Bright Mountain Media, Inc. 10-K

ITEM 9A. CONTROLS AND PROCEDURES Evaluation of Disclosure Controls and Procedures We maintain 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”)) that are designed to ensure that information required to be disclosed in our reports filed pursuant to the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules, regulations and related forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and President, and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues, if any, within an organization have been detected. Accordingly, our disclosure controls and procedures are designed to provide reasonable, not absolute, assurance that the objectives of our disclosure control system are met. 41 Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act), as of December 31, 2020. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2020, our disclosure controls and procedures were not effective because of the material weakness in internal control over financial reporting (“ICFR”) described below. Notwithstanding such material weakness in ICFR, our management, including our Chief Executive Officer and Chief Financial Officer, has concluded that our consolidated financial statements as of and for the year ended December 31, 2020 and our restated consolidated balance sheet, restated consolidated statement of operations, restated consolidated statement of changes in shareholders’ equity and restated consolidated statement of cash flows as of and for the year ended December 31, 2019, present fairly, in all material respects, our financial position, results of our operations and our cash flows for the periods presented in this Annual Report on Form 10-K, in conformity with GAAP. Management’s Report on Internal Control over Financial Reporting. Management is responsible for establishing and maintaining adequate ICFR (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act). Our ICFR includes controls and procedures designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external reporting purposes in accordance with GAAP. Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in the Securities Exchange Act of 1934 Rule 13a-15(f). Our management, with the participation of our Chief Executive Officer and President, and our Chief Financial Officer, conducted an evaluation of the effectiveness of our internal control over financial reporting based on the 2013 Internal Control – Integrated Framework (the “COSO Framework”). Based on this evaluation under the COSO Framework, management concluded that, as of December 31, 2020, our internal control over financial reporting was not effective because of the material weaknesses described below. A material weakness is a deficiency, or a combination of deficiencies, within the meaning of Public Company Accounting Oversight Board (“PCAOB”) Audit Standard No. 5, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. Management has identified the following material weaknesses, which have caused management to conclude that as of December 31, 2020 our ICFR were not effective at the reasonable assurance level: ● Insufficient segregation of duties, oversight of work performed and lack of compensating controls in our finance and accounting functions due to limited personnel. ● The Company’s systems that impact financial information and disclosures have ineffective information technology controls. ● Inadequate controls surrounding revenue recognition, to ensure that all material transactions and developments impacting the financial statements are reflected and properly recorded; ● Management evaluation of 1) the disclosure controls and procedures and 2) internal control over financial reporting was not sufficiently comprehensive due to limited personnel. ● Ineffective controls and procedures in area of review and preparation of Form 10-K and other filings on a timely basis. 42 ● Inadequate controls surrounding information provided to third party valuation reports in connection with acquisitions to ensure that the financial information is accurate and free from misstatements. ● Management calculation of the provision for income taxes and related deferred income taxes were not calculated correctly in accordance with ASC 740, Income Taxes. Management needs to gain a more precise understanding of the components of the income tax provision and deferred income taxes and monitor the differences between the income tax basis and financial reporting basis of assets and liabilities to effectively reconcile the deferred income tax balances. Internal Control Remediation Efforts. Management expects to remediate the material weaknesses identified above as follows: ● Management has leveraged and will continue to leverage experienced consultants to assist with ongoing GAAP, U.S. Securities, and Exchange Commission compliance requirements. We have expanded our finance department through the hiring of a certified public accountant to strengthen the segregation of duties, internal controls and enhance our current staff. Management will further expand the accounting and finance function by hiring appropriate staff to resolve this material weakness in 2021. ● Segregation of duties will be analyzed and adjusted Company-wide as part of the internal controls’ implementation and documentation of those controls and procedures that is expected to commence in 2021. ● In addition, we expect that the discontinuation of the E-Commerce segment will provide the opportunity for the finance department to focus on enhancing the efficiency and effectiveness of the department functions and reporting, allowing the staff to focus on one segment and revenue stream. ● The Company plans on evaluating various accounting systems to enhance our system controls. ● The Company plans to bring in consultants as needed to assist with the preparation of financial reports to be filed and ensure filings are made on a timely basis. ● The Company plan to implement controls related to the information to be provided to third party valuation firms to ensure information is accurate and free from misstatements. ● The Company will provide additional training and development classes for accounting and finance staff regarding current changes in accounting for income taxes and deferred income taxes, pursuant to ASC 740, to enhance their current skills and understanding of the components of deferred taxation and accounting for income taxes. We will continue to monitor and evaluate the effectiveness of our ICFR on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. 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 ICFR due to the exemption from such requirements established by rules of the SEC for smaller reporting companies. Changes in Internal Control Over Financial Reporting As stated, the steps taken in remediation were the changes in the Company’s ICFR (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the quarter ended December 31, 2020 that has materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. 43 PART III ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE Executive Officers and Directors Name Age Positions W. Kip Speyer* 73 Chairman of the Board of Directors Edward Cabanas* 50 Chief Financial Officer Todd F. Speyer* 40 Director, Chief Executive Officer- Bright Mountain, LLC Joey Winshman 33 Director, Chief Marketing Officer - Oceanside Pamela Parizek 56 Director Charles H. Lichtman 66 Director Harry Schulman 68 Director Gretchen Tibbits 54 Director * Named Executive Officer (“NEO”) W. Kip Speyer has been our CEO, President and Chairman of the Board since May 2010. During December 2021, he has stepped down as CEO and transitioned Mr. Matthew Drinkwater as the Company’s new CEO (see Subsequent Events Note 20 for further information). From 2005 to 2009 Mr. Speyer served as a director, the president and chief executive officer of Speyer Door and Window, LLC, which was sold to Haddon Windows, LLC (SecuraSeal, LLC, AccuWeld Corporation) in December 2009. From October 2002 to May 2005 Mr. Speyer had been a private investor. Mr. Speyer was president and chief executive officer of Intelligent Systems Software, Inc. from October 2000 through June 2002, whereby Mr. Speyer became chief executive officer of ICAD, Inc. (ICAD: NASDAQ) which was a combination of ISSI and Howtek, Inc. (HOWT:NASDAQ). Mr. Speyer was the president and chief executive officer of Galileo Corporation (GAEO: NASDAQ) from 1998 to 1999. Galileo Corporation changed its name to NetOptix (OPTX: NASDAQ) and was merged with Corning Corporation (GLW: NYSE) in a stock purchase in May 2000. From 1996 to 1998 Mr. Speyer was the president of Leisegang Medical Group, three medical device companies owned by Galileo Corporation. Prior to joining Galileo Corporation, Mr. Speyer founded Leisegang Medical, Inc. and served as its president and chief executive officer from 1986 to 1996. Leisegang Medical, Inc. was a company specializing in medical devices for women’s health. Mr. Speyer is a graduate of Northeastern University, Boston, Massachusetts, where he earned a Bachelor of Science Degree in Business Administration in 1972. Mr. W. Kip Speyer is active in many local charities and is the father of Mr. Todd F. Speyer, our Chief Operating Officer – Bright Mountain, LLC and a director. Mr. Speyer’s experience as the Chief Executive Officer and/or Chairman of the Board of Directors of other public companies were factors considered by our board of directors in concluding that he should be serving as a director of our company. Edward Cabanas Mr. Cabanas was appointed Chief Financial Officer on September 1, 2020. Mr. Cabanas, age 49 served as the Vice President-Finance for ACAMS, L.L.C. (Association of Certified Anti-Money Laundering Specialists), a wholly owned subsidiary of Adtalem Global Education (NYSE: ATGE) where he oversaw the finance function for the company and partnered with the operation focusing on sales management, international expansion and product development. From February 2017 until August 2019 Mr. Cabanas served as Senior Vice President, Chief Financial Officer for the connectivity segment of Global Eagle Entertainment (NASDAQ: ENT) where he oversaw the global finance and accounting functions for a leading provider of satellite-based connectivity to the air, sea and remote land markets. From 2001 until 2016 Mr. Cabanas served in various senior finance and business development positions at Laureate Education (NASDAQ: LAUR). Mr. Cabanas received a BS in Public Accounting from Fordham University and obtained his CPA license (currently inactive) from The State of New York. Todd F. Speyer has been a member of the board of directors and an employee of our company since January 2011, currently serving as our Chief Executive Officer – Bright Mountain, LLC. Mr. Speyer is responsible for the content and operations of our owned websites and proprietary ad serving technology. For over the previous five and one-half years, he has been responsible for the integration of all website organic growth and acquisitions, including content, design and visitor traffic. Previously, Mr. Speyer was our Director of Business Development, helping locate acquisitions and shaping the website portfolio. Mr. Speyer graduated from Florida State University in 2004 with a Bachelor of Arts Degree in English Literature. Mr. Todd F. Speyer is the son of Mr. W. Kip Speyer, our CEO, President and Chairman. Mr. Speyer’s website development experience as well as his marketing experience were factors considered by our board of directors in concluding that he should be serving as a director of our company. 44 Joey Winshman has been a member of our Board of Directors since August 2019. Mr. Winshman has served as Chief Marketing Officer of S&W since co-founding the company in February 2015. Since June 2019 he has also served as Chief Marketing Officer of Lumynox, a subsidiary of S&W. Prior to co-founding S&W, from June 2013 until January 2015 Mr. Winshman was Media Manager for Taptica International Ltd., now known as T remor International Ltd. (AIM: TRMR), a leader in advertising technologies with operations in more than 60 countries. Mr. Winshman, who is a citizen of both Israel and the U.S., received a B.S. in Business Administration, Management Information Systems, from the University of Vermont. Pamela Parizek has been a member of our Board of Directors since October 2020. Pam has over 30 years of experience advising corporate boards, audit committees, c-suite executives and outside counsel on complex accounting, legal and regulatory matters. She is a JD/CPA, certified in financial forensics, and previously served in the enforcement division of the U.S. Securities and Exchange Commission (SEC) and led the Washington, DC forensic practice of a Big Four accounting firm. Pamela has led numerous investigations involving public companies, private entities and charitable foundations and her findings have been presented to U.S. and foreign regulatory authorities – in compliance with restrictive data protection and privacy regimes around the world. She has also provided forensic assistance to audit engagement teams on fraud risk, accounting irregularities and alleged illegal acts. Pamela serves on the Board of Directors of Foundation for a Smoke-Free World and on the Board of Trustees of the National Museum of Women in the Arts. She previously served on the boards of Global Kids, Inc. and the SEC Historical Society. Ms. Parizek holds a JD from Northwestern University School of Law and a BA from Harvard College. Charles H. Lichtman has been a member of our board of directors since October 2014. Mr. Lichtman is an attorney practicing law since 1980, licensed in Illinois and Florida. He is a partner of Berger Singerman LLP since 2001. Mr. Lichtman has been honored as a two-time Lawyer of the Year by Best Lawyers in America and noted by them for his excellence every year since 2009 in the categories of Complex Business Litigation, Securities Litigation, Bankruptcy Litigation and Commercial Litigation. He has also been recognized by Chambers International and received other legal awards from various entities and periodicals. Mr. Lichtman’s professional experience as an attorney was the factor considered by our board of directors in concluding that he should be serving as a director of our company. Harry D. Schulman has been a member of our Board of Directors since November 2019. For more than 20 years he has served on multiple boards including Baird Capital, a private equity firm managing over $3 billion, Hancock Fabrics, Inc., O2 Media, Inc., QEP and HeZhong International Holdings. He holds a Master’s degree in International Business from the University of Miami and a Bachelor’s degree in Business from the University of Dayton. There are no family relationships between any of the executive officers and directors other than as set forth above. Each director is elected at our annual meeting of shareholders and holds office until the next annual meeting of shareholders, or until his 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, although less than a quorum exists. A director elected to fill a vacancy shall serve for the unexpired term of his or her predecessor. Vacancies occurring by reason of the removal of directors without cause may only be filled by vote of the shareholders. Gretchen Tibbits joined the Board of Directors in February 2021. Ms. Tibbits has over 25 years of experience in management, strategy, and mergers & acquisitions. She is an Investment Banker focused on the media & technology and consumer content & commerce sectors. Previously, Ms. Tibbits served in executive roles at LittleThings, StyleCaster, Hearst, ESPN, and WorkingWomanNetwork. Ms. Tibbits holds an M.B.A. in Finance and Management from New York University, where she was a Stern Scholar, and a B.A. from the University of Virginia. She currently chairs the Campaign for the Arts and the Arts Endowment at the University of Virginia and serves on the board of the Tectonic Theater Project. Ms. Tibbits has no arrangements or understandings with any other person pursuant to which she was appointed as a director and no family relationships with any director or executive officer of the Company. Ms. Tibbits has no direct or indirect beneficial ownership in the Company’s common stock or rights to acquire common stock. 45 Leadership structure, independence of directors and risk oversight Mr. W. Kip Speyer serves as our Chairman of our board of directors. Messrs. Lichtman, Schulman, Parizek, and Tibbits are considered independent directors within the meaning of Rule 802 of the NYSE American Company Guide. Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including credit risk, interest rate risk, liquidity risk, operational risk, strategic risk and reputation risk. Management is responsible for the day-to-day management of risks we face, while the board, as a whole and through its committees, has responsibility for the oversight of risk management. In its risk oversight role, the board of directors has the responsibility to satisfy itself that the risk management process designed and implemented by management are adequate and functioning as designed. To do this, the chairman of the board meets regularly with management to discuss strategy and the risks facing our company. Senior management attends the board meetings and is available to address any questions or concerns raised by the board on risk management and any other matters. The chairman of the board and independent members of the board work together to provide strong, independent oversight of our company’s management and affairs through its standing committees and, when necessary, special meetings of independent directors. Committees of our board of directors In May 2015, our board of directors established a standing Audit Committee and a standing Compensation Committee. In August 2016, our board of directors established a standing Corporate Governance and Nominating Committee. Each committee has a written charter. The charters are available on our website at www.brightmountainmedia.com. All committee members are required to be independent directors. Information concerning the current membership and function of each committee is as follows: Director Audit Committee Compensation Committee Corporate Governance and Nominating Committee Charles H. Lichtman ✔ ✔ Harry Schulman ✔ ✔ ✔ Pamela Parizek ✔ ✔ Gretchen Tibbits ✔ Audit Committee The Audit Committee assists the board in fulfilling its oversight responsibility relating to: ● the integrity of our financial statements; ● our compliance with legal and regulatory requirements; and ● the appointment, compensation, and oversight of our independent registered public accountants. The Audit Committee is composed of two directors, each of whom has been determined by the board of directors to be independent within the meaning of the NYSE American Company Guide. Two of the members of the Audit Committee are qualified as an “audit committee financial expert” as defined by the SEC. The Audit Committee met four times during 2020. 46 Compensation Committee The Compensation Committee assists the board in: ● determining, in executive session at which our Chief Executive Officer is not present, the compensation for our CEO or President, if such person is acting as the CEO; ● discharging its responsibilities for approving and evaluating our officer compensation plans, policies and programs; ● reviewing and recommending to the board regarding compensation to be provided to our employees and directors; and ● administering our stock compensation plans. The Compensation Committee is charged with ensuring that our compensation programs are competitive, designed to attract and retain highly qualified directors, officers, and employees, encourage high performance, promote accountability and assure that employee interests are aligned with the interests of our shareholders. The Compensation Committee is composed of two directors, both of whom have been determined by the board of directors to be independent within the meaning of the NYSE American Company Guide. The Compensation Committee did not meet in 2020. Corporate Governance and Nominating Committee The Corporate Governance and Nominating Committee: ● assists the board in selecting nominees for election to the Board; ● monitors the composition of the board; ● develops and recommends to the board, and annually reviews, a set of effective corporate governance policies and procedures applicable to our company; and ● regularly reviews the overall corporate governance of the Corporation and recommends improvements to the board as necessary. The purpose of the Corporate Governance and Nominating Committee is to assess the performance of the board and to make recommendations to the board from time to time, or whenever it shall be called upon to do so, regarding nominees for the board and to ensure our compliance with appropriate corporate governance policies and procedures. The Corporate Governance and Nominating Committee is composed of two directors, both of whom have been determined by the board of directors to be independent within the meaning of the NYSE American Company Guide. The Corporate Governance and Nominating Committee met three times in 2020. Shareholder nominations Shareholders who would like to propose a candidate may do so by submitting the candidate’s name, resume and biographical information to the attention of our Corporate Secretary. All proposals for nomination received by the Corporate Secretary will be presented to the Corporate Governance and Nominating Committee for appropriate consideration. It is the policy of the Corporate Governance and Nominating Committee to consider director candidates recommended by shareholders who appear to be qualified to serve on our board of directors. The Corporate Governance and Nominating Committee may choose not to consider an unsolicited recommendation if no vacancy exists on the board of directors and the committee does not perceive a need to increase the size of the board of directors. In order to avoid the unnecessary use of the Corporate Governance and Nominating Committee’s resources, the committee will consider only those director candidates recommended in accordance with the procedures set forth below. To submit a recommendation of a director candidate to the Corporate Governance and Nominating Committee, a shareholder should submit the following information in writing, addressed to the Corporate Secretary of Bright Mountain at our main office: ● the name and address of the person recommended as a director candidate; ● all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act; ● the written consent of the person being recommended as a director candidate to be named in the proxy statement as a nominee and to serve as a director if elected; ● as to the person making the recommendation, the name and address, as they appear on our books, of such person, and number of shares of our common stock owned by such person; provided, however , that if the person is not a registered holder of our common stock, the person should submit his or her name and address along with a current written statement from the record holder of the shares that reflects the recommending person’s beneficial ownership of our common stock; and ● a statement disclosing whether the person making the recommendation is acting with or on behalf of any other person and, if applicable, the identity of such person. 47 Code of Ethics and Conduct We have adopted a Code of Ethics and Conduct which applies to our board of directors, our executive officers and our employees. The Code of Ethics and Conduct outlines the broad principles of ethical business conduct we adopted, covering subject areas such as: ● conflicts of interest; ● corporate opportunities; ● public disclosure reporting; ● confidentiality; ● protection of company assets; ● health and safety; ● conflicts of interest; and ● compliance with applicable laws. A copy of our Code of Ethics and Conduct is available without charge, to any person desiring a copy, by written request to us at our principal offices at 6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487. Director compensation In December 2017, our board of directors adopted a compensation policy for our independent directors for 2019. Under the terms of the 2019 director compensation policy, independent directors will receive $500 in cash for each board meeting attended and members of any committee of the board receive an additional $250 per committee meeting attended. In November 2019, our board of directors changed the compensation policy to compensate the directors 2,500 stock options for each meeting attended. Our non-independent directors are not compensated for their services. At the end of 2020, our board of directors changed the compensation policy to compensate the independent directors with 45,000 restricted shares per year on a pro-rata basis, based on their start date. The following table provides information concerning the compensation paid to our independent directors for their services as members of our board of directors for 2020. The information in the following table excludes any reimbursement of out-of-pocket travel and lodging expenses which we may have paid: Fees Non-equity Nonqualified earned incentive deferred or Stock Option plan compensation All other paid in awards awards compensation earnings Compensation Name cash ($) ($) ($) ($) ($) ($) Total ($) Harry Schulman — 139,050 7,450 — — — 146,500 Pamela Parizek — 28,953 — — — — 28,953 Charles Lichtman — 139,050 7,450 — — — 146,500 Gretchen Tibbits (1) — — — — — — — (1) Ms. Tibbits joined the board in February 2021. She did not earn and was not paid any compensation during the 2020 year. Compliance with Section 16(a) of the Exchange Act Section 16(a) of the Exchange Act of 1934, as amended, requires our executive officers and directors, and persons who beneficially own more than 10% of a registered class of our equity securities to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common shares and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the Securities and Exchange Commission regulations to furnish us with copies of all Section 16(a) reports they file. Based on our review of the copies of such forms received by us, all executive officers, directors and persons holding greater than 10% of our issued and outstanding stock have filed the required reports in a timely manner during 2020, except for Mr. Kip Speyer who failed to timely file one Form 4, related to one disposition by gift. The delinquent Form 4 has subsequently been filed. 48 ITEM 11. EXECUTIVE COMPENSATION The following table summarizes all compensation recorded by us in the past two years for: ● our principal executive officer or other individual serving in a similar capacity; ● our two most highly compensated executive officers other than our principal executive officer who were serving as executive officers at December 31, 2020; and ● up to two additional individuals for whom disclosure would have been required but for the fact that the individual was not serving as an executive officer at December 31, 2020. Summary Compensation Table Name and principal position Year Salary ($) Bonus ($) Stock Awards ($) (1) Option Awards ($) No equity incentive plan compensation ($) Non-qualified deferred compensation earnings ($) All other compensation ($) Total ($) W. Kip Speyer, Chairman of the Board (2) 2020 275,520 — — — — — 9,785 285,305 2019 165,000 — — — — 8,800 173,800 Emily Smith, Chief Executive Officer – Wild Sky Media (3) 2020 235,000 — — — — — — — Todd Speyer, Chief Executive Officer – Bright Mountain, LLC 2020 144,347 — — — — — — 144,347 2019 114,583 — — — — — — 114,583 Edward Cabanas, Chief Financial Officer (4) 2020 73,903 73,903 Alan Bergman, Former Chief Financial Officer (5) 2020 140,000 — — — — — — 140,000 2019 67,500 — — — — — — 67,500 Greg Peters, Former President and Chief Operating Officer (6) 2020 325,000 — — — — — — 325,000 2019 40,625 — — — — — — 40,625 (1) The amounts included in the “Stock Awards” column represent the aggregate grant date fair value of the shares of our common stock, computed in accordance with ASC Topic 718. (2) The amount of compensation paid to Mr. W. Kip Speyer excludes $63,136 and $191,862 in interest and dividend payments for 2020 and 2019, respectively. Effective December 1, 2021, Mr. W. Kip Speyer has transitioned Chief Executive Officer role into Chairman of the Board. (3) Ms. Smith joined the Company in connection with the Wild Sky acquisition on June 1, 2020. (4) Mr. Cabanas joined the Company as its Chief Financial Officer on September 1, 2020. (5) As of December 31, 2020, Mr. Bergman is no longer an officer of the Company. (6) Mr. Peters resigned as the President and Chief Operating Officer of the Company effective December 31, 2020. Employment agreement with our named executive and other executive officers W. Kip Speyer We have entered into an Executive Employment Agreement with W. Kip Speyer, our Chairman of the Board, with an effective date of June 1, 2014. Under the terms of this agreement, he is serving as Chairman of the Board, Chief Executive Officer and President of our company. On April 1, 2017, we entered into an amendment to his employment agreement which extended the term for an additional three years, set his base compensation at $165,000 per annum and provided the ability to earn a performance bonus beginning for 2017 based upon annual revenues above $3,000,000 per year and the certain earnings before interest, taxes and depreciation, or “EBITDA,” goals as follows: (i) for annual revenues of $3,000,000 to $3,500,000, a bonus of 25% of his then base salary; (ii) for annual revenues of $3,500,001 to $4,000,000 and a minimum EBITDA of $100,000, a bonus of 40% of his then base salary; (iii) for annual revenues of $4,000,0001 to $4,500,000 and a minimum EBITDA of $150,000, a bonus of 65% of his then base salary; and (iv) for annual revenues of $4,500,001 or greater and a minimum EBITDA of $175,000, a bonus of 80% of this then base salary. Effective April 1, 2020, we entered into an amendment of his employment agreement to adjust his compensation to an annual rate of $325,000 and remove the performance bonus structure. 