measured based on costs incurred to-date relative to the total estimated costs expected to be incurred in providing services. The Company does not include costs that do not contribute to its progress toward satisfying its promise to the customer. Creative services revenues are generated by delivering campaign services to customers. Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for the individual performance obligations separately if they are distinct. If recurring services are performed, the Company recognizes revenue as the services are rendered over time, generally on a ratable basis over the contract term beginning on the date that the service is made available to the customer. For campaign services that require a one-time deliverable, we recognize revenue once the performance obligation is satisfied at a point in time. F- 15 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Media services revenues are generated through the access to programmatic campaigns. The Company recognizes revenue as the services are rendered over time, on a ratable basis over the contract term, beginning on the date that the service is made available to the customer. There is no significant initial cost incurred to obtain contracts with customers. Deferred Revenue The Company records deferred revenue when cash payments are received or amounts are invoiced in advance of performance obligations. The Company expects to recognize deferred revenue in the period when it provides its services and, therefore, satisfies its performance obligation to the customer. Cost of Revenue Cost of revenue includes internal labor and payment to third parties for services performed to drive revenue, which includes the publisher cost paid for ad exchange on third party sites, advertising fees, personnel costs, technology and data related costs, fees paid for content creation, influencers, writers and sales commission. Website Development Costs The Company accounts for its website development costs in accordance with FASB Accounting Standards Codification No. 350, Website Development Costs (ASC 350) . These costs, if any, are included in intangible assets in the accompanying consolidated balance sheets. Upgrades or enhancements that add functionality are capitalized while other costs during the operating stage are expensed as incurred. The Company amortizes the capitalized website development costs over an estimated life of five years . During the year ended December 31, 2024, the Company performed enhancements to its website of approximately $ 96,000 . During the year ended December 31, 2023 , all website development costs were expensed. Advertising and Marketing Advertising and marketing expenses are recognized as incurred and are included in general and administrative expenses on the accompanying consolidated statements of operations and comprehensive loss. For the years ended December 31, 2024 and 2023, advertising and marketing expense was $ 134,000 and $ 257,000 , respectively. Stock Based Compensation We account for stock based compensation in accordance with FASB Accounting Standards Codification No. 718, Compensation - Stock Compensation (ASC 718) . ASC 718 addresses accounting for share-based awards, including stock options, restricted stock, performance shares and warrants. Stock-based compensation for stock option grants to employees and non-employees is based on the fair value of the award on the date of grant. We record forfeitures as they occur. The Company calculates stock compensation expense using the graded vesting method, which begins expensing each tranche on the expense begin date through the vesting date. This will result in front-loaded expenses, and is included in general and administrative expenses in the consolidated statements of operations. Compensation cost is recognized over the requisite service period, which is generally the vesting period, and is included in general and administrative expenses in the consolidated statements of operations. The Company estimates the fair value of stock options using the Black-Scholes valuation model. The expected life represents the term the options granted are expected to be outstanding. The expected volatility is determined using the historical volatility of similar publicly traded companies. The risk-free interest rate is based on the U.S. Treasury rate in effect at the time of grant. F- 16 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Treasury Stock The Company accounts for its treasury stock as set forth in FASB Accounting Standards Codification No. 505, Treasury Stock (ASC 505-30) . Under ASC 505-30 the total amount paid to acquire the stock is recorded and no gain or loss is recognized at the time of purchase. Gains and losses are recognized at the time the treasury stock is reinstated or retired and are recorded in additional paid-in capital or retained earnings. At December 31, 2024 and 2023 , the Company owned 1,350,175 and 825,175 shares of treasury stock, respectively. Loss Per Share The Company computes net loss per share in accordance with FASB Accounting Standards Codification No. 260, Earnings Per Share (ASC 260) . Under the provisions of ASC 260, basic net loss per share is computed by dividing the net loss available to common shareholders by the weighted average common shares outstanding during the period. Diluted net loss per share adjusts basic net loss per share for the effect of stock options, warrants, convertible notes and restricted stock awards only in periods, or for such awards in which the effect is dilutive. ASC 260 also requires the Company to present basic and diluted loss per share information separately for each class of equity instruments that participates in any income distribution with primary equity instruments . Deferred Debt Costs Deferred debt costs include costs incurred in connection with acquiring and maintaining debt arrangements. These costs are directly deducted from the carrying amount of the liability in the consolidated balance sheets, are amortized over the life of the related debt using the effective interest method and are classified as interest expense in the accompanying consolidated statements of operations. These deferred debt costs are related to the Company's Centre Lane Senior Secured Credit Facility. Income Taxes We use the asset and liability method to account for income taxes. Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws in the period those differences are expected to reverse. A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized. The Company follows the provisions of FASB Accounting Standards Codification No. 740, Income Taxes (ASC 740). When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax expenses are recognized as tax expenses in the consolidated statements of operations and comprehensive loss. Segment Reporting Consistent with FASB Accounting Standards Codification No. 280, Segment Reporting (ASC "280"), our Chief Financial Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. The Chief Financial Officer uses consolidated net income or loss and total assets when assessing segment performance and deciding how to allocate resources. There are no segment managers who are held accountable by the Chief Financial Officer, or anyone else, for operations, operating results and planning for levels or components below the consolidated unit level. The factors used to determine the Company’s reportable segments follow the guidance of ASC 280-10-50-21 and 280-10-50-22 and include consideration of the type of services delivered, the customers and end markets served, the applicable revenue recognition methodology and the length of time it takes to deliver services to customers. Our divisions are digital publishing, advertising technology, consumer insights, creative services, and media services, and due to their similar economic characteristics, we have determined that we have one operating and reportable segment. F- 17 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of our consolidated financial statements as well as reported amounts of revenue and expenses during the periods presented. Our consolidated financial statements would be affected to the extent there are material differences between these estimates and actual results. Significant estimates included in the accompanying consolidated financial statements include, valuation of goodwill and intangible assets, allowance for current expected credit losses, the determination of the relative selling prices of our services, percentage of completion for revenue recognition, estimates of amortization period for intangible assets, estimates of depreciation period for property and equipment, discount rates used in the valuation of right-of-use assets and lease liabilities, litigation reserves, the valuation of equity-based transactions, valuation of the Center Lane Senior Secured Credit Facility carrying value regarding debt modification or extinguishment, and the valuation allowance on deferred tax assets. While these estimates are based on our best knowledge of current events and actions that may affect us in the future, actual results may differ materially from these estimates. Foreign Currency We translate the consolidated financial statements of our foreign subsidiaries, which have a functional currency in the respective country’s local currency, to U.S. dollars using month-end exchange rates for assets and liabilities and actual exchange rates for revenue, costs and expenses on the date of the transaction. Translation gains and losses as a result of consolidation are included in accumulated other comprehensive loss. Transaction gains and losses are included within “general and administrative expense” on the consolidated statements of operations and comprehensive loss. Concentrations of Credit Risk Financial instruments that potentially subject us to concentration of credit risk consist principally of cash, cash equivalents, restricted cash and accounts receivable. We place our cash, cash equivalents, and restricted cash with high credit-quality financial institutions. Such deposits may be in excess of federally insured limits. In addition, the Company maintains various bank accounts in Thailand and Israel, with some level of insurance. We perform periodic evaluations of the relative credit standing of financial institutions. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows. We perform credit evaluations of our customers’ financial condition and require no collateral from our customers. We maintain an allowance for current expected credit losses based upon the expected collectability of accounts receivable balances. The Company generates revenue as follows: • selling of advertisements placed on the Company’s owned and managed sites, as well as from advertisements placed on partner websites, for which the Company earns a share of the revenue; • facilitating the real-time buying and selling of advertisements at scale between networks of buyers, known as DSPs and sellers known as SSPs; • serving advertisers and agencies by providing access to premium inventory and leveraging data to optimize programmatic campaigns, where revenue is derived from the planning and execution of creative and media marketing campaign; and • providing primary research and secondary research, competitive intelligence and expert insight to address customer's strategic issues, where revenue is primarily derived from providing a single integrated service for research. F- 18 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following table provides information about customer and vendor concentration that exceeds 10% of revenue, accounts receivable and accounts payable for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 December 31, 2023 Revenue Concentration Customers exceeding 10% of revenue 1 2 Percentage of revenue: Customer 1 12.2 % 13.0 % Customer 2 * 10.0 % Total percentage of revenue 12.2 % 23.0 % * Represents a customer revenue balance less than the 10% threshold. December 31, 2024 December 31, 2023 Accounts Receivable Concentration Customers exceeding 10% of accounts receivable 3 2 Percentage of accounts receivable: Customer 1 * 15.7 % Customer 2 * 10.5 % Customer 3 13.5 % * Customer 4 11.1 % * Customer 5 10.4 % * Total percentage of accounts receivable 35.0 % 26.2 % * Represents a customer accounts receivable balance less than the 10% threshold. Off-balance Sheet Arrangements There are no off-balance sheet arrangements as of December 31, 2024 and December 31, 2023 . Reclassification As of and for the year ended December 31, 2024, reclassification of certain accounts has been made to previously reported amounts to conform to their treatment to the current period. Specifically, the Company identified a reclassification for non-direct project cost from personnel cost under general and administrative expenses to cost of revenue on the consolidated statements of operations and comprehensive loss. These reclassifications had no impact on the previously reported net loss for the year ended December 31, 2023 . Effective Accounting Pronouncements Adopted In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. The FASB reduced the number of accounting models for convertible debt and convertible preferred stock instruments and made certain disclosure amendments to improve the information provided to users. The new standard was effective January 1, 2024 (early adoption was permitted, but not earlier than January 1, 2021). This standard did not have an impact on our consolidated financial statements for the period ended December 31, 2024. For 2024 annual reporting, we adopted Accounting Standards Update ASU No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures . This new standard requires an enhanced disclosure of significant segment expenses on an annual and interim basis, effective for fiscal years beginning after December 15, 2024. The adoption of ASU 2023-07 did no t have a significant impact on our consolidated financial statements for the period ended December 31, 2024. F- 19 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Accounting Pronouncements Not Yet Adopted In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , which improves the transparency of income tax disclosures by requiring consistent categories and greater disaggregation of information in the effective tax rate reconciliation and income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness of income tax disclosures. This new standard will be effective for the annual periods beginning the year ended December 31, 2025. The new standard permits early adoption and can be applied prospectively or retrospectively. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In November 2024, the FASB issued ASU No. 2024-03, Income Statement Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses . The new guidance requires disaggregated information about certain income statement expense line items on an annual and interim basis. This guidance will be effective for annual periods beginning the year ended December 31, 2027 and for interim periods thereafter. The new standard permits early adoption and can be applied prospectively or retrospectively. We are evaluating the effect that this guidance will have on our consolidated financial statements and related disclosures. NOTE 3 – ACCOUNTS RECEIVABLE Accounts receivable, net, consisted of the following: December 31, 2024 December 31, 2023 (in thousands) Accounts receivable $ 12,460 $ 13,799 Unbilled receivables (1) 2,698 1,252 15,158 15,051 Less: allowance for current expected credit losses ( 125 ) ( 372 ) Accounts receivable, net $ 15,033 $ 14,679 (1) Unbilled receivable represents amounts for services rendered at the end of the period pending generation of invoice to the customer. Accounts receivable, net at January 1, 2023 was $ 3.6 million. Expected credit losses (recoveries) were $ 15,000 , and $ 58,000 for the years ended December 31, 2024, and 2023 , respectively. These amounts are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss. NOTE 4 – PREPAID EXPENSE AND OTHER ASSETS Prepaid expenses and other assets consisted of the following: December 31, 2024 December 31, 2023 (in thousands) Prepaid insurance (1) $ 358 $ 618 Prepaid software 93 46 Deposits 158 156 Subscriptions 213 174 Other current assets (2) 195 219 Total prepaid costs and other assets 1,017 1,213 Less: other long-term assets ( 158 ) ( 156 ) Prepaid expenses and other current assets $ 859 $ 1,057 (1) Includes $ 291,000 and $ 618,000 which is being paid over a period of time and is included in accounts payable at December 31, 2024 and 2023, respectively. (2) Includes approximately $ 121,000 which is being paid over a period of time and is included in accounts payable at December 31, 2024 . F- 20 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 5 – PROPERTY AND EQUIPMENT, NET Property and equipment, net consisted of the following: Useful Life December 31, 2024 December 31, 2023 (in thousands) Furniture and fixtures 3 - 5 $ - $ 8 Computer equipment 3 76 190 Computer software 5 206 206 282 404 Less: accumulated depreciation ( 213 ) ( 205 ) Property and equipment, net $ 69 $ 199 Depreciation expense was $ 127,000 , and $ 125,000 for the years ending December 31, 2024, and 2023 , respectively and is included in general and administrative expenses on the consolidated statements of operations and comprehensive loss. NOTE 6 – INTANGIBLE ASSETS, NET Website acquisitions, net, consisted of the following: December 31, 2024 December 31, 2023 (in thousands) Website acquisition assets $ 1,125 $ 1,124 Add: website development costs 96 - 1,221 1,124 Less: accumulated amortization ( 1,127 ) ( 1,123 ) Website acquisition assets, net $ 94 $ 1 Other intangible assets, net, consisted of the following: December 31, 2024 December 31, 2023 Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Gross Carrying Amount Accumulated Amortization Net Carrying Amount (in thousands) Trade name 2 - 10 $ 8,381 $ ( 3,795 ) $ 4,586 $ 8,381 $ ( 3,167 ) $ 5,214 IP/technology 10 5,821 ( 2,575 ) 3,246 5,821 ( 2,180 ) 3,641 Customer relationships 5 - 10 13,380 ( 7,900 ) 5,480 13,380 ( 7,002 ) 6,378 Non-compete agreements 3 - 5 402 ( 402 ) - 402 ( 402 ) - Other intangible assets, net $ 27,984 $ ( 14,672 ) $ 13,312 $ 27,984 $ ( 12,751 ) $ 15,233 The Company performed an impairment assessment during the period ended December 31, 2023, and recorded an impairment loss of $ 2.9 million. There was no triggering event or impairment loss for the year ended December 31, 2024. December 31, 2023 December 31, 2024 Accumulated Amortization Impairment Loss Amortization Expense Accumulated Amortization (in thousands) Trade name $ 3,167 $ - $ 628 $ 3,795 IP/technology 2,180 - 395 2,575 Customer relationships 7,002 - 898 7,900 Non-compete agreements 402 - - 402 Other intangible assets, net $ 12,751 $ - $ 1,921 $ 14,672 During the year ended December 31, 2023, the Company acquired intangible assets through the acquisition of the Big Village Entities as follows: F- 21 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Useful Life Gross Carrying Amount (in thousands) Trade name 7 - 10 $ 5,622 Developed technology 10 3,838 Customer relationships 7 - 10 6,700 Acquired intangible assets $ 16,160 For further details on the Big Village Acquisition, see Note 13 , Business Combinations to the consolidated financial statements. December 31, 2024 December 31, 2023 (in thousands) Website $ 94 $ 1 Other intangible assets 13,312 15,233 Intangible assets, net $ 13,406 $ 15,234 Amortization expense for the years ended December 31, 2024, and 2023 was approximately $ 1.9 million , and $ 2.5 million , respectively, related to both the website acquisition costs and the intangible assets, and is included in general and administrative expense in the statements of operations and comprehensive loss. As of December 31, 2024, expected remaining amortization expense of intangible assets and website acquisition by fiscal year is as follows: 2025 $ 1,864 2026 1,788 2027 1,788 2028 1,788 Thereafter 6,178 Total expected amortization expense $ 13,406 NOTE 7 – GOODWILL The following table represents the allocation of goodwill as of December 31, 2024 and 2023: Owned & Operated Ad Network Insights Total (in thousands) December 31, 2022 $ 9,725 $ 9,920 $ - $ 19,645 Additions 1,357 - 907 2,264 Impairment ( 8,217 ) ( 5,907 ) - ( 14,124 ) December 31, 2023 2,865 4,013 907 7,785 Additions - - - - Impairment - - - - December 31, 2024 $ 2,865 $ 4,013 $ 907 $ 7,785 Goodwill acquired as part of the Big Village Acquisition totals $ 2.3 million and represents the value of unidentifiable intangible assets including assembled workforce and strategic benefits that are expected to be achieved. We allocate goodwill to reporting units based on the expected benefit and synergies with our current reporting units. The Company categorizes goodwill into three reporting units: “Owned & Operated”, “Ad Network” and “Insights”. See Note 13, Business Combinations to the consolidated financial statements. F- 22 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Goodwill is tested for impairment at least annually and if triggering events are noted prior to the annual assessment. Impairment is deemed to occur when the carrying value of the goodwill associated with the reporting unit exceeds the implied value of the goodwill associated with the reporting unit. At September 30, 2023 and December 31, 2023, an impairment assessment was performed on goodwill for Ad Network, Owned & Operating and Insights reporting units. The assessment used a qualitative assessment which includes