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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x☒QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SeptemberJune 30, 20222023
or
o☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________

For the transition period from ___________ to ___________
Commission File Number 000-54887

form10-q_001.jpg

Bright Mountain Media, Inc.

(Exact Name of Registrant as Specified in its Charter)

Florida27-2977890

State or Other Jurisdiction of


Incorporation or Organization

I.R.S. Employer


Identification No.

6400 Congress Avenue,, Suite 2050,, Boca Raton,, FL33487
Address of Principal Executive OfficesZip Code

561-998-2440

561-998-2440
Registrant’s Telephone Number, Including Area Code

Not applicable

Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report

Securities registered pursuant to Section 12(b) of the Act:

Title of each classTrading Symbol(s)Name of each exchange on which registered
None

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ Nox ☒

No

o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ Nox ☒

No

o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐oAccelerated filer ☐o
Non-accelerated filer ☒xSmaller reporting company☒x
Emerging growth company☐o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ Noo ☒

No

APPLICABLE ONLY TO CORPORATE ISSUERSx

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of NovemberAugust 11, 2022,2023, there were 149,159,461 171,281,454 shares of the issuer’s shares outstanding.


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BRIGHT MOUNTAIN MEDIA, INC.

TABLE OF CONTENTS

Page No.
PART I - FINANCIAL INFORMATION
Unaudited Condensed Consolidated Financial Statements:
Condensed Consolidated Balance Sheets as of SeptemberJune 30, 20222023 (unaudited) and December 31, 20212022
45
Unaudited Condensed Consolidated Statements of Operations and Comprehensive loss for the Three and Nine Six Months Ended SeptemberJune 30, 20222023 and 20212022
56
Unaudited Condensed Consolidated Statements of Changes in Stockholders’Shareholders’ Deficit for the Three and NineSix Months Ended SeptemberJune 30, 2023 and 2022 and 2021
67
Unaudited Condensed Consolidated Statements of Cash Flows for the NineSix Months Ended SeptemberJune 30, 20222023 and 20212022
79
Notes to Condensed Consolidated Financial Statements
910
Management’s Discussion and Analysis of Financial Condition and Results of Operations
2936
Quantitative and Qualitative Disclosure About Market Risk
3849
Controls and Procedures
3949
 
PART II - OTHER INFORMATION
Legal Proceedings
3952
Risk Factors
3952
Unregistered Sales of Equity Securities and Use of Proceeds
3952
Default Upon Securities
3952
Mine Safety Disclosures
4052
Other Information
4052
Exhibits
4053
Signatures
4154

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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report includes forward-looking statements that relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to differ materially from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Words such as, but not limited to, “believe,” “expect,” “anticipate,” “estimate,” “intend,” “plan,” “targets,” “likely,” “aim,” “will,” “would,” “could,” and similar expressions or phrases identify forward-looking statements. We have based these forward-looking statements largely on our current expectations and future events and financial trends that we believe may affect our financial condition, results of operation, business strategy and financial needs. Forward-looking statements include, but are not limited to, statements about risks associated with:

•

●our ability to fully develop the Bright Mountain Media Ad Exchange Network and services platform;
●the continued appeal of internet advertising;
●our ability to manage and expand our relationships with publishers;
●our dependence on revenues from a limited number of customers;
●the impact of seasonal fluctuations on our revenues;
●acquisitions of new businesses and our ability to integrate those businesses into our operations;
●online security breaches;
●failure to effectively promote our brand and attract advertisers;
●our ability to protect our content;
●our ability to protect our intellectual property rights;
●the success of our technology development efforts;
●additional competition resulting from our business expansion strategy;
●our dependence on third party service providers;
●our ability to detect advertising fraud;
●liability related to content which appears on our websites;
●regulatory risks and compliance with privacy laws;
●dependence on executive officers and certain key employees and consultants;
●our ability to hire qualified personnel;
●possible problems with our network infrastructure;
●ongoing material weaknesses in our disclosure controls and internal control over financial reporting;
●the impact on available working capital resulting from the payment of cash dividends to our affiliates;
●dilution to existing shareholders upon the conversion of outstanding preferred stock and convertible notes and/or the exercise of outstanding options and warrants, including warrants with cashless exercise rights;
●the illiquid nature of our common stock;
●risks associated with securities litigation; and
●provisions of our charter and Florida law which may have anti-takeover effects

our history of losses;

•our dependence upon sales of equity securities and borrowings under our credit facility to fund operating capital;
•our ability to detect advertising fraud;
•the continued appeal of internet advertising;
•our ability to manage and expand our relationships with publishers;
•our dependence on revenues from a limited number of customers;
•the impact of seasonal fluctuations on our revenues;
•completed and proposed acquisitions;
•acquisitions of new businesses and our ability to integrate those businesses into our operations;
•online security breaches;
•failure to effectively promote our brand and attract advertisers;
•our ability to predict the impact of COVID and other future pandemics or outbreaks of disease;
•our ability to protect our content;
•our ability to protect our intellectual property rights;
•the success of our technology development efforts;
•our ability to obtain or maintain key website addresses;
•our dependence on certain third-party service providers;
•liability related to content which appears on our websites;
•dependence on executive officers and certain key employees and consultants;
•our ability to hire qualified personnel;
•regulatory risks and compliance with privacy laws;
•risks associated with potential litigation;
•limitations from our secured indebtedness;
•substantial doubts about our ability to continue as a going concern;
•ongoing material weaknesses in our disclosure controls and internal control over financial reporting;
•the limited public market for our common stock;
•additional competition resulting from our business expansion strategy;
•possible problems with our network infrastructure;
•adverse impacts to the amount of our working capital as a result of the amount of cash dividends and outstanding interest we pay affiliates;
•dilution to existing shareholders upon the conversion of outstanding convertible notes and/or the exercise outstanding options and warrants;
•provisions of our charter and Florida law which may have anti-takeover effects;
•concentration of our stock ownership and control; and
•our ability to issue additional shares of preferred stock in the future.
Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report, including the Part II, Item 2, our Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the Securities and Exchange Commission on June 13, 2022 and our other filings with the Securities and Exchange Commission in their entirety. Except for our ongoing obligations to disclose material
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information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this report the terms “Bright Mountain”, the “Company”“Company”, “we”, “us”, “our” and similar terms refer to Bright Mountain Media, Inc., a Florida corporation, and its subsidiaries. In addition, when used in this report, “third“second quarter of 2023” refers to the three months ended June 30, 2023, “second quarter of 2022” refers to the three months ended SeptemberJune 30, 2022, “third quarter of 2021” refers to the three months ended September 30, 2021, and “2021”“2022” refers to the year ended December 31, 2021.2022. The information which appears on, or that can be accessed through, our website at www.brightmountainmedia.com is not incorporated by reference in, or considered part of, this report.

3
Quarterly Report on Form 10-Q.
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PART 1I – FINANCIAL INFORMATION

Item 1. Financial Statements

BRIGHT MOUNTAIN MEDIA, INC.

CONDENSED

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share figures)

  September 30,  December 31, *
  2022  2021* 
  (unaudited)    
ASSETS        
Current Assets        
Cash and cash equivalents $412  $781 
Accounts receivable, net  3,904   3,550 
Prepaid expenses and other current assets  769   926 
Total Current Assets  5,085   5,257 
         
Property and equipment, net  37   65 
Intangible assets, net  4,896   6,069 
Goodwill  19,645   19,645 
Operating lease right-of-use asset  381   — 
Other assets  240   528 
Total Assets $30,284  $31,564 
LIABILITIES AND SHAREHOLDERS’ DEFICIT        
Current liabilities        
Accounts payable and accrued expenses $9,968  $10,967 
Other liabilities  2,144   1,598 
Interest payable – 10% Convertible Promissory Notes– related party  29   23 
Interest payable – Centre Lane Senior Secured Credit Facility – related party  1,855   617 
Deferred revenues  996   1,162 
PPP Loan  —   1,137 
Note payable – BMLLC acquisition debt  —   250 
Note payable – Centre Lane Senior Secured Credit Facility – related party (current portion)  2,832   7,316 
Total Current Liabilities  17,824   23,070 
         
Note payable – Centre Lane Senior Secured Credit Facility – net of discount, related party  23,582   15,164 
Note Payable – 10% Convertible Promissory Notes, net of discount, related party  64   54 
Operating lease liability  333   — 
Total liabilities  41,803   38,288 
         
Commitments and Contingencies  -    -  
         
Shareholders’ 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 September 30, 2022 and December 31, 2021  —   — 
Series B-1, 6,000,000 shares designated, no shares issued or outstanding at September 30, 2022 and December 31, 2021  —   — 
Series E, 2,500,000 shares designated, 125,000 shares issued and outstanding at September 30, 2022 and December 31, 2021; liquidation preference of $0.40 per share  1   1 
Series F, 4,344,017 shares designated, no shares issued or outstanding at September 30, 2022 and December 31, 2021  —   — 
Convertible preferred stock value      
         
Common stock, par value $0.01, 324,000,000 shares authorized, 149,984,636 and 149,810,383 issued and 149,159,461 and 148,985,208 outstanding at September 30, 2022 and December 31, 2021, respectively  1,500   1,498 
Treasury stock, at cost; 825,175 shares at September 30, 2022 and December 31, 2021  (220)  (220)
Additional paid-in capital  98,500   98,129 
Accumulated deficit  (111,366)  (106,144)
Accumulated other comprehensive income  66   12 
Total shareholders’ deficit  (11,519)  (6,724)
Total liabilities and shareholders’ deficit $30,284  $31,564 

June 30,
2023		December 31,
2022*
(unaudited)
ASSETS
Current Assets
Cash and cash equivalents$3,350 $316 
Accounts receivable, net15,225 3,585 
Prepaid expenses and other current assets1,423 600 
Total Current Assets19,998 4,501 
Property and equipment, net214 40 
Intangible assets, net19,556 4,510 
Goodwill20,936 19,645 
Operating lease right-of-use asset338 367 
Other assets187 137 
Total Assets$61,229 $29,200 
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued expenses$15,202 $10,317 
Other liabilities4,788 1,838 
Interest payable – 10% Convertible Promissory Notes– related party35 31 
Deferred revenues4,863 737 
Note payable – 10% Convertible Promissory Notes, net of discount, related party75 68 
Note payable – Centre Lane Senior Secured Credit Facility – related party (current portion)4,048 4,860 
Total Current Liabilities29,011 17,851 
Note payable – Centre Lane Senior Secured Credit Facility – net of discount, related party53,061 25,101 
Operating lease liability276 319 
Total liabilities82,348 43,271 
Shareholders’ deficit
Convertible preferred stock, par value $0.01, 20,000,000 shares authorized, no shares issued or outstanding at June 30, 2023 and December 31, 2022— — 
Common stock, par value $0.01, 324,000,000 shares authorized, 172,106,629 and 150,444,636 issued and 171,281,454 and 149,619,461 outstanding at June 30, 2023 and December 31, 2022, respectively1,721 1,504 
Treasury stock, at cost; 825,175 shares at June 30, 2023 and December 31, 2022(220)(220)
Additional paid-in capital101,266 98,797 
Accumulated deficit(124,136)(114,269)
Accumulated other comprehensive income250 117 
Total shareholders’ deficit(21,119)(14,071)
Total liabilities and shareholders’ deficit$61,229 $29,200 
*
*Derived from audited condensedconsolidated financial statements.

See accompanying notes to unaudited condensed consolidated financial statements

4
statements.
5

BRIGHT MOUNTAIN MEDIA, INC.

CONDENSED

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(in thousands, except share and per share figures)

             
  Three Months Ended  Nine Months Ended 
  September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
             
Revenue $5,244  $3,805  $14,420  $8,638 
Cost of revenue  3,098   1,708   7,726   4,568 
Gross margin  2,146   2,097   6,694   4,070 
General and administrative expenses  3,323   4,635   10,616   13,643 
Loss from operations  (1,177)  (2,538)  (3,922)  (9,573)
Financing income (expense)                
Gain on forgiveness of PPP loan  —   465   1,137   2,172 
Other income (expense)  18   (54)  58   (15)
Interest expense - Centre Lane Senior Secured Credit Facility- related party  (744)  (755)  (2,468)  (1,318)
Interest expense - Convertible Promissory notes - related party  (6)  (6)  (17)  (17)
Other interest expense  (9)  (1)  (10)  (336)
Total financing income (expense)  (741)  (351)  (1,300)  486 
Net loss before income tax  (1,918)  (2,889)  (5,222)  (9,087)
Income tax provision (benefit)  —   —   —   — 
Net loss  (1,918)  (2,889)  (5,222)  (9,087)
                 
Dividends                
Common stock deemed dividend  —   (212)  —   (212)
Preferred stock dividends  (1)  (62)  (3)  (241)
                 
Net loss attributable to common shareholders $(1,919) $(3,163) $(5,225) $(9,540)
Foreign currency translation 37  93  54  (21)
Comprehensive loss $(1,882) $(3,070) $(5,171) $(9,561)
                 
Net loss per common share:                
Basic and diluted $(0.01) $(0.03) $(0.04) $(0.08)
Weighted average shares outstanding                
Basic and diluted  149,159,461   125,744,703   149,140,312   121,718,466 

Three Months EndedSix Months Ended
June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Revenue$12,616 $5,717 $14,114 $9,176 
Cost of revenue9,162 2,900 10,132 4,628 
Gross margin3,454 2,817 3,982 4,548 
General and administrative expenses7,374 3,443 10,802 7,293 
Loss from operations(3,920)(626)(6,820)(2,745)
Financing (expense) income
Gain on forgiveness of PPP loan— 296 — 1,137 
Other income103 39 381 39 
Interest expense - Centre Lane Senior Secured Credit Facility - related party(2,244)(1,160)(3,407)(1,994)
Interest expense - Convertible Promissory notes - related party(6)(6)(11)(11)
Other interest expense(4)(1)(10)(1)
Total financing (expense)(2,151)(832)(3,047)(830)
Net loss before income taxes(6,071)(1,458)(9,867)(3,575)
Income tax provision— — — — 
Net loss(6,071)(1,458)(9,867)(3,575)
Dividends
Preferred stock dividends— (1)— (2)
Net loss attributable to common shareholders$(6,071)$(1,459)$(9,867)$(3,577)
Foreign currency translation119 17 133 17 
Comprehensive loss$(5,952)$(1,442)$(9,734)$(3,560)
Net loss per common share:
Basic and diluted$(0.04)$(0.01)$(0.06)$(0.02)
Weighted average shares outstanding
Basic and diluted166,779,390149,159,461158,291,304149,130,579
See accompanying notes to unaudited condensed consolidated financial statements

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BRIGHT MOUNTAIN MEDIA, INC

CONDENSED

CONSOLIDATED STATEMENTS OF CHANGE IN SHAREHOLDERS’ (DEFICIT) EQUITY

DEFICIT

For the Three and NineSix Months Ended SeptemberJune 30, 20222023 and 2021

2022

(unaudited)

(in thousands, except share figures)
Common StockTreasury StockAdditional
Paid-in
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Shareholders’
Deficit
SharesAmountSharesAmount
Balance, December 31, 2022150,444,636$1,504 (825,175)$(220)$98,797 $(114,269)$117 $(14,071)
Net loss—— —— — (3,796)— (3,796)
Common stock issued for services rendered190,0002 —— 29 — — 31 
Stock based compensation—— —— 25 — — 25 
Foreign currency translation, net—— —— — — 14 14 
Balance, March 31, 2023150,634,636$1,506 (825,175)$(220)$98,851 $(118,065)$131 $(17,797)
Net loss—— —— — (6,071)— (6,071)
Common stock issue to Center Lane Partners21,401,993214 — — 1,712 — — 1,926 
Extinguishment of Centre Lane Credit Facility—— —— 670 — — 670 
Common stock issued for options exercised70,0001 —— — —— 1 
Stock based compensation—— —— 33 — — 33 
Foreign currency translation, net—— —— — — 119 119 
Balance, June 30, 2023172,106,629$1,721 (825,175)$(220)$101,266 $(124,136)$250 $(21,119)


                               
  Preferred Stock  Common Stock  Treasury Stock  Additional Paid-in  Accumulated  Accumulated Other Comprehensive  Total Stockholders’ 
  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Loss  Deficit 
Balance, December 31, 2021  125,000  $1   149,810,383  $1,498   (825,175) $(220) $98,129  $(106,144) $12  $(6,724)
Net income (loss)  —   —   —   —   —   —   —   (2,117)  —   (2,117)
Series E preferred stock dividend  —   —   —   —   —   —   (1)  —   —   (1)
Stock option vesting expense  —   —   —   —   —   —   29   —   —   29 
Oceanside acquisition  —   —   174,253   2   —   —   277   —   —   279 
Balance, March 31, 2022  125,000  $1   149,984,636  $1,500   (825,175) $(220) $98,434  $(108,261) $12  $(8,534)
Net income (loss)  —   —   —   —   —   —   —   (1,187)  —   (1,187)
Series E preferred stock dividend  —   —   —   —   —   —   (1)  —   —   (1)
Stock option vesting expense  —   —   —   —   —   —   30   —   —   30 
Foreign currency translation, net  —   —   —   —   —   —   —   —   17   17 
Balance, June 30, 2022  125,000  $1   149,984,636  $1,500   (825,175) $(220) $98,463  $(109,448) $29  $(9,675)
Series E preferred stock dividend  —   —   —   —   —   —   (1)  —   —   (1)
Stock option vesting expense  —   —   —   —   —   —   38   —   —   38 
Foreign currency translation, net  —   —   —   —   —   —   —   —   37   37 
Net income (loss)  —   —   —   —   —   —   —   (1,918)  —   (1,918)
Balance, September 30, 2022  125,000  $1   149,984,636  $1,500   (825,175) $(220) $98,500  $(111,366) $66  $(11,519)

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  Preferred Stock  Common Stock  Treasury Stock  Additional Paid-in  Accumulated  Accumulated Other Comprehensive  

Total Stockholders’