49 The agreement with Mr. Speyer will terminate upon his death or disability. In the event of a termination upon his death, we are obligated to pay his beneficiary or estate an amount equal to one-year base salary plus any earned bonus at the time of his death. In the event the agreement is terminated as a result of his disability, as defined in the agreement, he is entitled to continue to receive his base salary for a period of one year. We are also entitled to terminate the agreement either with or without case, and he is entitled to voluntarily terminate the agreement upon one year’s notice to us. In the event of a termination by us for cause, as defined in the agreement, or voluntarily by Mr. Speyer, we are obligated to pay him the base salary through the date of termination. In the event we terminate the agreement without cause, we are obligated to give him one years’ notice of our intent to terminate and, at the end of the one-year period, pay an amount equal to two times his annual base salary together with any bonuses which may have been earned as of the date of termination. A constructive termination of the agreement will also occur if we materially breach any term of the agreement or if a successor to our company fails to assume our obligations under Mr. Speyer’s employment agreement. In that event, he will be entitled to the same compensation as if we terminated the agreement without cause. The employment agreement contains customary non-compete and confidentiality provisions. We have also agreed to indemnify Mr. Speyer pursuant to the provisions of our amended and restated articles of incorporation and amended and restated by-laws. Effective December 1, 2021, Mr. W. Kip Speyer has transitioned Chief Executive Officer role into Chairman of the Board. Todd Speyer We are not a party to an employment agreement with Mr. Todd Speyer. His compensation is determined by the compensation committee, based upon industry norms. Mr. Todd Speyer is Mr. Kip Speyer’s son. Mr. Todd Speyer’s compensation may be changed from time to time at the discretion of the compensation committee of the board of directors. Edward Cabanas We are not a party to an employment agreement with Mr. Cabanas. His compensation is determined by the board of directors based upon industry norms. Mr. Cabanas’ compensation may be changed from time to time at the discretion of the compensation committee of the board of directors. Emily Smith Ms. Emily Smith has an employment agreement which was assigned to Bright Mountain per the acquisition of CL Media Holdings, LLC (d/b/a/ Wild Sky Media) which occurred during June 2020. The agreement is dated August 15, 2019, subsequently amended on September 9, 2019. Ms. Smith would be the Chief Executive Officer of Wild Sky Media and earn an annual salary of $400,000, be eligible for an annual discretionary bonus, and be eligible for-profit participation. In case of termination, there is a 6-month severance clause, including continued benefits, if applicable, through the 6-month period. During April 2020, Ms. Smith accepted a reduction in pay to a base salary of $300,000 per year, which is still in effect as of this writing. Greg Peters Effective December 31, 2020, the Company accepted the resignation of Mr. Gregory Peters as its President and Chief Operating Officer and a Director of the Company. Effective January 1, 2021, the Board of Directors approved a Consulting Agreement with Greg Peters (“Peters Consulting Agreement”). The Peters Consulting Agreement replaced Mr. Peters existing Employment Agreement. The Peters Consulting Agreement will expire March 31, 2023 and will pay Mr. Peters $27,083 per month and he will provide up to 20 hours per week on matters mutually agreed to between Mr. Peters and the Company’s Chairman of the Board. Mr. Peters will not participate in the Company’s benefit programs and he is not entitled to any additional reimbursements except agreed out-of-pocket business expenses. Mr. Peters may work for others provided such entities do not compete with the business of the Company. The above represents a summary of Mr. Peters’ Consulting Agreement; the complete Peters Consulting Agreement is filed as Exhibit 10.30 to this Annual Report on Form 10-K. 50 Outstanding equity awards at fiscal year-end The following table provides information concerning unexercised stock options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of December 31, 2020, together with unexercised stock options, stock that has not vested and equity incentive plan awards for each of our other executive officers outstanding as of December 31, 2020: OPTION AWARDS STOCK AWARDS Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) Option Expiration Date Number of Shares or Units of Stock That Have Not Vested (#) Market Value of Shares or Units of Stock That Have Not Vested ($) Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights that Have Not Vested (#) Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested (#) W. Kip Speyer — — — — — — — — — Edward Cabanas — 100,000 — 2.10 8/3/30 — — — — Todd Speyer 180,000 — — 0.14 1/3/21 0 0 0 0 100,000 — — 0.65 10/27/25 0 0 0 0 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS As of November 17, 2021 we had 150,619,286 shares of our common stock issued and 149,794,111 shares of our common stock outstanding. The following table sets forth information regarding the beneficial ownership of our common stock as of that date by: ● each person known by us to be the beneficial owner of more than 5% of our common stock; ● each of our directors; ● each of our named executive officers; and ● our named executive officers and directors as a group. Unless specified below, the business address of each shareholder is c/o 6400 Congress Avenue, Suite 2050, Boca Raton, FL 33487. The percentages in the table have been calculated on the basis of treating as outstanding for a particular person, all shares of our common stock outstanding on that date and all shares of our common stock issuable to that holder in the event of exercise of outstanding options, warrants, rights or conversion privileges owned by that person at that date which are exercisable within 60 days of that date. Except as otherwise indicated, the persons listed below have sole voting and investment power with respect to all shares of our common stock owned by them, except to the extent that power may be shared with a spouse. Name of Beneficial Owner Amount and Nature of Beneficial Ownership % of Class W. Kip Speyer (1) 30,968,507 20.7 % Edward Cabanas 100,000 0.1 % Todd F. Speyer (2) 616,900 0.4 % Joey Winshman 4,353,351 2.9 % Charles H. Lichtman (3) 1,717,636 1.1 % Harry Schulman 50,000 0.0 % Pamela Parizek 9,370 0.0 % Gretchen Tibbits - - All directors and executive officers as a group (eight persons) (1)(2)(3) 37,815,764 25.2 % Andrew A. Handwerker (4) 11,918,458 8.0 % Total Officers, Directors and Affiliates 49,734,222 33.2 % 51 (1) The number of shares of common stock beneficially owned by Mr. Speyer includes (i) 2,375,000 shares issuable upon the conversion of shares of our 10% Series E convertible preferred stock, (ii) 2,177,233 shares of our common stock issuable upon the conversion of shares of our 12% Series F-1 Convertible Preferred Stock, (iii) 1,408,867 shares of common stock issuable upon the conversion of shares of our 6% Series F-2 Convertible Preferred Stock, (iv) 757,917 shares of our common stock issuable upon the conversion of shares of our 10% Series F-3 Convertible Preferred Stock, (v) 1,200,000 shares of our common stock issuable upon the conversion of shares of our 10% Series A-1 Convertible Preferred Stock, and (vi) 200,000 shares of our common stock issuable upon the conversion of convertible promissory notes in the aggregate principal amount of $80,000 which have a conversion price of $0.40 per share. (2) The number of shares of common stock beneficially owned by Mr. Speyer includes 75,000 shares underlying vested stock options. (3) The number of shares beneficially owned by Mr. Lichtman includes 136,599 shares underlying vested stock options. (4) The number of shares beneficially owned by Mr. Handwerker includes: ● 5,169,500 shares held jointly with his wife: and ● 4,390,888 shares held individually. The number of shares beneficially owned by Mr. Handwerker excludes 750,000 shares underlying common stock purchase warrants. Under the terms of the warrants, Mr. Handwerker may not exercise the warrants to the extent such conversion or exercise would cause him, together with his affiliates, to beneficially own a number of shares of our common stock which would exceed 4.99% of our then outstanding shares of our common stock following such exercise. This limitation may be increased to 9.99% at Mr. Handwerker’s option upon 61 days’ notice to us. Securities authorized for issuance under equity compensation plans The following table sets forth securities authorized for issuance under any equity compensation plans approved by our shareholders as well as any equity compensation plans not approved by our shareholders as of December 31, 2020. 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 Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) Plans approved by our shareholders: 2011 Stock Option Plan 563,000 0.23 337,000 2013 Stock Option Plan 433,000 0.91 467,000 2015 Stock Option Plan 141,000 0.72 859,000 2019 Stock Option Plan 238,227 1.83 4,761,773 Plans not approved by shareholders: - - - 52 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Related party transactions Preferred stock purchases During 2019, Mr. W. Kip Speyer purchased an aggregate of 1,200,000 shares of our 10% Series A-1 Convertible Preferred Stock at a purchase price of $0.50 per share. We used the proceeds from these sales for working capital. During 2018, Mr. W. Kip Speyer purchased an aggregate of 1,125,500 shares of our 10% Series E Convertible Preferred Stock at a purchase price of $0.40 per share. We used the proceeds from these sales for working capital. In 2020 and 2019 we paid cash dividends on these outstanding shares of our 10% Series E Convertible Preferred Stock and the three sub-series of our Series F Convertible Preferred Stock described below of $55,000 and $180,931, to Mr. Speyer, respectively. Note Exchange Agreement From time-to-time Mr. Speyer lent us funds for working capital under the terms of various convertible promissory notes. On November 7, 2019 we entered into a Note Exchange Agreement with Mr. Speyer pursuant to which we exchanged: ● $1,075,000 principal amount and accrued but unpaid interest due Mr. Speyer under 12% Convertible Promissory Notes maturing between September 26, 2021 and April 10, 2022 for 2,177,233 shares of our newly created Series F-1 Convertible Preferred Stock in full satisfaction of those notes: ● $660,000 principal amount and accrued but unpaid interest due Mr. Speyer under 6% Convertible Promissory Notes maturing between April 19, 2022 and July 27, 2022 for 1,408,867 shares of our newly created Series F-2 Convertible Preferred Stock in full satisfaction of those notes: and ● $300,000 principal amount and accrued but unpaid interest due Mr. Speyer under 10% Convertible Promissory Notes maturing between August 1, 2022 and August 30, 2022 for 757,197 shares of our newly created Series F-3 Convertible Preferred Stock in full satisfaction of those notes. Convertible notes During November 2019, we issued and sold Mr. Speyer two five-year unsecured convertible notes in the aggregate principal amount of $80,000. These notes, which are convertible at the option of the holder at any time at a conversion price of $0.40 per share, will automatically convert into shares of our common stock on the fifth anniversary of the date of issuance. We used the proceeds from these notes for working capital. Director independence Messrs. Lichtman, Schulman, Parizek and Tibbits are considered “independent” within the meaning of Section 802 of the NYSE American Company Guide. 53 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The following table shows the fees for professional audit services and other services rendered by EisnerAmper, LLP for the audit of the Company’s annual financial statements for the years ended December 31 2020 and 2019, and fees billed for the other services rendered during those periods. 2020 2019 Audit Fees $ 348,800 $ 309,990 Audit-Related Fees 300,350 49,920 Tax Fees 16,000 16,000 Total $ 665,150 $ 375,910 Audit Fees — This category includes the audit of our annual financial statements, review of financial statements included in our Quarterly Reports on Form 10-Q and services that are normally provided by the independent registered public accounting firm in connection with engagements for those fiscal years. 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. Audit-Related Fees — This category consists of 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. Tax Fees — This category consists 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. 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 audit and tax fees paid to the auditors with respect to 2020 and 2019 were pre-approved by the Audit Committee. 54 PART IV ITEM 15. EXHIBITS AND FINANCIAL STATEMENTS SCHEDULES 15(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. 15(a)(2) Financial Statement Schedules The financial statement schedules are listed in the Index to Consolidated Financial Statements on page F-1 of this Annual Report on Form 10-K. 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. 15(a)(3) Exhibits The exhibits are listed in the Exhibit Index attached to this Annual Report on Form 10-K. EXHIBIT INDEX Filed or Incorporated by Reference Furnished No. Exhibit Description Form Date Filed Number Herewith 3.1 Amended and Restated Articles of Incorporation Form 10 1/31/13 3.3 3.2 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 7/9/13 3.3 3.3 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 11/16/13 3.4 3.4 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 12/30/13 3.4 3.5 Articles of Amendment to the Amended and Restated Articles of Incorporation 10-K 3/31/14 3.5 3.6 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 7/28/14 3.6 3.7 Articles of Amendment to the Amended and Restated Articles of Incorporation 10-K/A 4/1/15 3.5 3.8 Articles of Amendment to the Amended and Restated Articles of Incorporation 8-K 12/4/15 3.7 3.9 Articles Amendment to the Amended and Restated Articles of Incorporation 8-K 11/13/18 3.10 3.10 Amended and Restated Bylaws Form 10 1/31/13 3.2 4.1 Form of unit warrant 2018 private placement 10-K 4/2/18 4.1 4.2 Form of placement agent warrant 2018 private placement 10-K 4/2/18 4.2 4.3 Specimen common stock certificate 10-K 05/14/2020 4.3 55 4.4 Form of unit warrant 2019 private placement 8-K 1/14/19 4.1 4.5 Form of placement agent warrant 2019 private placement 8-K 1/14/19 4.2 10.1 2011 Stock Option Plan Form 10 1/31/13 10.1 10.2 2013 Stock Option Plan 10-Q 11/13/13 10.18 10.3 2015 Stock Option Plan 8-K 5/27/15 10.36 10.4 2019 Stock Option Plan Filed 10.5 Letter agreement dated September 19, 2017 with Vinay Belani 8-K 9/25/17 10.2 10.6 Consulting Agreement dated September 6, 2017 by and between Spartan Capital Securities, LLC and Bright Mountain Media, Inc. 8-K 10/4/18 10.45 10.7 M&A Advisory Agreement dated September 6, 2017 by and between Spartan Capital Securities, LLC and Bright Mountain Media, Inc. 8-K 10/4/18 10.46 10.8 Finder’s Agreement dated October 31, 2018 by and between Spartan Capital Securities, LLC and Bright Mountain Media, Inc. 10-Q 11/20/18 10.2 10.9 Uplisting Advisory and Consulting Agreement dated December 11, 2018 by and between Spartan Capital Securities, LLC and Bright Mountain Media, Inc. 8-K 1/14/19 10.1 10.10 Lease Agreement dated August 24, 2014 for registrant’s principal executive offices 10-Q 11/12/14 10.26 10.11 Addendum to Lease dated August 5, 2015 for registrant’s principal executive offices 10-Q 8/11/15 10.37 10.12 Amendment to Lease Agreement dated August 8, 2018 for registrant’s principal executive offices 10-Q 11/20/18 10.1 10.13 Executive Employment Agreement effective April 1, 2020 by and between W. Kip Speyer and Bright Mountain Media, Inc. 8-K 3/31//20 10.1 10.14 Consulting Agreement effective January 1, 2021 between Greg Peters and Bright Mountain Media, Inc. 8-K 01/06/2021 10.1 10.15 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 10.16 Amendment dated July 31, 2019 to Finder’s Fee Agreement by and between Bright Mountain Media, Inc. and Spartan Capital Securities, LLC 8-K 8/7/19 10.2 10.17 Promissory Note dated August 15, 2019 due to Joey Winshman 8-K 8/16/19 10.1 10.18 Promissory Note dated August 15, 2019 to Nadav Slutzky 8-K 8/16/19 10.2 10.19 Promissory Note dated August 15, 2019 to Eli Desatnik 8-K 8/16/19 10.3 10.20 Employment Agreement dated August 15, 2019 by and between Slutzky & Winshman Ltd. and Joey Winshman 8-K 8/16/19 10.8 10.21 Consulting Agreement dated August 15, 2019 by and between Bright Mountain Media, Inc., Slutzky & Winshman Ltd. and Nadav Slutzky 8-K 8/16/19 10.9 10.22 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 10.23 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 10.24 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 56 10.25 Form of Warrant for November 2019 Private Placement 8-K 02/04/2020 10.2 10.26 First Amendment to an Amended and Restated Senior Credit Agreement dated April 26, 2021. 8-K 4/30/2021 10.1 10.27 Second Amendment to an Amended and Restated Senior Credit Facility Agreement dated May 26, 2021. 8-K 6/2/2021 10.1 10.28 Third Amendment to Amended and Restated Senior Credit Facility Agreement dated December 20, 2021 8-K 08/18/2021 10.1 10.29 Fourth Amendment to Amended and Restated Senior Secured Credit Agreement dated August 31, 2021 8-K 09/07/2021 10.1 10.30 Fifth Amendment to Amended and Restated Senior Secured Credit Agreement dated October 8, 2021 8-K 10/08/2021 10.1 10.31 Sixth Amendment to Amended and Restated Senior Secured Credit Agreement dated November 5, 2021 8-K 11/05/2021 10.1 10.32 Share Issuance Agreement between Spartan Capital Securities, LLC and Bright Mountain Media, Inc. dated September 22, 2021 8-K 09/28/2021 10.1 14.1 Code Conduct and Ethics 10-K 3/31/14 14.1 21.1 List of subsidiaries Filed 23.1 Consent of ___________ Filed 31.1 Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer Filed 31.2 Rule 13a-14(a)/15d-14(a) Certification of principal financial and accounting officer Filed 32.1 Section 1350 Certification of Chief Executive Officer and principal financial and accounting officer Filed 101.INS XBRL INSTANCE DOCUMENT Filed 101.SCH XBRL TAXONOMY EXTENSION SCHEMA Filed 101.CAL XBRL TAXONOMY EXTENSION CALCULATION LINKBASE Filed 101.DEF XBRL TAXONOMY EXTENSION DEFINITION LINKBASE Filed 101.LAB XBRL TAXONOMY EXTENSION LABEL LINKBASE Filed 101.PRE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE Filed 57 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: December 23, 2021 By: /s/ W. Kip Speyer W. Kip Speyer Director and Principal Executive Officer Date: December 23, 2021 By: /s/ Edward A. Cabanas Edward A. Cabanas 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: December 23, 2021 By: /s/ W. Kip Speyer W. Kip Speyer Chairman of the Board of Directors and Principal Executive Officer Date: December 23, 2021 By: /s/ Harry Schulman Harry Schulman Director Date: December 23, 2021 By: /s/ Charles H. Lichtman Charles H Lichtman Director Date: December 23, 2021 By: /s/ Joey Winshman Joey Winshman Chief Marketing Officer, Director Date: December 23, 2021 By: /s/ Todd Speyer Todd Speyer CEO Bright Mountain, LLC., Director Date : December 23, 2021 By: /s/ Pamela Parizek Pamela Parizek, Director Date : December 23, 2021 By: /s/ Gretchen Tibbits Gretchen Tibbits Director 58 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2020 INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm F-2 Consolidated balance sheets at December 31, 2020 and 2019 (As restated) F-3 Consolidated statements of operations for the years ended December 31, 2020 and 2019 (As restated) F-4 Consolidated statements of changes in shareholders’ equity for the years ended December 31, 2020 and 2019 (As restated) F-5 Consolidated statements of cash flows for the years ended December 31, 2020 and 2019 (As restated) F-6 Notes to consolidated financial statements F-8 F- 1 Report of Independent Registered Public Accounting Firm To the Board of Directors and Shareholders of Bright Mountain Media, Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Bright Mountain Media, Inc. (the “Company”) as of December 31, 2020 and 2019, the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the years ended December 31, 2020 and 2019, and the related notes (collectively referred to as the “financial statements”). 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 did not audit the financial statements of Slutzky and Winshman, Ltd., a wholly-owned subsidiary, which statements reflect total assets and revenues constituting 3.6 percent and 18.8 percent, respectively, as of and for the year ended December 31, 2020, and 3.6 percent and 40.5 percent, respectively, as of and for the year ended December 31, 2019, of the related consolidated totals. Those statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for Slutzky and Winshman, Ltd., is based solely on the report of the other auditors. In our opinion, based on our audits and the report of the other auditors, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Bright Mountain Media, Inc. as of December 31, 2020 and 2019, and the consolidated results of their operations and their cash flows for each of the years then ended, in conformity with accounting principles generally accepted in the United States of America. Restatement of Financial Statements As discussed in Note 2 to the financial statements, the Company’s financial statements as of and for the year ended December 31, 2019 (which were previously audited by predecessor auditors), have been restated to correct certain misstatements. Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 1 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 1. 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 the Company’s 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 the Company 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. 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. The Company 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 Company’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. /s/ WithumSmith+Brown, PC We have served as the Company’s auditor since 2021. East Brunswick, New Jersey December 23, 2021 F- 2 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2020 2019 (As Restated) ASSETS Current assets Cash and cash equivalents $ 736,046 $ 957,013 Accounts receivable, net of allowance for doubtful accounts of $774,826 and $505,401, at December 31, 2020 and 2019, respectively 6,430,253 3,967,899 Note receivable, net 13,910 63,812 Prepaid expenses and other current assets 940,214 704,505 Current assets – discontinued operations – 1,705 Total current assets 8,120,422 5,694,934 Property and equipment, net 113,250 30,666 Website acquisition assets, net 5,600 48,928 Intangible assets, net 7,653,717 19,392,436 Goodwill 19,645,468 52,133,622 Prepaid services/consulting agreements – long term 664,593 913,182 Right-of-use asset 72,598 397,912 Other assets 253,650 35,823 Total assets $ 36,529,299 $ 78,647,503 LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities Accounts payable $ 9,595,006 $ 8,517,769 Accrued expenses 3,546,896 4,722,491 Accrued interest to related party 65,437 6,629 Premium finance loan payable 339,890 179,844 Deferred revenues 346,529 163,180 Long term debt, current portion 2,091,735 165,163 Operating lease liability, current portion 72,727 211,744 Current liabilities – discontinued operations – 591 Total current liabilities 16,058,220 13,967,411 Long term debt to related parties, net 39,728 25,689 Long term debt 16,916,705 – Deferred tax liability – 319,936 Operating lease liability – net of current portion – 198,232 Total liabilities 33,014,653 14,511,268 Commitments and Contingencies Shareholders’ equity Convertible preferred stock, par value $0.01, 20,000,000 shares authorized, Series A-1, 2,000,000 shares designated, 1,200,000 shares issued and outstanding at December 31, 2020 and 2019 12,000 12,000 Series B-1, 6,000,000 shares designated, no shares issued and outstanding at December 31, 2020 and 2019 – – Series E, 2,500,000 shares designated, 2,500,000 issued and outstanding at December 31, 2020 and 2019 25,000 25,000 Series F, 4,344,017 shares designated, 4,344,017 issued and outstanding at December 31, 2020 and 2019 43,440 43,440 Common stock, par value $0.01, 324,000,000 shares authorized, 118,162,150 and 100,782,956 issued and 117,336,975 and 100,782,956 outstanding at December 31, 2020 and 2019, respectively 1,181,622 1,007,830 Treasury stock, at cost; 825,175 shares at December 31, 2020 (219,837 ) – Additional paid-in capital 96,427,166 84,265,623 Accumulated deficit (93,932,080 ) (21,217,658 ) Accumulated other comprehensive loss (22,665 ) – Total shareholders’ equity 3,514,646 64,136,235 Total liabilities and shareholders’ equity $ 36,529,299 $ 78,647,503 See accompanying notes to consolidated financial statements. F- 3 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS For the Years Ended December 31, 2020 2019 (As Restated) Revenue: Advertising $ 15,839,429 $ 6,691,462 Cost of revenue: Advertising 7,906,346 5,791,049 Gross profit 7,933,082 900,413 Operating expenses: Selling, general and administrative expenses 22,092,352 9,454,240 Impairment expense – Goodwill 42,279,087 – Impairment expense – Intangible assets 16,486,929 – Total operating expenses 80,858,368 9,454,240 Loss from continuing operations (72,925,286 ) (8,553,827 ) Other income (expense) Interest income 10,006 47,396 Gain on settlement of liability - 123,739 Other income 274,075 – Interest expense (581,924 ) (20,077 ) Interest expense – related party (58,807 ) (19,334 ) Total other income (356,650 ) 131,724 Loss before tax – continuing operations (73,281,936 ) (8,422,103 ) Loss before tax – discontinued operations – (136,734 ) Net loss before tax (73,281,936 ) (8,558,837 ) Income tax benefit 567,514 4,384,146 Net loss (72,714,422 ) (4,174,691 ) Preferred stock dividends Series A-1, Series E, and Series F preferred stock (363,460 ) (319,367 ) Total preferred stock dividends (363,460 ) (319,367 ) Net loss attributable to common shareholders (73,077,882 ) (4,494,058 ) Other comprehensive loss (22,665 ) – Comprehensive loss $ (73,100,547 ) (4,494,058 ) Basic and diluted net loss for continuing operations per share $ (0.65 ) $ (0.06 ) Basic and diluted net loss for discontinued operations per share (0.00 ) (0.00 ) Basic and diluted net loss per share $ (0.65 ) $ (0.06 ) Weighted average shares outstanding – basic and diluted 112,528,858 72,435,144 See accompanying notes to consolidated financial statements. F- 4 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY Years Ended December 31, 2020 and 2019 (As Restated) Preferred Stock Common Stock Treasury Stock Additional Paid-in Accumulated Accumulated Other Comprehensive Total Stockholders ’ Shares Amount Shares Amount Shares Amount Capital Deficit Loss Equity Balance, January 1, 2019 6,844,017 $ 68,440 62,125,114 $ 621,252 — $ — $ 19,775,753 $ (17,042,967 ) $ — $ 3,422,478 Net loss — — — — — — — (4,174,691 ) — (4,174,691 ) Series A-1, E and F preferred stock dividend — — — — — — (319,367 ) — — (319,367 ) Issuance of Series A-1 preferred stock 1,200,000 12,000 — — — — 588,000 — — 600,000 Issuance of common stock: Units consisting of one share of common stock and one warrant issued for cash, net of costs — — 2,183,750 21,838 — — 981,178 — — 1,003,016 Units consisting of one share of common stock and two warrants issued for cash, net of costs 1,310,860 13,109 — — 628,357 — — 641,466 Oceanside acquisition (Note 4) — — 12,513,227 125,132 — — 19,896,031 — — 20,021,163 MediaHouse acquisition (Note 4) — — 22,559,790 225,598 — — 42,523,703 — — 42,749,301 For services rendered — — 90,215 901 — — 140,283 — — 141,184 Share-based compensation — — — — — — 51,684 — — 51,684 Balance, December 31, 2019 (As Restated) 8,044,017 80,440 100,782,956 1,007,830 — — 84,265,623 (21,217,658 ) — 64,136,234 Net loss — — — — — — — (72,714,422 ) — (72,714,422 ) Series A-1, E and F preferred stock dividend — — — — — — (363,460 ) — — (363,460 ) Issuance of common stock: Units consisting of one share of common stock and two warrants issued for cash, net of costs — — 10,398,700 103,987 — — 3,915,710 — — 4,019,697 Exercise of stock options — — 130,000 1,300 — — 16,762 — — 18,062 Restricted Share Awards — — 130,081 1,301 — — 404,642 — — 405,943 WSM acquisition (Note 4) — — 2,500,000 25,000 — — 3,700,000 — — 3,725,000 For services rendered — — 2,609,160 26,092 — — 4,322,453 — — 4,348,545 For cashless exercise of warrants — — 1,611,253 16,113 — — (16,113 ) — — — Acquisition of treasury stock, at cost — — — — (825,175 ) (219,837 ) — — — (219,837 ) Share-based compensation — — — — — — 181,549 — — 181,549 Adjustment from foreign currency translation, net — — — — — — — — (22,665 ) (22,665 ) Balance, December 31, 2020 8,044,017 $ 80,440 118,162,150 $ 1,181,622 (825,175 ) $ (219,837 ) $ 96,427,166 $ (93,932,080 ) $ (22,665 ) $ 3,514,646 See accompanying notes to consolidated financial statements. F- 5 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS For the Years Ended December 31, 2020 2019 (As Restated) Cash flows from operating activities: Net loss $ (72,714,422 ) (4,174,691 ) Addback: Loss attributable to discontinued operations — 136,734 Adjustments to reconcile net loss to net cash used in operations: Depreciation 56,017 10,265 Amortization of debt discount 14,039 14,001 Amortization 3,630,418 580,294 Goodwill impairment 42,279,087 — Intangible impairment 16,486,929 — Write-off of tradename — 32,000 Gain on settlement of liability — (123,739 ) Stock option vesting expense 181,549 51,684 Common stock and warrants issued for