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 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. 35 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, 2021. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that as of December 31, 2021, 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 years ended December 31, 2021 and 2020, 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 Rule 13a-15(f) of the Exchange Act. 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, 2021 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. ● 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. 36 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, 2021 that has materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. ITEM 9B. OTHER INFORMATION None. ITEM 9C. Disclosure Regarding Foreign Jurisdictions the Prevent Inspections None noted. 37 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 Matthew Drinkwater* 49 Chief Executive Officer Edward Cabanas* 50 Chief Financial Officer Todd F. Speyer* 40 Director, Chief Executive Officer- Bright Mountain, LLC Joey Winshman 34 Director Pamela Parizek 57 Director Charles H. Lichtman 66 Director Harry Schulman 70 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. Matthew Drinkwater Mr. Drinkwater was appointed Chief Executive Officer on December 1, 2021. 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. Drinkwater, 48, is a digital executive with extensive, progressively advancing leadership experience at iconic high tech brands. From 2017 to the present, he served as the Senior Vice President, International for BuzzFeed. He also was in Agency Development and Global Accounts at Twitter from 2015 to 2017 and head of Twitter’s Global Online Sales in San Paolo, Brazil from 2013 through 2015. Mr. Drinkwater served as Vice President of Groupon East Coast from 2011 to 2013 and, Senior Director of Sales, New England and Canada at Yahoo from 2009 to 2011. Mr. Drinkwater holds a B.A. in Economics from College of the Holy Cross. 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. 38 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 through April 15, 2022. 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 stockholders and holds office until the next annual meeting of stockholders, 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 stockholders. 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. 39 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* ✔ ✔ ● On January 14, 2022, Mr. Lichtman stepped down as compensation committee member, and Ms. Tibbits was appointed Chairperson of the Compensation Committee. 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 eight times during 2021. 40 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 stockholders. 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 met two times in 2021. 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 four times in 2020. Stockholder nominations Stockholders 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 stockholders 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 stockholder 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. 41 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 $250 per committee meeting attended. In November 2019, our board of directors changed the compensation policy to compensate the directors 2,500 stock options for each meeting attended. Our non-independent directors are not compensated for their services. At the end of 2020, our board of directors changed the compensation policy to compensate the independent directors with 45,000 restricted shares per year on a pro-rata basis, based on their start date. The following table provides information concerning the compensation paid to our independent directors for their services as members of our board of directors for 2021. The information in the following table excludes any reimbursement of out-of-pocket travel and lodging expenses which we may have paid: Fees Non-equity Nonqualified earned incentive deferred or Stock Option plan compensation All other paid in awards awards compensation earnings Compensation Name cash ($) ($) ($) ($) ($) ($) Total ($) Harry Schulman — 450 — — — — 450 Pamela Parizek — 450 — — — — 450 Charles Lichtman — 450 — — — — 450 Gretchen Tibbits (1) — 413 — — — — 413 (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% stockholders 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. 42 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, 2021; 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, 2021. 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) 2021 276,250 8,000 284,250 2020 275,520 — — — — — 9,785 285,305 Emily Smith, Chief Executive Officer – Wild Sky Media (3) 2021 305,503 305,503 2020 235,000 — — — — — — 235,000 Todd Speyer, Chief Executive Officer – Bright Mountain, LLC 2021 157,250 157,250 2020 144,347 — — — — — — 144,347 Matt Drinkwater, Chief Executive Officer (7) 2021 20,833 20,833 2020 - - Edward Cabanas, Chief Financial Officer (4) 2021 191,250 191,250 2020 73,903 73,903 Alan Bergman, Former Chief Financial Officer (5) 2021 2020 140,000 — — — — — — 140,000 Greg Peters, Former President and Chief Operating Officer (6) 2021 2020 325,000 — — — — — — 325,000 (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 “Compensation - Stock Compensation”. (2) The amount of compensation paid to Mr. W. Kip Speyer excludes $8,113 and $63,136 in interest and dividend payments for 2021 and 2020, 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. (7) Mr. Drinkwater joined the Company on December 1, 2021 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. 43 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. Matthew Drinkwater We have entered into an Executive Employment Agreement with Matthew Drinkwater, our CEO. His employment contract’s term is for 3 years. The annual base salary is for $250,000 and he has a discretionary bonus target equivalent to 100% of his base salary subject to achievement of performance metrics. Lastly, he was granted 500,000 options of the Company’s common stock, which will vest at a rate of 25% per year beginning, December 1, 2021. For more information, please see the employment agreement attached. 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 $300,000 per year, which is still in effect as of this writing. 44 Outstanding equity awards at fiscal year-end The following table provides information concerning unexercised stock options, stock that has not vested and equity incentive plan awards for each named executive officer outstanding as of December 31, 2021, together with unexercised stock options, stock that has not vested and equity incentive plan awards for each of our other executive officers outstanding as of December 31, 2021: OPTION AWARDS STOCK AWARDS Name Number of Securities Underlying Unexercised Options (#) Exercisable Number of Securities Underlying Unexercised Options (#) Unexercisable Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) Option Exercise Price ($) 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 (#) Matthew Drinkwater 500,000 0.01 12/01/31 Edward Cabanas — 100,000 — 0.01 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 May 10, 2022 we had 151,154,970 shares of our common stock issued and 150,329,795 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 stockholder 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 Common Stock Amount and Nature of Beneficial Ownership % of Class Kip Speyer - Chairman of the Board 31,313,107 31,513,107 20.8 % Todd Speyer - CEO and Board member 541,900 616,900 0.4 % Edward Cabanas - CFO - 100,000 0.1 % Matt Drinkwater - CEO - 500,000 0.3 % Gretchen Tibbits - Board Member 41,250 41,250 0.0 % Pamela Parizek - Board Member 54,370 54,370 0.0 % Joey Winshman - Board Member 4,353,351 4,353,351 2.9 % Harry Schulman - Board Member 90,000 95,000 0.1 % Chuck Lichtman - Board Member 1,626,037 1,762,636 1.2 % Officers and Directors - TOTAL 38,020,015 39,036,614 25.8 % Andy Handwerker - Affiliate 11,918,458 11,918,458 7.9 % TOTAL - Officers, Directors, and Affiliates (OD&A) 49,938,473 50,955,072 33.7 % (1) The number of shares of common stock beneficially owned by Mr. Speyer includes 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. 45 (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 stockholders as well as any equity compensation plans not approved by our stockholders as of December 31, 2021. 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 stockholders: 2011 Stock Option Plan 203,000 0.67 697,000 2013 Stock Option Plan 333,000 0.62 567,000 2015 Stock Option Plan 141,000 0.83 859,000 2019 Stock Option Plan 738,227 0.60 4,261,773 Plans not approved by stockholders: - - - On April 14, 2022, the Board of Directors adopted and approved a new 2022 Stock Option plan, subject to Stockholder approval at the next Annual Meeting. This new plan would eliminate all these prior plans (2011-2019) and the new plan adds 22.5M shares available for option awards which is approximately 15% of the outstanding shares of 151m. See 8-K in April 2022. 