Bright Mountain Media, Inc. [BMTM] Filings

10-Q 1 bmtm-20230630.htm 10-Q bmtm-20230630

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 June 30, 2023

or

o			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number 000-54887

Bright Mountain Media, Inc.

(Exact Name of Registrant as Specified in its Charter)


Florida						27-2977890
State or Other Jurisdiction of Incorporation or Organization						I.R.S. Employer Identification No.


6400 Congress Avenue, Suite 2050, Boca Raton, FL						33487
Address of Principal Executive Offices						Zip Code

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 class

Trading 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 x 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 x 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

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

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 o No x

As of August 11, 2023, there were 171,281,454 shares of the issuer’s shares outstanding.

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BRIGHT MOUNTAIN MEDIA, INC.

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		Page No.
	PART I - FINANCIAL INFORMATION

Item 1.	Unaudited Consolidated Financial Statements:
	Consolidated Balance Sheets as of June 30, 2023 (unaudited) and December 31, 2022	5
	Unaudited Consolidated Statements of Operations and Comprehensive loss for the Three and Six Months Ended June 30, 2023 and 2022	6
	Unaudited Consolidated Statements of Changes in Shareholders’ Deficit for the Six Months Ended June 30 , 2023 and 2022	7
	Unaudited Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2023 and 2022	9
	Notes to Consolidated Financial Statements	10
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	36
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	49
Item 4.	Controls and Procedures	49

	PART II - OTHER INFORMATION

Item 1.	Legal Proceedings	52
Item 1A.	Risk Factors	52
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	52
Item 3.	Default Upon Securities	52
Item 4.	Mine Safety Disclosures	52
Item 5.	Other Information	52
Item 6.	Exhibits	53

	Signatures	54

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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 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, 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”, “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, “second quarter of 2023” refers to the three months ended June 30, 2023, “second quarter of 2022” refers to the three months ended June 30, 2022, and “2022” refers to the year ended December 31, 2022. The information on, or that can be accessed through, our website at www.brightmountainmedia.com is not incorporated by reference in, or considered part of, this Quarterly Report on Form 10-Q.

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

BRIGHT MOUNTAIN MEDIA, INC.

CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share figures)


	June 30, 2023		December 31, 2022*
	(unaudited)
ASSETS
Current Assets
Cash and cash equivalents	$	3,350	$	316
Accounts receivable, net	15,225		3,585
Prepaid expenses and other current assets	1,423		600
Total Current Assets	19,998		4,501
Property and equipment, net	214		40
Intangible assets, net	19,556		4,510
Goodwill	20,936		19,645
Operating lease right-of-use asset	338		367
Other assets	187		137
Total Assets	$	61,229	$	29,200
LIABILITIES AND SHAREHOLDERS’ DEFICIT
Current liabilities
Accounts payable and accrued expenses	$	15,202	$	10,317
Other liabilities	4,788		1,838
Interest payable – 10% Convertible Promissory Notes– related party	35		31

Deferred revenues	4,863		737
Note payable – 10% Convertible Promissory Notes, net of discount, related party	75		68
Note payable – Centre Lane Senior Secured Credit Facility – related party (current portion)	4,048		4,860
Total Current Liabilities	29,011		17,851
Note payable – Centre Lane Senior Secured Credit Facility – net of discount, related party	53,061		25,101
Operating lease liability	276		319
Total liabilities	82,348		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, respectively	1,721		1,504
Treasury stock, at cost; 825,175 shares at June 30, 2023 and December 31, 2022	(220)		(220)
Additional paid-in capital	101,266		98,797
Accumulated deficit	(124,136)		(114,269)
Accumulated other comprehensive income	250		117
Total shareholders’ deficit	(21,119)		(14,071)
Total liabilities and shareholders’ deficit	$	61,229	$	29,200


*			Derived from audited consolidated financial statements.

See accompanying notes to unaudited consolidated financial statements.