Equity

 
  Shares  Amount  Shares  Amount  Shares  Amount  Capital  Deficit  Loss  (Deficit) 
Balance, December 31, 2020  8,044,017  $80   118,162,150  $1,182   (825,175) $(220) $96,427  $(93,932) $                   (23) $         3,514 
Net income (loss)  —   —   —   —   —   —   —   (1,709)      (1,709)
Series A-1, E and F preferred stock dividend  —   —   —   —   —   —   (89)  —   —   (89)
Stock option vesting expense  —   —   —   —   —   —   68   —   —   68 
Options exercise  —   —   100,000   1   —   —   13   —   —   14 
Warrants exercise  —   —   25,000   —   —   —   10   —   —   10 
Foreign currency translation, net  —   —   —   —   —   —   —   —   (9)  (9)
Oceanside acquisition  —   —   379,266   4   —   —   603   —   —   607 
Balance, March 31, 2021  8,044,017  $80   118,666,416  $1,187   (825,175) $(220) $97,032  $(95,641) $(32) $2,406 
Net income (loss)  —   —   —   —   —   —   —   (4,489)  —   (4,489)
Series A-1, E and F preferred stock dividend  —   —   —   —   —   —   (90)  —   —   (90)
Stock option vesting expense  —   —   —   —   —   —   73   —   —   73 
Centre Lane Partners debt financing  —   —   3,150,000   31   —   —   2,466   —   —   2,497 
Foreign currency translation, net  —   —   —   —   —   —   —   —   (82)  (82)
Balance, June 30, 2021  8,044,017  $80   121,816,416  $1,218   (825,175) $(220) $99,481  $(100,130) $(114) $315 
Beginning balance  8,044,017  $80   121,816,416  $1,218   (825,175) $(220) $99,481  $(100,130) $(114) $315 
Net income (loss)  —   —   —   —   —   —   —   (2,889)  —   (2,889)
Series A-1, E and F preferred stock dividend  —   —   —   —   —   —   (62)  —   —   (62)
Stock option vesting expense  —   —   —   —   —   —   38   —   —   38 
Centre Lane Partners debt financing  —   —   2,000,000   20   —   —   42   —   —   62 
Common stock deemed dividend  —   —   10,398,700   104   —   —   108   (212)  —   - 
Conversion of Preferred stocks  (7,919,017)  (79)  7,919,017   79   —   —   —   —   —   - 
Foreign currency translation, net  —   —   —   —   —   —   —   —   93   93 
Balance, September 30, 2021  125,000  $1   142,134,133  $1,421   (825,175) $(220) $99,607  $(103,231) $(21) $(2,443)
Ending balance  125,000  $1   142,134,133  $1,421   (825,175) $(220) $99,607  $(103,231) $(21) $(2,443)

Preferred StockCommon StockTreasury StockAdditional
Paid-in
Capital		Accumulated
Deficit		Accumulated
Other
Comprehensive
Loss		Total
Shareholders’
Deficit
SharesAmountSharesAmountSharesAmount
Balance, December 31, 2021125,000$1 149,810,383$1,498 (825,175)$(220)$98,129 $(106,144)$12 $(6,724)
Net loss—— —— —— — (2,117) (2,117)
Series E preferred stock dividend—— —— —— (1)— — (1)
Stock based compensation—— —— —— 29 — — 29 
Oceanside acquisition—— 174,2532 —— 277 — — 279 
Balance, March 31, 2022125,000$1 149,984,636$1,500 (825,175)$(220)$98,434 $(108,261)$12 $(8,534)
Net loss—— —— —— — (1,458)— (1,458)
Series E preferred stock dividend—— —— —— (1)— — (1)
Stock based compensation—— —— —— 30 — — 30 
Foreign currency translation, net—— —— —— — — 17 17 
Balance, June 30, 2022125,0001149,984,636$1,500 (825,175)$(220)$98,463 $(109,719)$29 $(9,946)


See accompanying notes to unaudited condensed consolidated financial statements

6
statements.
8

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

CONDENSED

CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited) (in thousands)

(unaudited)

(in thousands)

  2022  2021 
  For the Nine Months Ended September 30, 
  2022  2021 
Cash flows from operating activities:        
Net loss $(5,222) $(9,087)
Adjustments to reconcile net loss to net cash used in operations:        
Depreciation  24   46 
Amortization of debt discount  923   384 
Amortization of intangibles  1,173   1,189 
Stock based compensation  97   179 
Stock compensation for Oceanside shares  

117

   

608

 
Gain on forgiveness of PPP loan  (1,137)  (2,172)
Write off doubtful accounts  —   (293)
Warrant expense for services rendered  —   10 
Provision for bad debt  87   82 
Changes in operating assets and liabilities:        
Accounts receivable  (387)  2,807 
Prepaid expenses and other current assets  423   636 
Accounts payable and accrued expenses  (1,024)  (171)
Other liabilities  661   (340)
Interest payable – Centre Lane Senior Secured Credit Facility, related party  1,334   945 
Interest payable – 10% Convertible Promissory note, related party  6   6 
Deferred revenue  (166)  463 
Net cash used in operating activities  (3,091)  (4,708)
         
Cash flows from investing activities:        
Purchase of property and equipment  —   (3)
Net cash used in investing activities  —   (3)
         
Cash flows from financing activities:        
Proceeds from stock option exercises  1   14 
Preference dividend payments  (3)  3 
Principal payments received (funded) for notes receivable  20   (1)
Proceeds from Centre Lane Senior Secured Credit Facility, related party  3,050   3,100 
Payment of interest on Centre Lane Credit Facility  (96)  — 
Repayments of BMLLC acquisition debt  (250)  — 
Proceeds from PPP loan  —   1,137 
Net cash provided by financing activities  2,722   4,253 
         
Net decrease in cash and cash equivalents  (369)  (458)
Cash and cash equivalents at the beginning of period  781   736 
Cash and cash equivalents at end of period $412  $278 

For the Six Months Ended June 30,
20232022
Cash flows from operating activities:
Net loss$(9,867)$(3,575)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation46 12 
Interest paid-in kind on Centre Lane Credit Facility2,407 — 
Amortization of operating lease right-of-use asset29 — 
Amortization of debt discount844 615 
Amortization of intangibles1,114 786 
Stock based compensation58 59 
Stock compensation for Oceanside shares— 117 
Gain on forgiveness of PPP loan— (1,137)
Common stock issued for services rendered31 — 
(Recovery of) provision for bad debt(27)222 
Changes in operating assets and liabilities:
Accounts receivable3,259 (146)
Prepaid expenses and other current assets(78)324 
Operating lease liability(24)4 
Accounts payable and accrued expenses(2,259)(950)
Other liabilities1,496 — 
Interest payable – Centre Lane Senior Secured Credit Facility, related party— 1,390 
Interest payable – 10% Convertible Promissory note, related party4 4 
Deferred revenue(627)(539)
Net cash used in operating activities(3,594)(2,814)
Cash flows from investing activities:
Purchase of property and equipment(4)(4)
Net cash used in investing activities(4)(4)
Cash flows from financing activities:
Proceeds from stock option exercises1 — 
Preference dividend payments— (2)
Principal payments received for notes receivable— 6 
Proceeds from Centre Lane Senior Secured Credit Facility, related party6,626 2,700 
Repayments of BMLLC acquisition debt— (250)
Net cash provided by financing activities6,627 2,454 
Effect of foreign exchange rates on cash5 — 
Net increase (decrease) in cash and cash equivalents3,034 (364)
Cash and cash equivalents at the beginning of period316 781 
Cash and cash equivalents at end of period$3,350 $417 
Supplemental disclosure of cash flow information
Cash paid for interest$161 $— 
Interest paid-in-kind on Centre Lane Credit Facility$2,407 $— 
Non-cash investing and financing activities
Recognition of right-of-use asset and operating lease liability$— $691 
Issuance of common shares to Oceanside to settle share liability$— $162 
Issuance of common stock for Centre Lane debt financing$1,926 $— 
Issuance of debt to finance acquisition of Big Village Entities$19,874 $— 

See accompanying notes to unaudited condensed consolidated financial statements

7
statements.
9

Table of Contents

BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

  For the Nine Months Ended September 30,
  2022 2021
Supplemental disclosure of cash flow information        
Cash paid for Interest $96  $— 
         
Non-cash investing and financing activities        
Recognition of right-of-use asset and operating lease liability $380  $— 
Issuance of common shares to Oceanside to settle share liability $162  $— 
Common stock deemed dividend $—  $212 
Conversion of Preferred shares to Common shares $—  $790 
Issuance of common stock to Centre Lane for debt issuance $—  $2,559 

See accompanying notes to unaudited condensed consolidated financial statements

8

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September

June 30, 20222023
(Unaudited)

(Unaudited)

NOTE 1 – DESCRIPTION OF BUSINESS.BUSINESS AND DEVELOPMENTS

Organization and Nature of Operations

Bright Mountain Media, Inc. (the “Company” or“Company,” “Bright Mountain” or “We”“we”), is a holding Companycompany which focuses on digital mediapublishing and advertising services.technology. The Company is engaged in content creation and advertising technology development that helps brandscustomers connect with, and market to, targeted audiences in high quality environments using a variety of formats to reach customers.digital ad formats.

Digital MediaPublishing

Our digital publishing businessdivision focuses on developing content that attracts an audience and monetizes that audience through advertising. The current portfolio of owned and operated websites is focused on moms, parenting, families, and more broadly, women. The portfolio includesconsists of popular websites including Mom.com, Cafemom.com, LittleThings.com, and MamasLatinas.com. This demographic is highly sought after by brands and their advertising agencies. We use internal and external technologies to constantly improve the effectiveness and efficiency of the content we create. Our publishing division monetizes its audiences through both direct and programmatic advertising sales.

Advertising ServicingTechnology

Our advertising technology businessdivision focuses on delivering targeted ads to audiences on owned and operated sites as well as third partythird-party publishers in a cost-effective manner through the deployment of proprietary technologies. Through acquisitionsBy developing our own proprietary technology stack, we are able to pass along efficiencies to both the demand and organic software development, we have consolidated and plan to further condense key elementssupply side of the prevailing digital advertising supply chain by eliminating industry “middlemen” and/or costly redundancy of services via our ad exchange. ecosystem. Our goal is to enable and support a streamlined, end-to-end advertising model that addresses both demand (ad buy(buy side) and publisher supply (media sell(sell side) for both direct sales teams and 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, while direct sales involve traditional insertion order-based, pre-selected sales between an ad buyer and an advertising sales executive.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 (Demand Side Platforms)demand side platforms ("DSPs") and sellers known as SSPs (Supply Side Platforms)supply side platforms ("SSPs").
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 LLCApplication, 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 OTC

On July 1, 2022,the Sellers’ Agency Business and Insights Business (as defined in the APA) (collectively, the “Business”). The Bid contemplated the payment of a deposit, a cash payment at Closing (as defined in the APA) and the assumption of certain of Sellers’ liabilities (the “Assumed Liabilities”), all as set forth in a definitive asset purchase agreement among the Sellers and the Company filed an application(the “APA”) and described below, for which the Company was successful.


In accordance with the Over-The-Counter (“OTC”Bidding Procedures, on April 4, 2023, the Sellers conducted an auction among qualified bidders, including the Company (the “Auction”) Markets Group Inc. for a review of its candidature to be upgraded. At the Auction, following certain negotiated modifications to the OTCQB exchangeAPA, the Company was declared the winning bidder with a bid of $20.0 million plus the Assumed Liabilities, in accordance with the modified APA. The Company delivered the deposit of $2.0 million to the escrow agent effective as of April 3, 2023.

10
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)


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 the offer of employment by the Company.

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

Agency is a digital marking service company, providing advertising technology serving advertisers and agencies by providing access to premium inventory, leveraging data to optimize programmatic campaigns. Agency's revenue is derived from the OTC Expert market as the Company is now current with its SEC filing obligations. The application was approved on August 19, 2022.

planning and execution of creative and media marketing campaigns.


Amendment to

Centre Lane Senior SecuredSecure Credit AgreementFacility

On July 8, 2022, the

The Company and its subsidiaries entered into its fifteenth amendmentare parties to the Amended and Restated Senior Secured Credit Agreement between itself, the lenders party thereto and Centre Lane Partners Master Credit Fund II, L.P. (“Centre Lane Partners”). The Company and its subsidiaries are parties to a credit agreement between itself and Centre Lane Partners, as Administrative Agent and Collateral Agent (“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 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% payable under the note payable-in-kind in lieu of cash payment up to April 30, 2024, then 5% payable quarterly in cash and 10% payable-in-kind in lieu of cash payment until maturity of April 20, 2026.
350,000
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 (“Securities Act”), in accordance with Section 4(a)(2) of the aggregate.Securities Act as a transaction by an issuer not involving a public offering. As of June 30, 2023, BV Agency, LLC and Centre Lane Partners has been determined to qualify as a related party as shares were issued to Centre Lane Partners as partown approximately 12.4% and 8.8% of the transaction. A related party is a party that can exercise significant influence overCompany’s outstanding common stock, respectively.

Reduction in Work Force

During the three and six months ended June 30, 2023, the Company reduced its headcount by 12 and 17 employees, respectively. There were no executive officers included in making financial and/or operating decisions.

9
this reduction. As a result, the Company recognized a onetime severance cost of approximately $114,000 and $236,000, respectively during the three and six months ended June 30, 2023.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The unaudited condensed consolidated financial statements include the accounts of the Company and all its wholly owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. The accompanying unaudited consolidated financial statements for the three and ninesix months ended SeptemberJune 30, 2022,2023, and 2021 2022
11
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)


have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) and in accordance with rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) regarding interim financial reporting. Accordingly, they do not include all the information and disclosures required by accounting principles generally accepted in the United States for complete consolidated financial statements. In the opinion of management, such unaudited condensed consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of the condensed consolidated financial position and the condensed consolidated results of operations. The condensed consolidated results of operations for periods presented are not necessarily indicative of the results to be expected for the full year or any future periods. The condensed consolidated balance sheet information as of December 31, 2021,2022, was derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, as filed with the SEC on June 13, 2022. The interim condensed consolidated financial statements should be read in conjunction with that report.

Going Concern and Liquidity

Historically, the Company has incurred losses, which has resulted in an accumulated deficit of approximately $111.4$124.1 million as of SeptemberJune 30, 2022.2023. Cash flows used in operating activities were $3.1$3.6 million and $4.7$2.8 million for the ninesix months ended SeptemberJune 30, 20222023 and 2021,2022, respectively. As of SeptemberJune 30, 2022,2023, the Company had approximately a $12.7$9.0 million working capital deficit, inclusive of $412,000$3.4 million in cash and cash equivalents to cover overhead expenses.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 factorsfactors. The Company is currently exploring all strategic alternatives, including but not limitedrestructuring or refinancing its debts, seeking additional debt, such as borrowings under the Credit Agreement or equity capital. The ability to cashaccess the capital market is also dependent on the stock volume and cash equivalents, working capital,market price of the ongoing increaseCompany's stock, which cannot be assured. Other measures include reducing or delaying certain business activities, reducing general and administrative expenses, including a reduction in revenue through increased sales and strategic capital raises.headcount. The ultimate success of these plans is not guaranteed.

In considering our forecast for the next twelve months, and the Company's current cash and working capital, as of the filing of this Quarterly Report on Form 10Q,10-Q, the Company’s available cash will not be sufficient to fund its anticipated level of operations. As a result, such matters create a substantial doubt regarding the Company’s ability to meet ourits financial needs and continue as a going concern.

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

The Company considers all highly liquid investments with a maturity of three months or less, when acquired, to be cash equivalents. The Company maintains its cash with various commercial banks in the U.S. and other foreign countries in which the Company operates.

As of June 30, 2023, the Company exceeded the federally insured limit of $250,000 for interest and non-interest-bearing accounts. As of December 31, 2022, the Company's interest and non-interest-bearing accounts were within the federally insured limit.

As of June 30, 2023, the Company had cash balances with a single financial institution in excess of the FDIC insured limit by amounts of $2.9 million.

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

Off-balance Sheet Arrangements
There are no off-balance sheet arrangements as of June 30, 2023 and December 31, 2022.

Transaction Cost

The Company incurred significant costs directly related to the Big Village Acquisition and are recorded as an expense on the income statement. See Note 13, Business Combinations, to these consolidated financial statements for further information.
12
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)


Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of our condensedunaudited consolidated financial statements as well as reported amounts of revenue and expenses during the periods presented. Our condensedunaudited 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 condensedunaudited consolidated financial statements include, revenue recognition, the fair value of acquired assets for purchase price allocation in business combinations, valuation of goodwill and intangible assets, estimates of amortization period for intangible assets, estimates of depreciation period for fixed assets,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.

Foreign Currency

We translate the financial statements of our foreign subsidiaries, which have a functional currency in the respective country’s local currency, to U.S. dollars using month-end exchange rates for assets and liabilities and actual exchange rates for revenue, costs and expenses on the date of the transaction. Translation gains and losses as a result of consolidation are included in accumulated other comprehensive loss. Transaction gains and losses are included within “general and administrative expense” on the condensed consolidated statements of operations. These gainsoperations and losses are immaterial to the financial statements.

10
comprehensive loss.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

Concentrations of Credit Risk


Financial instruments that potentially subject us to concentration of credit risk consist principally of cash and cash equivalents and accounts receivable. We place our cash and cash equivalents with high credit-quality financial institutions. Such deposits may be in excess of federally insured limits. In addition, the Company maintains various bank accounts in Thailand and Israel, which are not insured. To date, we have not experienced any losses on our cash and cash equivalents.with some level of insurance. We perform periodic evaluations of the relative credit standing of the financial institutions. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows.

We perform credit evaluations of our customers’ financial condition and require no collateral from our customers. We maintain an allowance for doubtful accounts receivable based upon the expected collectability of accounts receivable balances.

The Company generates revenue through salesas follows:

•selling 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.revenue;


•generating 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;

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

•providing primary research, 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.
13
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)



The followfollowing table provides information about concentration that exceed 10% of revenue, accounts receivable and accounts payable for the period.

SCHEDULE OF CUSTOMER CONCENTRATION RISK PERCENTAGE

                 
  

Three Months Ended

September 30,

  

Nine Months Ended

September 30,

 
  2022  2021  2022  2021 
             
Revenue Concentration                
Customers exceeding 10% of revenue  2   1   1   — 
% of overall revenue                
Customer 1  30.9%  10.9%  33.4%  —%
Customer 2  10.8%  —%  —%  —%
Total % of revenue  41.7%  10.9%  33.4%  —%

         
  

September 30,

2022

  

December 31,

2021

 
Accounts Receivable Concentration        
Customers exceeding 10% of receivable  2   2 
% of accounts receivable  46.1%  25.0%

         
  

September 30,

2022

  

December 31,

2021

 
Accounts Payable Concentration        
Vendors exceeding 10% of payable  1   1 
% of accounts payable  11.9%  11.2%

Cash and Cash Equivalents

The Company considers all highly liquid investments with a maturity of three months or less, when acquired, to be cash equivalents. The Company maintains its cash with various commercial banks.