services 4,348,545 — Compensation expense for stock issuances 405,943 140,283 Stock compensation for Oceanside shares 366,105 — Stock issued for cashless exercise of warrants — — Change in deferred taxes (567,513 ) (4,566,342 ) Provision for bad debt 437,404 53,802 Changes in operating assets and liabilities: Accounts receivable (35,140 ) (244,391 ) Prepaid expenses and other current assets 752,754 211,568 Prepaid services / consulting agreements 248,590 249,318 Other assets (217,827 ) 54,626 ROU asset and lease liability (11,935 ) 12,064 Accounts payable (80,419 ) 772,675 Accrued expenses (2,331,213 ) 3,839,287 Accrued interest — related party 58,808 5,682 Deferred revenues 183,349 159,017 Cash used in continuing operations for operating activities (6,508,935 ) (2,785,863 ) Cash provided by discontinued operations for operating activities 1,114 8,099 Net cash used in operating activities (6,507,821 ) (2,777,764 ) Cash flows from investing activities: Cash (paid)/proceeds (for)/from property and equipment, net (14,026 ) 46,742 Cash paid for website acquisitions — (8,000 ) Cash acquired in acquisition of subsidiaries 1,651,509 749,997 Net cash provided by investing activities from continuing operations 1,637,483 788,739 Cash flows from financing activities: Proceeds from issuance of common stock, net of commissions 4,019,697 1,645,383 Proceeds from issuance of preferred stock — 600,000 Insurance premium notes payable — 22,626 Dividend payments (63,136 ) (319,367 ) Principal payment on notes payable — — Note receivable funded — (45,062 ) Proceeds from repayment of note receivable 49,902 — Proceeds from exercise of options 18,062 — Proceeds from issuance of premium finance loan payable 160,046 — Proceeds from PPP loan 464,800 — Net cash provided by financing activities from continuing operations 4,649,371 1,903,581 Net decrease in cash and cash equivalents including cash and cash equivalents classified within assets related to continuing operations (222,081 ) (93,543 ) Net decrease in cash and cash equivalents classified within assets related to discontinued operations 1,114 8,099 Net decrease in cash and cash equivalents (220,967 ) (85,444 ) Cash and cash equivalents at beginning of year 957,013 1,042,457 Cash and cash equivalents at end of year $ 736,046 $ 957,013 See accompanying notes to consolidated financial statements. F- 6 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) Supplemental disclosure of cash flow information: Cash paid for interest $ – $ 31,250 Supplemental disclosure of non-cash investing and financing activities Settlement of Daily Engage liability $ 219,837 $ 165,163 Non-cash acquisition of S&W net assets $ – $ 3,234,811 Non-cash acquisition of MediaHouse net assets $ – $ 1,193,313 Non-cash acquisition of S&W net liabilities $ – $ 3,403,055 Non-cash acquisition of MediaHouse net liabilities $ – $ 4,228,721 Non-cash intangible assets of S&W $ – $ 20,189,407 Non-cash intangible assets of MediaHouse $ – $ 45,779,811 Non-cash acquisition of WSM net assets $ 5,469,625 $ – Non-cash acquisition of WSM net liabilities $ 19,805,484 $ – Non-cash intangible assets of WSM $ 18,060,859 $ – Common stock issued for acquisitions $ 3,725,000 $ 62,770,464 Recognition of right of use asset for S&W $ – $ 235,000 Recognition of right of use lease liability for S&W $ – $ 247,065 Issuance of common stock for services $ 4,348,545 $ – Issuance of debt in accordance with legal settlement (Encoding) $ 215,978 $ – See accompanying notes to consolidated financial statements. F- 7 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES Notes to the Consolidated Financial Statements NOTE 1 – NATURE OF OPERATIONS AND BASIS OF PRESENTATION Organization, Nature of Operations and Liquidity Bright Mountain Media, Inc. (the “Company” or “Bright Mountain” or “We”) is a Florida corporation formed on May 20, 2010. Its wholly owned subsidiary, Bright Mountain LLC, was formed as a Florida limited liability company in May 2011. Its wholly owned subsidiary, Bright Mountain, LLC (“BMLLC”) F/K/A Daily Engage Media Group, LLC (“Daily Engage”) was formed as a New Jersey limited liability company in February 2015. In August 2019, Bright Mountain Israel Acquisition, an Israeli company was formed and acquired the wholly owned subsidiary Slutzky & Winshman Ltd. (“S&W”) which then changed its name to Oceanside Media LLC (“Oceanside”), see Note 4. Further, on November 18, 2019, Bright Mountain, through its wholly owned subsidiary BMTM2, Inc., a Florida corporation, acquired News Distribution Network, Inc. (“NDN”), a Delaware company, which then changed its name to MediaHouse, Inc. (“MediaHouse”). On June 1, 2020, Bright Mountain acquired the wholly owned subsidiary CL Media Holdings, LLC D/B/A “Wild Sky Media” (“Wild Sky”). When used herein, the terms “BMTM, the “Company,” “we,” “us,” “our” or “Bright Mountain” refers to Bright Mountain Media, Inc. and its subsidiaries. Discontinued Operations Effective December 31, 2018 the Company discontinued the E-Commerce operations, the Products segment, per the determination of Management and the Board of Directors. Accordingly, the Company determined that the assets and liabilities of this reportable segment met the discontinued operations criteria in Accounting Standards Codification (“ASC”) 205 and were classified as discontinued operation at December 31, 2018. For the year ended December 31, 2019, loss from discontinued operations before tax was $136,734. There were no discontinued operations in 2020. See Discontinued Operations Note 5. Continuing Operations The Company is engaged in operating a proprietary, end-to-end digital media and advertising services platform designed to connect brand advertisers with demographically-targeted consumers – both large audiences and more granular segments – across digital, social and connected television (CTV) publishing formats. We define “end-to-end” as our process for taking ad buying from beginning to end, delivering a complete functional solution, usually without requiring any involvement from a third party. Through acquisitions and organic software development initiatives, we have consolidated and plan to further condense key elements of the prevailing digital advertising supply chain through the elimination of industry “middlemen” and/or costly redundancy of services via our ad exchange network. Our aim is to enable and support a streamlined, end-to-end advertising model that addresses both demand (ad buy side) and supply (media sell side) for both direct sales teams and programmatic sales and publishing of digital advertisements that reach specific target audiences based on what, where, when and how that specific target audience elects to access certain web and/or streaming video content. Programmatic advertising relies on computer programs to use data and proprietary algorithms to select which ads to buy and for what price, while direct sales involve traditional interpersonal contact between ad buyers and advertising sales representative(s). By selling advertisements on our current portfolio of 20 owned and operated websites and 13 CTV apps, coupled with acquisition or development of other niche web properties in the future, we are building depth in specific demographic verticals that allow us to package audiences into targeted consumer categories valued by advertisers. Oceanside provides digital performance-based marketing services to customers which include primarily advertisers and advertising agencies that promote or sell products and/or services to consumers through digital media. MediaHouse partners with content producers and online news market websites to distribute video and banner advertisements throughout the United States of America (“U.S.”). F- 8 Wild Sky owns and operates a collection of websites that offer significant global reach through its content and niche audiences and has become a wholly-owned subsidiary of the Company. Wild Sky is the home to parenting and lifestyle brands. Going Concern The accompanying consolidated financial statements have been prepared and are presented assuming the Company’s ability to continue as a going concern, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business. The Company has sustained a net loss of $72,714,422, used cash outflows from continuing operating activities of $6,508,935 for the year ended December 31, 2020, and has an accumulated deficit of $93,932,080 at December 31, 2020 that raise substantial doubt about its ability to continue as a going concern. The Company’s continuation as a going concern is dependent upon its ability to generate revenues, control its expenses and its ability to continue obtaining investment capital and loans from related parties and outside investors to sustain its current level of operations. Management continues raising capital through private placements and is exploring additional avenues for future fund-raising through both public and private sources. The Company is not currently involved in any binding agreements to raise private equity capital. The accompanying consolidated financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. COVID-19 Update On January 30, 2020, the World Health Organization declared the COVID-19 outbreak a “Public Health Emergency of International Concern” and on March 11, 2020, declared COVID-19 a pandemic. The spread of COVID-19, a novel strain of coronavirus, has and continues to alter the behavior of business and people in a manner that is having negative effects on local, regional and global economies. The COVID-19 pandemic has caused disruptions in the services we provide. The COVID-19 pandemic has resulted in many states and countries imposing orders resulting in the closure of non-essential businesses, including many companies which advertise digitally. During 2021, we continued seeing lower advertising dollar spend in the first half of the year, but saw a rebound during the second half of 2021 as the health crisis improved supported by higher travel rates, national vaccination programs, higher vaccination rates for the general public and a broader age distribution of vaccines permitting lower aged children to obtain the vaccinations. It appears the pandemic will continue into 2022, but the digital ad spend dollars appears to be on an uptrend which would be positive for our industry. NOTE 2 – RESTATEMENT OF PREVIOUSLY ISSUED CONSOLIDATED FINANCIAL STATEMENTS Restatement Background On March 31, 2021, the Board of Directors and management, upon the recommendation of the Audit Committee of the Board of Directors (the “Audit Committee”), concluded that the Company’s previously issued financial statements as of and for the year ended December 31, 2019 and unaudited consolidated financial statements as of and for each of the interim quarterly periods ended September 30, 2019, March 31, 2020, June 30, 2020 and September 30, 2020, (collectively, the “Prior Period Financial Statements”), should no longer be relied upon due to misstatements that are described below, and that we would restate such financial statements to make the necessary accounting corrections. Details of the restated Prior Period Financial Statements are provided below (see section “ Restatement Items ”). The Company evaluated the materiality of these errors both qualitatively and quantitatively in accordance with Staff Accounting Bulletin (“SAB”) No. 99, Materiality and SAB No. 108, Considering the Effects of Prior Year Misstatements in Current Year Financial Statements, and determined the effect of these corrections were material to the Prior Period Financial Statements. As a result of the material misstatements, we have restated our Prior Period Financial Statements, in accordance with ASC 250, Accounting Changes and Error Corrections (the “Restated Financial Statements”). F- 9 The Restatement Items reflect adjustments to correct identified errors and has restated previously issued financial statements because of failure to properly record the following: a. Finder’s Fee accrual – The Company maintains a Finder’s Agreement with Spartan Capital Securities LLC (“Spartan Capital”) to identify and assist in business combinations, including any merger, acquisition or sale of stock or assets in connection with a merger or acquisition of other businesses. Upon closing of any such transaction, the Company shall pay an agreed fee relative to the consideration paid or received by the Company (the “finder’s fee”). There were two errors: i) the Company incorrectly used 3% instead of 5% to calculate the final finders’ fee; and ii) the Company determined that the consideration amount for the acquisition of MediaHouse (defined below) was overstated and affected the finders’ fee calculation (refer to “c” below). In addition, the Company incorrectly calculated the number of shares to be issued to Spartan Capital as finder’s fees in connection with the Company’s acquisitions Slutzky & Winshman Ltd. (which later changed its name to Oceanside Media LLC) (“Oceanside”) and News Distribution Network, Inc. d/b/a MediaHouse (“MediaHouse”) during the year ended December 31, 2019. The result of the correction for the year ended December 31, 2019 related to the Oceanside acquisition was that upon acquisition closing, accrued expenses were decreased by $4,656 with a corresponding decrease in selling, general and administrative expenses. The result of the correction as of and for the year ended December 31, 2019, related to the MediaHouse acquisition was that upon acquisition closing, accrued expense liability was increased by $1,007,921 with a corresponding increase in operating expenses. Accrued expense liability and accumulated deficit were also corrected in the respective quarters ended March 31, 2020, June 30, 2020, and September 30, 2020. b. Common Stock issued in Oceanside acquisition – In connection with the Oceanside acquisition in August 2019, the Company issued an incorrect number of shares of Company common stock as consideration as it used a preliminary purchase price. Upon management’s re-evaluation of the consideration paid, the number of shares issued in connection with the Oceanside acquisition increased by 382,428 resulting in a correction and increase in goodwill, common stock and additional paid-in capital in the amounts of $611,885, $3,824, and $608,058, respectively, at September 30, 2019. c. MediaHouse acquisition – Upon evaluation of the final MediaHouse acquisition agreement, the Company noted the following corrections: There was a miscalculation of the fair value of the warrants to be issued as part of consideration in the amount of $3,829,889 due to the conversion of bridge loan and open lines of credit, as well as a valuation adjustment. Further, the change in intangible assets valuation was mainly driven by the use of a more updated forecast that was lower than the original forecast utilized along with an increase in the Company’s state effective rate used to record deferred tax assets and liabilities resulted in an increase to the deferred tax liability of $836,363 which was fully offset by an adjustment to the tax provision to adjust the Company’s valuation allowance. The decrease of the valuation allowance was recorded as a benefit in the tax provision for the year ended December 31, 2019. Additionally, in connection with the MediaHouse acquisition in November 2019, the Company issued shares of Company common stock to certain of MediaHouse’s investors as part of the consideration paid. During September 2020, the Company determined that one investor had been issued an incorrect number of shares as the result of a transposition mistake; the investor should have been issued 840,000 shares but was incorrectly issued 480,000 shares. This error resulted in a shortfall of shares of 360,000 valued at $590,400. In addition, another investor was not issued his shares in a timely manner amounting to 19,029 shares of the Company’s common stock valued at $31,208. Upon management’s re-evaluation of the MediaHouse acquisition and the number of shares issued as consideration, the number of shares increased by 379,029 resulting in a correction and increase in Goodwill of $621,608, increase to Common stock of $3,790 and an increase to Additional paid in capital of $617,818 at December 31, 2019. The reduction in the warrant valuation and equity corrections resulted in a reduction in consideration of ($3,208,282). The components in the change in consideration were: (1) reduction in warrant valuation of $3,829,889 and an increase in goodwill for two (2) investor equity corrections adding $621,608. F- 10 d. Changes to Goodwill, Intangible assets – In connection with the reevaluation of the Oceanside acquisition, the intangibles decreased $1,535,100 and the goodwill increased $1,535,100 from the previously filed version. In connection with the reevaluation of the MediaHouse acquisition, the intangibles increased $1,209,500 from the previously filed version. e. Share-based compensation from Oceanside acquisition – As part of the Oceanside acquisition, the Company assumed a local employee and contractor option plan and converted it to the Company’s existing equity compensation plan utilizing the existing vesting dates at the time of the acquisition. The option holders were two (2) classes of individuals: (1) employees and (2) contractors. The pre-acquisition Oceanside options ceased to exist as of the acquisition date and all outstanding and unvested options for these two groups were converted using the agreed exchange ratio. In re-evaluating the transaction as part of the errors noted above, management concluded the Company did not record stock compensation expense for the local employees and contractors since the acquisition. The result of the correction was an increase to share-based compensation, which is included in selling, general and administrative expenses, in the amount of $152,571 for the year ended December 31, 2019, with a corresponding increase in accrued expenses. f. Penalty accrual for untimely registration statement filings with the Securities and Exchange Commission (“SEC”) – During fiscal years 2018 and 2019, the Company sold units of its securities to various investors in several private placements. As part of each private placement, the Company agreed to file a registration statement with the SEC to register the resale of the shares by the respective holder in order to permit the public resale; such filing deadlines ranged from 120 to 270 days following the closing date of the respective placement and the Company was liable to pay a penalty fee for failure to file the resale registration statement within the allotted timeframe. The penalty fee is payable in cash and is equal to 2% of the aggregate purchase price paid by the respective investor for each 30 days until the earlier of the date the deficiency was cured or the expiration of 6 months from filing deadline. The Company did not timely file the resale registration statements pertaining to several such placements and as a result was liable for penalties beginning in the fourth quarter of 2019 and thereafter. These penalty fees were not properly recorded as an expense with an offset to accrued liability as of and for the year ended December 31, 2019. The correction resulted in an increase of selling, general and administrative expenses and corresponding accrued liability of $109,200 as of and for the year ended December 31, 2019. g. Not applicable. h. Not applicable. i. Not applicable. j. Other Adjustments – In addition, the Company has corrected other adjustments. While some of these other adjustments may be quantitatively immaterial, individually and in the aggregate, because the Company is correcting for the material errors above, management has decided to correct these other adjustments as well (“Other Adjustments”): ● Due to utilization of more updated forecasts, quarterly amortization expense on intangible assets (trademarks, customer lists, IP technology and non-compete agreements) has been reduced by $107,234 to reflect the changes in the intangible assets valuation. ● Selling, general and administrative expenses and accrued liabilities increased by $87,670 as of December 31, 2019, to account for professional services provided to Oceanside during 2019. ● Audit related items: F- 11 ● Audit adjustments ○ Elimination entry corrections ○ Accounts receivable, net adjustment and/or reclasses ○ Accounts payable adjustments and/or reclasses ○ Accrued expenses adjustments and/or reclasses k. Not applicable. l. Closing notes consideration change from Oceanside acquisition – As part of the acquisition, the treatment of the Closing notes totaling $750,000 was incorrectly recorded and per ASC 805-30-55 was determined to be compensation expense to be recognized ratably over the 24-month term of the Notes. As such, starting in September 2019 and concluding in August 2021, $31,250 per month will be charged to compensation expense and a corresponding accrued liability will be recorded until the full amount of the $750,000 is reflected on the balance sheet. As of August 15, 2020, the Company did not make payment on the 1 st closing notes and thereby defaulted on its obligation and the 2 nd closing note accelerated to become payable as of August 15, 2020. Upon default, the closing notes accrue interest at a 1.5% per month rate, or 18% annual rate. As a result, there was an incremental total charge of $300,672 recorded during 2020 which was $250,000 of additional compensation expense and $50,672 of interest expense-related party. m. Deferred revenue – As part of the audit of 2019, it was determined that $156,529 of recorded revenue needed to be reclassified into deferred revenue as part of the review of FASB ASC 606, Revenue from Contracts with Customers. n. Not applicable. The Company assessed the tax impact of the above restatement items, including any impact to deferred tax asset and liabilities. The Company determined that the impact of the changes for the finder’s fees (a), common stock issued in Oceanside acquisition (b), share-based compensation from Oceanside acquisition (e), and penalty accrual (f) would be permanent book/tax differences, therefore had no impact on the income tax provision or any tax assets and liabilities, current or deferred. Summary impact of Restatement Items and Other Adjustments to Prior Period Financial Statements The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated balance sheet as of December 31, 2019: As of December 31, 2019 As Previously Restatement Restatement Filed Adjustments As Restated References ASSETS Current Assets Cash and cash equivalents $ 957,013 $ 957,013 Accounts receivable, net 3,997,475 (29,576 ) 3,967,899 j Note receivable, net 63,812 63,812 Prepaid expenses and other current assets 752,975 (48,470 ) 704,505 j Current assets - discontinued operations 1,705 1,705 Total Current Assets 5,772,980 (78,046 ) 5,694,934 Property and equipment, net 30,666 30,666 Website acquisition assets, net 48,928 48,928 Intangible assets, net 19,610,801 (218,366 ) 19,392,435 b, c, d Goodwill 53,646,856 (1,513,234 ) 52,133,622 b, c Prepaid services/consulting agreements - long term 913,182 913,182 Right of use asset 397,912 397,912 Other assets 35,823 35,823 Total Assets $ 80,457,148 $ (1,809,645 ) $ 78,647,503 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 8,358,442 $ 159,328 $ 8,517,770 j Accrued expenses 3,228,328 1,494,163 4,722,491 a, e, f, j, l Accrued interest to related party 6,629 6,629 Premium finance loan payable 179,844 179,844 Deferred revenues 6,651 156,529 163,180 m Long term debt, current portion 165,163 165,163 Share Issuance Accrued Liability New - - Other current liabilities - - Operating lease liability, net of current portion 211,744 211,744 Current liabilities - discontinued operations 591 591 Total Current Liabilities 12,157,392 1,810,019 13,967,411 Long Term Debt to Related Parties, net 25,689 25,689 Long term debt - - Deferred tax liability 581,440 (261,504 ) 319,936 k Operating lease liability, net of current portion 198,232 198,232 Total Liabilities 12,962,753 1,548,516 14,511,269 Shareholders’ Equity Convertible preferred stock, par value $0.01, 20,000,000 shares authorized, Series A-1, 2,000,000 shares designated, 1,200,000 and outstanding at December 31, 2019 12,000 12,000 Series B-1, 6,000,000 shares designated, no issued and outstanding at December 31, 2019 - - Series E, 2,500,000 shares designated, issued and outstanding at December 31, 2019 25,000 25,000 Series F, 4,344,017 shares designated, issued and outstanding at December 31, 2019 43,440 43,440 Common stock, par value $0.01, 324,000,000 shares authorized, 100,782,956 shares issued and 100,782,956 outstanding at December 31, 2019 1,002,444 5,376 1,007,820 b, c Additional paid-in capital 86,856,500 (2,590,868 ) 84,265,632 b, c, d Accumulated deficit (20,444,989 ) (772,669 ) (21,217,658 ) a, c, e, f, j, m, k, l Treasury Stock - - Total shareholders’ equity 67,494,395 (3,358,160 ) 64,136,235 Total Liabilities and Shareholders’ Equity $ 80,457,148 $ (1,809,645 ) $ 78,647,503 As of December 31, 2019 : a. Finder’s Fee b. Common Stock issued in Oceanside acquisition c. Common Stock issued in MediaHouse Acquisition d. Changes to Goodwill, Intangible assets e. Share-based compensation from Oceanside acquisition f. Penalty accrual for untimely registration statement filings j. Other Adjustments k. Tax effect l. Closing notes consideration change from Oceanside acquisition m. Deferred revenue F- 12 The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated statement of operations for the year ended December 31, 2019: For the year ended December 31, 2019 As Previously Restatement Restatement Filed Adjustments As Restated References Revenues Advertising $ 6,998,810 $ (307,348 ) $ 6,691,462 m, j Cost of revenue Advertising 5,941,868 (150,819 ) 5,791,049 j Gross profit 1,056,942 (156,529 ) 900,413 Selling, general and administrative expenses 8,001,229 1,453,011 9,454,240 a, d, e, f, j, l Loss from operations (6,944,287 ) (1,609,540 ) (8,553,827 ) Other income (expense) Interest (expense) income,net 47,396 47,396 Gain on settlement of liability 123,739 123,739 Impairment Expense - - Settlement of contingent consideration - - Other expense - - Interest expense (20,077 ) (20,077 ) Interest expense - related party (19,334 ) (19,334 ) Total other income (expense) 131,724 - 131,724 Net loss from continuing operations before tax (6,812,563 ) (1,609,540 ) (8,422,103 ) Income (loss) from discontinued operations (136,734 ) (136,734 ) Net loss before tax (6,949,297 ) (1,609,540 ) (8,558,837 ) Income tax benefit 3,547,274 836,872 4,384,146 k Net loss (3,402,023 ) (772,668 ) (4,174,691 ) Preferred stock dividends Series A-1, Series E, and Series F preferred stock (319,352 ) (15 ) (319,367 ) Net loss attributable to common shareholders $ (3,721,375 ) $ (772,683 ) $ (4,494,058 ) Basic and diluted net loss for continuing operations per share $ (0.05 ) $ (0.06 ) Basic and diluted net profit for discontinued operations per share $ (0.00 ) $ (0.00 ) Basic and diluted net loss per share $ (0.05 ) $ (0.06 ) Weighted average shares outstanding - basic and diluted 69,401,729 72,435,144 For the year ended December 31, 2019 : a. Finder’s Fee c. Common Stock issued in MediaHouse Acquisition d. Changes to Goodwill, Intangible assets e. Share-based compensation from Oceanside acquisition f. Penalty accrual for untimely registration statement filings j. Other Adjustments k. Tax effect l. Closing notes consideration change from Oceanside acquisition m. Deferred revenue F- 13 The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated statement of cash flows for the year ended December 31, 2019: For the year ended December 30, 2019 As Previously Restatement Restatement Filed Adjustments As Restated References Cash flows from operating activities: Net loss $ (3,402,023 ) $ (772,668 ) $ (4,174,691 ) a, c, d, e, f, j, k, l, m Add back: loss attributable to discontinued operations 136,734 136,734 Adjustments to reconcile net loss to net cash used in operations: Depreciation 10,265 10,265 Amortization of debt discount 14,001 14,001 Amortization 687,529 (107,235 ) 580,294 d Impairment of tradename 32,000 32,000 Impairment of goodwill - - Impairment of intangibles - - Gain on settlement of liability (123,739 ) (123,739 ) Gain on sale of property and equipment - - Stock option compensation expense 45,674 6,010 51,684 j Stock issued for services 141,175 (892 ) 140,283 j Non-cash acquisition fee - - Non-cash compensation for services - - Non-cash settlement of contingent consideration - - Change in Deferred taxes (3,547,274 ) (1,019,068 ) (4,566,342 ) k Provision for bad debt 505,401 (451,599 ) 53,802 j Changes in operating assets and liabilities: - Accounts receivable (1,831 ) (242,560 ) (244,391 ) j Prepaid expenses and other current assets 295,389 (83,821 ) 211,568 j Prepaid services/consulting agreements 110,000 139,318 249,318 j Goodwill - - Other assets - 54,626 54,626 j ROU asset and lease liability (191,291 ) 203,355 12,064 j Accounts payable 160,210 612,465 772,675 j Accrued expenses 2,433,173 1,406,114 3,839,287 a, e, f, j, l Accrued interest to related party 5,682 5,682 Deferred rents - - Deferred revenues (4,163 ) 163,180 159,017 m Net cash used in continuing operations for operating activities (2,693,088 ) (92,775 ) (2,785,863 ) Net cash (used in) provided by discontinued operations 23,362 (15,263 ) 8,099 Net cash used in operating activities (2,669,726 ) (108,038 ) (2,777,764 ) Cash flows from investing activities: Purchase of property and equipment, net (11,443 ) 58,185 46,742 j Cash paid for website acquisition (8,000 ) (8,000 ) Cash proceeds from acquisition of subsidiaries 716,989 33,008 749,997 j Net cash (used in) provided by investing activities 697,546 91,193 788,739 Cash flows from financing activities: Proceeds from issuance of common stock, net of commissions 1,644,480 903 1,645,383 j Proceeds from issuance of preferred stock 600,000 600,000 Payments of insurance premium loans payable 87,307 (64,681 ) 22,626 j Dividend payments (319,352 ) (15 ) (319,367 ) g Principal payment on notes payable (64,681 ) 64,681 - j Note receivable funded (181,312 ) 136,250 (45,062 ) j Proceeds from repayment of note receivable 136,250 (136,250 ) - j Notes payable funded - - Increase in Common Shares - - Unlocated Difference - - Increase in APIC - - Net cash provided by financing activities 1,902,692 889 1,903,581 Net (decrease) in cash and cash equivalents classified within assets related to continued operations (69,488 ) (15,956 ) (93,543 ) Impact of foreign exchange rates on cash - - - Net (decrease) in cash and cash equivalents classified within assets related to discontinued operations (15,956 ) 15,956 8,099 j Net (decrease) increase in cash and cash equivalents (85,444 ) (0 ) (85,444 ) Cash and cash equivalents at beginning of period 1,042,457 1,042,457 Cash and cash equivalents at end of period $ 957,013 $ (0 ) $ 957,013 For the year ended December 31, 2019 : a. Finder’s Fee c. Common Stock issued in MediaHouse Acquisition d. Changes to Goodwill, Intangible assets e. Share-based compensation from Oceanside acquisition f. Penalty accrual for untimely registration statement filings j. Other Adjustments k. Tax effect l. Closing notes consideration change from Oceanside acquisition m. Deferred revenue F- 14 The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated statement of cash flows supplemental information for the year ended December 31, 2019: For the year ended December 30, 2019 As Previously Filed Restatement Adjustments As Restated Supplemental disclosure of cash flow information Cash paid for: Interest $ 31,250 $ - $ 31,250 Supplemental disclosure of non-cash investing and financing activities Settlement of Daily Engage liability $ 197,500 $ - $ 197,500 Non-cash acquisition of S&W net assets $ 3,234,754 $ (234,998 ) $ 2,999,756 Non-cash acquisition of S&W net liabilities $ 4,147,959 $ (985,082 ) $ 3,162,877 Non-cash acquisition of intangible assets of S&W $ 20,322,483 $ (17,201,883 ) $ 3,120,600 Non-cash acquisition right of use asset S&W $ 235,055 $ - $ 235,055 Common stock issued for acquisitions $ 65,361,962 $ (2,591,498 ) $ 62,770,464 Recognition of right of use lease liability for S&W $ 240,178 $ - $ 240,178 Non-cash acquisition of goodwill S&W $ - $ 17,068,807 $ 17,068,807 Non-cash acquisition of goodwill NDN $ - $ 29,189,611 $ 29,189,611 Non-cash acquisition of MediaHouse net assets $ 1,935,648 $ (737,437 ) $ 1,198,211 Non-cash acquisition of MediaHouse net liabilities $ 7,483,344 $ (3,254,623 ) $ 4,228,721 Non-cash intangible assets of MediaHouse $ 52,371,847 $ (35,781,647 ) $ 16,590,200 NOTE 3 –SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation and Basis of Presentation The consolidated financial statements include the accounts of the Company and all of its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”). Revenue Recognition On January 1, 2019, the Company adopted Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers (Topic 606) ” (“Topic 606”) using the modified retrospective method, applied only to those contracts which were not completed as of the date of the adoption. Following the adoption of Topic 606, the Company recognizes revenues at a point-in-time when control of services is transferred to the customer. The adoption of Topic 606 did not result in a material difference in accounting compared to legacy revenue guidance and no transition adjustments were required. To determine revenue recognition for arrangements that the Company determines are within the scope of Topic 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 Company will collect the consideration it is entitled to in exchange for the advertising services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of Topic 606, the Company assesses the advertising services promised within each contract and determines those that are performance obligations and assesses whether each promised advertising service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation based on relative fair values, when (or as) the performance obligation is satisfied. The Company recognizes revenue from its own advertising platform, ad network partners and websites (“Ad Network”) through its publishing advertiser impressions and pay-for-click services, the Company’s owned and operated sites, our ad network, or platforms. Invalid traffic on the Ad Network may impact the amount collected and adjusted by our Ad Network. The Company has one revenue stream generated directly from publishing advertisements, whether on the Company’s owned and operated sites, our ad network, or platforms. The revenue is earned when the users click on the published website advertisements. Specific revenue recognition criteria for the advertising revenue stream is as follows: ● Advertising revenues are generated by users “clicking” on or seeing website advertisements utilizing several ad network partners. ● Revenues are recognized net of adjustments based on the traffic generated and is billed monthly. The Company subsequently settles these transactions with publishers at which time adjustments for invalid traffic may impact the amount collected. There are no significant initial costs incurred to obtain contracts with customers, and no contract assets or contract liabilities recorded in our consolidated financial statements. F- 15 Leases On January 1, 2019, the Company adopted ASC 842, the new lease accounting standard, using the optional transition method under which comparative financial information has not been restated and will continue to apply the provisions of the previous lease standard in its annual disclosures for the comparative periods. The Company elected the package of practical expedients in transition; as such, the Company did not have to reassess whether expired or existing contracts are or contain a lease and did not have to reassess the lease classifications or reassess the initial direct costs associated with expired or existing leases. The new lease standard also provides practical expedients for an entity’s ongoing accounting. The Company elected the short-term lease recognition exemption under which the Company will not recognize right of use (“ROU”) assets or lease liabilities, which includes not recognizing ROU assets or lease liabilities for existing short-term leases. The Company elected the practical expedient to not separate lease and non-lease components for certain classes of assets (office building). The Company determines if an arrangement is a lease at inception. Operating lease ROU assets and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the remaining lease terms as of January 1, 2019. Since the Company’s lease agreements does not provide an implicit rate, the Company estimated an incremental borrowing rate based on the information available on January 1, 2019 in determining the present value of lease payments. Operating lease expense is recognized on a straight-line basis over the lease term, subject to any changes in the lease or expectations regarding the terms. Variable lease costs such as operating costs and property taxes are expensed as incurred. On January 1, 2019, the Company recognized a ROU asset and a lease liability of approximately $235,000 in relation to the adoption of ASC 842. Use of Estimates The preparation of 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. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. Significant estimates included in the accompanying consolidated financial statements include revenue recognition, the fair value of acquired assets for purchase price allocation in business combinations, valuation of goodwill and intangible assets, estimates of amortization period for intangible assets, estimates of depreciation period for fixed assets, the valuation of equity-based transactions, and the valuation allowance on deferred tax assets. Cash and Cash Equivalents The Company considers all highly liquid investments with an original maturity, or remaining maturity when acquired, of three months or less to be cash equivalents. Cash and cash equivalents are all maintained in bank accounts in the U.S. and other foreign countries in which the Company operates. Cash maintained in bank accounts outside of the U.S. is not significant. F- 16 Credit Risk The Company maintains certain of its cash balances in various U.S. banks, which at times, may exceed federally insured limits. The Company has not incurred any losses on these accounts. In addition, the Company maintains various bank accounts in Thailand, which are not insured. During the years ended December 31, 2020 and 2019, we have not incurred material losses on these uninsured accounts. The Company minimizes the concentration of credit risk associated with its cash by maintaining its cash with high quality federally insured financial institutions. The Company performs ongoing evaluations of its trade accounts receivable customers and generally does not require collateral. Fair Value of Financial Instruments and Fair Value Measurements We carry certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants on the measurement date. The three-tier hierarchy for inputs used in measuring fair value, which prioritizes the inputs based on the observability as of the measurement date, is as follows: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active; and Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. The Company measures its financial assets and liabilities in accordance with GAAP. For certain of our financial instruments, including cash, accounts payable, accrued expenses, and the short-term portion of long-term debt, the carrying amounts approximate fair value due to their short maturities. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the placement of assets and liabilities being measured within the fair value hierarchy. (See Note 13). Accounts Receivable Accounts receivable represent receivables from customers in the ordinary course of business. These are recorded at invoices amount on the date revenue is recognized. Receivables are recorded net of the allowance for doubtful accounts in the accompanying consolidated balance sheets. The Company provides allowances for doubtful accounts for estimated losses resulting from the inability of its customers to repay their obligation. If the financial condition of the Company’s customers were to deteriorate, resulting in an impairment of their ability to repay, additional allowances may be required. The Company provides for potential uncollectible accounts receivable based on specific customer identification and historical collection experience adjusted for existing market conditions. If market conditions decline, actual collection experience may not meet expectations and may result in decreased cash flows and increased bad debt expense. The Company is also subject to adjustments from traffic settlements that are deducted from open invoices. 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 and its collection agency are exhausted, the determination for charging off uncollectible receivables is made. F- 17 Property and Equipment Property and equipment are recorded at cost, less accumulated depreciation. Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets. Leasehold improvements are amortized over the lesser of the lease term or the useful life of the improvements. Website Development Costs The Company accounts for its website development costs in accordance with ASC 350-50, “ Website Development Costs ”. These costs, if any, are included in intangible assets in the accompanying consolidated financial statements. 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. As of December 31, 2020 and 2019, all website development costs have been expensed. While it is likely that we will have significant amortization expense as we continue to acquire websites, we believe that intangible assets represent costs incurred by the acquired website to build value prior to acquisition and the related amortization and impairment charges of assets, if applicable, are not ongoing costs of doing business. Goodwill, Net and Intangible Assets, Net Goodwill and Intangible assets result primarily from acquisitions. The Company categorizes Goodwill into two reporting units: “Owned & Operated” and “Ad Network”. Intangible assets include trade name, customer relationships, IP/technology and non-compete agreements. Upon the acquisition, the purchase price is first allocated to identifiable assets and liabilities, including the trade name and other intangibles, with any remaining purchase price recorded as goodwill. Goodwill is not amortized, rather, an impairment test is conducted on an annual basis, or more frequently if indicators of impairment are present, 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 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. If not, we compare the fair value with its carrying amount. To the extent the carrying amount exceeds its fair value, an impairment charge of the reporting unit’s goodwill would be necessary. The Company’s annual assessment date is December 31. The Company’s trade name and customer relationships are amortized on a straight-line basis over a useful life of 5 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 3-5 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 The Company evaluates long-lived assets, including amortizable intangible assets, 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. F- 18 Share-Based Compensation The Company accounts for share-based compensation related to instruments issued to employees and non-employees under GAAP, which requires the measurement and recognition compensation costs for all equity-based payment awards based on estimated fair values. The value of the portion of an employee award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company estimates the fair value of stock options by using the Black-Scholes option-pricing model. Share-based compensation expense is included in selling, general and administrative expenses on the accompanying consolidated statement of operations. We have elected to account for forfeitures as they occur. Advertising and Marketing Advertising and marketing expenses are expensed as incurred and are included in selling, general and administrative expenses on the accompanying consolidated statements of operations. For the years ended December 31, 2020 and 2019, advertising and marketing expense was $27,004 and $307,536, respectively, both attributable to continuing operations. Foreign Currency Translation Assets and liabilities of the Wild Sky, the Company’s Thai subsidiary are translated from Thai baht to U.S. dollars at exchange rates in effect at the balance sheet date. Income and expenses are translated at the exchange rates for the weighted average rates for the period. The translation adjustments for the reporting period will be included in our statements of comprehensive income. 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 ASC 740-10, Income Taxes - Overall. 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 Statement of Operations. Concentrations The Company generates revenues from through an Ad Exchange Network and through our Owned and Operated Ad Exchange Network. The Company’s largest customer accounts for approximately 10% and 13% of the 2020 and 2019 Ad Exchange Network Revenue, respectively. F- 19 Basic and Diluted Net Earnings (Loss) Per Common Share Earnings (loss) per share is calculated and reported under the “two-class” method. The “two-class” method is an earnings allocation method under which earnings per share is calculated for each class of common stock and participating security considering both dividends declared or accumulated and participation rights in undistributed earnings as if all such earnings had been distributed during the period. The Company has convertible preferred stock which have a right to participate in dividends; these are deemed to be participating securities. During periods of loss, there is no allocation required under the two-class method since the participating securities do not have a contractual obligation to fund the losses of the Company. When applicable, basic earnings (loss) per share is calculated by dividing net income, after deducting dividends on convertible preferred stock and participating securities as well as undistributed earnings allocated to participating securities, by the average number of common shares outstanding during the period. Diluted earnings (loss) per share is calculated in a similar manner after consideration of the potential dilutive effect of common stock equivalents on the average number of common shares outstanding during the period. Common stock equivalents include warrants and stock options. Common stock equivalents are calculated based upon the treasury stock method using an average market price of common shares during the period. Dilution is not considered when a net loss is reported. Common stock equivalents that have an antidilutive effect are excluded from the computation of diluted earnings per share. Segment Information The Company currently operates in one reporting segment. The services segment is focused on producing advertising revenue generated by users “clicking” on website advertisements utilizing several ad network partners, and direct advertisers and subscription revenue generated by the sale of access to career postings on one of our websites, however the latter, is insignificant. Recent Accounting Pronouncements In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2016-13 (amended by ASU 2019-10), “ Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, regarding the measurement of credit losses for certain financial instruments. ” which replaces the incurred loss model with a current expected credit loss (“CECL”) model. The CECL model is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. The Company is required to adopt the new guidance on January 1, 2023. The Company is currently evaluating the impact this guidance will have on the consolidated financial statements. In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-04 (amended by ASU 2019-10), “ Intangibles – Goodwill and other (Topic 350): Simplifying the Test for Goodwill Impairment. ” Which simplifies the test for goodwill impairment by removing the second step of the test. There is a one-step qualitative test and does not amend the optional qualitative assessment of goodwill impairment. The new standard is effective January 1, 2023 and is not expected to have a material impact on the Company’s consolidated financial statements. In August 2020, the FASB issued ASU 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) ”. The 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 is effective January 1, 2024 (early adoption is permitted, but not earlier than January 1, 2021). The new standard is not expected to have a material impact on the Company’s consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, “ Income taxes (Topic 740): Simplifying the Accounting for Income Taxes. ” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740 and clarifies and amends the existing guidance. The new standard is effective January 1, 2021 and the Company has adopted it effective January 1, 2020. The new standard did not have a material impact on the Company’s consolidated financial statements. In March 2020, the FASB issued ASU No. 2020-04, “ Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting ” which provides optional expedient and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In response to the concerns about structural risks of interbank offered rates (“IBORs”) and, particularly, the risk of cessation of the LIBOR, regulators in several jurisdictions around the world have undertaken reference rate reform initiatives to identify alternative reference rates that are more observable or transaction based and less susceptible to manipulation. This accounting standards update provides companies with optional guidance to ease the potential accounting burden associated with transitioning away from reference rates that are expected to be discontinued. This new guidance may be adopted by the Company no later than December 1, 2022, with early adoption permitted. The potential adoption of this guidance is not expected to have a material impact on the consolidated financial statements. F- 20 NOTE 4 – ACQUISITIONS Oceanside On July 31, 2019, the Company executed a Share Exchange Agreement and Plan of Merger (the “Oceanside Merger Agreement”) with Slutzky & Winshman Ltd., an Israeli company (“Oceanside”) and the shareholders of Oceanside (the “Oceanside Shareholders”). The merger closed on August 15, 2019, and the Company acquired all of the outstanding shares of S&W. Pursuant to the terms of the Merger Agreement, we issued 12,513,227 shares valued at $20,021,163 to owners and employees of Oceanside and contingent consideration of $750,000 paid through the delivery of unsecured, interest free, one and two year promissory notes (the “Closing Notes”). At the time of the acquisition and under ASC 805, these Closing Notes were recorded ratably as compensation expense into the statement of operations over the 24-month term and an accrued payable is being recognized over the same period. As of August 15, 2020, the Company did not make payment on the 1 st closing notes and thereby defaulted on its obligation and the 2 nd closing note accelerated to become payable as of August 15, 2020. Upon default, the closing notes accrue interest at a 1.5% per month rate, or 18% annual rate. As a result, there was an incremental total charge of $300,672 recorded during 2020 which was $250,000 of additional compensation expense and $50,672 of interest expense-related party. Effective upon the closing of the S&W Merger Agreement, the Company agreed to pay Spartan Capital Securities LLC (“Spartan Capital”), a broker-dealer and member of FINRA, a finder’s fee in the form of Company common stock plus $165,000 cash. Spartan Capital’s finder’s fee amounted to 650,000 shares (valued at $1,040,000) issued in February 2020 and the $165,000 which were included in the accrued expenses as of December 31, 2019 and paid in March 2020. The allocation of the purchase price to the assets acquired and liabilities assumed based on management’s estimate of fair values at the date of acquisition as follows: August 15, 2019 (As Restated) Tangible assets acquired Cash and cash equivalents $ 547,159 Short-term deposit 56,585 Accounts receivable, net 2,248,165 Prepaid expense and other current assets 251,652 Long-term deposits 59,326 Property and equipment, net 71,868 Intangible assets acquired: Tradename – Trademarks 799,500 IP/Technology 1,531,000 Customer relationships 489,000 Non-compete agreements 301,100 Less: Liabilities assumed Trade payables (3,089,865 ) Accrued expenses and other current liabilities (313,190 ) Due to parent 56 Less: Deferred tax liability (499,296 ) Net assets acquired 2,453,060 Goodwill 17,568,103 Total purchase price $ 20,021,163 The table below summarizes the value of the total consideration given in the transaction: Amount (As Restated) Shares issued to owners $ 19,281,278 Shares issued for vested options 643,885 Shares issued to employees 96,000 Total consideration $ 20,021,163 F- 21 MediaHouse On November 18, 2019, the Company executed a Merger Agreement which merged the Company and its wholly-owned subsidiary BMTM2, Inc., a Florida corporation with News Distribution Network, Inc. (“NDN”), a Delaware Company. The subsidiary then changed its name to MediaHouse, LLC (“MediaHouse”). The Company agreed to issue 22,559,790 shares of its common stock and 4,972,896 warrants to purchase shares of Company stock. Each share of NDN’s outstanding Series A1 Preferred Stock and common stock, other than shares to which holders shall have exercised dissenter’s rights in accordance with Delaware law, were cancelled and extinguished and converted into the right to receive shares of the Company’s common stock based upon a paid-in capital basis, and subject to a $1.75 conversion price of our common stock. For every $1.75 of paid-in capital by an NDN stockholder, the NDN stockholder received one share of the Company’s common stock. Moreover, all NDN warrants and options outstanding at the Effective Time of the Merger Agreement terminated and were cancelled unless exercised prior to the Effective Time of the Merger Agreement. As it pertains to outstanding promissory notes and other obligations payable to NDN, Bridge notes in the current principal amount of $1,243,224 were converted into shares of Company common stock at a conversion price of $0.50 per share, with one common stock warrant exercisable at $0.75 per share and one common stock warrant exercisable at $1.00 per share issued for each conversion share. The principal of the bridge notes was converted into shares of the Company’s common stock at a conversion price of $1.75 per share, and all accrued but unpaid interest were forgiven by the noteholders. The table below summarizes the shares and warrants issued in the MediaHouse acquisition: Shares issues in MediaHouse acquisition Amount (As Restated) Common Shares: Series A1 Preferred Stock 18,652,514 Bridge investors at $0.50 2,486,448 Bridge investors at 2X premium converted at $1.75 1,420,828 Total Common Shares 22,559,790 Warrants Bridge investors at $0.75 2,486,448 Bridge investors at $1.00 2,486,448 Total Warrants 4,972,896 The Total Consideration Shares are subject to lock up restrictions on resale as determined by Bright Mountain and 25% percent of the Total Consideration Shares were placed in escrow to satisfy certain obligations including, but not limited to, (i) the delivery of NDN audited financial statements, (ii) NDN having accounts receivable of at least $1,100,000 and (iii) certain NDN liabilities not to exceed $4,000,000. Effective upon the Closing, we agreed to pay Spartan Capital a finder’s fee equal to 1,389,160 shares of our common stock (valued at $2,278,222) which was included in the accrued expenses as of December 31, 2019. Of the 1,389,160 shares, 660,000 were issued in February 2020 and the remainder were issued in December 2020. F- 22 The allocation of the purchase price to the assets acquired and liabilities assumed based on management’s estimate of fair values at the date of acquisition as follows: November 18, 2019 (As Restated) Tangible assets acquired Cash & cash equivalents $ 146,253 Accounts receivable, net 962,722 Prepaid expense 53,214 Security deposit 31,124 Intangible assets acquired: Tradename – Trademarks 589,800 IP/Technology 4,280,000 Customer relationships 10,945,000 Non-compete agreements 775,400 Less: Liabilities assumed Accounts payable (4,000,000 ) Accrued expenses (28,429 ) Compensation expense (184,849 ) Deferred rent (15,444 ) Less: Deferred tax liability (4,204,786 ) Net assets acquired 9,350,005 Goodwill 33,394,397 Total purchase price $ 42,744,402 The table below summarizes the value of the total consideration given in the transaction: Amount (As Restated) Shares issued to owners $ 36,998,055 Warrants issued 5,746,347 Total consideration $ 42,744,402 Wild Sky Media On June 1, 2020, the Company entered into a membership interest purchase agreement (the “Purchase Agreement”) with Centre Lane Partners Master Credit Fund II, L.P. (“Centre Lane”) to purchase 100% of the membership interests of CL Media Holdings, LLC (“Wild Sky”). The Company issued 2,500,000 shares of restricted common stock to Centre Lane and Centre Lane issued a first lien senior secured credit facility of $16,451,905. Per the credit facility with Center Lane, our loan payments begin December 1, 2021. There is no prepayment penalty associated with this credit facility. Certain future capital raises do require partial or full prepayments of the credit facility. The Agreement provides for a senior secured five-year loan in the initial principal amount of $16,451,905. Pursuant to the Credit Agreement, the loan bears interest at six percent (6%) payment–in-kind interest (“PIK Interest”) which will be added to the outstanding principal balance. The Credit Agreement provides for no amortization for the first 18 months and 10% thereafter. Amortization is payable in equal quarterly installments on the principal balance after adding the PIK Interest with a bullet payment due at maturity on June 1, 2025. The loan under the Credit Agreement may be prepaid in minimum amounts $250,000. The loan balance can be prepaid with no penalty. The loan is guaranteed by Bright Mountain and certain of its domestic subsidiaries of which became party to a Guarantee Agreement dated as of the Effective Date and each domestic subsidiary that, subsequent to the Effective Date, becomes a subsidiary. The Credit Agreement contains negative covenants that, subject to certain exceptions, limits the ability of Bright Mountain and its subsidiaries to, among other things, incur debt, engage in new lines of business, incur liens, engage in mergers, consolidations, liquidations and dissolutions, dispose of assets of Bright Mountain and its subsidiaries, make investments, loans, advances, guarantees and acquisitions. Any equity raised up to $15,000,000 in the first one-hundred eighty days from the Credit Agreement is excluded from the loan balance prepayment requirements. F- 23 Effective upon the closing of the Wild Sky Purchase Agreement, the Company agreed to pay Spartan Capital Securities LLC (“Spartan Capital”), a broker-dealer and member of FINRA, a finder’s fee in the form of Company common stock. Spartan Capital was issued 610,000 shares (valued at $908,900) in December 2020. The allocation of the purchase price to the assets acquired and liabilities assumed based on management’s estimate of fair values at the date of acquisition as follows: June 1, 2020 (As Restated) Tangible assets acquired Cash & cash equivalents $ 1,651,509 Accounts receivable, net 2,887,282 Prepaid expense 484,885 Fixed assets, net 124,575 Other assets 321,374 Intangible assets acquired: Tradename – Trademarks 2,360,300 IP/Technology 1,412,000 Customer relationships 4,563,000 Less: Liabilities assumed Accounts payable (922,153 ) Accrued expenses (524,188 ) Other current liabilities (235,503 ) Long term loan payable – PPP (1,706,735 ) Less: Deferred tax liability (247,577 ) Net assets acquired 10,168,769 Goodwill 9,973,136 Total purchase price $ 20,141,905 The table below summarizes the value of the total consideration given in the transaction: Amount (As Restated) Debt issued $ 16,416,905 Shares issued 3,725,000 Total consideration $ 20,141,905 NOTE 5 – DISCONTINUED OPERATIONS During 2018 with the appropriate level of authority, management determined to exit, effective December 31, 2018, its Black Helmet and Bright Mountain Watches business lines as a result of, among other things, the change in our strategic direction to a focus solely in our advertising segment. The decisions to exit all components of our product segments will result in these businesses being accounted for as discontinued operations. Accordingly, the Company determined that the assets and liabilities of this reportable segment met the discontinued operations criteria in ASC 205, as such the results have been classified as discontinued operations. On March 8, 2019, the Black Helmet Apparel E-Commerce business was sold for $175,000. In 2020 the Company had no discontinued operations expense. F- 24 The detail of the consolidated balance sheets the consolidated statements of operations and consolidated cash flows for the discontinued operations is as stated below: December 31, 2019 (As restated) Discontinued Operations Cash and cash equivalents $ 791 Accounts receivable 914 Total Current Assets – Discontinued Operations 1,705 Total Assets – Discontinued Operations 1,705 Accounts payable 591 Total Current Liabilities – Discontinued Operations 591 Net Assets – Discontinued Operations $ 1,114 Year ended December 31, 2019 Revenues $ 102,999 Cost of revenue 55,844 Gross profit 47,155 Selling general, and administrative expenses 212,798 Loss from operations – discontinued operations (165,643 ) Other income 28,909 Loss from discontinued operations $ (136,734 ) Basic and fully diluted net loss per share – discontinued operations $ (0.00 ) Weighted average shares outstanding – basic & diluted 72,435,144 Year ended December 31, 2019 (As restated) Loss from discontinued operations $(136,734 ) Write-off of fixed assets 59,797 Change in Assets and Liabilities Classified as Discontinued Operations: Inventory 262,318 Accounts receivable (914 ) Other Assets 11,123 Accounts payable (155,811 ) Deferred Rent (16,417 ) Change in cash provided by discontinued operations $ 23,362 F- 25 NOTE 6 – PREPAID EXPENSES AND OTHER CURRENT ASSETS At December 31, 2020 and 2019, prepaid expenses and other current assets consisted of the following: December 31, 2020 2019 (As Restated) Prepaid insurance $ 386,206 $ 199,757 Prepaid consulting service agreements – Spartan (1) 379,771 310,000 Prepaid value added tax (VAT) fees – 7,981 Prepaid rent – 189,951 Prepaid expenses – other 174,237 (3,183 ) Prepaid expenses and other current assets $ 940,214 $ 704,506 (1) Spartan Capital is a broker-dealer that has assisted the Company with a range of services including capital raising activities, M&A advisory, and consulting services. The Company has a five-year agreement with Spartan Capital for the provision of such services and any prepayments made under the terms of this agreement starting October 2018 were capitalized and amortized over the remaining life of the agreement. NOTE 7 – PROPERTY AND EQUIPMENT At December 31, 2020 and 2019, property and equipment consisted of the following: December 31, Estimated Useful Life 2020 2019 (Years) Furniture and fixtures $ 80,844 $ 39,696 3-5 Leasehold improvements 1,388 1,388 3 Computer equipment 176,641 79,188 3 Total property and equipment 258,873 120,272 Less: accumulated depreciation (145,623 ) (89,606 ) Total property and equipment, net $ 113,250 $ 30,666 Depreciation expense was $46,369 and $10,265 for the years ending December 31, 2020 and 2019, respectively, all of which are attributable to continuing operations. NOTE 8 – WEBSITE ACQUISITION AND INTANGIBLE ASSETS At December 31, 2020 and 2019, respectively, website acquisitions, net consisted of the following: 2020 2019 Website acquisition assets $ 1,124,846 $ 1,124,846 Less: accumulated amortization (918,850 ) (875,522 ) Less: accumulated impairment loss (200,396 ) (200,396 ) Website acquisition assets, net $ 5,600 $ 48,928 Amortization expense related to website acquisition costs for the years ended December 31, 2020 and 2019 was $43,328 and $72,813, respectively, and is included in selling, general and administrative costs in the statements of operations. At December 31, 2020 and 2019, respectively, intangible assets, net consisted of the following: Useful Lives 2020 2019 (As Restated) Tradename 5 years $ 3,749,600 $ 1,389,300 Customer relationships 5 years 16,184,000 11,621,000 IP / Technology 10 years 7,223,000 5,811,000 Non-compete agreements 3-5 years 1,154,500 1,154,500 Total intangible assets 28,311,100 19,975,800 Less: accumulated amortization (4,170,454 ) (583,364 ) Less: accumulated impairment loss (16,486,929 ) – Intangible assets, net $ 7,653,717 $ 19,392,436 F- 26 Amortization expense related to intangible assets for the years ended December 31, 2020 and 2019 was $3,587,090 and $583,364, respectively, and is included in selling, general and administrative costs in the statements of operations. The table below shows the forward 5-year amortization table. Amount 2021 $ 1,596,021 2022 1,569,421 2023 1,554,500 2024 1,554,416 2025 & thereafter 1,379,359 Total $ 7,653,717 During 2020, the finite lived intangible assets associated with Oceanside and MediaHouse were tested for impairment valuation based on indicators of impairment noted by management, including decreased revenues. primarily resulting from the COVID-19 global pandemic when many companies in various industries were forced to restructure their advertising budgets and spending. The fair value of the respective assets was determined based on the projected future cash flows associated with the respective assets. These fair values were compared with the carrying values of the respective assets to determine if an impairment of the respective assets was warranted. It was determined that the carrying values of the finite lived intangible assets associated with Oceanside did not exceed the respective fair values of the assets, therefore no revaluation associated with these assets has been recognized. It was determined that the finite lived intangible assets associated with MediaHouse were deemed impaired based on an analysis of the carrying values and fair values of the assets. In September 2020, the Company recorded an impairment expense of $16,486,929 within intangible assets impairment expense on the consolidated statement of operations. NOTE 9 – GOODWILL The following table presents changes to goodwill for the years ended December 31, 2020 and 2019: Owned & Operated Ad Network Total January 1, 2019 goodwill $ – $ 988,926 $ 988,926 Additions (a) – 51,144,696 51,144,696 December 31, 2019 goodwill (as Restated) $ – $ 52,133,622 $ 52,133,622 Additions (b) 9,973,136 – 9,973,136 Deletions (c) (182,203 ) (182,203 ) Impairment loss (247,577 ) (42,031,510 ) (42,279,087 ) December 31, 2020 goodwill $ 9,725,559 $ 9,919,909 $ 19,645,468 (a) The Company recognized Goodwill of $17,568,103 and $33,394,397 in connection with the acquisitions of Oceanside and MediaHouse, respectively. Refer to Note 4. (b) The Company recognized Goodwill of $9,973,136 in connection with the acquisition Wild Sky. Refer to Note 4. (c) The Company had an adjustment to Goodwill related to purchase accounting related to the acquisition of MediaHouse for ($182,203) related to a working capital adjustment. 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. The year 2020 has been marked by the COVID-19 Global pandemic when many companies in various industries were forced to restructure their advertising budgets and spending. This is evidenced by the reduced revenues from our customers in comparison with the 2019 year. The fair value of the respective reporting units was determined based on both the Income Approach (Discount Cash Flows) and the Market Multiples Approach. In September 2020, it was determined that the carrying value of the Goodwill associated with the Owned & Operated reporting unit was not deemed impaired; while recorded goodwill associated with the Ad Network reporting unit exceeded the fair value of the Goodwill and in September 2020, the Company recorded an impairment of $42,279,087. F- 27 NOTE 10 – ACCRUED EXPENSES At December 31, 2020 and 2019, respectively, accrued expenses consisted of the following: Year ended December 31, 2020 2019 (As restated) Accrued interest $ 581,888 $ – Accrued salaries and benefits 1,237,909 291,837 Accrued dividends 455,956 158,966 Accrued traffic settlement (1) 10,254 95,254 Accrued legal settlement (2) 117,717 – Accrued legal fees 113,683 95,000 Accrued other professional fees 206,613 2,495,710 Share issuance liability (4) 515,073 1,155,836 Accrued warrant penalty (3) 262,912 109,200 Other accrued expenses 44,891 320,688 Total accrued expenses $ 3,546,896 $ 4,722,491 (1) The Company negotiates with its publishing partners regarding questionable traffic to arrive at traffic settlements. (2) Accrued legal settlement related to the Encoding legal matter. Refer to Note 13. (3) The Company has sold units of its securities to various investors in several private placements. As part of each private placement, the Company agreed to file a registration statement with the SEC to register the resale of the shares by the respective holder in order to permit the public resale; such filing deadlines ranged from 120 to 270 days following the closing date of the respective placement and the Company was liable to pay a penalty fee for failure to file the resale registration statement within the allotted timeframe. (4) Share issuance liability related to issuance of the Company’s common stock in connection with the Oceanside, MediaHouse and Wild Sky acquisitions and Oceanside employee share issuances. Refer to Note 4 for further information on the Company’s acquisitions. NOTE 11 –DEBT Short-term debt In connection with the acquisition of BMLLC, the Company issued promissory notes totaling $380,000. The notes had no stated interest rate and matured on September 19, 2018 and the Company was in default prior to a settlement reached on July 8, 2020. Effective July 8, 2020, the Company executed a Settlement Agreement and Release with Harry G. Pagoulatos, George Rezitis, and Angelo Triantafillou whereby they relinquish their Bright Mountain common stock shares, and the Company pays them full and final settlement of $385,000 within 12 months from the date the shares are delivered to Bright Mountain, which were received by our legal agent in December 2020. The Company had previously made payments against the notes resulting in a recorded liability due to the parties of $165,163. The settlement increased the liability to a final settlement amount of $385,000, requiring an additional liability of $219,837 which was recognized by the Company within “Notes payable” in the consolidated balance sheet. The balance of the notes payable at December 31, 2020 and 2019 were $385,000 and $165,163, respectively. The notes are payable one year from the surrender of the note holders’ common stock of the Company, which is included in treasury stock (Note 15). F- 28 Long-term debt to related parties During November 2018, the Company issued 10% convertible promissory notes in the amount of $80,000 to the Company’s Chairman of the Board. The notes mature five years from issuance and are 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 exists on the date the convertible notes were issued whereby the fair value of the underlying common stock to which the notes are convertible into is in excess of the face value of the note of $70,000. The principal balance of these notes payable was $80,000 at both December 31, 2020 and 2019 and discounts recognized upon respective origination dates as a result of the beneficial conversion feature total $39,728 and $54,311, respectively. At December 31, 2020 and 2019, the total convertible notes payable to related party net of discounts was $40,272 and $25,689, respectively. The unsecured and interest free Closing Notes of $750,000 as identified in Note 4 were recorded ratably as compensation expense into the statement of operations over the 24-month term and an accrued payable is being recognized over the same period. As of August 15, 2020, the Company did not make payment on the 1 st closing notes and thereby defaulted on its obligation and the 2 nd closing note accelerated to become payable as of August 15, 2020. Upon default, the closing notes accrue interest at a 1.5% per month rate, or 18% annual rate. As a result, there was a total charge of $300,672 recorded during the 3 rd quarter of 2020 which was $250,000 of compensation expense and $50,672 of interest expense-related party. The total $750,000 liability is recorded in accrued expenses. Interest expense for note payable to related party for the year ended December 31, 2020 and 2019 was $58,808 and $19,334, respectively. Long-term debt On April 24, 2020, under the Paycheck Protection Program (“PPP”) established by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, administered by the Small Business Administration (“SBA”),the Company entered into a promissory note of $464,800 with Regions Bank (the “Bright Mountain PPP Loan”) and has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Promissory Note contains customary events of default provisions. Under the terms of the CARES Act, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. On January 28, 2021, the Company applied for the promissory note to be forgiven by the SBA in whole or in part; as of the date of this report, the Company that application is still in process. This loan was forgiven on July 16, 2021 by the Small Business Administration (SBA). See Note 20 for Subsequent events information. Effective June 1, 2020, the Company acquired Wild Sky and assumed the $1,706,735 promissory note (the “Wild Sky PPP Loan”) with Holcomb Bank received under the PPP. The Wild Sky PPP Loan has a two-year term and bears interest at a rate of 1.0% per annum. Monthly principal and interest payments are deferred for six months after the date of disbursement. The Wild Sky PPP Loan may be prepaid at any time prior to maturity with no prepayment penalties. The Wild Sky PPP Loan contains customary events of default provisions. Under the terms of the CARES Act, PPP Loan recipients can apply for and be granted forgiveness for all or a portion of loans granted under the PPP. On January 22, 2021, the Company applied for the promissory note to be forgiven by the SBA in whole or in part and on March 29, 2021, the Company obtained the forgiveness of the Wild Sky PPP Loan in whole. Effective June 1, 2020, we entered into a membership interest purchase agreement to acquire 100% of Wild Sky The seller issued a first lien senior secured credit facility totaling $16,451,905, which consisted of $15,000,000 of initial indebtedness, repayment of Wild Sky’s existing accounts receivable factoring facility of approximately $900,000 and approximately $500,000 of expenses. The note bears interest at a rate of 6.0% per annum. Per the credit facility with the seller, our loan payments begin December 1, 2021. There is no prepayment penalty associated with this credit facility. Certain future capital raises do require partial or full prepayments of the credit facility. The membership interest purchase included a requirement that the opinion of the financial statements as of and for the year ended December 31, 2020 not include a “going concern opinion”; the Company has defaulted on this requirement but on April 26, 2021, the Company obtained a waiver from the lender waiving this requirement. F- 29 At December 31, 2020 and 2019 a summary of the Company’s debt is as follows: December 31, 2020 December 31, 2019 (As Restated) Non-interest bearing BMLLC acquisition debt $ 385,000 $ 165,163 PPP loans 2,171,534 – Wild Sky acquisition debt 16,451,906 – Total debt 19,008,440 165,163 Less: short term debt and current portion of long term debt 2,091,735 165,163 Long term debt $ 16,916,705 $ – Interest expense was $581,925 and $39,411 for the years ended December 31, 2020 and December 31, 2019, respectively. The minimum annual principal payments of notes payable at December 31, 2020 were: 2021 $ 2,091,735 2022 2,684,241 2023 1,696,463 2024 1,629,493 2025 10,906,508 Total $ 19,008,440 Premium Finance Loan Payable The Company generally finances its annual insurance premiums through the use of short-term notes, payable in 10 equal monthly installments. Coverages financed include Directors and Officers and Errors and Omissions with premiums financed in 2020 and 2019 of $380,397 and $110,200, respectively. Total Premium Finance Loan Payable balance for the Company’s policies was $339,890 and $179,844 as of December 31, 2020 and 2019, respectively. NOTE 12 – FAIR VALUE MEASUREMENTS The Company’s assets and liabilities recorded at fair value are categorized based upon a fair value hierarchy that ranks the quality and reliability of the information used to determine fair value. Financial instruments recognized in the consolidated balance sheets consist of cash, accounts receivable, prepaid expenses and other current assets, note receivable, accounts payable, accrued expenses and premium finance loan payable. The Company believes that the carrying value of its current financial instruments approximates their fair values due to the short-term nature of these instruments. The carrying value of long-term debt to related parties and long-term debt to others approximates the current borrowing rate for similar debt instruments. 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 property, plant and equipment, goodwill and intangible assets, net. Refer to Note 9 and Note 10 for discussion on impairment of intangible assets and goodwill, respectively. The Company does not have any non-financial liabilities measured and recorded at fair value on a non-recurring basis. F- 30 Financial Disclosures about Fair Value of Financial Instruments The tables below set forth information related to the Company’s consolidated financial instruments (in thousands): Level in Fair December 31, 2020 December 31, 2019 Value Hierarchy Carrying Amount Fair Value Carrying Amount Fair Value PPP Loan 2 2,171,534 2,171,534 – – Long-term debt 3 $ 16,451,906 16,451,906 – – Long-term debt to related parties 3 80,000 80,000 80,000 80,000 Non-interest bearing BMLLC acquisition debt 3 385,000 385,000 165,163 165,163 The following are the major categories of liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) as of December 31, 2020 and 2019: Fair Value measurement using Level 3 Balance at December 31, 2018 $ 309,844 Principal reductions during 2019 (64,681 ) Balance at December 31, 2019 $ 245,163 Additions during 2020 (1) 16,671,743 Balance at December 31, 2020 $ 16,916,906 (1) Additions are due to $16,451,906 related to the Wild Sky acquisition debt (Refer to Note 4) and $219,837 to settlement in relation with the acquisition of BMLLC. Refer to “Long term debt” in Note 12. NOTE 13 – COMMITMENTS AND CONTINGENCIES Leases The Company leases its corporate offices in Boca Raton, Florida under a long-term non-cancellable lease agreement expiring on October 31, 2021. The lease terms require base rent payments of approximately $7,260 per month for the first twelve months commencing in September 2018, with a 3% escalation each year. This monthly payment is all-inclusive and includes electricity, heat, air-conditioning, and water. The lease terms require a security deposit of $4,700 which is included in other assets in the consolidated balance sheet. The right-of-use asset and lease liability are as follows as of December 31, 2020 and 2019: 2020 2019 Assets Operating lease right-of-use asset $ 72,598 $ 397,912 Liabilities Operating lease liability, current $ 72,727 $ 211,744 Operating lease liability, net of current portion – 198,232 Total operating lease liabilities $ 72,727 $ 409,976 The Company’s non-lease components are primarily related to property maintenance and other operating services, which vary based on future outcomes and is recognized in rent expense when incurred and not included in the measurement of the lease liability. The Company did not have any variable lease payments for its operating lease for the year ended December 31, 2020. F- 31 Future minimum lease commitments due for facilities under non-cancellable operating leases at December 31, 2020 are as follows: Operating Leases 2021 $ 72,598 Total minimum lease payments $ 72,598 The following summarizes additional information related to the operating lease: December 31, 2020 2019 Weighted-average remaining lease term 0.83 years 1.83 years Weighted-average discount rate 5.50 % 5.50 % Rent expense for the years ended December 31, 2020 and 2019 was $377,704 and $137,152 of which $377,704 and $109,518 are from continuing operations, respectively. Legal From time-to-time, the Company may be involved in litigation or be subject to claims arising out of our operations or content appearing on our websites in the normal course of business. Although the results of litigation and claims cannot be predicted with certainty, the Company currently believes that the final outcome of these ordinary course matters will not have a material adverse effect on our business. Spartan Capital: Under the covenants of the Placement Agent Agreement and as disclosed in the Placement Offering Memorandum, the Company was obligated to make a filing with a stock exchange to list the Company’s shares. The Company was to make such filing by a listing deadline and have stock exchange approval by a listing approval deadline. In the event the Company was unable to meet to deadlines, the investors in the Offering would be entitled to one additional share of common stock for each share purchased in the Offering provided, however, that such deadlines and obligations of the Company to issue additional shares would be extended for so long as the Company was able to demonstrate to the reasonable satisfaction of the Placement Agent, which consent shall not be reasonably withheld that it had acted in good-faith in attempting to list such securities which included responding to comments from such exchange. The Company believes it has acted in good-faith and has no obligation. No litigation has been filed by Spartan at this time or any of the shareholders in connection with the matter. For more information, see Note 20 Subsequent events. In 2020, Synacor, Inc commenced an action against MediaHouse, LLC, Inform, Inc. and the Company, alleging approximately $230,000 was owed based on invoices provided in 2019 in respect to that certain Content Provider & Advertising Agreement with MediaHouse. The Company has filed an answer and defenses and intends to defend the alleged claims. This is recorded as an accrued liability as of December 31, 2020. For more information, see Note 20 Subsequent events. A former employee of the Company filed a suit against the Company MediaHouse, Inc., and Gregory A. Peters, a former Executive, (the “Defendants”) alleging two counts of defamation. Any potential losses associated with this matter cannot be estimated at this time. Encoding.com, Inc. (“Encoding”) was a former digital media customer of MediaHouse. Encoding had a long overdue outstanding receivable from MediaHouse’s predecessor company, Inform, Inc. MediaHouse did not assume the liability at acquisition. In 2020, the Company and Encoding agreed to settle the overdue receivable through the issuance of 175,000 warrants to purchase Company stock with a $1.00 exercise price. This is recorded as an accrued liability as of December 31, 2020 and the warrants were issued in 2021. Regardless of the outcome, litigation can have an adverse impact on our company because of defense and settlement costs, diversion of management resources and other factors. F- 32 NOTE 14 – PREFERRED STOCK The Company has authorized 20,000,000 shares of preferred stock with a par value of $0.01 (the “Preferred Stock”), issuable in such series and with such designations, rights and preferences as the board of directors may determine. The Company’s board of directors has previously designated five series of preferred stock, consisting of 10% Series A Convertible Preferred Stock (“Series A Stock”), 10% Series B Convertible Preferred Stock (“Series B Stock”), 10% Series C Convertible Preferred Stock (“Series C Stock”), 10% Series D Convertible Preferred Stock (“Series D Stock”) and 10% Series E Convertible Preferred Stock (“Series E Stock”). On November 5, 2018, the Company filed Articles of Amendment to Amended and Restated Articles of Incorporation, as amended, which: ● returned 1,000,000 shares of previously designated 10% Series B Convertible Preferred Stock, 2,000,000 shares of previously designated 10% Series C Convertible Preferred Stock and 2,000,000 shares of previously designated 10% Series D Convertible Preferred Stock to the status of authorized but undesignated and unissued shares of our blank check preferred stock as there were no shares of any of these series outstanding and no intention to issue any such shares in the future: and ● created three new series of preferred stock, 12% Series F-1 Convertible Preferred Stock (“Series F-1”) consisting of 2,177,233 shares, 6% Series F-2 Convertible Preferred Stock (“Series F-2”) consisting of 1,408,867 shares, and 10% Series F-3 Convertible Preferred Stock (“Series F-3”) consisting of 757,917 shares. 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. The Series F-1 pays dividends at the rate of 12% per annum and automatically converts into shares of our common stock on April 10, 2022. The Series F-2 pays dividends at the rate of 6% per annum and automatically converts into shares of our common on July 27, 2022. The Series F-3 pays dividends at the rate of 10% per annum and automatically converts into shares of our common stock on August 30, 2022. 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 our 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. On July 18, 2019, the Company filed Articles of Amendment to Amended and Restated Articles of Incorporation, as amended, which: ● Approved designation of 2,000,000 shares of the preferred stock as 10% series A-1 Convertible Preferred Stock and authorized the issuance of the Series A-1 Preferred Stock; ● Dividends on the Series A-1 Preferred stock are cumulative and payable in cash; ● Dividends shall be payable monthly in arrears within fifteen (15) days after the end of the month. F- 33 At both December 31, 2020 and 2019, there were 1,200,000 shares of Series A-1 Stock, 2,500,000 shares of Series E Stock and 4,344,017 shares of Series F Stock issued and outstanding. There are no shares of Series B Stock, Series B-1 Stock, Series C Stock or Series D Stock issued and outstanding. Other designations, rights and preferences of each of series of preferred stock are identical, including (i) shares do not have voting rights, except as may be permitted under Florida law, (ii) are convertible into shares of our common stock at the holder’s option on a one for one basis, (iii) are entitled to a liquidation preference equal to a return of the capital invested, and (iv) each share will automatically convert into shares of common stock five years from the date of issuance or upon a change in control. Both the voluntary and automatic conversion formulas are subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events. In 2019, Mr. W. Kip Speyer, the Company’s Chairman of the Board, purchased an aggregate of 1,200,000 shares of Series A-1 Stock at a purchase price of $0.50 per share. Dividends paid for Series A-1, E and F Convertible Preferred Stock were $63,136 and $180,931 for the years ended December 31, 2020 and 2019, respectively. Total preferred stock dividend accrued amounted to $363,460 and $319,351 for the years ended December 31, 2020 and 2019, respectively. NOTE 15 – COMMON STOCK Treasury Stock On July 8, 2020, the Company executed a Settlement Agreement and Release with the Harry G. Pagoulatos, George Rezitis, and Angelo Triantafillou whereby they relinquished their Bright Mountain common stock shares and the Company will pay a final settlement of $385,000 within 12 months from the date the shares are delivered to the Company, which were received by the legal agent in December 2020. As of December 31, 2020, the parties have provided the Company with the total 825,175 shares. The shares will be held as Treasury Stock by the Company and will be resold at later dates. Stock Issued for cash During 2020, the Company sold an aggregate of 10,398,700 units of its securities to 82 accredited investors, 27 of which are unduplicated, in a private placement exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $5,199,350. Each unit, which was sold at a purchase price of $0.50, consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.75 per share. Spartan Capital Securities, LLC (“Spartan Capital”) served as placement agent for the Company in this offering. As compensation for its services, Spartan Capital withheld $1,621,653 of certain fees. These include direct offering commissions of $1,179,653 which are included as an adjustment to Additional Paid-in-Capital, $165,000 of finders fees related to Oceanside acquisition and other fees totaling $277,000, of which $250,000 is included in prepaid and other current assets, and the remaining $27,000 were recorded as expense. In addition, the Company issued Spartan Capital Placement Agents Warrants to purchase an aggregate of 1,039,870 shares of our common stock at an exercise price of $1.00 per share. F- 34 During 2019, the Company sold an aggregate of 163,750 units of its securities to 1 accredited investor in a private placement exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $58,950. Each unit, which was sold at a purchase price of $0.40, consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.65 per share. Spartan Capital served as placement agent for the Company in this offering. As compensation for its services, the Company paid Spartan Capital commissions and other fees totaling $6,550 and issued Spartan Capital Placement Agents Warrants to purchase an aggregate of 16,375 shares of our common stock, including the cash commission and Placement Agent Warrants issued pursuant to the final closing on January 9, 2019 included in the Company’s consolidated statement of changes in shareholders’ equity for the year ended December 31, 2019 During 2019, the Company sold an aggregate of 2,570,860 units of its securities to 20 accredited investors in two private placements exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $1,285,530. A total of 1,270,000 units were sold under the first private placement dated February 14, 2019 at a purchase price of $0.50 per share resulting in gross proceeds of $635,000. Each unit was sold at a purchase price of $0.50 and consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.75 per share. On April 22, 2019, the Company amended the private placement to include a second warrant to purchase one share of common stock at an exercise price of $1.00 per share. 