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BRIGHT MOUNTAIN MEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(in thousands, except share and per share figures)


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022

Revenue	$	12,616	$	5,717	$	14,114	$	9,176
Cost of revenue	9,162		2,900		10,132		4,628
Gross margin	3,454		2,817		3,982		4,548
General and administrative expenses	7,374		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 income	103		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 translation	119		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 diluted	166,779,390		149,159,461		158,291,304		149,130,579

See accompanying notes to unaudited consolidated financial statements.

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BRIGHT MOUNTAIN MEDIA, INC

CONSOLIDATED STATEMENTS OF CHANGE IN SHAREHOLDERS’ DEFICIT

For the Six Months Ended June 30, 2023 and 2022

(unaudited)

(in thousands, except share figures)


	Common Stock		Treasury Stock			Additional Paid-in Capital			Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholders’ Deficit
		Shares	Amount		Shares			Amount
Balance, December 31, 2022		150,444,636	$	1,504	(825,175)	$	(220)		$	98,797	$	(114,269)	$	117	$	(14,071)
Net loss		—	—		—	—			—		(3,796)		—		(3,796)
Common stock issued for services rendered		190,000	2		—	—			29		—		—		31
Stock based compensation		—	—		—	—			25		—		—		25
Foreign currency translation, net		—	—		—	—			—		—		14		14
Balance, March 31, 2023		150,634,636	$	1,506	(825,175)	$	(220)		$	98,851	$	(118,065)	$	131	$	(17,797)
Net loss		—	—		—	—			—		(6,071)		—		(6,071)

Common stock issue to Center Lane Partners		21,401,993	214		—	—			1,712		—		—		1,926
Extinguishment of Centre Lane Credit Facility		—	—		—	—			670		—		—		670
Common stock issued for options exercised		70,000	1		—	—			—		—		—		1
Stock based compensation		—	—		—	—			33		—		—		33
Foreign currency translation, net		—	—		—	—			—		—		119		119
Balance, June 30, 2023		172,106,629	$	1,721	(825,175)	$	(220)		$	101,266	$	(124,136)	$	250	$	(21,119)

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	Preferred Stock			Common Stock			Treasury Stock			Additional Paid-in Capital		Accumulated Deficit		Accumulated Other Comprehensive Loss		Total Shareholders’ Deficit
	Shares	Amount		Shares	Amount		Shares	Amount
Balance, December 31, 2021	125,000	$	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	—	—		174,253	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 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, 2022	125,000	1		149,984,636	$	1,500	(825,175)	$	(220)	$	98,463	$	(109,719)	$	29	$	(9,946)

See accompanying notes to unaudited consolidated financial statements.

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BRIGHT MOUNTAIN MEDIA, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited) (in thousands)


	For the Six Months Ended June 30,
	2023		2022
Cash flows from operating activities:
Net loss	$	(9,867)	$	(3,575)
Adjustments to reconcile net loss to net cash used in operations:
Depreciation	46		12

Interest paid-in kind on Centre Lane Credit Facility	2,407		—
Amortization of operating lease right-of-use asset	29		—
Amortization of debt discount	844		615
Amortization of intangibles	1,114		786
Stock based compensation	58		59
Stock compensation for Oceanside shares	—		117
Gain on forgiveness of PPP loan	—		(1,137)

Common stock issued for services rendered	31		—
(Recovery of) provision for bad debt	(27)		222
Changes in operating assets and liabilities:
Accounts receivable	3,259		(146)
Prepaid expenses and other current assets	(78)		324
Operating lease liability	(24)		4
Accounts payable and accrued expenses	(2,259)		(950)
Other liabilities	1,496		—
Interest payable – Centre Lane Senior Secured Credit Facility, related party	—		1,390
Interest payable – 10% Convertible Promissory note, related party	4		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 exercises	1		—
Preference dividend payments	—		(2)
Principal payments received for notes receivable	—		6
Proceeds from Centre Lane Senior Secured Credit Facility, related party	6,626		2,700

Repayments of BMLLC acquisition debt	—		(250)

Net cash provided by financing activities	6,627		2,454
Effect of foreign exchange rates on cash	5		—
Net increase (decrease) in cash and cash equivalents	3,034		(364)
Cash and cash equivalents at the beginning of period	316		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 consolidated financial statements.

