What changed in this filing

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Item 7. Management’s Discussion and Analysis

2023-03-29 compared with 2022-06-13 · 378 added, 368 removed, 10 unchanged (99% of the section changed)

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

following discussion of our consolidated financial condition and results of operations for the years ended December 31, 2021 and 2020

should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere

in this Annual Report on Form 10-K.

Our discussion includes forward-looking statements based upon current expectations that involve risks

and uncertainties, such as our plans, objectives, expectations and intentions.

Actual results and the timing of events could differ materially

from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the Risk

Factors, Cautionary Notice Regarding Forward-Looking Statements and Business sections in this prospectus.

We use words such as “anticipate”,

“estimate”, “plan”, “project”, “continuing”, “ongoing”, “expect”,

“believe”, “intend”, “may”, “will”, “should”, “could” and similar

expressions to identify forward-looking statements.

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.

The pandemic has continued into 2022, but the digital ad

spend dollars appears to be on an uptrend which would be positive for our industry.

Mountain Media, Inc.

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

brand advertisers with demographically-targeted consumers – both large audiences and more granular segments – across digital,

social and connected television (“CTV”) publishing formats.

We define “end-to-end” as our process for taking

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

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

digital advertising supply chain through the elimination of industry “middlemen” and/or costly redundancy of services.

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.

advertising relies on computer programs to use data and proprietary algorithms to select which ads to buy and for what price, while direct

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

selling advertisements on our current portfolio of 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.

currently own parenting and lifestyle domains CafeMom, Mom.com, LittleThings, Revelist, BabyNameWizard and MamasLatinas.

Wild Sky Media’s

diverse website portfolio averages more than 100 million page views per month.

These particular web assets are the foundation of one

of Bright Mountain Media’s audiences – women between the ages of 19-54, which we believe appeal to brands focused on marketing

consumer products and providing products and services relating to parenting, insurance, mortgages, health, lifestyle and travel, among

Major brands on our platform connecting with consumers using our parenting and lifestyle domains include Amazon, Target, Disney,

Unilever, Clorox and Warner Brothers.

advertisers leverage our end-to-end platform for serving ads on web and CTV apps we own and operate, Bright Mountain Media retains 100%

of the advertising dollars spent for the ads, also referred to as “advertising spend.” If advertisements are placed on our

partner publishers’ websites through our platform, they, too, benefit, earning up to 50% of the advertising spend.

This compares

to a revenue yield of 30% or less of the advertising spend when ads are served through the conventional supply chain model.

of Operations

For the Year Ended

Cost of revenues

Selling, general and administrative expenses

Impairment expense – Intangible assets

Impairment expense – Goodwill

Loss from operations

(11,906,951 )

(72,925,286 )

Total other income (expense)

Net loss before tax

(12,000,237 )

(73,281,936 )

Income tax benefit

(12,000,237 )

(72,714,422 )

Total preferred stock dividends

Net loss attributable to common stockholders

$ (12,242,140 )

$ (73,077,882 )

revenues decreased approximately $2.9 million or 18% in 2021 over 2020.

The main reason was softness in our Oceanside advertising display

business year over year and the effect of the MediaHouse restructuring completed at the end of 2020.

of revenue as a percentage of revenues decreased approximately 1%, from approximately 50% in 2020 to approximately 49% in 2021 thereby

increasing gross profit margins from 50% during 2020 to 51% in 2021, mainly due to the inclusion of the Wild Sky business, improving

gross margins in our other ad network businesses and offset by the restructuring of the MediaHouse business which occurred at the end

2020, we recorded impairment expenses related to goodwill and intangible assets amounting to approximately $42.3 million and $16.5 million,

respectively.

These were non-recurring events in 2020 driven in part by the COVID-19 pandemic, that were not present in 2021.

year 2020 was marked by the COVID-19 Global pandemic when many companies in various industries were forced to restructure their advertising

budgets and spending.

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

has continued.

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

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

Many advertisers have moved away from direct ad buys

in favor of programmatic distribution with its lower costs.

The fair value of the respective reporting units was determined based on

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

In September 2020, it was determined that the carrying

value of the Goodwill associated with the Ad Network reporting unit exceeded the fair value of the Goodwill and in September 2020, the

Company recorded an impairment charge of $42.3 million.

No such adjustment was recorded for the Owned & Operated reporting unit as

it was determined not to be impaired.

we performed an assessment of our finite-lived intangibles based on indicators of impairment noted by management, including decreased

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 impairment 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 charge of $16.5 million.

General and Administrative (“SG&A”) Expenses

expenses decreased by approximately $3.6 million for 2021 compared to 2020.

Our selling, general and administrative expenses were 143%

of our total revenues for 2021 as compared to 139% for 2020.

The increase was mainly due to the incremental five months of selling, general

and administrative costs for the Wild Sky acquisition which occurred in June 2020.

general and administrative expenses are expected to increase as we execute our planned growth strategy of launching and operating the

Bright Mountain Media ad exchange network which will include additional administrative support.

Subject to the availability of additional

working capital, the Company also intends to add staff to its accounting department to improve controls over its accounting and reporting

As the Company expands the size of the accounting department, its use of consultants is expected to decrease.

other income (expense)

income (expense) decreased by $263 thousand for 2021 compared to 2020.

main drivers of the decrease were PPP loan forgiveness in 2021 of $2.2 million offset by increased interest expense – related party

of $1.9 million from 2021 to 2020:

results of acquisitions

The following table sets forth

a summary of the unaudited pro forma results of the Company as if the acquisition of Wild Sky which closed in June 2020, respectively,

had taken place on the first day of 2020.

