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Item 9A. Controls and Procedures

2024-04-01 compared with 2023-03-29 · 1158 added, 637 removed, 876 unchanged (67% of the section changed)

2 unchanged sentences

The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2023.

Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the period ended December 31, 2022, due to the existence of the material weaknesses in the Company’s internal control over financial reporting described below, the Company’s disclosure controls and procedures were not effective.

Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the period ended December 31, 2023, our disclosure controls and procedures are adequate to provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.

Management's Annual Report on Internal Control over Financial Reporting

2 unchanged sentences

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We continue to review our internal control over financial reporting and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").

Based upon this assessment, because of the effect of the material

weaknesses described below, management has concluded that the Company’s internal control over financial reporting was not effective as of December 31, 2022.

As set forth below, management will take steps to remediate the material weaknesses identified below.

Notwithstanding the material weaknesses described below, we have performed additional analyses and other procedures to enable management to conclude that our consolidated financial statements included in this Form 10-K fairly present, in all material respects, our financial condition and results of operations as of and for the year ended December 31, 2022.

As the Company integrates the operations acquired through the Big Village Acquisition, there is a risk of identifying deficiencies in our overall internal controls.

Our focus is on implementing and maintaining effective financial management systems and internal controls, an ongoing process.

However, given that all such controls are not yet fully operational, management has concluded that a material weakness exists in the Company’s internal controls over financial reporting, rendering them ineffective at December 31, 2023.

Notwithstanding the material weaknesses described below, we have performed additional analyses and other procedures to enable management to conclude that our consolidated financial statements included in this Form 10-K fairly represent, in all material respects, our financial condition and results of operations as of and for the year ended December 31, 2023.

Outlined below are the material weaknesses identified by management, along with the remedial actions planned.

Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal controls 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.

As of December 31, 2022, management identified the material weakness described below:

As of December 31, 2023, management identified certain material weaknesses.

As the Company continues to integrate the operations assumed as part of the Big Village Acquisition, we have identified deficiencies in our overall internal controls, specifically as identified below:

• Inadequate controls related to revenue recognition, cost of revenue, and the accounts payable and accrual process

leading to potential omission or misstatement of material transactions impacting financial statements;

• Ineffectiveness of the Company’s information technology systems and controls concerning financial information.

To address these weaknesses, the Company has initiated a remediation plan comprising the following measures:

• Updating the information technology general controls ("ITGC") risk assessment to incorporate operations from the Big Village Acquisition;

• Examination of information technology systems to ascertain necessary updates to support the financial reporting process;

• Collaboration with a third-party company to ensure SOX compliance, establish and document controls related to revenue recognition, accounts payable, and other processes to enhance internal controls over financial reporting;

• Expansion of our finance department through the hiring of certified public accountants with prior auditing experience, knowledge of SEC filings and technical issues.

In the year ended December 31, 2023, two additional certified public accountants were onboarded, tasked with month end close oversights and SEC reporting.

We believe this will strengthen our finance department as we work towards strong internal controls and provide guidance beyond the finance functions for those we rely on to provide information to support our financial reporting process.

We will continue to monitor and evaluate the effectiveness of our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary.

Management had previously identified the following material weaknesses, which caused management to conclude that as of December 31, 2022 our internal controls over financial reporting were not effective at the reasonable assurance level:

In conducting an analysis of the Centre Lane Senior Secured Credit Facility, errors were identified in connection with the accounting related to Amendments No.

8 – 15 of the Centre Lane Senior Secured Credit Facility, which resulted in the understatement of interest payable and interest expense for each of the interim quarterly periods ended June 30, 2022, and September 30, 2022 and the year-to-date 2022 period.

The Company has initiated a remediation plan to enhance controls relating to the accounting of its debt arrangements that includes the following:

• Internal interest calculations are to be prepared and compared to the model provided by the external evaluators, along with outstanding principal and carrying value;

• Quarterly statements are to be received from Centre Lane where the balances will be compared to internal schedules;

• Monthly journal entries for interest expense and supporting documentation will be reviewed by an individual independent of its preparation as part of the month end close;

• Monthly reconciliations will be performed to support the month end close, which will be reviewed and evidenced by both preparer’s and reviewer’s signature to demonstrate independence and accountability.

Management had previously identified the following material weaknesses, which caused management to conclude that as of December 31, 2021 our internal controls over financial reporting 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.

The Company has implemented a remediation plan to remediate the material weaknesses identified during the year ended December 31, 2021 as follows:

• We have hired a new Chief Financial Officer with extensive knowledge of implementing procedures to remediate material weaknesses in companies.

• We have expanded our finance department through the hiring of a certified public accountant with previous experience as an auditor and knowledge of SEC filings and technical issues.

We believe this will strengthen our finance department as we work towards segregation of duties, strong internal controls and provide guidance to enhance our current staff.

Management will further expand the accounting and finance function by hiring additional staff to ensure segregation of duties is enforced.

• We no longer rely on a third party consultant to prepare our SEC filings, and this is now being done internally.

• We have engaged a third party company to assist the Company with SOX compliance.

• As of our filing date, we are in the process of completing our information technology general controls ("ITGC") risk assessment and moving forward to document and implement controls over the revenue process.

During the year ended December 31, 2023, the Company implemented its remediation plan to enhance controls relating to the accounting of its debt arrangements that includes the following:

• Internal interest calculations are prepared and compared to the model provided by the external evaluators, along with outstanding principal and carrying value;

• Quarterly statements are being received from Centre Lane Partners where the balances are compared to internal schedules;

• Monthly journal entries for interest expense and supporting documentation are being reviewed by an individual independent of its preparation as part of the month end close;

• Monthly reconciliations are being performed to support the month end close, which are being reviewed and evidenced by both preparer’s and reviewer’s signature to demonstrate independence and accountability.

Due to the measures implemented to enhance controls relating to the accounting of the Company's debt as described above, at December 31, 2023, management concluded that such weakness did not exist at December 31, 2023.

This Annual Report on Form 10-K does not include an attestation report of the Company’s registered independent public accounting firm on management’s assessment regarding internal controls over financial reporting due to the exemption from such requirements established by rules of the SEC for smaller reporting companies.

8 unchanged sentences

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The information required by Item 10 of Part III of Form 10-K will be set forth in our definitive proxy statement for our 2023 Annual Meeting of Shareholders, to be filed with the SEC within 120 days of December 31, 2022, and is incorporated herein by reference.

Our Board currently consists of four members.

Each director is elected at our annual meeting of shareholders and holds office until the next annual meeting of shareholders, or until his or her successor is elected and qualified.

If any director resigns, dies or is otherwise unable to serve out his or her term, or if the board increases the number of directors, the board may fill any vacancy by a vote of a majority of the directors then in office.

A director elected to fill a vacancy shall serve for the unexpired term of his or her predecessor.

The following table sets forth the names, ages and positions of our directors:

75 Chairman of the Board of Directors

Matthew Drinkwater

50 Director and Chief Executive Officer

Kip Speyer has been our Chairman of the Board since May 2010.

Speyer also served as our Chief Executive Officer from May 2010 to December 2021.

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 was a private investor.

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) which was a combination of ISSI and Howtek, Inc.

Speyer was the president and chief executive officer of Galileo Corporation (NASDAQ:

GAEO) from 1998 to 1999.

Galileo Corporation changed its name to NetOptix (NASDAQ:

OPTX) and was merged with Corning Corporation (NYSE:

GLW) 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.

Speyer is a graduate of Northeastern University, Boston, Massachusetts, where he earned a Bachelor of Science Degree in Business Administration in 1972.

Kip Speyer is active in many local charities and is the father of Mr.

Speyer, our Senior Vice President of Revenue Operations and previously a member of our Board through March 31, 2023.

We believe that Mr.

Speyer possesses attributes that qualify him to serve as a member of our Board, including his extensive experience as the chief executive officer and/or chairman of the board of directors of other public companies.

Matthew Drinkwater has been a member of our Board since January 2022 and was appointed Chief Executive Officer in December 2021.

Drinkwater has an extensive track record of adding value to the companies he has worked for over his professional career in several key senior executive and sales roles at companies such as Buzzfeed Inc.

BZFD), Twitter Inc., Groupon Inc.

GRPN), Yahoo and America Online (AOL).

Drinkwater is a digital executive with extensive, progressively advancing leadership experience at iconic high tech brands.

Drinkwater was a member of Revenue Collective, a private organization for commercial growth operators, from 2020 to 2021.

Drinkwater served as the Senior Vice President, International from 2017 to 2019 and General Manager, International from 2019 to 2020 for BuzzFeed Inc.

He also was in Agency Development and Global Accounts at Twitter from 2015 to 2017 and head of Twitter’s Global Online Sales in San Paolo, Brazil from 2013 to 2015.

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.

Drinkwater holds a B.A.

in Economics from College of the Holy Cross.

We believe that Mr.

Drinkwater possesses attributes that qualify him to serve as a member of our Board, including his experience serving in key management roles at public companies and extensive knowledge of the tech industry.

Schulman has been a member of our Board since November 2019.

Schulman has been President of HDS Consulting LLC since 2008.

Prior to this role, Mr.

Schulman was an Operating Partner for Baird Capital Partners, a private equity firm managing over $3 billion in assets, assisting in creating sector strategy and finding executive leadership.

Schulman also formerly served as President and Chief Executive Officer of Applica Incorporated, a public company and distributor of small household appliances.

For more than 20 years, Mr.

Schulman has served on multiple boards including Baird Capital Partners, Hancock Fabrics, Inc., O2 Media, Inc., Q.E.P Co., Inc.

and HeZhong International Holdings.

Schulman 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.

We believe that Mr.

Schulman possesses attributes that qualify him to serve as a member of our Board, including his extensive experience serving on the boards of multiple companies.

Jeff Hirsch has been a member of our Board since August 2023.

Hirsch has over 25 years in technology, business, and sales organization development, brand strategy, and investor relations.

Since April 2023, he has served as a consultant and as the Managing Partner of Aperiam, a firm that invests in ad tech.

From July 2016 to April 2023, he held various leadership roles at PubMatic (NASDAQ:

PUBM), a digital marketing company, including serving as Chief Commercial Officer from 2019 until April 2023.

He also held prior executive roles as President of CPXi (now Digital Remedy), Chief Executive Officer of AudienceScience, Chief Marketing Officer of SundaySky, SVP of ValueClick, and was a founder and Chief Revenue Officer of Fastclick (NASDAQ:

Hirsch graduated from the University of California Santa Barbara with a B.A.

in Experimental Psychology.

We believe that Mr.

Hirsch possesses attributes that qualify him to serve as a member of our Board, including his extensive experience in management, strategy, and investor relations in our industry.

Director Independence

Our Board has determined that Mr.

Schulman and Mr.

Hirsch qualify as “independent” directors within the meaning of the NYSE listing standards.

The NYSE independence definition includes a series of objective tests regarding a director’s independence and requires that the Board make an affirmative determination that a director has no relationship with us that would interfere with such director’s exercise of independent judgment in carrying out the responsibilities of a director.

There are currently no family relationships among any of our directors or executive officers.

Kip Speyer serves as Chairman of the Board and is the father of Mr.

Speyer, our Senior Vice President of Revenue Operations and previously a member of our Board through March 31, 2023.

Executive Officers

Below are the names, ages, and positions of our current executive officers:

Matthew Drinkwater

50 Chief Executive Officer and Director

49 Chief Financial Officer

The following is certain biographical information describing the business experience of Mr.

Rudin, who does not serve as a director.

The biography of Mr.

Drinkwater appears earlier in this section.

See “Directors” above.

Ethan Rudin has served as our Chief Financial Officer since October 2023.

Prior to joining us, Mr.

Rudin served as the Chief Financial Officer of Boundless Network, a private equity-backed promotional products distribution platform since November 2022.

Rudin previously served as the Chief Financial Officer of BuildDirect Technologies, an online building materials retailer, from January 2021 to September 2022.

Prior to joining BuildDirect Technologies, Mr.

Rudin served as the Chief Financial Officer of Greenlane Holdings Inc., a distribution platform for premium vaporization products, from February 2019 to August 2020.

Prior to joining Greenlane Holdings Inc., Mr.

Rudin served in various roles at Napster/Rhapsody International Inc., an online music streaming platform, from August 2013 to December 2017, including as a special advisor to the Chief Executive Officer and as the Chief Financial Officer, Global Head of Label Relations & Business Development.

Rudin earned his Bachelor of Arts in Economics from Tufts University in 1996 and his Masters of Business Administration from Columbia University Business School in 2022.

Code of Business Conduct and Ethics

In order to clearly set forth our commitment to conduct our operations in accordance with our high standards of business ethics and applicable laws and regulations, our Board adopted a Code of Business Conduct and Ethics (the “Code of Conduct”), which is applicable to all directors, officers and employees.

The Code of Conduct includes our insider

trading policies and procedures.

A copy of the Code of Conduct is available on our website under the Investor Relations tab at www.brightmountainmedia.com .

You may also obtain a printed copy of our Code of Conduct, without charge, by sending a written request to our principal offices at 6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487.

Amendments or waivers of the Code of Conduct will be provided on our website within four business days following the date of the amendment or waiver.

Audit Committee.

We have a separately designated standing audit committee of the Board (the “Audit Committee”) established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

The current members of the Audit Committee are Harry Schulman (chair) and Jeff Hirsch.

All members of the Audit Committee have been determined by the Board to be independent within the meaning of the NYSE corporate governance standards.

The Board has determined that Mr.

Schulman qualifies as an “audit committee financial expert,” as defined in Item 407 of Regulation S-K.

The Audit Committee assists the Board with fulfilling its oversight responsibility relating to:

• the integrity of the Company’s financial statements and financial reporting process;

• the Company’s systems of internal controls;

• the performance of the Company’s accounting function and independent auditors;

• the independent auditor’s qualifications and independence.

Delinquent Section 16(a) Reports

Section 16(a) of the Securities Exchange Act of 1934 requires that the Company’s directors, officers and persons who beneficially own 10% or more of the Company’s common stock file with the SEC initial reports of ownership and reports of changes in ownership of our stock and our other equity securities.

To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended December 31, 2023 and for prior fiscal years, all such filing requirements applicable to any person who served as a director, officer, or greater than 10% beneficial owner during the year ended December 31, 2023 were complied with except that the following persons are in the process of filing Form 3s and/or Form 4s to report (i) joining the Company as an executive officer or director, (ii) a grant of shares of common stock in connection with their services to the Board of Directors, or (iii) a grant of options to purchase shares of common stock in connection with their employment:

Kip Speyer, Mr.

Drinkwater, Ms.

Martinez, Mr.

Schulman, Mr.

Tibbits, and Mr.

EXECUTIVE COMPENSATION

The information required by Item 11 of Part III of Form 10-K will be set forth in our definitive proxy statement for our 2023 Annual Meeting of Shareholders, to be filed with the SEC within 120 days of December 31, 2022, and is incorporated herein by reference.

Our named executive officers for the fiscal year ended December 31, 2023 (the “named executive officers”) are:

• Matthew Drinkwater, Chief Executive Officer and Director;

• Ethan Rudin, Chief Financial Officer;

• Miriam Martinez, former Chief Financial Officer.

Summary Compensation Table

The following table summarizes the compensation paid to our named executive officers for the years ended December 31, 2023, and 2022.

Name and Principal Position Year Salary Bonus Option Awards (1)

Matt Drinkwater (2)

2023 317,500 62,679 * 380,179

Chief Executive Officer 2022 250,000 — * 250,000

Ethan Rudin (3)

2023 67,708 — * 67,708

Chief Financial Officer 2022 — — — —

Miriam Martinez (4)

2023 222,952 — — 222,952

Former Chief Financial Officer 2022 85,240 — * 85,240

* Indicates that the grant date fair value of the option grant was less than one dollar.

(1) The amounts included in the Option Awards column reflects the aggregate fair market value of stock options to purchase our common stock on the grant date pursuant to FASB ASC Topic 718.

All stock options set forth below were granted with an exercise price equal to the fair market value of the common stock on the date of the grant.

Drinkwater's annual base salary was increased to $400,000 effective June 1, 2023.

He agreed to a 10% reduction in his base salary between September 2023 and December 31, 2023, which was contemporaneous with temporary salary reductions for Wild Sky Media employees.

Rudin was appointed Chief Financial Officer effective October 18, 2023.

Martinez transitioned from Chief Financial Officer to Principal Financial Officer on October 18, 2023 for a period of 60 days and then went on a leave of absence.

On March 6, 2024, she ended her employment by the Company.

Outstanding Equity Awards at Fiscal Year End

The following table sets forth the outstanding equity awards held by our named executive officers as of December 31, 2023.

Option Awards

Number of Securities Underlying Unexercised Options Exercisable

Number of Securities Underlying Unexercised Options Unexercisable

Option Exercise Price (in $)

Option Expiration Date

Matthew Drinkwater 375,000 (1) 125,000 (1) $ 0.01 December 1, 2031

62,500 187,500 (2) $ 0.01 May 25, 2032

Ethan Rudin — 325,000 (3) $ 0.10 October 27, 2033

Miriam Martinez

112,500 112,500 (4) $ 0.20 August 14, 2032

(1) On December 1, 2021, Mr.

Drinkwater was granted options to purchase 500,000 shares of common stock.

These options (i) vested 25% on each of November 30, 2021, November 30, 2022, and November 30, 2023, and (ii) will vest 25% on November 30, 2024.

(2) On May 25, 2022, Mr.

Drinkwater was granted options to purchase 250,000 shares of common stock.

These options (i) vested 25% on May 25, 2023 and (ii) will vest 25% on each of May 25, 2024, May 25, 2025, and May 25, 2026.

(3) On October 27, 2023, Mr.

Rudin was granted options to purchase 325,000 shares of common stock.

These options will vest 25% on each of October 27, 2024, October 27, 2025, October 27, 2026, and October 27, 2027.

(4) On August 15, 2022, Ms.

Martinez was granted options to purchase 225,000 shares of common stock.

These options vested 25% on August 14, 2023.

The vesting for 25% of the unvested options was accelerated effective March 6, 2024 when she ended her employment.

Executive Employment Agreements and Other Arrangements

Matthew Drinkwater

Effective December 1, 2021, we entered into an Executive Employment Agreement with Matthew Drinkwater, our Chief Executive Officer.

His employment contract's term is for three years.

His annual base salary is $250,000, and he has a discretionary bonus target of $250,000 subject to the achievement of certain year-over-year revenue and EBITDA performance metrics, with half of the bonus tied to the achievement of each of these goals.

Additionally, Mr.

Drinkwater was granted 500,000 options to purchase an equal number of shares of the Company's common stock at $0.01 per share.

Drinkwater is terminated without cause, he is entitled to severance equal to his base salary for the balance of the term of his contract.

Finally, following Mr.

Drinkwater's termination from the Company for any reason, he will be subject to a customary non-solicitation covenant for two years.