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BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

NOTE 1 – DESCRIPTION OF BUSINESS AND DEVELOPMENTS

Organization and Nature of Operations

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

Digital Publishing

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

Advertising Technology

Our advertising technology division focuses on delivering targeted ads to audiences on owned and operated sites as well as third-party publishers in a cost-effective manner through the deployment of proprietary technologies. By developing our own proprietary technology stack, we are able to pass along efficiencies to both the demand and supply side of the ecosystem. Our goal is to enable and support a streamlined, end-to-end advertising model that addresses both demand (buy side) and publisher supply (sell side) programmatic sales and delivery of digital advertisements using an array of audience targeting tools and advertising formats (display, audio, video, CTV, in-app). Programmatic advertising relies on artificial intelligence powered software programs that leverage data and proprietary algorithms to match the optimal selection of an ad with a bid price offered by advertisers.

The Company generates revenue through sales of advertising services which generate revenue from advertisements placed on the Company’s owned and managed sites, as well as from advertisements placed on partner websites, for which the Company earns a share of the revenue. Additionally, we also generate advertising services revenue from facilitating the real-time buying and selling of advertisements at scale between networks of buyers known as demand side platforms ("DSPs") and sellers known as 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 LLC, et al., jointly-administered under case No. 23-10174 (the “Bankruptcy Case”), the “Company” submitted a bid (the “Bid”) for the acquisition of certain assets of Big Village Insights, Inc., a Delaware corporation f/k/a Engine International, Inc., Big Village Agency LLC, a Delaware limited liability company f/k/a Engine USA LLC, Big Village Group Inc., a Delaware corporation f/k/a Engine Group Inc., Deep Focus, Inc., a New York corporation, EMX Digital Inc., a Delaware corporation, Balihoo, Inc., a Delaware corporation, and Big Village Media LLC, a Delaware limited liability company f/k/a Engine Media LLC in the Bankruptcy Case (collectively, the “Sellers”) related to the Sellers’ Agency Business and Insights Business (as defined in the APA) (collectively, the “Business”). 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 (the “APA”) and described below, for which the Company was successful.

In accordance with the Bidding Procedures, on April 4, 2023, the Sellers conducted an auction among qualified bidders, including the Company (the “Auction”). At the Auction, following certain negotiated modifications to the APA, 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.

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 planning and execution of creative and media marketing campaigns.

Centre Lane Senior Secure Credit Facility

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

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

On April 20, 2023, the Company and its subsidiaries CL Media Holdings LLC, Bright Mountain LLC, MediaHouse, Inc., Big-Village Agency LLC, and BV Insights LLC, and Centre Lane Partners entered into the Seventeenth Amendment to the Credit Agreement (the “Seventeenth Amendment”). The Credit Agreement was amended, as provided in the Seventeenth Amendment, to provide for an additional term loan amount of $26.3 million to, among other things, finance the 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.

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 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.

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 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.

NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation and Basis of Presentation

The unaudited 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 six months ended June 30, 2023, and 2022

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 consolidated financial statements include all adjustments (consisting of normal recurring accruals) necessary for the fair presentation of the consolidated financial position and the consolidated results of operations. The 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 consolidated balance sheet information as of December 31, 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, 2022. The interim 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 $124.1 million as of June 30, 2023. Cash flows used in operating activities were $3.6 million and $2.8 million for the six months ended June 30, 2023 and 2022, respectively. As of June 30, 2023, the Company had approximately a $9.0 million working capital deficit, inclusive of $3.4 million in cash and cash equivalents.