46 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE Related party transactions Preferred stock purchases In 2021 and 2020 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 $0 and $55,000, 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. 47 ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES The following table shows the fees for professional audit services and other services rendered by WithumSmith+Brown, PC for the audit of the Company’s annual financial statements for the years ended December 31, 2021 and 2020, and fees billed for the other services rendered during those periods. 2021 2020 Audit Fees $ 250,000 $ 348,800 Audit-Related Fees 75,000 300,350 Tax Fees 10,000 16,000 Total $ 335,000 $ 665,150 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 2021 and 2020 were pre-approved by the Audit Committee. 48 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 49 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 10-K 12/23/21 10.4 10.5 2022 Stock Option Plan 8-K 4/20/2022 10.3 10.6 Letter agreement dated September 19, 2017 with Vinay Belani 8-K 9/25/17 10.2 10.7 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 10.8 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 10.9 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 10.10 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 10.11 Lease Agreement dated August 24, 2014 for registrant’s principal executive offices 10-Q 11/12/14 10.26 10.12 Addendum to Lease dated August 5, 2015 for registrant’s principal executive offices 10-Q 8/11/15 10.37 10.13 Amendment to Lease Agreement dated August 8, 2018 for registrant’s principal executive offices 10-Q 11/20/18 10.1 10.14 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 10.15 Consulting Agreement effective January 1, 2021 between Greg Peters and Bright Mountain Media, Inc. 8-K 01/06/2021 10.1 10.16 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 10.17 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 10.18 Promissory Note dated August 15, 2019 due to Joey Winshman 8-K 8/16/19 10.1 10.19 Promissory Note dated August 15, 2019 to Nadav Slutzky 8-K 8/16/19 10.2 10.20 Promissory Note dated August 15, 2019 to Eli Desatnik 8-K 8/16/19 10.3 10.21 Employment Agreement dated August 15, 2019 by and between Slutzky & Winshman Ltd. and Joey Winshman 8-K 8/16/19 10.8 10.22 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 10.23 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 10.24 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 10.25 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 50 10.26 Form of Warrant for November 2019 Private Placement 8-K 02/04/2020 10.2 10.27 First Amendment to an Amended and Restated Senior Credit Agreement dated April 26, 2021. 8-K 4/30/2021 10.1 10.28 Second Amendment to an Amended and Restated Senior Credit Facility Agreement dated May 26, 2021. 8-K 6/2/2021 10.1 10.29 Third Amendment to Amended and Restated Senior Credit Facility Agreement dated December 20, 2021 8-K 08/18/2021 10.1 10.30 Fourth Amendment to Amended and Restated Senior Secured Credit Agreement dated August 31, 2021 8-K 09/07/2021 10.1 10.31 Fifth Amendment to Amended and Restated Senior Secured Credit Agreement dated October 8, 2021 8-K 10/08/2021 10.1 10.32 Sixth Amendment to Amended and Restated Senior Secured Credit Agreement dated November 5, 2021 8-K 11/05/2021 10.1 10.33 Seventh Amendment to an Amended and Restated Senior Secured Credit Agreement dated December 23, 2021 8-K 12/29/2021 10.1 10.34 Eighth Amendment to an Amended and Restated Senior Secured Credit Agreement dated January 26, 2022 8-K 1/20/2022 10.1 10.35 Ninth Amendment to an Amended and Restated Senior Secured Credit Agreement dated February 11, 2022 8-K 2/17/2022 10.1 10.36 Annex A to the Credit Agreement dated February 11, 2022 8-K 2/17/2022 10.2 10.37 Tenth Amendment to an Amended and Restated Senior Secured Credit Agreement dated March 11, 2022 8-K 3/31/2022 10.1 10.38 Annex A to the Credit Agreement dated March 11, 2022 8-K 3/31/2022 10.2 10.39 Twelfth Amendment to an Amended and Restated Senior Secured Credit Agreement dated April 15, 2022 8-K 4/20/2022 10.1 10.40 Annex A to the Credit Agreement dated April 15, 2022 8-K 4/20/2022 10.2 10.41 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 10-K 12/23/21 21.1 23.1 Consent of WithumSmith+Brown, PC 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 INLINE XBRL INSTANCE DOCUMENT 10-K 12/23/21 101.INS 101.SCH INLINE XBRL TAXONOMY EXTENSION SCHEMA 10-K 12/23/21 101.SCH 101.CAL INLINE XBRL TAXONOMY EXTENSION CALCULATION LINKBASE 10-K 12/23/21 101.CAL 101.DEF INLINE XBRL TAXONOMY EXTENSION DEFINITION LINKBASE 10-K 12/23/21 101.DEF 101.LAB INLINE XBRL TAXONOMY EXTENSION LABEL LINKBASE 10-K 12/23/21 101.LAB 101.PRE INLINE XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE 10-K 12/23/21 101.PRE 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) 51 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: June 10, 2022 By: /s/ Matthew Drinkwater Matthew Drinkwater Director and Principal Executive Officer Date: June 10, 2022 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: June 10, 2022 By: /s/ W. Kip Speyer W. Kip Speyer Chairman of the Board of Directors Date: June 10, 2022 By: /s/ Matthew Drinkwater Matthew Drinkwater Director and Principal Executive Officer Date: June 10, 2022 By: /s/ Harry Schulman Harry Schulman Director Date: June 10, 2022 By: /s/ Charles H. Lichtman Charles H Lichtman Director Date: June 10, 2022 By: /s/ Joey Winshman Joey Winshman Director Date: June 10, 2022 By: /s/ Todd Speyer Todd Speyer CEO Bright Mountain, LLC., Director Date : June 10, 2022 By: /s/ Pamela Parizek Pamela Parizek, Director Date : June 10, 2022 By: /s/ Gretchen Tibbits Gretchen Tibbits Director 52 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 2021 INDEX TO FINANCIAL STATEMENTS Page Report of Independent Registered Public Accounting Firm (PCAOB ID # 100 ) F-2 Consolidated balance sheets at December 31, 2021 and 2020 F-3 Consolidated statements of operations and comprehensive loss for the years ended December 31, 2021 and 2020 F-4 Consolidated statements of changes in stockholders’ equity for the years ended December 31, 2021 and 2020 F-5 Consolidated statements of cash flows for the years ended December 31, 2021 and 2020 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, 2021 and 2020, the related consolidated statements of operations, changes in shareholders’ equity and cash flows for each of the years ended December 31, 2021 and 2020, 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, as of and for the year ended December 31, 2020, 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, 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, 2021 and 2020, 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. 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 June 10, 2022 PCAOB ID Number 100 F- 2 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS December 31, 2021 2020 ASSETS Current assets Cash and cash equivalents $ 781,320 $ 736,046 Accounts receivable, net of allowance for doubtful accounts of $ 495,396 and $ 774,826 , at December 31, 2021 and 2020, respectively 3,550,126 6,430,253 Note receivable, net 21,415 13,910 Prepaid expenses and other current assets 904,716 940,214 Total current assets 5,257,577 8,120,423 Property and equipment, net 65,122 113,250 Website acquisition assets, net 4,000 5,600 Intangible assets, net 6,064,535 7,653,717 Goodwill 19,645,468 19,645,468 Prepaid services/consulting agreements – long term 284,825 664,593 Right-of-use asset - 72,598 Other assets 242,686 253,650 Total assets $ 31,564,213 $ 36,529,299 LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY Current liabilities Accounts payable $ 8,459,561 $ 9,595,006 Accrued expenses 3,764,665 3,546,896 Accrued interest to related party 640,255 65,437 Premium finance loan payable 334,284 339,890 Deferred revenues 1,162,425 346,529 Long term debt, current portion 1,387,140 2,091,735 Long term debt to related parties, current portion, net 7,316,402 – Other current liabilities 5,052 – Operating lease liability, current portion – 72,727 Total current liabilities 23,069,784 16,058,220 Long term debt to related parties, net 15,217,569 39,728 Long term debt – 16,916,705 Total liabilities 38,287,353 33,014,653 Commitments and Contingencies Stockholders’ (deficit) equity Convertible preferred stock, par value $ 0.01 , 20,000,000 shares authorized: Series A-1, 2,000,000 shares designated, 0 and 1,200,000 shares issued and outstanding at December 31, 2021 and 2020, respectively; liquidation preference of ($ 0.50 per share) – 12,000 Series B-1, 6,000,000 shares designated, no shares issued and outstanding at December 31, 2021 and 2020 – – Series E, 