As

Three Months Ended
June 30,		Six Months Ended
June 30,
2023202220232022
Revenue Concentration
Customers exceeding 10% of revenue1111
% of overall revenue14.2 %41.7 %12.7 %34.9 %
Total % of revenue14.2 %41.7 %12.7 %34.9 %
June 30,
2023		December 31,
2022
Accounts Receivable Concentration
Customers exceeding 10% of receivable21
% of accounts receivable33.1 %43.5 %
June 30,
2023		December 31,
2022
Accounts Payable Concentration
Vendors exceeding 10% of payable— 2
% of accounts payable— %21.8 %
Reclassification
During the year ended December 31, 2021, the Company exceeded the federally insured limits of $250,000 for interest and noninterest bearing deposits. The Company had cash balances with a single financial institution in excess of the FDIC insured limits by amounts of $0 and $190,000 as of September 30, 2022, and December 31, 2021, respectively. We monitor the financial condition of such institution and have not experienced any losses associated with these accounts.

Off-balance sheet arrangements

There are no off-balance sheet arrangements as of September 30, 2022 and December 31, 2021.

Reclassification

Reclassificationreclassification 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 condensed consolidated statements of operations, reclassification between note receivable to prepaid expense and other current assets, website acquisition assets to intangible asset,assets, as well as a reclassification between property and equipment and accumulated depreciation, accrued expenses to other liabilities on the condensed consolidated balance sheets. These reclassifications had no impact on the previously reported net loss for the three and ninesix months ended SeptemberJune 30, 2022 and 2021

2022.

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 period ended September 30, 2022.

11
Adopted

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

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 period ended September 30, 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 period ended September 30, 2022.

Recent Accounting Pronouncements Not Yet Adopted

In June 2016, the FASBFinancial Accounting Standards Board ("FASB") issued Accounting Standards Update (“ASU”) No. 2016-13 (amended by ASU 2019-10), Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, regarding the measurement of credit losses for certain financial instruments. instruments, which replaces the incurred loss model with a current expected credit loss (“CECL”) model. The CECL model is based on historical experience, adjusted for current conditions and reasonable and supportable forecasts. The Company iswas required to adopt the new guidance on January 1, 2023. The Company is currently evaluating theadoption of this standard did not have a material impact this guidance will have on the Company’sour consolidated financial statements.

In August 2020,statements for 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.six months ended June 30, 2023.


In October 2021, the FASB issued Accounting Standards Update (“ASU”)ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The amendments in this update require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606. At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. The amendments in this update should be applied prospectively to business combinations occurring on or after the effective date of the amendments. Early adoption of the amendments is permitted, including adoption in an interim period. An entity that early adopts in an interim period should apply the amendments (1) retrospectively to all business combinations for which the
14
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)


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 adoption of this standard did not have a material impact on our consolidated financial statements for the six months ended June 30, 2023.

Recent Accounting Pronouncements Not Yet Adopted
In August 2020, the FASB issued ASU No. 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40). This ASU simplifies the accounting for certain financial instruments with characteristics of liabilities and equity. The FASB reduced the number of accounting models for convertible debt and convertible preferred stock instruments and made certain disclosure amendments to improve the information provided to users. The new standard 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.

12

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable, net consisted of the following (in thousands):following:
(in thousands)June 30,
2023		December 31,
2022
Accounts receivable$11,959 $3,447 
Unbilled receivables (1)
3,757 724 
15,716 4,171 
Less allowance for doubtful accounts(491)(586)
Accounts receivable, net$15,225 $3,585 

SCHEDULE OF ACCOUNTS RECEIVABLES

  September 30,  December 31, 
  2022  2021 
Accounts receivable $4,406  $4,048 
Unbilled receivables  67   — 
 Total  4,473   4,048 
Less allowance for doubtful accounts  (569)  (498)
Accounts receivable, net $3,904  $3,550 

(1) - Unbilled receivables represent amounts for services rendered at the end of the period pending generation of invoice to the customer.
Bad debt expense included a recovery of $136,000 was $161,000 and an expense of $223,000 $49,000 for the three months ended SeptemberJune 30, 2022,2023, and 2021,2022, respectively, and expenses(recoveries) expense of $87,000$(27,000) and $82,000 $222,000 for the ninesix months ended SeptemberJune 30, 2023, and 2022, and 2021, respectively.
15
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)


NOTE 4 – PREPAID COSTS AND OTHER ASSETS

Prepaid expenses and other assets consisted of the following (in thousands):

SCHEDULE OF PREPAID COSTS AND OTHER ASSETS

  September 30, 2022  December 31, 2021 
Prepaid insurance $49  $427 
Prepaid consulting service agreements – Spartan (1)  397   380 
Prepaid software  208   — 
Deposits  234   285 
Other  121   362 
Total prepaid costs and other assets  1,009   1,454 
Less: Non-current other assets – Spartan (1)  (240)  (528)
Total Prepaid expenses and other current assets $769  $926 

following:
(in thousands)June 30, 2023December 31, 2022
Prepaid insurance$443 $1 
Prepaid consulting service agreements – Spartan (1)
95 285 
Prepaid software107 176 
Deposits187 137 
Subscriptions638 — 
Other140 138 
Total prepaid costs and other assets1,610 737 
Less: Non-current other assets(187)(137)
Prepaid expenses and other current assets$1,423 $600 
(1)
Spartan Capital Securities, LLC ("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-yearfive-year agreement with Spartan Capital commencing October 2018 for the provision of such services. A prepaymentDuring the years ended December 31, 2018 to December 31, 2020, a series of payments were made under the terms of this agreement, wereresulting in amounts being capitalized and amortized over the remaining life of the agreement. These amounts will be fully amortized by September 30, 2023.

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following (in thousands):

SCHEDULE OF PROPERTY AND EQUIPMENT

  

Estimated

Useful Life (Years)

  September 30, 2022  December 31, 2021 
Furniture and fixtures  3-5  $133  $39 
Computer equipment  3   245   176 
 Total      378   215 
Less: accumulated depreciation      (341)  (150)
Property and equipment, net     $37  $65 

following:

(in thousands)Estimated
Useful Life (Years)		June 30, 2023December 31, 2022
Furniture and fixtures3-5$8 $49 
Computer equipment3125 340 
Computer software52,229 — 
2,362 389 
Less: accumulated depreciation(2,148)(349)
Property and equipment, net$214 $40 
Depreciation and amortization expense for the three months ended SeptemberJune 30, 2023, and 2022 was $39,000 and 2021 was $12,000 and $12,000,$8,000, respectively, and $24,000$46,000 and $46,000$12,000 for the ninesix months ended Septemberand June 30, 2023, and 2022, and 2021, respectively.

The amounts are included in general and administrative expenses in the consolidated statements of operations.

13
operations and comprehensive loss.
16

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September

June 30, 20222023
(Unaudited)

(Unaudited)

NOTE 6 – INTANGIBLES ASSETS, NET

Website acquisitions, net consisted of the following (in thousands):

SCHEDULE OF WEBSITE ACQUISITIONS, NET

  September 30, 2022  December 31, 2021 
Website acquisition assets $1,124  $1,124 
Less: accumulated amortization  (921)  (920)
Less: cumulative impairment loss  (200)  (200)
Website Acquisition Assets, net  $3  $4 

June 30, 2023December 31, 2022
Website acquisition assets$1,124 $1,124 
Less: accumulated amortization(1,123)(1,122)
Website acquisition assets, net$1 $2 
Other intangible assets, net consisted of the following (in thousands):
As of June 30, 2023As of December 31, 2022

Useful Life
(Years)		Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount		Gross
Carrying
Amount		Accumulated
Amortization		Net
Carrying
Amount
Trade name2 - 10$8,381 $(1,973)$6,408 $2,759 $(1,617)$1,142 
IP/technology105,821 (1,047)4,774 1,983 (899)1,084 
Customer relationships5 - 1013,380 (5,023)8,357 6,680 (4,419)2,261 
Non-compete agreements3 - 5402 (386)16 402 (381)21 
Total$27,984 $(8,429)$19,555 $11,824 $(7,316)$4,508 

During the three and six months ended June 30, 2023, the Company acquired intangible assets through the acquisition of the Big Village Entities as follows, (in thousands):
Useful Life
(Years)		Amount
Trade name7 to 10$5,622 
Developed technology103,838 
Customer relationships7 to 106,700 
Total$16,160 
SCHEDULE OF INTANGIBLE ASSETS
June 30, 2023December 31, 2022
Website$1 $2 
Other intangibles19,555 4,508 
Total intangible, net$19,556 $4,510 

  As of September 30, 2022  As of December 31, 2021 
  Weighted Average Useful Life (Years)  Gross Carrying Amount  Accumulated Amortization  Net Carrying Amount  Gross Carrying Amount  Accumulated Amortization  Net Carrying Amount 
Trade name  2.0  $2,759  $(1,499) $1,260  $2,759  $(1,141) $1,618 
IP/Technology  7.1   1,983   (863)  1,120   1,983   (753)  1,230 
Customer relationships  2.2   6,680   (4,191)  2,489   6,680   (3,494)  3,186 
Non-compete agreements  0.4   402   (378)  24   402   (371)  31 
Total  3.4  $11,824  $(6,931) $4,893  $11,824  $(5,759) $6,065 

  September 30, 2022  December 31, 2021 
Website $3  $4 
Other intangibles  4,893   6,065)
Total intangible, net $4,896  $6,069 

Amortization expense for the three months ended SeptemberJune 30, 2022,2023 and 20212022 was approximately $387,000$728,000 and $$390,000, respectively, and $1.1 million and $786,000 for the six months ended and June 30, 2023, and 2022, respectively.
396,000
, respectively,
Amortization expense related to both the website acquisition costs and the intangible assets. Amortizationassets and is included in general and administrative expense forin the nine months ended Septemberstatements of operations and comprehensive loss.
17
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2022, and 2021 was approximately $2023
(Unaudited)
1.2
 million and $
1.2
 million, respectively, related to both the website acquisition costs and the intangible assets.

As of SeptemberJune 30, 2022,2023, expected remaining amortization expense of intangible assets and website acquisition by fiscal year is as follows (in thousands):

SCHEDULE OF AMORTIZATION EXPENSE OF INTANGIBLE ASSETS AND WEBSITE ACQUISITION

     
Remainder of 2022 $385 
2023  1,542 
2024  1,542 
2025  780 
2026  147 
Thereafter  497 
Total expected amortization expense $4,893 

14
Remainder of 2023$1,650 
20243,300 
20252,539 
20261,904 
Thereafter10,163 
Total expected amortization expense$19,556 

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

NOTE 7 – GOODWILL

The following table represents the allocation of Goodwillgoodwill as of SeptemberJune 30, 2022,2023, and December 31, 20212022 (in thousands):
Owned &
Operated		Ad
Exchange		OtherTotal
December 31, 2022$9,725 $9,920 $— $19,645 
Addition— — 1,291 1,291 
June 30, 2023$9,725 $9,920 $1,291 $20,936 

Goodwill acquired as part of the Big Village Acquisition totals $1.3 million, and represents the value of unidentifiable intangible assets including future technology, new customer relationships and workforce. See Note 13, Business Combinations.
SCHEDULE OF CHANGES GOODWILL

  

Owned &

Operated

  

Ad

Exchange

  Total 
September 30, 2022 $9,725  $9,920  $19,645 
December 31, 2021 $9,725  $9,920  $19,645 

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 Goodwillgoodwill associated with the reporting unit exceeds the implied value of the Goodwillgoodwill associated with the reporting unit. No triggering events were identified

At December 31, 2022, an assessment was performedusing aqualitative assessment whichincludes 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. In a quantitative test, the fair value of a reporting unit is determined based on a discounted cash flow analysis and further analyzed using other methods of valuation. A discounted cash flow analysis requires us to make various assumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on our long-term projections. Assumptions used in our impairment testing are consistent with our internal forecasts and operating plans. Our discount rate is based on our debt structure, adjusted for current period.market conditions. If the fair value of the reporting unit exceeds its carrying amount, there is no impairment. To the extent the carrying amount exceeds its fair value, an impairment charge of the reporting unit’s goodwill would be necessary.

18
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)


NOTE 8 – ACCOUNTS PAYABLE AND ACCRUED EXPENSES

Accounts payable and accrued expenses consisted of the following (in thousands):
June 30, 2023December 31, 2022
Accounts payable$11,139 $8,585 
Accrued wages, commissions and bonus644 380 
Publisher cost763 559 
Professional fees767 677 
Subcontractor1,270 — 
Other619 116 
Total accounts payable and accrued expenses$15,202 $10,317 
NOTE 9 – OTHER LIABILITIES

Other liabilities consisted of the following (in thousands):
SCHEDULE OF ACCOUNTS PAYABLE AND ACCRUED EXPENSES

  September 30, 2022  December 31, 2021 
Accounts payable $7,680  $8,461 
Accrued wages, commissions and bonus
  573   1,459 
Publisher cost
  939   — 
Professional fees  577   775 
Other  199   272 
Total accounts payable and accrued expenses $9,968  $10,967 
June 30, 2023December 31, 2022
Current portion of long term lease$57 $38 
Dividend payable692 692 
Project advance expense (1)
2,696 — 
Litigation reserves1,338 1,107 
Other current liabilities5 1 
Total other liabilities$4,788 $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 910 – CENTRE LANE SENIOR SECURED CREDIT FACILITY

Effective June 1, 2020, the Company entered into a membership interest purchase agreement to acquire 100%100% of Wild Sky Media, a subsidiary (the “Purchase Agreement”). To finance this acquisition, the Company obtained a first lien senior secured credit facility from Centre Lane Partners Master Credit Fund II, L.P. (“Centre Lane Partners”) in the amount of $16.5$16.5 million, comprising $15.0of $15.0 million of initial indebtedness, repayment of Wild Sky’s existing accounts receivable factoring facility of approximately $900,000$900,000 and approximately $500,000$500,000 of expenses.

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

As part of the Seventeenth Amendment, the Company is required to pay an amendment fee of 2% of the principal amount of the existing First Out and Last Out Terms 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
19
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)


$4.3 million, respectively. These fees total $724,000 and are due on payable at maturity. Additionally, the maturity dates were extended to 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 Centre Lane Partners. 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 June 30, 2023, BV Agency, LLC and Centre Lane Partners own approximately 12.4% and 8.8% of the Company’s outstanding common stock, respectively.

Including the Seventeenth Amendment, Centre Lane Partners subsequently loaned the Company an additional $8.2$36.0 million to provide liquidity to fund operations beginning in April 2021 (the “Credit(as amended, the “Centre Lane Senior Secured Credit Facility” as amended)). 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 original note issued under the Centre Lane Senior Secured Credit Facility bearsinitially bore interest at a rate of 6.0%6.0% per annum, and matures June 30, 2025, with payments of 2.5% of outstanding principal beginning on June 30, 2023.2023. The interest rate was increased to 10.0% at10.0% pursuant to the first amendment to the Centre Lane Senior Secured Credit Facility and 12% afterinterest payable under the ninth amendment, in each case, with interestnote is payable-in-kind (“PIK Interest”) in lieu of cash payment. See below for a summary

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 amendments tocash payment. These draws are known as the Credit Facility.“last in first out loans”, totaling $4.4 million inclusive of exit fees at June 30, 2023, due and payable on April 20, 2026.

There is no prepayment penalty associated with this Centre Lane Senior Secured Credit Facility. However, certain future capital raises do require partial or full prepayments of the Centre Lane Senior Secured Credit Facility.

Facility would be required in the event of certain future capital raises.

Optional Prepayment

The Company may, at anytime,any time, voluntarily prepay, in whole or in part, a minimum of $250,000 $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.

Repayment of Loans

The Company is required to repay in cash to Centre Lane Partners (i) commencing with the Fiscal Quarterfiscal quarter ending on June 30, 2023, in consecutive quarterly installments to be paid on the last day of each Fiscal Quarterfiscal quarter of the Company, an amount equal to 2.5%2.5% of the outstanding aggregate principal amount of the Loansoriginal 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 Datematurity date all outstanding Obligationsobligations (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 Partiesloan parties that are due and payable on such date.

The outstanding amount for these draws at June 30, 2023 is $32.4 million, inclusive of interest paid in kind.


On June 30, 2023, the Company and its subsidiaries entered into its Eighteenth Amendment with Centre Lane Partners regarding installment payment due on June 30, 2023, to be paid in equal monthly installments on July 3, 2023, August 7, 2023 and September 5, 2023, respectively.

During the three and ninesix months ended SeptemberJune 30, 2022, and 20212023, the Company paid approximately $96,000 and $0$161,000 toward outstanding interest payable. payable, there was no payment made during the same period for 2022.

There was no payment on the principal loan balance for the three or nineand six months ended SeptemberJune 30, 2022,2023, and 2021.2022.
Fees

20
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)

Fees

Under the terms of the Centre Lane Senior Secured Credit Facility, the Company is also required to pay Centre Lane Partners a non-refundable annual administration fee equal to $35,000$35,000 for agency services provided under thisthe Credit Agreement. The Credit FacilityAgreement 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 Credit FacilityAgreement and on each anniversary of the Effective Date during the term of this Agreementagreement by adding and capitalizing the full amount of such fee to the outstanding principal balance of the Loans. For the nine months ended September 30, 2022, theloans. The accumulated administrative fee was $105,000since inception of the facility is $140,000 and is included in outstanding principal.

Default on Facility

The Credit Facility includes restrictive covenants that, among other things, require thatadministrative fee charged during the auditor’s opinion on the financial statements as ofthree months ended June 30, 2023 and for the year ended December 31, 2020, does not include a “going concern qualification.” The Company defaulted on this requirement2022 was $35,000 and on April 26, 2021, obtained a waiver of this requirement from the lender.