The Company’s ability to continue as a going concern is dependent on its ability to meet its liquidity needs through a combination of factors. The Company is currently exploring all strategic alternatives, including restructuring or refinancing its debts, seeking additional debt, such as borrowings under the Credit Agreement or equity capital. The ability to access the capital market is also dependent on the stock volume and market price of the Company's stock, which cannot be assured. Other measures include reducing or delaying certain business activities, reducing general and administrative expenses, including a reduction in headcount. The ultimate success of these plans is not guaranteed.

In considering our forecast for the next twelve months, the Company's current cash and working capital, as of the filing of this Quarterly Report on Form 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 its financial needs and continue as a going concern.

The accompanying unaudited 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.

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 unaudited consolidated financial statements as well as reported amounts of revenue and expenses during the periods presented. Our unaudited 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 unaudited consolidated financial statements include, valuation of goodwill and intangible assets, estimates of amortization period for intangible assets, estimates of depreciation period for property and equipment, the valuation of equity-based transactions, valuation of the Center Lane Senior Secured Facility carrying value regarding debt modification or extinguishment, and the valuation allowance on deferred tax assets.

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 consolidated statements of operations and comprehensive loss.

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, with some level of insurance. We perform periodic evaluations of the relative credit standing of financial institutions. Any loss incurred or a lack of access to such funds could have a significant adverse impact on the Company's financial condition, results of operations, and cash flows.

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 as 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;

•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.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

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


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022

Revenue Concentration
Customers exceeding 10% of revenue	1		1		1		1

% of overall revenue	14.2	%	41.7	%	12.7	%	34.9	%

Total % of revenue	14.2	%	41.7	%	12.7	%	34.9	%


	June 30, 2023		December 31, 2022
Accounts Receivable Concentration
Customers exceeding 10% of receivable	2		1
% of accounts receivable	33.1	%	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, 2022, reclassification of certain accounts has been made to previously reported amounts to conform to their treatment to the current period. Specifically, the Company identified a reclassification of commissions from general and administrative expenses to cost of revenue on the consolidated statements of operations, reclassification between note receivable to prepaid expense and other current assets, website acquisition assets to intangible assets, as well as a reclassification between accrued expenses to other liabilities on the consolidated balance sheets. These reclassifications had no impact on the previously reported net loss for the three and six months ended June 30, 2022.

Effective Accounting Pronouncements Adopted

In June 2016, the Financial 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, 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 was required to adopt the new guidance on January 1, 2023. The adoption of this standard did not have a material impact on our consolidated financial statements for the six months ended June 30, 2023.

In October 2021, the FASB issued 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

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.

NOTE 3 – ACCOUNTS RECEIVABLE

Accounts receivable, net consisted of the 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

(1) - Unbilled receivables represent amounts for services rendered at the end of the period pending generation of invoice to the customer.

Bad debt expense was $161,000 and $49,000 for the three months ended June 30, 2023, and 2022, respectively, and (recoveries) expense of $(27,000) and $222,000 for the six months ended June 30, 2023, and 2022, respectively.

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)	June 30, 2023		December 31, 2022
Prepaid insurance	$	443	$	1
Prepaid consulting service agreements – Spartan (1)	95		285
Prepaid software	107		176
Deposits	187		137
Subscriptions	638		—
Other	140		138
Total prepaid costs and other assets	1,610		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-year agreement with Spartan Capital commencing October 2018 for the provision of such services. During the years ended December 31, 2018 to December 31, 2020, a series of payments were made under the terms of this agreement, resulting in amounts being capitalized and amortized over the remaining life of the agreement. These amounts will be fully amortized by September 30, 2023.

NOTE 5 – PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:


(in thousands)	Estimated Useful Life (Years)	June 30, 2023		December 31, 2022
Furniture and fixtures	3-5	$	8	$	49
Computer equipment	3	125		340
Computer software	5	2,229		—
		2,362		389
Less: accumulated depreciation		(2,148)		(349)
Property and equipment, net		$	214	$	40

Depreciation and amortization expense for the three months ended June 30, 2023, and 2022 was $39,000 and $8,000, respectively, and $46,000 and $12,000 for the six months ended and June 30, 2023, and 2022, respectively.