970,500 units were sold at a purchase price of $0.50 per unit resulting in gross proceeds of $485,250. We used $1,008,225 of the proceeds to issue 6% promissory notes to Inform, Inc as a part of the potential acquisition. On July 15, 2019, these two offerings were terminated and replaced with a private placement offering units at a purchase price of $0.50 consisting of one share of common stock, one five-year warrant to purchase one share of common stock at an exercise price of $0.75 per share, and a second warrant to purchase one share of common stock at an exercise price of $1.00 per share. A total of 330,360 units were sold under the private placement dated July 15, 2019 units at a purchase price of $0.50 per share resulting in gross proceeds of $165,280. We used $148,662 of the proceeds to issue 6% promissory notes to Inform, Inc as a part of the potential acquisition. The investors in the first offering dated February 14, 2019 were required to subscribe for the second warrant offered in the April 22, 2019 amendment in a private placement dated July 11, 2019 which terminated on July 31, 2019 with no ability to extend. A total of 980,000 warrants were issued to eleven investors in the first private placement who subscribed for the second warrant. Three investors did not subscribe for the second warrant. During 2019, the Company sold an aggregate of 750,000 units of its securities to 3 accredited investors in a private placement exempt from registration under the Securities Act in reliance on exemptions provided by Section 4(a)(2) and Rule 506(b) of Regulation D resulting in gross proceeds to the Company of $300,000. Each unit, which was sold at a purchase price of $0.40, consisted of one share of common stock and one five-year warrant to purchase one share of common stock at an exercise price of $0.65 per share. Stock issued for services During the year ended 2019, the Company issued an aggregate 90,215 shares of our common stock to consultants for services rendered based on the fair value of the date of grant, which range from $1.00 to $1.79 a share for an aggregate value of $141,185. During the year ended 2020, the Company issued an aggregate 2,609,160 shares of our common stock to consultants for services rendered based on the fair value of the date of grant, which range from $1.49 to $1.90 a share for an aggregate value of $4,332,623. During 2020, Spartan Capital notified Bright Mountain of a cashless exercise of 1,852,003 warrants which had previously been awarded as compensation for facilitating private placement offerings. A total of 1,464,691 shares were issued as follows: 1,295,806 shares at $4.00 and 168,885 shares at $4.37, for an aggregate value of $5,921,251. During 2020, two Spartan Capital employees, who had previously been assigned warrants according to Spartan Capital’s internal incentive compensation program, notified Bright Mountain of a cashless exercise 175,000 warrants. A total of 146,563 shares were issued at a $4.00 share price, for an aggregate value of $586,252 During 2020, a former employee exercised 50,000 stock options for $6,950. A current employee exercised 80,000 stock options for $11,112. F- 35 NOTE 16 – SHARE-BASED COMPENSATION Stock Options Plans On April 20, 2011, the Company’s board of directors and majority stockholder adopted the 2011 Stock Option Plan (the “2011 Plan”), to be effective on January 3, 2011. The Company has reserved for issuance an aggregate of 900,000 shares of common stock under the 2011 Plan. The maximum aggregate number of shares of Company stock that shall be subject to Grants made under the Plan to any individual during any calendar year shall be 180,000 shares. On April 1, 2013, the Company’s board of directors and majority stockholder adopted the 2013 Stock Option Plan (the “2013 Plan”), to be effective on April 1, 2013. The Company has reserved for issuance an aggregate of 900,000 shares of common stock under the 2013 Plan. On May 22, 2015, the Company’s board of directors and majority stockholder adopted the 2015 Stock Option Plan (the “2015 Plan”), to be effective on May 22, 2015. The Company has reserved for issuance an aggregate of 1,000,000 shares of common stock under the 2015 Plan. On November 7, 2019, the Company’s board of directors and majority stockholder adopted the 2019 Stock Option Plan (the “2019 Plan”), to be effective on November 7, 2019. The Company has reserved for issuance an aggregate of 5,000,000 shares of common stock under the 2019 Plan. As of December 31, 2020, 337,000 shares, 467,000 shares, 859,000 shares and 4,761,773 shares were remaining for future issuance under the 2011 Plan, 2013 Plan, 2015 Plan and 2019 Plan, respectively. The purpose of the 2011 Plan, 2013 Plan, 2015 Plan, and 2019 Plan (together, the “Plans”) are to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. Under the 2015 Plan, the Company is authorized to issue incentive stock options intended to qualify under Section 422 of the Code, non-qualified stock options, stock appreciation rights, performance shares, restricted stock and long-term incentive awards. The Company’s board of directors will administer the 2011 Plan until such time as such authority has been delegated to a committee of the board of directors. The material terms of each option granted pursuant to the 2011 Plan by the Company shall contain the following terms: (i) that the purchase price of each share purchasable under an incentive option shall be determined by the Committee at the time of grant, (ii) the term of each option shall be fixed by the Committee, but no option shall be exercisable more than 10 years after the date such option is granted and (iii) in the absence of any option vesting periods designated by the Committee at the time of grant, options shall vest and become exercisable in terms and conditions, consistent with the Plan, as may be determined by the Committee and specified in the Grant Instrument. Share-based compensation is recognized as an expense on a straight-line basis over the requisite service period, which is generally the vesting period. Employee stock options granted under the plan generally vest ratably over a four-year period and expire on the tenth anniversary of their issuance. Restricted Stock Awards (“RSAs”) granted under the plan generally vest [in four equal annual installments beginning one year after the date of grant]. Stock Options 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- 36 The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted during the years ended December 31, 2020 and 2019: Assumptions: 2020 2019 Expected term (years) 6.25 6.25 Expected volatility 127 % 89 % Risk-free interest rate 0.31 – 0.51 % 1.78 – 1.99 % Dividend yield 0 % 0 % Expected forfeiture rate 0 % 0 % 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. The Company recorded $181,550 and $51,684 of stock option expense for the year ended December 31, 2020 and 2019, respectively. The stock option expense for year ended December 31, 2020 and 2019 has been recognized as a component of general and administrative expenses in the accompanying consolidated financial statements. For the year ended December 31, 2020, there was no non-cash stock-based stock option compensation expense and for the year ended December 31, 2019 non-cash stock-based stock option compensation expense was $141,884. As of December 31, 2020, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $279,295 to be recognized over a weighted-average period of 1.76 years. A summary of the Company’s stock option activity during the year ended December 31, 2020 is presented below: Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Balance Outstanding, December 31, 2019 2,020,227 $ 0.58 4.5 $ 2,767,711 Granted 190,000 1.88 – – Exercised (130,000 ) 0.13 – – Forfeited (705,000 ) – – – Expired – – – – Balance Outstanding, December 31, 2020 1,375,227 $ 0.76 4.1 $ 3,201,237 Exercisable at December 31, 2020 1,110,932 $ 0.49 2.7 $ 2,883,659 F- 37 Summarized information with respect to options outstanding under the Plans at December 31, 2020 and 2019, respectively, is as follows: Options Outstanding at December 31, 2020 Options Exercisable Range or Exercise Price Number Outstanding Weighted Average Exercise Price Remaining Contractual Life (In Years) Number Exercisable Weighted Average Exercise Price 0.14 – 0.24 410,000 $ 0.14 0.0 410,000 $ 0.13 0.25 – 0.49 126,000 $ 0.28 1.7 126,000 $ 0.28 0.50 – 0.85 501,000 $ 0.69 4.5 513,500 $ 0.69 0.86 – 1.74 138,227 $ 1.64 8.9 36,432 $ 1.64 1.75 100,000 $ 1.75 8.5 25,000 $ 1.75 2.10 100,000 $ 2.10 0.0 – $ – 1,375,227 $ 0.76 4.1 1,110,932 $ 0.49 Options Outstanding at December 31, 2019 Options Exercisable Range or Exercise Price Number Outstanding Weighted Average Exercise Price Remaining Contractual Life (In Years) Number Exercisable Weighted Average Exercise Price 0.14 – 0.24 540,000 $ 0.14 1.3 540,000 $ 0.14 0.25 – 0.49 351,000 $ 0.28 3.2 351,000 $ 0.28 0.50 – 0.85 906,000 $ 0.68 5.6 864,500 $ 0.68 0.86 – 1.74 123,227 $ 0.94 5.4 – $ – 1.75 100,000 $ 0.77 4.3 – $ – 2,020,227 $ 0.58 4.5 1,755,500 $ 0.43 Restricted Stock Awards The Company recognized compensation expense for 130,081 RSAs granted to independent directors of the Company and former employees of MediaHouse amounting to $405,943 for the year ended December 31, 2020. There was no compensation expense for RSAs for the year ended December 31, 2019. The restrictions on these share awards were for 1 year, hence they lapse in November and December 2021, respectively. Shares held in escrow As part of the Company’s acquisition of the Oceanside (Note 4), the Company assumed the existing S&W Option plan (“Israel Sub Plan”). The Israel Sub Plan was cancelled the and the 26 individuals who were participants in the plan had their options under the Israel Sub Plan converted into options to purchase stock of the Company, with their original vesting period. The grant date was determined to be the acquisition date and the stock price on the acquisition date of $1.60 was determined to be the grant price. As of the acquisition date, there were a total of 546,773 shares that will be issued between acquisition date and March 31, 2023. F- 38 Warrants At December 31, 2020, we had 35,848,316 common stock warrants outstanding to purchase shares of our common stock with an exercise price ranging between $0.65 and $1.00 per share. A summary of the Company’s warrants outstanding as of December 31, 2020 and 2019, respectively is presented below: Warrants as of December 31, 2020 Exercise Price Number Outstanding Warrant Value $ 1.00 4,817,308 $ 4,817,308 $ 0.65 15,575,000 $ 10,123,750 $ 0.75 15,456,008 $ 11,592,006 35,848,316 $ 26,533,064 Warrants as of December 31, 2019 Exercise Price Number Outstanding Warrant Value $ 1.00 4,817,308 $ 4,817,308 $ 0.65 15,575,000 $ 10,123,750 $ 0.75 5,057,308 $ 3,792,981 25,449,616 $ 18,734,039 During 2020, a total of 2,027,003 warrants were exercised in a cashless transaction with exercise prices of $0.65 and $1.00 per share. F- 39 NOTE 17 – LOSS PER SHARE Basic loss per share is calculated by dividing net loss for the year by the weighted average number of common shares outstanding for the period. In computing dilutive loss per share, basic loss per share is adjusted for the assumed issuance of all applicable potentially dilutive share-based awards, including common stock options, convertible preferred stock and warrants. Because both periods reported a net loss, dilution is not considered and basic loss per share equals diluted loss per share. The following common stock equivalents have been excluded from the calculation as their effect is anti-dilutive: December 31, 2020 2019 (As restated) Common stock equivalent from: Stock options 1,375,227 2,020,227 Warrants 35,848,316 25,449,618 Convertible preferred stock 8,044,017 8,044,017 Convertibles notes payable 200,000 200,000 From a dilutive perspective, existing cashless warrants, when converted, will result in a lower number of common shares. NOTE 18 – RELATED PARTY TRANSACTIONS As discussed in Note 11, notes payable to the CEO amounted to $39,728 and $25,689 as of December 31, 2020 and 2019 respectively, and are reported net of their unamortized debt discount of $40,272 and $54,311 as of December 31, 2020 and 2019, respectively. See Note 11 further discussion on these notes payable. We paid cash dividends on the outstanding shares of the Company’s Series E and F Preferred Stock amounting to $54,922 and $180,931 to the CEO in 2020 and 2019, respectively, and $5,100 and $5,100 to Mr. Richard Rogers, a former member of the board of directors, in 2020 and 2019, respectively. NOTE 19 – INCOME TAXES The Company is subject to federal and various state income taxes in the U.S. 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. On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES”) was signed into law and it amended some of the tax provisions introduced by the Tax Cuts and JOBS Act previously enacted on December 22, 2017. Specifically, the CARES Act temporarily relaxed the business interest limitation for tax years 2019 and 2020, and temporarily eliminated the 80% taxable income limitation for net operating loss deductions and provided a five-year carryback for net operating losses generated in tax years 2018, 2019, and 2020. On December 27, 2020, the Consolidated Appropriations Act (“CAA”) was signed into law and largely extended and expanded many of the provisions introduced by the CARES Act, and also included extensions for expiring tax deductions, credits, and incentives that were scheduled to expire on December 31, 2020. The tax effects of the various provisions from the CARES Act and the CAA have been accounted for, however, neither tax law change had a material impact to the consolidated financial statements. F- 40 The Company’s loss before income taxes from continuing operations consists of the following: Year ended December 31, 2020 2019 (As Restated) United States $ (53,116,100 ) $ (7,108,543 ) Foreign (20,165,836 ) (1,313,560 ) Total loss before provision for income taxes $ (73,281,936 ) $ (8,422,103 ) The provision for income taxes consists of the following: Year ended December 31, 2020 2019 (As Restated) Deferred Federal $ (192,561 ) $ (3,483,942 ) State (55,017 ) (720,844 ) Foreign (319,936 ) (179,360 ) (567,514 ) (4,384,146 ) Discontinued Operations Deferred: Federal – – State – – – – Total – – F- 41 A reconciliation of the federal statutory income tax rate to the effective tax rate is as follows: 2020 2019 Amount Rate Amount Rate (As Restated) Federal tax expense (benefit) at the statutory rate from continuing operations $ (15,389,206 ) 21.00 % $ (1,768,642 ) 21.00 % State tax benefit, net of federal income tax benefit (1,436,416 ) 1.96 % (236,344 ) 2.81 % Effect of foreign taxes 1,007,969 (1.38 )% 65,678 (0.78 )% Transaction costs 271,423 (0.37 )% 234,646 (2.79 )% Impairment 7,929,074 (10.82 )% – – % Stock compensation 113,862 (0.16 )% 42,894 (0.51 )% Other permanent differences (138,526 ) 0.19 % 103,783 (1.23 )% Change in valuation allowance 7,074,306 (9.65 )% (2,826,161 ) 33.56 % Total tax provision (benefit) (567,514 ) 0.77 % (4,384,146 ) 52.06 % Federal tax expense (benefit) at the statutory rate from discontinued operations – – (28,714 ) (21.00 )% State tax benefit, net of federal income tax benefit – – 13,981 10.23 % – – Change in valuation allowance – – 14,733 10.77 % Total - discontinued operations – – – – Total $ – – $ (3,340,629 ) (39.82 )% The goodwill and intangible impairments recorded during the year ended December 31, 2020 (see Notes 9 and 10) are non-deductible for tax purposes. As the Company does not have significant tax basis in the impaired goodwill, in accordance with ASC 740, there was historically no deferred taxes recorded for the goodwill basis difference, therefore, the goodwill impairment charge results in a permanent difference and a reconciling item for our effective tax rate for the year. The tax effect of significant components of the Company’s deferred tax assets and liabilities at December 31, 2020 and 2019, are as follows: Year ended December 31, 2020 2019 (As Restated) Deferred tax assets: Net operating loss carryforward $ 11,329,880 $ 5,128,865 Other 417,728 165,540 Total gross deferred tax assets 11,747,608 5,294,405 Less: Deferred tax asset valuation allowance (11,579,703 ) (917,456 ) Total net deferred tax assets $ 167,905 $ 4,376,949 Property and equipment (24,238 ) 71,977 Intangible assets (143,667 ) (4,624,908 ) Net deferred tax liability $ – $ (319,936 ) F- 42 As of December 31, 2020, the Company had U.S. federal net operating loss carryforwards of $39.5 million that expire at various dates from 2030 through 2037, and include $29.2 million that have an unlimited carryforward period. As of December 31, 2020, the Company had state and local net operating loss carryforwards of $57.4 million that expire at various dates from 2030 through 2040, and includes $22.9 million that have an unlimited carryforward period. As of December 31, 2020, the Company had foreign net operating loss carryforwards of $3.8 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 2020 were fully offset by the deferred tax liability and a valuation allowance on the remaining balance. Based on all available evidence, management determined that is it more likely than not that the Company’s net deferred tax assets will not be realized. The change in the valuation allowance was an increase of approximately $10.7 million for the year ended December 31, 2020, primarily as a result of the current year tax loss and the acquisition of Wild Sky. During 2020, the Company completed the acquisitions of Wild Sky, see Note 4. In connection with the acquisition of Wild Sky, the Company recorded additional net deferred tax assets of $3.3 million primarily related to estimated NOLs incurred by Wild Sky Media prior to the acquisition. In addition, a valuation allowance of $3.6 million was recorded against Wild Sky Media’s deferred tax assets due to limitations on the ability to utilize their NOLs stemming the timing of the reversals of the deferred tax liabilities from the intangibles. The net impact of the above adjustments, which totaled a net DTL of $0.2 million was recorded as an adjustment to goodwill in acquisition accounting. Also, in connection with the acquisition, as a result of the net deferred tax liability from Wild Sky, the Company was able to release a portion of its historical valuation allowance in the amount by the same amount as the Wild Sky Media net deferred tax liability. The release of the valuation allowance was recorded as a benefit in the tax provision for the year ending December 31, 2020. During 2019, the Company completed the acquisitions of Oceanside and MediaHouse, see Note 4. In each acquisition, the Company recognized acquired intangible assets and, in accordance with ASC 740, resulted in the recognition of deferred tax liabilities associated with these intangible assets. As a result of the acquisition of MediaHouse, the Company reduced its historical federal and state valuation allowance by approximately $3.2 million, which was recorded as a tax benefit in the Company’s income statement. 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. F- 43 The Company records tax positions as liabilities and adjusts these liabilities when its judgement 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, 2020 and 2019, 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, 2020 and 2019, no accrued interest or penalties are recorded on the balance sheet, and the Company has not 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 are still open under statute from 2017 to the present in the U.S. and from 2019 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. NOTE 20 – SUBSEQUENT EVENTS As disclosed in Note 12, on January 22, 2021, the Company applied for the Wild Sky PPP Loan to be forgiven by the SBA in whole or in part and on March 29, 2021, the Company obtained the forgiveness of the Wild Sky PPP Loan in whole. Further, on May 26, 2021, the Company applied for the Bright Mountain PPP Loan to be forgiven by the SBA in whole or in part and on July 16, 2021, the Company obtained the forgiveness of the Bright Mountain PPP Loan in whole. On April 26, 2021, the Company and certain of its subsidiaries entered into a First Amendment to Amended and Restated Senior Secured Credit Agreement (the “First Amendment to Credit Agreement”). The Company and its subsidiaries are parties to a credit agreement between itself and Centre Lane Partners Master Credit Fund II, L.P. (“Center Lane Partners”) as Administrative Agent and Collateral Agent dated June 5, 2020 (the “Credit Agreement”). The Credit Agreement was amended to permit the Company to raise up to $6,000,000 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 (the “Loans”) under the Credit Agreement. The interest rate on the Loans after April 26, 2021 was increased to 10.00% per annum from 6.00%, which can continue to be paid in-kind in lieu of cash payment. The Credit Agreement was further amended to permit the Company to provide audited financial statements for the year ended December 31,2020 on or before June 14, 2021. In addition, the Company may issue up to $800,000 in dividends from the previous limit of $500,000 per annum. During May 2021, the Company settled an outstanding debt with Encoding.com, Inc. (“Encoding”) was a former digital media customer of MediaHouse. Encoding had a long overdue outstanding receivable from MediaHouse’s predecessor company, Inform, Inc. MediaHouse did not assume the liability at acquisition. In 2020, the Company and Encoding agreed to settle the overdue receivable through the issuance of 175,000 warrants to purchase Company stock with a $1.00 exercise price. This is recorded as an accrued liability as of December 31, 2020 and the warrants were issued in May of 2021. F- 44 Between May 26, 2021 and November 5, 2021, the Company and certain of its subsidiaries entered into five amendments to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners Master Credit Fund II, L.P. (“Centre Lane Partners”). The Company and its subsidiaries are parties to a credit agreement between itself and Centre Lane Partners as Administrative Agent and Collateral Agent dated June 5, 2020, as amended (the “Credit Agreement”). The Credit Agreement was amended to provide for an additional loan amount of $4.625 million, in the aggregate. This term loan shall be repaid by February 15, 2022. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $2.712 million which will be added and capitalized to the principal amount of the original loan and the original loan terms apply. In addition, the Company has issued 12.5 million common shares to Centre Lane Partners as part of these transactions. On June 28, 2021 Bright Mountain Media, Inc (the “Company”) issued a press release that effective at the close of business on June 30, 2021, Bright Mountain Media, Inc’s., common stock (“BMTM”) ceased trading on the OTCQB and its shares began trading on the OTC Pink Market on July 1, 2021. The common stock will continue to trade with the symbol BMTM. Furthermore, on September 28, 2021, Bright Mountain Media, Inc. shares of common stock began trading on the Expert Market from the OTC Pink Sheets. The Company’s Common Stock will continue to be on the Expert Market until such time as the Company has become current in its filings with the Securities and Exchange Commission at which point it will seek to have its shares restored to the OTC markets. On August 31, 2021, the Company’s Chairman of the Board, W. Kip Speyer, converted his preferred shares into common shares of the Company. In that transaction, he converted 7,919,017 preferred shares into 7,919,017 common shares of the Company. As of said date, the Company has an accrued dividend liability due to Mr. W. Kip Speyer recorded totaling $695,773. On September 22, 2021, the Company entered into a Share Issuance Settlement with Spartan Capital Securities, LLC (“Spartan”). Under the terms of the Agreement, the Company agreed to issue a total of 10,398,700 of its common stock (the “Shares”) to seventy-five accredited investors who participated in the Company’s Private Placement Offering, which began in November 2019 and was completed in August 2020 (the “Private Placement”). As previously disclosed, under the terms of Private Placement, if the Company did not file a listing application of its common stock on the NYSE American Exchange within an agreed time period after the Company had received at least $1,500,000 of net proceeds, contemplated by the Placement Agent Agreement (the “Listing Application Deadline”) and obtained listing approval from the NYSE American within a 120 days from the Listing Application Deadline the Company would issue to each Investor in such Offering an additional share of common stock provided that if the Listing was not obtained by Listing Approval Deadline, the Listing Approval Deadline would be extended for so long and to the extent that the Company could demonstrate to Spartan’s reasonable satisfaction that it has used and continuing to use good faith efforts to obtain Listing Approval. The Company believes it has acted in good faith, but in order to avoid protracted and expensive litigation as to whether the Company was obligated to issue the Shares to the private placement investors, and without admitting or denying that the Company had any such obligation, the Company has agreed to issue the Shares to the private placement investors as set forth above. Effective December 1, 2021, the Company appointed Mr. Matthew Drinkwater as its new Chief Executive Officer (CEO). Mr. Drinkwater joins the Company with an extensive track record of adding value to the Company’s he has worked for over his professional career in several Key Senior Executive and Sales roles at companies such as Buzzfeed, Twitter, Groupon Inc., Yahoo and America Online (AOL). Mr. W. Kip Speyer will remain with the Company in his role of Chairman of the Board and transition his CEO role to Mr. Drinkwater. On or about December 1, 2021, there was an understanding reached in principle related to a legal proceeding between Synacor and MediaHouse, subject to finalization and execution of a definitive agreement. On December 3, 2021, the Company received formal notification that an event of default had occurred under the Closing Notes as part of the Oceanside acquisition. The Company is reviewing its obligations under the Notes. F- 45 NOTE 21 – QUARTERLY FINANCIAL INFORMATION (unaudited) (as restated) The Company has restated the accompanying unaudited condensed consolidated quarterly financial information in accordance with the requirements of the Securities and Exchange Commission and U.S. GAAP for interim financial information and with the instructions to Form 10-Q and Article 8 of Regulation S-X. The condensed consolidated quarterly financial information includes all adjustments, consisting only of normal, recurring adjustments, necessary for a fair presentation of the financial position of the Company and the results of its operations and its cash flows. The condensed consolidated quarterly financial information should be read in conjunction with the consolidated financial statements and notes included in this Form 10-K as well as previously filed Quarterly Reports on Form 10-Q relating to accounts and disclosures not subject to these restatements. The Restatements Items reflect adjustments to correct errors for several financial statements captions on the Company’s balance sheet, statements of operations, statements of changes in stockholders equity and statements of cash flows, in connection with accounting for the Company’s acquisitions. In addition, we are correcting other errors identified related to accrued dividends, penalty fees for late registration with the SEC and a prepaid investor relations consulting agreement. The nature and impact of these adjustments are described below and also detailed in the tables included below. For discussion of the impact of restatement items in the annual period ended December 31, 2020, refer to Note 2. Restatement Items a. Finder’s Fee accrual – The Company maintains a Finder’s Agreement with Spartan Capital Securities LLC (“Spartan Capital”) to identify and assist in business combinations, including any merger, acquisition or sale of stock or assets in connection with a merger or acquisition of other businesses. Upon closing of any such transaction, the Company shall pay an agreed fee relative to the consideration paid or received by the Company (the “finder’s fee”). There were two errors: i) the Company incorrectly used 3% instead of 5% to calculate the final finders’ fee; and ii) the Company determined that the consideration amount for the acquisition of MediaHouse was overstated and affected the finders’ fee calculation (refer to “c” below). In addition, the Company incorrectly calculated the amount of shares to be issued to Spartan Capital as finder’s fees in connection