These combined results are not necessarily indicative of the results that may have been achieved

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

December 31, 2020

Total revenue

Total operating expenses

(90,365,754 )

Net loss attributable to common stockholders

The following discussion of our consolidated financial condition and results of operations for the years ended December 31, 2022, and 2021 should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.

Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions.

Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the "Risk Factors," "Cautionary Notice Regarding Forward-Looking Statements" and "Business" sections in this prospectus.

We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could” and similar expressions to identify forward-looking statements.

Organization and Nature of Operations

Bright Mountain Media, Inc.

is a holding company which focuses on digital publishing and advertising technology.

The Company is engaged in content creation and advertising technology development that helps customers connect with, and market to, targeted audiences in high quality environments using a variety of digital advertising ("ad") formats.

Digital Publishing

Our digital publishing division focuses on developing content that attracts an audience and monetizes that audience through advertising.

The current portfolio of owned and operated websites is focused on moms, parenting, families, and more broadly, women.

The portfolio consists of popular websites including Mom.com, Cafemom.com, LittleThings.com, and MamasLatinas.com.

This demographic is highly sought after by brands and their advertising agencies.

We use internal and external technologies to constantly improve the effectiveness and efficiency of the content we create.

Our publishing division monetizes its audiences through both direct and programmatic advertising sales.

Advertising Technology

Our advertising technology division focuses on delivering targeted ads to audiences on owned and operated sites as well as third-party publishers in a cost-effective manner through the deployment of proprietary technologies.

Through acquisitions and organic software development, we have consolidated and plan to further condense key elements of the prevailing digital advertising supply chain by eliminating industry “middlemen” and/or costly redundancy of services via our ad exchange.

By developing our own proprietary technology stack, we are able to pass along efficiencies to both the demand and supply side of the ecosystem.

Our goal is to enable and support a streamlined, end-to-end advertising model that addresses both advertiser demand (buy side) and publisher supply (sell side) programmatic sales and delivery of digital advertisements using an array of audience targeting tools and advertising formats (display, audio, video, connected television (CTV), in-app).

Programmatic advertising relies on artificial intelligence powered software programs that leverage data and proprietary algorithms to match the optimal selection of an ad with bid price offered by advertisers.

The Company generates revenue through sales of advertising services which generate revenue from advertisements placed on the Company’s owned and managed sites, as well as from advertisements placed on partner websites, for which the Company earns a share of the revenue.

Additionally, we also generate advertising services revenue from facilitating the real-time buying and selling of advertisements at scale between networks of buyers, known as demand side platforms ("DSPs) and sellers known as supply side platforms ("SSPs").

Key Factor Affecting Our Performance

Seasonal Fluctuations .

Typically advertising technology companies report a material portion of their revenues during the third and fourth calendar quarter as a result of back to school and holidays related advertising spend.

Our experience since transitioning to focus solely on advertising has been consistent with this trend.

Because of seasonal fluctuations, there

can be no assurance that the results of any particular quarter will be indicative of results for the full year or for future years or quarters.

Limited Number of Customers .

During the years ended December 31, 2022, and 2021, one customer represented 37.7% and 8.6% of revenue, respectively.

The loss of this customer could have a material adverse impact on the results of operations in future periods.

Key Operating and Financial Metrics

We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions.

The following are the key financial and operational metrics for the years ended December 31, 2022, and 2021:

($ in thousands) 2022 2021

Revenue $ 19,580 $ 12,925

Cost of revenue 10,493 6,350

Gross Margin 9,087 6,575

General and administrative expenses 14,249 18,482

Total financing income (expense) (2,963) (93)

Net loss $ (8,125) $ (12,000)

Adjusted EBITDA (1) $ (2,463) $ (7,678)

(1) For a reconciliation of net loss to Adjusted EBITDA see “Use of Non-GAAP Financial Measures” below.

Revenue increased $6.7 million or 51% in the year ended December 31, 2022 when compared to the same period in 2021.

See below for a detailed analysis of revenue for the years ended December 31, 2022, and 2021.

Cost of Revenue

Cost of revenue includes payment to third parties for services performed to drive revenue, which include revenue share paid for ad exchange on third party sites, advertising fees, fees paid for content creation, influencers, writers and sales commission.

Costs of revenue increased approximately $4.1 million or 65% for the year ended December 31, 2022 compared to 2021.

See below for a detailed analysis of cost of revenue for the years ended December 31, 2022, and 2021.

General and Administrative Expenses

General and administrative expenses consist primarily of (i) personnel and related costs for our executive, finance and accounting, human resources, and administrative personnel, including salaries, benefits, bonuses, and stock-based compensation;

(ii) legal, accounting, and other professional service fees;

(iii) other corporate expenses;

(iv) information technology costs;

and (v) facility costs.

General and administrative expenses decreased approximately $4.2 million or 23% for the year ended December 31, 2022 compared to the year ended December 31, 2021.

See below for a detailed analysis of general and administrative expenses for the years ended December 31, 2022 and 2021.

Results of Operations

The following is our analysis of the results of operations for the years ended December 31, 2022, and 2021.

This analysis should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.