On October 4, 2023, we entered into an Executive Employment Agreement with Ethan Rudin, our Chief Financial Officer.

Pursuant to his employment contract, his annual base salary is $325,000, and he has a discretionary bonus target equivalent to 25% of his base salary subject to the achievement of certain performance metrics.

In addition to his base salary and bonus, Mr.

Rudin is eligible to participate in all of the Company's benefit plans offered from time to time, subject to satisfying eligibility requirements.

Additionally, Mr.

Rudin was granted options to purchase 325,000 shares of

the Company's common stock with an exercise price equal to the fair market value of our common stock on the date of grant.

Rudin is terminated without cause, subject to complying with certain conditions, he is entitled to severance equal to his annual salary payable in six equal monthly installments.

Pursuant to the terms of the employment agreement, Mr.

Rudin is bound by customary non-competition and non-solicitation covenants during his period of employment and for a period of one year after the date his employment with the Company terminates.

Director Compensation Table

On August 15, 2023, our Board of Directors adopted a new compensation policy for the directors of the board.

Under the terms of the director compensation policy, directors will receive quarterly cash compensation of $10,000 for service as a director and additional cash compensation of $5,000 for service as chair of the board or of one or more of the Board's committees.

The cash compensation payments are effective April 1, 2023 with payments commencing in October 2023.

The director compensation policy, which was clarified on March 22, 2023, provides 100,000 shares of common stock per year for independent directors on a pro-rata basis for 2023 based on an individual's start date.

Commencing January 1, 2024, directors will receive options to purchase 100,000 shares of our common stock at an exercise price equal to the fair market value of our common stock on the first business day of the year.

Such options will vest in full on December 31 of the same year.

Additionally, the Company reimburses each director for fees, travel, and expenses related to their attendance of Board and Committee meetings, if and when incurred, and for income taxes incurred on their respective stock grants.

The following table summarizes the compensation earned by our directors for their services as members of our Board for the year ended December 31, 2023.

The information in the following table excludes any reimbursement of out-of-pocket travel and lodging expenses which we may have paid.

Fees Earned in Cash

Awards ($) (1)

All Other Compensation ($) (8)

Kip Speyer (2)

$ 45,000 $ — $ 62,500 $ 107,500

Pamela Parizek (3)

45,000 6,000 1,800 52,800

Gretchen Tibbits (5)

— 2,482 745 3,227

Todd Speyer (6)

— 15,000 175,000 190,000

Jeff Hirsch (7)

15,000 2,285 686 17,971

(1) The stock awards column represents the aggregate grant date fair value of awards earned during the calendar year determined pursuant to FASB ASC Topic 718.

Kip Speyer is not an independent director of our board and while he will receive cash compensation of $45,000 for services provided for the period between April 1, 2023 through December 31, 2023, he will not receive any stock compensation for services provided in the year ended December 31, 2023.

Parizek resigned from the Board of Directors effective January 18, 2024.

The stock awards column for Ms.

Parizek represents 100,000 shares of Company common stock granted for services provided in the year ended December 31, 2023.

(4) The stock awards column for Mr.

Schulman represents 100,000 shares of common stock granted for services provided in the year ended December 31, 2023.

Tibbits resigned from the Board of Directors effective June 1, 2023.

Tibbits will not receive cash compensation for her service on the board as her resignation predates the changes in our compensation policy which allows for such compensation.

The stock awards column for Ms.

Tibbits represents 41,370 shares of common stock granted for services provided for the period from January 1, 2023 through May 31, 2023.

Todd Speyer resigned as a director effective March 31, 2023 and continues to be employed by the Company.

The stock awards column for Mr.

Todd Speyer represents 100,000 shares of common stock granted in connection with his resignation from the board on March 31, 2023.

Todd Speyer will not be reimbursed for income taxes incurred on his stock grant as his resignation predates the change in our compensation policy which allows for cash reimbursement.

Hirsch was appointed a member of the Board of Directors effective August 15, 2023.

The stock awards column for Mr.

Hirsch represents 38,082 shares of common stock granted for services provided for the period from August 15, 2023 through December 31, 2023.

(8) All other compensation represents (i) amounts paid to each director who received shares of the Company's common stock as 2023 director compensation to compensate such director for income taxes due with respect to the value of such stock;

and (ii) salary paid to each of Mr.

Kip Speyer and to Mr.

Todd Speyer earned during 2023 in the amount of $62,500 and $175,000, respectively.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The information required by Item 12 of Part III of Form 10-K will be set forth in our definitive proxy statement for our 2023 Annual Meeting of Shareholders, to be filed with the SEC within 120 days of December 31, 2022, and is incorporated herein by reference.

Securities Authorized for Issuance Under Equity Compensation Plan

The following table provides information as of December 31, 2023 with respect to all of our compensation plans under which equity securities are authorized for issuance:

Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights

Weighted Average Exercise Price of Outstanding Options, Warrants and Rights (1)

Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))

Plan Category

Equity compensation plans approved by shareholders

Equity compensation plans not approved by shareholders (2)

0.12 11,771,640

(1) This number reflects the weighted-average exercise price of outstanding options and has been calculated exclusive of outstanding restricted stock unit awards issued under our Stock Option Plan.

(2) The below shows Stock Option Plans not approved by stockholders under which grants remain outstanding.

Stock Option Plan Outstanding Options

2013 Stock Option Plan

215,000 No further grants can be made under this plan

2015 Stock Option Plan

266,000 No further grants can be made under this plan

2019 Stock Option Plan

633,227 No further grants can be made under this plan

2022 Stock Option Plan

9,614,133 Current plan

2022 Stock Option Plan

On April 14, 2022, the Board of Directors of the Company and the Compensation Committee of the Board adopted and approved the 2022 Bright Mountain Media Stock Option Plan (the “Stock Option Plan”).

The Stock Option Plan provides for the grant of awards to eligible employees, directors and consultants in the form of stock options.

The purpose of the Stock Option Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success.

The Stock Option Plan has a term of 10 years and

authorizes the issuance of up to 22,500,000 shares of the Company’s common stock.

As of December 31, 2023, 11,771,640 shares were remaining under the Stock Option Plan for the future issuance.

Security Ownership of Certain Beneficial Owners and Management

Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities.

In accordance with the SEC rules, shares of our common stock that may be acquired upon exercise or vesting of equity awards within 60 days of the date of the table below are deemed beneficially owned by the holders of such options and are deemed outstanding for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage of ownership of any other person.

As of March 29, 2024, 172,382,586 shares of our common stock were issued and 171,557,411 shares were outstanding.

The following table sets forth information with respect to the beneficial ownership of our common stock as of March 29, 2024, by (i) each of our directors and named executive officers, (ii) all of our directors and executive officers as a group, and (iii) each shareholder known by us to be the beneficial owner of more than 5% of our common stock.

To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of common stock beneficially owned by such person, except to the extent such power may be shared with a spouse.

To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted.

To our knowledge, there is no arrangement, including any pledge by any person of our securities or any of our parents, the operation of which may at a subsequent date result in a change in control of our company.

Unless otherwise noted below, the address of each person listed on the table is c/o Bright Mountain Media, Inc., 6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487.

Name and Address of Beneficial Owner (1)

Amount and Nature of Beneficial Ownership

Percentage of Outstanding Common Stock Owned (2)

Matthew Drinkwater (3)

Ethan Rudin — *

Miriam Martinez (3)

Kip Speyer (4)

31,393,157 18.3 %

Harry Schulman (5)

All executive officers and directors as a group (6 persons) (6)

32,178,157 18.7 %

Beneficial Ownership of 5% or more:

Kip Speyer (4)

31,393,157 18.3 %

10th Lane Partners, LP (7)

36,551,993 21.3 %

Centre Lane Partners Master Credit Fund II, LP (8)

15,150,000 8.8 %

BV Agency, LLC (9)

21,401,993 12.5 %

Andrew Handwerker (10)

9,060,388 5.3 %

* Represents beneficial ownership of less than 1%.

(1) Except as otherwise indicated, the address of each beneficial owner is c/o Bright Mountain Media, Inc.

6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487.

(2) The percentage of beneficial ownership of the Company is calculated based on 171,557,411 shares of common stock issued and outstanding as of March 29, 2024.

(3) Represents shares underlying exercisable options to purchase shares of common stock.

(4) Includes 62,500 shares underlying exercisable options to purchase common stock.

The amount for Mr.

Kip Speyer excludes 200,000 shares that could have been issued in connection with the conversion of $80,000 of convertible notes, which have matured and remain outstanding but are no longer convertible.

(5) Includes 7,500 shares underlying exercisable options to purchases shares of common stock.

(6) Includes 682,500 shares underlying exercisable options to purchase shares of common stock.

(7) Based on a Schedule 13G/A filed on May 10, 2023 by 10th Lane Partners, LP and Centre Lane Partners Master Credit Fund II, L.P., consists of 21,401,993 shares held of record by BV Agency, LLC and 15,150,000 shared held of record by Centre Lane Partners Master Credit Fund II, LP.

10th Lane Partners, LP is the Investment Adviser for these funds and has sole voting and dispositive power of these shares.

The address for 10th Lane Partners, LP is 60 East 42nd Street, Suite 2220, New York, New York 10165.

(8) Based on a Schedule 13G/A filed on May 10, 2023 by 10th Lane Partners, LP and Centre Lane Partners Master Credit Fund II, L.P., Centre Lane Partners Master Credit Fund II LP is the record holder of 15,150,000 shares but disclaims ownership of these shares as 10th Lane Partners LP is the Investment Adviser for this fund and has sole voting and dispositive power of these shares.

The address for 10th Lane Partners, LP is 60 East 42nd Street, Suite 2220, New York, New York 10165.

(9) Based on a Schedule 13G/A filed on May 10, 2023 by 10th Lane Partners, LP and Centre Lane Partners Master Credit Fund II, L.P., BV Agency, LLC is the record holder of 21,401,993 shares.

10th Lane Partners LP is the Investment Adviser for this fund and has sole voting and dispositive power of these shares.

The address for 10th Lane Partners, LP is 60 East 42nd Street, Suite 2220, New York, New York 10165.

Handwerker has sole voting and dispositive power with respect to 4,078,388 shares and shared voting and dispositive power with respect to 4,732,000 shares.

This information is based on a Schedule 13G/A filed on April 9, 2018, but has been adjusted to exclude 250,000 shares of underlying warrants that were exercisable at the time the Schedule 13G/A was filed but have since expired according to the Company's records.

The address for Andrew Handwerker is 4399 Pine Tree Drive, Boynton Beach, Florida 33436.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

The information required by Item 13 of Part III of Form 10-K will be set forth in our definitive proxy statement for our 2023 Annual Meeting of Shareholders, to be filed with the SEC within 120 days of December 31, 2022, and is incorporated herein by reference.

Related Party Transaction Policy

Under its written charter, the Audit Committee of our Board of Directors is responsible for reviewing and approving related party transactions (as defined in Item 404 of Regulation S-K).

Our management is responsible for bringing any such transaction to the attention of the Audit Committee.

In approving or rejecting any such transaction, the Audit Committee considers the relevant facts and circumstances, including the material terms of the transaction, risks, benefits, costs, availability of other comparable services or products and, if applicable, the impact on a director’s independence.

Preferred Stock Purchases

Cash dividends paid during the year ended December 31, 2023 and 2022 was $0 and $5,000, respectively.

At December 31, 2023, accrued unpaid preference dividends on the preferred stock were $691,000.

This amount is payable to Mr.

Kip Speyer, a director of the Company.

Convertible Notes

During November 2018, we issued and sold Mr.

Kip Speyer, a director of the Company, two five-year unsecured convertible notes in the aggregate principal amount of $80,000.

These notes, which were convertible at the option of the holder at any time prior to maturity at a conversion price of $0.40 per share, matured in November 2023, but remain outstanding.

We used the proceeds from these notes for working capital.

The highest outstanding principal amount of the convertible notes held by Mr.

Kip Speyer was $80,000 during the year ended December 31, 2023.

Accrued interest owed to Mr.

Kip Speyer was $39,000 as of December 31, 2023.

Centre Lane Partners

Centre Lane Partners Master Credit Fund II, L.P.

("Centre Lane Partners"), who sold the Wild Sky business to the Company in June 2020 and beneficially owns more than 5% of the common stock of the Company, partnered and assisted the Company from a liquidity perspective during the year ended December 31, 2023.

This relationship has been determined to qualify as a related party.

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

Through December 31, 2023, the Company has entered into nineteen amendments to the Amended and Restated Senior Secured Credit Agreement between it and Centre Lane Partners (the “Credit Agreement”).

The highest total amount of related party debt including fees and interest paid in kind capitalized owed to Centre Lane Partners was $70.2 million at December 31, 2023.

Interest paid during the year was $425,000 in cash, and $6.7 million paid in kind.

Employment Matters

On February 8, 2023, the Company and Mr.

Kip Speyer memorialized Mr.

Kip Speyer’s continued service as Chairman of the Board of Directors.

Also, the Company and Mr.

Kip Speyer memorialized the expiration date for Mr.

Kip Speyer’s employment agreement with the Company as April 1, 2023.

See the Director Compensation table above for Mr.

Kip Speyer’s total compensation for the year ended December 31, 2023.

Speyer, who is the son of Mr.

Kip Speyer, our Chairman of the Board, is employed by the Company as Senior Vice President of Revenue Operations.

Speyer was previously a member of our Board through March 31, 2023.

We are not a party to an employment agreement with Mr.

His compensation was determined by the compensation committee, based upon industry norms.

Todd Speyer $175,000 for his services as an employee of the Company during the year ended December 31, 2023.

We did not pay Mr.

Todd Speyer any amounts for his services as a director during the year ended December 31, 2023.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The information required by Item 14 of Part III of Form 10-K will be set forth in our definitive proxy statement for our 2023 Annual Meeting of Shareholders, to be filed with the SEC within 120 days of December 31, 2022, and is incorporated herein by reference.

Principal Accountant Fees and Services

WithumSmith+Brown, PC ("Withum") has served as the Company's independent registered public accounting firm for the years ended December 31, 2023 and 2022.

The following table sets forth the fees for professional audit services and other services rendered by Withum for the years ended December 31, 2023 and 2022, respectively.

December 31, 2023 December 31, 2022

Audit Fees (1)

$ 790,261 $ 450,137

Audit-Related Fees (2)

32,319 48,854

All Other Fees (4)

$ 860,284 $ 499,886

(1) Audit Fees.

Audit Fees include fees of audits for our annual financial statements, reviews of the related quarterly financial statements, and services that are normally provided by the independent accountants in connection with statutory and regulatory filings or engagements, including reviews of documents filed with the SEC.

This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.

(2) Audit-Related Fees.

Audit Related Fees include assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements or acquisition audits and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission and other accounting consulting.

(3) Tax Fees.

Tax Fees consist of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice.

The services for the fees disclosed under this category include tax return preparation and technical tax advice.

The Company’s tax return for the year ended December 31, 2023 has not been completed as of the date of this filing.

(4) All Other Fees.

All Other Fees consist of fees for professional services or costs not otherwise reported in Audit Fees, Audit-Related Fees or Tax Fees.

No such fees were incurred during the years ended December 31, 2023 and 2022.

Policy for Approval of Audit and Permitted Non-Audit Services

Our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm.

Under the procedure, the Audit Committee of the Board approves the engagement letter with respect to audit, tax, and review services.

Other fees are subject to pre-approval by the Audit Committee.

The fees paid to the auditors with respect to 2023 and 2022 were pre-approved by the Audit Committee.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

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8-K 11/21/19 2.1

3.1 Amended and Restated Articles of Incorporation

10 1/31/13 3.3

3.2 Articles of Amendment to the Amended and Restated Articles of Incorporation

3.1 Amended and Restated Articles of Incorporation , filed March 11, 2013

3.2 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed July 9, 2013

8-K 7/9/13 3.3

3.3 Articles of Amendment to the Amended and Restated Articles of Incorporation

3.3 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed November 21, 2013

8-K 11/16/13 3.4

3.4 Articles of Amendment to the Amended and Restated Articles of Incorporation

3.4 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed December 27, 2013

8-K 12/30/13 3.4

3.5 Articles of Amendment to the Amended and Restated Articles of Incorporation

3.5 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed February 25, 2014

10-K 3/31/14 3.5

3.6 Articles of Amendment to the Amended and Restated Articles of Incorporation

3.6 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed July 10, 2014

8-K 7/28/14 3.6

3.7 Articles of Amendment to the Amended and Restated Articles of Incorporation

3.7 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed September 24, 2014

10-K/A 4/1/15 3.5

3.8 Articles of Amendment to the Amended and Restated Articles of Incorporation

3.8 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed March 20, 2015

3.9 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed October 27, 2015

8-K 12/4/15 3.7

3.9 Articles Amendment to the Amended and Restated Articles of Incorporation

3.10 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed September 16, 20 16

3.11 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed September 6, 2017

3.12 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed September 29, 2017

3.13 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed November 5, 2018

8-K 11/13/18 3.10

3.14 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed July 31, 2019

3.15 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed September 3, 2019

3.16 Articles of Amendment to the Amended and Restated Articles of Incorporation , filed December 23, 2019

3.17 Amended and Restated Bylaws

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10.2 201 5 Stock Option Plan

10-Q 11/13/13 10.18

10.3 2015 Stock Option Plan

8-K 5/27/15 10.36

5/27/15 10.36

10.3 201 9 Stock Option Plan

10-K 12/23/21 10.4

12/23/21 10.4

10.4 2022 Stock Option Plan

8-K 4/20/22 10.3

10.6 Letter A greement 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

10.5 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 Letter Agreement dated February 8, 2023 by and between W.

Kip Speyer and Bright Mountain Media, Inc.

8-K 2/10/23 10.1

10.16 Consulting Agreement effective January 1, 2021 between Greg Peters and Bright Mountain Media, Inc.

8-K 1/6/21 10.1

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

10.6 Membership Interest Purchase Agreement dated June 5, 2020 between Centre Lane Partners Master Credit Fund II and Bright Mountain Media, Inc.

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8-K 2/16/23 10.2

10.50 Share Issuance Agreement between Spartan Capital Securities, LLC and Bright Mountain Media, Inc.

dated September 22, 2021

8-K 9/28/21 10.1

10.33 Seventeenth Amendment to Amended and Restated Senior Secured Credit Agreement, dated April 20, 2023

10.34 Eighteenth Amendment to Amended and Restated Senior Secured Credit Agreement, dated July 28, 2023

10.35 Nineteenth Amendment to Amended and Restated Senior Secured Credit Agreement, dated July 28, 2023

10.36 Annex A to the Credit Agreement, dated July 28, 2023

10.37 Employment Agreement by and between the Company and Ethan Rudin

10.38 E mployment Agreement by and between the Company and Matthew Drinkwater

12/17/21 10.1

21.1 List of subsidiaries

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31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)

32.1* Certification of the Principal Executive Officer and the P rincipal F inancial O fficer pursuant to Section 1350

32.1* Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to Section 1350

32.2* Certification of the Chief Financial Officer and Principal Financial and Accounting Officer pursuant to Section 1350

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104 Cover Page Interactive Data File (embedded within the Inline XBRL document) X

* Furnished herewith.