2,500,000 shares designated, 125,000 and 2,500,000 shares issued and outstanding at December 31, 2021 and 2020, respectively; liquidation preference of ($ 0.40 per share) 1,250 25,000 Series F, 4,344,017 shares designated, 0 and 4,344,017 shares issued and outstanding at December 31, 2021 and 2020, respectively; liquidation preference of ($ 0.50 per share for Series F-1 and F-2 and $ 0.40 per share for Series F-3) – 43,440 Preferred stock, value – 43,440 Common stock, par value $ 0.01 , 324,000,000 shares authorized, 149,810,383 and 118,162,150 issued and 148,985,208 and 117,336,975 outstanding at December 31, 2021 and 2020, respectively 1,498,104 1,181,622 Treasury stock, at cost; 825,175 shares at December 31, 2021 and 2020 ( 219,837 ) ( 219,837 ) Additional paid-in capital 98,128,947 96,427,166 Accumulated deficit ( 106,144,065 ) ( 93,932,080 ) Accumulated other comprehensive income (loss) 12,461 ( 22,665 ) Total stockholders’ (deficit) equity ( 6,723,140 ) 3,514,646 Total liabilities and stockholders’ (deficit) equity $ 31,564,213 $ 36,529,299 See accompanying notes to consolidated financial statements. F- 3 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS 2021 2020 For the Years Ended December 31, 2021 2020 Revenue: Advertising $ 12,924,569 $ 15,839,429 Cost of revenue: Advertising 6,323,204 7,906,346 Gross profit 6,601,365 7,933,082 Operating expenses: Selling, general and administrative expenses 18,508,316 22,092,352 Impairment expense – Goodwill - 42,279,087 Impairment expense – Intangible assets - 16,486,929 Total operating expenses 18,508,316 80,858,368 Loss from operations ( 11,906,951 ) ( 72,925,286 ) Other income (expense) Interest income - 10,006 Gain on forgiveness of PPP loan 2,171,535 - Other (expense) income 2,145 274,075 Interest expense ( 322,172 ) ( 581,924 ) Interest expense – related party ( 1,944,794 ) ( 58,807 ) Total other expense ( 93,286 ) ( 356,650 ) Net loss before tax ( 12,000,237 ) ( 73,281,936 ) Income tax benefit - 567,514 Net loss ( 12,000,237 ) ( 72,714,422 ) Preferred stock dividends: Series A-1, Series E, and Series F preferred stock ( 241,903 ) ( 363,460 ) Deemed dividends ( 211,748 ) - Total Preferred stock dividends ( 453,651 ) ( 363,460 ) Net loss attributable to common stockholders ( 12,453,888 ) ( 73,077,882 ) Other comprehensive income (loss) 35,126 ( 22,665 ) Comprehensive loss $ ( 12,418,762 ) $ ( 73,100,547 ) Basic and diluted net loss per share $ ( 0.10 ) $ ( 0.65 ) Weighted average shares outstanding – basic and diluted 128,163,616 112,528,858 See accompanying notes to consolidated financial statements. F- 4 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) Shares Amount Shares Amount Shares Amount Capital Deficit Loss (Income) Equity Years Ended December 31, 2021 and 2020 Preferred Stock Common Stock Treasury Stock Additional Paid-in Accumulated Accumulated Other Comprehensive Total Stockholders’ (Deficit) Shares Amount Shares Amount Shares Amount Capital Deficit Loss (Income) Equity Balance, December 31, 2019 8,044,017 $ 80,440 100,782,956 $ 1,007,829 — — $ 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 Balance 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 Net loss — — — — — — — ( 12,000,237 ) — ( 12,000,237 ) Series A-1, E and F preferred stock dividend — — — — — — ( 241,903 ) — — ( 241,903 ) Issuance of common stock: Services rendered — — 176,250 1,762 — — — — — 1,762 Exercise of stock options — — 100,000 1,000 — — 12,900 — — 13,900 Exercise of warrants — — 25,000 250 — — 9,750 — — 10,000 To Centre Lane Partners as part of debt financing — — 12,650,000 126,500 — — 1,002,967 — — 1,129,467 Conversion of preferred to common shares ( 7,919,017 ) ( 79,190 ) 7,919,017 79,190 — — — — — — Deemed dividends — — 10,398,700 103,987 — — 107,761 ( 211,748 ) — — To Oceanside personnel as part of acquisition agreement — — 379,266 3,793 — — 603,033 — — 606,826 Share-based compensation — — — — — — 207,273 — — 207,273 Adjustment from foreign currency translation, net — — — — — — — — 35,126 35,126 Balance, December 31, 2021 125,000 $ 1,250 149,810,383 $ 1,498,104 ( 825,175 ) $ ( 219,837 ) $ 98,128,947 $ ( 106,144,065 ) $ 12,461 $ ( 6,723,140 ) Balance 125,000 $ 1,250 149,810,383 $ 1,498,104 ( 825,175 ) $ ( 219,837 ) $ 98,128,947 $ ( 106,144,065 ) $ 12,461 $ ( 6,723,140 ) See accompanying notes to consolidated financial statements. F- 5 BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS 2021 2020 For the Years Ended December 31, 2021 2020 Cash flows from operating activities: Net loss $ ( 12,000,237 ) ( 72,714,422 ) Adjustments to reconcile net loss to net cash used in operations: Depreciation 48,365 56,017 Non-cash interest expense 577,628 14,039 Amortization 1,590,782 3,630,418 Goodwill impairment — 42,279,087 Intangible impairment — 16,486,929 Stock issued for services rendered 1,762 — Stock option vesting expense 207,272 181,549 Common stock and warrants issued for services 10,000 4,348,545 Compensation expense for stock issuances — 405,943 Stock compensation for Oceanside shares 280,826 366,105 Change in deferred taxes — ( 567,513 ) Write off doubtful accounts ( 239,575 ) — Gain on forgiveness of PPP loan ( 2,171,535 ) — Provision for bad debt 74,282 437,404 Changes in operating assets and liabilities: Accounts receivable 3,080,546 ( 35,140 ) Prepaid expenses and other current assets 415,265 752,754 Prepaid services / consulting agreements 248,590 Other assets 10,966 ( 217,827 ) ROU asset and lease liability ( 129 ) ( 11,935 ) Accounts payable ( 1,195,875 ) ( 80,422 ) Accrued expenses 1,256,795 ( 2,331,213 ) Accrued interest — related party 1,309,548 58,808 Deferred revenues 815,896 183,349 Cash used in continuing operations for operating activities ( 5,927,418 ) ( 6,508,935 ) Cash provided by discontinued operations for operating activities — 1,114 Net cash used in operating activities ( 5,927,418 ) ( 6,507,821 ) Cash flows from investing activities: Cash paid for property and equipment, net ( 237 ) ( 14,026 ) Cash acquired in acquisition of subsidiaries — 1,651,509 Net cash (used in) provided by investing activities ( 237 ) 1,637,483 Cash flows from financing activities: Proceeds from issuance of common stock, net of commissions — 4,019,697 Dividend payments ( 5,000 ) ( 63,136 ) Proceeds from debt financing 5,125,000 — Repayments of debt ( 285,000 ) — Principal payments received (funded) for notes receivable ( 7,505 ) 49,902 Proceeds from exercise of options 13,900 18,062 Proceeds from issuance of (payments of) premium finance loan payable ( 5,606 ) 160,046 Proceeds from PPP loan 1,137,140 464,800 Net cash provided by financing activities 5,972,929 4,649,371 Net increase in cash and cash equivalents classified within assets related to discontinued operations — 1,114 Net increase (decrease) in cash and cash equivalents 45,274 ( 222,081 ) Cash and cash equivalents at beginning of year 736,046 957,013 Cash and cash equivalents at end of year $ 781,320 $ 736,046 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 $ — $ — Supplemental disclosure of non-cash investing and financing activities Conversion of Preferred shares to Common shares $ 211,748 — Issuance of debt in accordance with legal settlement $ 79,190 — Settlement of Daily Engage liability $ — $ 219,837 Issuance of common stock to Centre Lane for debt issuance $ 1,002,967 $ — 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 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”). 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. 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 These consolidated financial statements have been prepared on a going concern basis which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company’s management has evaluated whether there is substantial doubt about the Company’s ability to continue as a going concern and has determined that substantial doubt existed as of the date of the end of the period covered by this report. This determination was based on the following factors: (i) the Company used cash of approximately $ 5.9 million in operations in 2021; (ii) the Company’s available cash as of the date of this filing will not be sufficient to fund its anticipated level of operations for the next 12 months; (iii) the Company will require additional financing for the fiscal year ending December 31, 2022 to continue at its expected level of operations; and (iv) if the Company fails to obtain the needed capital, it will be forced to delay, scale back, or eliminate some or all of its development activities or perhaps cease operations. In the opinion of management, these factors, among others, raise substantial doubt about the ability of the Company to continue as a going concern as of the date of the end of the period covered by this report and for one year from the issuance of these consolidated financial statements. The Company has sustained a net loss of $ 12,000,237 , used cash outflows from continuing operating activities of $ 5,927,418 for the year ended December 31, 2021, and has an accumulated deficit of $ 106,144,065 at December 31, 2021 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. F- 9 NOTE 2 – 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 The Company recognizes revenue in accordance with FASB ASC Topic 606, Revenue from Contracts with Customers (“ASC 606”). The Company recognizes revenues at a point-in-time when control of services is transferred to the customer. Cash received by the Company prior to when control of services is transferred to the customer is recorded as deferred revenue. To determine revenue recognition for arrangements that the Company determines are within the scope of 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- 10 Leases The Company records leases in accordance with FASB ASC Topic 842, Leases. The Company determines if an arrangement is a lease at inception. Operating lease right-of-use 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 lease inception. Since the Company’s lease agreements does not provide an implicit rate, the Company estimated an incremental borrowing rate based on the information available at lease inception 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. 