15
$35,000, respectively.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

The below table summarizes the loan balances and accrued interest for the periods ended SeptemberJune 30, 2022,2023, and December 31, 2021,2022, (in thousands):

SCHEDULE OF LOAN BALANCES AND ACCRUED INTEREST

  September 30, 2022  December 31, 2021 
       
Note payable – Centre Lane Senior Secured Credit Facility – net of discount, related party (Current Portion) $2,832  $7,316 
Note payable – Centre Lane Senior Secured Credit Facility – net of discount, related party  23,582   15,164 
Net principal  26,414   22,480 
Add: debt discount  3,490  3,854
Outstanding principal $29,904  $26,334 

June 30, 2023December 31, 2022
Note payable – Centre Lane Senior Secured Credit Facility – net of discount, related party (Current Portion)$4,048 $4,860 
Note payable – Centre Lane Senior Secured Credit Facility – net of discount, related party53,061 25,101 
Net principal57,109 29,961 
Add: debt discount7,041 3,148 
Outstanding principal$64,150 $33,109 
The below table summarizes the movement in the outstanding principal from inception through Septemberfor the periods ended June 30, 2023, and December 31, 2022, (in thousands):

SCHEDULE OF OUTSTANDING PRINCIPAL FROM INCEPTION

     
  September 30, 2022 
Original loan $16,417 
Add:    
Additional draw  8,175 
Exit and other fees  3,805 
Interest capitalized  1,657 
Total  13,637 
Less: Payment  (150)
Outstanding principal $29,904 

16
June 30, 2023December 31, 2022
Opening balance$33,109 26,334 
Add: 
Draws27,816 3,050 
Exit and other fees818 621 
Interest capitalized2,407 3,104 
31,041 6,775 
Outstanding principal$64,150 $33,109 


BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

Amendments to Centre Lane Senior SecuredCredit Facility

Commencing in April 2021, the Company and certain of its subsidiaries entered into various amendments to the Senior Secured Credit Agreement withbetween itself and Centre Lane Partners. The Company and its subsidiaries are parties to a credit agreement between itself and Centre Lane Partners as Administrative Agent and Collateral Agent. The Credit Agreement was amended to provide for additional loans used for working capital. 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 SeptemberJune 30, 2022,2023, there were 15eighteen amendments to the Credit Facility.Agreement.


Consistent with FASB ASC Topic 870 470 Debt (“,(“ASC 470”), the Company is required to perform an analysis of the change in each amendment to determine whether the change is a modification or an extinguishment of debt. Under a modification, no gain or loss is recorded, and a new effective interest rate is established based on the carrying value of the debt and revised cash flow. If the debt is extinguished, the old debt is derecognized and the new debt is recorded 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. Interest expense is recorded based on the effective interest rate of the
21
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)


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%10% different from the present value of the remaining cash flows under the terms of the old debt.

On July 8, 2022,

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 certainthe new debt of $62.7 million was recognized at estimated fair value. A gain on extinguishment was recognized against additional paid in capital of $670,000, as Centre Lane Partners is a related party.

On June 30, 2023, the Company and its subsidiaries entered into its fifteenth amendment to the Amended and Restated Senior Secured Credit Agreement between itself andEighteenth Amendment with Centre Lane Partners Master Credit Fund II, L.P. (“Centre Lane Partners”). The Company and its subsidiaries are parties to a credit agreement between itself and Centre Lane Partners as Administrative Agent and Collateral Agent dated June 5, 2020, as amended (the “Credit Agreement”). The Credit Agreement was amended to provide for an additional loan amount of $350,000 in the aggregate. This term loan maturesregarding installment payment due on June 30, 2023. In addition, and as part of the transaction, there is an Exit Fee (“the Exit Fee”) totaling $18,000 which will2023, to be added and capitalized to the principal amount of the term loan.

Based on external assessment performed on the amendment of the Credit Facilitypaid in equal monthly installments on July 8, 2022,3, 2023, August 7, 2023 and September 5, 2023, respectively. There was no impact on principal or interest and no fees incurred by the Company determined that it was a modification, and did not recognize any gain.

for this amendment.

The below table summarizes the amendments to the Credit Agreement that impacted principal, interest and fees that were executed by the Company since the inception of the facility to SeptemberJune 30, 2022,2023, (in thousands),thousands, except for share data:

SCHEDULE OF AMENDMENTS EXECUTED SINCE INCEPTION OF FACILITY

Amendment Number  Amendment Date Additional Loan $’000  New Repayment Date New Interest Rate  Exit Fee (B)  Common Stock Issued  Accounting Impact
1(A)  April 26, 2021 $-  June 30, 2025  10% $-   150,000  Extinguishment
2  May 26, 2021  1,500  June 30, 2025  -%  750   3,000,000  Modification
3  August 12, 2021  500  June 30, 2025  -%  250   2,000,000  Modification
4  August 31, 2021  1,100  June 30, 2025  -%  550   -  Modification
5  October 8, 2021  725  June 30, 2025  -%  363   -  Extinguishment
6  November 5, 2021  800  June 30, 2025  -%  800   7,500,000  Modification
7  December 23, 2021  500  June 30, 2025  -%  500   -  Modification
8  January 26, 2022  350  June 30, 2025  -%  350   -  Modification
9  February 11, 2022  250  June 30, 2023  12%  13   -  Modification
10  March 11, 2022  300  June 30, 2023  -%  15   -  Modification
11  March 25, 2022  500  June 30, 2023  -%  25   -  Modification
12  April 15, 2022  450  June 30, 2023  -%  23   -  Modification
13  May 10, 2022  500  June 30, 2023  -%  25   -  Modification
14  June 10, 2022  350  June 30, 2023  -%  18   -  Modification
15  July 8, 2022  350  June 30, 2023  -%  18   -  Modification
     $8,175        $3,700   12,650,000   

data):

Number		DateDraw $’000Repayment
Date		Interest
Rate (PIK)		Interest Rate (Cash)Agency FeeExit Fee (A)Common
Stock Issued		Accounting Impact
104/26/21$— April 20, 202610 %$— $— $— 150,000 Extinguishment(B)
205/26/211,500 April 20, 202610 %— — 750 3,000,000 Modification
308/12/21500 April 20, 202610 %— — 250 2,000,000 Modification
408/31/211,100 April 20, 202610 %— — 550 — Modification
510/08/21725 April 20, 202610 %— — 363 — Extinguishment
611/05/21800 April 20, 202610 %— — 800 7,500,000 Modification
712/23/21500 April 20, 202610 %— 70 500 — Modification
$5,125 $70 $3,213 12,650,000 
801/26/22350 April 20, 202610 %— — 350 — Modification
902/11/22250 April 20, 20264 %8 %— 13 — Modification
1003/11/22300 April 20, 20264 %8 %— 15 — Modification
1103/25/22500 April 20, 20264 %8 %— 25 — Modification
1204/15/22450 April 20, 20264 %8 %— 23 — Modification
1305/10/22500 April 20, 20264 %8 %35 25 — Modification
1406/10/22350 April 20, 20264 %8 %— 18 — Modification
1507/08/22350 April 20, 20264 %8 %— 18 — Modification
$3,050 $35 $487 — 
1602/10/231,500 April 20, 20264 %8 %— 75 — Modification
1704/20/2326,316 April 20, 202615 %— %35 708 21,401,993 Extinguishment(C)
$35,991 $140 $4,483 34,051,993 
(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 $6,000,000 $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 $800,000 in dividends from the previous limit of $500,000 $500,000 per annum.
(B)(C)Added15% PIK until April 20, 2024, then 5% cash and capitalized to the principal amount of the original loan and the original loan terms apply.

1710% PIK thereafter.

Draws advanced by amendments 2 through 8 totaling $5.5 million and exit fees totaling $3.6 million, were due for full repayment on February 28, 2022. Prior to this date, the loan agreement allowed the Company to waive the accrual of
22
BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September

June 30, 2023
(Unaudited)


interest on these amounts. There was no repayment of these amounts, and as a result, on March 11, 2022, amendment 10 was executed, changing the repayment date of the outstanding principal and commencing interest accrual on the exit fees.

All amounts advanced for amendments 9 through 16 were due on June 30, 2023 along with accrued and unpaid interest, however, the maturity date was changed to April 20, 2026 with amendment 17. The outstanding amount at June 30, 2023 is $4.4 million, inclusive of interest paid in kind.
(Unaudited)

As of SeptemberJune 30, 2022,2023 and December 31,2021, the carrying value31, 2022, of the facilityCentre Lane Senior Secured Credit Facility was $26.4$57.1 million and $22.5$30.0 million, respectively, net of unamortized debt discount of $3.5$7.0 million and $3.9$3.1 million, respectively. The discount is being amortized over the remaining life of the Centre Lane Senior Secured Credit facility using the effective interest method.

Interest expense for the three and ninesix months ended SeptemberJune 30, 2022,2023, and 20212022 consisted of the following (in thousands):
Three Months EndedSix Months Ended
June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Interest expense$1,707 $829 $2,570 $1,386 
Amortization536 331 837 608 
Total interest expense$2,243 $1,160 $3,407 $1,994 


SCHEDULE OF INTEREST EXPENSE
Subsequent Events

  September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
  Three Months Ended  Nine Months Ended 
  September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
Interest expense $433  $520  $1,555  $945 
Amortization  311   235   913   373 
Total interest expense $744  $755  $2,468  $1,318 
On July 28, 2023, the Credit Agreement was amended, to provide for an additional term loan amount of $2.0 million. This term loan matures on June 30, 2024.
See Note 23, Subsequent Events to the consolidated financial statements.

NOTE 1011 – 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 August 15,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$20.0 million to owners and employees of Oceanside and contingent consideration of $750,000$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

On 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.

rate.

On September 6, 2022, the Company’s Board of Directors (the "Board") approved a settlement with the Oceanside Shareholders providing for payment of $650,000$650,000 payable over a 50-month period commencingwhich commenced January 2023. The Company recognize 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 accruedAmount unpaid as of DecemberJune 30, 2021. The amount is included in Litigation settlement in the condensed consolidated statement of operations.2023 was $572,000.
NOTE 12 –

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

NOTE 11 –10% CONVERTIBLE PROMISSORY NOTES


During

On November 30, 2018, the Company issued 10% convertible promissory notes ("Convertible Promissory notesNotes") in the amount of $80,000$80,000 to the Chairman of the Board, a related party. The notesConvertible 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$0.40 per share. A beneficial conversion feature exists on the date the convertible notesConvertible Notes were issued whereby the fair value of the underlying common stock to which the notesConvertible Notes are convertible is in excess of the face value of the noteConvertible Notes of $$80,000.
23
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
80,000
.


The principal balance of these notesConvertible Notes payable was $80,000$80,000 at SeptemberJune 30, 20222023 and December 31, 2021,2022. The total Convertible Notes payable was $75,000 and discounts recognized upon these origination dates as a result$68,000, net of the beneficial conversion feature total $16,000discount of $5,000 and $26,000, respectively. At September$12,000, at June 30, 20222023 and December 31, 2021, the total 10% Convertible Promissory note payable was $2022, respectively.
64,000
 and $54,000, net of discount, respectively.

Interest expense for the 10% Convertible Promissory noteNotes was $6,000$6,000 inclusive of interest of $2,000$2,000 and discount amortization was $4,000of $4,000 for the three months ended SeptemberJune 30, 2022,2023, and 2021, respectively.2022. Interest expense for the 10% Convertible Promissory note for the nine months ended September 30, 2022, and 2021Notes was $17,000,$11,000 inclusive of interest of $7,000$4,000 and discount amortization of $7,000 for the six months ended June 30, 2023 and 2022.

The outstanding principal and interest of the Convertible Notes is due and payable November 2023.

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 purchase price has been allocated to the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price over the fair value of the net assets acquired was $allocated to goodwill and intangibles. The goodwill of $1.3 million recognized was attributable to assembled workforce
24
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)

10,000
and strategic benefits that are expected to be achieved. Identified intangibles total $16.2 million inclusive of the below, in thousands:

Useful Life
(Years)		Amount
Trade name7 to 10$5,622 
Developed technology103,838 
Customer relationships7 to 106,700 
$16,160 
The following table summarizes the allocation of the purchase price based on the estimated fair value of the acquired assets and assumed liabilities at the date of the Big Village Acquisition, in thousands:
Purchase price consideration
Center Lane Senior Secured Credit Facility$19,874 
Fair value of assets assumed
Accounts receivable$14,872 
Intangibles16,160 
Goodwill1,291 
Prepaid and other assets795 
Property and equipment216 
33,334 
Fair value of liabilities assumed
Accounts payable and accrued expenses$7,271 
Deferred revenue4,754 
Other current liabilities1,435 
13,460 
Total fair value of assets and liabilities assumed$19,874 

, respectively.
We incurred costs related to the Big Village Acquisition of approximately $1.0 million during the three and six months ended June 30, 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.

NOTE 1214 – PAYCHECK PROTECTION PROGRAM

The Paycheck Protection Program (“PPP”) was established by the Coronavirus Aid, Relief, and Economic Security (“CARES”Act (the "CARES Act") Act,and administered by the Small Business Administration (“SBA”). During 20202021 to 2021,2022, the Company and one of its subsidiaries.subsidiaries, Wild Sky Media, entered into agreements to borrow funds under the PPP program. 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 bears 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 PPP forgiveness during the nine months ended September

25
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2021.

2023

(Unaudited)
Second Bright Mountain PPP Loan

On February 17, 2021, the Company entered into a promissory note of $296,000$296,000 with Regions Bank (the “Second Bright Mountain PPP Loan”) which had a two-yeartwo-year term and bears interest at a rate of 1.0%1.0% per annum. This was the second tranche available under the PPP program and was forgiven as of June 15, 2022, and the Company recorded a non-cash gain of $296,000$296,000 on the PPP forgiveness during the ninethree and six months ended SeptemberJune 30, 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 PPP forgiveness during the nine months ended September 30, 2021.

Second Wild Sky PPP Loan

On March 23, 2021, Wild Sky entered into a promissory note of $841,000$842,000 with Holcomb Bank (the “Second Wild Sky PPP Loan”) which had a two-yeartwo-year term and bears interest at a rate of 1.0%1.0% per annum. This was the second tranche available under the PPP program and was forgiven as of March 23, 2022, and the Company recorded a non-cash gain of $841,000$842,000 on the PPP forgiveness during the ninesix months ended SeptemberJune 30, 2022.

19

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

NOTE 1315 – REVENUE RECOGNITION

The following table represents our revenuesrevenue disaggregated by type (in thousands):

SCHEDULE OF REVENUES DISAGGREGATION

                 
  Three Months Ended  Nine Months Ended 
  September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
             
Revenue:                
Digital media $2,464  $2,768  $6,407  $5,828 
Advertising services  2,780   1,037   8,013   2,810 
Total revenues $5,244  $3,805  $14,420  $8,638 

Three Months EndedSix Months Ended
June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Revenue:
Digital publishing$1,444 $2,364 $2,399 $3,988 
Advertising technology11,172 3,353 11,715 5,188 
Total revenue$12,616 $5,717 $14,114 $9,176 
Geographic Information

Revenue by geographical region consistconsists of the following (in thousands):

SCHEDULE OF REVENUE BY GEOGRAPHICAL REGION INFORMATION

                 
  Three Months Ended  Nine Months Ended 
  September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
             
Revenue:                
Unites States $4,902  $3,372  $13,375  $7,536 
Israel  342   433   1,045   1,102 
Total revenue $5,244  $3,805  $14,420  $8,638 

Three Months EndedSix Months Ended
June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Revenue:
Unites States$12,616 $5,053 $14,077 $8,108 
Israel— 664 37 1,068 
Total revenue$12,616 $5,717 $14,114 $9,176 
Revenue by geography is generally based on the country of the Company’s contracting entity. Total United States revenue was approximately 93%100% and 88% of total revenue for the three and nine months ended SeptemberJune 30, 2023 and 2022, respectively, and 89%100% and 87%88% for the three and ninesix months ended SeptemberJune 30, 2021,2023 and 2022, respectively.

As of SeptemberJune 30, 2022,2023, and December 31, 2021,2022, approximately 100%100% of our long-lived assets were attributable to operations in the United States. Long-lived assets include websites and other intangibles assets that are utilized in overall revenue generation.

26
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
Deferred Revenue

The movement in deferred revenue during the ninesix months ended SeptemberJune 30, 2022,2023 and the year ended December 31, 2021,2022 comprised the following (in thousands):

SCHEDULE OF DEFERRED REVENUE 

  September 30, 2022  December 31, 2021 
Deferred revenue at start of the period $1,162  $347 
Amounts invoiced during the period  433   1,059 
Less: revenue recognized during the period  (599)  (244)
Deferred revenue at end of the period $996  $1,162 

20
June 30, 2023December 31, 2022
Deferred revenue at start of the period$737 $1,162 
Amounts invoiced during the period1,561 588 
Business combination4,754 — 
Less: revenue recognized during the period(2,189)(1,013)
Deferred revenue at end of the period$4,863 $737 

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

NOTE 1416 – STOCK BASED COMPENSATION

On April 14, 2022, the Board of Directors of the Company and the Compensation Committee of the Board adopted and approved the 2022 Bright Mountain Media Stock Option Plan (the “Stock Option Plan”). The Stock Option Plan provides for the grant of awards to eligible employees, directors and consultants in the form of stock options. The purpose of the Stock Option Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. The Stock Option Plan 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 hereof.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. As of SeptemberJune 30, 2022, 16,524,3402023, 16,543,215 shares were remaining under the 2022Stock Option Plan for the future issuance.

Options

As of SeptemberJune 30, 2022,2023, options to purchase 5,975,6605,956,785 shares of common stock were outstanding under the Stock Option Plan at a weighted average exercise price of $0.31$0.14 per share.

Compensation expense recorded in connection with the Stock Option Plan was $38,000$33,000 and $100,000$30,000 for the three months ended SeptemberJune 30, 2023 and 2022, respectively, with $58,000 and 2021, respectively and $97,000 and $179,000$59,000 for the ninesix months ended SeptemberJune 30, 2022,2023 and 2021,2022, respectively. These amounts have been recognized as a component of general and administrative expenses in the accompanying condensed consolidated financial statements.

The following table presents the activity of the Company’s outstanding stock options of common stock for the ninesix months ended SeptemberJune 30, 2022:

SCHEDULE OF STOCK OPTION ACTIVITY

Common Stock Options 

Number of

Options

  

Weighted

Average

Exercise

Price

  

Weighted

Average

Remaining

Contractual

Term

  

Aggregate

Intrinsic

Value

 
Balance Outstanding, December 31, 2021  1,415,227  $0.62   6.2  $— 
Granted  5,070,433   0.01   9.6   — 
Exercised  (100,000)  —   —   — 
Forfeited  (338,000)  —   —   — 
Expired  (72,000)  —   —   — 
Balance Outstanding, September 30, 2022  5,975,660  $0.31   7.9  $— 
Exercisable at September 30, 2022  642,864  $0.75   3.1  $— 
Unvested at September 30, 2022  5,332,796  $0.04   2.1  $— 

The intrinsic value of the options exercised during the nine months ended September2023:

Common Stock OptionsNumber of
Options		Weighted
Average
Exercise
Price		Weighted
Average
Remaining
Contractual
Term		Aggregate
Intrinsic
Value
Balance Outstanding, December 31, 20226,517,660$0.12 7.8$— 
Granted535,000$0.16 9.2$— 
Exercised(70,000)— — $— 
Forfeited(869,375)$0.01 — $— 
Expired(156,500)0.10 — — 
Balance Outstanding, June 30, 20235,956,785$0.14 8.2$— 
Exercisable at, June 30, 20231,835,897$0.29 6.3$— 
Unvested at, June 30, 20234,120,888$0.07 9.0$— 
27
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2022, and 2021 was $0.