This certification is deemed not filed for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing under the Securities Act or the Exchange Act.

* This certification is being furnished and shall not be deemed “filed” with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liability of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.

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.

March 28, 2023

April 1, 2024

/s/ Matthew Drinkwater

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(Principal Executive Officer)

March 28, 2023

/s/ Miriam Martinez

Miriam Martinez

April 1, 2024

/s/ Ethan Rudin

Chief Financial Officer

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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.

March 28, 2023

April 1, 2024

Chairman of the Board of Directors

March 28, 2023

April 1, 2024

/s/ Matthew Drinkwater

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Director and Chief Executive Officer

March 28, 2023

April 1, 2024

/s/ Harry Schulman

Harry Schulman

March 28, 2023

/s/ Pamela Parizek

Pamela Parizek

March 28, 2023

/s/ Gretchen Tibbits

Gretchen Tibbits

March 28, 2023

/s/ Todd Speyer

April 1, 2024

/s/ Jeff Hirsch

BRIGHT MOUNTAIN MEDIA, INC.

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We have audited the accompanying consolidated balance sheets of Bright Mountain Media, Inc.

(the "Company") as of December 31, 2022 and 2021, the related consolidated statements of operations and comprehensive loss, changes in stockholders’ deficit and cash flows for each of the years ended December 31, 2022 and 2021, and the related notes (collectively referred to as the "financial statements").

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2022 and 2021, and the consolidated results of their operations and their cash flows for each of the years in the period then ended, in conformity with accounting principles generally accepted in the United States of America.

(the “Company”) as of December 31, 2023 and 2022, and the related consolidated statements of operations and comprehensive loss, changes in stockholders’ deficit and cash flows for each of the years ended December 31, 2023 and 2022, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of Bright Mountain Media, Inc.

as of December 31, 2023 and 2022, and the results of its operations and its cash flows for each of the years in the period ended, in conformity with accounting principles generally accepted in the United States of America.

Substantial Doubt Regarding the Company’s Ability to Continue as a Going Concern

3 unchanged sentences

The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Emphasis of the Matter – Restatement of Interim Financial Statements

As disclosed in Note 21 of the consolidated financial statements, the unaudited interim financial statements as of and for the periods ended June 30, 2022 and September 30, 2022 have been restated to correct an understatement of interest expense and interest payable.

This matter is described in more detail in Note 21 of the consolidated financial statements.

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.

Our responsibility is to express an opinion on these financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to Bright Mountain Media, Inc.

in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB and in accordance with auditing standards generally accepted in the United States of America.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

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.

Bright Mountain Media, Inc.

is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits, we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control over financial reporting.

Accordingly, we express no such opinion.

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Critical Audit Matter Description

The Company recognizes revenue at a point in time when control of services is transferred to the customer.

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 in its customer agreements.

The Company derives revenue from three revenue streams which include (i) digital advertisements on its owned and operating publishing websites, as well as advertising on partner mobile apps and digital streaming services such as CTV (Connected Television) Channels in its customer agreements, (ii) providing creative and media services to customers, and (iii), consumer insights over time as the research, intelligence, and insight services are performed for the customer.

The Company recognizes the first revenue stream at a point in time when control of services is transferred to the customer.

The Company recognizes the second revenue stream over time based on the signed contract terms which includes the service period.

The Company recognizes the third revenue stream as a percentage of total budgeted project costs as the underlying project costs are incurred for signed contracts.

In determining revenue recognition for these customer agreements, the Company performs the following five steps:

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(iii) determine the transaction price;

(iv) allocate the

transaction price to the performance obligations in the contract;

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

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

We identified revenue recognition as a critical audit matter due to significant management estimates and judgments inherently required in determining revenue to be recognized.

This in turn led to an especially high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the reasonableness of management’s significant estimates and assumptions surrounding revenue recognition.

How the Critical Audit Matter Was Addressed in the Audit

Our principal audit procedures related the Company’s revenue recognition for these customer agreements included the following:

Our principal audit procedures related the Company’s revenue recognition for these revenue streams included the following:

• Digital Advertising

◦ We performed a walkthrough of the design effectiveness and implementation of internal controls with respect to the Company’s revenue and cash receipts cycle.

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▪ We determine that the allocation of the transaction price was to a single performance obligation.

◦ We tested the amount of impressions delivered by the Company to the customer from the independent ad server data to test the properness of recognized revenue with the terms of the contract.

▪ We obtained the amount of impressions delivered by the Company to the customer from the third-party ad server data to test the appropriateness of recognized revenue with the terms of the contract.

◦ We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements.

Valuation of goodwill - Refer to Notes 2 and 7 to the consolidated financial statements

• Creative and Media Services

◦ We performed a walkthrough of the design effectiveness and implementation of internal controls with respect to the Company’s revenue and cash receipts cycle.

◦ We selected a sample of customer agreements and performed the following procedures:

▪ Obtained and read the contract source documents for each selection as well as amendments thereto.

▪ We obtained an understanding of the performance obligations associated with the Company’s revenue contracts.

▪ We tested the transaction price within the contract, which was represented by the total value for creative and media services that must be delivered by the Company.

▪ We determine that the allocation of the transaction price was to a single performance obligation.

▪ We tested the appropriateness of recognized revenue with the terms of the contract.

◦ We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements.

• Consumer Insights

◦ We performed a walkthrough of the design effectiveness and implementation of internal controls with respect to the Company’s revenue and cash receipts cycle.

◦ We selected a sample of customer agreements and performed the following procedures:

▪ Obtained and read the contract source documents for each selection as well as amendments thereto.

▪ We obtained an understanding of the performance obligations associated with the Company’s revenue contracts.

▪ We tested the transaction price within the contract, which was represented by the total value for consumer insights that must be delivered by the Company.

▪ We determine that the allocation of the transaction price was to a single performance obligation.

▪ We tested the appropriateness of recognized revenue with the terms of the contract by evaluating the underlying budgeted costs and actual costs that drive the percent of the total contract value recognized during the year.

◦ We tested the mathematical accuracy of management’s calculations of revenue and the associated timing of revenue recognized in the financial statements.

Valuation of Intangible Assets and Goodwill - Refer to Notes 2, 6, and 7 to the consolidated financial statements

Critical Audit Matter Description

As reflected in the Company’s consolidated financial statements at December 31, 2022 the Company’s goodwill was approximately $19.6 million.

As reflected in the Company’s consolidated financial statements at December 31, 2023 the Company’s intangible assets and goodwill was approximately $ 15 million and $ 7.8 million, respectively.

As disclosed in Note 2 to the consolidated financial statements, the Company tests goodwill 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.

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If the fair value of the reporting unit exceeds its carrying amount, there is no impairment.

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

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

We identified the evaluation of the Company's impairment test of goodwill and intangible assets as a critical audit matter due to significant management estimates and judgements inherently required in determining the fair value of estimates.

This in turn led to a high degree of auditor judgement, subjectivity, and effort in performing procedures to evaluate the reasonableness of management's significant estimates and assumptions, several of which extend many years into the future.

Additionally, the audit effort involved the use of professionals with specialized skill and knowledge.

How the Critical Audit Matter Was Addressed in the Audit

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• We reviewed the professional qualifications and objectivity/independence of the external valuation specialist.

• We independently performed a calculation of the fair value to evaluate whether the external valuation specialist’s conclusion was reasonable and consistent with our conclusion.

Accounting for debt modifications - Refer to Note 9 to the consolidated financial statements

• We tested the underlying assumptions presented in the impairment assessment as it relates to projections

Accounting and Valuation for Debt Modifications and Extinguishment - Refer to Note 10 to the consolidated financial statements

Critical Audit Matter Description

4 unchanged sentences

If the debt is extinguished, the old debt is derecognized and the new debt is recorded as fair value, which becomes the new carrying value.

We identified the evaluation of the Company’s accounting for debt modifications as a critical audit matter due to significant complex calculations inherently required in determining proper accounting treatment.

This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures to evaluate the reasonableness of management’s assumptions and calculations.

Additionally, the audit effort involved the use of professionals with specialized skill and knowledge.

How the Critical Audit Matter Was Addressed in the Audit

We read and evaluated the debt extinguishment analysis report, prepared by the Company's external valuation specialist that assessed each amendment to the credit agreement.

There were a total of 15 amendments that were executed.

We read and evaluated the debt modification and extinguishment analysis report, prepared by the Company's external valuation specialist that assessed each amendment to the credit agreement.

There were a total of 4 amendments that were executed during the year.

For each amendment, the external valuation specialist calculated the present value of the cash flows under the terms of the amendment and determine if it was considered substantially different by at least a 10% difference from the present value of the remaining cash flow of the original debt instrument.

6 unchanged sentences

• We independently performed a calculation of the present value of the debt instrument under the new terms from the amendment and the original terms of the debt instrument to evaluate whether the external valuation specialist’s conclusion were reasonable and consistent with our conclusion.

Business Combination - Refer to Note 13 to the consolidated financial statements

Critical Audit Matter Description

As reflected in the Company’s consolidated financial statements at December 31, 2023, the Company completed a business combination on April 20, 2023, for approximately $20.0 million.

As disclosed in Note 13 to the consolidated financial statements, the Company allocated the purchase price to acquired assets and liabilities, including intangibles and the residual value being assigned to goodwill.

The fair value assigned to the acquired intangibles is based on a discounted flow analysis, in which the Company makes various assumptions, including assumptions about future cash flows, growth rates and discount rates.

The assumptions about future cash flows and growth rates are based on the Company’s long-term projections.

Assumptions used in the Company’s fair value calculations are consistent with the Company’s internal forecasts and operating plans.

The Company’s discount rate is based on the Company’s debt structure, adjusted for current market conditions.

We identified the evaluation of the Company's fair value valuation of acquired intangibles and residual goodwill as a critical audit matter due to significant management estimates and judgements inherently required in determining the fair

value estimates.

Additionally, the audit effort involved the use of professionals with specialized skill and knowledge.

How the Critical Audit Matter Was Addressed in the Audit

We identified the evaluation of the fair value measurement of the acquired Trade Name, Customer Relationships, and Developed Technology as a critical audit matter.

A high degree of subjective auditor judgment was required to evaluate certain key assumptions used to estimate the acquisition-date fair value of the acquired intangible assets.

Specifically, the key assumptions for certain intangible assets, including revenue growth rates and the discount rate, represented subjective determinations of future market and economic conditions.

Changes to those assumptions could have had a significant effect on the determination of the fair value measurements.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including controls related to the development of the key assumptions for certain tangible and intangible assets.

We performed sensitivity analyses over the key assumptions for revenue growth rates to assess the impact of changes in those key assumptions on the Company’s determination of the fair value of the intangible assets, respectively.

We evaluated the reasonableness of the Company’s forecasted revenue growth rates by comparing them to historical results for comparable products and peer companies, analyst expectations, and industry related third-party data.

We evaluated the data sources used by management in determining the key assumptions for the intangible assets by comparing to industry standards and evidence obtained in other areas of the audit.

In addition, we involved valuation professionals with specialized skills and knowledge, who assisted in:

(1) evaluating the discount rates used by the Company for the intangible assets by comparing them against discount rate ranges that were independently developed using publicly available market data for comparable entities

(2) testing the source information underlying the determination of the discount rates

Along with the procedures previously described, we performed the following procedures:

• We evaluated management's assessment that the acquisition accurately represented a business combination and properly identified the accounting acquirer of the underlying transaction

• We utilized the knowledge, experience, and expertise of our internal valuation specialists to execute the planned valuation procedures related to the valuation by assessing the reasonableness of the methodologies employed to value the intangibles and goodwill.

• We reviewed the professional qualifications and objectivity/independence of the external valuation specialist.

• We tested the underlying assumptions presented in the business combination as it relates to projections

/s/ WithumSmith+Brown, PC

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East Brunswick, New Jersey

March 28, 2023

April 1, 2024

PCAOB ID Number 100

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Intangible assets, net 15,234 4,510

Goodwill 19,645 19,645

Operating lease right-of-use asset 306 367

Other assets 137 528

Other assets, non-current

Total Assets $ 43,417 $ 29,200

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Accounts payable and accrued expenses $ 17,497 $ 10,317

Other liabilities 1,838 1,598

Other current liabilities

Interest payable – 10 % Convertible Promissory Notes – related party

Interest payable – Centre Lane Senior Secured Credit Facility – related party — 617

Deferred revenue 4,569 737

PPP Loan and other loans — 1,387

Note payable – 10 % Convertible Promissory Notes, net of discount – related party

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Total Current Liabilities 30,802 17,851

Note payable – Centre Lane Senior Secured Credit Facility – net of discount, related party 25,101 15,164

Note payable – 10 % Convertible Promissory Notes, net of discount, related party

Operating lease liability 319 —

Other liabilities, non-current 325 —

Note payable – Centre Lane Senior Secured Credit Facility, net of discount – related party (non-current)

58,674 25,101

Finance lease obligations, non-current

Operating lease liabilities, non-current

Total Liabilities 90,082 43,271

Stockholders’ Deficit

Convertible preferred stock, par value $ 0.01 , 20,000,000 shares authorized:

Series A-1, 2,000,000 shares designated, no shares issued or outstanding at December 31, 2022 and December 31, 2021

Series B-1, 6,000,000 shares designated, no shares issued or outstanding at December 31, 2022 and December 31, 2021

Series E, 2,500,000 shares designated, 0 and 125,000 shares issued and outstanding at December 31, 2022 and December 31, 2021;

liquidation preference of $ 0.40 per share

Series F, 4,344,017 shares designated, no shares issued or outstanding at December 31, 2022 and December 31, 2021

Convertible preferred stock, par value $ 0.01 , 20,000,000 shares authorized, no shares issued or outstanding at December 31, 2023 and December 31, 2022

Common stock, par value $ 0.01 , 324,000,000 shares authorized, 172,103,134 and 150,444,636 issued and 171,277,959 and 149,619,461 outstanding at December 31, 2023 and December 31, 2022, respectively

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General and administrative expenses 22,522 14,155

Total operating expenses 14,249 18,482

Impairment of goodwill and intangibles 17,070 —

Loss from operations

Financing income (expense)

( 26,812 ) ( 5,068 )

Financing (expense) income

Gain on forgiveness of PPP loan — 1,137

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Other interest expense ( 27 ) ( 14 )

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

Total financing (expense) ( 8,752 ) ( 3,057 )

Net loss before income tax

Income tax provision (benefit) — —

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

Common stock deemed dividend — ( 212 )

Preferred stock dividends ( 5 ) ( 242 )

( 35,564 ) ( 8,125 )

Income tax provision

( 35,564 ) ( 8,125 )

Preferred stock dividends — ( 5 )

Net loss attributable to common stockholders $ ( 35,564 ) $ ( 8,130 )

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AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT

(in thousands, except share and per share data)

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Comprehensive

Loss (Income) Total

Stockholders’

Shares Amount Shares Amount Shares Amount

Balance, December 31, 2020 8,044,017 $ 80 118,162,150 $ 1,182 ( 825,175 ) $ ( 220 ) $ 96,427 $ ( 93,932 ) $ ( 23 ) $ 3,514

Net loss — — — — — — — ( 12,000 ) — ( 12,000 )

Series A-1, E and F preferred stock dividend — — — — — — ( 242 ) — — ( 242 )

Common stock issued for services rendered — — 176,250 2 — — — — — 2

Exercise of stock options — — 100,000 1 — — 13 — — 14

Exercise of warrants — — 25,000 — — — 10 — — 10

Centre Lane Partners debt financing — — 12,650,000 127 — — 1,002 — — 1,129

Conversion of preferred to common shares ( 7,919,017 ) ( 79 ) 7,919,017 79 — — — — — —

Common stock deemed dividend — — 10,398,700 104 — — 108 ( 212 ) — —

Common stock issued for Oceanside acquisition — — 379,266 4 — — 603 — — 607

Stock based compensation — — — — — — 207 — — 207

Adjustment from foreign currency translation, net — — — — — — — — 35 35

Balance, December 31, 2021 125,000 $ 1 149,810,383 $ 1,498 ( 825,175 ) $ ( 220 ) $ 98,129 $ ( 106,144 ) $ 12 $ ( 6,724 )

Balance at December 31, 2021 125,000 $ 1 149,810,383 $ 1,498 ( 825,175 ) $ ( 220 ) $ 98,129 $ ( 106,144 ) $ 12 $ ( 6,724 )

Net loss — — — — — — — ( 8,125 ) — ( 8,125 )

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Series E preferred stock conversion ( 125,000 ) ( 1 ) 125,000 1 — — — — — —

Exercise of stock options — — 100,000 1 — — — — — 1

Common stock issued for options exercised — — 100,000 1 — — — — — 1

Stock based compensation — — — — — — 144 — — 144

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Warrants issued in settlement of liability — — — — — — 216 — — 216

Common stock issued for services rendered — — 235,000 2 — — 36 — — 38

Issue of common stock for services rendered — — 235,000 2 — — 36 — — 38

Adjustment from foreign currency translation, net — — — — — — — — 105 105

Balance, December 31, 2022 — — 150,444,636 1,504 ( 825,175 ) ( 220 ) 98,797 ( 114,269 ) 117 ( 14,071 )

Net loss — — — — — — — ( 35,564 ) — ( 35,564 )

Adjustment to common stock issued for Oceanside acquisition

— — ( 23,495 ) — — — — — — —

Common stock issued for options exercised

— — 90,000 1 — — — — — 1

Stock based compensation — — — — — — 196 — — 196

Common stock issued to Centre Lane Partners

— — 21,401,993 214 — — 1,712 — — 1,926

Issue of common stock for services rendered

— — 190,000 2 — — 29 — — 31

Extinguishment of Centre Lane Credit Facility

— — — — — — 671 — — 671

Adjustment from foreign currency translation, net — — — — — — — — 145 145

Balance, December 31, 2023

— $ — 172,103,134 $ 1,721 ( 825,175 ) $ ( 220 ) $ 101,405 $ ( 149,833 ) $ 262 $ ( 46,665 )

See accompanying notes to consolidated financial statements.