with the Company’s acquisitions Slutzky & Winshman Ltd. (which later changed its name to Oceanside Media LLC) (“Oceanside”) and News Distribution Network, Inc. d/b/a MediaHouse (“MediaHouse”) during the third and fourth quarters of 2019, respectively, and the acquisition of CL Media Holdings (known as Wild Sky Media) (“Wild Sky”) in the second quarter of 2020. The result of the correction as of and for the three and nine months ended September 30, 2019 related to the Oceanside acquisition was that accrued expenses were decreased by $4,656 with a corresponding decrease in operating expenses. Accrued expenses and accumulated deficit were also corrected in the respective quarters ended March 31, 2020, June 30, 2020, and September 30, 2020. The result of the correction as of and for three and six months ended June 30, 2020, related to the Wild Sky acquisition was that upon acquisition closing, accrued expenses were increased by $909,954 with a corresponding increase in operating expenses. Accrued expenses and accumulated deficit were also corrected in the quarter ended September 30, 2020. The result of the correction for the year ended December 31, 2019, related to the MediaHouse acquisition was that upon acquisition closing, accrued expense liability was increased by $1,007,921 with a corresponding increase in operating expenses. Accrued expense liability and accumulated deficit were also corrected in the respective quarters ended March 31, 2020, June 30, 2020, and September 30, 2020. b. Common Stock issued in Oceanside acquisition – In connection with the Oceanside acquisition in August 2019, the Company issued an incorrect number of shares of Company common stock as consideration as it used a preliminary purchase price. Upon management’s re-evaluation of the purchase price, the number of shares issued in connection with the Oceanside acquisition increased by 382,428 resulting in a correction and increase in goodwill, common stock, and additional paid-in capital in the amounts of $611,885, $3,824, and $608,058, respectively, at September 30, 2019. F- 46 c. Common Stock issued in MediaHouse acquisition – Upon re-evaluation of the final MediaHouse acquisition agreement, the Company noted the following corrections: There was a miscalculation of the fair value of the warrants to be issued as part of consideration in the amount of $3,829,889 due to the conversion of bridge loan and open lines of credit, as well as a valuation adjustment. Further, the change in intangible assets valuation was mainly driven by the use of a more updated forecast that was lower than the original forecast utilized along with an increase in the Company’s state effective rate used to record deferred tax assets and liabilities resulted in an increase to the deferred tax liability of $836,363 which was fully offset by an adjustment to the tax provision to adjust the Company’s valuation allowance. The decrease of the valuation allowance was recorded as a benefit in the tax provision for the year ended December 31, 2019. Additionally, in connection with the MediaHouse acquisition in November 2019, the Company issued shares of Company common stock to certain of MediaHouse’s investors as part of the consideration paid. During September 2020, the Company determined that one investor had been issued an incorrect number of shares as the result of a transposition mistake; the investor should have been issued 840,000 shares but was incorrectly issued 480,000 shares. This error resulted in a shortfall of shares of 360,000 valued at $590,400. In addition, another investor was not issued his shares in a timely manner amounting to 19,029 shares of the Company’s common stock valued at $31,208. Upon management’s re-evaluation of the MediaHouse acquisition and the number of shares issued as consideration, the number of shares increased by 379,029 resulting in a correction and increase in Goodwill of $621,608, increase to Common stock of $3,790 and an increase to Additional paid in capital of $617,818 at December 31, 2019. The reduction in the warrant valuation and equity corrections resulted in a reduction in consideration of ($3,208,282). The components in the change in consideration were: (1) reduction in warrant valuation of $3,829,889 and an increase in goodwill for two (2) investor equity corrections adding $621,608. d. Goodwill and intangible assets impact of additional share issuance and correction, respectably, of MediaHouse and Oceanside acquisitions – In connection with the re-evaluation of the Oceanside and MediaHouse acquisitions described in letters “b” and “c” above, the Company also re-evaluated the impairment charge it had recorded during the three and nine months ended September 30, 2020 (see Note 10). As a result of this re-evaluation, the impairment charge was increased by $4,769,472 for the three and nine months ended September 30, 2020. The net increase was comprised of an increase in impairment charge of $4,935,356 related to intangible assets and a decrease in impairment charge of $165,884 related to Goodwill. e. Share-based compensation from Oceanside acquisition – As part of the Oceanside acquisition, the Company assumed a local employee and contractor option plan and converted it to the Company’s existing equity compensation plan utilizing the existing vesting dates at the time of the acquisition. The option holders were two (2) classes of individuals: (1) employees and (2) contractors. The pre-acquisition Oceanside options ceased to exist as of the acquisition date and all outstanding and unvested options for these two groups were converted using the agreed exchange ratio. In re-evaluating the transaction as part of the errors noted above, management concluded the Company did not record stock compensation expense for the local employees and contractors since the acquisition. The result of the correction of the adjustment was an increase to share-based compensation and accrued expenses as follows: $36,355 as of September 30, 2019, $98,261 as of March 31, 2020, $189,795 as of June 30, 2020, and $277,950 as of September 30, 2020, respectively. f. Penalty accrual for untimely registration statement filings with the Securities and Exchange Commission (“SEC”) – During fiscal years 2018 and 2019, the Company sold units of its securities to various investors in several private placements. As part of each private placement, the Company agreed to file a registration statement with the SEC to register the resale of the shares by the respective holder in order to permit the public resale; such filing deadlines ranged from 120 to 270 days following the closing date of the respective placement and the Company was liable to pay a penalty fee for failure to file the resale registration statement within the allotted timeframe. The penalty fee is payable in cash and is equal to 2% of the aggregate purchase price paid by the respective investor for each 30 days until the earlier of the date the deficiency was cured or the expiration of 6 months from filing deadline. F- 47 The Company did not timely file the resale registration statements pertaining to three private placements made in fiscal years 2018 and 2019 and as a result was liable for penalties beginning in the fourth quarter of 2019 on the first two placements and the third quarter of 2020 on the third placement. These penalty fees were not properly recorded as an expense with an offset to accrued liability in their respective accounting period. The correction resulted in an increase in accrued liability of $109,200 as of December 31, 2019 with a corresponding offset to selling, general and administrative expenses for the year ended December 31, 2019 and which remains as a liability as of March 31, 2020, June 30, 2020, and September 30, 2020 for the first two placements, and an increase of selling, general and administrative expenses and corresponding accrued liability in the additional amount of $76,856 as of and for the three and nine months ended September 30, 2020, relating to the third placement. As of September 30, 2020, the accumulated liability totaled $186,056. g. Preferred stock dividends – Between August 2, 2019, and December 23, 2019, a related party purchased an aggregate of 1,200,000 shares of Series A-1 Preferred Stock at a purchase price of $0.50 per share. Series A-1 Preferred Stock pays dividends at the rate of 10% per annum; dividends are cumulative and payable in cash monthly in arrears within fifteen (15) days after the end of the month. (See Note 14). It was subsequently determined that the 2020 dividends on these shares were calculated incorrectly due to a mathematical error in the computation and were incorrectly reported. The correction resulted in a reduction of accrued dividends payable and an increase in additional paid-in capital amounting to $29,119 as of March 31, 2020, $88,157 as of June 30, 2020, and $177,330 as of September 30, 2020. h. Common stock issued for investor relations agreement – The Company entered into an investor relations consulting agreement with MZ Group (“MZ”) in January 2020 for a period of 12 months. As part of compensation for these services, the Company agreed to issue 60,000 shares of Company common stock to MZ at $1.50 per share in May 2020 totaling $90,000 and recorded it during March 2020 and failed to properly record a prepaid expense and a corresponding accrued expense for share issuance liability in the amount of $114,000, using a $1.90 per share price from January 2020 when the contract was signed. Consequently, the Company failed to i) record the share issuance that ultimately occurred in May 2020 and ii) amortize the prepaid expense monthly over the 12-month term of the contract. The correction of this error as of and for the three months ended March 31, 2020, resulted in the following adjustments: accrued expenses increased by $114,000, additional paid-in capital decreased by $89,400, common stock decreased by $600, prepaid expenses and other current assets increased by $85,500, and selling, general and administrative expenses decreased by $61,500. The correction of this error as of and for the three months ended June 30, 2020, resulted in the following adjustments: accrued expenses decreased by $114,000, additional paid-in capital increased by $113,400, common stock increased by $600, prepaid expenses and other current assets decreased by $28,500, selling, general and administrative expenses increased by $28,500. The correction of this error as of and for the three months ended September 30, 2020, resulted in the following adjustments: prepaid expenses and other current assets decreased by $28,500, selling, general and administrative expenses increased by $28,500. For the six months ended June 30, 2020, the adjustment was $57,000 and for the nine months ended September 30, 2020, the adjustment was $85,500. i. M&A Advisory Fee – During November 2019, the Company signed a placement agent agreement with Spartan Capital to raise funds for funding of the Company. Earlier, during July 2019, the Company signed an M&A advisory agreement that had a $250,000 fee that contemplated the provision of consulting services related to potential M&A transactions, including, but not limited to valuations, transaction terms and structures, evaluation and due diligence of candidate business, and other. The $250,000 fee would be deducted from the private placement closings once a minimum of $1.5 million of net funds were received by the Company. This agreement became effective as of the closing date of the sale of units in the private placement resulting in net proceeds to the Company of at least $1.5 million and had a duration of 60 months. By the 3rd closing of the private placement during March 2020, the Company realized the minimum net proceeds requirement of $1.5 million and the $250,000 fee was deducted from the net proceeds to the Company. In accounting for this transaction, the Company did not correctly capitalize the $250,000 fee as a prepaid asset in March 2020, when it became probable that the amount would be owed, subject to amortization over the remaining contractual term of 43 months. F- 48 The correction of this error resulted in an increase to prepaid expenses of $250,000 as of March 31, 2020, and a corresponding decrease in other expense for the three months ended March 31, 2020. In addition, the correction of this error resulted in an increase in other expenses and corresponding decrease in prepaid expenses for the amortization of $5,814, $17,442, and $17,442 for the three months ended March 31, 2020, June 30, 2020, and September 30, 2020, respectively. The cumulative effect of this correction resulted in an increase in other expenses and a corresponding decrease in prepaid expenses of $5,814, $23,256 and $40,698 as of March 31, 2020, as of June 30, 2020, and as of September 30, 2020, respectively. j. Other Adjustments – In addition, the Company has corrected other adjustments. While some of these other adjustments may be quantitatively immaterial, individually and in the aggregate, because the Company is correcting for the material errors above, management has decided to correct these other adjustments as well (“Other Adjustments”): ● Due to utilization of more updated forecasts, quarterly amortization expense on intangible assets (trademarks, customer lists, IP technology and non-compete agreements) decreased by $24,423 in the three months ended March 31, 2020, decreased $6,348 in the three months ended June 30, 2020, and increased $29,802 in the three months ended September 30, 2020, to reflect the changes in the intangible assets valuation. For the six months ended June 30, 2020, the amortization expense decreased $30,771 and for the nine months ended September 30, 2020, the amortization expense decreased $969. ● Selling, general and administrative expenses and accrued liabilities decreased by $87,670 as of and for the three months ended March 31, 2020, to correct an error relating to previously recorded professional services provided to Oceanside during 2019. ● Audit related items: ○ Audit adjustments ○ Elimination entry corrections ○ Accounts receivable, net adjustment and/or reclasses ○ Accounts payable adjustments and/or reclasses ○ Accrued expenses adjustments and/or reclasses k. Tax effect – The Company assessed the tax impact of the above restatement items, including any impact to deferred tax asset and liabilities. The Company determined that the impact of the changes for the finder’s fees (a), goodwill (d), share-based compensation (e), penalty accrual (f), preferred dividends (g) and common stock issued for investor relations agreement would be permanent book/tax differences, therefore had no impact on the income tax provision or any tax assets and liabilities, current or deferred. Tax effect of the other adjustments is discussed below. As of March 31, 2020: The deferred tax liability balance decreased by $24,711 and income tax benefit increased by the same amount for the three months ended March 31, 2020, as a result of correcting an error in the calculation of Oceanside’s net deferred tax liability, which was originally recorded in Q3 2020 as an out of period adjustment, along with changes to the deferred tax liability stemming from the changes in the amortization of the Oceanside intangibles. As of June 30, 2020: Goodwill increased by $140,321, deferred tax liability decreased by $35,846 and income tax benefit increased by $176,167 for the three months ended June 30, 2020, as a result of the following: The $140,321 goodwill adjustment related to a true-up to the Wild Sky acquisition recorded originally in Q3 2020 from the estimate included in the original Q2 2020 financials. The offset of the change in the deferred tax liability recorded through goodwill for Wild Sky was a change in the valuation allowance at the Company. The $140,321 change in valuation allowance at the Company level is recorded through the profit and loss and is part of the $176,167 change. F- 49 An additional $11,136 (out of the $78,048) change in the tax provision relates to reversing a deferred tax liability related to indefinite lived asset from Wild Sky that was recorded in error originally in Q2 2020 as it was originally determined that Wild Sky would have tax amortizable goodwill but with the Wild Sky acquisition accounting adjustments noted above it was determined the deferred tax liability originally recorded in Q2 2020 should be reversed. The remaining $24,710 (out of the $176,167) relates to the same issue as described above for the Q1 2020 adjustment. The offset was a decrease to the deferred tax liability balance. As of September 30, 2020: Goodwill decreased by $26,347, deferred tax liability increased by $38,848 and income tax benefit decreased by $65,194 for the three months ended September 30, 2020, as a result of the following: The $26,347 adjustment to goodwill was to reverse the true-up that was originally recorded in Q3 2020 that was pushed back to Q2 2020. The corresponding offset was to decrease the income tax benefit. $97,690 of the tax provision adjustment relates to reversing the two $40,565 true-ups that were originally booked in Q3 2020 but were pushed back to Q1 and Q2 2020, along with changes to the deferred tax liability stemming from the changes in the amortization of the Oceanside intangibles. There is a $58,843 increase to the tax benefit and offsetting decrease to the deferred tax liability to record the impact of the Oceanside impairment. The effect of this adjustment was to reduce Oceanside’s remaining deferred tax liability to $0. Subsequent to the impairment, the Oceanside operations were in a net deferred tax asset position which was offset with a valuation allowance. l. Closing notes consideration change from Oceanside acquisition – As part of the acquisition, the treatment of the Closing notes totaling $750,000 was incorrectly recorded and per ASC 805-30-55 was determined to be compensation expense to be recognized ratably over the 24-month term of the Notes. As such, starting in September 2019 and concluding in August 2021, $31,250 per month will be charged to compensation expense and a corresponding accrued liability will be recorded until the full amount of the $750,000 is reflected on the balance sheet. As of August 15, 2020, the Company did not make payment on the 1 st closing notes and thereby defaulted on its obligation and the 2 nd closing note accelerated to become payable as of August 15, 2020. Upon default, the closing notes accrue interest at a 1.5% per month rate, or 18% annual rate. As a result, there was an incremental total charge of $300,672 recorded during 2020 which was $250,000 of additional compensation expense and $50,672 of interest expense-related party. m. Deferred revenue – As part of the audit of 2019, it was determined that $156,529 of recorded revenue needed to be reclassified into deferred revenue as part of the review of FASB ASC 606, Revenue from Contracts with Customers. For the restated quarters in 2020, this deferred revenue carries forward from the year end December 31, 2019 and has no statement of operations impact in the quarters ended March 31, 2020, June 30, 2020 nor September 30, 2020. n. Reversal of gain on legal settlement – The Company determined that during Q3 2020, it recorded incorrectly a non-cash gain on a legal settlement that involved the repurchase of 550,117 Treasury shares of $935,408. The treatment was incorrect and did not follow the appropriate accounting guidance, ASC 505-30-25-2 and the Company corrected for this error. The net effect on Shareholder’s equity is neutral as the accumulated deficit increase was offset entirely by the decreased Treasury share value F- 50 Restatement of Previously Issued Unaudited Interim Condensed Consolidated Financial Statements The following tables present the Restatement Items, as well as other adjustments, on the Company’s unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2019: Balance Sheet As of September 30, 2019 As Previously Filed Restatement Adjustments As Restated Restatement References ASSETS Current Assets Cash and cash equivalents $ 587,520 $ 587,520 Accounts receivable, net 3,576,299 3,576,299 Note receivable, net 1,283,887 1,283,887 Prepaid expenses and other current assets 612,377 612,377 Current assets - discontinued operations 1,720 1,720 Total Current Assets 6,061,803 - 6,061,803 Property and equipment, net 80,465 80,465 Website acquisition assets, net 65,293 65,293 Intangible assets, net 4,305,097 (1,502,068 ) 2,803,029 b, d Goodwill 16,397,449 2,646,278 19,043,727 b, d, k Prepaid services/consulting agreements - long term 930,002 930,002 Right of use asset 447,915 447,915 Other assets 76,002 76,002 Total Assets $ 28,364,026 $ 1,144,210 $ 29,508,236 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 4,665,201 $ 4,665,201 Accrued expenses 1,920,507 62,949 1,983,456 a, e, l Accrued interest to related party 4,160 4,160 Premium finance loan payable 3,383 3,383 Deferred revenues - - Long term debt, current portion 165,163 165,163 Share Issuance Accrued Liability New - Other current liabilities - - Operating lease liability, net of current portion 189,669 189,669 Current liabilities - discontinued operations 591 591 Total Current Liabilities 6,948,674 62,949 7,011,623 Long Term Debt to Related Parties, net 22,160 22,160 Long term debt - - Deferred tax liability - 491,059 491,059 k Operating lease liability, net of current portion 258,246 258,246 Total Liabilities 7,229,080 554,008 7,783,088 Shareholders’ Equity Convertible preferred stock, par value $0.01, 20,000,000 shares authorized, Series A-1, 2,000,000 shares designated, 50,000 and outstanding at September 30, 2019 5,000 5,000 Series B-1, 6,000,000 shares designated, no issued and outstanding at September 30, 2019 - - Series E, 2,500,000 shares designated, issued and outstanding at September 30, 2019 25,000 25,000 Series F, 4,344,017 shares designated, issued and outstanding at September 30, 2019 43,440 43,440 Common stock, par value $0.01, 324,000,000 shares authorized, - 78,152,118 shares issued & outstanding at September 30, 2019 776,898 4,624 781,522 b Additional paid-in capital 40,778,245 607,258 41,385,503 b Accumulated deficit (20,493,637 ) (21,681 ) (20,515,318 ) a, d, e, k, l Treasury Stock - - Total shareholders’ equity 21,134,946 590,201 21,725,147 Total Liabilities and Shareholders’ Equity $ 28,364,026 $ 1,144,210 $ 29,508,236 As of September 30, 2019 : a. Finder’s Fee b. Common Stock issued in Oceanside acquisition d. Goodwill and intangible assets impact of additional share issuance and correction, respectively, of MH and Oceanside acquisitions e. Share-based compensation from Oceanside acquisition k. Tax effect l. Closing notes consideration change from Oceanside acquisition F- 51 Income Statement For the three months ended September 30, 2019 For the nine months ended September 30, 2019 As Previously Filed Restatement Adjustments As Restated As Previously Filed Restatement Adjustments As Restated Restatement References Revenues Advertising $ 2,113,276 $ - $ 2,113,276 $ 3,915,326 $ - $ 3,915,326 Cost of revenue Advertising 1,432,922 - 1,432,922 2,874,076 - 2,874,076 Gross profit 680,354 - 680,354 1,041,250 - 1,041,250 Selling, general and administrative expenses 2,734,203 29,918 2,764,121 4,452,490 29,918 4,482,408 a, d, e, l Loss from operations (2,053,849 ) (29,918 ) (2,083,767 ) (3,411,240 ) (29,918 ) (3,441,158 ) Other income (expense) Interest (expense) income,net 16,234 16,234 37,281 37,281 Gain on settlement of liability - - 122,500 122,500 Impairment Expense - - - - Settlement of contingent consideration - - - - Other expense - - - - Interest expense (6,993 ) (6,993 ) (7,902 ) (7,902 ) Interest expense - related party (5,574 ) (5,574 ) (17,289 ) (17,289 ) Total other income (expense) 3,667 - 3,667 134,590 - 134,590 Net loss from continuing operations before tax (2,050,182 ) (29,918 ) (2,080,100 ) (3,276,650 ) (29,918 ) (3,306,568 ) Income (loss) from discontinued operations 13,649 13,649 (174,021 ) (174,021 ) Net loss before tax (2,036,533 ) (29,918 ) (2,066,451 ) (3,450,671 ) (29,918 ) (3,480,589 ) Income tax benefit - 8,237 8,237 - 8,237 8,237 k Net loss (2,036,533 ) (21,681 ) (2,058,214 ) (3,450,671 ) (21,681 ) (3,472,352 ) Preferred stock dividends Series A-1, Series E, and Series F preferred stock (52,682 ) (52,682 ) (201,484 ) (201,484 ) Net loss attributable to common shareholders $ (2,089,215 ) $ (21,681 ) $ (2,110,896 ) $ (3,652,155 ) $ (21,681 ) $ (3,673,836 ) Basic and diluted net loss for continuing operations per share $ (0.03 ) $ (0.03 ) $ (0.05 ) $ (0.05 ) Basic and diluted net profit for discontinued operations per share $ 0.00 $ 0.00 $ (0.00 ) $ (0.00 ) Basic and diluted net loss per share $ (0.03 ) $ (0.03 ) $ (0.05 ) $ (0.05 ) Weighted average shares outstanding - basic and diluted 64,267,465 64,267,465 66,485,230 70,623,818 For the three and nine months ended September 30, 2019 : a. Finder’s Fee d. Goodwill and intangible assets impact of additional share issuance and correction, respectively, of MH and Oceanside acquisitions e. Share-based compensation from Oceanside acquisition k. Tax effect l. Closing notes consideration change from Oceanside acquisition F- 52 Statement of Cash Flows For the nine months ended September 30, 2019 As Previously Filed Restatement Adjustments As Restated Restatement References Cash flows from operating activities: Net loss $ (3,450,671 ) $ (21,681 ) $ (3,472,352 ) a, d, e, l Add back: loss attributable to discontinued operations 174,021 174,021 Adjustments to reconcile net loss to net cash used in operations: Depreciation 5,613 5,613 Amortization of debt discount 10,472 10,472 Amortization 120,668 (33,032 ) 87,636 d Impairment of tradename 20,800 20,800 Gain on settlement of liability (122,500 ) (122,500 ) Gain on sale of property and equipment - - Stock option compensation expense 29,074 67,605 96,679 e Stock issued for services 32,250 32,250 Change in Deferred taxes - (8,237 ) (8,237 ) k Provision for bad debt 29,338 29,338 Changes in operating assets and liabilities: Accounts receivable (808,812 ) (808,812 ) Prepaid expenses and other current assets 482,979 482,979 Other assets (17,369 ) (17,369 ) ROU asset and lease liability - - Accounts payable 1,078,205 1,078,205 Accrued expenses 1,070,498 (4,655 ) 1,065,843 a Accrued interest to related party 3,213 3,213 Deferred rents - - Deferred revenues (4,163 ) (4,163 ) Net cash used in continuing operations for operating activities (1,346,384 ) 0 (1,346,384 ) Net cash (used in) provided by discontinued operations (155,739 ) (155,739 ) Net cash used in operating activities (1,502,123 ) 0 (1,502,123 ) Cash flows from investing activities: Purchase of property and equipment (8,746 ) (8,746 ) Cash received in acquisition 603,744 603,744 Cash paid for website acquisition - - Principal collected on notes receivable 77,500 77,500 Notes receivable funded (1,156,887 ) (1,156,887 ) Cash paid for website acquisition (8,000 ) (8,000 ) Cash proceeds from acquisition of subsidiaries - - Net cash (used in) provided by investing activities (492,389 ) - (492,389 ) Cash flows from financing activities: Proceeds from issuance of common stock, net of commissions 1,651,410 1,651,410 Proceeds from issuance of preferred stock 250,000 250,000 Payments of insurance premium loans payable (89,154 ) (89,154 ) Dividend payments (201,847 ) (201,847 ) Principal payment on notes payable (64,681 ) (64,681 ) Net cash provided by financing activities 1,545,728 - 1,545,728 Net (decrease) in cash and cash equivalents classified within assets related to continued operations (448,784 ) - (448,784 ) Impact of foreign exchange rates on cash 9,818 9,818 Net (decrease) in cash and cash equivalents classified within assets related to discontinued operations (15,971 ) (15,971 ) Net (decrease) increase in cash and cash equivalents (454,937 ) - (454,937 ) Cash and cash equivalents at beginning of period 1,042,457 1,042,457 Cash and cash equivalents at end of period $ 587,520 $ - $ 587,520 For the nine months ended September 30, 2019 : a. Finder’s Fee d. Goodwill and intangible assets impact of additional share issuance and correction, respectively, of MH and Oceanside acquisitions e. Share-based compensation from Oceanside acquisition k. Tax effect l. Closing notes consideration change from Oceanside acquisition F- 53 The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated statement of cash flows supplemental information for the nine months ended September 30, 2019: For the nine months ended September 30, 2019 As Previously Filed Restatement Adjustments As Restated Supplemental disclosure of cash flow information Cash paid for: Interest $ 15,926 $ - $ 15,926 Supplemental disclosure of non-cash investing and financing activities Premium finance loan payable recorded as prepaid $ 28,602 $ - $ 28,602 Non-cash acquisition of S&W net assets $ - $ 2,999,756 $ 2,999,756 Non-cash acquisition of S&W net liabilities $ 168,244 $ 2,994,633 $ 3,162,877 Non-cash acquisition of intangible assets of S&W $ 4,169,000 $ (1,048,400 ) $ 3,120,600 Non-cash acquisition right of use asset S&W $ 266,230 $ (31,175 ) $ 235,055 Common stock issued for acquisitions $ - $ 20,021,163 $ 20,021,163 Recognition of right of use lease liability for S&W $ 245,540 $ - $ 245,540 Non-cash acquisition of goodwill S&W $ 15,408,523 $ 1,660,284 $ 17,068,807 Reduction of liability with Daily Engage Media Group LLC $ 197,500 $ - $ 197,500 Note receivable for the sale of Black Helmet $ 155,000 $ - $ 155,000 Stock issued for prepaid services/consulting agreement to Spartan Capital $ 32,220 $ - $ 32,220 Stock dividend $ 100 $ - $ 100 The following tables present the Restatement Items, as well as other adjustments, on the Company’s unaudited interim condensed consolidated financial statements as of and for the three months ended March 31, 2020: Balance Sheet As of March 31, 2020 As Previously Restatement Restatement Filed Adjustments As Restated References ASSETS Current Assets Cash and cash equivalents $ 1,270,023 $ 1,270,023 Accounts receivable, net 3,207,560 (211,773 ) 2,995,787 j Note receivable, net 38,329 38,329 Prepaid expenses and