consideration of the economic, industry and market conditions in addition to the overall financial performance of the Company and these assets. Our qualitative assessment concluded that it is more likely than not that the estimated fair value of the Ad Network and Owned & Operating reporting units was less than the carrying value, hence, we performed a quantitative analysis. Our assessment for Insights reporting unit did not have such conclusion, hence a quantitative analysis was not required. In a quantitative test, the fair value of a reporting unit is determined based on a discounted cash flow analysis and further analyzed using other methods of valuation. A discounted cash flow analysis requires us to make various assumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on our long-term projections. Assumptions used in our impairment testing are consistent with our internal forecasts and operating plans. Our discount rate is based on a market participant debt structure and cost of capital. If the fair value of the reporting unit exceeds its carrying amount, there is no impairment. To the extent the carrying amount exceeds its fair value, an impairment charge of the reporting unit’s goodwill would be necessary. Our quantitative analysis showed that the implied fair value of our goodwill for Ad Network and Owned & Operating reporting units is less than its carrying value which resulted in an impairment charge of approximately $ 14.1 million for the year ended December 31, 2023. At September 30, 2024, an impairment assessment was performed on goodwill for Ad Network, Owned & Operating and Insights reporting units. The assessment used a qualitative assessment, including consideration of the economic, industry and market conditions in addition to the overall financial performance of the Company and these assets. Our qualitative assessment concluded that it is more likely than not that the estimated fair value of the Ad Network, Owned & Operating and Insights reporting units exceeds its carrying amount. Since the assets are considered recoverable, no impairment charge was recognized for the year ended December 31, 2024. NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES Accounts payable and accrued expenses consisted of the following: December 31, 2024 December 31, 2023 (in thousands) Accounts payable (1) $ 14,428 $ 11,391 Accrued wages, commissions, and bonus 527 353 Publisher cost 2,811 1,153 Professional fees 1,138 1,322 Subcontractor 3,438 3,013 Other 325 265 Total accounts payable and accrued expenses $ 22,667 $ 17,497 (1) Accounts payable includes $ 5.2 million at both December 31, 2024 and December 31, 2023, respectively, for Slutzky & Winshman Ltd. and Mediahouse Inc., whose operations were terminated during the year ended December 31, 2023. Accounts payable includes $ 266,000 at December 31, 2024 for Wild Sky Media Co. Ltd., whose operations were terminated during the year ended December 31, 2024. F- 23 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 9 – OTHER CURRENT LIABILITIES Other current liabilities consisted of the following: December 31, 2024 December 31, 2023 (in thousands) Current portion of long-term lease $ 101 $ 82 Dividend payable 691 692 Project advance expense (1) 1,546 1,401 Litigation reserves 2,224 1,152 Other current liabilities 8 23 Total other liabilities 4,570 3,350 Less: other long-term liabilities ( 169 ) ( 325 ) Other current liabilities $ 4,401 $ 3,025 (1) Represents amount advanced by customers to cover third party expenses specifically related to their project. These expenses are offset against the advance and are not part of the Company's income statement. NOTE 10 – CENTRE LANE SENIOR SECURED CREDIT FACILITY Effective June 1, 2020, the Company entered into a membership interest purchase agreement to acquire 100 % of Wild Sky Media, a subsidiary of the Company (the “Purchase Agreement”). To finance this acquisition, the Company obtained a first lien senior secured credit facility from Centre Lane Partners Master Credit Fund II, L.P. (“Centre Lane Partners”) in the amount of $ 16.5 million, comprised of $ 15.0 million of initial indebtedness, repayment of Wild Sky’s existing accounts receivable factoring facility of approximately $ 900,000 and approximately $ 500,000 of expenses. As of December 31, 2024, Centre Lane Partners had loaned the Company an additional $ 39.9 million to provide liquidity to fund operations. The Centre Lane Senior Secured Credit Facility has been determined to qualify as a related party transaction as shares were issued to Centre Lane Partners as part of the transaction. A related party is a party that can exercise significant influence over the Company in making financial and/or operating decisions. On April 4, 2023, the Company entered into a commitment letter (the “Commitment Letter”) with Centre Lane Partners, pursuant to which they would provide financing in the form of a senior secured credit facility for the acquisition of the Big Village Entities. On April 20, 2023, the Company and its subsidiaries entered into the Seventeenth Amendment to the Credit Agreement (the “Seventeenth Amendment”) with Centre Lane Partners. The Credit Agreement was amended, as provided in the Seventeenth Amendment, to provide for an additional term loan amount of $ 26.3 million to, among other things, finance the Big Village Acquisition. This term loan, which was provided by BV Agency, LLC, matures on April 20, 2026 and was issued at a discount of 5 % or $ 1.3 million. Interest of 15 % payable under the note is payable-in-kind in lieu of cash payment up to April 30, 2024, then 5 % payable quarterly in cash and 10 % payable-in-kind in lieu of cash payment until maturity of April 20, 2026. As a result of the Twentieth Amendment (as described below), interest payable on the loans under the Seventeenth Amendment from April 2024 until June 30, 2025 was converted from a combination of cash and PIK to solely PIK at the rate of 15 %, with an option to maintain such terms after June 30, 2025 in exchange for an additional 2 % PIK fee or to transition to payments made 10 % PIK and 5 % in cash. As part of the Seventeenth Amendment, the Company is required to pay an amendment fee of 2 % of the principal amount of the existing initial principal plus amendments one to eight ("First In Last Out Loans") and amendments nine to sixteen ("Last In First Out Loans"), totaling $ 706,000 , additionally, an exit fee of $ 18,000 of the loan to finance the Big Village Acquisition. The outstanding principal on these at April 20, 2023 was $ 31.0 million and $ 4.3 million, respectively. These fees total $ 724,000 and are due and payable at maturity. Also, in connection with the Seventeenth Amendment, on April 20, 2023, the Company issued 21,401,993 shares of common stock of the Company to BV Agency, LLC, an entity beneficially owned by Centre Lane Partners. The shares were valued at $ 1.9 million, based on a per share price of $ 0.09 , which was the closing price of the Company’s common stock at close of market on April 19, 2023. F- 24 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS On July 28, 2023, the Company and its subsidiaries entered into the Nineteenth Amendment to the Credit Agreement (the “Nineteenth Amendment”) with Centre Lane Partners to provide for an additional term loan amount of $ 2.0 million to, among other things, finance the integration and further growth of the Company post-Big Village Acquisition. This term loan was part of the Last In First Out Loans and matured on June 28, 2024. On June 30, 2024 the Company and its subsidiaries entered into the Twentieth Amendment to the Credit Agreement (the "Twentieth Amendment" and together with the Credit Agreement and all other amendments thereto, the "Centre Lane Secured Credit Facility") with Centre Lane Partners to provide, among other things, for the extension of the maturity date of the term loan under the Nineteenth Amendment to December 31, 2024. Beginning September 30, 2024, the Company commenced repayment by making four monthly payments of principal and interest with the balance paid on December 31, 2024. The original note issued under the Centre Lane Senior Secured Credit Facility initially bore interest at a rate of 6.0 % per annum, with payments of 2.5 % of outstanding principal beginning on June 30, 2023. The interest rate was increased to 10.0 % pursuant to the first amendment to the Centre Lane Senior Secured Credit Facility and interest payable under the note is PIK in lieu of cash payment. Commencing with the Ninth Amendment, the interest rate was increased to 12 % per annum on all subsequent draws with 8 % per annum payable quarterly in cash and 4 % per annum payable-in-kind in lieu of cash payment. These “last in first out loans,” totaling $ 5.2 million inclusive of exit fees at December 31, 2024, are due and payable on April 20, 2026, excluding the amounts due under the Nineteenth Amendment which were due and payable on December 31, 2024. In connection with the Nineteenth Amendment, adjustments were made to the interest rate for outstanding loans with the exception of the draw under the Seventeenth Amendment as follows: • The interest rate per annum changed to 7.0 % plus the Secured Overnight Financing Rate ("SOFR"). At December 31, 2024, the SOFR was 4.71 % , thus the overall interest rate on these facilities was 11.71 % , per annum; and • The cash pay rate for the last in first out loans was changed to the SOFR plus 3.0 % per annum. At December 31, 2024, the rate was 7.71 % per annum. In connection with the Twentieth Amendment, adjustments were made to the interest rate for outstanding loans as follows: • Adjusting the amortization of the last out loans with quarterly installments of $ 100,000 commencing on September 30, 2024, with quarterly payments increasing to 2.5 % of the amount outstanding under the loans (including capitalized PIK interest) commencing on March 31, 2025. The amount outstanding under the last out loans was $ 37.5 million at December 31, 2024. • Changing the last out term loan PIK rate to the SOFR plus 7 % until December 31, 2024, and to the SOFR plus 2 % (previously 5 %) thereafter; • Converting interest payable on the Seventeenth Amendment loan from April 2024 until June 30, 2025 from a combination of cash and PIK to solely PIK at the rate of 15 %, with an option to maintain such terms after June 30, 2025 in exchange for an additional 2 % PIK fee or to transition to payments made 10 % PIK and 5 % in cash; • Extending the due date for the 5 % exit fee with respect to the Nineteenth Amendment to December 31, 2024; and • Agreeing to pay an amendment fee equal to 2 % of the principal amount of the Seventeenth Amendment term loan and Nineteenth Amendment term loan, which amount was paid-in-kind by adding the amount