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CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands, except share and per share data)

For the Years Ended December 31,

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Adjustments to reconcile net loss to net cash used in operations:

Effects of foreign currency translation 105 35

Depreciation 125 38

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Amortization of intangibles 2,490 1,558

Impairment of goodwill and intangibles 17,070 —

Stock based compensation 196 144

Common stock and warrants issued for services 38 12

Common stock issued for services rendered

Stock compensation for Oceanside shares — 89

Write off doubtful accounts — ( 240 )

Gain on forgiveness of PPP loan — ( 1,137 )

Provision for bad debt 84 74

Expected credit losses

Changes in operating assets and liabilities:

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Prepaid expenses and other current assets 360 695

Operating lease right-of-use asset ( 382 ) —

Operating lease liability ( 54 ) ( 25 )

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Interest payable – 10% Convertible Promissory note - related party

Deferred revenues ( 426 ) 816

Deferred revenue

( 701 ) ( 426 )

Net cash used in operating activities ( 4,658 ) ( 3,115 )

Cash flows from investing activities:

Cash paid for property and equipment ( 14 ) —

Net cash (used in) provided by investing activities ( 14 ) —

Purchase of property and equipment ( 14 ) ( 14 )

Net cash used in investing activities

( 14 ) ( 14 )

Cash flows from financing activities:

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Repayments of debt — ( 250 )

Principal payments received (funded) for notes receivable 21 ( 8 )

Proceeds from stock option exercises 1 14

Principal payments received for notes receivable — 21

Principal payments on finance lease obligations

Payment of interest on Centre Lane Senior Secured Credit Facility, related party — (153)

Proceeds from PPP loan — 1,137

Proceeds from stock option exercises 1 1

Net cash provided by financing activities 8,353 2,664

Net (decrease) increase in cash and cash equivalents ( 465 ) 45

Effect of foreign exchange rates on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

3,685 ( 466 )

Cash and cash equivalents at beginning of year 315 781

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Supplemental disclosure of non-cash investing and financing activities

Recognition of right-of-use asset and operating lease liability $ 382 $ —

Recognition of right-of-use asset and lease liability

Conversion of Preferred shares to Common shares $ — $ 1

Common stock issued to Oceanside to settle share liability $ — $ 279

Debt issued in accordance with legal settlement $ — $ 79

Common stock issued to Centre Lane for debt issuance $ 1,926 $ —

Issuance of debt to finance acquisition of Big Village Entities $ 19,874 $ —

Extinguishment of Centre Lane Credit Facility $ 671 $ —

Warrants issued to settle liability $ — $ 216

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Bright Mountain Media, Inc.

(the “Company” or “Bright Mountain” or “we”), 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 ad formats.

(together with its wholly-owned subsidiaries, the “Company,” “Bright Mountain” or “we”) has an end-to-end digital media and advertising services platform that efficiently connects brands with targeted consumer demographics.

We focus on digital publishing, advertising technology, consumer insights, creative and media services.

Digital Publishing

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

Programmatic advertising relies on artificial intelligence powered software programs that leverage data and proprietary algorithms to match the optimal selection of an ad with a 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 DSPs and sellers known as SSPs.

Application to OTC

On July 1, 2022, the Company filed an application with the Over-The-Counter (“OTC”) Markets Group Inc.

for a review of its candidature to be upgraded to the OTCQB exchange from the OTC Expert Market as the Company is now current with its SEC filing obligations.

The application was approved on August 19, 2022 and as of August 19, 2022, the Company's Common Stock is quoted for trading on the OTCQB Market under the symbol "BMTM," and continues to be quoted on this exchange at December 31, 2022.

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

Consumer Insights

Our consumer insights division focuses on providing primary and secondary research, competitive intelligence, and expert insight to address customers' strategic issues.

We provide cutting-edge and dynamic research, offering clients a comprehensive perspective on their consumers.

This insight extends to strategic guidance on the optimal timing and channels to effectively connect with target audiences.

Our cutting-edge approach combines advanced data analytics, artificial intelligence, and comprehensive market research, to uncover actionable insights that drive informed decision-making.

Creative Services

Our creative services division transforms data into award-winning campaigns.

We are uniquely able to leverage insights teams with highly strategic media planning and buying teams to ensure brands not only position their advertising precisely, but also yield impactful business results.

Our goal is to combine data-driven decisions with creativity fueled by a deep understanding of modern culture.

Media Services

Our media services division focuses on advertisers and agencies by providing access to premium inventory, leveraging data to optimize programmatic campaigns.

Our aim is to empower clients to access the most sought-after advertising spaces across diverse platforms tailored to their specific needs and preferences.

Our data-driven approach ensures that ad placements are not only well-targeted, but also continuously optimized for maximum efficiency and ROI.

Our commitment to combining premium inventory access with data-driven programmatic campaign optimization makes us an indispensable partner in the success of our clients' advertising and marketing endeavors.

The Company generates revenue through:

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

• the selling of advertisements placed on our owned and managed sites and on partner websites where we earn a share of the revenue,

• facilitating the seamless, real-time exchange of advertisements on a large scale, bridging networks of buyers (referred to as "DSPs") and networks of sellers (referred to as "SSPs"),

• serving advertisers through providing access to premium resources and leveraging data to optimize programmatic campaigns, where revenue is derived from the planning and execution of creative and media marketing campaigns, and

• providing primary and secondary research, competitive intelligence, and expert insights to address customers' strategic issues, where revenue is primarily derived from providing a single integrated service for such research.

Asset Purchase Agreement

On April 3, 2023, in accordance with certain procedures (the “Bidding Procedures”) adopted by the United States Bankruptcy Court for the District of Delaware (the “Bankruptcy Court”) in In re Big Village Holding LLC , et al., jointly-administered under case No.

23-10174 (the “Bankruptcy Case”), the “Company” submitted a bid (the “Bid”) for the acquisition of certain assets of Big Village Insights, Inc., a Delaware corporation f/k/a Engine International, Inc., Big Village Agency LLC, a Delaware limited liability company f/k/a Engine USA LLC, Big Village Group Inc., a Delaware corporation f/k/a Engine Group Inc., Deep Focus, Inc., a New York corporation, EMX Digital Inc., a Delaware corporation, Balihoo, Inc., a Delaware corporation, and Big Village Media LLC, a Delaware limited liability company f/k/a Engine Media LLC in the Bankruptcy Case (collectively, the “Sellers”) related to the Sellers’ Agency Business and Insights Business (as defined in the APA) (collectively, the “Business”).

On April 10, 2023, the Company entered into a definitive asset purchase agreement to acquire the assets of two business units of Big Village (Big Village Insights, Inc and Big Village Agency LLC, (together, the “Big Village Entities”)) for approximately $ 20.0 million, plus assumed liabilities, in an all-cash transaction funded by a senior secured credit facility (the "Big Village Acquisition").

On April 20, 2023, the Company completed the Big Village Acquisition.

As part of the Big Village Acquisition, the Company formed BV Insights, LLC ("Insights") and Big-Village Agency, LLC ("Agency") to incorporate the assets acquired in the transactions.

Additionally, letters of employment were extended to certain legacy employees of the Big Village Entities, resulting in a total of 203 employees accepting an offer of employment by the Company.

Centre Lane Senior Secure Credit Facility

The Company and its subsidiaries are parties to the Amended and Restated Senior Secured Credit Agreement between itself, the lender party thereto, and Centre Lane Partners Master Credit Fund II, L.P., as Administrative Agent and Collateral Agent (“Centre Lane Partners”), dated June 5, 2020, as amended (the “Credit Agreement”).

On April 4, 2023, the Company entered into a commitment letter (the “Commitment Letter”) with Centre Lane Solutions Partners, LP (together with any designated affiliates thereof, the “CLP Lenders”), pursuant to which CLP Lenders would provide financing in the form of a senior secured credit facility for the Big Village Acquisition.

On April 20, 2023, the Company and its subsidiaries CL Media Holdings LLC, Bright Mountain LLC, Mediahouse, Inc., Big-Village Agency LLC, and BV Insights LLC, and Centre Lane Partners entered into the Seventeenth Amendment to the Credit Agreement (the “Seventeenth Amendment”).

The Credit Agreement was amended, as provided in the Seventeenth Amendment, to provide for an additional term loan amount of $ 26.3 million to, among other things, finance the Big Village Acquisition.

This term loan, which was provided by BV Agency, LLC, (an affiliate of Centre Lane Solutions Partners, LP) matures on April 20, 2026 and was issued at a discount of 5 % or $ 1.3 million.

Interest of 15 % is payable under the note, payable-in-kind in lieu of cash payments through April 30, 2024, then 5 % is payable quarterly in cash and 10 % payable-in-kind in lieu of cash payments until maturity of April 20, 2026.

Also, in connection with the Seventeenth Amendment, on April 20, 2023, the Company issued 21,401,993 shares of common stock of the Company to BV Agency, LLC, an entity beneficially owned by CLP Lenders.

The issuance of the shares of common stock were not registered under the Securities Act of 1933, as amended (the “Securities Act”), in accordance with Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.

As of December 31, 2023, BV Agency, LLC and Centre Lane Partners own approximately 12.4 % and 8.8 % of the Company’s outstanding common stock, respectively.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Other Developments

During 2022, the Company began scaling down its operations of Slutzky & Winshman Ltd, a digital media company located in Israel that was acquired in August 2019.

This decision was made after a consistent decline in revenue.

In 2023, we terminated operations in Israel and all employees were terminated.

Also in 2023, we terminated the operation of News Distribution Network, Inc., a newspaper technology company, which we also acquired in 2019, and subsequently rebranded this service as Mediahouse, also as a result of a declining revenue stream.

There were no specific costs associated with these exits.

At December 31, 2023, these two entities have not yet been dissolved.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Cash flows used in operating activities were $ 4.7 million and $ 3.1 million for the years ended December 31, 2023 and 2022, 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 market is also dependent on the stock volume and market price of the Company's stock, which cannot be assured.

As of December 31, 2023, the Company had a working capital deficit of approximately $ 11.1 million inclusive of $ 4.0 million in cash and cash equivalents.

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

The Company is currently exploring several strategic alternatives, including restructuring or refinancing its debt, or seeking additional debt, including borrowing under the Centre Lane Senior Secured Credit Agreement or raising equity capital.

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

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

The ultimate success of these plans is not guaranteed.

In considering our forecast for the next twelve months, the 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.

The Company's current cash and working capital, as of the filing of this Annual Report on Form 10-K, is not expected to be sufficient to fund its anticipated level of operations over the next twelve months.

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

The accompanying 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.

No executive officer was included in this reduction.

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

Cash and Cash Equivalents

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and other foreign countries in which the Company operates.

As of December 31, 2022, the Company's interest and noninterest bearing accounts were within the federally insured limits of $ 250,000 .

As of December 31, 2021, the Company exceeded the federally insured limit of $ 250,000 for interest and noninterest bearing accounts.

As of December 31, 2022, the Company exceeded the insurance limit for one of its international bank accounts by $ 66,000 .

The Company had cash balances with a single financial institution in excess of the FDIC insured limits by amounts of $ 0 and $ 93,000 as of December 31, 2022 and December 31, 2021, respectively.

As of December 31, 2023, the Company exceeded the federally insured limits of $ 250,000 for interest and non-interest-bearing accounts.

The Company held a cash balance with a single financial institution in excess of the FDIC insured limit in the amount of $ 3.7 million as of December 31, 2023.

As of December 31, 2022, the Company's interest and non-interest-bearing accounts were within the federally insured limit.

As of December 31, 2023 and 2022, the Company exceeded the insurance limit of $ 29 ,000 for one of its international bank accounts by $ 31 ,000 and $ 66 ,000, respectively.

Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows.

At December 31, 2022, and 2021, the Company had $ 316,000 and $ 781,000 , respectively, in cash and cash equivalents.

Subsequent Event

On March 10, 2023, the FDIC took over Silicon Valley Bank ("SVB"), which is one of the Company's banking institution.

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

Accounts Receivable and Allowance for Doubtful Accounts

At December 31, 2023, and 2022, the Company had $ 4.0 million and $ 316 ,000, respectively, in cash and cash equivalents.

Accounts Receivable and Allowances

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

310, Receivables, (ASC 310) .

Receivables are recorded at the invoice amount on the date revenue is recognized and are presented net of the allowance for 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.

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

Certain receivables are subject to adjustments from traffic settlements that are deducted from open invoices.

Our receivables are not interest bearing and are not collateralized.

Unbilled receivables are the results of timing differences between billings to clients and are included in accounts receivable.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The allowance for current expected credit losses is based on our assessment of the collectability of customer accounts.

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

The 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.

Once collection efforts by the Company are exhausted, the determination for charging off uncollectible receivables is made.

Expected credit losses are recorded as general and administrative expenses on our consolidated statements of operations and comprehensive loss.

Property and Equipment, net

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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.

Leasehold improvements and assets under finance lease are amortized over the lesser of the lease term or the useful life of the improvements.

When assets are sold or retired, the applicable cost and accumulated depreciation or amortization are removed from the accounts.

The resulting gains or losses are reflected in the combined statements of operations and comprehensive loss.

We account for goodwill under FASB Accounting Standards Codification No.

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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:

“Owned & Operated” and “Ad Network”.

We allocate goodwill to reporting units based on the expected benefit from business combination.

The Company categorizes goodwill into three reporting units:

“Owned & Operated”, “Ad Network” and “Insights”.

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

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

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

See Note 7, Goodwill, to the consolidated financial statements for details regarding goodwill impairment.

Intangible Assets

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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 3 years- five years .

The Company’s trade name is amortized on a straight-line basis over a useful life of 2 years to 10 years.

Customer relationships are amortized on a straight-line basis over a useful life of 5 years to 10 years.

IP/technology is amortized on a straight-line basis over a useful life of 10 years.

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

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

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Amortization and Impairment of Long-Lived Assets

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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.

See Note 6, Intangibles, to the consolidated financial statements for details regarding impairment of intangibles.

The Company determines 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 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.

A contract is, or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease.

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

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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.

We recognize rent expense under our operating leases on a straight-line basis, variable lease costs such as operating costs and property taxes are expensed as incurred.

For finance leases, we record interest expense on the lease liability in addition to amortizing the right-of-use asset (generally straight-line) over the shorter of the lease term or the useful life of the right-of-use asset.

Finance leases are included in property and equipment, net, finance lease obligations, and finance lease obligations, non-current on our consolidated balance sheets.

Revenue Recognition

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

The Company recognizes revenue at a point-in-time when control of services is transferred to the customer.

The Company recognizes revenue at a point in time when control is transferred to the customer or over time as a percentage of completion or otherwise in accordance with the terms of the contract.

Cash received by the Company prior to when control of services is transferred to the customer is recorded as deferred revenue.

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The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it provides to the customer.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the services promised within each

contract and determines those that are performance obligations and assesses whether each promised service is distinct.

The Company then recognizes 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.

Advertising revenue is generated by audiences seeing or clicking on digital advertisements utilizing several advertiser partners.

Revenue is recognized net of adjustments based on the number of advertisements delivered and are billed monthly or generated via custom content production and extensions on our social media platforms.

There is no significant initial cost incurred to obtain contracts with customers, and no contract assets or contract liability recorded in our consolidated financial statements other than those classified as deferred revenue.

At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the services promised within each contract and determines those that are performance obligations and assesses whether each promised service is distinct.

The Company then recognizes revenue when (or as) the performance obligation is satisfied.

The Company generates revenue through:

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

• the selling of advertisements placed on our owned and managed sites and on partner websites where we earn a share of the revenue;

• facilitating the seamless, real-time exchange of advertisements on a large scale, bridging networks of buyers (referred to as "DSPs") and networks of sellers (referred to as "SSPs");

Digital publishing and advertising technology revenues are generated by audiences seeing or clicking on digital advertisements utilizing several advertising partners.

The Company recognizes revenue once the performance obligation is satisfied at a point in time, on a gross basis net of adjustments based on the number of advertisements delivered.

Customers are billed monthly or billing is generated via custom content production and extensions on our social media platforms.

Consumer insights revenues are generated by providing primary and secondary research, competitive intelligence, and expert insight to address customers' strategic issues.

The Company recognizes revenue as the services are rendered, by applying the percentage of completion method on a cost-to-cost basis to measure progress toward satisfaction of the performance obligation.

Progress toward satisfaction of the performance obligation is measured based on costs incurred to-date relative to the total estimated costs expected to be incurred in providing services.

The Company does not include costs that do not contribute to its progress toward satisfying its promise to the customer.

Creative services revenues are generated by delivering campaign services to customers.

Some of our contracts with customers contain multiple performance obligations.

For these contracts, we account for the individual performance obligations separately if they are distinct.

If recurring services are performed, the Company recognizes revenue as the services are rendered over time, generally on a ratable basis over the contract term beginning on the date that the service is made available to the customer.

For campaign services that require a one-time deliverable, we recognize revenue once the performance obligation is satisfied at a point in time.

Media services revenues are generated through the access to programmatic campaigns.

The Company recognizes revenue as the services are rendered over time, on a ratable basis over the contract term, beginning on the date that the service is made available to the customer.

There is no significant initial cost incurred to obtain contracts with customers.

Deferred Revenue

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

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

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

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

Cost of Revenue

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

Cost of revenue includes internal labor and payment to third parties for services performed to drive revenue, which includes the publisher cost paid for ad exchange on third party sites, advertising fees, personnel costs, technology and data related costs, fees paid for content creation, influencers, writers and sales commission.

Website Development Costs

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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.

During the year ended December 31, 2023 and 2022, 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

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

assets represent costs incurred by the acquired website to build value prior to an acquisition, and any related amortization and impairment expenses are not representative of ongoing costs of doing business.

Advertising and Marketing

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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.

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

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

We record forfeitures as they occur.

The 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 calculates stock compensation expense using the graded vesting method, which begins expensing each tranche on the expense begin date through the vesting date.

This will result in front-loaded expenses, and is included in general and administrative expenses in the consolidated statements of operations.

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

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

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

The expected volatility is determined using the

historical volatility of similar publicly traded companies.

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

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

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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.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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

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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.

Our components are digital publishing, advertising technology, consumer insights, creative and media services.

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.

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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 condensed consolidated financial statements as well as reported amounts of revenue and expenses during the periods presented.

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, valuation of goodwill and intangible assets, estimates of amortization period for intangible assets, estimates of depreciation period for property and equipment, the valuation of equity-based transactions, valuation of the Center Lane Senior Secured Facility carrying value regarding debt modification or extinguishment, and the valuation allowance on deferred tax assets.

Significant estimates included in the accompanying consolidated financial statements include, valuation of goodwill and intangible assets, allowance for current expected credit losses, the determination of the relative selling prices of our services, percentage of completion for revenue recognition, estimates of amortization period for intangible assets, estimates of depreciation period for property and equipment, discount rates used in the valuation of right-of-use assets and lease liabilities, litigation reserves, the valuation of equity-based transactions, valuation of the Center Lane Senior Secured Facility carrying value regarding debt modification or extinguishment, and the valuation allowance on deferred tax assets.

While these estimates are based on our best knowledge of current events and actions that may affect us in the future, actual results may differ materially from these estimates.

Foreign Currency

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Such deposits may be in excess of federally insured limits.