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

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

NOTE 6 – INTANGIBLES ASSETS, NET

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


	June 30, 2023		December 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, 2023							As of December 31, 2022
	Useful Life (Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Trade name	2 - 10	$	8,381	$	(1,973)	$	6,408	$	2,759	$	(1,617)	$	1,142
IP/technology	10	5,821		(1,047)		4,774		1,983		(899)		1,084
Customer relationships	5 - 10	13,380		(5,023)		8,357		6,680		(4,419)		2,261
Non-compete agreements	3 - 5	402		(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 name	7 to 10	$	5,622
Developed technology	10	3,838
Customer relationships	7 to 10	6,700
Total		$	16,160


	June 30, 2023		December 31, 2022
Website	$	1	$	2
Other intangibles	19,555		4,508
Total intangible, net	$	19,556	$	4,510

Amortization expense for the three months ended June 30, 2023 and 2022 was approximately $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.

Amortization expense related to both the website acquisition costs and the intangible assets and is included in general and administrative expense in the statements of operations and comprehensive loss.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

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


Remainder of 2023	$	1,650
2024	3,300
2025	2,539
2026	1,904
Thereafter	10,163

Total expected amortization expense	$	19,556

NOTE 7 – GOODWILL

The following table represents the allocation of goodwill as of June 30, 2023, and December 31, 2022 (in thousands):


	Owned & Operated		Ad Exchange		Other		Total
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.

Goodwill is tested for impairment at least annually and if triggering events are noted prior to the annual assessment. Impairment is deemed to occur when the carrying value of the goodwill associated with the reporting unit exceeds the implied value of the goodwill associated with the reporting unit.

At December 31, 2022, an assessment was performed using a qualitative assessment which includes consideration of the economic, industry and market conditions in addition to the overall financial performance of the Company and these assets. Our qualitative assessment did not conclude that it is more likely than not that the estimated fair value of the reporting unit is greater than the carrying value, and we performed a quantitative analysis. In a quantitative test, the fair value of a reporting unit is determined based on a discounted cash flow analysis and further analyzed using other methods of valuation. A discounted cash flow analysis requires us to make various assumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on our long-term projections. Assumptions used in our impairment testing are consistent with our internal forecasts and operating plans. Our discount rate is based on our debt structure, adjusted for current market conditions. If the fair value of the reporting unit exceeds its carrying amount, there is no impairment. To the extent the carrying amount exceeds its fair value, an impairment charge of the reporting unit’s goodwill would be necessary.

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, 2023		December 31, 2022
Accounts payable	$	11,139	$	8,585
Accrued wages, commissions and bonus	644		380
Publisher cost	763		559
Professional fees	767		677
Subcontractor	1,270		—
Other	619		116
Total accounts payable and accrued expenses	$	15,202	$	10,317

NOTE 9 – OTHER LIABILITIES

Other liabilities consisted of the following (in thousands):


	June 30, 2023		December 31, 2022
Current portion of long term lease	$	57	$	38
Dividend payable	692		692
Project advance expense (1)	2,696		—
Litigation reserves	1,338		1,107
Other current liabilities	5		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 10 – CENTRE LANE SENIOR SECURED CREDIT FACILITY

Effective June 1, 2020, the Company entered into a membership interest purchase agreement to acquire 100% of Wild Sky Media, 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 million, comprising of $15.0 million of initial indebtedness, repayment of Wild Sky’s existing accounts receivable factoring facility of approximately $900,000 and approximately $500,000 of expenses.

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

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 $36.0 million to provide liquidity to fund operations beginning in April 2021 (as amended, the “Centre Lane Senior Secured Credit Facility”). This Centre Lane Senior Secured Credit Facility has been determined to qualify as a related party transaction as shares were issued to Centre Lane Partners as part of the transaction. A related party is a party that can exercise significant influence over the Company in making financial and/or operating decisions.