Summarized information with respect to options outstanding under the stock option plans at September 30, 2022, is as follows:

SCHEDULE OF OPTIONS OUTSTANDING UNDER OPTION PLANS

   Options Outstanding       
Range or
Exercise Price		  

Number

Outstanding

  

Weighted

Average

Exercise

Price

  

Remaining

Average

Contractual

Life

(In Years)

  

Number

Exercisable

  

Weighted

Average

Exercise

Price

 
$0.01 – 0.13   5,062,433  $0.01   9.6   12,500  $0.01 
$0.14 – 0.24   225,000   0.20   9.88   —   — 
$0.25 – 0.49   54,000   0.28   0.7   54,000   0.28 
$0.50 – 0.85   501,000   0.69   2.7   501,000   0.69 
$0.86 – 1.75   133,227   1.64   7.2   75,364   1.63 
                       
Total   5,975,660  $0.11   8.9   642,864  $0.75 

2023

(Unaudited)
As of SeptemberJune 30, 2022,2023, there were total unrecognized compensation costs related to non-vested share-based compensation arrangements of $146,000$167,588 to be recognized through May 2026.

2030.

The following table provides the weighted average assumptions used in determining the fair value of the stock-based awards for the ninethree months ended SeptemberJune 30, 2023 and 2022:
June 30, 2023June 30, 2022
Expected Term (years)6.256.25
Expected volatility499 %412 %
Risk -free interest rate3.59 %2.70 %
Dividend yield— %— %
Expected forfeiture rate— %— %
535,000 and 4,845,433 options were issued during the six months ended June 30, 2022 and 2021:

SCHEDULE OF STOCK OPTIONS WEIGHTED AVERAGE ASSUMPTIONS

  

September 30,

2022

  

September 30,

2021

 
Expected Term (years)  6.25   6.25 
Expected volatility  96% - 104%  94% - 96%
Risk -free interest rate  2.73% - 2.93%  0.67%
Dividend yield  0%  0%
Expected forfeiture rate  0%  0%

21
2022.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

NOTE 1517 – FAIR VALUE MEASUREMENTS

The fair value of the Company’s financial assets and liabilities reflects management’s estimate of amounts that the Company would have received in connection with the sale of the assets or paid in connection with the transfer of the liabilities in an orderly transaction between market participants at the measurement date. In connection with measuring the fair value of its assets and liabilities, the Company seeks to maximize the use of observable inputs (market data obtained from independent sources) and to minimize the use of unobservable inputs (internal assumptions about how market participants would price assets and liabilities).

The following fair value hierarchy is used to classify assets and liabilities based on the observable inputs and unobservable inputs used in order to value the assets and liabilities:

Level 1: Valuation is based on unadjusted quoted prices in active markets for identical assets and liabilities that are accessible at the reporting date. Because valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.


Level 2: Valuation is determined from pricing inputs that are other than quoted prices in active markets that are either directly or indirectly observable as of the reporting date. Observable inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and interest rates and yield curves that are observable at commonly quoted intervals.


Level 3: Valuation is based on inputs that are both significant to the fair value measurement and unobservable. Level 3 inputs include 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 condensed 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%10% Convertible Promissory Note approximates the fair value due to their nature and level of risk.

NOTE 16 – 18– 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.

28
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)

The Company leases its corporate offices in Boca Raton, Florida under a long-term non-cancellable operating lease agreement that expired on October 31, 2021.2021 (as amended, the “Lease”). On June 14, 2022, the Company signed a second lease addendum (“Second(the “Second Addendum”) to the leaseLease with a lease term for five years beginning upon completion of improvements to the office space by the Landlord,landlord, which was completed on September 12, 2022. The annual base rent is $96,000,$100,000, with a provision for a 3% increase on each anniversary of the rent commencement date.date. The Company has the option to renew the leaseLease for one additional five-year term.
five-year
 term.

At SeptemberJune 30, 2022,2023 the operating lease asset was $338,000 and is included under assets on the consolidated balance sheet.

At June 30, 2023, the operating lease liability was $381,000$333,000, including current portion of $57,000 and is included under liabilities on the condensed consolidated balance sheet.

At September 30, 2022, the operating lease asset was $381,000 and is included under assets on the condensed consolidated balance sheet.

Over the lease term, the Company is required to amortize the operating lease asset and record interest expense on the lease liability created at leaseLease commencement. Operating lease expense was approximately $6,000$40,000 and $81,000 for the three and ninesix months ended SeptemberJune 30, 2023, respectively, and there was no such expense for the same period in 2022.

Rent expense prior to commencement of the lease was $3,000, net of landlord incentives and $95,000Lease for the three and ninesix months ended SeptemberJune 30, 2022 was $44,000 and $92,000, respectively.

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.

22

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

Rent expense was $60,000 and $162,000 for the three and nine months ended September 30, 2021.

As of SeptemberJune 30, 2022,2023 and December 31, 2021,2022, the right-of-use asset and lease liability for the operating lease are summarized as follows (in thousands):

June 30, 2023December 31, 2022
Assets  
Operating lease right-of-use asset$338 $367 
  
Liabilities  
Operating lease liability, current$57 $38 
Operating lease liability, net of current portion276 319 
Total operating lease liability$333 $357 

Current portion of operating lease liability of $57,000 and $38,000 is included in other liabilities on the balance sheets at June 30, 2023 and December 31, 2022, respectively.
Litigation
SCHEDULE OF RIGHT OF USE ASSET AND LEASE LIABILITY

  September 30, 2022  December 31, 2021 
Assets        
Operating lease right-of-use asset $381  $      - 
         
Liabilities        
Operating lease liability, current $48  $- 
Operating lease liability, net of current portion  333   - 
Total operating lease liability $381  $- 

Litigation

In accordance with applicable accounting guidance, the Company establishes an accrued liability for litigation and regulatory matters when those matters present loss contingencies that are both probable and estimable. In such cases, there may be exposure to loss in excess of any amounts accrued. When a loss contingency is not both probable and estimable, the Company does not establish an accrued liability. As a litigation or regulatory matter develops, the Company, in conjunction with any outside counsel handling the matter, evaluates on an ongoing basis whether such matter presents a loss contingency that is probable and estimable. If, at the time of evaluation, the loss contingency related to a litigation or regulatory matter is not both probable and estimable, the matter will continue to be monitored for further developments that would make such loss contingency both probable and estimable. When a loss contingency related to a litigation or regulatory matter is deemed to be both probable and estimable, the Company will establish an accrued liability with respect to such loss contingency and record a corresponding amount of litigation-related expense. The Company will then continue to monitor the matter for further developments that could affect the amount of any such accrued liability.

29
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
Ladenburg

Synacor Litigation

In 2020, Synacor, Inc .

On July 11, 2023, Ladenburg Thalmann & Co. Inc. (“Synacor”Ladenburg”) commencedfiled 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 amountbreach of $40,000 to be 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 condensed consolidated statements of operations.

At September 30, 2022, the Company paid $108,000 in connection with the Synacor settlement agreement , leaving an outstanding balance of $76,000. This amount is included in other liabilities on the condensed consolidated balance sheet at September 30, 2022.

MediaHouse Defamation

A former employee of the Company filed a suit against the Company MediaHouse, Inc., and Gregory A. Peters, a former Executive, (the “Defendants”) alleging two counts of defamation.

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 $57,000 was outstanding at September 30, 2022. This amount is included in other liabilities on the condensed consolidated balance sheet.

23

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

Slutzky & Winshman – Default on Obligations

Bright Mountain has been sued by plaintiffs Joey Winshman, Eli Desatnik and Nadav Slutzy (“Plaintiffs”) in a lawsuit filedcontract 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 December 17, 2021 (the “Lawsuit”). Plaintiffs allegeSeptember 1, 2020. According to Ladenburg, that Bright Mountain defaulted on its obligationsAgreement provided that Ladenburg would be the exclusive investment advisor and banker for the Company. Ladenburg alleges that the Agreement entitles them to Plaintiffs under three promissory notesa fee for any financing transactions (debt financing or merger and acquisition transactions) 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,Company engages in during the Company’s Board of Directors approved a settlement of $650,000 payable over a 50-month period commencing January 2023. See Note 10, Oceanside Share Exchange Loan for detailsterm of the settlement.

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.

Other Litigation

Other litigation is defined as smaller claims or litigationslitigation that are neither individually ornor 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. However,The outcome is not determinable as of the Company believes that the resolutionissuance of these other proceedings will not, based on information currently available, have a material adverse effect on the Company’s financial position or results of operations.

statements.

NOTE 1719 – STOCKHOLDERS’SHAREHOLDERS’ DEFICIT

Preferred Stocks

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. Speyer. The Company recognizes 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 condensed consolidated balance sheet.

The Company has authorized 20,000,000 shares of preferred stock with a par value of $0.01$0.01 (the “Preferred Stock”), issuable in such series and with such designations, rights and preferences as the Board of Directors may determine. The Company’s Board of Directors has previously designated five series of preferred stock, consisting of 10% Series A Convertible Preferred Stock (“Series A Stock”), 10% Series B Convertible Preferred Stock (“Series B Stock”), 10% Series C Convertible Preferred Stock (“Series C Stock”), 10% Series D Convertible Preferred Stock (“Series D Stock”) and 10% Series E Convertible Preferred Stock (“Series E Stock”) and 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. The Series F-1 pays dividends at the rate of 12%12% per annum and automatically converts into shares of our common stock on April 10, 2022. The Series F-2 pays dividends at the rate of 6%6% per annum and automatically converts into shares of our common on July 27, 2022. The Series F-3 pays dividends at the rate of 10%10% per annum and automatically converts into shares of our common stock on August 30, 2022. The Series E pays dividends at the rate of 10% per annum and automatically converted into shares of our common stock on November 21, 2022.
Additional terms of the designations, rights and preferences of the Series F-1, Series F-2 and Series F-3 include:

●the shares have no voting rights, except as may be provided under Florida law;
●the shares pay cash dividends subject to the provisions of Florida law at the dividend rates set forth above, payable monthly in arrears;
●the shares are convertible at any time at the option of the holder into shares of our common stock on a 1:1 basis. The conversion ratio is proportionally adjusted in the event of stock splits, recapitalization or similar corporate events. Any shares not previously converted will automatically convert into shares of our common stock on the dates set forth above;
●the shares rank junior to the 10% Series A Convertible Preferred Stock and our 10% Series E Convertible Preferred Stock;
●in the event of a liquidation or winding up of the Company, the shares have a liquidation preference of $0.50 per share for the Series F-1, $0.50 per share for the Series F-2 and $0.40 per share for the Series F-3; and
●the shares are not redeemable by the Company.

24
•the shares have no voting rights, except as may be provided under Florida law;

•

the shares pay cash dividends subject to the provisions of Florida law at the dividend rates set forth above, payable monthly in arrears;

•the shares are convertible at any time at the option of the holder into shares of our common stock on a 1:1 basis. The conversion ratio is proportionally adjusted in the event of stock splits, recapitalization or similar corporate events. Any shares not previously converted will automatically convert into shares of our common stock on the dates set forth above;
30
BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September

June 30, 20222023
(Unaudited)
•

(Unaudited)

At September 30, 2022,the shares rank junior to the 10% Series A Convertible Preferred Stock and December 31, 2021, 125,000 shares ofour 10% Series E Stock were issuedConvertible Preferred Stock;

•in the event of a liquidation or winding up of the Company, the shares have a liquidation preference of $0.50 per share for the Series F-1, $0.50 per share for the Series F-2 and outstanding. There$0.40 per share for the Series F-3; and
•the shares 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.not redeemable by the Company.


Other designations, rights and preferences of each of series of preferred stock are identical, including (i) including:
•shares do not have voting rights, except as may be permitted under Florida law, (ii) law;
•are convertible into shares of our common stock at the holder’s option on a one for one basis, (iii) basis;
•are entitled to a liquidation preference equal to a return of the capital invested,invested; and (iv)
•each share will automatically convert into shares of common stock five years from the date of issuance or upon a change in control.

Both the voluntary and automatic conversion formulas are subject to proportional adjustment in the event of stock splits, stock dividends and similar corporate events.

Dividends paid for Convertible Preferred Stock

There were $no shares of preferred stock issued or outstanding at June 30, 2023, and December 31, 2022.
1,000
 during
At June 30, 2023 and December 31, 2022, accrued unpaid preference dividend was $692,000 payable to the three months ended September 30, 2022Company's Chairman, Mr. Kip Speyer, and for Series E and F Convertible Preferred Stock were $0 duringis included under other liabilities in the three months ended September 30, 2021. Dividends paid for Convertible Preferred Stock were $2,000 during the nine months ended September 30, 2022 and for Series E and F Convertible Preferred Stock were $3,000 during the nine months ended September 30, 2021.

consolidated balance sheet.

Common Stocks

Shares of Common Stock under the 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 is a term of 10 years and authorizes the issuance of up to 22,500,000 shares of the Company’s common stock. As of SeptemberJune 30, 2022, 16,524,3402023, 16,543,215 shares were remaining under the 2022 Plan for the future issuance.

Issue

31
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
Issuance of Common Stock

During the ninethree and six months ended SeptemberJune 30, 2023, the Company issued shares of our common stock as follows (in thousands, except share data):
Three Months EndedSix Months Ended
June 30, 2023June 30, 2023
Shares (#)ValueShares (#)Value
Shares issued to Centre Lane related to debt financing21,401,993 $1,926 21,401,993 $1,926 
Common stock issued for options exercised70,000 170,000 1
Common stock issued for services rendered——190,000 31
21,471,993 $1,927 21,661,993 $1,958 
During the six months ended June 30, 2022, the Company issued a net 174,253 shares of our common stock for the following concepts (in thousands, except share data):
Shares (#)Value
Shares issued to Oceanside employees per the acquisition agreement valued at $1.60174,253$279 
Total174,253$279 
Treasury Stocks

SCHEDULE OF COMMON SHARES ISSUED DURING THE PERIOD

  Shares (#)  Value 
Shares issued to Oceanside employees per the acquisition agreement valued at $1.60  174,253  $279 

During the nine monthsyear ended September 30,December 31, 2021, the Company issued a net 16,052,966 shares of ourthree shareholders relinquished their Bright Mountain common stock forshares. A total of 825,175 shares were acquired with a value of $220,000. The shares are being held as Treasury Stock by the following concepts (in thousands, except share data):

  Shares (#)  Value 
Shares issued to Centre Lane related to debt financing  5,150,000  $2,559 
Options exercised by employees  100,000   14 
Warrants exercised  25,000   10 
Stock issued for deemed dividend (1)  10,398,700   - 
Shares issued to Oceanside employees per the acquisition agreement valued at $1.60  379,266   607 
Total  16,052,966  $3,190 

(1)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.

25
Company.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September

Warrants
At June 30, 2022

(Unaudited)

Warrants

At September 30, 2022,2023, we had 35,823,31631,173,316 common stock warrants outstanding to purchase shares of our common stock with an exercise price ranging between $0.65$0.65 and $1.00$1.00 per share. A summary of the Company’s warrants outstanding as of SeptemberJune 30, 2023, is presented below:

Warrants as of
June 30, 2023
Exercise Price		Number
Outstanding		Gross cash proceeds
if exercised
$1.00 4,992,308$4,992 
$0.65 10,725,000$6,971 
$0.75 15,456,008$11,592 
 31,173,316$23,555 
Approximately 4,825,000 common stock warrants expired during the six months ended June 30, 2023.
32
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
At December 31, 2022, we had 35,998,316 common stock warrants outstanding to purchase shares of our common stock with an exercise price ranging between $0.65 and 2021, respectively$1.00 per share. A summary of the Company’s warrants outstanding as of December 31, 2022, is presented below:

SCHEDULE OF WARRANT OUTSTANDING

Warrants as of

September 30, 2022

  Number  Gross cash proceeds 
Exercise Price  Outstanding  if exercised 
$1.00   4,817,308  $4,817,308 
$0.65   15,550,000  $10,107,500 
$0.75   15,456,008  $11,592,006 
     35,823,316  $26,516,814 

Warrants as of

September 30, 2021

  Number  Gross cash proceeds 
Exercise Price  Outstanding  if exercised 
$1.00   4,817,308  $4,817,308 
$0.65   15,550,000  $10,107,500 
$0.75   15,456,008  $11,592,006 
     35,823,316  $26,516,814 

During 2021, a total of 25,000 warrants were exercised at $0.40 per share.

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. 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 and will be resold at later dates.

Warrants as of
December 31, 2022
Exercise Price		Number
Outstanding		Gross cash proceeds
if exercised
$1.00 4,992,308$4,992 
$0.65 15,550,000$10,108 
$0.75 15,456,008$11,592 
 35,998,316$26,692 
NOTE 1820 – LOSS PER SHARE

As of SeptemberJune 30, 2022,2023, and September 30, 2021,2022, there were 149,984,636172,106,629 and 149,810,383149,984,636 shares of common stock issued, respectively, and 149,159,461171,281,454 and 148,985,208149,159,461 shares of common stock outstanding, respectively. Outstanding shares as of SeptemberJune 30, 2022,2023, and September 30, 2021,2022, have been adjusted to reflect 825,175 treasury shares.


Basic net loss per share is computed by dividing the net earnings attributable to common shareholders by the weighted average number of common shares outstanding during the period.

Diluted earningsloss per share is computed by dividing net income attributable to common shareholders by the weighted average number of common shares outstanding, increased to include the number of additional common shares that would have been outstanding if the dilutive potential common shares had been issued. Conversion or exercise of the potential common shares is not reflected in diluted earnings per share unless the effect is dilutive. The dilutive effect, if any, of outstanding common share equivalents is reflected in diluted earnings per share by application of the treasury stock method, and if-converted method as applicable.

26

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2022

(Unaudited)

The following tables reconcile actual basic and diluted earnings per share for the three and ninesix months ended SeptemberJune 30, 2022,2023, and September 30, 20212022 (in thousands, except per share data).