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. At December 31, 2021 and 2020, the Company had $ 781,320 and $ 736,046 , respectively, in cash equivalents. F- 11 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, 2021 and 2020, 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 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- 12 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 Topic 350-50, “ Website Development Costs ”. These costs, if any, are included in intangible assets in the accompanying consolidated balance sheets. Upgrades or enhancements that add functionality are capitalized while other costs during the operating stage are expensed as incurred. The Company amortizes the capitalized website development costs over an estimated life of five years. As of December 31, 2021 and 2020, 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- 13 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 and comprehensive loss. For the years ended December 31, 2021 and 2020, advertising and marketing expense was $ 58,445 and $ 27,004 , respectively. Foreign Currency Translation Assets and liabilities of 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 is 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 Topic 740-10, Income Taxes – Overall (“ASC 740-10”). 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 Advertising revenue. The Company’s largest customer accounts for approximately 8.6 % and 9.6 % of the 2021 and 2020 Advertising revenue, respectively. As of December 31, 2021, two customers accounted for more than 10 % of the accounts receivable balance, at 13.1 % and 12.0 % . As of December 31, 2020, no customers accounted for more than 10 % of the accounts receivable balance. As of December 31, 2021, one vendor accounted for more than 10% of the accounts payable balance, at 11.2 % . As of December 31, 2020, no vendors accounted for more than 10 % of the accounts payable balance. F- 14 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 (loss), 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 Company is currently evaluating the 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- 15 NOTE 3 – ACQUISITIONS 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 Credit 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- 16 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: SCHEDULE OF PURCHASE PRICE ALLOCATION TO ASSETS ACQUIRED AND LIABILITIES ASSUMED June 1, 2020 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: SCHEDULE OF TOTAL CONSIDERATION TRANSACTION Amount Debt issued $ 16,416,905 Shares issued 3,725,000 Total consideration $ 20,141,905 NOTE 4 – PREPAID EXPENSES AND OTHER CURRENT ASSETS At December 31, 2021 and 2020, respectively, prepaid expenses and other current assets consisted of the following: SCHEDULE OF PREPAID EXPENSES AND OTHER CURRENT ASSETS 2021 2020 December 31, 2021 2020 Prepaid insurance $ 427,461 $ 386,206 Prepaid consulting service agreements – Spartan (1) 379,775 379,771 Prepaid expenses – other 97,480 174,237 Prepaid expenses and other current assets $ 904,716 $ 940,214 (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. F- 17 NOTE 5 – PROPERTY AND EQUIPMENT At December 31, 2021 and 2020, respectively, property and equipment consisted of the following: SCHEDULE OF PROPERTY AND EQUIPMENT 2021 2020 (Years) December 31, Estimated Useful Life 2021 2020 (Years) Furniture and fixtures $ 38,728 $ 80,844 3 - 5 Leasehold improvements - 1,388 3 Computer equipment 176,624 176,641 3 Total property and equipment 215,352 258,873 Less: accumulated depreciation ( 150,230 ) ( 145,623 ) Total property and equipment, net $ 65,122 $ 113,250 Depreciation expense was $ 48,365 and $ 56,017 for the years ending December 31, 2021 and 2020, respectively and is included in selling, general and administrative expenses on the consolidated statements of operations and comprehensive loss. NOTE 6 – WEBSITE ACQUISITION AND INTANGIBLE ASSETS At December 31, 2021 and 2020, respectively, website acquisitions, net consisted of the following: SCHEDULE OF WEBSITE ACQUISITIONS, NET 2021 2020 Website acquisition assets $ 1,124,846 $ 1,124,846 Less: accumulated amortization ( 920,450 ) ( 918,850 ) Less: accumulated impairment loss ( 200,396 ) ( 200,396 ) Website acquisition assets, net $ 4,000 $ 5,600 Amortization expense related to website acquisition costs for the years ended December 31, 2021 and 2020 was $ 1,600 and $ 43,328 , respectively, and is included in selling, general and administrative costs in the statements of operations and comprehensive loss. At December 31, 2021 and 2020, respectively, intangible assets, net consisted of the following: SCHEDULE OF INTANGIBLE ASSETS Useful Lives 2021 2020 Tradename 5 years $ 3,749,600 $ 3,749,600 Customer relationships 5 years 16,184,000 16,184,000 IP / Technology 10 years 7,223,000 7,223,000 Non-compete agreements 3 - 5 years 1,154,500 1,154,500 Total intangible assets 28,311,100 28,311,100 Less: accumulated amortization ( 5,759,636 ) ( 4,170,454 ) Less: accumulated impairment loss ( 16,486,929 ) ( 16,486,929 ) Intangible assets, net $ 6,064,535 $ 7,653,717 F- 18 Amortization expense related to intangible assets for the years ended December 31, 2021 and 2020 was $ 1,589,182 and $ 3,587,090 , respectively, and is included in selling, general and administrative costs in the statements of operations and comprehensive loss. The table below shows the forward 5-year amortization table. SCHEDULE OF FINITE LIVED INTANGIBLE ASSET Amount 2022 $ 1,563,704 2023 1,554,500 2024 1,554,416 2025 1,391,915 Total $ 6,064,535 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 7 – GOODWILL The following table presents changes to goodwill for the years ended December 31, 2021 and 2020: SCHEDULE OF CHANGES GOODWILL Owned & Operated Ad Network Total January 1, 2020 goodwill $ – $ 52,133,622 $ 52,133,622 Additions (a) 9,973,136 – 9,973,136 Deletions (b) ( 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 Additions – – – December 31, 2021 goodwill $ 9,725,559 $ 9,919,909 $ 19,645,468 (a) The Company recognized Goodwill of $ 9,973,136 in connection with the acquisition Wild Sky. Refer to Note 3. (b) 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, recorded goodwill associated with Owned & Operated and the Ad Network reporting unit exceeded the fair value of the Goodwill and the Company recorded an impairment of $ 247,577 and $ 42,031,510 , respectively. F- 19 NOTE 8 – ACCRUED EXPENSES At December 31, 2021 and 2020, respectively, accrued expenses consisted of the following: SCHEDULE OF ACCRUED EXPENSES 2021 2020 Year ended December 31, 2021 2020 Accrued interest $ - $ 581,888 Accrued salaries and benefits 1,459,299 1,237,909 Accrued dividends 691,861 455,956 Accrued traffic settlement (1) 10,254 10,254 Accrued legal settlement (2) 81,101 117,717 Accrued legal fees 182,537 113,683 Accrued other professional fees 592,421 206,613 Share issuance liability (4) 189,067 515,073 Accrued warrant penalty (3) 366,899 262,912 Other accrued expenses 191,226 44,891 Total accrued expenses $ 3,764,665 $ 3,546,896 (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 11. (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 3 for further information on the Company’s acquisitions. NOTE 9 – DEBT Long-term debt to related parties Centre Lane Partners Master Credit Fund II, L.P. (“Center Lane Partners”), who sold the Company the Wild Sky business in June 2020 has partnered and assisted the Company from a liquidity perspective starting in April 2021. This relationship has been determined to qualify as a related party. A related party is a party that can exercise significant influence over the Company in making financial and/or operating decisions. Effective June 1, 2020, the Company entered into a membership interest purchase agreement to acquire 100 % of Wild Sky (the “Purchase Agreement”). 