other current assets 485,074 273,236 758,310 h, i Current assets - discontinued operations - - Total Current Assets 5,000,986 61,463 5,062,449 Property and equipment, net 25,413 25,413 Website acquisition assets, net 35,316 35,316 Intangible assets, net 18,671,791 (193,943 ) 18,477,848 d Goodwill 53,646,856 (1,513,235 ) 52,133,621 b, c Prepaid services/consulting agreements - long term 775,000 775,000 Right of use asset 348,721 348,721 Other assets 94,672 94,672 Total Assets $ 78,598,755 $ (1,645,714 ) $ 76,953,041 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 8,152,462 $ (87,970 ) $ 8,064,492 j Accrued expenses 893,540 1,562,744 2,456,284 a, e, f, g, h, l Accrued interest to related party 8,652 8,652 Premium finance loan payable 125,453 125,453 Deferred revenues 18,609 156,529 175,138 m Long term debt, current portion 165,163 165,163 Share Issuance Accrued Liability New - - Other current liabilities - - Operating lease liability, net of current portion 215,004 215,004 Current liabilities - discontinued operations - - Total Current Liabilities 9,578,883 1,631,303 11,210,186 Long Term Debt to Related Parties, net 29,179 29,179 Long term debt - - Deferred tax liability 516,941 (286,215 ) 230,726 k Operating lease liability, net of current portion 130,979 130,979 Total Liabilities 10,255,982 1,345,088 11,601,070 Shareholders’ Equity Convertible preferred stock, par value $0.01, 20,000,000 shares authorized, Series A-1, 2,000,000 shares designated, 1,200,000 and outstanding at March 31, 2020 12,000 12,000 Series B-1, 6,000,000 shares designated, no issued and outstanding at March 31, 2020 - - Series E, 2,500,000 shares designated, issued and outstanding at March 31, 2020 25,000 25,000 Series F, 4,344,017 shares designated, issued and outstanding at March 31, 2020 43,440 43,440 Common stock, par value $0.01, 324,000,000 shares authorized, 107,270,456 shares issued and outstanding at March 31, 2020 1,067,329 4,776 1,072,105 b, c Additional paid-in capital 91,099,013 (2,651,149 ) 88,447,864 b, c Accumulated deficit (23,904,009 ) (344,430 ) (24,248,439 ) a, c, e, f, j, h, i, k, l, m Treasury Stock - - Total shareholders’ equity 68,342,773 (2,990,803 ) 65,351,970 Total Liabilities and Shareholders’ Equity $ 78,598,755 $ (1,645,714 ) $ 76,953,041 As of March 31, 2020 : a. Finder’s Fee b. Common Stock issued in Oceanside acquisition c.Common Stock issued in MediaHouse Acquisition d. Goodwill and intangible assets impact of additional share issuance and correction, respectively, of MH and Oceanside acquisitions e. Share-based compensation from Oceanside acquisition f. Penalty accrual for untimely registration statement filings g. Preferred stock dividends h. Common stock issued for investor relations agreement i. M&A advisory fee j. Other Adjustments k. Tax effect F- 54 Income Statement For the three months ended March 31, 2020 As Previously Restatement Restatement Filed Adjustments As Restated References Revenues Advertising $ 2,270,186 $ - $ 2,270,186 Cost of revenue Advertising 1,823,082 - 1,823,082 Gross profit 447,104 - 447,104 Selling, general and administrative expenses 3,979,378 (403,528 ) 3,575,850 e, h, i, j, l Loss from operations (3,532,274 ) 403,528 (3,128,746 ) Other income (expense) Interest (expense) income,net 10,993 10,993 Gain on settlement of liability - - Impairment Expense - - Settlement of contingent consideration - - Other expense (215 ) (215 ) Interest expense - - Interest expense - related party (2,023 ) (2,023 ) Total other income (expense) 8,755 - 8,755 Net loss from continuing operations before tax (3,523,519 ) 403,528 (3,119,991 ) Income (loss)from discontinued operations - - Net loss before tax (3,523,519 ) 403,528 (3,119,991 ) Income tax benefit 64,499 24,711 89,210 k Net loss (3,459,020 ) 428,239 (3,030,781 ) Preferred stock dividends Series A-1, Series E, and Series F preferred stock (118,252 ) (118,252 ) Net loss attributable to common shareholders $ (3,577,272 ) $ 428,239 $ (3,149,033 ) Basic and diluted net loss for continuing operations per share $ (0.03 ) $ (0.03 ) Basic and diluted net profit for discontinued operations per share $ - $ - Basic and diluted net loss per share $ (0.03 ) $ (0.03 ) Weighted average shares outstanding - basic and diluted 106,098,560 106,098,560 For the three months ended March 31, 2020 : e. Share-based compensation from Oceanside acquisition h. Common stock issued for investor relations agreement i. M&A advisory fee j. Other Adjustments k. Tax effect l. Closing notes consideration change from Oceanside acquisition F- 55 Statement of Cash Flows For the three months ended March 31, 2020 As Previously Restatement Restatement Filed Adjustments As Restated References Cash flows from operating activities: Net loss $ (3,459,020 ) $ 428,239 $ (3,030,781 ) d, e, h, i, j, k, l Add back: loss attributable to discontinued operations Adjustments to reconcile net loss to net cash used in operations: Depreciation 5,253 5,253 Amortization of debt discount 3,490 3,490 Amortization 952,622 (24,423 ) 928,199 d Gain on settlement of liability 36,595 36,595 Gain on sale of property and equipment - - Stock option compensation expense - - Stock issued for services 91,718 91,718 Non-cash acquisition fee 275,000 275,000 Non-cash compensation for services - (90,000 ) (90,000 ) h Non-cash settlement of contingent consideration - - Change in Deferred taxes (64,499 ) (24,711 ) (89,210 ) k Provision for bad debt - - Changes in operating assets and liabilities: Accounts receivable 789,915 789,915 Prepaid expenses and other current assets 314,015 (321,705 ) (7,690 ) h, i Prepaid serveices/consulting agreements 93,182 93,182 Goodwill - - Other assets (58,849 ) (58,849 ) ROU asset and lease liability (14,802 ) (14,802 ) Accounts payable (205,980 ) (65,100 ) (271,080 ) j Accrued expenses (141,893 ) 97,701 (44,192 ) e, j, l Accrued interest to related party 2,023 2,023 Deferred rents - - Deferred revenues 11,958 11,958 Net cash used in continuing operations for operating activities (1,369,272 ) - (1,369,272 ) Net cash (used in) provided by discontinued operations - - Net cash used in operating activities (1,369,272 ) - (1,369,272 ) Cash flows from investing activities: Purchase of property and equipment - - Net cash (used in) provided by investing activities - - - Cash flows from financing activities: Proceeds from issuance of common stock, net of commissions 1,734,937 1,734,937 Proceeds from issuance of preferred stock - Payments of insurance premium loans payable (54,391 ) (54,391 ) Dividend payments (23,747 ) (23,747 ) Principal payment on notes payable - - Note receivable funded - - Proceeds from repayment of note receivable 25,483 25,483 Net cash provided by financing activities 1,682,282 - 1,682,282 Net (decrease) in cash and cash equivalents classified within assets related to continued operations 313,010 - 313,010 Net (decrease) in cash and cash equivalents classified within assets related to discontinued operations - - Net (decrease) increase in cash and cash equivalents 313,010 - 313,010 Cash and cash equivalents at beginning of period 957,013 957,013 Cash and cash equivalents at end of period $ 1,270,023 $ - $ 1,270,023 For the three months ended March 31, 2020 : d. Goodwill and intangible assets impact of additional share issuance and correction, respectively, of MediaHouse and Oceanside acquisitions e. Share-based compensation from Oceanside acquisition h. Common stock issued for investor relations agreement i. M&A advisory fee j. Other Adjustments k. Tax effect l. Closing notes consideration change from Oceanside acquisition The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated statement of cash flows supplemental information for the three months ended March 31, 2020: For the three months ended March 31, 2020 As Previously Filed Restatement Adjustments As Restated Supplemental disclosure of cash flow information Cash paid for: Interest $ 2,023 $ - $ 2,023 Supplemental disclosure of non-cash investing and financing activities Premium finance loan payable recorded as prepaid $ 125,987 $ - $ 125,987 Stock issued for prepaid services/consulting agreements to Spartan Capital $ 2,212,400 $ - $ 2,212,400 Accrued consulting fees withheld from offering proceeds $ 165,000 $ (165,000 ) $ - The following tables present the Restatement Items, as well as other adjustments, on the Company’s unaudited interim condensed consolidated financial statements as of and for the three and six months ended June 30, 2020: F- 56 Balance Sheet As of June 30, 2020 As Previously Restatement Restatement Filed Adjustments As Restated References ASSETS Current Assets Cash and cash equivalents $ 1,905,182 $ 1,905,182 Accounts receivable, net 4,715,622 (211,773 ) 4,503,849 j Note receivable, net 35,215 35,215 Prepaid expenses and other current assets 903,874 227,294 1,131,168 h, i Current assets - discontinued operations - - Total Current Assets 7,559,893 15,521 7,575,414 Property and equipment, net 139,349 139,349 Website acquisition assets, net 24,052 24,052 Intangible assets, net 24,882,063 901,405 25,783,468 b, c, d, j Goodwill 64,568,671 (2,461,914 ) 62,106,757 b, c, d, k Prepaid services/consulting agreements - long term 697,500 697,500 Right of use asset 296,514 296,514 Other assets 448,575 448,575 Total Assets $ 98,616,617 $ (1,544,987 ) $ 97,071,630 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 8,609,805 $ (87,970 ) $ 8,521,835 j Accrued expenses 1,032,458 2,546,659 3,579,117 a, e, f, g, h, j, l Accrued interest to related party 10,675 10,675 Premium finance loan payable 71,062 71,062 Deferred revenues 80,741 156,529 237,270 m Long term debt, current portion 165,163 165,163 Share Issuance Accrued Liability New - - Other current liabilities - - Operating lease liability, net of current portion 218,697 218,697 Current liabilities - discontinued operations - - Total Current Liabilities 10,188,601 2,615,218 12,803,819 Long Term Debt to Related Parties, net 32,670 32,670 Long term debt 18,588,440 18,588,440 Deferred tax liability 433,955 (322,061 ) 111,894 k Operating lease liability, net of current portion 82,396 82,396 Total Liabilities 29,326,062 2,293,157 31,619,219 Shareholders’ Equity Convertible preferred stock, par value $0.01, 20,000,000 shares authorized, Series A-1, 2,000,000 shares designated, 1,200,000 and outstanding at June 30, 2020 12,000 12,000 Series B-1, 6,000,000 shares designated, no issued and outstanding at June 30, 2020 - - Series E, 2,500,000 shares designated, issued and outstanding at June 30, 2020 25,000 25,000 Series F, 4,344,017 shares designated, issued and outstanding at June 30, 2020 43,440 43,440 Common stock, par value $0.01, 324,000,000 shares authorized, - 110,795,456 shares issued & outstanding at June 30, 2020 1,102,579 5,376 1,107,955 b, c, h Additional paid-in capital 95,116,892 (2,478,711 ) 92,638,181 b, c Accumulated deficit (27,009,356 ) (1,364,810 ) (28,374,166 ) a, c, e, f, j, h, i, k, l, m Treasury Stock - - Total shareholders’ equity 69,290,555 (3,838,144 ) 65,452,411 Total Liabilities and Shareholders’ Equity $ 98,616,617 $ (1,544,987 ) $ 97,071,630 As of June 30, 2020 : a. Finder’s Fee b. Common Stock issued in Oceanside acquisition c. Common Stock issued in MediaHouse Acquisition d. Goodwill and intangible assets impact of additional share issuance and correction, respectively, of MediaHouse and Oceanside acquisitions e. Share-based compensation from Oceanside acquisition f. Penalty accrual for untimely registration statement filings g. Preferred stock dividends h. Common stock issued for investor relations agreement i. M&A advisory fee j. Other Adjustments k. Tax effect l. Closing notes consideration change from Oceanside acquisition m. Deferred revenue F- 57 Income Statement For the three months ended June 30, 2020 For the six months ended June 30, 2020 As Previously Restatement As Previously Restatement Restatement Filed Adjustments As Restated Filed Adjustments As Restated References Revenues Advertising $ 2,273,940 $ - $ 2,273,940 $ 4,544,126 $ - $ 4,544,126 Cost of revenue Advertising 1,097,504 - 1,097,504 2,920,586 - 2,920,586 Gross profit 1,176,436 - 1,176,436 1,623,540 - 1,623,540 Selling, general and administrative expenses 4,387,741 1,196,547 5,584,288 8,367,119 793,019 9,160,138 a, d, e, h, i, j, l Loss from operations (3,211,305 ) (1,196,547 ) (4,407,852 ) (6,743,579 ) (793,019 ) (7,536,598 ) Other income (expense) Interest (expense) income,net (82,261 ) (82,261 ) (71,268 ) (71,268 ) Gain on settlement of liability - - - - Impairment Expense - - - - Settlement of contingent consideration - - - - Other expense - - (215 ) (215 ) Interest expense - - - - Interest expense - related party (2,023 ) (2,023 ) (4,046 ) (4,046 ) Total other income (expense) (84,284 ) - (84,284 ) (75,529 ) - (75,529 ) Net loss from continuing operations before tax (3,295,589 ) (1,196,547 ) (4,492,136 ) (6,819,108 ) (793,019 ) (7,612,127 ) Income (loss)from discontinued operations - - - - Net loss before tax (3,295,589 ) (1,196,547 ) (4,492,136 ) (6,819,108 ) (793,019 ) (7,612,127 ) Income tax benefit 190,242 176,167 366,409 254,741 200,878 455,619 k Net loss (3,105,347 ) (1,020,380 ) (4,125,727 ) (6,564,367 ) (592,141 ) (7,156,508 ) Preferred stock dividends Series A-1, Series E, and Series F preferred stock (148,995 ) (148,995 ) (267,247 ) (267,247 ) Net loss attributable to common shareholders $ (3,254,342 ) $ (1,020,380 ) $ (4,274,722 ) $ (6,831,614 ) $ (592,141 ) $ (7,423,755 ) Basic and diluted net loss for continuing operations per share $ (0.03 ) $ (0.04 ) $ (0.06 ) $ (0.07 ) Basic and diluted net profit for discontinued operations per share $ - $ - $ - $ - Basic and diluted net loss per share $ (0.03 ) $ (0.04 ) $ (0.06 ) $ (0.07 ) Weighted average shares outstanding - basic and diluted 107,427,197 107,427,197 106,148,084 106,148,084 For the three and six months ended June 30, 2020 : a. Finder’s Fee d. Goodwill and intangible assets impact of additional share issuance and correction, respectively, of MediaHouse and Oceanside acquisitions e. Share-based compensation from Oceanside acquisition h. Common stock issued for investor relations agreement i. M&A advisory fee j. Other Adjustments k. Tax effect l. Closing notes consideration change from Oceanside acquisition F- 58 Statement of Cash Flows For the six months ended June 30, 2020 As Previously Restatement Restatement Filed Adjustments As Restated References Cash flows from operating activities: Net loss $ (6,564,367 ) $ (592,141 ) $ (7,156,508 ) a, d, e, h, i, j, k, l Add back: loss attributable to discontinued operations Adjustments to reconcile net loss to net cash used in operations: Depreciation 10,179 10,179 Amortization of debt discount 6,981 6,981 Amortization 1,999,914 (30,771 ) 1,969,143 d Impairment of tradename - - Impairment of goodwill - - Impairment of intangibles - - Gain on settlement of liability - - Gain on sale of property and equipment - - Stock option compensation expense 78,094 78,094 Stock issued for services 91,718 91,718 Non-cash acquisition fee 275,000 275,000 Non-cash compensation for services - (90,000 ) (90,000 ) h Non-cash settlement of contingent consideration - - Change in Deferred taxes (254,741 ) (200,878 ) (455,619 ) k Provision for bad debt 773,944 773,944 Changes in operating assets and liabilities: Accounts receivable 1,395,191 1,395,191 Prepaid expenses and other current assets 335,100 (275,763 ) 59,337 h, i Prepaid serveices/consulting agreements 215,682 215,682 Goodwill - - Other assets 212,230 212,230 ROU asset and lease liability (7,485 ) (7,485 ) Accounts payable (670,790 ) (65,100 ) (735,890 ) j Accrued expenses (847,068 ) 1,254,653 407,585 a, e, f, g, h, j, l Accrued interest to related party 4,046 4,046 Deferred rents - - Deferred revenues 40,757 40,757 Net cash used in continuing operations for operating activities (2,905,615 ) - (2,905,615 ) Net cash (used in) provided by discontinued operations - - Net cash used in operating activities (2,905,615 ) - (2,905,615 ) Cash flows from investing activities: Purchase of property and equipment (4,055 ) (4,055 ) Cash received in acquisition WSM 1,357,669 1,357,669 Cash paid for website acquisition - - Principal collected on notes receivable - - Notes receivable funded - - Cash paid for website acquisition - - Cash proceeds from acquisition of subsidiaries - - Net cash (used in) provided by investing activities 1,353,614 - 1,353,614 Cash flows from financing activities: Proceeds from issuance of common stock, net of commissions 2,170,562 2,170,562 Proceeds from issuance of preferred stock - - Payments of insurance premium loans payable (108,782 ) (108,782 ) Dividend payments (55,007 ) (55,007 ) Principal payment on notes payable - - Note receivable funded - - Proceeds from repayment of note receivable 28,597 28,597 Notes payable funded 464,800 464,800 Increase in Common Shares - - Unlocated Difference - - Increase in APIC - - Net cash provided by financing activities 2,500,170 - 2,500,170 Net (decrease) in cash and cash equivalents classified within assets related to continued operations 948,169 - 948,169 Net (decrease) in cash and cash equivalents classified within assets related to discontinued operations - - Net (decrease) increase in cash and cash equivalents 948,169 - 948,169 Cash and cash equivalents at beginning of period 957,013 957,013 Cash and cash equivalents at end of period $ 1,905,182 $ - $ 1,905,182 For the six months ended June 30, 2020 : a. Finder’s Fee d. Goodwill and intangible assets impact of additional share issuance and correction, respectively, of MediaHouse and Oceanside acquisitions e. Share-based compensation from Oceanside acquisition f. Penalty accrual for untimely registration statement filings g. Preferred stock dividends h. Common stock issued for investor relations agreement i. M&A advisory fee j. Other Adjustments k. Tax effect l. Closing notes consideration change from Oceanside acquisition The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated statement of cash flows supplemental information for the six months ended June 30, 2020: For the six months ended June 30, 2020 As Previously Filed Restatement Adjustments As Restated Supplemental disclosure of cash flow information Cash paid for: Interest $ 4,046 $ - $ 4,046 Supplemental disclosure of non-cash investing and financing activities Premium finance loan payable recorded as prepaid $ 87,461 $ - $ 87,461 Stock issued for prepaid services/consulting agreements to Spartan Capital $ 2,212,400 $ - $ 2,212,400 Accrued consulting fees withheld from offering proceeds $ 165,000 $ (165,000 ) $ - Non-cash acquisition of assets of Wild Sky $ (4,111,956 ) $ 9,581,581 $ 5,469,625 Non-cash acquisition of intangible assets of Wild Sky $ (18,060,859 ) $ 26,396,159 $ 8,335,300 Non-cash acquisition of goodwill of Wild Sky $ - $ 9,725,559 $ 9,725,559 Non-cash acquisition of liabilities of Wild Sky $ 3,388,579 $ - $ 3,388,579 Long term debt from acquisition $ 16,416,905 $ - $ 16,416,905 Common stock issued for acquisition $ 3,725,000 $ - $ 3,725,000 F- 59 The following tables present the Restatement Items, as well as other adjustments, on the Company’s unaudited interim condensed consolidated financial statements as of and for the three and nine months ended September 30, 2020: Balance Sheet As of September 30, 2020 As Previously Restatement Restatement Filed Adjustments As Restated References ASSETS Current Assets Cash and cash equivalents $ 1,050,370 $ 1,050,370 Accounts receivable, net 5,409,605 (211,773 ) 5,197,832 j Note receivable, net 13,646 13,646 Prepaid expenses and other current assets 702,054 181,352 883,406 h, i Current assets - discontinued operations - - Total Current Assets 7,175,675 (30,422 ) 7,145,253 Property and equipment, net 119,912 119,912 Website acquisition assets, net 12,789 12,789 Intangible assets, net 12,052,337 (4,063,753 ) 7,988,584 b, c, d Goodwill 22,150,047 (2,322,375 ) 19,827,672 b, c, d, k Prepaid services/consulting agreements - long term 620,000 620,000 Right of use asset 243,549 243,549 Other assets 396,969 396,969 Total Assets $ 42,771,278 $ (6,416,550 ) $ 36,354,728 LIABILITIES AND SHAREHOLDERS’ EQUITY Current Liabilities Accounts payable $ 7,605,873 $ (87,970 ) $ 7,517,903 j Accrued expenses 1,933,476 3,041,960 4,975,436 a, e, f, g, h, j Accrued interest to related party 12,720 16,644 29,364 Premium finance loan payable 16,671 16,671 Deferred revenues 65,512 156,529 222,041 m Long term debt, current portion 1,135,000 1,135,000 Share Issuance Accrued Liability New - - Other current liabilities - - Operating lease liability, net of current portion 221,763 221,763 Current liabilities - discontinued operations - - Total Current Liabilities 10,991,015 3,127,163 14,118,178 Long Term Debt to Related Parties, net 36,199 36,199 Long term debt 18,588,440 (750,000 ) 17,838,440 l Deferred tax liability 283,213 (283,213 ) 0 k Operating lease liability, net of current portion 21,915 21,915 Total Liabilities 29,920,782 2,093,950 32,014,732 Shareholders’ Equity Convertible preferred stock, par value $0.01, 20,000,000 shares authorized, Series A-1, 2,000,000 shares designated, 1,200,000 and outstanding at September 30, 2020 12,000 12,000 Series B-1, 6,000,000 shares designated, no issued and outstanding at September 30, 2020 - - Series E, 2,500,000 shares designated, issued and outstanding at September 30, 2020 25,000 25,000 Series F, 4,344,017 shares designated, issued and outstanding at September 30, 2020 43,440 43,440 Common stock, par value $0.01, 324,000,000 shares authorized, - 115,101,656 shares issued & outstanding at September 30, 2020 1,145,642 5,376 1,151,018 b, c, h Additional paid-in capital 96,360,804 (2,389,538 ) 93,971,266 b, c, g, h, j Accumulated deficit (83,581,144 ) (7,061,746 ) (90,642,890 ) a, c, d, e, f, h, i, j, k, l, n Treasury Stock (1,155,245 ) 935,408 (219,837 ) n Total shareholders’ equity 12,850,496 (8,510,500 ) 4,339,996 Total Liabilities and Shareholders’ Equity $ 42,771,278 $ (6,416,550 ) $ 36,354,728 As of September 30, 2020 : a. Finder’s Fee b. Common Stock issued in Oceanside acquisition c. Common Stock issued in MediaHouse Acquisition d. Goodwill and intangible assets impact of additional share issuance and correction, respectively, of MediaHouse and Oceanside acquisitions e. Share-based compensation from Oceanside acquisition f. Penalty accrual for untimely registration statement filings g. Preferred stock dividends h. Common stock issued for investor relations agreement i. M&A advisory fee j. Other Adjustments k. Tax effect l. Closing notes consideration change from Oceanside acquisition F- 60 Income Statement For the three months ended September 30, 2020 For the nine months ended September 30, 2020 As Previously Restatement As Previously Restatement Restatement Filed Adjustments As Restated Filed Adjustments As Restated References Revenues Advertising $ 4,894,486 $ - $ 4,894,486 $ 9,438,612 $ - $ 9,438,612 Cost of revenue Advertising 2,085,060 - 2,085,060 5,005,646 - 5,005,646 Gross profit 2,809,426 - 2,809,426 4,432,966 - 4,432,966 Selling, general and administrative expenses 5,493,343 660,218 6,153,561 13,860,462 1,453,237 15,313,699 a, d, e, f, h, i, j Loss from operations (2,683,917 ) (660,218 ) (3,344,135 ) (9,427,496 ) (1,453,237 ) (10,880,733 ) Other income (expense) Interest (expense) income,net (251,779 ) (251,779 ) (323,047 ) (323,047 ) Gain on settlement of liability 935,408 (935,408 ) 935,408 (935,408 ) n Impairment Expense (53,996,544 ) (4,769,472 ) (58,766,016 ) (53,996,544 ) (4,769,472 ) (58,766,016 ) d Settlement of contingent consideration (750,000 ) 750,000 - (750,000 ) 750,000 - l Other expense - - (215 ) (215 ) Interest expense - - - - Interest expense - related party (2,045 ) (16,644 ) (18,689 ) (6,091 ) (16,644 ) (22,735 ) Total other income (expense) (54,064,960 ) (4,971,524 ) (59,036,484 ) (54,140,489 ) (4,971,524 ) (59,112,013 ) Net loss from continuing operations before tax (56,748,877 ) (5,631,742 ) (62,380,619 ) (63,567,985 ) (6,424,761 ) (69,992,746 ) Income (loss) from discontinued operations - - - - Net loss before tax (56,748,877 ) (5,631,742 ) (62,380,619 ) (63,567,985 ) (6,424,761 ) (69,992,746 ) Income tax benefit 177,089 (65,194 ) 111,895 431,830 135,684 567,514 k Net loss (56,571,788 ) (5,696,936 ) (62,268,724 ) (63,136,155 ) (6,289,077 ) (69,425,232 ) Preferred stock dividends Series A-1, Series E, and Series F preferred stock (180,122 ) (180,122 ) (447,369 ) (447,369 ) Net loss attributable to common shareholders $ (56,751,910 ) $ (5,696,936 ) $ (62,448,846 ) $ (63,583,524 ) $ (6,289,077 ) $ (69,872,601 ) Basic and diluted net loss for continuing operations per share $ (0.51 ) $ (0.56 ) $ (0.59 ) $ (0.65 ) Basic and diluted net profit for discontinued operations per share $ - $ - $ - $ - Basic and diluted net loss per share $ (0.51 ) $ (0.56 ) $ (0.59 ) $ (0.65 ) Weighted average shares outstanding - basic and diluted 110,995,809 110,995,809 108,099,730 108,099,730 For the three and nine months ended September 30, 2020 : a. Finder’s Fee d. Goodwill and intangible assets impact of additional share issuance and correction, respectively, of MediaHouse and Oceanside acquisitions e. Share-based compensation from Oceanside acquisition f. Penalty accrual for untimely registration statement filings h. Common stock issued for investor relations agreement i. M&A advisory fee j. Other Adjustments k. Tax effect l. Closing notes consideration change from Oceanside acquisition F- 61 Statement of Cash Flows For the nine months ended September 30, 2020 As Previously Restatement Restatement Filed Adjustments As Restated References Cash flows from operating activities: Net loss $ (63,136,155 ) $ (6,289,077 ) $ (69,425,232 ) a, e, f, h, i, j, k, l, n Add back: loss attributable to discontinued operations Adjustments to reconcile net loss to net cash used in operations: Depreciation 29,616 29,616 Amortization of debt discount 10,510 10,510 Amortization 3,289,330 (969 ) 3,288,361 j Impairment of tradename - - Impairment of goodwill 42,444,971 (165,884 ) 42,279,087 d Impairment of intangibles 11,551,573 4,935,356 16,486,929 d Gain on settlement of liability (935,408 ) 935,408 n Gain on sale of property and equipment - - Stock option compensation expense 129,105 129,105 Stock issued for services 92,218 92,218 Non-cash acquisition fee 275,000 275,000 Non-cash compensation for services - (90,000 ) (90,000 ) h Non-cash settlement of contingent consideration 750,000 (750,000 ) - l Change in Deferred taxes (431,830 ) (135,684 ) (567,514 ) k Provision for bad debt 287,068 287,068 Changes in operating assets and liabilities: Accounts receivable 1,193,666 1,193,666 Prepaid expenses and other current assets 536,920 (229,821 ) 307,099 h, i Prepaid serveices/consulting agreements 293,182 293,182 Goodwill - - Other assets 263,836 263,836 ROU asset and lease liability (11,935 ) (11,935 ) Accounts payable (1,674,722 ) (65,100 ) (1,739,822 ) j Accrued expenses 53,950 1,839,127 1,893,077 e, f Accrued interest to related party 6,091 16,644 22,735 Deferred rents - - Deferred revenues 25,528 25,528 Net cash used in continuing operations for operating activities (4,957,486 ) 0 (4,957,486 ) Net cash (used in) provided by discontinued operations - - Net cash used in operating activities (4,957,486 ) 0 (4,957,486 ) Cash flows from investing activities: Purchase of property and equipment (4,055 ) (4,055 ) Cash received in acquisition WSM 1,357,669 1,357,669 Cash paid for website acquisition - - Principal collected on notes receivable - - Notes receivable funded - - Cash paid for website acquisition - - Cash proceeds from acquisition of subsidiaries - - Net cash (used in) provided by investing activities 1,353,614 - 1,353,614 Cash flows from financing activities: Proceeds from issuance of common stock, net of commissions 3,586,148 3,586,148 Proceeds from issuance of preferred stock - - Payments of insurance premium loans payable (163,173 ) (163,173 ) Dividend payments (235,129 ) (235,129 ) Principal payment on notes payable - - Note receivable funded - - Proceeds from repayment of note receivable - - Notes payable funded 464,800 464,800 Increase in Common Shares 44,583 44,583 Unlocated Difference - - Increase in APIC - - Net cash provided by financing activities 3,697,229 - 3,697,229 Net (decrease) in cash and cash equivalents classified within assets related to continued operations 93,357 - 93,357 Net (decrease) in cash and cash equivalents classified within assets related to discontinued operations - - Net (decrease) increase in cash and cash equivalents 93,357 - 93,357 Cash and cash equivalents at beginning of period 957,013 957,013 Cash and cash equivalents at end of period $ 1,050,370 $ - $ 1,050,370 For the nine months ended September 30, 2020 : a. Finder’s Fee d. Goodwill and intangible assets impact of additional share issuance and correction, respectively, of MediaHouse and Oceanside acquisitions e. Share-based compensation from Oceanside acquisition f. Penalty accrual for untimely registration statement filings h. Common stock issued for investor relations agreement i. M&A advisory fee j. Other Adjustments k. Tax effect l. Closing notes consideration change from Oceanside acquisition The following table presents the effect of the Restatement Items and Other Adjustments, on the Company’s consolidated statement of cash flows supplemental information for the nine months ended September 30, 2020: For the nine months ended September 30, 2020 As Previously Filed Restatement Adjustments As Restated Supplemental disclosure of cash flow information Cash paid for: Interest $ 6,091 $ - $ 6,091 Supplemental disclosure of non-cash investing and financing activities Non-cash acquisition of assets of Wild Sky $ (4,111,956 ) $ 9,581,581 $ 5,469,625 Non-cash acquisition of intangible assets of Wild Sky $ (7,246,300 ) $ 15,581,600 $ 8,335,300 Non-cash acquisition of goodwill of Wild Sky $ (10,814,559 ) $ 20,787,695 $ 9,973,136 Non-cash acquisition of liabilities of Wild Sky $ 3,388,579 $ 247,577 $ 3,636,156 Long term debt from acquisition $ 16,416,905 $ - $ 16,416,905 Common stock issued for acquisition $ 3,725,000 $ - $ 3,725,000 Issuance of debt in accordance with legal settlement $ 219,837 $ - $ 219,837 F- 62