SCHEDULE OF LOSS PER SHARE

                 
  Three Months ended  Nine Months ended 
  September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
Net loss $(1,918) $(2,889) $(5,222) $(9,087)
Preferred stock dividends  (1)  (274)  (3)  (453)
Net loss available to common shareholders, basic and diluted computation  (1,919)  (3,163)  (5,225)  (9,540)
                 
Weighted average shares - denominator basic and diluted computation  149,159,461   125,744,703   149,140,312   121,718,466 
Loss per common share – basic and diluted $(0.01) $(0.03) $(0.04) $(0.08)

Three Months EndedSix Months Ended
June 30, 2023June 30, 2022June 30, 2023June 30, 2022
Loss per share:
Numerator:
Net loss$(6,071)$(1,458)$(9,867)$(3,575)
Preferred stock dividends— (1)— (2)
Net loss available to common shareholders$(6,071)$(1,459)(9,867)(3,577)
Denominator
Weighted-average common shares outstanding
Basic and diluted166,779,390149,159,461158,291,304149,130,579
Net loss per common share
Basic and diluted$(0.04)$(0.01)$(0.06)$(0.02)
33
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)
The anti-dilutive securities excluded from the weighted-average shares used to calculate the diluted net loss per common share were as follows:

SCHEDULE OF ANTI DILUTIVE SECURITIES EXCLUDED FROM THE WEIGHTED-AVERAGE SHARES

       
  As of 
  September 30, 2022  September 30, 2021 
Shares subject to outstanding common stock options  5,975,660   915,227 
Shares subject to outstanding warrants  35,823,316   35,823,316 
Shares subject to preferred stock  125,000    125,000  
Anti-dilutive securities excluded from the weighted-average shares  125,000    125,000  

As of June 30,
20232022
Shares unvested and subject to exercise of stock options5,956,7856,188,660
Shares subject to warrants stock conversion31,173,31635,823,316
Shares subject to convertible preferred stock conversion— 125,000
Shares subject to convertible notes stock conversion200,000 200,000 
NOTE 1921 – RELATED PARTIES

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 20212022 and through the ninesix months ended SeptemberJune 30, 2022. 2023.

Additionally, in connection with the Seventeenth Amendment, on June 30, 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. 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 SeptemberJune 30, 2022,2023, the Company has entered into fifteen18 amendments to the Amended and Restated Senior Secured Credit agreementAgreement between itself and Centre Lane Partners. See Note 9 -10, Centre Lane Senior Secured Credit Facility for more information.

The total related party debt owed to Centre Lane Partners was $29.9$64.2 million and $26.3$33.1 million as of SeptemberJune 30, 20222023 and December 31, 2021,2022, respectively. See Note 9,10, Centre Lane Senior Secured Credit Facility, for details on this facility.

more information.

Convertible Promissory Note

As discussed in Note 11,12, 10% Convertible Promissory Note,Notes, the note payable to the Chairman of the Board amounted to $80,000 $80,000 and $80,000$80,000 as of SeptemberJune 30, 2022,2023, and December 31, 2021, respectively,2022, respectively. See Note 11,12, 10% Convertible Promissory NoteNotes for further discussion on these notes payable.

Preferred Stocks

During the three months ended SeptemberJune 30, 2022,2023, and 2021,2022, the Company paid cash dividends on the outstanding shares of the Company’s Series E and F Preferred Stock of $2,000$0 and $0,$1,200, respectively, held by affiliates of the Company.
During the ninesix months ended SeptemberJune 30, 2022,2023, and 2021,2022, the Company paid cash dividends on the outstanding shares of the Company’s Series E and F Preferred Stock of $3,000$0 and $3,000,$2,500, respectively, held by affiliates of the Company.

27

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

SeptemberAt June 30, 2022

(Unaudited)

Oceanside Acquisition

The unsecured2023 and interest free Closing Notes of $750,000 relatedDecember 31, 2022, accrued unpaid preference dividend was $692,000. These amounts are payable to the Oceanside acquisition were recorded ratably as compensation expense into the condensed 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 $300,672 recorded during the third quarter of 2020 which was $250,000 of compensation expense and $50,672 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 condensed consolidated statement of operations.

Company's Chairman, Mr. Kip Speyer.

NOTE 2022 – INCOME TAXES

The Company recorded $0$0 tax provision for the three and ninesix months ended SeptemberJune 30, 2022,2023, and 2021,2022, due in large part to its expected tax losses for the period and maintaining a full valuation allowance against its net deferred tax assets.

At SeptemberJune 30, 20222023 and December 31, 2021,2022, the Company had no unrecognized tax benefits or accrued interest and penalties recorded. No interest and penalties were recognized during the three and ninesix months ended SeptemberJune 30, 2022,2023, and 2021.

2022.
34
BRIGHT MOUNTAIN MEDIA, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2023
(Unaudited)

NOTE 2123 – SUBSEQUENT EVENTS
Centre Lane Senior Secure Credit Facility Amendment

Management has considered subsequent events through November 14, 2022,On July 28, 2023, the date this reportCompany 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 Nineteenth Amendment to the Credit Agreement (the “Nineteenth Amendment”). The Credit Agreement was issued,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 there were no events that required additional disclosure.further growth of the Company post-Acquisition. This term loan matures on April 20, 2026.

28


35

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the condensed consolidated financial statements and related notes included elsewhere in this report and in our Annual Report on Form 10-K filed withfor the Securities and Exchange Commission on June 13,year ended December 31, 2022. In addition to historical consolidated financial information, this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and those discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2021,2022, and in any subsequent filing we make with the SEC.

Business Overview

Organization and Nature of Operations

Bright Mountain Media, Inc. (the “Company” or “Bright Mountain” or “We”), is a holding Companycompany which focuses on digital mediapublishing and advertising services.technology. The Company is engaged in content creation and advertising technology development that helps brandscustomers connect with, and market to, targeted audiences in high quality environments using a variety of formats to reach customers.digital advertising ("ad") formats.

Digital MediaPublishing

Our digital publishing businessdivision focuses on developing content that attracts an audience and monetizes that audience through advertising. The current portfolio of owned and operated websites is focused on moms, parenting, families, and more broadly, women. The portfolio includesconsists of popular websites including Mom.com, Cafemom.com, LittleThings.com, and MamasLatinas.com. This demographic is highly sought after by brands and their advertising agencies. We use internal and external technologies to constantly improve the effectiveness and efficiency of the content we create. Our publishing division monetizes its audiences through both direct and programmatic advertising sales.

Advertising ServicingTechnology

Our advertising technology businessdivision focuses on delivering targeted ads to audiences on owned and operated sites as well as third partythird-party publishers in a cost-effective manner through the deployment of proprietary technologies. Through acquisitions and organic software development, we have consolidated and plan to further condense key elements of the prevailing digital advertising supply chain by eliminating industry “middlemen” and/or costly redundancy of services via our ad exchange. By developing our own proprietary technology stack, we are able to pass along efficiencies to both the demand and supply side of the ecosystem. Our goal is to enable and support a streamlined, end-to-end advertising model that addresses both advertiser demand (ad buy(buy side) and publisher supply (media sell(sell side) for both direct sales teams and programmatic sales and delivery of digital advertisements using an array of audience targeting tools and advertising formats (display, audio, video, CTV,connected television (CTV), in-app). Programmatic advertising relies on artificial intelligence powered software programs that leverage data and proprietary algorithms to match the optimal selection of an ad with bid pricesprice 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. 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. Additionally, following the acquisition of Big Village’s agency and insights divisions, advertising technology is also derived from consumer insights and creative media services. Revenue is primarily derived from providing a single integrated service for research, planning and execution of creative and media marketing campaigns.
Asset Purchase Agreement

On April 20, 2023, the Company completed the acquisition 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").

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.

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

Agency is a digital marking service company, providing advertising technology serving advertisers while direct sales involve traditional insertion order-based, pre-selected sales between an ad buyer and an advertising sales executive.

agencies by providing access to premium inventory, leveraging data to optimize programmatic campaigns. Agency's revenue is derived from the planning and execution of creative and media marketing campaigns.

Key FactorFactors Affecting Our Performance

Seasonal Fluctuations. Typically advertising technology companies report a material portion of their revenues during the third and fourth calendar quarter as a result of holidayback to school and holidays related adadvertising spend. Our experience since transitioning to focus solely on advertising has been consistent with this trend. Because of seasonal fluctuations, there can be no assurance that the results of any particular quarter will be indicative of results for the full year or for future years or quarters.


Limited Number of Customers. During the ninesix months ended SeptemberJune 30, 2023 and 2022 one customer represented 33.4%12.7% and 34.9% of revenue, respectively.

Managing Industry Dynamics. We operate in the rapidly evolving digital advertising industry. Advances in programmatic advertising technologies, which is the efficient and automated method of purchasing ads online, has enabled publishers to auction their ad inventory to more buyers, simultaneously in real time. As advertisers keep pace with ongoing changes in the way that consumers view and interact with digital media there was no such concentrationwill be further innovation. We believe our focus on our customers has allowed us to understand their needs and our ongoing innovation has enabled us to quickly adapt to changes in the industry, develop new solutions and do so cost effectively. Our performance depends on our ability to keep pace with industry changes and the evolving needs of our customers while continuing our cost efficiency.

Additionally, companies are looking for new means to target their messaging to their desired audiences as regulatory concerns accelerate the same periodimpact on existing industry standards. Tech companies will be limited in 2021. The losshow they monetize personal information for advertising purposes.

Two highly visible examples of this customers couldtrend are the impending degradation of Google’s third-party cookie and the data security measures embedded within Apple’s iPhone. This has created a need for companies to find new methods to better understand their target audiences, and have a material adverse impact on our results of operations in future periods.

the tools to reach those audiences.

Key Operating and Financial Metrics

We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. The following is our analysis for the three and ninesix months ended SeptemberJune 30, 2022,2023 and 2021,2022 (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Revenue$12,616 $5,717 $14,114 $9,176 
Cost of revenue9,162 2,900 10,132 4,628 
Gross margin3,454 2,817 3,982 4,548 
General and administrative expenses7,374 3,443 10,802 7,293 
Total financing income (expense)(2,151)(832)(3,047)(830)
Net loss(6,071)(1,458)(9,867)(3,575)
Adjusted EBITDA (1)$(1,856)$39 $(3,942)$(1,389)

(1)

  Three Months Ended  Nine Months Ended 
  September 30, 2022  September 30, 2021  September 30, 2022  September 30, 2021 
             
Revenue $5,244  $3,805  $14,420  $8,638 
Net loss $(1,918) $(2,889) $(5,222) $(9,087)
Adjusted EBITDA (1) $(509) $(490) $(542) $(4,636)

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

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Revenue

Revenue

The Company generates revenue through salesas follows:
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•selling 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 generaterevenue;

•generating advertising services revenue from facilitating the real-time buying and selling of advertisements at scale between networks of buyers, known as DSPs (Demand Side Platforms) and sellers known as SSPs (Supply Side Platforms).SSPs;


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

•providing primary research, 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.

Revenue increased 38% in$6.9 million or 121% for the three months ended SeptemberJune 30, 2022, when2023, compared to the same period in 2021.2022. Revenue increased 67% in$4.9 million or 54% for the ninesix months ended SeptemberJune 30, 2022, when2023, compared to the same period in 2021.2022. See below for a detailed analysis of revenue for the three and ninesix months ended SeptemberJune 30, 2022.

Non-GAAP Financial Measure

EBITDA2023, and Adjusted EBITDA2022.


Cost of Revenue

To provide investors with additional information regarding our financial results, we have disclosed EBITDA,

Cost of revenue includes internal labor and payment to third parties for services performed to drive revenue, which is a non-GAAP financial measure that we calculate as net income before interest, taxes, depreciationinclude revenue share paid for ad exchange on third party sites, advertising fees, personnel costs, technology and amortizationdata related costs, fees paid for content creation, influencers, writers and Adjusted EBITDA, which represents EBITDA adjusted for certain unusualsales commission.

Costs of revenue increased approximately $6.3 million or infrequent items (such as changes in the fair value of financial instruments and warrants).

We report adjusted EBITDA as a supplemental measure to U.S. generally accepted accounting principles (“GAAP”). This measure is one of the primary metrics by which we evaluate the performance of our business, on which our internal budgets are based. We believe that investors have access to, and we are obligated to provide, the same set of tools that we use in analyzing our results. This non-GAAP measure should be considered in addition to results prepared in accordance with GAAP but should not be considered a substitute for or superior to GAAP results. We endeavor to compensate216% for the limitationsthree months ended June 30, 2023 compared to 2022. Costs of revenue increased approximately $5.5 million or 119% for the non-GAAP measure presented by providing the comparable GAAP measure with equal or greater prominence and description of the reconciling items, including quantifying such itemssix months ended June 30, 2023 compared to derive the non-GAAP measure. We encourage investors to examine the reconciling adjustments between the GAAP and non-GAAP measure.

Our adjusted EBITDA is defined as operating income/loss excluding:

●non-cash stock option compensation expense;
●depreciation;
●Non-restructuring severance expenses
●Nonrecurring professional fees;
●acquisition-related items consisting of amortization expense and impairment expense;
●interest; and
●amortization on debt discount.

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We believe this measure is useful2022. See below for analysts and investors as this measure allows a more meaningful year-to-year comparison of our performance. Moreover, our management uses this measure internally to evaluate the performance of our business as a whole. The above items are excluded from adjusted EBITDA measure because these items are non-cash in nature, and we believe that by excluding these items, adjusted EBITDA corresponds more closely to the cash operating income/loss generated from our business. Adjusted EBITDA has certain limitations in that it does not take into account the impact to our statement of operations and comprehensive loss of certain expenses. As a result, you should not consider these in isolation or as a substitute fordetailed analysis of our results as reported under GAAP, including net loss, which we consider to be the most directly comparable GAAP financial measure. Somecost of these limitations are:

●although depreciation is a non-cash charge, the assets being depreciated may have to be replaced in the future, and neither EBITDA nor Adjusted EBITDA reflect cash capital expenditure requirementsrevenue for such replacements or for new capital expenditure requirements;

●EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; and

●EBITDA and Adjusted EBITDA do not reflect tax payments that may represent a reduction in cash available.

A reconciliation of net loss before taxes to non-GAAP EBITDA and Adjusted EBITDA is as follows (in thousands):

  For the Three Months Ended September 30,  For the Nine Months Ended September 30, 
  2022  2021  2022  2021 
             
Net loss before tax plus: $(1,918) $(2,889) $(5,222) $(9,087)
Depreciation expense  12   12   24   46 
Amortization expense  387   396   1,173   1,189 
Amortization of debt discount  314   238   923   384 
Other interest expense  11   3   17   343 
Interest expense - Centre Lane Senior Secured Credit Facility and Convertible Promissory Notes- related party  433   520   1,555   945 
EBITDA  (761)  (1,720)  (1,530)  (6,180)
Stock compensation expense  38   100   214   399 
Nonrecurring professional fees  350   903   657   1,063 
Bad debt expense (recovery)  (136)  223   87   82 
Non-restructuring severance expense  -   4   30   - 
Adjusted EBITDA $(509) $(490) $(542) $(4,636)

For the three and ninesix months ended SeptemberJune 30, 2022,2023, and 2021,2022.


General and Administrative Expenses

General and administrative expenses consist primarily of (i) personnel and related costs for our executive, finance and accounting, human resources, and, administrative personnel, including salaries, benefits, bonuses, and stock-based compensation; (ii) legal, accounting and other professional service fees; (iii) other corporate expenses; (iv) information technology costs; and (v) facility costs.

General and administrative expenses increased approximately $3.9 million or 114% for the three months ended June 30, 2023 compared to disclose an adjusted EBITDA that accurately represents actual operations, we have excluded2022. General and administrative expenses increased approximately $3.5 million or 48% for the PPP loan forgiveness fromsix months ended June 30, 2023 compared to 2022. See below for a detailed analysis of general and administrative expenses for the calculation.

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three and six months ended June 30, 2023 and 2022.


Results of Operations

The following is our analysis of the results of operations for the periods indicated below. This analysis should be read in conjunction with ourthe consolidated financial statements includingand the related notes to the financial statements.those statements that are included elsewhere in this Quarterly Report on Form 10-Q.
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Three Months Ended SeptemberJune 30, 2022,2023 Compared to Three Months Ended SeptemberJune 30, 2021

2022

Net loss from operations for the quarter ended SeptemberJune 30, 2022,2023 was $2.0$6.1 million as compared to a net loss of $2.9$1.5 million for the same period last year.in 2022. The following is our analysis for the period.
Three Months Ended June 30,
20232022Change% Change
   
Revenue$12,616 $5,717 $6,899 121 %increased
Cost of revenue9,162 2,900 6,262 216 %increased
Gross margin3,454 2,817 637 23 %increased
General and administrative expense7,374 3,443 3,931 114 %increased
Loss from operations(3,920)(626)(3,294)526 %increased
Financing (expense) income(2,151)(832)(1,319)159 %increased
Net loss(6,071)(1,458)(4,613)316 %increased
Gross margin %27 %49 %(22)%(44)%decreased

Revenue

  For the Three Months Ended September 30,        
  2022  2021  Change  % Change    
                
Revenue $5,244  $3,805  $1,439   38%  Increase 
Cost of revenue  3,098   1,708   1,390   81%  Increase 
Gross margin  2,146   2,097   49   2%  Increase 
General and administrative expense  3,323   4,635   (1,312)  (28)%  Decrease 
Loss from operations  (1,177)  (2,538)  1,361   54%  Decrease 
Financing expense (income)  (741)  (351)  (390)  (111)%  Increase 
Provision (benefit) for income taxes  -   -   -   -     
Net loss $(1,918) $(2,889) $971   34%  Decrease 
                     
Gross margin %  41%  55%  (14)%  (26)%  Decrease 

Revenue

Revenue

Our revenue showed an overall increase of $6.9 million or 121% for the three months ended SeptemberJune 30, 2022, increased $1.4 million or 38% when2023 compared to the same period in 2021. The increase2022 and was largely attributable to Ad Services, which increased 168%. This growth has been driven by our abilitya combination of the Big Village Acquisition offset by macroeconomics factors coupled with overall reduction in spending by some partners due to leverage our digital media assets to attract top advertisers,inflationary concerns, which in turn has allowed us to onboard direct premium publishers, especially in the CTV market. This led to an increase in volume,lower than normal rates. Macroeconomic impact was noted significantly by direct sales for the digital publishing customers as well as ratesreduction in traffic. We also noted one of our partners changing its platform to favor short video and overall revenue.other "creator" content over news and media type content.