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 defaulted on this requirement and on April 26, 2021, the Company obtained a waiver of this requirement from the lender. 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”). 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 (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. In addition, the Company may issue up to $ 800,000 in dividends from the previous limit of $ 500,000 per annum. In addition, the Company has issued 150,000 common shares to Centre Lane Partners as part of this transaction. On May 26, 2021, the Company and certain of its subsidiaries entered into a Second amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (“the Second Amendment”). 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 $ 1.5 million, in the aggregate. This term loan shall be repaid by June 30, 2023. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 750,000 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 3.0 million common shares to Centre Lane Partners as part of this transaction. F- 20 On August 12, 2021, the Company and certain of its subsidiaries entered into a Third amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (“the Third Amendment”). 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 $ 500,000 , in the aggregate. This term loan shall be repaid by February 28, 2022. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 250,000 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 2.0 million common shares to Centre Lane Partners as part of this transaction. On August 31, 2021, the Company and certain of its subsidiaries entered into a Fourth amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (“the Fourth Amendment”). 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 approximately $ 1,100,000 , in the aggregate. This term loan shall be repaid by February 28, 2022. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 550,000 which will be added and capitalized to the principal amount of the original loan and the original loan terms apply. There was no issuance of common shares as part of this amendment. On October 8, 2021, the Company and certain of its subsidiaries entered into a Fifth amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (“the Fifth Amendment”). 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 $ 725,000 , in the aggregate. This term loan shall be repaid by February 28, 2022. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 800,000 which will be added and capitalized to the principal amount of the original loan and the original loan terms apply. There was no issuance of common shares as part of this amendment. On November 5, 2021, the Company and certain of its subsidiaries entered into a Sixth amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (“the Sixth Amendment”). 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 $ 800,000 , in the aggregate. This term loan shall be repaid by February 28, 2022. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 800,000 which will be added and capitalized to the principal amount of the original loan and the original loan terms apply. This amendment required the Company to issue 7,500,000 shares of the Company’s common stock to Centre Lane Partners prior to November 30, 2021. On December 23, 2021, the Company and certain of its subsidiaries entered into a Seventh amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (“the Seventh Amendment”). 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 $ 500,000 , in the aggregate. This term loan shall be repaid by February 28, 2022. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 500,000 which will be added and capitalized to the principal amount of the original loan and the original loan terms apply. There was no issuance of common shares as part of this amendment. See Note 18 for amendments to the Amended and Restated Senior Secured Credit Agreement subsequent to December 31, 2021. F- 21 As part of these transactions and given that Centre Lane was determined to be a related party, an independent fair value analysis was performed by the Company and all related transactions were recorded accordingly. As of the First Amendment dated April 26, 2021, the Company evaluated the debt for extinguishment or debt modification under FASB ASC Topic 470-50, Debt – Modifications and Extinguishments , and determined extinguishment was applicable. Under the rules, the Company extinguished the debt, which included the capitalized interest through April 26, 2021, and recorded it net of the debt discount, including all applicable fees and stock issuances. The debt discount determined for the First Amendment totaled $ 2,363,986 and is amortized over the remaining life of the loan and is included in interest expense – related party on the accompanying consolidated statement of operations or until the next debt modification or extinguishment is determined. For the Second Amendment, which occurred on May 26, 2021, the Company determined it was a debt modification. The Second Amendment provided the Company with debt financing of $ 1,500,000 , an Exit fee of $ 750,000 , and issuance of 3,000,000 shares of common stock issued to Centre Lane. The debt discount determined for the Second Amendment totaled $ 904,637 . For the Third Amendment, which occurred on August 12, 2021, the Company determined it was a debt modification. The Third Amendment provided the Company with debt financing of $ 500,000 , an Exit fee of $ 250,000 , and issuance of 2,000,000 shares of common stock issued to Centre Lane. The debt discount determined for the Third Amendment totaled $ 322,529 . For the Fourth Amendment, which occurred on August 31, 2021, the Company determined it was a debt modification. The Fourth Amendment provided the Company with debt financing of $ 1,100,000 , an Exit fee of $ 550,000 , and no common share issuance. The debt discount determined for the Fourth Amendment totaled $ 560,783 . For the Fifth Amendment, which occurred on October 8, 2021, the Company determined it was a debt extinguishment. The Fifth Amendment provided the Company with debt financing of $ 725,000 , an Exit fee of $ 362,500 , and no common share issuance. The debt discount determined for the Fifth Amendment totaled $ 2,635,013 . For the Sixth Amendment, which occurred on November 5, 2021, the Company determined it was a debt modification. The Sixth Amendment provided the Company with debt financing of $ 800,000 , an Exit fee of $ 800,000 , and no common share issuance. The debt discount determined for the Sixth Amendment totaled $ 902,745 . For the Seventh Amendment, which occurred on December 23, 2021, the Company determined it was a debt modification. The Seventh Amendment provided the Company with debt financing of $ 500,000 , an Exit fee of $ 500,000 , and no common share issuance. The debt discount determined for the Seventh Amendment totaled $ 510,783 . The accumulated gross debt discount as of December 31, 2021 totaled $ 8,200,476 and will be amortized into the consolidated statement of operations and included in the interest expense – related party over the remaining life of the loan or until the next debt modification or extinguishment is determined. Interest expense for notes payable to related party for the years ended December 31, 2021 and 2020 was $ 2,128,179 and $ 0 , respectively, and amortization of debt discount was $ 4,371,804 and $ 0 , respectively. 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, the Company 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, Business Combinations , 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 one year closing note and thereby defaulted on its obligation and the two-year 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 third 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 years ended December 31, 2021 and 2020 was $ 135,000 and $ 50,671 , respectively. During November 2018, the Company issued 10% convertible promissory notes in the amount of $ 80,000 to a related party, the Chairman of the Board. The notes mature five years from issuance and is 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 December 31, 2021 and 2020, and discounts recognized upon respective origination dates as a result of the beneficial conversion feature total $ 26,271 and $ 40,272 , respectively. At December 31, 2021 and 2020, the total convertible notes payable to related party net of discounts was $ 53,729 and $ 39,728 , respectively. F- 22 Interest expense for note payable to related party was $ 8,113 for the years ended December 31, 2021 and 2020 and discount amortization was $ 14,039 . Long-term debt On April 24, 2020, under the Paycheck Protection Program (“PPP”) established by the 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), and recorded as PPP loan forgiveness on the consolidated statement of operations and comprehensive loss. 