In addition, the Company maintains various bank accounts in Thailand and Israel, which are not insured.

To date, we have not experienced any losses on our cash and cash equivalents.

We perform periodic evaluations of the relative credit standing of the financial institutions.

In addition, the Company maintains various bank accounts in Thailand and Israel, with some level of insurance.

We perform periodic evaluations of the relative credit standing of financial institutions.

Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

We perform credit evaluations of our customers’ financial condition and require no collateral from our customers.

We maintain an allowance for doubtful accounts receivable based upon the expected collectability of accounts receivable balances.

The follow table provides information about customer and vendor concentration that exceeds 10% of revenue, accounts receivable and accounts payable for the years ended December 31, 2022 and 2021:

We maintain an allowance for current expected credit losses based upon the expected collectability of accounts receivable balances.

The Company generates revenue as follows:

• selling of advertisements placed on the Company’s owned and managed sites, as well as from advertisements placed on partner websites, for which the Company earns a share of the revenue;

• facilitating the real-time buying and selling of advertisements at scale between networks of buyers, known as DSPs and sellers known as SSPs;

• serving advertisers and agencies by providing access to premium inventory and leveraging data to optimize programmatic campaigns, where revenue is derived from the planning and execution of creative and media marketing campaign;

• providing primary research and secondary research, competitive intelligence and expert insight to address customer's strategic issues, where revenue is primarily derived from providing a single integrated service for research.

The following table provides information about customer and vendor concentration that exceeds 10% of revenue, accounts receivable and accounts payable for the years ended December 31, 2023 and 2022:

Revenue Concentration

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Customer 1 13.0 % — %

Customer 2 10.0 % 37.7 %

Total % of revenue 23.0 % 37.7 %

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Total % of accounts payable — % 21.8 %

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Off-balance Sheet Arrangements

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Reclassification

During the year ended December 31, 2022, reclassification of certain accounts has been made to previously reported amounts to conform to their treatment to the current period.

Specifically, the Company identified a reclassification of commissions from general and administrative expenses to cost of revenue on the consolidated statements of operations and comprehensive loss, reclassification between note receivable to prepaid expense and other current assets, website acquisition assets to intangible asset, as well as a reclassification between property and equipment and accumulated depreciation, accrued expenses to other liabilities on the consolidated balance sheets.

These reclassifications had no impact on the previously reported net loss for year ended December 31, 2021.

Effective Accounting Pronouncements

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 how an entity is required to test goodwill for impairment by eliminating Step 2 from the goodwill impairment test.

The current guidance requires companies to calculate the implied fair value of goodwill in Step 2 by calculating the fair value of all assets (including any unrecognized intangible assets) and liabilities of the reporting unit and subtracting it from the fair value of the reporting unit previously calculated in Step 1.

The amendments in this update modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value.

This update is effective beginning after December 15, 2021.

We adopted this standard on January 1, 2022.

The adoption of this standard did not have a material impact on our condensed consolidated financial statements for the year ended December 31, 2022.

In December 2019, the FASB issued Accounting Standards Update (“ASU”) 2019-12, Income Taxes (Topic 740) - Simplifying the Accounting for Income Taxes.

The ASU enhances and simplifies various aspects of the income tax accounting guidance in ASC 740, including requirements related to the following:

(1) hybrid tax regimes;

(2) tax basis step-up in goodwill obtained in a transaction that is not a business combination;

(3) separate financial statements of entities not subject to tax;

(4) intra-period tax allocation exception to the incremental approach;

(5) ownership changes in investments;

(6) interim-period accounting for enacted changes in tax law;

and (7) year-to-date loss limitation in interim-period tax accounting.

The amendments in ASU 2019-12 are effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods therein.

This update is effective beginning after December 15, 2021.

We adopted this standard on January 1, 2022.

The adoption of this standard did not have a material impact on our consolidated financial statements for the year ended December 31, 2022.

In January 2020, the FASB issued Accounting Standards Update (“ASU”) No.

2020-01, Clarifying the Interactions between Topic 321, Topic 323, and Topic 815 .

The amendments in this update clarify certain interactions between the guidance to account for certain equity securities.

This update is effective beginning after December 15, 2021.

We adopted this standard on January 1, 2022.

The adoption of this standard did not have a material impact on our consolidated financial statements for the year ended December 31, 2022.

Recent Accounting Pronouncements Not Yet Adopted

As of and for the year ending December 31, 2023, certain amounts have been reclassified for comparative purposes.

Changes were made for foreign currency translation from operating activities to showing the cash and cash equivalent impact only as a separate line item below financing activities, right of use asset and liability showing a net position instead showing a separate line item for asset and liabilities and reclassification on other operating activities line items for accounts payable and accrued expenses on the consolidated statement of cash flows.

Changes were made for other expenses under finance income (expense), to general and administrative expense, which impacted our loss from operations

Effective Accounting Pronouncements Adopted

In June 2016, the FASB issued Accounting Standards Update (“ASU”) No.

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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 does not anticipate adopting this guidance will have a material impact on its consolidated financial statements.

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).

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 this guidance will have on the Company’s consolidated financial statements.

The Company was required to adopt the new guidance on January 1, 2023.

Based on the nature of our business, the adoption of this standard did not have a material impact on our consolidated financial statements for the year ended December 31, 2023.

In October 2021, the FASB issued Accounting Standards Update (“ASU”) No.

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An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (2) prospectively to all business combinations that occur on or after the date of initial application.

The Company does not anticipate adopting this guidance will have a material impact on its consolidated financial statements.

The Company adopted this standard in accounting for its Big Village Acquisition.

Recent Accounting Pronouncements Not Yet Adopted

In August 2020, the FASB issued Accounting Standards Update (“ASU”) No.

2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40).

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 this guidance will have on the Company’s consolidated financial statements.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 3 – ACCOUNTS RECEIVABLE

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Unbilled receivables ( A )

allowance for doubtful accounts ( 586 ) ( 498 )

allowance for current expected credit losses

( 372 ) ( 586 )

Accounts receivable, net $ 14,679 $ 3,585

(A) - Unbilled receivable represents amounts for services rendered at the end of the period pending generation of invoice to the customer.

Bad debt expense was $ 84,000 , and $ 74,000 for the years ended December 31, 2022, and 2021, respectively.

Accounts receivable, net at January 1, 2022 was $ 3.6 million.

Expected credit losses was $ 58,000 , and $ 84,000 for the years ended December 31, 2023, and 2022, respectively.

These amounts are included in general and administrative expenses in the consolidated statements of operations and comprehensive loss.

NOTE 4 – PREPAID EXPENSE AND OTHER ASSETS

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Prepaid insurance (1)

Prepaid consulting service agreements – Spartan (1)

Prepaid consulting service

Prepaid software 46 176

Deposits 156 137

Other 314 119

Subscriptions 174 —

Other current assets 219 138

Total prepaid expense and other assets 1,213 737

Non-current other assets – Spartan (1)

other assets, non-current

( 156 ) ( 137 )

Prepaid expenses and other current assets $ 1,057 $ 600

(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 commencing October 2018 for the provision of such services.

During the years ended December 31, 2018 to December 31, 2020, a series of payments were made under the terms of this agreement, resulting in amounts being capitalized and amortized over the remaining life of the agreement.

These amounts will be fully amortized by September 30, 2023.

Approximately $ 285,000 included in non-current for 2021 relates to Spartan.

(1) The amount of $ 618,000 is being paid over a period of time and is also included in accounts payable at December 31, 2023.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 5 – PROPERTY AND EQUIPMENT

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Computer equipment 3 190 340

Computer software

accumulated depreciation ( 205 ) ( 349 )

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accumulated amortization ( 1,123 ) ( 1,122 )

accumulated impairment loss — ( 200 )

Website acquisition assets, net $ 1 $ 2

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Other intangible assets, net consisted of the following:

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Trade name 2 - 10

$ 8,381 $ ( 3,167 ) $ 5,214 $ 2,759 $ ( 1,617 ) $ 1,142

IP/Technology 10 5,821 ( 2,180 ) 3,641 1,983 ( 899 ) 1,084

Customer relationships 5 - 10

13,380 ( 7,002 ) 6,378 6,680 ( 4,419 ) 2,261

Non-compete agreements 3 - 5

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Total $ 27,984 $ ( 12,751 ) $ 15,233 $ 11,824 $ ( 7,316 ) $ 4,508

The Company performed an impairment assessment at September 30, 2023 and December 31, 2023, and recorded an impairment loss of $ 2.9 million.

There was no impairment loss for the year ended December 31, 2022.

Impairment loss is included in the below table:

(in thousands) Accumulated Amortization

Impairment Loss

Accumulated Amortization

December 31, 2022 Twelve Months Ended

December 31, 2023 December 31, 2023

Trade name $ 1,617 $ 742 $ 808 $ 3,167

IP/technology 899 900 381 2,180

Customer relationships 4,419 1,291 1,292 7,002

Non-compete agreements 381 13 8 402

Total $ 7,316 $ 2,946 $ 2,489 $ 12,751

During the year ended December 31, 2023, the Company acquired intangible assets through the acquisition of the Big Village Entities as follows:

(in thousands) Useful Life

(Years) Amount

Trade name 7 to 10

Developed technology 10 3,838

Customer relationships 7 to 10

Total $ 16,160

For further details on the Big Village Acquisition, see Note 13 , Business Combinations to the consolidated financial statements.

Website $ 1 $ 2

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Amortization expense for the years ended December 31, 2023, and 2022 was approximately $ 2.5 million, and $ 1.6 million, respectively, related to both the website acquisition costs and the intangible assets and is included in general and administrative expense in the statements of operations and comprehensive loss.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

As of December 31, 2023, expected remaining amortization expense of intangible assets and website acquisition by fiscal year is as follows:

($ in thousands) Amount

Thereafter 497

Total $ 15,234

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The following table represents the allocation of goodwill as of December 31, 2023 and 2022:

($ in thousands) Owned & Operated Ad Network Total

($ in thousands) Owned & Operated Ad Network Insights

December 31, 2021 $ 9,725 $ 9,920 $ — $ 19,645

December 31, 2022 9,725 9,920 — 19,645

Additions 1,357 — 907 2,264

Impairment ( 8,217 ) ( 5,907 ) — ( 14,124 )

December 31, 2023 $ 2,865 $ 4,013 $ 907 $ 7,785

Goodwill acquired as part of the Big Village Acquisition totals $ 2.3 million and represents the value of unidentifiable intangible assets including assembled workforce and strategic benefits that are expected to be achieved.

We allocate goodwill to reporting units based on the expected benefit and synergies with our current reporting units.

The Company categorizes goodwill into three reporting units:

“Owned & Operated”, “Ad Network” and “Insights”.

See Note 13, Business Combinations to the consolidated financial statements.

Goodwill is tested for impairment at least annually and if triggering events are noted prior to the annual assessment.

Impairment is deemed to occur when the carrying value of the goodwill associated with the reporting unit exceeds the implied value of the goodwill associated with the reporting unit.

At December 31, 2022 and 2021, an assessment was performed using a qualitative assessment which includes consideration of the economic, industry and market conditions in addition to the overall financial performance of the Company and these assets.

Our qualitative assessment did not conclude that it is more likely than not that the estimated fair value of the reporting unit is greater than the carrying value, and we performed a quantitative analysis.

At September 30, 2023 and December 31, 2023, an impairment assessment was performed on goodwill for Ad Network, Owned & Operating and Insights reporting units.

The assessment used a qualitative assessment which includes consideration of the economic, industry and market conditions in addition to the overall financial performance of the Company and these assets.

Our qualitative assessment concluded that it is more likely than not that the estimated fair value of the Ad Network and Owned & Operating reporting units is less than the carrying value, hence, we performed a quantitative analysis.

Our assessment for Insights reporting unit did not have such conclusion, hence a quantitative analysis was not required.

In a quantitative test, the fair value of a reporting unit is determined based on a discounted cash flow analysis and further analyzed using other methods of valuation.

A discounted cash flow analysis requires us to make various assumptions, including

assumptions about future cash flows, growth rates and discount rates.

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.

Our discount rate is based on a market participant debt structure and cost of capital.

If the fair value of the reporting unit exceeds its carrying amount, there is no impairment.

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

Our quantitative analysis showed that the implied fair value of our goodwill for Ad Network and Owned & Operating reporting units is less than its carrying value which resulted in an impairment charge of approximately $ 14.1 million .

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

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($ in thousands) 2023 2022

Accounts payable $ 8,585 $ 8,460

Accounts payable (A)

$ 11,391 $ 8,585

Accrued wages, commissions and bonus 353 380

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Professional fees 1,322 677

Subcontractor 3,013 —

Other 265 116

Total accounts payable and accrued expenses $ 17,497 $ 10,317

Accounts payable includes $ 5.2 million, and $ 5.9 million at December 31, 2023 and, 2022, respectively, for Slutzky & Winshman Ltd and Mediahouse, whose operations were terminated during the year ended December 31, 2023.

NOTE 9 – OTHER CURRENT LIABILITIES

Other current liabilities consisted of the following:

(in thousands) December 31, 2023 December 31, 2022

Current portion of long term lease $ 82 $ 38

Dividend payable 692 692

Project advance expense (1)

Litigation reserves 1,152 1,107

Other current liabilities 23 1

Total other current liabilities 3,350 1,838

other liabilities, non-current ( 325 ) —

Other current liabilities $ 3,025 $ 1,838

(1) Represents amount advanced by customers to cover third party expenses specifically related to their project, these expenses are offset against the advance and are not part of the Company's income statement.

NOTE 10 – CENTRE LANE SENIOR SECURED CREDIT FACILITY

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(“Centre Lane Partners”) in the amount of $ 16.5 million, comprised of $ 15.0 million of initial indebtedness, repayment of Wild Sky’s existing accounts receivable factoring facility of approximately $ 900,000 and approximately $ 500,000 of expenses.

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 owning 10 % of the Company's Common Stock as of December 31, 2022.

On April 4, 2023, the Company entered into a commitment letter (the “Commitment Letter”) with Centre Lane Partners, pursuant to which they would provide financing in the form of a senior secured credit facility for the acquisition of the Big Village Entities.

On April 20, 2023, the Company and its subsidiaries entered into the Seventeenth Amendment to the Credit Agreement (the “Seventeenth Amendment”) with Centre Lane Partners.

The Credit Agreement was amended, as provided in the Seventeenth Amendment, to provide for an additional term loan amount of $ 26.3 million to, among other things, finance the Acquisition.

This term loan, which was provided by BV Agency, LLC, matures on April 20, 2026 and was issued at a discount of 5 % or $ 1.3 million.

Interest of 15 % payable under the note is payable-in-kind in lieu of cash

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

payment up to April 30, 2024, then 5 % payable quarterly in cash and 10 % payable-in-kind in lieu of cash payment until maturity of April 20, 2026.

As part of the Seventeenth Amendment, the Company is required to pay an amendment fee of 2 % of the principal amount of the existing initial principal plus amendments one to eight ("First In Last Out Loans") and amendments nine to sixteen ("Last In First Out Loans"), totaling $ 706,000 , additionally, an exit fee of $ 18,000 of the loan to finance the Big Village Acquisition.

The outstanding principal on these at April 20, 2023 was $ 31.0 million and $ 4.3 million, respectively.

These fees total $ 724,000 and are due and payable at maturity.

Additionally, the maturity dates were extended to April 20, 2026.

The shares valued $ 1.9 million, based on a per share price of $ 0.09 , which was the closing price of the Company’s common stock at close of market on April 19, 2023.

The issuance of the shares of common stock were not registered under the Securities Act of 1933, as amended (“Securities Act”), in accordance with Section 4(a)(2) of the Securities Act as a transaction by an issuer not involving a public offering.

As of December 31, 2023, BV Agency, LLC and Centre Lane Partners own approximately 12.4 % and 8.8 % of the Company’s outstanding common stock, respectively.

On July 28, 2023, the Company and its subsidiaries entered into the Nineteenth Amendment to the Credit Agreement (the “Nineteenth Amendment”) with Centre Lane Partners.

The Credit Agreement was amended, as provided in the Nineteenth Amendment, to provide for an additional term loan amount of $ 2.0 million to, among other things, finance the integration and further growth of the Company post-Acquisition.

This term loan is part of the last in first out loans and matures on June 28, 2024 .

Including the Nineteenth Amendment, Centre Lane Partners subsequently loaned the Company an additional $ 38.0 million to provide liquidity to fund operations beginning in April 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.

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 initially bore interest at a rate of 6.0 % per annum and is scheduled to mature on June 30, 2025, with payments of 2.5 % of outstanding principal beginning on June 30, 2023.

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

The interest rate was increased to 10.0 % pursuant to the first amendment to the Centre Lane Senior Secured Credit Facility and interest payable under the note is 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.

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

These last in first out loans, totals $ 6.9 million inclusive of exit fees at December 31, 2023, due and payable on April 20, 2026, excluding the Nineteenth Amendment which is due and payable on June 28, 2024.

In connection with the Nineteenth Amendment, adjustments were made to the interest rate for outstanding loans with the exception of the draw under the Seventeenth Amendment as follows:

• The interest rate per annum changed to 7.0 % per annum plus the Secured Overnight Financing Rate ("SOFR").

At December 31, 2023, the SOFR was 5.39 % per annum, overall interest on these facilities was 12.39 %, per annum at December 31, 2023;

• The cash pay rate for the last in first out loans was changed to the SOFR plus 3.0 % per annum, at December 31, 2023, the rate was 8.39 %, per annum;

• Effective July 1, 2024, the first in last out loans PIK Rate per annum will be 7.0 % per annum plus SOFR plus 5.0 % per annum.

There is no prepayment penalty associated with this Centre Lane Senior Secured Credit Facility.

2 unchanged sentences

The Company may at any time, voluntarily prepay, in whole or in part, a minimum of $ 250,000 of the outstanding principal of the loans, plus any accrued but unpaid interest on the aggregate principal amount of the loans being prepaid.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Repayment of Loans

Interest) and (ii) on the maturity date all outstanding obligations (including, without limitation, all accrued and unpaid principal and interest on the principal amounts of the Loans (including any accrued but uncapitalized PIK Interest)) of the loan parties that are due and payable on such date.

The Company is required to repay in cash to Centre Lane Partners (i) commencing with the fiscal quarter ending on June 30, 2023, in consecutive quarterly installments to be paid on the last day of each fiscal quarter of the Company, an amount equal to 2.5 % of the outstanding aggregate principal amount of the original principal plus draws advanced by amendments 2 through 8 along with accrued and unpaid interest (after giving effect to capitalized PIK Interest) and (ii) on the maturity date all outstanding obligations (including, without limitation, all accrued and unpaid principal and interest on the principal amounts of the Loans (including any accrued but uncapitalized PIK Interest)) of the loan parties that are due and payable on such date.

The outstanding amount for these draws at December 31, 2023 is $ 34.1 million, inclusive of interest paid in kind.