The Company focuses on digital publishing and advertising technology.

Digital Publishing

Digital publishing decreased by $895,000 or 38% for the three months ended June 30, 2023 compared to the same period in 2022. Approximately 93%$1.5 million or 12% of the Company’s revenue for the three months ended June 30, 2023 was generated from our digital mediapublishing customers withincompared to $2.4 million or 41% for the United Statessame period in 2022.

Advertising Technology

Advertising technology increased by $7.8 million or 233% for the three months ended June 30, 2023 compared to the same period in 2022. Approximately $11.2 million or 89% of America (“US”) with 7%the Company’s revenue for the three months ended June 30, 2023 was generated from our advertising technology customers compared to $3.4 million or 59% for the same period in 2022. The increase is attributable to the Big Village Entities which represents $9.2 million or 82% of advertising technology sales and 73% of overall revenue for the three months ended June 30, 2023.

During the three months ended June 30, 2023, approximately 100% of advertising technology revenue was generated in the U.S. and 0% was generated from our business in Israel, compared to 89%80%and 20% in the USU.S. and 11% in Israel, respectively, for the same period in 2021.2022. During the latter part of 2022, the Company started scaling down its operations in Israel and focusing more on its U.S. market in advertising technology to capitalize on more attractive revenue streams.

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Cost of Revenue

Three Months Ended June 30,
20232022Change% Change
Direct salaries and labor cost$2,528 $— $2,528 100 %increased
Direct project cost2,576 — 2,576 100 %increased
Non-direct project cost2,390 — 2,390 100 %increased
Revenue share1,131 1,654 (523)(32)%decreased
Content creation307 365 (58)(16)%decreased
Sales commission196 298 (102)(34)%decreased
Other34 583 (549)(94)%decreased
$9,162 $2,900 $6,262 216 %increased
Costs of revenue increased $1.4$6.3 million or 81%216% for the three months ended SeptemberJune 30, 2023, compared to the same period for 2022. Approximately $7.5 million or 82% in cost of revenue is attributable to the Big Village Entities for the three months ended June 30, 2023.
Direct Salaries and Labor
Direct salaries and labor cost was $2.5 million for the three months ended June 30, 2023 and represents 28% of overall cost of revenue and represent salary and labor cost of employees that works directly on customer's project for the Big Village Entities.
Direct salaries and labor cost also includes approximately $1.2 million for the three months ended June 30, 2023, representing bonus paid to the employees of Big Village as part of the Big Village Acquisition.
Direct Project Cost
Direct project cost was $2.6 million for the three months ended June 30, 2023 and represents 28% of overall cost of revenue and includes payments made to third-parties that are directly attributable to completion of project to allow for revenue recognition for the Big Village Entities.
Non-Direct Cost
Non-direct cost was $2.4 million for the three months ended June 30, 2023 and represents 26% of overall cost of revenue, these cost are overall client services that are not specifically related to a particular project.
Revenue Share
Revenue share cost represents $1.1 million or 12% and 57% overall cost of revenue for the three months ended June 30, 2023 and 2022, respectively, and represents payments to media providers and website publishers.
Gross Margin
Our gross margin increased $637,000 or 23% for the three months ended June 30, 2023, compared to the same period for 2022.
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General and Administrative Expenses
Three Months Ended June 30,
20232022Change% Change
Personnel cost$2,017 $1,579 $438 28 %
Legal expense607 231 376 163 %
Professional fees2,789 665 2,124 319 %
Insurance272 152 120 79 %
Depreciation and amortization expense766 398 368 92 %
Website expense378 339 39 12 %
Other545 79 466 590 %
Total$7,374 $3,443 $3,931 114 %
    
Gross margin as a percentage of general and administrative expense47 %82 %(35)%(43)%
General and administrative expenses increased $3.9 million, or 114% for the three months ended June 30, 2023, compared to the same period in 2021. These costs include2022. The reduction is primarily due to a combination of factors as discussed below.

Personnel Cost

Personnel cost increased by approximately $438,000 or 28% for the three months ended June 30, 2023 compared to the same period in 2022. This change is mainly driven by a combination of an increase and reduction in head count.

During the three months ended June 30, 2023, the Company's headcount increased by 205 employees, with 203 employees attributable to the Big Village Acquisition. Personnel cost for Big Village employees are allocated between cost of revenue and general and administrative expenses depending on their contribution to certain revenue generated projects. Amount included in general and administrative expenses was $194,000 with $2.5 million included under cost of revenue for the three months ended June 30, 2023.

During the three months ended June 30, 2023, the Company's headcount was reduced by 12 employees that were terminated as a reduction in force. The Company incurred severance cost of approximately $114,000 which was paid subsequent to the quarter end.

The Company incurred severance cost of approximately $29,000 associated with head count reduction during the same period for 2022.

Legal Fees

Legal fees increased $376,000 or 163%, for the three months ended June 30, 2023, compared to the same period in 2022. Approximately $359,000 represents cost associated with the Big Village Acquisition.

Professional Fees

Professional fees increased $2.1 million or 319%, for the three months ended June 30, 2023, compared to the same period in 2022. Approximately $685,000 represents cost associated with the Big Village Acquisition.

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Financing Expense
Three Months Ended June 30,
20232022Change% Change
Interest expense$2,254 $1,167 $1,087 93 %
Gain of forgiveness of PPP loan— (296)296 (100)%
Other expense (income)(103)(39)(64)164 %
Total financing expense (income)$2,151 $832 $1,319 159 %

Financing expense increased $1.3 million or 159% for the three months ended June 30, 2023, compared to the same period 2022. This increase was largely attributable to a $1.1 million increase in interest expense related to the Centre Lane Senior Secured Credit Facility, which reflected higher principal and fees due to the Centre Lane Senior Secured Credit Facility amendments during the year ended December 31, 2022 and through the quarter end. This increase was offset by a reduction in the Paycheck Protection Program ("PPP") loan forgiveness amount, which was $296,000 in 2022.



Six Months Ended June 30, 2023 Compared to Six Months Ended June 30, 2022
Net loss from operations for the six months ended June 30, 2023 was $9.9 million as compared to a net loss of $3.6 million for the same period in 2022. The following is our analysis for the period.
Six Months Ended June 30,
20232022Change% Change
Revenue$14,114 $9,176 $4,938 54 %increased
Cost of revenue10,132 4,628 5,504 119 %increased
Gross margin3,982 4,548 (566)(12)%decreased
General and administrative expense10,802 7,293 3,509 48 %increased
Loss from operations(6,820)(2,745)(4,075)148 %increased
Financing (expense) income(3,047)(830)(2,217)267 %increased
Net loss$(9,867)$(3,575)$(6,292)176 %increased
Gross margin %28 %50 %(22)%(44)%decreased
Revenue
Our revenue showed an overall increase of $4.9 million or 54% for the six months ended June 30, 2023 compared to the same period in 2022 and was driven by a combination of the acquisition of the Big Village Entities offset by macroeconomics factors coupled with overall reduction in spending by some partners due to inflationary concerns, this has led to lower than normal rates. Macroeconomic impact was noted significantly by direct sales for the digital publishing customers as well as reduction in traffic. We also noted one of our partners changing its platform to favor short video and other "creator" content over news and media type content.

Digital Publishing

Digital publishing reduced by $1.6 million or 39% for the three months ended June 30, 2023 compared to the same period in 2022. Approximately $2.4 million or 17% of the Company’s revenue for the six months ended June 30, 2023 was generated from our digital publishing customers compared to $4.0 million or 43% for the same period in 2022.

Advertising Technology

Advertising technology increased by $6.5 million or 126% for the six months ended June 30, 2023 compared to the same period in 2022. Approximately $11.7 million or 83% of the Company’s revenue for the six months ended June 30,
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2023 was generated from our advertising technology customers compared to $5.2 million or 57% for the same period in 2022. The increase is attributable to the Big Village Entities which represents 79% or $9.2 million of advertising technology sales and 65% of overall revenue for the six months ended June 30, 2023.

During the six months ended June 30, 2023, approximately 100% of advertising technology revenue was generated in the U.S. and 0% was generated from our business in Israel, compared to 79% and 21% in the U.S. and Israel, respectively, for the same period in 2022. During the latter part of 2022, the Company started scaling down its operations in Israel and focusing more on its U.S. market in advertising technology to capitalize on more attractive revenue streams.
Cost of Revenue
Six Months Ended June 30,
20232022Change% Change
Direct salaries and labor$2,528 $— $2,528 100 %increased
Direct project and other cost2,576 — 2,576 100 %increased
Non-direct project cost2,390 — 2,390 100 %increased
Revenue share1,617 2,447 (830)(34)%decreased
Content creation598 672 (74)(11)%decreased
Sales commission247 336 (89)(26)%decreased
Other176 1,173 (997)(85)%decreased
$10,132 $4,628 $5,504 119 %increased
Direct Salaries and Labor
Direct salaries and labor cost was $2.5 million for the six months ended June 30, 2023 and represents 25% of overall cost of revenue and represent salary and labor cost of employees that works directly on customer's project for the Big Village Entities.
Direct salaries and labor cost also includes approximately $1.2 million for the six months ended June 30, 2023, representing bonus paid to the employees of Big Village as part of the Big Village Acquisition.
Direct Project Cost
Direct project cost was $2.6 million for the six months ended June 30, 2023 and represents 25% of overall cost of revenue and includes payments made to third-parties that are directly attributable to completion of project to allow for revenue recognition for the Big Village Entities.
Non-Direct Cost
Non direct cost was $2.6 million for the six months ended June 30, 2023 and represents 24% of overall cost of revenue, these cost are overall client services that are not specifically related to a particular project.
Revenue Share
Revenue share cost represents $1.6 million or 16% and $2.4 million or 53% overall cost of revenue for the six months ended June 30, 2023 and 2022, respectively, and represents payments to media providers and website publishers. The increase was largely attributable to revenue share payments which increased $1.2 million. The Company started expanding its usage of ad exchange on third party’s site which is also associated with the increase noted in revenue as discussed above.

Gross Margin

Our gross margin increased $49,000decreased $566,000 or 2% when12% for the six months ended June 30, 2023, compared to the same period for 2021,2022 which is consistent with the increase noted in revenue and cost of revenue.

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General and Administrative Expenses

  For the Three Months Ended September 30,       
  2022  2021  Change  % Change    
                
Personnel cost $1,663  $1,978   $(315)  (16)%  Decrease 
Depreciation and amortization expense  399   408   (9)  (2)%  Decrease 
Legal expense  53   92   (39)  (42)%  Decrease 
Professional fees  827   1,248   (421)  (34)%  Decrease 
Insurance  146   136   10   7%  Increase 
Other  235   773   (538)  (70)%  Decrease 
Total $3,323  $4,635   $(1,312)  (28)%  Decrease 
                     
Gross margin as a percentage of general and administrative expense  65%  45%  19%  43%  Increase 

Six Months Ended June 30,
20232022Change% Change
Personnel cost$3,762 $3,300 $462 14 %increased
Legal fees660 312 348 112 %increased
Professional fees3,574 1,416 2,158 152 %increased
Insurance431 296 135 46 %increased
Depreciation and amortization1,160 798 362 45 %increased
Website expense687 692 (5)(1)%decreased
Other528 479 49 10 %increased
Total$10,802 $7,293 $3,509 48 %increased
     
Gross margin as a percentage of general and administrative expense37 %62 %(25)%(41)%decreased
General and administrative expenses decreased $1.3increased $3.5 million, or 28%48% for the threesix months ended SeptemberJune 30, 2022,2023, compared to the same period in 2021.2022. The reduction is primarily due to a combination of factors as discussed below.

Professional Fees

Professional fees decreased $421,000

Personnel Cost
Personnel cost increased approximately $462,000 or 34%, when14% for the six months ended June 30, 2023 compared to the same period for 2021. The amount for 2021 was higher due to cost incurred for audit and consultant fees which represented 63% of professional fees compared to 90% for 2021. This expense was in connection with the Company’s restatement of its financial results for the period January 1, 2019, to December 31, 2021.

Personnel Cost

Personnel cost decreased $315,000 or 16% when compared to the same period for 2021.2022. This change is mainly driven by an increase in head count, as a result of the acquisition of Big Village Entities.

During the six months ended June 30, 2023 the Company's headcount increased by 205 employees, with 203 employees attributable to the Big Village Acquisition. Personnel cost for Big Village employees are allocated between cost of revenue and general and administrative expenses depending on their contribution to certain revenue generated projects. Amount included in general and administrative expenses was $194,000 with $2.5 million included under cost of revenue for the six months ended June 30, 2023.

During the six months ended June 30, 2023, the Company's headcount was reduced by 17 employees including 12 employees that were terminated as a reduction in force. The Company incurred severance cost of approximately $236,000 which was paid subsequent to the quarter end.

The Company incurred severance cost of approximately $29,000 associated with head count of 21 employeesreduction during the same period for 2022.
Legal Expense
Legal fees increased $348,000 or 26%. Total employees at September112%, for the six months ended June 30, 2022, was 59 compared to 80 at September 30, 2021.

Legal Expense

Legal expense is a combination of legal fees and litigation settlement amounts. During the period, the Company incurred cost of $350,000 in legal fees offset by a credit of $297,000 in litigation settlement, resulting in a net decrease of $39,000 or 42%2023, compared to the same period in 2021. The credit in litigation settlement is mainly attributable to reversal of previous accrual related to2022. Approximately $359,000 represents cost associated with the Slutzky & Winshman and Synacor litigation as discussed in Note 16, Commitment and Contingencies.

Financing expense (income)

  For the Three Months Ended September 30,      
  2022  2021  Change  % Change   
               
Interest expense $759  $761  $(2)  -% Decrease
Gain of forgiveness of PPP loan  -   (465)  (465)  (100)% Decrease
Other expense (income)  (18)  55   73   133% Decrease
Total financing expense (income) $741  $351  $390   111% Increase

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Big Village Acquisition.
Professional Fees

Financing cost

Professional fees increased $390,000,$2.2 million or 111%152%, for the threesix months ended SeptemberJune 30, 2022,2023, compared to the same period in 2022. Approximately $685,000 represents cost associated with the Big Village Acquisition.
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Financing Expense
Six Months Ended June 30,
20232022Change% Change
Interest expense$3,428 $2,006 $1,422 71 %increased
Gain of forgiveness of PPP loan— (1,137)1,137 (100)%decreased
Other expense (income)(381)(39)(342)877 %increased
Total financing expense (income)$3,047 $830 $2,217 267 %increased
Financing expense increased $2.2 million or 267% for 2021.the six months ended June 30, 2023, compared to the same period 2022. This increase was largely attributable to $465,000 in the Paycheck Protection Program loan forgiveness during the three months ended September 30, 2021, which offset the overall finance cost.

Nine Months Ended September 30, 2022, Compared to Nine Months Ended September 30, 2021

Net loss from operations for the quarter ended September 30, 2022, was $5.2a $1.4 million as compared to a net loss of $9.1 million for the same period last year. The following is our analysis for the period.

  For the Nine Months Ended September 30,      
  2022  2021  Change  % Change   
               
Revenue $14,420  $8,638  $5,782   67% Increase
Cost of revenue  7,726   4,568   3,158   69% Increase
Gross margin  6,694   4,070   2,624   64% Increase
General and administrative expense  10,616   13,643   (3,027)  (22)% Decrease
Loss from operations  (3,922)  (9,573)  5,651   59% Decrease
Financing expense (income)  (1,300)  486   (1,786)  (368)% Decrease
Provision (benefit) for income taxes  -   -   -   -   
Net loss $(5,222) $(9,087) $3,865   43% Decrease
                   
Gross margin %  46%  47%  (1)%  (1)% Decrease

Revenue

Revenue for the nine months ended September 30, 2022, increased $5.8 million or 67% compared to the same period for 2021. The increase was largely attributable to Ad Services which increased $8.0 million or 185%. This growth has been driven by our ability to leverage our digital media assets to attract top advertisers, which in turn has allowed us to onboard direct premium publishers, especially in the CTV market. This led to an increase in volume, as well as rates and overall revenue.

Approximately 93% of the Company’s revenue was generated from our digital media customers in the US and 7% was generated from our business in Israel, compared to 87% in the US and 13% in Israel for the same period in 2021.

Cost of Revenue

Costs of revenue increased $3.2 million or 69% for the nine months ended September 30, 2022, compared to the same period for 2021. These costs include revenue share payments to media providers and website publishers. The increase was largely attributable to revenue share payments which increased $2.9 million. The Company started expanding its usage of ad exchange on third party’s site which is also associated with the increase noted in revenue as discussed above.

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Gross Margin

Our gross margin increased $2.6 million or 64% when compared to the same period for 2021, which is consistent with the increase noted in revenue and cost of revenue.

General and Administrative Expenses

  For the Nine Months Ended September 30,      
  2022  2021  Change  % Change   
               
Personnel cost $4,955  $6,750  $(1,795)  (27)% Decrease
Depreciation and amortization expense  1,197   1,235   (38)  (3)% Decrease
Legal fees  365   405   (40)  (10)% Decrease
Professional Fees  2,243   2,983   (740)  (25)% Decrease
Insurance  450   440   10   2% Increase
Other  1,406   1,830   (424)  (23)% Decrease
Total $10,616  $13,643  $(3,027)  (22)% Decrease
                   
Gross margin as a percentage of general and administrative expense  63%  30%  33%  111% Increase

General and administrative expenses decreased $3.0 million or 22% for the nine months ended September 30, 2022, compared to the same period in 2021. The reduction is due to a combination of factors as discussed below.

Professional Fees

Professional fees decreased $740,000 or 25% when compared to the same period for 2021. The amount for 2021 was higher due to cost incurred for audit and consultant fees which represented 68% of professional fees compared to 87% for 2022. This expense was in connection with the Company’s restatement of its financial results for the period January 1, 2019, to December 31, 2021.

Personnel Cost

Personnel cost decreased $1.8 million or 27% when compared to the same period for 2021. This change is mainly driven by a reduction in head count of 21 employees or 26%. Total employees at September 30, 2022 was 59 compared to 80 at September 30, 2021.

Legal Expense

Legal expense is a combination of legal fees and litigation settlement amounts. During the nine months ended September 30, 3022, the Company incurred cost of $662,000 in legal fees offset by a credit of $297,000 in litigation settlement, resulting in a net decrease of $40,000 or 10%. The credit in litigation settlement is mainly attributable to reversal of a previous accrual related to the Slutzky & Winshman and Synacor litigation, as discussed in Note 16, Commitment and Contingencies.