of such amendment fee to the outstanding principal balance. This fee was $ 672,000 at June 30, 2024. On December 26, 2024, the Company and its subsidiaries entered into the Twenty-First Amendment to the Credit Agreement (the "Twenty-First Amendment") with Centre Lane Partners for the purpose of securing a bond (the "Bond") to stay execution of a judgment in the amount of approximately $ 1.7 million that was entered into against the Company as a result of certain disclosed litigation (the "Ladenburg litigation"), as the Company intends to appeal the judgment. See Note 17, Commitments and Contingencies. On December 26, 2024, the Company borrowed an additional approximately $ 1.9 million from the lenders, which funds were used to secure the Bond. Amounts drawn pursuant to the Twenty-First Amendment, including all accrued but unpaid principal and interest thereon, will mature and become payable on the earlier of (i) the date upon which the Ladenburg litigation is resolved and results in the Company being obligated to pay less than the judgment, and (ii) April 20, 2026. F- 25 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Interest included on the Twenty-First Amendment loan amounts will be payable in a combination of cash and payments in kind. Interest to be paid in cash will accrue at (i) a rate of 0 % per annum from the date the loan amounts are funded until June 30, 2025, and (ii) a rate of 5 % per annum thereafter; provided, however if prior to June 30, 2025, the Company informs Centre Lane Partners that it will pay the PIK fee to the lenders, then the interest rate will remain 0 % per annum. Interest to be paid in kind will accrue at (i) a rate of 15 % per annum from the date the loan amounts are funded until June 30, 2025 and (ii) a rate of 10 % per annum thereafter; provided, however if prior to June 30, 2025, the Company informs Centre Lane Partners that it will pay the PIK fee to the lenders, then the interest rate will remain 15 % per annum. For purposes of the foregoing, the PIK fee shall mean an amount equal to 2% of the Twenty-First Amendment loan amounts outstanding payable in kind. In connection with the Twenty-First Amendment and as consideration therefore, the Company agreed to issue a number of shares of the common stock of the Company, par value $ 0.01 per share, equal to 2.5 % of the fully-diluted pro forma ownership of the Company, or 5,0001,991 shares of the common stock, to an affiliate of the lenders. Following such issuance, Centre Lane Partners and its affiliates collectively beneficially own approximately 23.6 % of the Company's common stock. As of December 31, 2024, BV Agency, LLC, and Centre Lane Partners beneficially own approximately 15.0 % and 8.6 % of the Company’s outstanding common stock, respectively. Optional Prepayment The Company may, at any time, voluntarily prepay, in whole or in part, a minimum of $ 250,000 of the outstanding principal of the loans, plus any accrued but unpaid interest on the aggregate principal amount of the loans being prepaid. There is no prepayment penalty associated with the Centre Lane Senior Secured Credit Facility. However, partial or full prepayments of the Centre Lane Senior Secured Credit Facility is required in the event of certain future capital raises. Repayment of Loans With respect to the last out loans, the Company was initially required to repay in cash to Centre Lane Partners (i) commencing with the fiscal quarter ended on June 30, 2023, in consecutive quarterly installments to be paid on the last day of each fiscal quarter of the Company, an amount equal to 2.5 % of the outstanding aggregate principal amount of the original principal plus draws advanced by amendments 2 through 8 along with accrued and unpaid interest (after giving effect to capitalized PIK Interest) and (ii) on the maturity date all outstanding obligations (including, without limitation, all accrued and unpaid principal and interest on the principal amounts of the Loans (including any accrued but uncapitalized PIK Interest)) of the loan parties that are due and payable on such date. As a result of the Twentieth Amendment, the Company will commence amortization of the first in last out loans with quarterly installments of $ 100,000 commencing on September 30, 2024, with quarterly payments increasing to 2.5 % of the amount outstanding under the loans (including capitalized PIK interest) commencing on March 31, 2025. On June 30, 2023, the Company and its subsidiaries entered into its Eighteenth Amendment with Centre Lane Partners to change the timing of certain installment payments which were due on June 30, 2023. The Eighteenth Amendment deferred these payments into equal monthly installments due on July 3, 2023, August 7, 2023, and September 5, 2023, respectively. There was no impact on principal or interest and no fees incurred by the Company as a result of this amendment. In connection with the Nineteenth Amendment, and prior to the execution of the Twentieth Amendment, quarterly installments equal to 2.5 % of the outstanding aggregate principal were due on the first in last out loans commencing March 31, 2024. For the year ended December 31, 2024, the Company paid $ 3.1 million toward the principal loan balance. For the year ended December 31, 2023, the Company paid $ 270,000 toward the principal loan balance. The amount outstanding under the first in last out loans was $ 37.5 million at December 31, 2024. Interest payable on the last in first out loans at December 31, 2024 was $ 21,000 . During the year ended December 31, 2024, the Company paid approximately $ 539,000 towards outstanding interest on the last in first out loans. During the year ended December 31, 2023, the Company paid approximately $ 425,000 towards outstanding interest on the last in first out loans. F- 26 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Fees Under the terms of the Centre Lane Senior Secured Credit Facility, the Company is also required to pay Centre Lane Partners a non-refundable annual administration fee equal to $ 35,000 for agency services provided under this agreement. The Centre Lane Senior Secured Credit Facility provides that this fee shall be in all respects fully earned, due and paid-in-kind by the Company on the effective date (“Effective Date”) of the Centre Lane Senior Secured Credit Facility and on each anniversary of the Effective Date during the term of this agreement by adding and capitalizing the full amount of such fee to the outstanding principal balance of the loans. The accumulated administrative fee since inception of the facility is $ 175,000 and is included in outstanding principal. The administrative fee charged during the years ended December 31, 2024 and 2023 was $ 35,000 for both periods, respectively. The below table summarizes the loan balances and accrued interest for the years ended December 31, 2024 and 2023: December 31, 2024 December 31, 2023 (in thousands) Note payable - Centre Lane senior secured credit facility - related party (current) $ 3,808 $ 5,592 Note payable - Centre Lane senior secured credit facility - related party (net of discount) 71,043 58,674 Net principal 74,851 64,266 Add: debt discount 3,971 5,962 Outstanding principal $ 78,822 $ 70,228 The below table summarizes the movement in the outstanding principal from inception through December 31, 2024: December 31, 2024 December 31, 2023 (in thousands) Opening balance $ 70,228 $ 33,109 Add: Draws 1,861 29,816 Exit and other fees, net 505 917 Interest capitalized 9,353 6,656 81,948 70,498 Less Payments ( 3,125 ) ( 270 ) Outstanding principal $ 78,822 $ 70,228 Amendments to Centre Lane Senior Secured Credit Facility Commencing April 2021, the Company and certain of its subsidiaries entered into various amendments to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners. The Credit Agreement was amended a number of times to provide for additional loans used for working capital and acquisitions. In addition, and as part of the transaction, there are exit fees (the “Exit Fees”), which will be added and capitalized to the principal amount of the original loan. As of December 31, 2024, there were twenty-one amendments to the Centre Lane Senior Secured Credit Facility. Consistent with FASB ASC Topic 470 Debt , (“ASC 470”), the Company is required to perform an analysis of the change in each amendment to determine whether the change is a modification or an extinguishment of debt. Under a modification, no gain or loss is recorded, and a new effective interest rate is established based on the carrying value of the debt and revised cash flow. If the debt is extinguished, the old debt is derecognized and the new debt is recorded at fair value, which becomes the new carrying value. A gain or loss is recorded for the difference between the net carrying value of the original debt and the fair value of the new debt, additionally, in the event the transaction is with a related party, this gain or loss should be recognized against additional paid in capital. Interest expense is recorded based on the effective interest rate of the new debt. A debt is considered extinguished if the present value of the new cash flows under the term of the new debt is at least 10% different from the present value of the remaining cash flows under the terms of the old debt. F- 27 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS In connection with the Seventeenth Amendment, the Company determined that the change was an extinguishment consistent with ASC 470, Debt, the old debt of $ 35.5 million was de-recognized and the new debt of $ 62.7 million was recognized at estimated fair value. A gain on extinguishment was recognized against additional paid in capital of $ 671,000 , as Centre Lane Partners is a related party. The below table summarizes the amendments that were executed by the Company since the inception of the facility to December 31, 2024, (in thousands, except for share data): No. Date Draw Repayment Date Interest Rate Paid-in-Kind d Interest Rate Cash e Agency Fee Exit Fee a Common Stock Issued Accounting Impact (in thousands, except share data) 1 4/26/2021 $ - 4/20/2026 11.71 % 0.00 % $ - $ - 150,000 Extinguishment b 2 5/26/2021 1,500 4/20/2026 11.71 % 0.00 % - 750 3,000,000 Modification f 3 8/12/2021 500 4/20/2026 11.71 % 0.00 % - 250 2,000,000 Modification f 4 8/31/2021 1,100 4/20/2026 11.71 % 0.00 % - 550 - Modification f 5 10/8/2021 725 4/20/2026 11.71 % 0.00 % - 363 - Extinguishment f 6 11/5/2021 800 4/20/2026 11.71 % 0.00 % - 800 7,500,000 Modification f 7 12/23/2021 500 4/20/2026 11.71 % 0.00 % 70 500 - Modification f 5,125 70 3,213 12,650,000 8 1/26/2022 350 4/20/2026 11.71 % 0.00 % - 350 - Modification f 9 2/11/2022 250 4/20/2026 11.71 % 7.71 % - 13 - Modification g 10 3/11/2022 300 4/20/2026 11.71 % 7.71 % - 15 - Modification