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. On February 17, 2021, under the 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 $ 295,600 with Regions Bank (the “Second 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 Second Bright Mountain 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. This was the second tranche available under the PPP program. On March 23, 2021, under the PPP, the Company’s Wild Sky subsidiary entered into a promissory note of $ 841,540 with Holcomb Bank (the “Second Wild Sky 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 Second Wild Sky 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. This was the second tranche available under the PPP program. 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- 23 At December 31, 2021 and 2020 a summary of the Company’s debt is as follows: SCHEDULE OF LONG-TERM DEBT December 31, 2021 December 31, 2020 Non-interest bearing BMLLC acquisition debt $ 250,000 $ 385,000 PPP loans 1,137,140 2,171,534 Wild Sky acquisition debt 18,146,564 16,451,906 Centre Lane debt 8,187,500 Note payable debt to the Company’s Chairman of the Board 80,000 80,000 Total debt 27,801,204 19,088,440 Less: debt discount, related party ( 3,880,093 ) ( 40,272 ) Less: current portion of long-term debt ( 1,387,140 ) ( 2,091,735 ) Less: current portion of long-term debt, related party ( 7,316,402 ) - Long term debt to related parties, net and long term debt, respectively $ 15,217,569 $ 16,956,433 Interest expense was $ 2,266,966 and $ 640,731 for the years ended December 31, 2021 and 2020, respectively. The minimum annual principal payments of notes payable at December 31, 2021 were: SCHEDULE OF MATURITIES OF LONG-TERM OBLIGATION 2022 $ 7,983,418 2023 2,497,366 2024 1,668,166 2025 15,652,254 Total $ 27,801,204 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 2021 and 2020 of $ 406,522 and $ 380,397 , respectively. Total Premium Finance Loan Payable balance for the Company’s policies was $ 334,284 and $ 339,890 as of December 31, 2021 and 2020, respectively. NOTE 10 – FAIR VALUE MEASUREMENTS The Company’s assets and liabilities recorded at fair value on a recurring basis 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, 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 6 and Note 7 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- 24 Financial Disclosures about Fair Value of Financial Instruments The tables below set forth information related to the Company’s consolidated financial instruments (in thousands): SCHEDULE OF CONSOLIDATED FINANCIAL INSTRUMENT Level in Fair December 31, 2021 December 31, 2020 Value Hierarchy Carrying Amount Fair Value Carrying Amount Fair Value PPP Loan 2 $ 1,137,140 $ 1,137,140 $ 2,171,534 $ 2,171,534 Long-term debt 3 $ - $ - $ 16,451,906 $ 16,451,906 Long-term debt to related parties 3 $ 26,414,064 $ 26,414,064 $ 80,000 $ 80,000 Non-interest bearing BMLLC acquisition debt 2 $ 250,000 $ 250,000 $ 385,000 $ 385,000 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, 2021 and 2020: SCHEDULE OF LIABILITIES MEASURED AT FAIR VALUE ON RECURRING BASIS Fair Value measurement using Level 3 Balance at December 31, 2019 $ 245,163 Additions during 2020 (1) 16,671,542 Balance at December 31, 2020 $ 16,916,705 Reclassification (2) ( 464,800 ) Extinguishment (3) ( 16,451,905 ) Acquisition debt, Wild Sky, related party 18,146,564 Addition: Related party debt (4) 8,187,500 Addition: Related party debt (5) 80,000 Decrease: Related party debt discount and amortization (6) ( 3,880,093 ) Total long term debt to related parties at December 31, 2021 $ 22,533,971 (1) Additions are due to $ 16,451,906 related to the Wild Sky acquisition debt (Refer to Note 3) and $ 219,837 to settlement in relation with the acquisition of BMLLC. Refer to “Long term debt” in Note 12. (2) Related to reclassification of Bright Mountain PPP loan (3) Centre Lane determined to be related party (see note 14) and applying ASC 470 guidance (4) Centre Lane debt financing from May 26, 2021 through December 23, 2021 (5) Note payable to the Company’s Chairman of the Board (6) Debt discount and amortization on related party financings NOTE 11 – COMMITMENTS AND CONTINGENCIES Leases The Company leases its corporate offices in Boca Raton, Florida under a long-term non-cancellable lease agreement that expired on October 31, 2021 . The lease terms required 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 was 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 sheets. The Company currently operates on a month-to-month basis with the landlord. The right-of-use asset and lease liability are as follows as of December 31, 2021 and 2020: SCHEDULE OF RIGHT OF USE ASSET AND LEASE LIABILITY 2021 2020 Assets Operating lease right-of-use asset $ – $ 72,598 Liabilities Operating lease liability, current $ – $ 72,727 Operating lease liability, net of current portion – – Total operating lease liabilities $ – $ 72,727 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 years ended December 31, 2021 and 2020. F- 25 Rent expense for the years ended December 31, 2021 and 2020 was $ 203,340 and $ 377,704 , 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 stockholders in connection with the matter. For more information, see Note 18 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 18 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. Bright Mountain has been sued by plaintiffs Joey Winshman, Eli Desatnik and Nadav Slutzy (“Plaintiffs”) in a lawsuit filed in the United States District Court for the Southern District of Florida on December 17, 2021 (the “Lawsuit”). Plaintiffs allege that BMM defaulted on its obligations to Plaintiffs under three promissory notes that arose from the merger between Bright Mountain Israel Acquisition Ltd., a wholly owned subsidiary of Bright Mountain, and Slutzky & Winshman Ltd. Plaintiffs seek to recover from Bright Mountain the principal balance of the promissory notes, interest, attorney’s fees, and costs. Discovery in the Lawsuit is underway and the parties continue to intermittently explore the possibility of settlement. 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 was 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- 26 NOTE 12 – PREFERRED STOCK The Company has authorized 20,000,000 shares of preferred stock with a par value of $ 0.01 (the “Preferred Stock”), issuable in such series and with such designations, rights and preferences as the board of directors may determine. The Company’s board of directors has previously designated five series of preferred stock, consisting of 10% Series A 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”). 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. F- 27 At December 31, 2021 and 2020, there were 0 and 1,200,000 shares of Series A-1 Stock, 125,000 and 2,500,000 shares of Series E Stock, and 0 and 4,344,017 shares of Series F Stock issued and outstanding, respectively. 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 2021, 7,919,017 shares of Series A-1, E and F convertible preferred stock were converted to 7,919,017 common shares. Dividends paid for Series A-1, E and F Convertible Preferred Stock were $ 2,522 and $ 63,136 for the years ended December 31, 2021 and 2020, respectively. Total preferred stock dividend accrued amounted to $ 691,861 and $ 363,460 for the years ended December 31, 2021 and 2020, respectively. NOTE 13 – 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 the year ended December 31, 2021, the Company did not sell any of its securities through a private placement. 