On June 30, 2023, the Company and its subsidiaries entered into its Eighteen th Amendment with Centre Lane Partners regarding installment payments which were due on June 30, 2023.

The Eighteenth Amendment required equal monthly installments on July 3, 2023, August 7, 2023 and September 5, 2023, respectively.

There was no impact on principal or interest and no fees incurred by the Company for this amendment.

In connection with the Nineteenth Amendment, quarterly installments equal to 2.5 % of the outstanding aggregate principal are due on the first in last out loans commencing March 31, 2024.

During the years ended December 31, 2023, and 2022, the Company paid approximately $ 425,000 and $ 153,000 , respectively, toward outstanding interest payable.

2 unchanged sentences

The Centre Lane Senior Secured Credit Facility provides that this fee shall be in all respects fully earned, due and paid-in-kind by the Company on the effective date (“Effective Date”) of the Centre Lane Senior Secured Credit Facility and on each anniversary of the Effective Date during the term of this agreement by adding and capitalizing the full amount of such fee to the outstanding principal balance of the loans.

For the year ended December 31, 2022, the accumulated administrative fee was $ 105,000 and is included in outstanding principal.

The below table summarizes the loan balances and accrued interest for the year ended December 31, 2022 and 2021:

The accumulated administrative fee since inception of the facility is $ 140,000 and is included in outstanding principal.

The administrative fee charged for the years ended December 31, 2023, and 2022 was $ 35,000 , respectively.

The below table summarizes the loan balances and accrued interest for the years ended December 31, 2023 and 2022:

($ in thousands) 2023 2022

2 unchanged sentences

Net principal at December 31, 2023 and 2022

64,266 29,961

debt discount 5,962 3,148

Outstanding principal at December 31, 2023 and 2022

$ 70,228 $ 33,109

The below table summarizes the movement in the outstanding principal from inception through December 31, 2023:

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

($ in thousands) 2023 2022

11 unchanged sentences

In addition, and as part of the transaction, there are Exit Fees (“the Exit Fees”), which will be added and capitalized to the principal amount of the original loan.

As of December 31, 2022, there were fifteen amendments to the Centre Lane Senior Secured Credit Facility.

As of December 31, 2023, there were nineteen amendments to the Centre Lane Senior Secured Credit Facility.

Consistent with FASB ASC Topic 470 Debt , (“ASC 470”), the Company is required to perform an analysis of the change in each amendment to determine whether the change is a modification or an extinguishment of debt.

1 unchanged sentence

If the debt is extinguished, the old debt is derecognized and the new debt is recorded as fair value, which becomes the new carrying value.

A gain or loss is recorded for the difference between the net carrying value or the original debt and the fair value of the new debt.

A gain or loss is recorded for the difference between the net carrying value of the original debt and the fair value of the new debt, additionally, in the event the transaction is with a related party, this gain or loss should be recognized against additional paid in capital.

Interest expense is recorded based on the effective interest rate of the new debt.

A debt is considered extinguished if the present value of the new cash flows under the term of the new debt is at least 10% different from the present value of the remaining cash flows under the terms of the old debt.

In connection with the Seventeenth Amendment, the Company determined that the change was an extinguishment consistent with ASC 470, Debt , the old debt of $ 35.5 million was derecognized and the new debt of $ 62.7 million was recognized at estimated fair value.

A gain on extinguishment was recognized against additional paid in capital of $ 671,000 , as Centre Lane Partners is a related party.

The below table summarizes the amendments that were executed by the Company since the inception of the facility to December 31, 2023, (in thousands, except for share data):

Number Date Draw $'000 Repayment Date Interest Rate (PIK) Interest Rate (Cash) Agency Fee Exit Fee (B) Common Stock Issued Accounting Impact

1 4/26/2021 $ — 6/30/2025 10 % — % $ — $ — 150,000 Extinguishment (A)

2 5/26/2021 1,500 6/30/2025 10 % — % — 750 3,000,000 Modification

3 8/12/2021 500 6/30/2025 10 % — % — 250 2,000,000 Modification

4 8/31/2021 1,100 6/30/2025 10 % — % — 550 — Modification

5 10/8/2021 725 6/30/2025 10 % — % — 363 — Extinguishment

6 11/5/2021 800 6/30/2025 10 % — % — 800 7,500,000 Modification

7 12/23/2021 500 6/30/2025 10 % — % 70 500 — Modification

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Number Date Draw $'000 Repayment Date Interest Rate (PIK) (D)

Interest Rate (Cash) Agency Fee Exit Fee (A)

Common Stock Issued Accounting Impact

1 4/26/2021 $ — 4/20/2026 12.39 % — % $ — $ — 150,000 Extinguishment (B)

2 5/26/2021 1,500 4/20/2026 12.39 % — % — 750 3,000,000 Modification (F)

3 8/12/2021 500 4/20/2026 12.39 % — % — 250 2,000,000 Modification (F)

4 8/31/2021 1,100 4/20/2026 12.39 % — % — 550 — Modification (F)

5 10/08/2021 725 4/20/2026 12.39 % — % — 363 — Extinguishment (F)

6 11/05/2021 800 4/20/2026 12.39 % — % — 800 7,500,000 Modification (F)

7 12/23/2021 500 4/20/2026 12.39 % — % 70 500 — Modification (F)

$ 5,125 $ 70 $ 3,213 12,650,000

8 1/26/2022 350 6/30/2025 10 % — % — 350 — Modification

9 2/11/2022 250 6/30/2023 4 % 8 % — 13 — Modification

10 3/11/2022 300 6/30/2023 4 % 8 % — 15 — Modification

11 3/25/2022 500 6/30/2023 4 % 8 % — 25 — Modification

12 4/15/2022 450 6/30/2023 4 % 8 % — 23 — Modification

13 5/10/2022 500 6/30/2023 4 % 8 % 35 25 — Modification

14 6/10/2022 350 6/30/2023 4 % 8 % — 18 — Modification

15 7/8/2022 350 6/30/2023 4 % 8 % — 18 — Modification

8 1/26/2022 350 4/20/2026 12.39 % — % — 350 — Modification (F)

9 2/11/2022 250 4/20/2026 4.00 % 8.39 % — 13 — Modification (G)

10 3/11/2022 300 4/20/2026 4.00 % 8.39 % — 15 — Modification (G)

11 3/25/2022 500 4/20/2026 4.00 % 8.39 % — 25 — Modification (G)

12 4/15/2022 450 4/20/2026 4.00 % 8.39 % — 23 — Modification (G)

13 5/10/2022 500 4/20/2026 4.00 % 8.39 % 35 25 — Modification (G)

14 6/10/2022 350 4/20/2026 4.00 % 8.39 % — 18 — Modification (G)

15 7/08/2022 350 4/20/2026 4.00 % 8.39 % — 18 — Modification (G)

$ 3,050 $ 35 $ 487 —

16 2/10/2023 1,500 4/20/2026 4.00 % 8.39 % — 75 — Modification (G)

17 4/20/2023 26,316 4/20/2026 15.00 % — % 35 708 21,401,993 Extinguishment (C)

19 7/28/2023 2,000 6/28/2024 4.00 % 8.39 % $ — 100 — Modification (G)

$ 29,816 $ 35 $ 883 21,401,993

Total $ 37,991 $ 140 $ 4,583 34,051,993

The Centre Lane Senior Secured Credit Facility was amended to permit the Company to raise up to $ 6.0 million of total cash proceeds from the sale of its preferred stock prior to December 31, 2021, without having to make a mandatory prepayment of the loans.

(A) Added and capitalized to the principal amount of the original loan and the original loan terms apply.

(B) The Centre Lane Senior Secured Credit Facility was amended to permit the Company to raise up to $ 6.0 million of total cash proceeds from the sale of its preferred stock prior to December 31, 2021, without having to make a mandatory prepayment of the loans.

Additionally, the Company may issue up to $ 800,000 in dividends from the previous limit of $ 500,000 per annum.

Added and capitalized to the principal amount of the original loan and the original loan terms apply.

(D) New rates in effect in connection with amendment nineteen, Amendment 1 through 8 PIK rate was 10 %.

(E) New rates in effect in connection with amendment nineteen, Amendment 9 through 16 cash rate was 8 %.

First In Last Out Loans.

Last In First Out Loans.

As discussed above, there was no impact on principal or interest and no fees incurred by the Company for amendment 18, hence not included in above table.

Draws advanced by amendments 2 through 8 totaling $ 5.5 million and exit fees totaling $ 3.6 million, were due for full repayment on February 28, 2022;

prior to this date, the loan agreement allowed the Company to waive accrual of interest on these amounts.

prior to this date, the loan agreement allowed the Company to waive accrual of

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

interest on these amounts.

There was no repayment of these amounts, and as a result, on March 11, 2022, amendment 10 was executed, changing the repayment date of the outstanding principal and commencing interest accrual on the exit fees.

All amounts advanced for Amendments 9 through 15 are due on June 30, 2023 along with accrued and unpaid interest.

The outstanding amount at December 31, 2022 is $ 2.8 million, inclusive of interest paid in kind.

Commencing June 30, 2023, the Company is required to pay 2.5 % of the original principal plus draws advanced by amendments 2 through 8 along with accrued and unpaid interest.

All amounts advanced for Amendments 9 through 16 were due on June 30, 2023 along with accrued and unpaid interest, however, the maturity date was changed to April 20, 2026 with amendment 17.

The outstanding amount at December 31, 2023 is $ 6.9 million, inclusive of interest paid in-kind.

1 unchanged sentence

The discount is being amortized over the remaining life of the Centre Lane Senior Secured Credit facility using the effective interest method.

During the years ended December 31, 2022 and 2021, the Company recorded amortization of debt discount of $ 1.2 million and $ 563,000 , respectively on the Centre Lane Senior Secured Credit Facility.

During the years ended December 31, 2023 and 2022, the Company recorded amortization of debt discount of $ 2.1 million and $ 1.2 million, respectively on the Centre Lane Senior Secured Credit Facility.

Interest expense for the year ended December 31, 2023, and 2022 consisted of the following:

6 unchanged sentences

Total $ 70,228

NOTE 10 – OCEANSIDE SHARE EXCHANGE LOAN

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 July 31, 2019, and the Company acquired all of the outstanding shares of Oceanside.

Pursuant to the terms of the Oceanside Merger Agreement, the Company issued 12,513,227 shares valued at $ 20.0 million 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 Note(s)”).

At the time of the acquisition and under FASB ASC Topic 805, Business Combinations (“ASC 805”), these Closing Notes were recorded ratably as compensation expense into the statement of operations and comprehensive loss over the 24-month term and the Company recorded an accrued payable 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, the Company recorded a total charge of $ 301,000 during the third quarter of 2020, comprised of $ 250,000 in compensation expense and $ 51,000 in interest expense.

The Company also established a reserve for the $ 750,000 Closing Note principal balance which is included in litigation reserves.

On September 6, 2022, the Company’s Board of Directors approved a settlement with the Oceanside Shareholders providing for payment of $ 650,000 payable over a 50-month period commencing January 2023.

The Company recognized a gain of approximately $ 286,000 which includes $ 100,000 for the reduction in the settlement amount and $ 186,000 representing interest that was previously accrued as of December 30, 2021.

The amount is included in litigation settlement in the consolidated statement of operations and comprehensive loss for the year ended December 31, 2022.

NOTE 11 – 10% CONVERTIBLE PROMISSORY NOTES

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

The Convertible Notes are unsecured and mature five years from

issuance and are convertible at the option of the holder into shares of common stock at any time prior to maturity at a conversion price of $ 0.40 per share.

The Convertible Notes are unsecured and mature five years from issuance and are convertible at the option of the holder into shares of common stock at any time prior to maturity at a conversion price of $ 0.40 per share.

A beneficial conversion feature exists on the date the Convertible Notes were issued whereby the fair value of the underlying common stock to which the Convertible Notes are convertible is in excess of the face value of the Convertible Notes of $ 80,000 .

1 unchanged sentence

The total Convertible Notes payable was $ 80,000 and $ 68,000 , net of discount of $ 0 and $ 12,000 , at December 31, 2023 and 2022, respectively.

Interest expense for the Convertible Notes was $ 22,000 inclusive of interest of $ 8,000 and discount amortization was $ 14,000 for the years ended December 31, 2022, and 2021, respectively.

The outstanding principal and interest is due and payable November 2023.

NOTE 12 – PAYCHECK PROTECTION PROGRAM

The Paycheck Protection Program (“PPP”) was established by the Coronavirus Aid, Relief, and Economic Security (“CARES”) Act, administered by the Small Business Administration (“SBA”).

During 2020 to 2021, the Company and one of its subsidiaries.

Wild Sky Media, entered into agreements to borrow funds under the PPP.

Under the terms of the CARES Act, PPP loan recipients could apply for and be granted forgiveness for all, or a portion of loans granted under the PPP.

Bright Mountain PPP Loan

On April 24, 2020, the Company entered into a promissory note of $ 465,000 with Regions Bank (the “Bright Mountain PPP Loan”) which had a two-year term and bore interest at a rate of 1.0 % per annum.

On January 28, 2021, the Company applied for the promissory note to be forgiven by the SBA in whole or in part and on July 16, 2021, the Company obtained the forgiveness of the Bright Mountain PPP Loan in whole and recorded a non-cash gain of $ 465,000 on the Bright Mountain PPP Loan forgiveness during the year ended December 31, 2021.

Second Bright Mountain PPP Loan

On February 17, 2021, the Company entered into a promissory note of $ 296,000 with Regions Bank (the “Second Bright Mountain PPP Loan”) which had a two-year term and bore interest at a rate of 1.0 % per annum.

This was the second tranche available under the PPP and was forgiven as of June 15, 2022, and the Company recorded a non-cash gain of $ 296,000 on the Second Bright Mountain PPP Loan forgiveness during the year ended December 31, 2022.

Wild Sky PPP Loan

Effective June 1, 2020, the Company acquired Wild Sky and assumed the $ 1.7 million promissory note (the “Wild Sky PPP Loan”) with Holcomb Bank received 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 and recorded a non-cash gain of $ 1.7 million on the Wild Sky PPP Loan forgiveness during the year ended December 31, 2021.

Second Wild Sky PPP Loan

On March 23, 2021, Wild Sky entered into a promissory note of $ 842,000 with Holcomb Bank (the “Second Wild Sky PPP Loan”) which had a two-year term and bore interest at a rate of 1.0 % per annum.

This was the second tranche available under the PPP and was forgiven as of March 23, 2022, and the Company recorded a non-cash gain of $ 842,000 on the Second Wild Sky PPP Loan forgiveness during the year ended December 31, 2022.

Total non-cash gain recorded by the Company for the PPP was $ 1.1 million and $ 2.2 million for the years ended December 31, 2022, and 2021, respectively.

NOTE 13 – FAIR VALUE MEASUREMENTS

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date.

In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date.

Because valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date.

Observable inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and interest rates and yield curves that are observable at commonly quoted intervals.

Valuation is based on inputs that are both significant to the fair value measurement and unobservable.

Level 3 inputs includes situations where there is little, if any, market activity for the financial instrument.

The inputs into the determination of fair value generally require significant management judgment or estimation.

Fair Value Considerations

Financial instruments recognized in the consolidated balance sheets consist of cash, accounts receivable, other liabilities and accounts payable.

The Company believes that the carrying value of its current financial instruments approximates their fair value due to the short-term nature of these instruments.

The carrying value of the Centre Lane Senior Secured Credit Facility and the 10 % Convertible Promissory Note approximates the fair value due to their nature and level of risk.

Interest expense for the Convertible Notes was $ 20,000 and $ 22,000 , inclusive of interest of $ 8,000 and discount amortization of $ 12,000 and $ 14,000 for the years ended December 31, 2023, and 2022, respectively.

The outstanding principal and interest of the Convertible Notes was due and payable November 2023, the loan remains unpaid at December 31, 2023 with outstanding principal of $ 80,000 and interest payable of $ 39,000 .

The outstanding principal continues to accrue interest.

NOTE 12 – LEASES

The Company accounts for its lease under FASB ASC Topic 842, Leases (“ASC 842”), which requires lessees to recognize on the balance sheet at lease commencement, the lease assets and the related lease liabilities for the rights and obligations created by operating and finance leases with lease terms of more than 12 months.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Operating Lease

The Company leases its corporate offices in Boca Raton, Florida under a long-term non-cancellable lease agreement which was signed on June 14, 2022, with lease term for five years beginning upon completion of improvements to the office space by the landlord, which was completed on September 12, 2022.

The annual base rent is $ 100,000 , with a provision for a 3 % increase on each anniversary of the rent commencement date.

The Company has the option to renew the lease for one additional five-year term.

At December 31, 2023, and 2022, the operating lease right-of-use asset was $ 306,000 and 367,000 , respectively, and is included under assets on the consolidated balance sheets.

At December 31, 2023, and 2022, the operating lease right-of-use lease liability was $ 303,000 and $ 357,000 , respectively, including the current portion of $ 64,000 and $ 38,000 , respectively, and is included under liabilities on the consolidated balance sheets.

Over the lease term, the Company is required to amortize the operating lease asset and record interest expense on the lease liability created at lease commencement.

Operating lease expense was approximately $ 161,000 and $ 33,000 for the years ended December 31, 2023 and 2022.

Rent expense prior to commencement of the lease was $ 110,000 , net of landlord incentives of $ 95,000 for the year ended December 31, 2022, and is included in general and administrative expense in the statements of operations and comprehensive loss.

The Company’s non-lease components are primarily related to property maintenance and other operating services, which vary based on future outcomes and are recognized in rent expense when incurred and not included in the measurement of the lease liability.

Finance Lease

On October 1, 2023, the Company entered into a lease agreement for computer equipment with a lease term of three years .

At December 31, 2023, the finance lease asset was $ 60 ,000 and is included under assets on the consolidated balance sheets.

At December 31, 2023, the finance lease liability was $ 60 ,000, including the current portion of $ 18 ,000, and is included under liabilities on the consolidated balance sheets.

Finance lease expense for the year ended December 31, 2023 was $ 7,000 , inclusive of interest of $ 3,000 and amortization of $ 4,000 , included in general and administrative expense the statements of operations and comprehensive loss.

As of December 31, 2023 and 2022, the right-of-use asset and lease liability for the operating lease are summarized as follows (in thousands):

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Operating lease

Finance lease (1)

Operating lease liability, current $ 64 $ 38

Operating lease liability, net of current portion 239 319

Total operating lease liabilities $ 303 $ 357

Finance lease obligations, current

Finance lease obligations, net of current portion

Total finance lease obligations

Weighted average remaining lease terms (in years)

Operating lease 3.75 4.75

Finance lease 2.75 —

Weighted average discount rate

Operating lease 14.39 % 14.39 %

Finance lease 21.12 % — %

(1) Finance lease represents computer software, see Note 5 "Property and Equipment".