The original note issued under the Centre Lane Senior Secured Credit Facility initially bore interest at a rate of 6.0% per annum, with payments of 2.5% of outstanding principal beginning on June 30, 2023. The interest rate was increased to 10.0% pursuant to the first amendment to the Centre Lane Senior Secured Credit Facility and interest payable under the note is payable-in-kind (“PIK Interest”) in lieu of cash payment.

Commencing with the ninth amendment, the interest rate was increased to 12% on all subsequent draws with 8% payable quarterly in cash and 4% payable-in-kind in lieu of cash payment. These draws are known as the “last in first out loans”, totaling $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, partial or full prepayments of the Centre Lane Senior Secured Credit Facility would be required in the event of certain future capital raises.

Optional Prepayment

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

Repayment of Loans

The Company is required to repay in cash to Centre Lane Partners (i) commencing with the fiscal quarter ending on June 30, 2023, in consecutive quarterly installments to be paid on the last day of each fiscal quarter of the Company, an amount equal to 2.5% of the outstanding aggregate principal amount of the original principal plus draws advanced by amendments 2 through 8 along with accrued and unpaid interest (after giving effect to capitalized PIK Interest) and (ii) on the maturity date all outstanding obligations (including, without limitation, all accrued and unpaid principal and interest on the principal amounts of the Loans (including any accrued but uncapitalized PIK Interest)) of the loan parties that are due and payable on such date. The outstanding amount for these draws at 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 six months ended June 30, 2023, the Company paid approximately $161,000 toward outstanding interest payable, there was no payment made during the same period for 2022.

There was no payment on the principal loan balance for the three and six months ended June 30, 2023, and 2022.

Fees

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

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 for agency services provided under the Credit Agreement. The Credit Agreement 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 Agreement and on each anniversary of the Effective Date during the term of this agreement by adding and capitalizing the full amount of such fee to the outstanding principal balance of the loans. The accumulated administrative fee since inception of the facility is $140,000 and is included in outstanding principal. The administrative fee charged during the three months ended June 30, 2023 and 2022 was $35,000 and $35,000, respectively.

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


	June 30, 2023		December 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 party	53,061		25,101
Net principal	57,109		29,961
Add: debt discount	7,041		3,148
Outstanding principal	$	64,150	$	33,109

The below table summarizes the movement in the outstanding principal for the periods ended June 30, 2023, and December 31, 2022, (in thousands):


	June 30, 2023		December 31, 2022
Opening balance	$	33,109	26,334
Add:
Draws	27,816		3,050
Exit and other fees	818		621
Interest capitalized	2,407		3,104
	31,041		6,775

Outstanding principal	$	64,150	$	33,109

Amendments to Centre Lane Senior Secured Credit Facility

Commencing April 2021, the Company and certain of its subsidiaries entered into various amendments to the Credit Agreement between 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 June 30, 2023, there were eighteen amendments to the Credit Agreement.

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

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

In connection with the Seventeenth Amendment, the Company determined that the change was an extinguishment consistent with ASC 470, Debt, the old debt of $35.5 million was derecognized and the new debt of $62.7 million was recognized at estimated fair value. A gain on extinguishment was recognized against additional paid in capital of $670,000, as Centre Lane Partners is a related party.

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 June 30, 2023, (in thousands, except for share data):


Number	Date	Draw $’000		Repayment Date	Interest Rate (PIK)		Interest Rate (Cash)			Agency Fee		Exit Fee (A)		Common Stock Issued	Accounting Impact
1	04/26/21	$	—	April 20, 2026	10	%	$	—		$	—	$	—	150,000	Extinguishment	(B)
2	05/26/21	1,500		April 20, 2026	10	%	—			—		750		3,000,000	Modification
3	08/12/21	500		April 20, 2026	10	%	—			—		250		2,000,000	Modification
4	08/31/21	1,100		April 20, 2026	10	%	—			—		550		—	Modification
5	10/08/21	725		April 20, 2026	10	%	—			—		363		—	Extinguishment
6	11/05/21	800		April 20, 2026	10	%	—			—		800		7,500,000	Modification
7	12/23/21	500		April 20, 2026	10	%	—			70		500		—	Modification
		$	5,125							$	70	$	3,213	12,650,000