Year Ended December 31, 2022 Compared to Year Ended December 31, 2021

Net loss from operations for the year ended December 31, 2022 was $8.1 million as compared to a net loss of $12.0 million for the year ended December 31, 2021.

The following is our analysis for the period.

Year Ended December 31,

($ in thousands) 2022 2021 Change % Change

Revenue $ 19,580 $ 12,925 $ 6,655 51 % increased

Cost of revenue 10,493 6,350 4,143 65 % increased

Gross margin 9,087 6,575 2,512 38 % increased

General and administrative expense 14,249 18,482 (4,233) (23) % decreased

Loss from operations (5,162) (11,907) 6,745 (57) % decreased

Financing income (expense) (2,963) (93) (2,870) 3086 % increased

Net loss $ (8,125) $ (12,000) $ 3,875 (32) % decreased

Gross margin % 46 % 51 % (5) % (10) % decreased

The Company focuses on digital publishing and advertising technology.

Digital Publishing

Our digital publishing division focuses on developing content that attracts an audience and monetizes that audience through advertising.

The current portfolio of owned and operated websites is focused on moms, parenting, families, and more broadly, women.

The portfolio consists of popular websites including Mom.com, Cafemom.com, LittleThings.com, and MamasLatinas.com.

This demographic is highly sought after by brands and their advertising agencies.

We use internal and external technologies to constantly improve the effectiveness and efficiency of the content we create.

Our publishing division monetizes its audiences through both direct and programmatic advertising sales.

Advertising Technology

Our advertising technology division focuses on delivering targeted ads to audiences on owned and operated sites as well as third party publishers in a cost-effective manner through the deployment of proprietary technologies.

By developing our own proprietary technology stack, we are able to pass along efficiencies to both the demand and supply side of the ecosystem.

Our goal is to enable and support a streamlined, end-to-end advertising model that addresses both demand (buy side) and publisher supply (sell side) programmatic sales and delivery of digital advertisements using an array of audience targeting tools and advertising formats (display, audio, video, CTV, in-app).

Additionally, we also generate advertising services revenue from facilitating the real-time buying and selling of advertisements at scale between networks of buyers known as DSPs and sellers known as SSPs.

Revenue for the year ended December 31, 2022, increased $6.7 million or 51% compared to the same period for 2021.

The increase was largely attributable to digital publishing revenue which increased $5.1 million or 178%.

This growth has been driven by our ability to leverage our digital publishing assets to attract top advertisers, which in turn has allowed us to onboard direct premium publishers, especially in the CTV market.

This led to an increase in volume, as well as rates and overall revenue.

Approximately 43% of the Company’s revenue for the year ended December 31, 2022 was generated from our digital publishing customers compared to 22% for the year ended December 31, 2021.

Advertising technology revenue increased $1.5 million or 15% for the year ended December 31, 2022 compared to the same period for 2021.

In 2022, approximately 90% of advertising technology revenue was generated in the U.S.

and 10% was generated from our business in Israel, compared to 87% and 13% in the U.S.

and Israel for the same period in 2021, respectively.

Cost of Revenue

Costs of revenue increased $4.1 million or 65% for the year ended December 31, 2022, compared to the same period for 2021.

These costs include revenue share payments to media providers and website publishers.

The increase was largely attributable to revenue share payments which increased $4.1 million.

The Company started expanding its usage of ad exchange on a third party’s site which is also associated with the increase noted in revenue as discussed above.

Our gross margin increased $2.5 million or 38% for the year ended December 31, 2022, when compared to the same period for 2021.

General and Administrative Expenses

Year Ended December 31,

($ in thousands) 2022 2021 Change % Change

Personnel cost $ 6,622 $ 8,945 $ (2,323) (26) % decreased

Legal fees 231 520 (289) (56) % decreased

Professional fees 3,276 4,574 (1,298) (28) % decreased

Insurance 599 540 59 11 % increased

Depreciation and amortization 1,597 1,639 (42) (3) % decreased

Other 1,923 2,264 (341) (15) % decreased

Total $ 14,248 $ 18,482 $ (4,234) (23) % decreased

Gross margin as a percentage of general and administrative expense 64 % 36 % 28 % 78 % increased

General and administrative expenses decreased $4.2 million or 23% for the year ended December 31, 2022, compared to the same period in 2021.

The reduction is due to a combination of factors as discussed below.

Personnel Cost

Personnel cost decreased approximately $2.3 million or 26% compared to the year ended December 31, 2021.

This change is mainly driven by a reduction in head count of 23 employees or 29%.

We had 57 total employees as of December 31, 2022 compared to 80 total employees as of December 31, 2021.

Legal fees is a combination of legal fees and litigation settlement amounts.

During the year ended December 31, 2022, the Company incurred costs of $589,000 in legal fees offset by $357,000 in a litigation settlement, resulting in a net decrease of $289,000 or 56% compared to the year ended December 31, 2021.

The credit in litigation settlement is mainly

attributable to the reversal of a previous accrual related to the Slutzky & Winshman and Synacor litigation, as discussed in Note 15, "Commitment and Contingencies."

Professional Fees

During the year ended December 31, 2022, professional fees decreased $1.3 million or 28% when compared to the same period, 2021.

The amount for 2021 was higher due to the costs incurred for audit and consultant fees which represented 66% of professional fees in 2022 compared to 82% for 2021.

This expense was in connection with the Company’s restatement of its financial results for the period January 1, 2019 to December 31, 2021.