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Financing expense (income)

  For the Nine Months Ended September 30,       
  2022  2021  Change  % Change    
                
Interest expense $2,494  $1,672  $822   49%  Increase 
Gain of forgiveness of PPP loan  (1,137)  (2,172)  1,035   (48)%  Decrease 
Other expense (income)  (57)  14   (71)  (507)%  Decrease 
Total financing expense (income) $1,300  $(486) $1,786   (368%)  Increase 

Financing cost increased $1.8 million or 368% for the nine months ended September 30, 2022, compared to the same period for 2021. This increase was largely attributable to $822,000 increase in interest expense related to the Centre Lane Senior Secured Credit Facility, which showedreflected higher principal and fees due to the Credit FacilityAgreement amendments during the nine monthsyear ended September 30, 2022.December 31, 2022 through the quarter end. This increase was offset by a reduction in the Paycheck Protection Program ("PPP") loan forgiveness amount, which was $1.1 million comparedin 2022.

Use of Non-GAAP Financial Measure

Non-GAAP results are presented only as a supplement to $2.2 millionthe financial statements and for use within management's discussion and analysis based on U.S. generally accepted accounting principles ("GAAP"). The non-GAAP financial information is provided to enhance the same periodreader's understanding of the Company's financial performance, but non-GAAP measures should not be considered in isolation or as a substitute for 2021, resultingfinancial measures calculated in accordance with GAAP.

All of the items included in the reconciliation from net loss to EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation, etc.) or (ii) items that management does not consider to be useful in assessing the Company's ongoing operating performance (e.g., M&A costs, income taxes, gain on sale of investments, loss on disposal of assets, etc.). In the case of the non-cash items, management believes that investors can better assess the Company's operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect the Company's ability to generate free cash flow or invest in its business.

We use, and we believe investors benefit from the presentation of, EBITDA and Adjusted EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating performance on a higherconsistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. We believe that EBITDA is useful to investors and other external users of our financial statements in evaluating our operating performance because EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, for 2022.

taxes, and depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired.


Because not all companies use identical calculations, the Company's presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the Company's performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures.
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A reconciliation of net loss before taxes to non-GAAP EBITDA and Adjusted EBITDA is as follows (in thousands):
Three Months Ended June 30,Six Months Ended June 30,
2023202220232022
Net loss before tax plus:(6,071)(1,458)(9,867)(3,575)
Depreciation expense39 8 46 12 
Amortization of intangibles728 390 1,114 786 
Amortization of debt discount540 335 844 615 
Other interest expense8 1 10 1 
Interest expense - Centre Lane Senior Secured Credit Facility and Convertible Promissory Notes - related party1,709 836 2,573 1,396 
EBITDA(3,047)112 (5,280)(765)
Stock compensation expense33 30 58 176 
Gain on forgiveness of PPP loan— (296)— (1,137)
Non-restructuring severance expense114 29 236 29 
 Non-recurring professional fees685 164 685 308 
 Non-recurring legal fees359 — 359 — 
Adjusted EBITDA$(1,856)$39 $(3,942)$(1,389)
Liquidity and Capital Resources

Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. The following table summarizedsummarizes total current assets, total current liabilities and net working capital (deficit) at Septemberas of June 30, 2022 as2023, compared to December 31, 2021.2022.
June 30, 2023December 31, 2022
Total current assets$19,998 $4,501 
Total current liabilities29,011 17,851 
Net working capital deficit$(9,013)$(13,350)

  September 30, 2022  December 31, 2021 
Total current assets $5,085  $5,257 
Total current liabilities  17,824   23,070 
Net working capital deficit $(12,739) $(17,813)

As of SeptemberJune 30, 2022,2023, we had a cash balance of $412,000$3.4 million compared with a cash balance of $781,000 at$0.3 million as of December 31, 2021. During 2021, we implemented policies and procedures around cash collections to prevent the aging of accounts receivables which continues in 2022. Cash collection efforts have been successful, and we feel that we have appropriately reserved for uncollectible amounts at September 30, 2022.

During the ninesix months ended SeptemberJune 30, 2023 and 2022, the Company received $3.1$6.6 million and $2.7 million, respectively, in debt financing from Centre Lane Partners.Partners Master Credit Fund II, L.P. (“Centre Lane Partners"). The use of the funds was for general working capital needs. During May 26, 2021, through December 31, 2021,needs and to fund the Company received $5.1 million in debt financing fromBig Village Acquisition. See Note 10, Centre Lane Partners. The use of the funds wasSenior Secured Credit Facility for general working capital needs.

more information.

Going concern

Concern

Going Concern and Liquidity
Historically, the Company has incurred losses, which has resulted in an accumulated deficit of approximately $111.4$124.1 million as of SeptemberJune 30, 2022.2023. Cash flows used in operating activities were $3.1$3.6 million and $4.7$2.8 million for the ninesix months ended SeptemberJune 30, 2022,2023 and 2021,2022, respectively. As of SeptemberJune 30, 2022,2023, the Company had approximately a $12.7$9.0 million in working capital deficit, inclusive of $412,000$3.4 million in cash and cash equivalents to cover overhead expenses.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 factorsfactors. The Company is currently exploring all strategic alternatives, including but not limitedrestructuring or refinancing its debts, seeking additional debt, such as borrowings under the Credit Agreement or equity capital. The ability to cashaccess the capital market is also dependent on the stock volume and cash equivalents, working capital,market price of the ongoing increaseCompany's stock, which cannot be
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assured. Other measures include reducing or delaying certain business activities, reducing general and administrative expenses, including a reduction in revenue through increased sales and strategic capital raises.headcount. The ultimate success of these plans is not guaranteed.

In considering our forecast for the next twelve months, and the Company's current cash and working capital, as of the filing of this Quarterly Report on Form 10Q,10-Q, the Company’s available cash will not be sufficient to fund its anticipated level of operations. As a result, such matters create a substantial doubt regarding the Company’s ability to meet ourits financial needs and continue as a going concern.

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The accompanying condensedunaudited 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.

Summary of Cash Flows

The following table summarizes our cash flows from operating, investing, and financing activities for the ninesix months period ended SeptemberJune 30, 2022,2023 and 20212022 (in thousands):
Six Months Ended June 30,
20232022
Statement of Cash Flows Data:
Total cash (used in) provided by:
Operating activities(3,594)(2,814)
Investing activities(4)(4)
Financing activities6,627 2,454 
Effect of foreign exchange rates on cash5 — 
Increase (decrease) in cash and cash equivalents3,034 (364)

  Nine Months Ended September 30,
  2022 2021
Statement of Cash Flows Data:        
Total cash (used in) provided by:        
Operating activities $(3,091) $(4,708)
Investing activities  -   (3)
Financing activities  2,722   4,253 
Decrease in cash and cash equivalents $(369) $(458)

Operating Activities

For the ninesix months ended SeptemberJune 30, 2022,2023, cash used in operating activities was $3.1$3.6 million. The primary factors affecting our operating cash flows during the period were our net loss of $5.2$9.9 million, adjusted for non-cash charges of $1.2$1.1 million for depreciation and amortization of our property, equipment and intangible assets, $923,000$844,000 of amortization of debt discount, $97,000$58,000 of stock-based compensation expense, $117,000 of stock compensation for Oceanside shares, $87,000 for$2.4 million in interest paid in kind on the provision of bad debt, $1.1 million from the gain on forgiveness of PPP loanCentre Lane Credit Facility and a $842,000 net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $661,000 increase in other liabilities and a $1.3 million increase in accrued interest, offset by a $1.0 million decrease in accounts payable, a $166,000 decrease in deferred revenue, and a $387,000 increase in accounts receivable.

For the nine months ended September 30, 2021, cash used in operating activities was $4.7 million. The primary factors affecting our operating cash flows during the period were our net loss of $9.1 million, adjusted for non-cash charges of $1.2 million for depreciation and amortization of our property, equipment and intangible assets, $384,000 of amortization of debt discount, $180,000 of stock-based compensation expense, $607,000 of stock compensation for Oceanside shares, $82,000 for the provision of bad debt, $2.2 million from the gain on forgiveness of PPP loan and a $4.3$1.8 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $3.3 million increase in accounts receivables offset by a $2.3 million increase in accounts payable and accrued expenses, an increase in other liabilities of $1.5 million, and a $627,000 increase in deferred revenue.


For the six months ended June 30, 2022, cash used in operating activities was $2.8 million. The primary factors affecting our operating cash flows during the period were our net loss of $3.6 million, adjusted for non-cash charges of $786,000 for amortization of intangible assets, $615,000 of amortization of debt discount, $59,000 of stock-based compensation expense, $117,000 of stock compensation for Oceanside shares, $222,000 for the provision of bad debt, $1.1 million from the gain on forgiveness of PPP loan and a $88,000 net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $950,000 increase in accounts payable and accrued expenses, a $146,000 decrease in accounts receivable, a $636,000 decrease$1.4 million increase in interest payable on Centre Lane Senior Secured Credit Facility, and a $539,000 increase in deferred revenue, offset by a $324,000 increase in prepaid expenses and other current assets, a $463,000 increase in deferred revenues, and a $945,000 increase in accrued interest, offset by a $171,000 decrease in accounts payable and a $340,000 decrease in other liabilities.

assets.

Investing Activities

Cash used in investing activities of $0$4,000 and $3,000 for$4,000 for the ninesix months ended SeptemberJune 30, 2023,2022, and 2021,2022, respectively, was due entirely to the purchase of property and equipment.

Financing Activities

During the ninesix months ended SeptemberJune 30, 2023, and 2022 the Company raised $3.1$6.6 million and $2.7 million, respectively, of debt financing from Centre Lane Senior Secured Credit Facility, which was used primarily to fund our working capital.

Duringcapital and the nine months ended September 30, 2021, the Company raised $3.1 million of debt financing which was used primarily to fund our working capital.Big Village Acquisition.

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Contractual Obligations and Commitments

The Company leases its corporate offices under a long-term non-cancellable operating 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 $96,000, with a provision for a 3% increase on each anniversary of the rent commencement date.date, the lease expires in 2027. The Company has the option to renew the lease for one additional five-year term. See Note 16,18, Commitment and Contingencies for details regarding the Company’s lease.

There were no other material changes in our contractual obligations and commitments from those disclosed above and in the Annual Report on Form 10-K for the year ended December 31, 2021, filed with the SEC on June 13, 2022.

Off-Balance Sheet Arrangements

As of SeptemberJune 30, 2022,2023, there were no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.

Critical Accounting Policies and Estimates

Our condensed consolidated financial statements are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, expenses and related disclosures. We evaluate our estimates and assumptions on an ongoing basis. Our estimates are based on historical experience and various other assumptions that we believe to be reasonable under the circumstances. Our actual results could differ from these estimates.

We believe that the assumptions and estimates associated with revenue recognition, accounts receivable allowances, income taxes, equity-based compensation, intangibles and goodwill valuation have the greatest potential impact on our consolidated financial statements. Therefore, we consider these to be our critical accounting policies and estimates. For further information on all of our significant accounting policies, see the Company’s audited condensed consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021, filed with2022.
Business Combination
We account for acquisitions under FASB ASC Topic 805, Business Combinations, ("ASC 805"). In general, the SECacquisition method of accounting requires companies to record assets acquired and liabilities assumed at their respective fair market values at the date of acquisition. We primarily estimate fair value of identified intangible assets using discounted cash flow analyses based on June 13, 2022,market participant based inputs. Any amount of the purchase price paid that is in excess of the estimated fair values of net assets acquired is recorded as goodwill in our condensed consolidated balance sheets. Transaction costs, as well as costs to reorganize acquired companies, are expensed as incurred in our condensed consolidated statement of operations. The Company has allocated the purchase price based on preliminary estimates of fair value for the assets acquired and liabilities assumed using information currently available. Adjustments, if any, to the preliminary allocation are not expected to be material.

Recent accounting pronouncements

Accounting Pronouncements

Recent accounting pronouncements are detailed in the “Summary of Significant Accounting Policies” in Note 2 to our unaudited condensed consolidated financial statements.

Smaller Reporting Company Status

We are a “smaller reporting company” as defined in the Securities Exchange Act of 1934, as amended (the “Exchange Act”). We may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as the market value of our voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter, or our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our
48

voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of our second fiscal quarter.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We have operations within

As a smaller reporting company as defined in Rule 12b-2 of the United States and limited operations with customers located in Israel and vendors in Thailand, andExchange Act, we are exposednot required to market risks in the ordinary course of our business, including the effects of interest rate changes, inflation and exchange rate charges. Information relatinginclude information otherwise required by this Item 3 to quantitative and qualitative disclosures about these market risks is set forth below.

Interest Rate Risk

We consider all highly liquid investments with an original maturity of three months or less to be cash and cash equivalents. Other exposure to interest rate risk relates to our Senior Secured Credit Facility which did not have an unusual impact on our business for the nine months ended September 30, 2022.

Inflation Rate Risk

We do not believe that inflation has had a material effect on our business, financial condition, or results of operations. We continue to monitor the impact of inflation in order to minimize its effects through pricing strategies, productivity improvements and cost reductions. If our costs were to become subject to significant inflationary pressures, we may not be able to fully offset such higher costs through price increases. Our inability or failure to do so could harm our business, financial condition, and results of operations.

38
Form 10-Q.

Foreign Currency Exchange Rate Risk

The Company has operations in Israel and Thailand and reports financial results in US dollars. As a result, there is a foreign currency exchange rate translation risk; however, these risks are limited to operating expenses and not significant to our overall operations. The exchange rate risk to our financial statements is immaterial.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. We maintain “disclosure controls
The Company’s management, with the participation of the Company’s Chief Executive Officer and procedures” as such term is defined in Rule 13a-15(e) under Securities Exchange ActChief Financial Officer, have evaluated the effectiveness of 1934 (the “Exchange Act”). In designing and evaluating ourthe Company’s disclosure controls and procedures our management recognized that disclosure controls(as defined in Rules 13a-15(e) and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that15d-15(e) under the objectivesExchange Act) as of disclosure controls and procedures are met. Additionally, in designing disclosure controls and procedures, our management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures. The design of any disclosure controls and procedures also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.

June 30, 2023. Based on ourthat evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the endperiod ended June 30, 2023, due to the existence of the period covered by this report, management has concluded that ourmaterial weaknesses in the Company’s internal control over financial reporting described below, the Company’s disclosure controls and procedures were not effective sucheffective.


Our senior management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act as a process designed by, or under the supervision of, our principal executive and principal financial officers, or persons performing similar functions, and effected by our Board, senior management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with U.S. GAAP.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the information relatingdegree of compliance with the policies or procedures may deteriorate. We continue to our Company, required to be disclosed in our Securities and Exchange Commission reports (i) is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms and (ii) is accumulated and communicated to our management, including our Chief Executive Officer, to allow timely decisions regarding required disclosure as a result of continuing material weaknesses inreview our internal control over financial reporting as describedand may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in “Internal Control — Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021. 2022, because of the effect of the materialweaknesses described below, management concluded that based upon this assessment 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 Quarterly Report on Form 10-Q fairly present, in all material respects, our financial condition and results of operations as of and for the quarter ended June 30, 2023.

Material Weaknesses

A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that results in more thanthere is a remote likelihoodreasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected.detected on a timely basis. As previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022, management identified the material weakness described below:

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.
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During the six months ended June 30, 2023, the Company commenced 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; and

•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.

Also, as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2021, 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 (i) the disclosure controls and procedures and (ii) 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; and

•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.

Commencing in the year ended December 31, 2022, the Company implemented a remediation plan to remediate the material weaknesses identified during the year ended December 31, 2021 as follows:

•We have implemented changeshired 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.

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

•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.

We will continue to monitor and evaluate the effectiveness of our internal controlcontrols over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow. We do not, however, expect that the material weaknesses in our disclosure controls will be remediated until we increase our headcount of accounting and administrative staff to improve our internal controls over financial reporting.

Changes in Internal Control over Financial Reporting. We continue to strategically planReporting

Other than the matters set forth above, there were no changes in our internal control over financial reporting through this fiscalidentified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter Q3 2022.ended June 30, 2023 that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures and internal control over financial reporting, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures and internal control over financial reporting must reflect the fact that there are resource constraints, and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.






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PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

For a description of developments to legal proceedings during the ninesix months ended SeptemberJune 30, 2022,2023, see “Litigation” under Note 16,18, “Commitments and Contingencies” to our consolidated financial statements.

Item 1A. Risk factors.

We incorporate by referenceFactors.

There have been no material changes to the risk factorsRisk Factors previously disclosed in Part I, Item 1A of our 2021Annual Report on Form 10-K.

10-K for the year ended December 31, 2022.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

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None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.
None.
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None.

Item 6. Exhibits.

No.Exhibit DescriptionFormDate FiledNumberHerewith
31.1Rule 13a-14(a)/15d-14(a) certification of Principal Executive OfficerFiled
31.2Rule 13a-14(a)/15d-14(a) certification of principal financial and accounting officerFiled
32.1Section 1350 Certification by the Chief Financial Officer pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002Filed
32.2Section 1350 Certification by the Chief Executive Officer pursuant to Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002Filed
101.INSInline XBRL Instance DocumentFiled
101.SCHInline XBRL Taxonomy Extension Schema DocumentFiled
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentFiled
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentFiled
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentFiled
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentFiled
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

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No.Exhibit DescriptionFormDate FiledNumberHerewith
2.18-K4/13/232.1
10.18-K4/26/2310.1
10.28-K4/26/2310.2
10.3Filed
10.58-K8/3/2310.1
10.68-K10.2
31.1Filed
31.2Filed
32.1*Filed
32.2*Filed
101.INSInline XBRL Instance DocumentFiled
101.SCHInline XBRL Taxonomy Extension Schema DocumentFiled
101.CALInline XBRL Taxonomy Extension Calculation Linkbase DocumentFiled
101.DEFInline XBRL Taxonomy Extension Definition Linkbase DocumentFiled
101.LABInline XBRL Taxonomy Extension Label Linkbase DocumentFiled
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentFiled
104Cover Page Interactive Data File (embedded within the Inline XBRL document)

*    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.


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SIGNATURES

Pursuant to the requirements 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.
NovemberAugust 14, 20222023By:/s/ Matthew Drinkwater

Matthew Drinkwater,

Chief Executive Officer and Director
(Principal Executive Officer

Officer)
By:/s/ Miriam Martinez

Miriam Martinez,

Chief Financial Officer
(Principal Financial and Accounting OfficerOfficer)

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