8	01/26/22	350		April 20, 2026	10	%	—			—		350		—	Modification
9	02/11/22	250		April 20, 2026	4	%	8		%	—		13		—	Modification
10	03/11/22	300		April 20, 2026	4	%	8		%	—		15		—	Modification
11	03/25/22	500		April 20, 2026	4	%	8		%	—		25		—	Modification
12	04/15/22	450		April 20, 2026	4	%	8		%	—		23		—	Modification
13	05/10/22	500		April 20, 2026	4	%	8		%	35		25		—	Modification
14	06/10/22	350		April 20, 2026	4	%	8		%	—		18		—	Modification
15	07/08/22	350		April 20, 2026	4	%	8		%	—		18		—	Modification
		$	3,050							$	35	$	487	—

16	02/10/23	1,500		April 20, 2026	4	%	8		%	—		75		—	Modification
17	04/20/23	26,316		April 20, 2026	15	%	—		%	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 $6.0 million of total cash proceeds from the sale of its preferred stock prior to December 31, 2021, without having to make a mandatory prepayment of the loans. Additionally, the Company may issue up to $800,000 in dividends from the previous limit of $500,000 per annum.

(C)			15% PIK until April 20, 2024, then 5% cash and 10% 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

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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.

As of June 30, 2023 and December 31, 2022, of the Centre Lane Senior Secured Credit Facility was $57.1 million and $30.0 million, respectively, net of unamortized debt discount of $7.0 million and $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 six months ended June 30, 2023, and 2022 consisted of the following (in thousands):


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022
Interest expense	$	1,707	$	829	$	2,570	$	1,386
Amortization	536		331		837		608
Total interest expense	$	2,243	$	1,160	$	3,407	$	1,994

Subsequent Events

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 11 – OCEANSIDE SHARE EXCHANGE LOAN

On July 31, 2019, the Company executed a Share Exchange Agreement and Plan of Merger (the “Oceanside Merger Agreement”) with Slutzky & Winshman Ltd., an Israeli company (“Oceanside”) and the shareholders of Oceanside (the “Oceanside Shareholders”).

The merger closed on July 31, 2019, and the Company acquired all of the outstanding shares of Oceanside. Pursuant to the terms of the Oceanside Merger Agreement, the Company issued 12,513,227 shares valued at $20.0 million to owners and employees of Oceanside and contingent consideration of $750,000 paid through the delivery of unsecured, interest free, one and two-year promissory notes (the “Closing Note(s)”).

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.

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 payable over a 50-month period which commenced January 2023. Amount unpaid as of June 30, 2023 was $572,000.

NOTE 12 – 10% CONVERTIBLE PROMISSORY NOTES

On November 30, 2018, the Company issued 10% convertible promissory notes ("Convertible Notes") in the amount of $80,000 to the Chairman of the Board, a related party. The Convertible Notes are unsecured and mature five years from issuance and are convertible at the option of the holder into shares of common stock at any time prior to maturity at a conversion price of $0.40 per share. A beneficial conversion feature exists on the date the Convertible Notes were issued whereby the fair value of the underlying common stock to which the Convertible Notes are convertible is in excess of the face value of the Convertible Notes of $80,000.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

The principal balance of these Convertible Notes payable was $80,000 at June 30, 2023 and December 31, 2022. The total Convertible Notes payable was $75,000 and $68,000, net of discount of $5,000 and $12,000, at June 30, 2023 and December 31, 2022, respectively.

Interest expense for the Convertible Notes was $6,000 inclusive of interest of $2,000 and discount amortization of $4,000 for the three months ended June 30, 2023, and 2022. Interest expense for the Convertible Notes was $11,000 inclusive of interest of $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.