Financing (Expense) Income

Year Ended December 31,

($ in thousands) 2022 2021 Change % Change

Interest expense $ 4,262 $ 2,267 $ 1,995 88 % increased

Gain on forgiveness of PPP loan (1,137) (2,172) 1,035 (48) % decreased

Other expense (income) (162) (2) (160) 8000 % increased

Total financing expense (income) $ 2,963 $ 93 $ 2,870 3086 % increased

Financing expense increased $2.9 million or 3086% for the year ended December 31, 2022, compared to the same period 2021.

This increase was largely attributable to a $2.0 million increase in interest expense related to the Centre Lane Senior Secured Credit Facility, which reflected higher principal and fees due to the Centre Lane Senior Secured Credit Facility amendments during the year ended December 31, 2022.

This increase was offset by a reduction in the Paycheck Protection Program ("PPP") loan forgiveness amount, which was $1.1 million in 2022 compared to $2.2 million for the same period in 2021, resulting in a higher expense for 2022.

Liquidity and Capital Resources

Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash.

The following table summarizes total current assets, total current liabilities and net working capital (deficit) as of December 31, 2022 as compared to December 31, 2021.

($ in thousands) 2022 2021

Total current assets $ 4,501 $ 5,257

Total current liabilities 17,851 23,070

Net working capital deficit $ (13,350) $ (17,813)

As of December 31, 2022, we had a cash balance of $316,000 compared with a cash balance of $781,000 as of December 31, 2021.

During 2021, we implemented policies and procedures around cash collections to prevent the aging of accounts receivables, and we have continued following such policies and procedures in 2022.

Cash collection efforts are improving, and we believe we have appropriately reserved for uncollectible amounts as of December 31, 2022.

During the year ended December 31, 2022, the Company received $3.1 million in debt financing from Centre Lane Partners Master Credit Fund II, L.P.

(“Centre Lane Partners").

The use of the funds was for general working capital needs.

During the period from May 26, 2021 to December 31, 2021, the Company received $5.1 million in debt financing from Centre Lane Partners.

The use of the funds was for general working capital needs.

Going Concern

Historically, the Company has incurred losses, which has resulted in an accumulated deficit of approximately $114.3 million as of December 31, 2022.

Cash flows used in operating activities were $3.1 million and $5.9 million for the years

ended December 31, 2022, and 2021, respectively.

As of December 31, 2022, the Company had a working capital deficit of approximately $13.3 million, inclusive of $316,000 in cash and cash equivalents.

The Company’s ability to continue as a going concern is dependent on its ability to meet its liquidity needs through a combination of factors.

The Company is currently exploring all strategic alternatives, including restructuring or refinancing its debts, seeking additional debt, such as borrowings under the Centre Lane Senior Secured Credit Facility or equity capital.

The ability to access the capital markets is also dependent on the stock volume and market price of the Company's stock, which cannot be assured.

Other measures include reducing or delaying certain business activities, reducing general and administrative expenses, and a further reduction in headcount.

The ultimate success of these plans is not guaranteed.

In considering our forecast for the next twelve months, the Company's current cash and working capital, as of the filing of this Annual Report on Form 10-K, the Company’s available cash will not be sufficient to fund its anticipated level of operations.

As a result, such matters create a substantial doubt regarding the Company’s ability to meet its financial needs and continue as a going concern.

The accompanying condensed consolidated financial statements are prepared on a going concern basis and do not include any adjustments that might result from uncertainty about the Company’s ability to continue as a going concern.

Subsequent Event

On February 28, 2023, the Company reduced its headcount from 57 employees to 52 employees.

There were no executive officers included in this reduction.

See Note 22, "Subsequent Events", to the accompanying consolidated financial statements for further information.

Financing Arrangement Summary

Centre Lane Senior Secured Credit Facility

Effective June 1, 2020, the Company entered into a membership interest purchase agreement to acquire 100% of Wild Sky Media (the “Purchase Agreement”).

To finance this acquisition, the Company obtained a first lien senior secured credit facility from Centre Lane Partners in the amount of $16.5 million, comprising $15.0 million of initial indebtedness, repayment of Wild Sky’s existing accounts receivable factoring facility of approximately $900,000 and approximately $500,000 of expenses.

Centre Lane Partners subsequently loaned the Company an additional $8.2 million to provide liquidity to fund operations beginning in April 26, 2021 (as amended, the “Centre Lane Senior Secured Credit Facility”).

This Centre Lane Senior Secured Credit Facility has been determined to qualify as a related party transaction as shares were issued to Centre Lane Partners as part of the transaction, resulting in Centre Lane Partners holding 10% of the shares issued and outstanding at December 31, 2022.

A related party is a party that can exercise significant influence over the Company in making financial and/or operating decisions.

The note issued under the Centre Lane Senior Secured Credit Facility bears interest at a rate of 6.0% per annum and matures June 30, 2025, with payments of 2.5% of outstanding principal beginning on June 30, 2023.

The interest rate was increased to 10.0% pursuant to the first amendment with interest payable-in-kind (“PIK Interest”) in lieu of cash payment.

Commencing with the ninth amendment, the interest rate was increased to 12% on all subsequent draws with 8% payable quarterly in cash and 4% payable-in-kind in lieu of cash payment.

These draws are known as the "last in first out loans," totaling $2.8 million inclusive of exit fees at December 31, 2022, due and payable on June 30, 2023.