g 11 3/25/2022 500 4/20/2026 11.71 % 7.71 % - 25 - Modification g 12 4/15/2022 450 4/20/2026 11.71 % 7.71 % - 23 - Modification g 13 5/10/2022 500 4/20/2026 11.71 % 7.71 % 35 25 - Modification g 14 6/10/2022 350 4/20/2026 11.71 % 7.71 % - 18 - Modification g 15 7/8/2022 350 4/20/2026 11.71 % 7.71 % - 18 - Modification g 3,050 35 487 - 16 2/10/2023 1,500 4/20/2026 11.71 % 7.71 % - 75 - Modification g 17 h 4/20/2023 26,316 4/20/2026 15.00 % 0.00 % 35 708 21,401,993 Extinguishment c 19 7/28/2023 2,000 6/28/2024 11.71 % 7.71 % - 100 - Modification g 29,816 35 883 21,401,993 20 6/30/2024 - 12/31/2024 11.71 % 7.71 % 35 672 - Modification i 21 12/26/2024 1,861 4/20/2026 15.00 % 0.00 % - - 5,001,991 Modification j 1,861 35 672 5,001,991 $ 39,852 $ 175 $ 5,255 39,053,984 (a) Added and capitalized to the principal amount of the original loan and the original loan terms apply. (b) The Centre Lane Senior Secured Credit Facility was amended to permit the Company to raise up to $ 6.0 million of total cash proceeds from the sale of its preferred stock prior to December 31, 2021, without having to make a mandatory prepayment of the loans. Additionally, the Company may issue up to $ 800,000 in dividends from the previous limit of $ 500,000 per annum. (c) 15 % PIK until April 20, 2024, then 5 % cash and 10 % PIK thereafter. (d) New rates in effect in connection with Amendment 19, Amendment 1 through 8 PIK rate was 10 %. (e) New rates in effect in connection with Amendment 19, Amendment 9 through 16 cash rate was 8 %. (f) Last Out Loans. (g) Last In First Out Loans. (h) As discussed above, there was no impact on principal or interest and no fees incurred by the Company for Amendment 18, hence not included in above table. (i) New rates and repayment terms in connection with Amendment 20. (j) 0 % cash rate until June 30, 2025, then 5 % per annum thereafter. 15 % paid-in-kind rate until June 30, 2025 then 10 % paid-in-kind thereafter. F- 28 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Draws advanced by Amendments 2 through 8 totaling $ 5.5 million and exit fees totaling $ 3.6 million, were due for full repayment on February 28, 2022; prior to this date, the loan agreement allowed the Company to waive the accrual of interest on these amounts. There was no repayment of these amounts, and as a result, on March 11, 2022, Amendment 10 was executed, changing the repayment date of the outstanding principal, and commencing interest accrual on the exit fees. All amounts advanced for Amendments 9 through 16 were due on June 30, 2023 along with accrued and unpaid interest, however, the maturity date was changed to April 20, 2026 with Amendment 17. The outstanding amount at December 31, 2024 is $ 5.2 million , inclusive of interest paid in kind. As of December 31, 2024 and 2023, the carrying value of the Centre Lane Senior Secured Credit Facility was $ 74.9 million and $ 64.3 million , respectively, net of unamortized debt discount of $ 4.0 million and $ 6.0 million , respectively. The discount is being amortized over the remaining life of the Centre Lane Senior Secured Credit facility using the effective interest method. During the years ended December 31, 2024 and 2023, the Company recorded amortization of debt discount of $ 2.7 million and $ 2.1 million , respectively on the Centre Lane Senior Secured Credit Facility. Interest expense for the year ended December 31, 2024 and 2023 consisted of the following: Year Ended December 31, 2024 December 31, 2023 (in thousands) Interest expense $ 9,913 $ 7,080 Amortization 2,697 2,062 Total interest expense $ 12,610 $ 9,142 The minimum annual principal payments of notes payable at December 31, 2024 were: December 31, 2024 (in thousands) 2025 $ 3,808 2026 75,014 $ 78,822 NOTE 11 – 10% CONVERTIBLE PROMISSORY NOTES On November 30, 2018, the Company issued 10 % convertible promissory notes ("Convertible Notes") in the amount of $ 80,000 to our then Chairman of the Board, a related party. The Convertible Notes were unsecured and matured five years from issuance and were convertible at the option of the holder into shares of common stock at any time prior to maturity at a conversion price of $ 0.40 per share. A beneficial conversion feature existed on the date the Convertible Notes were issued whereby the fair value of the underlying common stock into which the Convertible Notes was convertible was in excess of the face value of the Convertible Notes of $ 80,000 . The principal balance of these Convertible Notes payable was $ 80,000 at December 31, 2023. The total Convertible Notes payable was $ 80,000 at December 31, 2023. Interest expense for the Convertible Notes was $ 20,000 , inclusive of interest of $ 8,000 and discount amortization of $ 12,000 for the year ended December 31, 2023. The outstanding principal and interest of the Convertible Notes was due and payable in November 2023, and on July 1, 2024, the Company repaid the outstanding principal of $ 80,000 and outstanding interest of $ 43,000 on the Convertible Notes due to its former Chairman of the Board. F- 29 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 12 – LEASES The Company accounts for its lease under FASB ASC Topic 842, Leases (“ASC 842”), which requires lessees to recognize on the balance sheet at lease commencement, the lease assets and the related lease liabilities for the rights and obligations created by operating and finance leases with lease terms of more than 12 months. Operating Lease The Company leases its corporate offices in Boca Raton, Florida under a long-term non-cancellable lease agreement. An addendum to the lease dated June 14, 2022 sets a lease renewal term of five years beginning upon completion of improvements to the office space by the landlord, which were completed on September 12, 2022. The annual base rent as of the beginning of this renewal term is approximately $ 143,000 , with a provision for a 3 % increase on each anniversary of the rent commencement date. The Company has the option to renew the lease for one additional five-year term. At December 31, 2024, and 2023, the operating lease right-of-use asset was $ 253,000 and $ 306,000 , respectively, and is included under assets on the consolidated balance sheets. At December 31, 2024, and 2023, the operating lease right-of-use lease liability was $ 252,000 and $ 303,000 , respectively, including the current portion of $ 79,000 and $ 64,000 , respectively, and is included under liabilities on the consolidated balance sheets. Over the lease term, the Company is required to amortize the operating lease asset and record interest expense on the lease liability created at lease commencement. Operating lease expense was approximately $ 173,000 and $ 161,000 for the years ended December 31, 2024 and 2023. The Company’s non-lease components are primarily related to property maintenance and other operating services, which vary based on future outcomes and are recognized in rent expense when incurred and not included in the measurement of the lease liability. Operating Lease Sublease During the year ended December 31, 2024 , the Company entered into two sublease agreements for its Boca Raton corporate office suites. The subleases will continue for the remaining term on the initial lease agreement of 3 years with no option to extend. The aggregate minimum annual rental income under the subleases is approximately $ 137,000 with 3 % escalations per annum. The Company retained the ability to use the address as its corporate office. At December 31, 2024, the operating lease subleases right-of-use liability was $ 12,000 and is included as an offset to right-of-use assets within other non-current liabilities on the consolidated balance sheet. Operating lease sublease income was approximately $ 84,000 for the year ended December 31, 2024. Finance Lease On October 1, 2023, the Company entered into a lease agreement for computer equipment with a lease term of three years . At December 31, 2024, and 2023, the finance lease asset was $ 42,000 and $ 60,000 , respectively, and is included under assets on the consolidated balance sheets. At December 31, 2024, and 2023, the finance lease liability was $ 42,000 and $ 60,000 , respectively, including the current portion of $ 22,000 and $ 18,000 , respectively, and is included under liabilities on the consolidated balance sheets. Finance lease expense for the year ended December 31, 2024 was $ 28,900 , inclusive of interest of $ 11,000 and amortization of $ 17,900 , and is included in general and administrative expense in the statements of operations and comprehensive loss. Finance lease expense for the year ended December 31, 2023 was $ 7,000 , inclusive of interest of $ 3,000 and amortization of $ 4,000 , and is included in general and administrative expense in the statements of operations and comprehensive loss. F- 30 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2024 and 2023, the right-of-use asset and lease liability for the operating lease are summarized as follows (in thousands): December 31, 2024 December 31, 2023 (in thousands) Assets: Total operating lease right-of-use asset $ 253 $ 306 Total finance lease asset (1) $ 42 $ 60 Liabilities: Operating lease liability, current $ 79 $ 64 Operating sublease liability, net of current portion 12 - Operating lease liability, net of current portion 173 239 Total operating lease liability $ 264 $ 303 Finance lease liability, current $ 22 $ 18 Finance lease liability, net of current portion 20 42 Total finance lease liability $ 42 $ 60 Weighted average remaining lease term (in years): Operating lease 2.75 3.75 Finance lease 1.75 2.75 Weighted average discount rate: Operating lease 14.39 % 14.39 % Finance lease 21.12 % 21.12 % (1) Finance lease represents computer software, see Note 5 "Property and Equipment". As of December 31, 2024, the aggregate annual lease obligations were as follows (in thousands): Operating Leases Finance Leases (in thousands) 2025 $ 79 $ 22 2026 96 20 2027 77 - Total lease obligations 252 42 Less: amount representing interest 0 0 Net lease obligations $ 252 $ 42 NOTE 13 – BUSINESS COMBINATIONS On April 20, 2023, the Company completed the Big Village Acquisition of two business units of Big Village Holding LLC for approximately $ 20.0 million, plus assumed liabilities, in an all-cash transaction funded by a senior secured credit facility. As part of the Big Village Acquisition, the Company formed BV Insights, LLC ("Insights") and Big-Village Agency, LLC ("Agency") to incorporate the assets acquired in the transactions. Additionally, letters of employment were extended to certain legacy employees of the Big Village Entities, resulting in a total of 203 employees accepting the offer of employment by the Company. The purpose of the acquisition was to add synergies to our existing revenue