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

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

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 name	7 to 10	$	5,622
Developed technology	10	3,838
Customer relationships	7 to 10	6,700
		$	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
Intangibles	16,160
Goodwill	1,291
Prepaid and other assets	795
Property and equipment	216
	33,334
Fair value of liabilities assumed
Accounts payable and accrued expenses	$	7,271
Deferred revenue	4,754
Other current liabilities	1,435
	13,460

Total fair value of assets and liabilities assumed	$	19,874

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 14 – PAYCHECK PROTECTION PROGRAM

The Paycheck Protection Program (“PPP”) was established by the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act") and administered by the Small Business Administration (“SBA”). During 2021 to 2022, the Company and one of its 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 MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

Second Bright Mountain PPP Loan

On February 17, 2021, the Company entered into a promissory note of $296,000 with Regions Bank (the “Second Bright Mountain PPP Loan”) which had a two-year term and bears interest at a rate of 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 on the PPP forgiveness during the three and six months ended June 30, 2022.

Second Wild Sky PPP Loan

On March 23, 2021, Wild Sky entered into a promissory note of $842,000 with Holcomb Bank (the “Second Wild Sky PPP Loan”) which had a two-year term and bears interest at a rate of 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 $842,000 on the PPP forgiveness during the six months ended June 30, 2022.

NOTE 15 – REVENUE RECOGNITION

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


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 30, 2022

Revenue:
Digital publishing	$	1,444	$	2,364	$	2,399	$	3,988
Advertising technology	11,172		3,353		11,715		5,188
Total revenue	$	12,616	$	5,717	$	14,114	$	9,176

Geographic Information

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


	Three Months Ended				Six Months Ended
	June 30, 2023		June 30, 2022		June 30, 2023		June 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 100% and 88% of total revenue for the three months ended June 30, 2023 and 2022, respectively, and 100% and 88% for the six months ended June 30, 2023 and 2022, respectively.

As of June 30, 2023, and December 31, 2022, approximately 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.

BRIGHT MOUNTAIN MEDIA, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

June 30, 2023

(Unaudited)

Deferred Revenue

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


	June 30, 2023		December 31, 2022
Deferred revenue at start of the period	$	737	$	1,162
Amounts invoiced during the period	1,561		588
Business combination

Bright Mountain Media, Inc. [BMTM] Filings
10-Q	[2023-08-14]
10-Q	[2023-05-12]
10-K	[2023-03-29]
10-Q	[2022-11-14]
10-Q	[2022-08-12]
10-Q	[2022-06-30]
10-K	[2022-06-13]
10-Q	[2022-03-31]
10-Q	[2022-03-07]
10-Q	[2022-02-08]
10-K	[2021-12-23]
10-Q	[2020-11-24]
10-Q	[2020-08-19]
10-Q	[2020-06-29]
10-K	[2020-05-14]
10-Q	[2019-11-19]
10-Q	[2019-08-19]
10-Q	[2019-05-23]
S-1	[2019-04-25]
10-K	[2019-04-12]
10-Q	[2018-11-20]
10-Q	[2018-08-20]
10-Q	[2018-05-21]
10-K	[2018-04-02]
10-Q	[2017-11-20]
10-Q	[2017-08-21]
10-Q	[2017-05-22]
10-K	[2017-03-31]
10-Q	[2016-11-18]
S-1	[2016-08-26]
10-Q	[2016-08-15]
10-Q	[2016-05-11]
10-K	[2016-03-24]
10-Q	[2015-11-12]
10-Q	[2015-08-11]
10-Q	[2015-05-08]
10-K	[2015-03-31]
10-Q	[2014-11-12]
10-Q	[2014-08-12]
10-Q	[2014-05-13]
10-K	[2014-03-31]
10-Q	[2013-11-13]
10-Q	[2013-08-14]
10-Q	[2013-05-14]