For a full description of the Centre Lane Senior Secured Credit Facility, see Note 9, "Centre Lane Senior Secured Credit Facility" of our accompanying notes to the consolidated financial statements.

10% Convertible Promissory Note

During November 2018, the Company issued 10% convertible promissory notes (the "Convertible Notes") in the amount of $80,000 to the Chairman of the Board, a related party.

The Convertible Notes are unsecured and mature in November 2023.

The Convertible Notes are convertible at the option of the holder into shares of Common Stock at any time prior to maturity at a conversion price of $0.40 per share.

Approximately $118,000 is due and payable by November 2023, consisting of outstanding principal and interest.

For a full description of the Convertible Notes, see Note 11, "10% Convertible Promissory Notes" of our accompanying notes to the consolidated financial statements.

Summary of Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities for the year ended December 31, 2022, and 2021:

Year Ended December 31,

($ in thousands) 2022 2021

Total cash (used in) provided by:

Operating activities $ (3,115) $ (5,933)

Investing activities (14) —

Financing activities 2,664 5,978

(Decrease) increase in cash and cash equivalents $ (465) $ 45

Operating Activities

For the year ended December 31, 2022, cash used in operating activities was $3.1 million.

The primary factors affecting our operating cash flows during the period were our net loss of $8.1 million, adjusted for non-cash charges of $1.6 million for amortization of intangible assets, $1.2 million of amortization of debt discount, $144,000 of stock-based compensation expense, $89,000 of stock compensation for Oceanside shares, $84,000 for the provision of bad debt, $1.1 million from the gain on forgiveness of the PPP loan and a $229,000 net change in operating assets and liabilities.

The primary drivers of the changes in operating assets and liabilities were a $698,000 increase in other liabilities and a $695,000 increase in prepaid and other current assets, offset by a $596,000 decrease in accounts payable and accrued expenses, a $465,000 decrease in interest payable on Centre Lane Senior Secured Credit Facility and a $426,000 decrease in deferred revenue.

For the year ended December 31, 2021, cash used in operating activities was $5.9 million.

The primary factors affecting our operating cash flows during the period were our net loss of $12.0 million, adjusted for non-cash charges of $1.6 million for amortization of intangible assets, $578,000 of amortization of debt discount, $207,000 of stock-based compensation expense, $281,000 of stock compensation for Oceanside shares, $74,000 for the provision of bad debt, $2.2 million from the gain on forgiveness of PPP loan and a $5.7 million net change in operating assets and liabilities.

The primary drivers of the changes in operating assets and liabilities were a $3.0 million increase in accounts receivable, a $1.3 million increase in interest payable on Centre Lane Senior Secured Credit Facility, and a $816,000 increase in deferred revenue, offset by a $426,000 decrease in prepaid and other current assets.

Investing Activities

Cash used in investing activities of $14,000 and $0 for the year ended December 31, 2022, and 2021, respectively, was due entirely to the purchase of property and equipment.

Financing Activities

During the year ended December 31, 2022, the Company raised $3.1 million of debt financing from Centre Lane Senior Secured Credit Facility, which was used primarily to fund our working capital.

During the year ended December 31, 2021, the Company raised $5.1 million of debt financing from Centre Lane Senior Secured Credit Facility and $1.1 million from the PPP Loan, which were used primarily to fund our working capital.

Contractual Obligations and Commitments

The following table represents our contractual obligations as of December 31, 2022, aggregated by type:

Total Due in less than 1 year Due 1-3 years Due 3-5 years More than 5 years

($ in thousands)

Operating lease $ 357 $ 38 $ 236 $ 83 $ —

10% Convertible Promissory Notes 80 80 — — —

Interest payable - 10% Convertible Promissory Notes 38 38 — — —

Centre Lane Senior Secured Credit Facility 31,109 4,860 26,249 — —

Interest payable - Centre Lane Senior Secured Credit Facility 11,237 588 10,649 — —

$ 42,821 $ 5,604 $ 37,134 $ 83 $ —

the year ended December 31, 2021, the Company’s tax provision was $0.

the year ended December 31, 2020, the Company had an income tax benefit of $567,514 and a deferred tax liability of $0 as a result of

the reversal of the existing deferred tax liabilities associated with acquisitions from the impairment recorded.

The Company’s

net operating loss carry forwards may be subject to annual limitations if the Company experiences a change of ownership as defined in

Section 382 of the Internal Revenue Code.

The Company has not conducted a study to determine if a change of ownership has occurred.

stock dividends

stock dividends paid decreased by $122 thousand from 2021 to 2020.

We paid stock dividends on our A-1 series of our preferred stock which

was held by an unrelated third party, and cash dividends on E and F series of our preferred stock which are held by affiliates.

report Adjusted EBITDA from continuing operations as a supplemental measure to U.S.

Use of Non-GAAP Financial Measures

Non-GAAP results are presented only as a supplement to the financial statements and for use within management's discussion and analysis based on U.S.

generally accepted accounting principles (GAAP).

This measure is one of the primary metrics by which we evaluate the performance of our business, on which our internal budgets are based.

We believe that investors have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results.

This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute

for or superior to GAAP results.

We endeavor to compensate for the limitations of the non-GAAP measure presented by providing the comparable

GAAP measure with equal or greater prominence and description of the reconciling items, including quantifying such items to derive the

non-GAAP measure.

adjusted EBITDA from continuing operations is defined as operating income/loss excluding:

stock option compensation expense;

loss on note exchange transaction with our Chairman of the Board;

depreciation;

acquisition-related

items consisting of amortization expense and impairment expense;

on debt discount.

believe this measure is useful for analysts and investors as this measure allows a more meaningful year-to-year comparison of our performance.