As of December 31, 2023, the aggregate annual lease obligations were as follows (in thousands):

Operating Lease

Finance Lease

2024 $ 64 $ 18

Total lease obligations

Amount representing interest

Net lease obligations

NOTE 13 – BUSINESS COMBINATIONS

On April 20, 2023, the Company completed the Big Village Acquisition of two business units of Big Village Holding LLC for approximately $ 20.0 million, plus assumed liabilities, in an all-cash transaction funded by a senior secured credit facility.

As part of the Big Village Acquisition, the Company formed BV Insights, LLC ("Insights") and Big-Village Agency, LLC ("Agency") to incorporate the assets acquired in the transactions, additionally, letters of employment were extended to certain legacy employees of the Big Village Entities, resulting in a total of 203 employees accepting the offer of employment by the Company.

The purpose of the acquisition was to add synergies to our existing revenue stream.

The purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair value at the date of acquisition.

The excess of the purchase price over the fair value of the net assets acquired was allocated

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

to goodwill and intangibles.

The goodwill of $ 2.3 million recognized was attributable to assembled workforce and strategic benefits that are expected to be achieved and is tax deductible for a period of 15 years.

Identified intangibles total $ 16.2 million inclusive of the below:

(in thousands)

(Years) Amount

Trade name 7 to 10

Developed technology 10 3,838

Customer relationships 7 to 10

The following table summarizes the allocation of the purchase price based on the estimated fair value of the acquired assets and assumed liabilities at the date of the Big Village Acquisition and subsequent adjustment:

(in thousands) Balance

Purchase price consideration

Centre Lane Senior Secured Credit Facility

Fair value of assets acquired

Accounts receivable 12,477

Intangibles 16,160

Goodwill 2,264

Prepaid and other assets 836

Property and equipment 206

Fair value of liabilities assumed

Accounts payable and accrued expenses 6,540

Deferred revenue 4,534

Other current liabilities 995

Total fair value of assets acquired and liabilities assumed

We incurred costs related to the Big Village Acquisition of approximately $ 2.2 million during the year ended December 31, 2023.

Additionally, $ 2.8 million in cure claims was paid to accepted vendors on the closing date and $ 1.2 million was subsequently paid to employees representing bonus.

Amounts for cure claims and bonuses are included above as part of assumed liability.

All acquisition related costs were expensed as incurred and have been recorded in general and administrative expenses in our consolidated statements of operations and comprehensive loss.

The final allocation of purchase price has changed from the preliminary allocation because of a reduction in the fair value of assets acquired of $ 2.4 million and liabilities assumed of $ 1.4 million, resulting in an increase in goodwill of approximately $ 1.0 million.

Proforma Results

Our results for the year ended December 31, 2023 include results from the Big Village Acquisition between April 20, 2023 to December 31, 2023.

Standalone revenue related to the entities acquired in the Big Village Acquisition was $ 31.0 million, for the year ended December 31, 2023.

The following unaudited pro forma information presents the Company's results of operations as if the Big Village Acquisition had occurred on January 1, 2022.

The proforma results do not purport

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

to represent what the Company's results of operations actually would have been if the transaction had occurred on January 1, 2022 or what the Company's operating results will be in future periods.

Supplemental pro forma information is as follows:

Years Ended December 31,

Revenue $ 56,780 $ 75,948

Net loss $ 36,741 $ ( 6,640 )

Basic and diluted net loss per share $ 0.22 $ ( 0.05 )

NOTE 14 – REVENUE RECOGNITION

The following table represents our revenues disaggregated by type (in thousands):

The following table represents our revenue disaggregated by type (in thousands):

Year Ended December 31,

1 unchanged sentence

Advertising technology 9,463 11,548

Consumer insights

Creative services

Media services

Total revenue $ 44,546 $ 19,580

3 unchanged sentences

United States

Israel 1,180 1,263

$ 44,546 $ 18,400

Total revenue $ 44,546 $ 19,580

4 unchanged sentences

Deferred Revenue

The movement in deferred revenue during the year ended December 31, 2022 and 2021, comprised the following (in thousands):

The movement in deferred revenue during the years ended December 31, 2023 and 2022, comprised the following (in thousands):

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2023 December 31, 2022

1 unchanged sentence

Amounts invoiced during the year 31,864 588

Business combinations

revenue recognized during the year ( 32,566 ) ( 1,013 )

Deferred revenue at end of the year $ 4,569 $ 737

NOTE 15 – COMMITMENTS AND CONTINGENCIES

Lease Agreements

The Company accounts for its operating lease under FASB ASC Topic 842, Leases (“ASC 842”), which requires lessees to recognize on the balance sheet at lease commencement, the lease assets and the related lease liabilities for the rights and obligations created by operating and finance leases with lease terms of more than 12 months.

The Company leases its corporate offices in Boca Raton, Florida under a long-term non-cancellable lease agreement that expired on October 31, 2021.

On June 14, 2022, the Company signed a second lease addendum (“Second Addendum”) to the lease with a lease term for five years beginning upon completion of improvements to the office space by the landlord, which was completed on September 12, 2022.

The annual base rent is $ 100,000 , with a provision for a 3 % increase on each anniversary of the rent commencement date.

The Company has the option to renew the lease for one additional five-year term.

At December 31, 2022, the operating lease asset was $ 367,000 and is included under assets on the consolidated balance sheets.

At December 31, 2022, the operating lease liability was $ 357,000 and is included under liabilities on the consolidated balance sheets.

Over the lease term, the Company is required to amortize the operating lease asset and record interest expense on the lease liability created at lease commencement.

Operating lease expense was approximately $ 33,000 for the year ended December 31, 2022.

Rent expense prior to commencement of the lease was $ 110,000 , net of landlord incentives of $ 95,000 for the year ended December 31, 2022.

Rent expense for the year ended December 31, 2021 was $ 203,000 .

The Company’s non-lease components are primarily related to property maintenance and other operating services, which varies based on future outcomes and is recognized in rent expense when incurred and not included in the measurement of the lease liability.

As of December 31, 2022 and 2021, the right-of-use asset and lease liability for the operating lease are summarized as follows (in thousands):

Operating lease right-of-use asset $ 367 $ —

Operating lease liability, current $ 38 $ —

Operating lease liability, net of current portion 319 —

Total operating lease liabilities $ 357 $ —

Weighted average remaining lease terms (in years) 4.75 —

Weighted average discount rate 14.39 % —

Current portion of operating lease liability of $ 38,000 is included in other liabilities on the balance sheets at December 31, 2022.

In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable.

In such cases, there may be exposure to loss in excess of any amounts accrued.

When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability.

As a litigation or regulatory matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable.

If, at the time of evaluation, the loss contingency related to a litigation or regulatory matter is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable.

When a loss contingency related to a litigation or regulatory matter is deemed to be both probable and estimable, the Company will establish an accrued liability with respect to such loss contingency and record a corresponding amount of litigation-related expense.

The Company will then continue to monitor the matter for further developments that could affect the amount of any such accrued liability.

Synacor Litigation

In 2020, Synacor, Inc.

(“Synacor”) commenced an action against MediaHouse, LLC, Inform, Inc.

and the Company, alleging approximately $ 230,000 was owed based on invoices issued in 2019 in respect to that certain Content Provider & Advertising Agreement with MediaHouse.

During January 2022, the Company entered into a settlement agreement related to the legal proceedings with Synacor totaling $ 184,000 .

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 which was paid on or before January 24, 2023.

The Company previously reserved approximately $ 245,000 towards this litigation, and following the settlement, the Company recognized an adjustment of $ 61,000 included in litigation settlement on the consolidated statements of operations for the year ended December 31, 2022.

At December 31, 2022, the Company paid $ 144,000 in connection with the Synacor settlement agreement, leaving an outstanding balance of $ 40,000 .

This amount is included in other liabilities on the consolidated balance sheet at December 31, 2022.

MediaHouse Defamation

A former employee of the Company filed a suit against the Company, MediaHouse, LLC, and Gregory A.

Peters, a former Executive, (the “Defendants”) alleging two counts of defamation.

On August 2, 2022, the parties engaged in mediation, which resulted in a settlement of the lawsuit on August 4, 2022.

The Company agreed to pay $ 62,500 over a 12-month period, with the first payment commencing on September 8, 2022,

and final payment due on August 1, 2023.

Approximately $ 42,000 was outstanding at December 31, 2022.

This amount is included in other liabilities on the consolidated balance sheet at December 31, 2022.

Slutzky & Winshman – Default on Obligations

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 Bright Mountain 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.

On September 6, 2022, the Company’s Board of Directors approved a settlement of $ 650,000 payable over a 50-month period commencing January 2023.

The amount is included in other liabilities on the consolidated balances sheets.

See Note 10, "Oceanside Share Exchange Loan" to the accompanying consolidated financial statements for further information.

Other Litigation

Other litigation is defined as smaller claims or litigation that are neither individually nor collectively material.

It does not include lawsuits that relate to collections.

The Company is party to various other legal proceedings that arise in the ordinary course of business, separate from normal course accounts receivable collections matters.

Due to the inherent difficulty of predicting the outcome of these litigations and other legal proceedings, the Company cannot predict the eventual outcome of these matters, and it is reasonably possible that some of them could be resolved unfavorably to the Company.

As a result, it is possible that the Company’s results of operations or cash flows in a particular fiscal period could be materially affected by an unfavorable resolution of pending litigation or contingencies.

The outcome is not determinable as of the issuance of these financial statements.

NOTE 15 – STOCK BASED COMPENSATION

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The Stock Option Plan is the successor to the Company’s prior stock option plans (2011, 2013, 2015, and 2019 Plans) and accordingly no new grants will be made under the prior plans from and after the date of adoption of the Stock Option Plan.

The Stock Option Plan has a term of 10 years and authorizes the issuance of up to 22,500,000 shares of the Company’s common stock.

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(in years) Aggregate

(in thousands)

Balance Outstanding, December 31, 2022 6,517,660 $ 0.33 7.8 $ 552

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Unvested at December 31, 2023

100,000 common stock options were exercised during the years ended December 31, 2022 and 2021, respectively, with an intrinsic value of $ 44,000 and $ 295,000 , respectively.

8,811,406 $ 0.07 9.2 $ 447

During the years ended December 31, 2023 and 2022, 90,000 and 100,000 common stock options were exercised with an aggregate intrinsic value of $ 10,000 and $ 44,000 , respectively.

Summarized information with respect to options outstanding under the stock option plans at December 31, 2023, is as follows:

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Options Outstanding Options Exercisable

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10,728,360 $ 0.10 8.7 1,916,954 $ 0.22

As of December 31, 2022, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $ 154,000 to be recognized over a weighted-average period of 1.95 years.

As of December 31, 2023, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $ 503,000 to be recognized through July 2027.

The Company estimates the fair value of share-based compensation utilizing the Black-Scholes option pricing model, which is dependent upon several variables such as the expected option term, expected volatility of our stock price over the expected option term, expected risk-free interest rate over the expected option term, expected dividend yield rate over the expected option term, and an estimate of expected forfeiture rates.

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The Company has elected to account for forfeitures as they occur.

Restricted Stock Awards (RSAs)

During the years ended December 31, 2022, and 2021, the Company granted 235,000 and 176,250 in RSAs to its independent directors and recognized compensation expense of approximately $ 2,400 and $ 1,800 , respectively.

Shares Held in Escrow

As part of the Company’s acquisition of Oceanside, the Company assumed the existing S&W Option plan (“Israel Sub Plan”).

The Israel Sub Plan was cancelled and 26 individuals who were participants in the plan had their options under the Israel Sub Plan convert 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.

During the year ended December 31, 2022, and 2021, shares of 174,253 and 379,266 were issued under the Israel Sub Plan.

During the year ended December 31, 2022, and 2021, the Company recognized stock based compensation expense of $ 89,000 and $ 281,000 , respectively, in connection with the Oceanside employee share issuances.

These are included in general and administrative expenses on the consolidated statements of operation and comprehensive loss.

NOTE 16 – FAIR VALUE MEASUREMENTS

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date.

Because valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date.

Valuation is based on inputs that are both significant to the fair value measurement and unobservable.

Level 3 inputs includes situations where there is little, if any, market activity for the financial instrument.

The inputs into the determination of fair value generally require significant management judgment or estimation.

Fair Value Considerations

Financial instruments recognized in the consolidated balance sheets consist of cash, accounts receivable, other liabilities and accounts payable.

The Company believes that the carrying value of its current financial instruments approximates their fair value due to the short-term nature of these instruments.

The carrying value of the Centre Lane Senior Secured Credit Facility and the 10 % Convertible Promissory Note approximates the fair value due to their nature and level of risk.

Assets Measured at Fair Value on a Nonrecurring Basis

The Company has certain non-financial assets that are measured at fair value on a non-recurring basis when there is an indicator of impairment, and they are recorded at fair value only when impairment is recognized.

These assets include goodwill and intangible assets, net.

The below table shows the quantitative information for assets measured at fair value on a non-recurring basis:

($ in thousands)

Quantitative Information about Level 3 Fair Value Measurements

Fair Value Valuation Technique Unobservable Input Rate (Weighted Average Cost of Capital

Goodwill $ 7,785 Discounted cash flow Discount rate 21.12 %

Intangible assets, net $ 15,234 Discounted cash flow Discount rate 21.12 %

Goodwill and Intangibles Assets

At September 30, 2023 and December 31, 2023 an impairment assessment was performed on goodwill and intangibles for Ad Network, Owned & Operating and Insights reporting units.

We estimated the fair value of our reporting units utilizing an income approach (discounted cash flow method), which incorporated significant unobservable Level 3 inputs.

The assessment indicated that the carrying value was in excess of its implied fair value, resulting in an impairment charge of $ 14.1 million and $ 2.9 million for goodwill and intangible assets, respectively.

During the year ended December 31, 2023, goodwill and intangibles acquired by the Company were $ 2.3 million and $ 16.2 million , respectively.

The assumptions about future cash flows and growth rates are based on the Company’s long-term projections.

Assumptions used in the Company’s fair value calculations are consistent with the Company’s internal forecasts and operating plans.

The Company’s discount rate is based on the Company’s debt structure, adjusted for current market conditions.

Goodwill represents the residual value after the fair value of the intangibles were identified.

Centre Lane Senior Secured Credit Facility

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The Company is required to perform an analysis of the change in each amendment to determine whether the change is a modification or an extinguishment of debt.

Under a modification, no gain or loss is recorded, and a new effective interest rate is established based on the carrying value of the debt and revised cash flow.

If the debt is extinguished, the old debt is derecognized and the new debt is recorded as fair value, which becomes the new carrying value.

Amendment seventeen was considered an extinguishment, the company utilize a third party valuation company to calculate the present value of the cash flows under the terms of the amendment and determine if it was considered substantially different by at least a 10 % difference from the present value of the remaining cash flow of the original debt instrument.

NOTE 17 – COMMITMENTS AND CONTINGENCIES

In such cases, there may be exposure to loss in excess of any amounts accrued.

When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability.

The Company will then continue to monitor the matter for further developments that could affect the amount of any such accrued liability.

On July 11, 2023, Ladenburg Thalmann & Co.

(“Ladenburg”) filed an action against the Company for breach of contract in the United States District Court for the Southern District of Florida, Case No.

9:23-cv-81019-AMC.

Ladenburg alleges that it entered into an Investment Banking Agreement (the “Agreement”) with the Company on September 1, 2020.

According to Ladenburg, that Agreement provided that Ladenburg would be the exclusive investment advisor and banker for the Company.

Ladenburg alleges that the Agreement entitles them to a fee for any financing transactions (debt financing or merger and acquisition transactions) that the Company engages in during the term of the contract.

In April 2023, the Company informed Ladenburg of an impending Big Village Acquisition.

Ladenburg now seeks $ 1.5 million plus interest, costs and attorneys’ fees and expenses as a result of that acquisition and debt financing, claiming that it is entitled to a fee.

The Company disputes the allegations and disputes that Ladenburg is entitled to receive any fee since it did not perform any work pertaining to such acquisition.

The outcome of this matter is not determinable as of the date of issuance of these financial statements.

Other Litigation

Other litigation is defined as smaller claims or litigation that are neither individually nor collectively material.

It does not include lawsuits that relate to collections.

The Company is party to various other legal proceedings that arise in the ordinary course of business, separate from normal course accounts receivable collections matters.

The outcome is not determinable as of the issuance of these financial statements.

NOTE 18 - STOCKHOLDER S' DEFICIT

Preferred Stock

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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”), 10% Series E Convertible Preferred Stock (“Series E Stock”) and 10% Series F Convertible Preferred Stock (“Series F Stock”) .

The Company’s board of directors has designated six 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”);

10% Series E Convertible Preferred Stock (“Series E Stock”);

10% Series F Convertible Preferred Stock (“Series F 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.

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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.

• shares do not have voting rights, except as may be permitted under Florida law;

• are convertible into shares of our common stock at the holder’s option on a one for one basis;

• are entitled to a liquidation preference equal to a return of the capital invested;

• 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.

On August 31, 2021, W.

Kip Speyer, the Company’s CEO, at that time, gave notice that all his held preferred stock was converted in accordance with the original terms.

Accordingly, 7,919,017 shares of the Company’s common stock were issued to Mr.

The Company recognized the conversion of the preferred stock on August 31, 2021 and provided all rights as a common shareholder with regard to said shares to Mr.

Speyer, including all voting rights.

The Company confirms that there was no inducement to convert the shares and that the correct shares were issued in accordance with the original conversion terms.

Approximately $ 691,000 in outstanding dividend related to this preferred stock is included in other liabilities on the consolidated balance sheet at December 31, 2022.

At December 31, 2022 and 2021, 0 and 125,000 shares of Series E Stock were issued and outstanding, respectively.

There are no shares of Series A-1 Stock, Series B Stock, Series B-1 Stock, Series C Stock, Series D or Series F Stock issued and outstanding.

There were no shares of preferred stock issued or outstanding at December 31, 2023, and 2022.

The Series E stock automatically converted into shares of our common stock on November 21, 2022, and 1,250 shares were transferred to common stock to satisfy this transaction.

Dividends for Series A Convertible Preferred Stock were $ 0 and $ 40,000 during the years ended December 31, 2022 and 2021, respectively.

Dividends for Series E Convertible Preferred Stock were $ 5,000 and $ 68,000 , for the years ended December 31, 2022 and 2021, respectively.

Dividend for Series F Convertible Preferred Stock were $ 0 and $ 134,000 during the years ended December 31, 2022 and 2021, respectively.

At December 31, 2022 and 2021, accrued unpaid preference dividend was $ 691,000 and $ 692,000 , respectively, amounts for 2021 included $ 242,000 due within that year.

These amounts are payable to the Company's Chairman, Mr.