stream. F- 31 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair value at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was allocated to goodwill and intangibles. The goodwill of $ 2.4 million recognized was attributable to assembled workforce and strategic benefits that are expected to be achieved and is tax deductible for a period of 15 years. Identified intangibles total $ 16.2 million inclusive of the below: Useful Life Amount (in thousands) Trade name 7 - 10 $ 5,622 Developed technology 10 3,838 Customer relationships 7 - 10 6,700 $ 16,160 The following table summarizes the allocation of the purchase price based on the estimated fair value of the acquired assets and assumed liabilities at the date of the Big Village Acquisition and subsequent adjustment: Balance (in thousands) Purchase price consideration: Centre Lane Senior Secured Credit Facility $ 19,874 Fair value of assets acquired: Accounts receivable 12,477 Intangibles 16,160 Goodwill 2,425 Prepaid and other assets 836 Property and equipment 206 $ 32,104 Fair value of liabilities assumed: Accounts payable and accrued expenses 6,540 Deferred revenue 4,695 Other current liabilities 995 $ 12,230 Total fair value of assets acquired and liabilities assumed $ 19,874 We incurred costs related to the Big Village Acquisition of approximately $ 2.2 million during the year ended December 31, 2023. Additionally, $ 2.8 million in cure claims was paid to accepted vendors on the closing date and $ 1.2 million was subsequently paid to employees representing bonuses. Amounts for cure claims and bonuses are included above as part of assumed liability. All acquisition related costs were expensed as incurred and have been recorded in general and administrative expenses in our consolidated statements of operations and comprehensive loss. F- 32 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 14 – REVENUE RECOGNITION The following table represents our revenue disaggregated by type (in thousands): Year Ended December 31, 2024 December 31, 2023 (in thousands) Revenue: Digital publishing $ 1,733 $ 4,130 Advertising technology 18,449 9,463 Consumer insights 27,021 23,868 Creative services 7,056 5,130 Media services 2,422 1,955 Total revenue $ 56,681 $ 44,546 Geographic Information Revenue by geography is generally based on the country of the Company’s contracting entity. Total United States revenue was approximately 100 % of total revenue for the years ended December 31, 2024, and 2023. As of December 31, 2024, and 2023 , approximately 100 % of our long-lived assets were attributable to operations in the United States. Long-lived assets include websites and other intangibles assets that are utilized in overall revenue generation. Deferred Revenue The movement in deferred revenue during the years ended December 31, 2024 and 2023, comprised the following (in thousands): December 31, 2024 December 31, 2023 (in thousands) Deferred revenue at the start of the period $ 4,569 $ 737 Amounts invoiced during the period 40,529 31,864 Business combination - 4,534 Less: revenue recognized during the period ( 42,215 ) ( 32,566 ) Deferred revenue at the end of the period $ 2,883 $ 4,569 NOTE 15 – STOCK BASED COMPENSATION On April 14, 2022, the Board of Directors of the Company and the Compensation Committee of the Board adopted and approved the 2022 Bright Mountain Media Stock Option Plan (the “Stock Option Plan”). The Stock Option Plan provides for the grant of awards to eligible employees, directors and consultants in the form of stock options. The purpose of the Stock Option 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. The Stock Option Plan has a term of 10 years and authorizes the issuance of up to 22,500,000 shares of the Company’s common stock. As of December 31, 2024, 12,040,967 shares were remaining under the Stock Option Plan for the future issuance. Options As of December 31, 2024, options to purchase 10,459,033 shares of common stock were outstanding under the Stock Option Plan at a weighted average exercise price of $ 0.10 per share. Compensation expense recorded in connection with the Stock Option Plan was $ 254,000 , and $ 196,000 for the years ended December 31, 2024, and 2023, respectively. These amounts have been recognized as a component of general and administrative expenses in the accompanying consolidated financial statements. F- 33 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following table presents the activity of the Company’s outstanding stock options of common stock for the year ended December 31, 2024: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term Aggregate Intrinsic Value Common stock options: Balance outstanding at December 31, 2023 10,728,360 $ 0.12 8.7 $ 568 Granted 469,673 $ 0.06 - $ 0 Exercised ( 80,250 ) $ 0.01 - $ 3 Forfeited ( 326,250 ) $ 0.19 - $ - Expired ( 332,500 ) $ 0.49 - $ - Balance outstanding at December 31, 2024 10,459,033 $ 0.10 8.0 $ 79 Exercisable at December 31, 2024 4,181,164 $ 0.15 7.4 $ 45 Unvested at December 31, 2024 6,277,869 $ 0.07 8.3 $ 34 During the years ended December 31, 2024 and 2023, 80,250 and 90,000 common stock options were exercised with an aggregate intrinsic value of $ 3,000 and $ 10,000 , respectively. Summarized information with respect to options outstanding under the stock option plans at December 31, 2024, is as follows: Options Outstanding Options Exercisable Range of Exercise Price Number Outstanding Weighted Average Exercise Price Remaining Contractual Life (in years) Number Exercisable Weighted Average Exercise Price $ 0.002 - $ 0.13 9,172,806 $ 0.06 8.2 3,430,937 $ 0.04 $ 0.14 - $ 0.24 877,000 $ 0.17 8.0 337,250 $ 0.17 $ 0.25 - $ 0.49 276,000 $ 0.40 1.0 279,750 $ 0.40 $ 0.50 - $ 0.85 - $ - - - $ - $ 0.86 - $ 1.75 133,227 $ 1.22 4.9 133,227 $ 1.22 10,459,033 $ 0.09 8.0 4,181,164 $ 0.11 As of December 31, 2024, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $ 229,000 to be recognized through July 2027. The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of our stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates. F- 34 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The following table provides the weighted average assumptions used in determining the fair value of the stock-based awards for the year ended December 31, 2024 and 2023: December 31, 2024 December 31, 2023 Expected term (years) 5.82 yrs 6.25 yrs Expected volatility 452.21 % 486.00 % Risk-free interest rate 4.12 % 4.15 % Dividend yield 0.00 % 0.00 % Expected forfeiture rate 0.00 % 0.00 % During the year ended December 31, 2024 and 2023, 469,673 and 6,128,200 options were issued, respectively. The expected life is computed using the simplified method, which is the average of the vesting term and the contractual term. The expected volatility is based on an average of similar public company’s historical volatility, as the Company’s common stock is quoted in the over-the-counter market on the OTCQB Tier of the OTC Markets, Inc. The risk-free interest rate is based on the U.S. Treasury yields with terms equivalent to the expected term of the related option at the time of the grant. Dividend yield is based on historical trends. While the Company believes these estimates are reasonable, the compensation expense recorded would increase if the expected life was increased, a higher expected volatility was used, or if the expected dividend yield increased. The Company has elected to account for forfeitures as they occur. NOTE 16 – FAIR VALUE MEASUREMENTS The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities). The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities: Level 1: Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date. Because valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment. Level 2 : Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date. Observable inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and interest rates and yield curves that are observable at commonly quoted intervals. Level 3 : Valuation is based on inputs that are both significant to the fair value measurement and unobservable. Level 3 inputs includes situations where there is little, if any, market activity for the financial instrument. The inputs into the determination of fair value generally require significant management judgment or estimation. Fair Value Considerations Financial instruments recognized in the consolidated balance sheets consist of cash, accounts receivable, other liabilities and accounts payable. The Company believes that the carrying value of its current financial instruments approximates their fair value due to the short-term nature of these instruments. The carrying value of the Centre Lane Senior Secured Credit Facility approximates the fair value due to the nature and level of risk. F- 35 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Assets Measured at Fair Value on a Nonrecurring Basis The Company has certain non-financial assets that are measured at fair value on a non-recurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized. These assets include goodwill and intangible assets, net. The below table shows the quantitative information for assets measured at fair value on a non-recurring basis: Quantitative Information about Level 3 Fair Value Measurements Fair Value Valuation Technique Unobservable Input Rate (Weighted Average Cost of Capital) (in thousands) Goodwill $ 7,785 Discounted cash flow Discount rate 19.84 % Intangible assets, net $ 13,312 Discounted cash flow Discount rate 19.84 % Goodwill and Intangibles Assets Goodwill and intangible assets are tested for impairment at least annually, and if triggering events are noted prior to the annual assessment. Impairment is deemed to occur when the carrying value associated with the reporting unit exceeds the implied value associated with the reporting unit. We estimate the fair value of our reporting units utilizing an income approach (discounted cash flow method), which incorporates significant unobservable Level 3 inputs. At September 30, 2023 and December 31, 2023 an impairment assessment was performed on goodwill and intangibles for Ad Network, Owned & Operating and Insights reporting units. We estimated the fair value of our reporting units utilizing an income approach (discounted cash flow method), which incorporated significant unobservable Level 3 inputs. The assessment indicated that the carrying value was in excess of its implied fair value, resulting in an impairment charge of $ 14.1 million and $ 2.9 million for goodwill and intangible assets, respectively. During the year ended December 31, 2023, goodwill and intangibles acquired by the Company were $ 2.3 million and $ 16.2 million, respectively. The fair value assigned to the acquired intangibles is based on a discounted flow analysis, in which the Company makes various assumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on the Company’s long-term projections. Assumptions used in the Company’s fair value calculations are consistent with the Company’s internal forecasts and operating plans. The Company’s discount rate is based on the Company’s debt structure, adjusted for current market conditions. Goodwill represents the residual value after the fair value of the intangibles were identified. At September 30, 2024, an impairment assessment was performed on goodwill and intangibles for Ad Network, Owned & Operating and Insights reporting units. We estimated the fair value of our reporting units utilizing an income approach (discounted cash flow method), which incorporated significant unobservable Level 3 inputs. The assessment indicated that the carrying value was not in excess of its implied fair value, resulting in no impairment charge for the year ended December 31, 2024. Centre Lane Senior Secured Credit Facility The Company is required to perform an analysis of the change in each amendment to determine whether the change is a modification or an extinguishment of debt. Under a modification, no gain or loss is recorded, and a new effective interest rate is established based on the carrying value of the debt and revised cash flow. If the debt is extinguished, the old debt is derecognized and the new debt is recorded as fair value, which becomes the new carrying value. Amendment Seventeen was considered an extinguishment. The Company utilized a third party valuation company to calculate the present value of the cash flows under the terms of the amendment and determined that it was substantially different by at least 10 % from the present value of the remaining cash flow of the original debt instrument. F- 36 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS NOTE 17 – COMMITMENTS AND CONTINGENCIES Litigation In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. In such cases, there may be exposure to loss in excess of any amounts accrued. When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. As a litigation or regulatory matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. If, at the time of evaluation, the loss contingency related to a litigation or regulatory matter is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable. When a loss contingency related to a litigation or regulatory matter is deemed to be both probable and estimable, the Company will establish an accrued liability with respect to such loss contingency and record a corresponding amount of litigation-related expense. The Company will then continue to monitor the matter for further developments that could affect the amount of any such accrued liability. Ladenburg On July 11, 2023, Ladenburg Thalmann & Co. Inc. (“Ladenburg”) filed an action against the Company for breach of contract in the United States District Court for the Southern District of Florida (the “District Court”), Case No. 9:23-cv-81019-AMC. Ladenburg alleges that it entered into an Investment Banking Agreement (the “Agreement”) with the Company on September 1, 2020. According to Ladenburg, that Agreement provided that Ladenburg would be the exclusive investment advisor and banker for the Company. Ladenburg alleges that the Agreement entitles them to a fee for any financing transactions (debt financing or merger and acquisition transactions) that the Company engages in during the term of the contract. In April 2023, the Company informed Ladenburg of the impending Big Village Acquisition. Ladenburg now seeks $ 1.5 million, plus interest, costs and attorneys’ fees and expenses as a result of that acquisition and debt financing, claiming that it is entitled to a fee. The Company disputes the allegations and disputes that Ladenburg is entitled to receive any fee since it did not perform any work pertaining to such acquisition. On November 27, 2024, the District Court entered a judgment in favor of Ladenburg and against the Company granting damages of $ 1.7 million to Ladenburg. On December 26, 2024, the Company filed a motion with the District Court requesting that the District Court reconsider its judgment. This motion was denied on January 30, 2025. The Company plans to appeal the judgment. The outcome of this matter is not determinable as of the date of issuance of these consolidated financial statements. Other Litigation Other litigation is defined as smaller claims or litigation that are neither individually nor collectively material. It does not include lawsuits that relate to collections. The Company is party to various other legal proceedings that arise in the ordinary course of business, separate from normal course accounts receivable collections matters. Due to the inherent difficulty of predicting the outcome of these other legal proceedings, the Company cannot predict the eventual outcome of these matters, and it is reasonably possible that some of them could be resolved unfavorably to the Company. As a result, it is possible that the Company’s results of operations or cash flows in a particular fiscal period could be materially affected by an unfavorable resolution of pending litigation or contingencies. The outcome is not determinable as of the issuance of these financial statements. NOTE 18 - STOCKHOLDERS' DEFICIT 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 designated six series of preferred stock, consisting of: 1. 10% Series A Convertible Preferred Stock (“Series A Stock”); 2. 10% Series B Convertible Preferred Stock (“Series B Stock”); 3. 10% Series C Convertible Preferred Stock (“Series C Stock”); 4. 10% Series D Convertible Preferred Stock (“Series D Stock”); 5. 10% Series E Convertible Preferred Stock (“Series E Stock”); and 6. 10% Series F Convertible Preferred Stock (“Series F Stock”). F- 37 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS The designations, rights and preferences of the Series F-1, Series F-2 and Series F-3 are identical, other than the dividend rate, liquidation preference and date of automatic conversion into shares of our common stock. Additional terms of the designations, rights and preferences of the Series F-1, Series F-2 and Series F-3 include: • the shares have no voting rights, except as may be provided under Florida law; • the shares pay cash dividends subject to the provisions of Florida law at the dividend rates set forth above, payable monthly in arrears; • the shares are convertible at any time at the option of the holder into shares of our common stock on a 1:1 basis. The conversion ratio is proportionally adjusted in the event of stock splits, recapitalization or similar corporate events. Any shares not previously converted will automatically convert into shares of our common stock on the dates set forth above; • the shares rank junior to the 10 % Series A Convertible Preferred Stock and our 10 % Series E Convertible Preferred Stock; • in the event of a liquidation or winding up of the Company, the shares have a liquidation preference of $ 0.50 per share for the Series F-1, $ 0.50 per share for the Series F-2 and $ 0.40 per share for the Series F-3; and • the shares are not redeemable by the Company. Other designations, rights and preferences of each of series of preferred stock are identical, including: • shares do not have voting rights, except as may be permitted under Florida law; • shares are convertible into our common stock at the holder’s option on a one for one basis; • shares are entitled to a liquidation preference equal to a return of the capital invested; and • each share will automatically convert into shares of common stock five years from the date of issuance or upon a change in control. Both the voluntary and automatic conversion formulas are subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events. There were no shares of preferred stock issued or outstanding at December 31, 2024, and 2023. At December 31, 2024 and 2023, accrued unpaid preference dividend was $ 691,000 . This amount is payable to the Company's former Chairman, Mr. Kip Speyer, and is included under other current liabilities in the consolidated balance sheet at December 31, 2024. Common Stock Shares of Common Stock under the Stock Option Plan On April 14, 2022, the Board and the Compensation Committee of the Board adopted and approved the 2022 Stock Option Plan. The Stock Option Plan has a term of 10 years and authorizes the issuance of up to 22,500,000 shares of the Company’s common stock. As of December 31, 2024 , 12,040,967 shares were remaining under the 2022 Plan for the future issuance. Issue of Common Stock During the year ended December 31, 2024, the Company issued 5,361,693 shares of our common stock for the following concepts (in thousands, except share data): Year Ended December 31, 2024 Shares (#) Value Shares issued to Centre Lane related to debt financing 5,001,991 $ 175 Common stock issued for options exercised 80,250 $ 2 Common stock issued for services rendered 279,452 $ 16 Shares of common stock issued, net 5,361,693 $ 193 F- 38 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS During the year ended December 31, 2023 , the Company issued 21,658,498 shares of our common stock for the following concepts (in thousands, except share data): Year Ended December 31, 2023 Shares (#) Value Shares issued to Centre Lane related to debt financing 21,401,993 $ 1,926 Oceanside share adjustment (1) ( 23,495 ) $ - Common stock issued for options exercised 90,000 $ 1 Common stock issued for services rendered 190,000 $ 31 Shares of common stock issued, net 21,658,498 $ 1,958 (1) Represents an adjustment to reconcile shares actually issued related to the Oceanside acquisition in 2019. Treasury Stock During the year ended December 31, 2024 , one shareholder relinquished their Bright Mountain common stock shares. A total of 525,000 shares were acquired at no cost to the Company. A total of 1,350,175 shares of the Company's common stock, with a value of $ 220,000 , are being held as Treasury Stock by the Company. Warrants At December 31, 2024 and 2023, we had 10,573,700 and 21,362,066 common stock warrants outstanding to purchase shares of our common stock, respectively, with an exercise price ranging between $ 0.65 and $ 1.00 per sh are. Of the 10,573,700 common stock warrants outstanding at December 31, 2024 , 10,398,700 will expire in 2025, and 175,000 will expire in 2030. Approximately 10,788,366 and 14,636,250 common stock warrants expired during the years ended December 31, 2024 and 2023, respectively. A summary of the Company’s warrants outstanding as of December 31, 2024 and 2023 is presented below: December 31, 2024 Exercise Price Number Outstanding Gross Cash Proceeds (if exercised) $ 0.65 - $ - $ 0.75 10,398,700 $ 7,799 $ 1.00 175,000 $ 175 10,573,700 $ 7,974 December 31, 2023 Exercise Price Number Outstanding Gross Cash Proceeds (if exercised) $ 0.65 913,750 $ 594 $ 0.75 15,456,008 $ 11,592 $ 1.00 4,992,308 $ 4,992 21,362,066 $ 17,178 NOTE 19 – LOSS PER SHARE As of December 31, 2024 and 2023, there were 177,464,827 and 172,103,134 shares of common stock issued, respectively, and 176,114,652 and 171,277,959 shares of common stock outstanding, respectively. Outstanding shares as of December 31, 2024 and 2023, have been adjusted to reflect 1,350,175 and 825,175 treasury shares, respectively. Basic net loss per share is computed by dividing the net earnings attributable to common shareholders by the weighted average number of common shares outstanding during the period. F- 39 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Diluted loss per share is computed by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding, increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Conversion or exercise of the potential common shares is not reflected in diluted earnings per share unless the effect is dilutive. The dilutive effect, if any, of outstanding common share equivalents is reflected in diluted earnings per share by application of the treasury stock method, and if-converted method as applicable. The following tables reconcile actual basic and diluted earnings per share for the years ended December 31, 2024 and 2023 (in thousands except shares and per share data): Year Ended December 31, 2024 December 31, 2023 (in thousands, except per share data) Numerator: Net loss $ ( 17,024 ) $ ( 35,564 ) Denominator: Weighted-average common shares outstanding: Basic 171,199,036 164,845,671 Diluted 171,199,036 164,845,671 Net loss per common share Basic $ ( 0.10 ) $ ( 0.22 ) Diluted $ ( 0.10 ) $ ( 0.22 ) The anti-dilutive securities excluded from the weighted-average shares used to calculate the diluted net loss per common share for the years ended December 31, 2024 and 2023 were as follows: December 31, 2024 December 31, 2023 Shares unvested and subject to exercise of stock options 10,459,033 10,728,360 Shares subject to warrants stock exercise 10,573,700 21,362,066 Shares subject to convertible notes stock conversion - 200,000 NOTE 20 – RELATED PARTY TRANSACTIONS Centre Lane Partners Centre Lane Partners has provided, and continues to provide, funding to assist the Company with its liquidity needs through the Centre Lane Senior Secured Credit Facility. In connection with the Seventeenth Amendment, on April 20, 2023, the Company issued 21,401,993 shares of common stock of the Company to BV Agency, LLC, an entity beneficially owned by Centre Lane Partners. In connection with the Twenty-First Amendment, on December 26, 2024, the Company issued an additional 5,0001,991 shares of common stock of the Company to BV Agency, LLC, an entity beneficially owned by Centre Lane Partners. BV Agency, LLC, and Centre Lane Partners beneficially own approximately 15.0 % and 8.6 % of the Company’s outstanding common stock, respectively. SEC rules define a related party as including (i) any director or executive officer of the Company, or any immediate family member thereof, (ii) any director nominee, or any immediate family member thereof, and (iii) a 5% or greater shareholder of the Company, or any immediate family member thereof. As a result, BV Agency, LLC, and Centre Lane Partners together are considered to be related parties of the Company. Through December 31, 2024 , the Company has entered into 21 amendments to the Credit Agreement between itself and Centre Lane Partners. The total related party debt owed to Centre Lane Partners was $ 78.8 million and $ 70.2 million as of December 31, 2024 and 2023, respectively. See Note 10, Centre Lane Senior Secured Credit Facility for details on this facility. F- 40 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS Preferred Stock At December 31, 2024 and 2023, accrued unpaid preference dividend was $ 691,000 . These amounts are payable to the Company's former Chairman, Mr. Kip Speyer. NOTE 21 – INCOME TAXES The Company is subject to federal and various state income taxes in the United States as well as income taxes in various foreign jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations. The Company’s loss before income taxes consists of the following: Year Ended December 31, 2024 2023 United States $ ( 15,653 ) $ ( 35,806 ) Foreign ( 60 ) 242 Total loss before provision for income taxes $ ( 15,713 ) $ ( 35,564 ) A reconciliation of the federal statutory income tax rate to the effective tax rate is as follows: December 31, 2024 2023 Amount Rate Amount Rate Federal tax expense (benefit) at the statutory rate from operations $ ( 3,300 ) 21.00 % $ ( 7,469 ) 21.00 % State tax benefit, net of federal income tax benefit ( 419 ) 2.67 % ( 631 ) 1.78 % Other adjustments 52 - 0.33 % ( 70 ) 0.20 % Effect of foreign taxes ( 11 ) 0.07 % ( 7 ) 0.02 % Impairment - 0.00 % 2,944 - 8.28 % Stock compensation 49 - 0.31 % 40 - 0.11 % Change in valuation allowance 3,629 - 23.09 % 5,193 - 14.61 % Total tax provision (benefit) $ - 0.00 % $ - 0.00 % The tax effect of significant components of the Company’s deferred tax assets and liabilities at December 31, 2024 and 2023, are as follows: December 31, 2024 2023 Deferred tax assets: Net operating loss carryforward $ 23,568 $ 20,665 Intangible assets 2,223 1,964 Lease liability 88 97 Other 991 732 Total gross deferred tax assets 26,870 23,458 Less: Deferred tax asset valuation allowance ( 26,392 ) ( 22,762 ) Total net deferred tax assets $ 478 $ 696 Deferred tax liabilities: Property and equipment - - Right-of-use asset ( 89 ) ( 98 ) Debt modification ( 389 ) ( 598 ) Net deferred tax liability $ - $ - F- 41 Table of Contents BRIGHT MOUNTAIN MEDIA, INC. NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS As of December 31, 2024 , the Company had U.S. federal net operating loss carryforwards of $ 88.1 million that expire at various dates from 2030 through 2038 , and includes $ 77.8 million that have an unlimited carryforward period. As of December 31, 2024, the Company had state and local net operating loss carryforwards of $ 109.8 million that expire at various dates from 2030 through 2042 , and includes $ 36 million that have an unlimited carryforward period. As of December 31, 2024, the Company had foreign net operating loss carryforwards of $ 4.7 million primarily in Israel that have an unlimited carryforward period. The utilization of the Company’s net operating losses may be subject to a U.S. federal limitation due to the “change in ownership provisions” under Section 382 of the Internal Revenue Code and other similar limitations in various state jurisdictions. Such limitations may result in the expiration of net operating loss carryforwards before their utilization. The Company has not completed a study to assess whether an “ownership change” as defined in Section 382 has occurred or whether there have been multiple ownership changes since the Company’s inception. Future changes in the Company’s stock ownership, which may be outside of the Company’s control, may trigger an “ownership change.” In addition, future equity offerings or acquisitions that have equity as a component of the purchase price could result in an “ownership change.” In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. Because of the historical earnings history of the Company and its foreign subsidiaries, the net deferred tax assets less deferred tax liabilities for 2024 were fully offset by the deferred tax liability and a 100% valuation allowance on the remaining balance. Based on all available evidence, management determined that it is more likely than not that the Company's net deferred tax assets will not be realized. As a result, the Company continues to maintain a full valuation against its net deferred tax assets. For the years ended December 31, 2024, and 2023, the change in the valuation allowance was an increase of approximately $ 3.6 million and an increase of approximately $ 5.2 million, respectively. The Tax Cuts and Jobs Act (TCJA) resulted in significant changes to the treatment of research and developmental (R&D) expenditures under Section 174 of the IRC. For tax years beginning after December 31, 2021, taxpayers are required to capitalize and amortize all R&D expenditures that are paid or incurred in connection with their trade or business. Specifically, costs for U.S.-based R&D activities must be amortized over five years and costs for foreign R&D activities must be amortized over 15 years —both using a midyear convention. As of December 31, 2024, the Company capitalized a substantial amount of R&D expenditures primarily related to research and development activities performed in the U.S. The calculation of the Company’s tax liabilities involves dealing with uncertainties in the application of complex tax laws and regulations for both federal taxes and the many states in which it operates or does business in. A tax benefit from an uncertain tax position may be recognized when it is more likely than not that the position will be sustained upon examination, including resolutions of any related appeals or litigation, on the basis of the technical merits. The Company records tax positions as liabilities and adjusts these liabilities when its judgment changes as a result of the evaluation of new information not previously available. Because of the complexity of some of these uncertainties, the ultimate resolution may result in a payment that is materially different from the Company’s current estimate of the recognized tax benefit liabilities. These differences will be reflected as increases or decreases to income tax expense in the period in which new information is available. As of December 31, 2024, and 2023, the Company has not recorded any liabilities for uncertain tax positions in its consolidated financial statements. The Company records interest and penalties related to unrecognized tax benefits in the provision for income taxes. As of December 31, 2024 and 2023, no accrued interest or penalties are recorded on the balance sheets, and the Company has no t recorded any related expenses. The Company files tax returns as prescribed by the tax laws of the jurisdictions in which it operates. In the normal course of business, the Company is subject to examinations by federal, foreign, and state and local jurisdictions, where applicable. There are currently no pending tax examinations. The Company’s tax years currently open under statute from 2021 to the present in the U.S. and from 2020 to present in the Company’s foreign operations. To the extent the Company has tax attribute carryforwards, the tax years in which the attribute was generated may still be adjusted upon examination by the Internal Revenue Service and state and local tax authorities to the extent utilized in a future period. F- 42