Moreover, our management uses this measure internally to evaluate the performance of our business as a whole.

The above items are excluded

from adjusted EBITDA measure because these items are non-cash in nature, and we believe that by excluding these items, adjusted EBITDA

corresponds more closely to the cash operating income/loss generated from our business.

Adjusted EBITDA has certain limitations in that

it does not take into account the impact to our statement of operations of certain expenses.

EBITDA (used as described above) for the year ended December 31, 2021 was a loss of $7.0 million, compared to a loss of $7.0 million

for the year ended December 31, 2020.

following is a reconciliation of loss before tax - continuing operations, the most directly comparable GAAP measure, to adjusted EBITDA:

For the Year Ended December 31,

Loss before tax

$ (12,000,237 )

The non-GAAP financial information is provided to enhance the reader's understanding of the Company's financial performance, but non-GAAP measures should not be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP.

All of the items included in the reconciliation from net loss to EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation, etc.) or (ii) items that management does not consider to be useful in assessing the Company's ongoing operating performance (e.g., M&A costs, income taxes, gain on sale of investments, loss on disposal of assets, etc.).

In the case of the non-cash items, management believes that investors can better assess the Company's operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect the Company's ability to generate free cash flow or invest in its business.

We use, and we believe investors benefit from the presentation of, EBITDA and Adjusted EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations.

We believe that EBITDA is useful to investors and other external users of our financial statements in evaluating our operating performance because EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, and depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired.

Because not all companies use identical calculations, the Company's presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies.

However, these measures can still be useful in evaluating the Company's performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures.

A reconciliation of net loss before taxes to EBITDA and Adjusted EBITDA is as follows:

Year Ended December 31,

($ in thousands) 2022 2021

Net loss before tax plus:

$ (8,125) $ (12,000)

Adjusted for:

Depreciation expense 38 48

Amortization expense 1,558 1,591

Amortization of debt discount 1,199 578

Other interest expense 13 90

Interest expense - Centre Lane Senior Secured Credit Facility and Convertible Promissory Notes- related party 3,051 1,600

EBITDA (2,266) (8,093)

Stock compensation expense 233 488

Nonrecurring professional fees 657 1,766

Gain on forgiveness of PPP loan (1,137) (2,172)

Bad debt expense

Professional fees

Share-based compensation (a)

Depreciation and amortization (b)

Acquisition related expenses (c)

Capital raise expenses (d)

Impairment expense (e)

Interest expense, net (f)

Oceanside seller note expense (g)

Adjusted EBITDA from continuing operations

$ (7,031,112 )

$ (7,010,795 )

options and restricted stock awards were granted to employees and independent directors of the Company.

depreciation, amortization of intangibles and amortization of the debt discount.

expenses were incurred for the Wild Sky acquisition in 2020

Company incurred expenses in connection with raising capital from third parties in order to continue funding the Company.

Company recorded impairment charges related to goodwill and other intangibles in 2020 driven by the COVID-19 pandemic.

interest expense to related parties of $1,944,794 and 58,807 in 2021 and 2020, respectively.

Oceanside seller note compensation expense of $625,000.

This is a one-time, nonrecurring expense related to the Oceanside acceleration

of the seller note accounting treatment.

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.

Company has sustained a net loss of $12.0 million, used cash outflows from of $5.9 million for the year ended December 31, 2021, and

has an accumulated deficit of $106.1 million at December 31, 2021 that raise substantial doubt about its ability to continue as a going

consider liquidity in terms of cash flows from operations and their sufficiency to fund business operations, including working capital

needs, debt service, acquisitions, contractual obligations, and other commitments.

In particular, to meet our payment service obligations

at all times, we must have sufficient highly liquid assets and be able to move funds on a timely basis.

principal sources of liquidity are our borrowing on our debt facilities along with capital raised through sale of our securities, supplemented

with cash generated by operating activities.

Our primary cash needs are for day to day operations, to pay interest and principal on our

indebtedness, to fund working capital requirements and complete business acquisitions.

of December 31, 2021, we had a balance of cash and cash equivalents of $781 thousand and negative working capital of $17.8 million as

compared to cash and cash equivalents of $736 thousand and negative working capital of $7.9 million as of December 31, 2020.

is in discussions with various vendors to settle balances due for common stock and/or common stock warrants as opposed to cash.

current assets decreased approximately $2.9 million or 35% as of December 31, 2021 from December 31, 2020 which reflects the substantial

decrease in our accounts receivable.

Our current liabilities increased approximately $7.0 million as of December 31, 2021 from December

31, 2020 which primarily reflects an increase in the current portion of long-term debt.

2020 we raised an additional $3,577,698 in net proceeds through the sale of our securities via a private placement memorandum which includes

one share and one stock warrant.

We issued 10,398,700 shares and 10,398,700 warrants in the transactions.

2021, the Company entered into an amendment to their existing Credit Agreement with Centre Lane Partners to provide an additional $5.1

million of funding and liquidity.

Pursuant to the terms of the Credit Agreement, the term loan is due and payable on or before June 30,

For the Year Ended December 31,

Net cash used in operating activities

$ (5,927,418 )

$ (6,508,935 )

Net cash (used in) provided by investing activities

Net cash provided by financing activities

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

Net increase (decrease) in cash and cash equivalents

cash used in operating activities totaled $5.9 million and $6.5 million for 2021 and 2020, respectively.