Kip Speyer and is included under other liabilities in the consolidated balance sheet as at December 31, 2022.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Dividends for Series E Convertible Preferred Stock were $ 5,000 , for the year ended December 31, 2022, There were no preferred stock dividends paid in the year ended December 31, 2023.

At December 31, 2023 and 2022, accrued unpaid preference dividend was $ 691,000 .

This amount is payable to the Company's Chairman, Mr.

Kip Speyer and is included under other liabilities in the consolidated balance sheet at December 31, 2023.

Shares of Common Stock under the Stock Option Plan

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Shares (#) Value $'000

Conversion of Preferred Stocks 125,000 1

Services rendered 235,000 38

Options exercised by employees 100,000 1

Shares issued to Oceanside employees per the acquisition agreement valued at $ 1.60

Shares issued to Centre Lane related to debt financing 21,401,993 $ 1,926

Common stock issued for services rendered 190,000 31

Common stock issued for options exercised 90,000 1

Adjustment to Oceanside shares issued (A)

Total 21,658,498 $ 1,958

(A) -represents an adjustment to reconcile shares actually issued related to the Oceanside acquisition in 2019.

During the year ended December 31, 2022, the Company issued 634,253 shares of our common stock for the following concepts (in thousands, except share data):

Shares (#) Value $'000

Shares issued to Centre Lane related to debt financing 12,650,000 $ 1,129

Services rendered 176,250 2

Options exercised by employees 100,000 14

Warrants exercised 25,000 10

Stock issued for deemed dividend 10,398,700 —

Common stock issued for services rendered 235,000 $ 38

Common stock issued for options exercised 100,000 1

Conversion of Preferred Stocks 125,000 1

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Total 634,253 $ 319

Stocks 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.

Treasury Stocks

During the year ended December 2020, the Company executed a settlement agreement with three shareholders who relinquished their Bright Mountain common stock shares.

During the year ended December 31, 2021, three shareholders relinquished their Bright Mountain common stock shares.

A total of 825,175 shares were acquired with a value of $ 220,000 .

The shares are being held as Treasury Stock by the Company.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2023 and 2022, we had 21,362,066 and 35,998,316 common stock warrants outstanding to purchase shares of our common stock, respectively, 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, 2022 is presented below:

Approximately 14,636,250 common stock warrants expired during the year ended December 31, 2023, there was no expiration for the year ended December 31, 2022.

A summary of the Company’s warrants outstanding as of December 31, 2023 and 2022 is presented below:

December 31, 2023

Warrants Exercise Price Number

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21,362,066 $ 17,178

During the year ended December 31, 2022, a total of 175,000 warrants were issued in settlement of liability of $ 216,000 .

A summary of the Company’s warrants outstanding as of December 31, 2021, is presented below:

December 31, 2022

Warrants Exercise Price Number

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35,998,316 $ 26,692

During the year ended December 31, 2021, a total of 25,000 warrants were exercised at $ 0.40 per share.

NOTE 19 – LOSS PER SHARE

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The following tables reconcile actual basic and diluted earnings per share for the years ended December 31, 2023, and 2022 (in thousands except shares and per share data).

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Loss per share:

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

$ ( 35,564 ) $ ( 8,125 )

Preferred stock dividends — ( 5 )

Common stock deemed dividend — ( 212 )

Net loss available to common stockholders $ ( 35,564 ) $ ( 8,130 )

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Basic and diluted

$ ( 0.22 ) $ ( 0.05 )

The anti-dilutive securities excluded from the weighted-average shares used to calculate the diluted net loss per common share for the years ended December 31, 2023, and 2022 were as follows:

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Shares subject to warrants stock conversion 21,362,066 35,998,316

Shares subject to convertible preferred stock conversion — 125,000

Shares subject to convertible notes stock conversion 200,000 200,000

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Centre Lane Partners

Centre Lane Partners Master Credit Fund II, L.P.

Centre Lane Partners, who sold the Wild Sky business to the Company in June 2020 has partnered and assisted the Company from a liquidity perspective during 2022 and through the year ended December 31, 2023.

This relationship has been determined to qualify as a related party.

Additionally, in connection with the Seventeenth Amendment, on December 31, 2023, the Company issued 21,401,993 shares of common stock of the Company to BV Agency, LLC, an entity beneficially owned by Centre Lane Partners.

This relationship has been determined to qualify as a related party, BV Agency, LLC and Centre Lane Partners own approximately 12.4 % and 8.8 % of the Company’s outstanding common stock, respectively.

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

Through December 31, 2022, the Company has entered into 15 amendments to the Amended and Restated Senior Secured Credit agreement between itself and Centre Lane Partners.

See Note 9 - Centre Lane Senior Secured Credit Facility for more information.

Through December 31, 2023, the Company has entered into 19 amendments to the Credit Agreement between itself and Centre Lane Partners.

The total related party debt owed to Centre Lane Partners was $ 70.2 million and $ 33.1 million as of December 31, 2023 and 2022, respectively.

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Convertible Promissory Note

As discussed in Note 11, 10 % Convertible Promissory Note, the note payable to the Chairman of the Board amounted to $ 80,000 as of December 31, 2022, and 2021, respectively, See Note 11, 10 % Convertible Promissory Note for further discussion on these notes payable.

As discussed in Note 11, 10 % Convertible Promissory Note, the note payable to the Chairman of the Board amounted to $ 80,000 as of December 31, 2023, and 2022, respectively.

See Note 11, 10 % Convertible Promissory Note for further discussion on these notes payable.

Preferred Stocks

During the years ended December 31, 2023 and 2022, the Company paid cash dividends on the outstanding shares of the Company’s Series E and F Preferred Stock of $ 0 and $ 5,000 , respectively, held by affiliates of the Company.

At December 31, 2022 and 2021, accrued unpaid preference dividend was $ 691,000 and $ 692,000 , respectively, amounts for 2021 included $ 242,000 due with that year.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

At December 31, 2023 and 2022, accrued unpaid preference dividend was $ 691,000 .

These amounts are payable to the Company's Chairman, Mr.

Oceanside Acquisition

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 and comprehensive loss 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 $ 301,000 recorded during the third quarter of 2020 which was $ 250,000 of compensation expense and $ 51,000 of interest expense.

The Company established a reserve for the $ 750,000 which was included in litigation reserves.

On September 6, 2022, the Company’s Board of Directors approved a settlement of $ 650,000 payable over a 50- month period commencing January 2023.

The Company recognize a gain of approximately $ 286,000 which includes $ 100,000 for the reduction in the settlement and $ 186,000 representing interest that was previously accrued up to December 30, 2021, the amount is included in litigation settlement in the consolidated statement of operations and comprehensive loss.

For details on the Oceanside Acquisition, see Note 10, "Oceanside Shares Exchange", to the consolidated financial statements.

NOTE 21 – INCOME TAXES

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The Cancellation of Debt Income ("CODI") from these loans were deemed excludable from taxable income and therefore deducted as a permanent book tax difference during the year ended December 31, 2022.

During the year ended December 30, 2020, the Company obtained two PPP loans of $ 1.7 million and $ 465,000 .

These were forgiven during the year ended December 31, 2021, the CODI from these loans were deemed excludable from taxable income and therefore deducted as a permanent book tax difference.

The Company’s loss before income taxes consists of the following:

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Effect of foreign taxes ( 7 ) 0.02 % 43 ( 0.53 ) %

Transaction costs — — % 22 ( 0.18 ) %

Impairment 2,944 ( 8.28 ) % — — %

Stock compensation 40 ( 0.11 ) % 38 ( 0.46 ) %

Other permanent differences — — % 70 ( 0.58 ) %

Change in valuation allowance 5,193 ( 14.61 ) % 2,632 ( 32.40 ) %

Total tax provision (benefit) $ — — % $ — — %

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

The tax effect of significant components of the Company’s deferred tax assets and liabilities at December 31, 2023, and 2022, are as follows:

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Net operating loss carryforward $ 20,665 $ 16,552

Intangible assets

Lease liability

Other 732 1,028

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Property and equipment — ( 10 )

Right-of-use asset

Debt modification

Net deferred tax liability $ — $ —

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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.

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.

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For the years ended December 31, 2023, and 2022, the change in the valuation allowance was an increase of approximately $ 5.2 million and an increase of approximately $ 2.6 million, respectively.

The Tax Cuts and Jobs Act (TCJA) resulted in significant changes to the treatment of research and developmental (R&D) expenditures under Section 174 of the IRC.

For tax years beginning after December 31, 2021, taxpayers are required to capitalize and amortize all R&D expenditures that are paid or incurred in connection with their trade or business.

Specifically, costs for U.S.-based R&D activities must be amortized over five years and costs for foreign R&D activities must be amortized over 15 years—both using a midyear convention.

As of December 31, 2023, the Company capitalized a substantial amount of R&D expenditures primarily related to research and development activities performed in the U.S.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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.

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The Company records interest and penalties related to unrecognized tax benefits in the provision for income taxes.

As of December 31, 2022 and 2021, no accrued interest or penalties are recorded on the balance sheet, and the Company has not recorded any related expenses.

As of December 31, 2023 and 2022, no accrued interest or penalties are recorded on the balance sheets, 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.

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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 21 – RESTATEMENT OF PREVIOUSLY ISSUED UNAUDITED FINANCIAL STATEMENTS

On March 6, 2023, the Board, upon the recommendation of the Audit Committee of the Company’s Board (the “Audit Committee”), determined that the Company’s previously issued unaudited consolidated financial statements as of and for each of the periods ended June 30, 2022 and September 30, 2022 (collectively, the “Prior Quarters Unaudited Financial Statements”) should no longer be relied upon due to material errors contained in those financial statements primarily relating to the understatement of interest payable and interest expense (the “Restatement Items”).

In October 2022, under the direction of the Company’s recently appointed Chief Financial Officer, a detailed analysis was performed of the Amended and Restated Senior Secured Credit Agreement, dated June 5, 2020, among the Company, the lenders party thereto and Centre Lane Partners Master Credit Fund II, L.P.

(“Centre Lane”), as amended.

During the course of this analysis, errors were identified in connection with the accounting related to Amendments No.

8 – 15 of the Centre Lane Senior Secured Credit Facility, which resulted in the understatement of interest payable and interest expense for each of the interim quarterly periods ended June 30, 2022 and September 30, 2022 and the year-to-date 2022 period.

As a result of such errors, the management of the Company, the Audit Committee and the Board of Directors have determined that it is appropriate to restate the Prior Period Financial Statements to correct the accounting of the Restatement Items.

From December 30, 2021 to January 26, 2022, draws advanced by Amendments 2 through 8 of the Centre Lane Senior Secured Credit Facility totaling $ 5.5 million, and exit fees totaling $ 3.6 million, were due for full repayment on February 28, 2022.

On March 11, 2022, there was a further amendment (Amendment 10) to the Centre Lane Senior Secured Credit Facility, which changed the repayment date of the outstanding principal and capitalized these exit fees with a new repayment date.

The Company did not commence accruing interest on these amounts.

Consistent with FASB ASC No.

250, Accounting Changes and Error Corrections, (ASC 250), we are restating these amounts.

The table below reflects the impact of the correction of the understatement of the interest payable on the consolidated balance sheet as at June 30, 2022, in thousands:

June 30, 2022

As Previously Filed Restatement Adjustment As Restated

Total Assets $ 30,701 $ — $ 30,701

Current Liabilities

Interest payable – Centre Lane Senior Secured Credit Facility – related party 1,702 270 1,972

Other current liabilities 15,796 — 15,796

Total current Liabilities 17,498 270 17,768

Long term liabilities 22,878 — 22,878

Total Liabilities 40,376 270 40,646

Shareholders’ deficit

Accumulated deficit ( 109,448 ) ( 270 ) ( 109,718 )

Other 99,773 — 99,773

Total shareholders’ deficit ( 9,675 ) ( 270 ) ( 9,945 )

Total liabilities and shareholders’ deficit $ 30,701 $ — $ 30,701

The table below reflects the impact of the correction of the understatement of the interest expense on the consolidated statement of operations and comprehensive loss for the three and six months ended June 30, 2022, in thousands, except for shares and per share data:

Three Months Ended June 30, 2022 Six Months Ended June 30, 2022

As Previously Filed Restatement Adjustment As Restated As Previously Filed Restatement Adjustment As Restated

Gross margin $ 2,817 $ — $ 2,817 $ 4,586 $ — $ 4,586

General and administrative expenses 3,443 — 3,443 7,331 — 7,331

Loss from operations ( 626 ) — ( 626 ) ( 2,745 ) — ( 2,745 )

Financing income (expense)

Interest expense - Centre Lane Senior Secured Credit Facility- related party ( 885 ) ( 270 ) ( 1,155 ) ( 1,724 ) ( 270 ) ( 1,994 )

Other 323 — 323 1,164 — 1,164

Total financing income (expense) ( 562 ) ( 270 ) ( 832 ) ( 560 ) ( 270 ) ( 830 )

Net loss before income tax ( 1,188 ) ( 270 ) ( 1,458 ) (3,305) ( 270 ) ( 3,575 )

Income tax provision (benefit) — — — — — —

Net loss $ ( 1,188 ) $ ( 270 ) $ ( 1,458 ) $ (3,305) $ ( 270 ) $ ( 3,575 )

Net loss attributable to common shareholders $ ( 1,189 ) ( 270 ) ( 1,459 ) $ ( 3,307 ) $ ( 270 ) $ ( 3,577 )

Comprehensive loss $ ( 1,172 ) $ ( 270 ) $ ( 1,442 ) $ ( 3,290 ) $ ( 270 ) $ ( 3,560 )

Basic and diluted net loss per share $ ( 0.01 ) $ — $ ( 0.01 ) $ ( 0.02 ) $ — $ ( 0.02 )

Weighted average shares outstanding

Basic and diluted 149,159,461 — 149,159,461 149,130,579 — 149,130,579

The table below reflects the impact of the correction of the understatement of the interest payable on the consolidated balance sheet as at September 30, 2022, in thousands:

September 30, 2022

As Previously Filed Restatement Adjustment As Restated

Total Assets $ 30,284 $ — $ 30,284

Current Liabilities

Interest payable – Centre Lane Senior Secured Credit Facility – related party 1,855 582 2,437

Other current liabilities 16,551 — 16,551

Total current Liabilities 18,406 582 18,988

Long term liabilities 23,979 — 23,979

Total Liabilities 42,385 582 42,967

Shareholders’ deficit

Accumulated deficit ( 111,948 ) ( 582 ) ( 112,530 )

Other 99,847 — 99,847

Total shareholders’ deficit ( 12,101 ) ( 582 ) ( 12,683 )

Total liabilities and shareholders’ deficit $ 30,284 $ — $ 30,284

The table below reflects the impact of the correction of the understatement of the interest expense on the consolidated statement of operations and comprehensive loss for the three and nine months ended September 30, 2022, in thousands, except for shares and per share data:

Three Months Ended September 30, 2022 Nine Months Ended September 30, 2022

As Previously Filed Restatement Adjustment As Restated As Previously Filed Restatement Adjustment As Restated

Gross margin $ 2,146 $ — $ 2,146 $ 6,694 $ — $ 6,694

General and administrative expenses 3,323 — 3323 10,616 — 10,616

Loss from operations ( 1,177 ) — ( 1,177 ) ( 3,922 ) — ( 3,922 )

Financing income (expense)

Interest expense - Centre Lane Senior Secured Credit Facility- related party ( 744 ) ( 312 ) ( 1,056 ) ( 2,468 ) ( 582 ) ( 3,050 )

Other 3 — 3 1,168 — 1,168

Total financing income (expense) ( 741 ) ( 312 ) ( 1,053 ) ( 1,300 ) ( 582 ) ( 1,882 )

Net loss before income tax ( 1,918 ) ( 312 ) ( 2,230 ) ( 5,222 ) ( 582 ) ( 5,804 )

Income tax provision (benefit) — — — — — —

Net loss $ ( 1,918 ) $ ( 312 ) $ ( 2,230 ) $ ( 5,222 ) $ ( 582 ) $ ( 5,804 )

Net loss attributable to common shareholders ( 1,919 ) ( 312 ) ( 2,231 ) ( 5,225 ) $ ( 582 ) $ ( 5,807 )

Comprehensive loss ( 1,882 ) $ ( 312 ) $ ( 2,194 ) ( 5,171 ) $ ( 582 ) $ ( 5,753 )

Basic and diluted net loss per share $ 0.01 $ — $ 0.01 $ 0.04 $ — $ 0.04

Weighted average shares outstanding

Basic and diluted 149,159,461 — 149,159,461 149,140,312 — 149,140,312

NOTE 22 – SUBSEQUENT EVENTS

Centre Lane Senior Secure Credit Facility Amendment

On February 10, 2023, the Company and its subsidiaries CL Media Holdings LLC, Bright Mountain Media, Inc., Bright Mountain LLC, MediaHouse, Inc.

entered into the Sixteenth Amendment to Amended and Restated Senior Secured Credit Agreement (the “Agreement”).

The Company and its subsidiaries are parties to a credit agreement between itself, the lenders party thereto and Centre Lane Partners Master Credit Fund II, L.P.

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 term loan amount of $ 1.5 million.

This term loan matures on June 30, 2023.

As of February 10, 2023, the accumulated term loan principal is $ 32.6 million, inclusive of fees and interest paid in kind capitalized.

Reduction in Work Force

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

There were no executive officers included in this reduction.

As a result, the Company will recognize a onetime severance cost of approximately $ 122,000 during the first quarter of 2023.

The reduction in force will result in annual savings of approximately $ 343,000 or 7 % of gross salary.

Non-Reliance on Previously Issued Financial Statements

On March 6, 2023, the Board of Directors, upon the recommendation of the Audit Committee, determined that the Company’s previously issued unaudited consolidated financial statements as of and for each of the interim quarterly periods ended June 30, 2022 and September 30, 2022 (collectively, the “Prior Period Financial Statements”), should no

longer be relied upon due to material errors contained in those financials statements primarily relating to the understatement of interest payable and interest expense (the “Restatement Items”).

The Company is restating its financial statements as of and for each of the periods ended June 30, 2022 and September 30, 2022 in this Annual Report on Form 10-K for the year ended December 31, 2022.

See Note 21, "Restatement of Previously Issued Unaudited Financial Statements", to the consolidated financial statements for details of the restatement.

Collapse of Silicon Valley Bank

On March 10, 2023, the FDIC took over Silicon Valley Bank ("SVB"), which is one of the Company's banking institution.

At December 31, 2022 approximately $ 152,000 , including a corporate credit card deposit of $ 50,000 , was held by the bank, this was subsequently reduced to $ 51,000 as of our filing date, consisting mainly of the corporate credit card deposit.

Departure of Director

On January 18, 2024, Pamela J.

Parizek, a director, notified the Company that she was resigning from the Board of Directors, effective immediately.

At the time of her resignation, Ms.

Parizek was the Chair of the Company's Audit Committee.

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 9A. Controls and Procedures