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. Stock issued for services During the year ended December 31, 2021, the Company issued 13,330,516 shares of our common stock for the following concepts: SCHEDULE OF COMMON SHARES ISSUED DURING THE PERIOD Shares (#) Value Shares issued to Centre Lane related to debt financing 12,650,000 $ 1,129,467 Services rendered 176,250 1,762 Options exercised by employees 100,000 13,900 Warrants exercised 25,000 10,000 Shares issued to Oceanside employees per the acquisition agreement valued at $ 1.60 379,266 606,826 Total 13,330,516 $ 1,761,955 F- 28 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 . Stock issued for acquisitions 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 . The common shares were valued at $ 3,725,000 or $ 1.49 per share. Stock issued for deemed dividend 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 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. This issuance was determined to be a deemed dividend. Stock issued for conversion of preferred shares On August 31, 2021, the Company converted 7,919,017 of preferred shares to 7,919,017 common shares. NOTE 14 – 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. F- 29 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, 2021, 697,000 shares, 567,000 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- 30 The following table summarizes the assumptions the Company utilized to record compensation expense for stock options granted during the years ended December 31, 2021 and 2020: SCHEDULE OF ASSUMPTIONS USED IN VALUING STOCK OPTIONS Assumptions: 2021 2020 Expected term (years) 6.25 6.25 Expected volatility 94 %- 96 % 127 % Risk-free interest rate 0.67 % 0.31 – 0.51 % 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 $ 207,272 and $ 181,549 of stock option expense for the year ended December 31, 2021 and 2020, respectively. The stock option expense for year ended December 31, 2021 and 2020 has been recognized as a component of general and administrative expenses in the accompanying consolidated financial statements. As of December 31, 2021, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $ 205,773 to be recognized over a weighted-average period of 1.85 years. A summary of the Company’s stock option activity during the year ended December 31, 2021 is presented below: SCHEDULE OF STOCK OPTION ACTIVITY Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in years) Aggregate Intrinsic Value Balance Outstanding, December 31, 2020 1,375,227 $ 0.76 4.1 $ 3,201,237 Granted 650,000 0.48 8.4 - Exercised ( 100,000 ) - - - Forfeited ( 200,000 ) - - - Expired ( 310,000 ) - - - Balance Outstanding, December 31, 2021 1,415,227 $ 0.62 6.2 $ - Exercisable at December 31, 2021 732,364 $ 0.70 3.5 $ - F- 31 Summarized information with respect to options outstanding under the Plans at December 31, 2021 and 2020, respectively, is as follows: SCHEDULE OF OPTIONS OUTSTANDING UNDER OPTION PLANS Options Outstanding at December 31, 2021 Options Exercisable Range or Exercise Price Number Outstanding Weighted Average Exercise Price Remaining Contractual Life (In Years) Number Exercisable Weighted Average Exercise Price 0.01 - 0.13 650,000 $ 0.01 9.7 25,000 $ 0.01 0.25 - 0.49 126,000 $ 0.28 0.7 126,000 $ 0.28 0.50 - 0.85 501,000 $ 0.69 3.5 501,000 $ 0.69 0.86 - 1.75 138,227 $ 1.64 7.9 80,364 $ 1.63 1,415,227 $ 0.43 6.5 732,364 $ 0.70 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 Restricted Stock Awards The Company recognized compensation expense for 176,250 RSAs granted to independent directors amounting to $ 1,762 for the year ended December 31, 2021. 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. The restrictions on these share awards were for 1 year, hence they lapsed in November and December 2021, respectively. Shares held in escrow As part of the Company’s acquisition of the Oceanside, 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- 32 Warrants At December 31, 2021, we had 35,823,316 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, 2021 and 2020, respectively is presented below: SCHEDULE OF WARRANT OUTSTANDING Warrants as of December 31, 2021 Number Gross cash proceeds Exercise Price Outstanding if exercised $ 1.00 4,817,308 $ 4,817,308 $ 0.65 15,550,000 $ 10,107,500 $ 0.75 15,456,008 $ 11,592,006 35,823,316 $ 26,516,814 Warrants as of December 31, 2020 Number Gross cash proceeds Exercise Price Outstanding if exercised $ 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 During 2021, a total of 25,000 warrants were exercised in a cashless transaction with exercise prices of $ 0.65 and $ 1.00 per share. 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- 33 NOTE 15 – 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 both 2021 and 2020, net loss was reduced by deemed dividends of $ 241,903 and $ 363,460 , respectively, to calculate basic loss per share. 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: SCHEDULE OF LOSS PER SHARE December 31, 2021 2020 Common stock equivalent from: Stock options 1,415,227 1,375,227 Warrants 35,823,316 35,848,316 Convertible preferred stock 125,000 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 16 – RELATED PARTY TRANSACTIONS As discussed in Note 11, notes payable to the CEO amounted to $ 53,729 and $ 39,728 as of December 31, 2021 and 2020 respectively, and are reported net of their unamortized debt discount of $ 26,271 and $ 40,272 as of December 31, 2021 and 2020, 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 $ 0 and $ 54,922 to the CEO in 2021 and 2020, respectively, and $ 5,000 and $ 5,100 to Mr. Richard Rogers, a former member of the board of directors, in 2021 and 2020, respectively. Centre Lane Partners Master Credit Fund II, L.P. (“Center Lane Partners”), who sold the Company the Wild Sky business in June 2020 (see Note 3) has partnered and assisted the Company from a liquidity perspective during 2021. This relationship has been determined to qualify as a related party. A related party is a party that can exercise significant influence over the Company in making financial and/or operating decisions. 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”). 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 (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. In addition, the Company may issue up to $ 800,000 in dividends from the previous limit of $ 500,000 per annum. In addition, the Company has issued 150,000 common shares to Centre Lane Partners as part of this transaction. On May 26, 2021, the Company and certain of its subsidiaries entered into a Second Amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (the “Second Amendment”). 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 $ 1.5 million, in the aggregate. This term loan shall be repaid by December 31, 2021. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 0.750 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 3.0 million common shares to Centre Lane Partners as part of this transaction. F- 34 On August 12, 2021, the Company and certain of its subsidiaries entered into a Third amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (“the Third Amendment”). 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 $ 500,000 , in the aggregate. This term loan shall be repaid by February 28, 2022. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 250,000 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 2.0 million common shares to Centre Lane Partners as part of this transaction. On August 31, 2021, the Company and certain of its subsidiaries entered into a Fourth amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (“the Fourth Amendment”). 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 approximately $ 1,100,000 , in the aggregate. This term loan shall be repaid by February 28, 2022. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 550,000 which will be added and capitalized to the principal amount of the original loan and the original loan terms apply. There was no issuance of common shares as part of this amendment. On October 8, 2021, the Company and certain of its subsidiaries entered into a Fifth amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (“the Fifth Amendment”). 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 $ 725,000 , in the aggregate. This term loan shall be repaid by February 28, 2022. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 800,000 which will be added and capitalized to the principal amount of the original loan and the original loan terms apply. There was no issuance of common shares as part of this amendment. On November 5, 2021, the Company and certain of its subsidiaries entered into a Sixth amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (“the Sixth Amendment”). 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 $ 800,000 , in the aggregate. This term loan shall be repaid by February 28, 2022. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 800,000 which will be added and capitalized to the principal amount of the original loan and the original loan terms apply. This amendment required the Company to issue 7,500,000 shares of the Company’s common stock to Centre Lane Partners prior to November 30, 2021. On December 23, 2021, the Company and certain of its subsidiaries entered into a Seventh amendment to the Amended and Restated Senior Secured Credit Agreement between itself and Centre Lane Partners (“the Seventh Amendment”). 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 $ 500,000 , in the aggregate. This term loan shall be repaid by February 28, 2022. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 500,000 which will be added and capitalized to the principal amount of the original loan and the original loan terms apply. There was no issuance of common shares as part of this amendment. See Note 18 for amendments to the Amended and Restated Senior Secured Credit Agreement subsequent to December 31, 2021. The accumulated gross debt discount as of December 31, 2021 totaled $ 8,200,476 and will be amortized into the consolidated statement of operations and included in the interest expense – related party over the remaining life of the loan or until the next debt modification or extinguishment is determined. Interest expense for note payable to related party for the year ended December 31, 2021 and 2020 was $ 2,128,179 and $ 0 , respectively. F- 35 The total related party debt owed to Centre Lane Partners was $ 26,334,064 and $ 16,451,905 as of December 31, 2021 and 2020. The debt owed to Centre Lane Partners is reported net of their unamortized debt discount of $ 3,853,822 and $ 0 as of December 31, 2021 and 2020. For further clarification, please see Note 9, Notes Payable. During the year ended December 31, 2021 and 2020, we paid cash dividends on the outstanding shares of the Company’s Series E and F Preferred Stock of $ 5,000 and $ 60,022 , respectively held by affiliates of the Company. The unsecured and interest free Closing Notes of $ 750,000 related to the Oceanside acquisition were recorded ratably as compensation expense into the consolidated 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 First Closing Note and thereby defaulted on its obligation and the Second 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 third quarter of 2020 which was $ 250,000 of compensation expense and $ 50,672 of interest expense-related party. For the year ended December 31, 2021, $ 135,000 of interest expense-related party was recorded. NOTE 17 – 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. Notable provisions of the CAA included changes to the Paycheck Protection Program including legislation concluding that expenses used to obtain loan forgiveness are tax deductible. The Company evaluated the various aspects of the Act and determined that it was eligible for the Paycheck Protection Program (PPP Loan). Two PPP Loans were received in 2020, one for $ 1,706,735 and one for $ 464,800 . These were forgiven during 2021 and the CODI from these loans were deemed excludable from taxable income and therefore deducted as a permanent book tax difference. The Company took two additional PPP Loans out during 2021 for $ 841,540 and $ 295,600 . Of these, the $ 841,540 loan has been forgiven in March 2022, and its corresponding CODI will be excluded from taxable income in 2022. If the $ 295,600 loan is forgiven in subsequent years, the CODI will be excludable from taxable income, consistent with the treatment in the current year. F- 36 The Company’s loss before income taxes consists of the following: SCHEDULE OF LOSS BEFORE INCOME TAXES 2021 2020 Year ended December 31, 2021 2020 United States $ ( 11,001,991 ) $ ( 53,116,100 ) Foreign ( 998,246 ) ( 20,165,836 ) Total loss before provision for income taxes $ ( 12,000,237 ) $ ( 73,281,936 ) The provision for income taxes consists of the following: SCHEDULE OF PROVISION FOR INCOME TAXES Year ended December 31, 2021 2020 Deferred Federal $ – $ ( 192,561 ) State – ( 55,017 ) Foreign – ( 319,936 ) – ( 567,514 ) Discontinued Operations Deferred: Federal – – State – – – – Total – – F- 37 A reconciliation of the federal statutory income tax rate to the effective tax rate is as follows: SCHEDULE OF INCOME TAX RATE RECONCILIATION 2021 2020 Amount Rate Amount Rate Federal tax expense (benefit) at the statutory rate from continuing operations $ ( 2,520,050 ) 21.00 % $ ( 15,389,206 ) 21.00 % State tax benefit, net of federal income tax benefit ( 754,285 ) 6.29 % ( 1,436,416 ) 1.96 % PPP loan forgiveness ( 456,022 ) 3.80 % – – % Other adjustments ( 9,228 ) 0.08 % – – % Effect of foreign taxes 52,080 ( 0.43 )% 1,007,969 ( 1.38 )% Transaction costs 21,837 ( 0.18 )% 271,423 ( 0.37 )% Impairment – – % 7,929,074 ( 10.82 )% Stock compensation 234,172 ( 1.95 )% 113,862 ( 0.16 )% Other permanent differences 69,900 ( 0.58 )% ( 138,526 ) 0.19 % Change in valuation allowance 3,361,596 ( 28.03 )% 7,074,306 ( 9.65 )% Total tax provision (benefit) – – % ( 567,514 ) 0.77 % The goodwill and intangible impairments recorded during the year ended December 31, 2020, 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 in the 2020 effective tax rate. The tax effect of significant components of the Company’s deferred tax assets and liabilities at December 31, 2021 and 2020, are as follows: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2021 2020 Year ended December 31, 2021 2020 Deferred tax assets: Net operating loss carryforward $ 14,268,960 $ 11,329,880 Other 675,523 417,728 Total gross deferred tax assets 14,944,483 11,747,608 Less: Deferred tax asset valuation allowance ( 14,937,665 ) ( 11,579,703 ) Total net deferred tax assets $ 6,818 $ 167,905 Property and equipment ( 6,818 ) ( 24,238 Intangible assets – ( 143,667 ) Net deferred tax liability $ – $ – F- 38 As of December 31, 2021, the Company had U.S. federal net operating loss carryforwards of $ 50.2 million that expire at various dates from 2030 through 2038 , and includes $ 39.9 million that have an unlimited carryforward period. As of December 31, 2021, the Company had state and local net operating loss carryforwards of $ 54.4 million that expire at various dates from 2030 through 2041 , and includes $ 14.0 million that have an unlimited carryforward period. As of December 31, 2021, the Company had foreign net operating loss carryforwards of $ 4.2 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 2021 were fully offset by the deferred tax liability and a 100% valuation allowance on the remaining balance. Based on all available evidence, management determined that is it more likely than not that the Company’s net deferred tax assets will not be realized. As a result, the Company continues to maintain a full valuation against its net deferred tax assets. For the years that ended December 31, 2021 and December 31, 2020, the change in the valuation allowance was an increase of approximately $ 3.4 million and an increase of approximately $ 10.7 million, respectively. During 2020, the Company completed the acquisitions of Wild Sky. 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. 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- 39 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, 2021 and 2020, 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, 2021 and 2020, 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 2018 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 18 – SUBSEQUENT EVENTS Between January 26, 2022 and June 10, 2022, the Company and certain of its subsidiaries entered into seven 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 $ 2.7 million, in the aggregate. This term loan matures on June 30, 2023 . In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $ 468 thousand which will be added and capitalized to the principal amount of the original loan and the original loan terms apply. During January 2022, the Company entered into a settlement agreement related to the legal proceeding with Synacor referenced in Note 11. The agreement obligates the Company to pay $ 12,000 per month beginning January 24, 2022 for 12 consecutive months and then a final one-time payment in the amount of $ 40,000 to be paid on or before January 24, 2023. Notwithstanding, the Company has an early settlement option to pay-off the obligation with a discount if it pays $ 160,000 to Synacor on or before September 1, 2022, which amount shall be inclusive of the monthly installments previously mentioned prior to the date when early settlement payment is transmitted to Synacor. On January 14, 2022, the Board of Directors nominated and elected Mr. Matthew Drinkwater, the Company’s Chief Executive Officer to the Board of Directors of the Company. In February 2022, the Russian Federation and Belarus commenced military action with the country of Ukraine. As a result of this action, various nations, including the United States, have instituted economic sanctions against the Russian Federation and Belarus. Further, the impact of this action and related sanctions on the world economy are not determinable as of the date of these financial statements. The specific impact on the Company’s financial condition, results of operations, and cash flows is also not determinable as of the date of these financial statements. On April 14, 2022, the Board of Directors of the Company and the Compensation Committee of the Board adopted and approved the 2022 Bright Mountain Media Stock Option Plan (the “Stock Option Plan”). The Stock Option Plan will be presented for stockholder approval at the Company’s 2022 Annual Meeting of Stockholders. The Stock Option Plan provides for the grants of awards to eligible employees, directors and consultants in the form of stock options. stock. The Stock Option Plan is the successor to the Company’s prior stock option plans and accordingly no new grants will be made under the prior plans from and after the date hereof. The Stock Option Plan is a term of 10 years and authorizes the issuance of up to 22,500,000 shares of the Company’s common stock. F- 40