The decrease in cash used of

$0.6 million is a result of an increase of $6.9 million of changes in working capital and a reduction of $6.3 million of cash generated

by our operating results for the year ended December 31, 2021, which were positively impacted by the growth of the business and acquisitions

during the year.

Net cash used in investing activities

totaled $237 in 2021 as a result of the purchase of property and equipment.

Net cash provided by investing activities totaled

$1.6 million in 2020 solely related to cash acquired as part of the Wild Sky Media acquisition.

cash provided by financing activities totaled $6.0 million and $4.6 million for 2021 and 2020, respectively.

Financing activities in

2021 were mainly cash provided debt financing of $5.1 million and proceeds from the PPP loan of $1.1 million, offset by repayments of

debt of $285 thousand.

Financing activities in 2020 were mainly cash provided from the sale of our securities, net of repayments of debt

obligations and the payable of cash dividends on our Series A, E and F convertible preferred stock to related parties.

balance sheet arrangements

do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial

condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources

that are material to investors.

accounting policies

preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management

to make estimates and assumptions about future events that affect the amounts reported in our consolidated financial statements and related

notes, as well as the related disclosure of contingent assets and liabilities at the date of the financial statements.

Management evaluates

its accounting policies, estimates and judgments on an on-going basis.

Management bases its estimates and judgments on historical experience

and various other factors that are believed to be reasonable under the circumstances.

Actual results may differ from these estimates

under different assumptions and conditions.

Our significant accounting policies are discussed in Part II, Item 8, Financial Statements

and Supplementary Data, Note 3, “Summary of Significant Accounting Policies.”

accounting policies are those policies that management believes are very important to the portrayal of our financial position and results

of operations, and that require management to make estimates that are difficult, subjective or otherwise complex.

Based on these criteria,

management has identified the following critical accounting policies:

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, our 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.

Company has one revenue stream generated directly from publishing advertisements, whether on our 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 are as follows:

revenues are generated by users “clicking” on or seeing website advertisements utilizing several ad networks partners.

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.

receivable represent receivables from customers in the ordinary course of business.

These are recorded at invoiced amounts 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

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.

policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net

Once collection efforts by the Company and its collection agency are exhausted, the determination for charging off uncollectible

receivables is made.

Net and Intangible Assets, Net

and Intangible assets result primarily from acquisitions.

Non-restructuring severance expense 50 333

Adjusted EBITDA $ (2,463) $ (7,678)

Critical Accounting Policies

Critical Accounting Estimates

The preparation of financial statements in conformity with Generally Accepted Accounting Principles ("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.

Critical accounting policies are those policies that management believes are very important to the portrayal of our financial position and results of operations, and that require management to make estimates that are difficult, subjective or otherwise complex.

Based on these criteria, management has identified the following critical accounting policies:

Revenue Recognition

The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification No.

606, Revenue from Contracts with Customers, (ASC 606) .

The Company recognizes 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 ASC 606, the Company performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract;

and (v) recognize revenue when (or as) the Company satisfies a performance obligation.

The Company only applies the five-step model to contracts when it is probable that 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 ASC 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 primarily from delivering digital advertisements on its owned and operated publishing websites, as well as advertising on partner websites, mobile apps and digital streaming services such as CTV (Connected Television) channels.

Advertising revenues are generated by audiences seeing or clicking on digital advertisements utilizing several advertiser partners.

Revenues are recognized net of adjustments based on the number of advertisements delivered and are billed monthly.

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.

Deferred Revenue

The Company records deferred revenue when cash payments are received in advance of performance obligations.

The Company expects to recognize the deferred revenue in the following period when it transfers its services and, therefore, satisfies its performance obligation to the customers.

We determine whether an arrangement contains a lease at inception in accordance with FASB Accounting Standards Codification No.

842, Leases, (ASC 842) .

Operating leases are included in operating lease right-of-use (“ROU”) assets and operating lease right-of-use (“ROU”) liability on our consolidated balance sheets.

ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date.

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

We do not include options to extend or terminate the lease term unless it is reasonably certain that we will exercise any such options.

We recognize rent expense under our operating leases on a straight-line basis.

Variable lease costs such as operating costs and property taxes are expensed as incurred.

Accounts Receivable and Allowance for Doubtful Accounts

Accounts receivable represent receivables from customers in the ordinary course of business and are recorded in accordance with FASB Accounting Standards Codification No.

310, Receivables, (ASC 310) .

Receivables are recorded at the invoice amount on the date revenue is recognized and are presented net of the allowance for doubtful accounts in the accompanying consolidated balance sheets.

Receivables are subjected to adjustments from traffic settlements that are deducted from open invoices.

Our receivables are not interest bearing and not collateralized.

The allowance for doubtful accounts is based on our assessment of the collectability of customer accounts.

We regularly review our receivables that remain outstanding past their applicable payment terms and establish an allowance for potential write-offs by considering factors such as historical experience, credit quality, age of the accounts receivable balances, and current and forecasted economic conditions that may affect a customer’s ability to pay.

The 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 is exhausted, the determination for charging off uncollectible receivables is made.

Property and Equipment, Net

Property and equipment are recorded at cost, less accumulated depreciation in accordance with FASB Accounting Standards Codification No.

360, Property, Plant and Equipment, (ASC 360) .

Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets.

Leasehold improvements are amortized over the lesser of the lease term or the useful life of the improvements.

We account for Goodwill under FASB Accounting Standards Codification No.

350, Goodwill and Other, (ASC 350).

Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination.

The Company categorizes Goodwill into two reporting units:

Operated” and “Ad Network”.

Intangible assets include trade name, customer relationships, IP/technology and non-compete

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.

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

“Owned & Operated” and “Ad Network”.

Goodwill is tested for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, which are determined through a qualitative assessment.

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 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 September 30.

Company’s trade name, customer relationships and IP/technology are amortized on a straight-line basis over a useful life of 5 years.

Non-compete agreements are amortized on a straight-line basis over the length of each agreement, typically between 3-5 years.

reviews for impairment indicators of finite-lived intangibles and other long-lived assets as described below in “Amortization and

Impairment of Long-Lived Assets.”

and Impairment of Long-Lived Assets

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.

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.

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.

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.

To the extent the carrying amount exceeds its fair value, an impairment charge of the reporting unit’s goodwill would be necessary.

We perform our annual goodwill impairment test as of December 31, 2022 and 2021, we determined there were no events or circumstances which indicated that the carrying value of a reporting unit exceeded the fair value.

Intangible Assets

We account for intangibles under FASB Accounting Standards Codification No.

350, Goodwill and Other, (ASC 350).

Intangible assets acquired in a business combination, or an asset acquisition are recorded at fair value on the date of acquisition and amortized over their estimated useful lives.

Intangible assets include trade name, customer relationships, IP/technology and non-compete agreements.

The Company’s trade name and customer relationships are amortized on a straight-line basis over a useful life of five years.

IP/technology is amortized on a straight-line basis over a useful life of ten years.

Non-compete agreements are amortized on a straight-line basis over the length of each agreement, typically between three to five years.

The Company reviews for impairment indicators of finite-lived intangibles and other long-lived assets as described below in “Amortization and Impairment of Long-Lived Assets.”

Amortization and Impairment of Long-Lived Assets

Long-lived assets, such as property, equipment, right-of-use assets, and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted future net cash flows expected to be generated by the asset.

If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset.

For long-lived assets held for sale, assets are written down to fair value, less cost to sell.

Fair value is determined based on discounted cash flows, appraised values or management’s estimates, depending upon the nature of the assets.

There were no impairment losses related to long-lived assets in any of the periods presented.

Cost of Revenue

Cost of revenue includes payment to third parties for services performed to drive revenue, including revenue share paid for ad exchange on third party sites, advertising fees, and fees paid for content creation, freelancers, writers and sales commissions.

Website Development Costs

The Company accounts for its website development costs in accordance with FASB Accounting Standards Codification No.

350, Website Development Costs (ASC 350) .

These costs, if any, are included in intangible assets in the

accompanying consolidated balance sheets.

Upgrades or enhancements that add functionality are capitalized while other costs during the operating stage are expensed as incurred.

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

As of December 31, 2022, and 2021, 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.

Stock-Based Compensation

We account for stock based compensation in accordance with FASB Accounting Standards Codification No.

718, Compensation - Stock Compensation (ASC 718) .

ASC 718 addresses accounting for share-based awards, including stock options, restricted stock, performance shares and warrant.

Stock-based compensation for stock options to employees and non-employees is based upon the fair value of the award on the date of grant.

We record forfeitures as they occur.

The compensation cost is recognized over the requisite service period, which is generally the vesting period, and is included in general and administrative expenses in the consolidated statements of operations.

The Company estimates the fair value of stock options using the Black-Scholes valuation model.

The expected life represents the term the options granted are expected to be outstanding.

The expected volatility was determined using the historical volatility of similar publicly traded companies.

The risk-free interest rate is based on the U.S.

Treasury rate in effect at the time of grant.

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

Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws in the period those differences are expected to reverse.

A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized.

The Company follows the provisions of FASB Accounting Standards Codification No.

740, Income Taxes (ASC 740).

When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained.

In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any.

Tax positions taken are not offset or aggregated with other positions.

Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more

than 50 percent likely of being realized upon settlement with the applicable taxing authority.

The portion of the benefits associated

with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax

benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the

taxing authorities upon examination.

Interest and penalties associated with unrecognized tax expenses are recognized as tax expenses

in the Statement of Operations.

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 and comprehensive loss.

Segment Reporting

Consistent with FASB Accounting Standards Codification No.

280, Segment Reporting (ASC 280), our Chief Financial Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance.

There are no segment managers who are held accountable by the Chief Financial Officer, or anyone else, for operations, operating results and planning for levels or components below the consolidated unit level.

Accordingly, we determined we have one operating and reportable segment.

Off Balance Sheet Arrangements

As of December 31, 2022, there were no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.

Foreign Currency

We translate the financial statements of our foreign subsidiaries, which have a functional currency in the respective country’s local currency, to U.S.

dollars using month-end exchange rates for assets and liabilities and actual exchange rates for revenue, costs and expenses on the date of the transaction.

Translation gains and losses are included within “general and administrative expense” on the consolidated statements of operations.

These gains and losses are immaterial to the financial statements.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

applicable for a smaller reporting company.

As a smaller reporting company as defined in Rule 12b-2 of the Exchange Act, we are not required to include information otherwise required by this Item 7A to Form 10-K.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis