EDGAR 10-K Filing

Company CIK: 1568385
Filing Year: 2024
Filename: 1568385_10-K_2024_0001628280-24-014146.json

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ITEM 1. BUSINESS
ITEM 1. DESCRIPTION OF BUSINESS
This business description should be read in conjunction with our audited consolidated financial statements and accompanying notes thereto appearing elsewhere in this Annual Report on Form 10-K, which are incorporated herein by this reference.
Unless specifically set forth to the contrary, when used in this Annual Report on Form 10-K the terms “Bright Mountain,” the “Company,” “we,” “our,” “us,” and similar terms refers to Bright Mountain Media, Inc., a Florida corporation, and our subsidiaries.
Business Overview
Organization and Nature of Operations
Bright Mountain Media, Inc. (together with its wholly-owned subsidiaries, the “Company,” “Bright Mountain” or “we”) has an end-to-end digital media and advertising services platform that efficiently connects brands with targeted consumer demographics. We focus on digital publishing, advertising technology, consumer insights, creative and media services.
Digital Publishing
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 software programs that leverage data and proprietary algorithms to match the optimal selection of an ad with a bid price offered by advertisers.
Consumer Insights
Our consumer insights division focuses on providing primary and secondary research, competitive intelligence, and expert insight to address customers' strategic issues. We provide cutting-edge and dynamic research, offering clients a comprehensive perspective on their consumers. This insight extends to strategic guidance on the optimal timing and channels to effectively connect with target audiences. Our cutting-edge approach combines advanced data analytics, artificial intelligence, and comprehensive market research, to uncover actionable insights that drive informed decision-making.
Creative Services
Our creative services division transforms data into award-winning campaigns. We are uniquely able to leverage insights teams with highly strategic media planning and buying teams to ensure brands not only position their advertising precisely, but also yield impactful business results. Our goal is to combine data-driven decisions with creativity fueled by a deep understanding of modern culture.
Media Services
Our media services division focuses on advertisers and agencies by providing access to premium inventory, leveraging data to optimize programmatic campaigns. Our aim is to empower clients to access the most sought-after
advertising spaces across diverse platforms tailored to their specific needs and preferences. Our data-driven approach ensures that ad placements are not only well-targeted, but also continuously optimized for maximum efficiency and ROI. Our commitment to combining premium inventory access with data-driven programmatic campaign optimization makes us an indispensable partner in the success of our clients' advertising and marketing endeavors.
The Company generates revenue through:
•the selling of advertisements placed on our owned and managed sites and on partner websites where we earn a share of the revenue;
•facilitating the seamless, real-time exchange of advertisements on a large scale, bridging networks of buyers (referred to as "DSPs") and networks of sellers (referred to as "SSPs");
•serving advertisers through providing access to premium resources and leveraging data to optimize programmatic campaigns, where revenue is derived from the planning and execution of creative and media marketing campaigns; and
•providing primary and secondary research, competitive intelligence, and expert insights to address customers' strategic issues, where revenue is primarily derived from providing a single integrated service for such research.
Our Strategy
Leveraging technology, data and insights to power customers’ creative and media strategies.
We Are Built on Advertising Technology
Innovative advertising technology built for modern digital media audiences. Our mission is to transform programmatic advertising through more sophisticated technology-with simpler, more straight-forward integrations-and a culture of true partnership.
We are Powered by Our Data Driven Insights
Our global research and analytics division uncovering not just the ‘what’ but the ‘why’ behind customer behavior, supporting clients’ insights needs with agile tools, CX research, branding, product innovation, data analytics, and more. We go beyond research to deliver integrated expertise and products that fine tune your data strategies, drive bottom line growth, and differentiate in today’s marketplace. Through collaboration with your teams to uncover the human truths that help you activate insight and accelerate growth.
A powerhouse of Millennial, Gen Z and Gen Alpha research, our consumer insights division is the foremost authority on emerging trends, generational insights, and youth behavior empowering companies to see tomorrow.
We Are Creative in Love with Our Craft
A modern creative and media shop that positions brands to be lifted by their audiences with contextually crafted work in social, digital, and traditional channels. We aim to understand what is happening now in humanity and culture and getting prepared for what's next.
We Are The Authority On Moms And Motherhood
Our division offers massive global reach through our engaging content and multicultural audiences. We are here for mom throughout her motherhood journey. Helping families raise happy, kind and confident kids. Delivering diverse voices and perspectives on motherhood.
Market Challenge
According to eMarketer's report, "US Ad Spending 2023", published May 2023, digital ad spending in the US faces its slowest growth rate in over a decade, even though almost $20.0 billion more was anticipated to be spent in 2023 compared to 2022. Most of the new money is going to new channels, rather than those that were popular just a few years ago. Total ad spending for 2023 in the U.S. was expected to reach approximately $350.00 billion. Digital was expected to account for 74.6% of that total, or $263.89 billion. Total media ad spending was anticipated to increase by just 3.8% due to negative growth from traditional media. TV, radio, out-of-home (OOH), and print ad spending were anticipated to collectively contract by 6.3% in 2023, with the bulk of the loss coming from TV.
According to eMarketer, CTV ad spending was set to be the second-fastest growing major ad channel in 2023.
According to eMarketer's report, "Advertising Trends to Watch in 2024", published November 2023, after growing at a compound annual rate of 17.6% over the past 15 years, digital ad spending is expected to settle into year over year growth in the low double digits starting in 2024 and through at least 2027. This is a sign of a mature market that should top $270.0 billion in 2024 and account for over three-quarters of all ad spending.
Industry Outlook
Impact on the U.S. Market
In April 2023, a report was published by Interactive Advertising Bureau ("IAB") titled "Internet Advertising Revenue Report, Full-Year 2022 Results." The report reflected how the digital advertising industry showed resilience in the face of a strained economy. Internet advertising revenues grew 10.8% year-over year (YoY), totaling $209.7 billion. After seeing exponential growth coming out of the pandemic, the highest level of growth seen since 2006, a deceleration in advertising revenues was expected. High inflation rates and economic uncertainty throughout 2022 impacted marketing budgets.
The IAB report states that the programmatic growth trend continued in 2022 as it grew 10.5% year over year and increased its share of overall non-search ad revenue to 12.7% (from 10.8% in 2021).
The IAB report indicated that mobile advertising revenues continue to strengthen with 14.1% YoY growth and ad revenues reaching a record high of $154.1 billion. The continued evolution and expansion of digital environments, the
increase in consumption of digital audio formats such as podcasts, plus the continued rollout of 5G and its beneficial impact on VR and AR advertising capabilities, were likely to continue to positively impact mobile ad revenues in 2023.
IAB indicated that they expected to see advertising budgets in 2023 continue to migrate to retail media networks as they offer advertisers access to first-party data for personalization and measurement in closed-loop environments.
Per the IAB report, regulatory uncertainty and continued economic challenges will likely threaten industry profit margins and reduce the rate of economic contributions. As user privacy concerns continue to rise and new state-level regulations are being introduced, it’s becoming increasingly evident that the industry needs to adapt and evolve beyond traditional methods.
Impact on the Worldwide Market
In January 2024, eMarketer published a report titled "Worldwide Digital Ad Spending Forecast 2024". The report stated that ad spending growth will accelerate across the board in 2024, and that digital media, traditional media, and total media ad spending will all grow faster worldwide this year than in 2023. After two years of relative malaise, the outlook is positive on a global scale and in every major region of the world. eMarketer indicated that digital advertising had a better 2023 than they originally predicted.
According to eMarketer's report, the US is expected to account for almost 40% of total worldwide ad spending and 44% of digital ad spending in 2024. In 2023, the US posted its slowest digital ad growth in 14 years of 9.7%, but the world's largest economy still produced $23.8 billion in new digital ad dollars. In other words, in a down year, the US produced more new digital ad spending than almost any other country in the world produced in total. The US is expected to return to double-digit growth for both total and digital ad spending this year, and its share of the worldwide spending in both categories is expected to tick up in the coming years, after taking a slight dip in 2023.
Digital Ad Spending Worldwide, 2022-2027
billions, % change and % of total media ad spending
Note: includes advertising that appears on desktop and laptop computers as well as mobile phones, tablets, and other internet-connected devices, and includes all the various formats of advertising on those platforms
Source: Insider Intelligence | eMarketer Forecast, Oct 2023
284093 www.eMarketer.com
Intellectual Property
We currently rely on a combination of trade secret laws and restrictions on disclosure to protect our intellectual property rights. Our success depends on the protection of the proprietary aspects of our technology as well as our ability to operate without infringing on the proprietary rights of others. We also enter into proprietary information and confidentiality agreements with our employees, consultants and commercial partners and control access to, and distribution of, our software documentation and other proprietary information.
Technology and Product Platforms (Including URL’s)
Our top technical priorities are the security of our systems and the fast and reliable delivery of pages and ads to our users. Our systems are designed to handle processing of personal data, as well as traffic and network growth. We rely on multiple tiers of redundancy/failover and, with respect to our advertising technology business, third-party content delivery networks to achieve our goal of 24 hours-a-day, seven-days-a-week uptime. Regular automated backups protect the integrity of our data. Our servers are continuously monitored by numerous third-party and open-source monitoring and alerting tools.
Competition
We compete with other companies that have significantly greater financial, technical, marketing, and distribution resources.
Most of our competitors have significantly greater financial, technical, marketing and distribution resources as well as greater experience in the industry. There are no assurances we will ever be able to effectively compete in our marketplace. Our websites, ad technology, and monetization solutions may not be competitive with other technologies and/or our websites, ad technology, and monetization solutions may be displaced by newer technology. If this happens, our sales and revenues will likely decline. In addition, our current and potential competitors may establish cooperative relationships with larger companies, to gain access to greater development or marketing resources. Competition may result in price reductions, reduced gross margins and loss of market share.
Customers
Our customers are advertisers, advertising agencies and advertising service organizations seeking to have their respective advertisements placed on one of the many platforms serviced by the Company. For the years ended December 31, 2023 and 2022, two customers represented 23.0% of our revenue and one customer represented 37.7% of our revenue, respectively; both customers have the option to cancel their agreements by providing the Company 10 days and 30 days prior written notice, respectively.
Regulatory Environment
Interest-based advertising, or the use of data to draw inferences about a user’s interests and deliver relevant advertising to that user, has come under increasing scrutiny by legislative, regulatory, and self-regulatory bodies in the U.S. and abroad that focus on consumer protection or data privacy. In particular, this scrutiny has focused on the use of cookies and other technology to collect or aggregate information about Internet users’ online browsing activity. Because we, and our clients, rely upon large volumes of such data collected primarily through cookies, it is essential that we monitor developments in this area domestically and globally, and engage in responsible privacy practices, including providing consumers with notice of the types of data we collect and how we use that data to provide our services.
We rely on IP addresses, geo-location information, and persistent identifiers about Internet users and do not attempt to associate this data with other data that can be used to identify real people. This type of information is considered personal data in some jurisdictions or otherwise may be the subject of future legislation or regulation. The definition of personal data varies by state and country and continues to evolve in ways that may require us to adapt our practices to avoid violating laws or regulations related to the collection, storage, and use of consumer data. For example, some European countries consider IP addresses or unique device identifiers to be personal data subject to heightened legal and regulatory requirements. As a result, our technology platform and business practices must be assessed regularly in each country in which we do business.
There are also several specific foreign laws and regulations governing the collection and use of certain types of consumer data relevant to our business.
For instance, the use and transfer of personal data in the European Union (the "EU") member states is currently governed under the EU Data Protection Directive, which generally prohibits the transfer of personal data of EU subjects outside of the EU, unless the party exporting the data from the EU implements a compliance mechanism designed to ensure that the receiving party will adequately protect such data. In addition, the EU has finalized the General Data Protection Regulation (“GDPR”), which became effective in May 2019. The GDPR sets out higher potential liabilities for certain data protection violations, as well as a greater compliance burden for us in the course of delivering our solution in Europe. Among other requirements, the GDPR obligates companies that process large amounts of personal data about EU residents to implement a number of formal processes and policies reviewing and documenting the privacy implications of the development, acquisition, or use of all new products, technologies, or types of data. Further, the EU is expected to replace the EU Cookie Directive governing the use of technologies to collect consumer information with the EU ePrivacy Regulation. The EU ePrivacy Regulation proposes burdensome requirements around obtaining consent and imposes fines for violations that are materially higher than those imposed under the EU Cookie Directive.
Additionally, our compliance with our privacy policy and our general consumer privacy practices are also subject to review by the Federal Trade Commission and state regulators, which may bring enforcement actions to challenge allegedly unfair and deceptive trade practices, including the violation of privacy policies and representations therein. Certain State Attorneys General may also bring enforcement actions based on comparable state laws or federal laws that permit state-level enforcement. Outside of the U.S., our privacy and data practices are subject to regulation by data protection authorities and other regulators in the countries in which we do business.
Human Capital
Because of the service nature of our business, the quality of personnel is of crucial importance to our continuing success and our employees, including creative, digital, research, media and account specialists, and their skills and relationships with clients, are among our most valuable assets. There is keen competition for qualified employees.
As of December 31, 2023, we had 190 employees, of which 173 were employed in the U.S. and 17 outside of the U.S., in Thailand.
We employ a balanced approach in managing our human capital resources. Depending on where a human-capital management function is most effective or efficient, processes are either managed at the holding company or designated to our operating units to adopt strategies appropriate for their client sector, workforce makeup, talent requirements and business demands.
The holding company retains oversight of all human capital resources and activities, setting standards, providing support and policy guidance, and sharing programs. At the corporate center, centralized human capital management processes include development of human resources governance and policy; executive compensation for senior leaders across the Company; benefits programs; performance planning, development and retention of the Company’s senior executives and key roles in the operating units; and executive development.
The Company sets specific standards for human capital management and, on a yearly basis, assesses each operating unit’s performance in managing and developing its workforce. We undertake human capital initiatives with the aim of ensuring that employees have the high level of competence and commitment our business needs to succeed. We formally assess our operating units against their efforts in the areas of people development, diversity and inclusion, performance management, talent acquisition and organization development in order to drive or support the units’ strategic business and growth goals. Accordingly, the operating units create and deploy skills-training programs, management training, employee goal-setting and feedback platforms, applicant-tracking systems, new-employee onboarding processes, and other programs intended to enhance the performance and engagement of the workforce.
Diversity, Equity and Inclusion are essential priorities for the Company. Our goal is that our talent represents the diversity of our communities and consumers, with a corporate culture that drives belonging, well-being and growth. We believe that such a workplace will enable us to provide cultural insights to help our clients make authentic and responsible connections with their customers. The programs we provide in support of diversity, equity and inclusion include, training and curated and bespoke content, research and tools, to foster awareness and action on an array of critical issues that we believe are vital for the recruitment, retention, advancement, well-being and belonging for people who are part of under-represented groups.
The Company has a 401(K) plan that covers employees that have reached 18 years of age upon commencement of employment. The plan provides for voluntary employee contribution through salary deductions. For the year ended December 31, 2023, and 2022, there were no employer contribution made.
History of Our Company
We were organized as a Florida corporation in 2010 but remained a development stage company until 2013, when we changed our name to Bright Mountain Holdings, Inc., and began building our digital marketing brand in 2014. In 2015, we changed our name again to Bright Mountain Acquisition Corporation, and then to Bright Mountain Media, Inc., as we began acquiring businesses, including e-commerce businesses, and implementing our strategy to transform into a digital publishing and advertising technology holding company. During 2018, we discontinued our e-commerce product sales segment to focus entirely on the advertising segment. In 2020, we acquired Wild Sky Media in the digital publishing area consistent with our strategy to transform into a digital publishing and advertising technology holding company. In 2023, we expanded our focus when we completed the acquisition of two business units of Big Village (Big Village Insights, Inc and Big Village Agency LLC, (together, the “Big Village Entities”)). Through these acquisitions, we have now expanded how we connect with our customers focusing on consumer insights, and creative and media services. We currently have six subsidiaries: CL Media Holdings LLC, Bright Mountain LLC, Mediahouse, LLC, Slutzky & Winshman Ltd, Big-Village Agency LLC, and BV Insights LLC; each of which offers a unique service to our customers. During the year ended December 31, 2023, we terminated operations of Mediahouse, LLC and Slutzky & Winshman Ltd, which were located in the United States and Israel, respectively. At December 31, 2023, these two entities held no employees but had not been dissolved.
Our principal executive offices are located at 6400 Congress Avenue, Suite 2050, Boca Raton, FL 33487, and our
telephone number is (561) 998-2440.
Available Information
The Company’s Annual Report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports are available free of charge through the “Investor Relations” section of the Company’s website, www.brightmountainmedia.com, as soon as reasonably practical after they are filed with the Securities and Exchange Commission (“SEC”). The SEC maintains a website, www.sec.gov, which contains periodic reports, proxy and information statements, and other information filed electronically with the SEC by the Company. The information on, or that can be accessed through our website is not incorporated by reference in, or considered part of, this Annual Report on Form 10-K.

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ITEM 1A. RISK FACTORS
ITEM 1A. RISK FACTORS
Our business, financial condition, results of operations, prospects and the prevailing market price and performance of our common stock may be adversely affected by a number of factors, including the factors discussed below. You should carefully consider the risk factors set forth below and elsewhere in this Annual Report on Form 10-K, together with all the other information included in this Annual Report on Form 10-K. The risks and uncertainties described in this Annual Report on Form 10-K or in any document incorporated by reference herein are not the only risks and uncertainties that we face. Additional risks that are not presently known to us or that we currently believe to be immaterial may become material and adversely affect our business. If any of the following risks and uncertainties develop into actual events, our business, financial condition, results of operations, prospects or the prevailing market price and performance of our common stock could be materially adversely affected, and you could lose your entire investment in our Company.
Summary of Principal Risk Factors
Risks Relating to Our Financial Condition and Indebtedness
•We have a history of losses.
•We may not be able to refinance, extend or repay our substantial indebtedness owed to Centre Lane, which would have a material adverse effect on our financial condition and ability to continue as a going concern.
•Our secured indebtedness may impair our ability to operate our business.
•We have depended upon sales of equity securities and borrowings under the Centre Lane Senior Secured Credit Facility to provide operating capital.
•Our economic performance has raised substantial doubt about our ability to continue as a going concern.
•If we fail to establish and maintain adequate internal control over our financial and management system, our ability to accurately and timely report our financial results could be adversely affected, resulting in errors in our financial reporting, which could cause a loss of investor confidence.
•We depend upon a substantial portion of our revenues from a limited number of customers.
•We are subject to seasonal fluctuations in our revenues in future periods.
•Our cash could be adversely affected if the financial institutions in which we hold our cash fail.
Risks Related to Our Operations
•Past acquisitions and any future acquisitions, joint ventures, strategic alliances or similar transactions may not perform as expected.
•The acquisition of new businesses is costly, and these acquisitions may not enhance our financial condition.
•If we fail to detect advertising fraud or other actions that impacts our advertising campaign performance, we could harm our reputation with advertisers or agencies, which would cause our revenue and business to suffer.
•If advertising on the internet loses its appeal, our revenue could decline.
•Our success is dependent upon our ability to effectively expand and manage our relationships with our publishers.
•Online security breaches or other disruptions of our information technology systems could harm our business.
•We must generate high quality content in order to attract and retain users, advertisers and strategic buyers.
•We may expend significant resources to protect our content or to defend claims of infringement by third parties, and if we are not successful, we may lose the rights to use material or be required to pay significant fees.
•Failure to protect our intellectual property rights or claims by others that we infringe their intellectual property rights could substantially harm our business.
•Developing and implementing new and updated applications, features and services for our websites may be more difficult than expected, may take longer and cost more than expected and may not result in sufficient increases in revenue to justify the costs.
•If we are unable to obtain or maintain key website addresses, our ability to operate and grow our business may be impaired.
•If we are unable to respond to rapid technological change, our products and services could become obsolete, and our reputation could suffer.
•Our ability to deliver our content depends upon the quality, availability, policies and prices of certain third-party service providers.
•We may be held liable for content or third-party links on our website or content distributed to third parties, and our general liability insurance may not be adequate to compensate us for all liabilities to which we are exposed.
•We depend on our senior management team and other key employees, and the loss of any of them could harm our business.
•We must hire, integrate and/or retain qualified personnel to support our business.
•We deliver advertisements to users from third-party advertising services, which exposes our users to content and functionality over which we do not have ultimate control.
•Our services may be interrupted if we experience problems with our network infrastructure.
•Our systems may fail due to natural disasters, telecommunications failures and other events, any of which would limit user traffic.
•We are unable to predict the impacts of COVID-19 and any other future pandemic or outbreak of disease on our business.
•Privacy violations could impair our business.
•We are subject to several regulatory risks, and any failure to comply with various regulations could adversely impact our business.
•Litigation is both costly and time-consuming, and there is no certainty of a favorable result.
•Our industry is intensely competitive, and if we do not effectively compete against current and future competitors, our business, results of operations and financial condition could be harmed.
•We may be adversely affected by the effects of inflation.
•Our platform relies on third-party open source software components.
•The effectiveness of certain services we offer depends on our ability to collect and use online data.
•The rejection of digital advertising by consumers, through opt-in, opt-out or ad-blocking technologies or other means or the restriction on the use of third party-cookies, mobile device identifiers or other tracking technologies, could adversely affect our business, results of operations, and financial condition.
•If ad formats and digital device types develop in ways that prevent advertisements from being delivered to consumers, our business, results of operations, and financial condition may be adversely affected.
•Our intellectual property rights may be difficult to enforce and protect, which could enable others to copy or use aspects of our technology without compensating us, thereby eroding our competitive advantages and having an adverse effect on our business, results of operations, and financial condition.
•We could experience a decline in renewals or demand for our subscription-based research services.
•We may be unable to develop and offer new research products and services.
•Our creative advertising services division may not be able to remain competitive or retain key clients.
Risks Related to the Ownership of Our Securities
•There is a limited public market for our Common Stock.
•We have outstanding convertible notes, options and warrants to purchase approximately 19% of our outstanding Common Stock, which will have a dilutive effect on our existing shareholders if converted or exercised.
•The concentration of stock ownership and control by Centre Lane, and our debt transaction with Centre Lane, may cause conflicts of interests that may adversely affect us.
•Some provisions of our charter documents and Florida law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our shareholders and may prevent attempts by our shareholders to replace or remove our current management.
•Our Company has a concentration of stock ownership and control, which may have the effect of delaying, preventing or deterring a change of control.
•We do not anticipate paying any cash dividends on our Common Stock in the foreseeable future and, as such, capital appreciation, if any, of our Common Stock will be your sole source of gain for the foreseeable future.
•We may issue additional shares of preferred stock in the future that may adversely impact your rights as holders of our Common Stock.
RISKS RELATING TO OUR FINANCIAL CONDITION AND INDEBTEDNESS
We have a history of losses.
We incurred significant net losses for the years ended December 31, 2023, and 2022, and at December 31, 2023, we had a significant accumulated deficit. There is substantial doubt that we will be able to significantly increase our revenues and gross profit to a level which supports profitable operations and provides sufficient funds to pay our operating expenses and other obligations as they become due. The Company’s ability to continue as a going concern is dependent on its ability to meet its liquidity needs through a combination of factors. The Company is currently exploring all strategic alternatives, including restructuring or refinancing its debts, seeking additional debt, such as borrowings under the Centre Lane Senior Secured Credit Facility or seeking 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. The Company may need to pursue other measures including reducing or delaying certain business activities, reducing general and administrative expenses, and reducing its headcount.
We may not be able to refinance, extend or repay our substantial indebtedness owed to Centre Lane, which would have a material adverse effect on our financial condition and ability to continue as a going concern.
We anticipate that we will need a significant amount of cash in the near future in order to repay the portion of our outstanding debt obligations owed under the Centre Lane Senior Secured Credit Facility as and when they mature during 2024. As of December 31, 2023, we owed Centre Lane $70.2 million under the Centre Lane Senior Secured Credit Facility. Of this amount, $879,000, $3.0 million, $879,000 and $879,000 is due on March 31, 2024, June 30, 2024, September 30, 2024 and December 31, 2024, respectively. The balance of $64.6 million is due in 2025 or later. If we have insufficient cash to pay these amounts and we are otherwise unable to extend the maturity dates or refinance these obligations, we would be in default. We cannot provide any assurances that we will be able to raise the necessary amount of capital to repay these obligations or that we will be able to extend the maturity dates or otherwise refinance these obligations. Upon a default in the Centre Lane Senior Secured Credit Facility, Centre Lane would have the right to exercise its rights and remedies to collect, which would include foreclosing on our assets. Accordingly, a default would have a material adverse effect on our business and, if Centre Lane exercises its rights and remedies, we would likely be forced to seek bankruptcy protection.
Our secured indebtedness may impair our ability to operate our business.
As of December 31, 2023, and 2022, we had $70.2 million and $33.1 million in outstanding secured indebtedness under the Centre Lane Senior Secured Credit Facility, respectively. The instruments governing our existing secured indebtedness may inhibit our ability to incur additional debt and require significant payments from the proceeds of any debt or equity sale without the consent of the lender. In addition, we have additional covenants and obligations under the secured indebtedness which may limit our ability to operate our business. Our ability to repay the indebtedness may require us to dedicate a substantial portion of our cash flow for operations to payment of debt service and principal thereby reducing funds available to implement our business strategy. Our level of indebtedness could also provide limits in our ability to adjust to changing market conditions and vulnerability in the event of a downturn in economic conditions in the businesses in which we operate and impair our ability to obtain additional financing for our business strategy. If we are unable to meet our obligations under the secured indebtedness, the lender may call a default and our business could be foreclosed upon.
We have depended upon sales of equity securities and borrowings under the Centre Lane Senior Secured Credit Facility to provide operating capital.
Historically, we have not generated sufficient gross profit to pay our operating expenses and we reported a net loss for the years ended December 31, 2023, and 2022. During 2023 and 2022, we were dependent on borrowings under the Amended and Restated Centre Lane Senior Secured Credit Facility (the "Centre Lane Senior Secured Credit Facility") to support our working capital needs. We are not currently a party to any binding agreements to raise additional capital and there are no assurances we will be able to raise any additional third-party capital. Although we recently improved our gross profit substantially and became cash flow positive, there can be no assurance that this trend will continue, and if it does not continue, and we are unable to raise sufficient additional working capital as needed, we may be unable to grow our Company, and we may not be able to pay our liabilities as they come due.
The Company’s economic performance has raised substantial doubt about our ability to continue as a going concern.
Our audited consolidated financial statements have been prepared assuming we will continue as a going concern. We have experienced substantial and recurring losses from operations, which losses have caused an accumulated deficit of $149.8 million at December 31, 2023. Our independent registered public accounting firm’s report on our audited financial statements includes an explanatory paragraph related to substantial doubt about the Company’s ability to continue as a going concern. Our audited consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
If we fail to establish and maintain adequate internal control over our financial and management system, our ability to accurately and timely report our financial results could be adversely affected, resulting in errors in our financial reporting, which could cause a loss of investor confidence.
We must maintain effective financial and management systems and internal controls to meet our public company reporting obligations. Moreover, the Sarbanes-Oxley ("SOX") requires, among other things, that we maintain effective
disclosure controls and procedures and internal control over financial reporting. If we have a material weakness or deficiency in our internal control over financial reporting, we may not detect errors on a timely basis and our financial statements may be materially misstated. Effective internal controls are necessary for us to produce reliable financial reports and are important to prevent fraud. As a result, our failure to maintain effective financial and management systems and internal controls could result in errors in our financial reporting, us being subject to regulatory action and a loss of investor confidence in the reliability of our financial statements.
We depend upon a substantial portion of our revenues from a limited number of customers.
For the year ended December 31, 2023, two customers represented 23.0% of our revenue, and for the year ended December 31, 2022, one customer represented 37.7% of our revenue. The loss of these customers could have a material adverse impact on our results of operations in future periods. There are inherent risks whenever a large percentage of total revenues are concentrated with a limited number of customers. It is not possible for us to predict the future level of demand for our services that will be generated by these customer. In addition, revenues from these customers may fluctuate from time to time based on the commencement and completion of projects, the timing of which may be affected by market conditions or other facts, some of which may be outside of our control. If these customers experiences declining or delayed sales due to market, economic or competitive conditions, we could be pressured to reduce the prices we charge for our services or we could lose two major customers. These customers may generally terminate their business with us upon 10 and 30 days’ notice, respectively. Any such development could have an adverse effect on our margins and financial position and would negatively affect our revenue, results of operations and/or the trading price of our Common Stock.
We are subject to seasonal fluctuations in our revenues in future periods.
Typically advertising technology companies report a material portion of their revenues during the fourth calendar quarter as a result of holiday-related advertising spending. Our experience 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.
Our cash could be adversely affected if the financial institutions in which we hold our cash fail.
The Company maintains domestic cash deposits in Federal Deposit Insurance Corporation (“FDIC”) insured banks. The domestic bank deposit balances may exceed the FDIC insurance limits. Also, in the foreign markets we serve, we also maintain cash deposits in foreign banks, some of which are not insured or partially insured by the FDIC or other similar agency. These balances could be impacted if one or more of the financial institutions in which we deposit monies fails or is subject to other adverse conditions in the financial or credit markets.
RISKS RELATED TO OUR OPERATIONS
Past acquisitions and any future acquisitions, joint ventures, strategic alliances or similar transactions may not perform as expected.
We have consummated and may continue to consummate acquisitions, joint ventures and strategic alliances in order to provide increased capabilities to our existing products, supply new products and services or enhance our distribution channels. We may make strategic acquisitions of and investments in other businesses that offer complementary products, services and technologies, augment our market segment coverage and geographic locations, or enhance our technological capabilities. We may also enter into strategic alliances or joint ventures to achieve these goals. If we fail to integrate acquired businesses successfully into our existing businesses, or if these businesses fail to perform as well as we had anticipated, we could incur unanticipated expenses and losses, and the costs of the acquisition could exceed the benefits either in the short term or the long term.
Risks that could have a material adverse effect on our business, results of operations or financial condition include, without limitation:
•the inability of the acquired business to meet the sales and operating projections provided to us;
•the difficulty of assimilating the operations and personnel of acquired businesses;
•the unexpected loss of customers of the acquired business;
•the diversion of management time and resources and the potential disruption of our ongoing business;
•the potential inability of management to maximize our financial and strategic position as a result of an acquisition or investment;
•the potential for costs and delays in implementing, and the potential difficulty in maintaining, uniform standards, controls, procedures and policies, including the integration of different information systems;
•unexpected costs and time associated with upgrading the acquired business's internal accounting systems as well as educating each of its staff as to the proper methods of collecting and recording financial data;
•the risk of entering market segments in which we have no or limited direct prior experience and where competitors in such market segments have stronger market segment positions;
•potential unknown liabilities associated with acquired businesses;
•the risk that there could be deficiencies in the internal controls of any acquired company or investments that could result in a material weakness in our overall internal controls taken as a whole; and
•the potential loss of key employees of an acquired company.
We cannot assure you that we will be successful in overcoming these risks or any other problems encountered with acquisitions and other strategic transactions. These risks may prevent us from realizing the expected benefits from acquisitions and could result in the failure to realize the full economic value of a strategic transaction or the impairment of goodwill and/or intangible assets recognized at the time of an acquisition. These risks could be heightened if we complete a large acquisition or multiple acquisitions within a short period of time.
The acquisition of new businesses is costly, and these acquisitions may not enhance our financial condition.
An element of our growth strategy has been to acquire companies which complement our business. The process to undertake a potential acquisition can be time-consuming and costly. We have expended and expect to continue to expend significant resources to undertake business, financial and legal due diligence on potential acquisition targets. In addition, there is no guarantee that we will acquire the company after completing due diligence. The process of identifying and consummating an acquisition could result in the use of substantial amounts of cash and exposure to undisclosed or potential liabilities of acquired companies. In some instances, we may be required to provide historic audited financial statements for up to two years for acquisition targets in compliance with the rules and regulations of the SEC. The necessity to provide these audited financial statements will increase the costs to us of consummating an acquisition or, if it is determined that the target company cannot obtain the requisite audited financials, we may be unable to pursue an acquisition which might otherwise be accretive to our business. In addition, even if we are successful in acquiring additional companies, there are no assurances that the operations of these businesses will enhance our future financial condition. To the extent that a business we acquire does not meet the performance criteria used to establish a purchase price, some or all of the goodwill related to that acquisition could be charged against our future earnings, if any.
If we fail to detect advertising fraud or other actions that impacts our advertising campaign performance, we could harm our reputation with advertisers or agencies, which would cause our revenue and business to suffer.
Some campaigns may experience fraudulent and other invalid impressions, clicks or conversions that advertisers may perceive as undesirable, such as non-human traffic generated by machines that are designed to simulate human users and artificially inflate user traffic on websites. These activities could overstate the performance of any given advertising campaign and could harm our reputation. It may be difficult for us to detect fraudulent or malicious activity on websites where we do not own content and rely in part on our customers to control such activity. If we fail to detect or prevent fraudulent or other malicious activity, the affected advertisers may experience or perceive a reduced return on their investment and our reputation may be harmed. High levels of fraudulent or malicious activity could lead to dissatisfaction with our solutions, refusals to pay, demands for refunds or future credit or withdrawal of future business.
If advertising on the internet loses its appeal, our revenue could decline.
Our business model may not continue to be effective in the future for a number of reasons, including:
•a decline in the rates that we can charge for advertising and promotional activities;
•our inability to create applications for our customers;
•the fact that internet advertisements and promotions are, by their nature, limited in content relative to other media;
•companies may be reluctant or slow to adopt online advertising and promotional activities that replace, limit or compete with their existing direct marketing efforts;
•companies may prefer other forms of Internet advertising and promotions that we do not offer;
•the quality or placement of transactions, including the risk of non-screened, non-human inventory and traffic, could cause a loss in customers or revenue; and
•regulatory actions may negatively impact our business practices.
If the number of companies who purchase online advertising and promotional services from us does not grow, we may experience difficulty in attracting publishers, and our revenue could decline.
Our success is dependent upon our ability to effectively expand and manage our relationships with our publishers.
Outside of our owned and operated websites, we are dependent upon our publishing partners to provide the media we sell. We depend on these publishers to make their respective media inventories available to us to use in connection with the campaigns that we manage, create or market. Our growth depends, in part, on our ability to expand and maintain our publisher relationships within our network and to have access to new sources of media inventory such as new partner websites and Facebook pages that offer attractive demographics, innovative and quality content and growing Web user traffic volume. Our ability to attract new publishers to our networks and to retain Web publishers currently in our networks will depend on various factors, some of which are beyond our control. These factors include, but are not limited to, our ability to introduce new and innovative products and services, our pricing policies, and the cost-efficiency to Web publishers of outsourcing their advertising sales. In addition, the number of competing intermediaries that purchase media inventory from Web publishers continues to increase. In the event we are not able to maintain effective relationships with our publishers, our ability to distribute our advertising campaigns will be greatly hindered which will reduce the value of our services and adversely impact our results of operations in future periods.
Online security breaches or other disruptions of our information technology systems could harm our business.
The efficient operation of our business depends on our information technology systems. We collect, process, store, and share high volumes of personal information which is regulated by various laws. We rely on encryption and authentication technology to effect secure transmission of such information. These systems may be susceptible to damage, disruptions or shutdowns due to attacks by computer hackers, computer viruses, employee error or malfeasance, power outages, hardware failures, telecommunication or utility failures, catastrophes or other unforeseen events. We may need to expend significant resources to protect against security breaches or to address problems caused by breaches.
While we are unaware of any security breaches to date, experienced programmers or “hackers” could penetrate sectors of our systems. Because a hacker who is able to penetrate network security could misappropriate proprietary information or cause interruptions in our services, we may have to expend significant capital and resources to protect against or to alleviate problems caused by hackers. We frequently update and improve our information security environment and assess and adopt new methods, devices, and technologies, but our policies and information security controls may not keep pace with emerging threats. Additionally, we may not have a timely remedy against a hacker who is able to penetrate our network security. Threats to information security evolve constantly and are increasingly sophisticated and complex, which makes detecting and successfully defending against them more difficult. Undetected vulnerabilities may persist in our network environment over long periods of time and could come from or spread to the networks and systems of our suppliers and customers. Such security breaches could materially affect our operations, damage our reputation and expose us to risk of loss or litigation. In addition, the transmission of computer viruses resulting from hackers or otherwise could expose us to significant liability. Our insurance policies may not be adequate to reimburse us for losses caused by security breaches. We also face risks associated with security breaches affecting third parties with whom we have relationships. In addition, government regulators may impose fines, penalties, and other civil or criminal consequences for security breaches and inadequate information security.
We must generate high quality content in order to attract and retain users, advertisers and strategic buyers.
The success of the Wild Sky Media brand depends largely on its ability to provide high quality content which is of interest to its users. If its users do not perceive its existing content to be of high quality, or if we introduce new content or enter into new business ventures that are not favorably perceived by users, we may not be successful in promoting and maintaining the Wild Sky Media brand. Any change in the focus of our operations as a result of the content we provide
creates a risk of diluting our brand, confusing users and decreasing the value of our website traffic base to advertisers. If we are unable to maintain or grow the Wild Sky Media brand, our business could be harmed.
We may expend significant resources to protect our content or to defend claims of infringement by third parties, and if we are not successful, we may lose the rights to use material or be required to pay significant fees.
Our success and ability to compete are dependent on our proprietary content. We rely on copyright law to protect our content. While we actively take steps to protect our proprietary rights, these steps may not be adequate to prevent the infringement or misappropriation of our content, which could harm our business. In addition to content written by our employees, we also acquire content from various freelance providers and other third-party content providers. While we attempt to ensure that such content may be freely used by us, other parties may assert claims of infringement against us relating to such content. We may need to obtain licenses from others to refine, develop, market and deliver new content or services. We may not be able to obtain any such licenses on commercially reasonable terms or at all or rights granted pursuant to any licenses may not be valid and enforceable.
Failure to protect our intellectual property rights or claims by others that we infringe their intellectual property rights could substantially harm our business.
Our website domain names are crucial to our business. However, as with phone numbers, we do not have and cannot acquire any property rights in an internet address. The regulation of domain names in the U.S. and in other countries is also subject to change. Regulatory bodies could establish additional top-level domains, appoint additional domain name registrars or modify the requirements for holding domain names. As a result, we might not be able to maintain our domain names or obtain comparable domain names, which could harm our business. We also rely on a combination of trade secret laws and restrictions on disclosure to protect our intellectual property rights. Our success depends on the protection of the proprietary aspects of our technology as well as our ability to operate without infringing on the proprietary rights of others. Despite these measures, any of our intellectual property rights could be challenged, invalidated, circumvented or misappropriated. Others may independently discover our trade secrets and proprietary information, and in such cases, we could not assert any trade secret rights against such parties. Costly and time-consuming litigation could be necessary to enforce and determine the scope of our intellectual property rights. Therefore, in certain jurisdictions, we may be unable to protect our technology and designs adequately against unauthorized third-party use, which could adversely affect our ability to compete.
Developing and implementing new and updated applications, features and services for our websites may be more difficult than expected, may take longer and cost more than expected and may not result in sufficient increases in revenue to justify the costs.
Attracting and retaining users of our websites requires us to continue to provide quality, targeted content and to continue to develop new and updated applications, features and services for our websites. If we are unable to do so on a timely basis or if we are unable to implement new applications, features and services without disruption to our existing ones, our ability to continue to expand our website traffic will be in jeopardy. The costs of development of these enhancements may negatively impact our ability to achieve profitability. There can be no assurance that the revenue opportunities from expanded website content, or updated technologies, applications, features or services will justify the amounts ultimately spent by us.
If we are unable to obtain or maintain key website addresses, our ability to operate and grow our business may be impaired.
Our website addresses, or domain names, are critical to our business. We currently own more than 142 domain names. However, the regulation of domain names is subject to change, and it may be difficult for us to prevent third parties from acquiring domain names that are similar to ours, that infringe our trademarks or that otherwise decrease the value of our brands. If we are unable to obtain or maintain key domain names for the various areas of our business, our ability to operate and grow our business may be impaired.
If we are unable to respond to rapid technological change, our products and services could become obsolete, and our reputation could suffer.
The markets for our products and services are characterized by rapidly changing technology, evolving industry standards and increasingly sophisticated customer requirements. The introduction of products embodying new technology
and the emergence of new industry standards can negatively impact the marketability of our existing products and can exert price pressures on existing products. Additionally, if our websites or services do not work as intended, or if we are unable to upgrade the functionality of our websites or services as needed to keep up with the rapid evolution of technology , our websites or services may not operate properly or as efficiently as those of our competitors, which could harm our business. It is critical to our success that we are able to anticipate and react quickly to changes in technology or in industry standards and to successfully develop, introduce, and achieve market acceptance of new, enhanced and competitive products and services on a timely basis and cost-effective basis. Software product design, development and enhancement involve creativity, expense and the use of new development tools and learning processes. Delays in software development processes are common, as are project failures, and either factor could harm our business. There can be no assurance that we will successfully develop new products and services or enhance and improve our existing products and services, that new products and services and enhanced and improved existing products and services will achieve market acceptance or that the introduction of new products and services or enhanced existing products and services by others will not negatively impact us. Our inability to develop products and services that are competitive in technology and price and that meet end-user needs could have a material adverse effect on our business, financial condition or results of operations.
Our ability to deliver our content depends upon the quality, availability, policies and prices of certain third-party service providers.
We rely on third parties to provide website hosting services. In certain instances, we rely on a single service provider for some of these services. In the event the providers were to terminate our relationship or stop providing these services, our ability to operate our websites could be impaired. Our ability to address or mitigate these risks may be limited. The failure of all or part of our website hosting services could result in a loss of access to our websites which would harm our results of operations.
We may be held liable for content or third-party links on our website or content distributed to third parties, and our general liability insurance may not be adequate to compensate us for all liabilities to which we are exposed.
As a publisher and distributor of content over the internet, including links to third-party websites that may be accessible through our websites, or content that includes links or references to a third-party’s website, we face potential liability for defamation, negligence, copyright, patent or trademark infringement and other claims based on the nature, content or ownership of the material that is published on or distributed from our websites. These types of claims have been brought, sometimes successfully, against online services, websites and print publications in the past. Other claims may be based on errors, or false or misleading information provided on linked websites, including information deemed to constitute professional advice such as legal, medical, financial or investment advice. Although we carry general liability insurance, our insurance may not be adequate to indemnify us for all liabilities imposed. Any liability that is not covered by our insurance or is in excess of our insurance coverage could severely harm our financial condition and business. Implementing measures to reduce our exposure to these forms of liability may require us to spend substantial resources and limit the attractiveness of our websites to users.
We depend on our senior management team and other key employees, and the loss of any of them could harm our business.
We rely on our leadership team and other key employees. From time to time, there are changes in our management team resulting from the hiring or departure of executives or other key employees, which could disrupt our business. Although some of our senior management are parties to an employment contract with us, some of our senior management and key employees are employed on an at will basis, which means that they could terminate their employment with us at any time. The loss of one or more of our executive officers or key employees could have a material adverse effect on our business.
We must hire, integrate and/or retain qualified personnel to support our business.
Our success also depends on our ability to attract, train and retain qualified personnel. Competition for qualified personnel is intense and we may experience difficulty in hiring and retaining highly skilled employees with appropriate qualifications. If we fail to attract and retain qualified personnel, our business may suffer.
We deliver advertisements to users from third-party advertising services, which exposes our users to content and functionality over which we do not have ultimate control.
We display pay-per-click, banner, cost per acquisition (“CPM”), direct, and other forms of advertisements to users that come from third-party advertising services. We do not control the content and functionality of such third-party advertisements and, while we provide guidelines as to what types of advertisements are acceptable, there can be no assurance that such advertisements will not contain content or functionality that is harmful to users. Our inability to monitor and control what types of advertisements get displayed to users could negatively impact our reputation and have a material adverse effect on our business, financial condition and results of operations.
Our services may be interrupted if we experience problems with our network infrastructure.
Various risks could interrupt access to our primary network infrastructure or data, exposing us to significant costs and other liabilities. Our revenue depends on technology for critical business operations, providing services to our clients, delivering and measuring advertising impressions, operating our ad exchange, and impression placement. That technology further depends on our IT systems' continuing and uninterrupted performance. Our IT infrastructure operates on cloud-based service providers, Software as a Service (SaaS) providers), and managed services housed in third-party commercial data centers, including primary and secondary locations, which are regionally dispersed to mitigate the impact of a localized event. This infrastructure relies on multiple internet service providers (ISPs), content delivery networks (CDNs), domain name systems (DNS providers), and mobile networks for operations. In addition, our systems interact with the systems of buyers and sellers and their contractors.
Any damage to, or failure of, these systems could result in interruptions to the availability or functionality of our service. Moreover, the failure of our data center hosting facilities or any other third-party providers to meet our capacity requirements or dramatically increased costs of such resources, could result in interruptions in the availability or functionality of our solutions or impede our ability to scale our operations. All of these providers and systems are vulnerable to disruption and/or damage from several sources, many of which are beyond our control, including without limitation: (i) loss of adequate power or cooling and telecommunications failures, (ii) fire, flood, earthquake, hurricane, and other natural disasters, (iii) software and hardware errors, failures, or crashes, (iv) financial insolvency, and (v) computer viruses, malware, hacking, terrorism, and similar disruptive problems.
Cyberattacks present a severe threat because they are difficult to prevent and remediate, are constantly evolving and improving, and can be used to defraud our buyers and sellers and their clients to steal confidential or proprietary data from us, our clients, or their users. Artificial intelligence has the potential to exacerbate cybersecurity threats, increasing their frequency and sophistication. Malfunctions or failure of our systems or systems that interact with our systems, or inaccessibility or corruption of data, could disrupt our operations and negatively impact our business. This could impact our business operations to a level in excess of any applicable business interruption insurance, result in potential liability to buyers and sellers, and negatively affect our reputation and ability to sell our solution.
Our systems may fail due to natural disasters, telecommunications failures and other events, any of which would limit user traffic.
Our websites are hosted by third-party providers. Any disruption of the computing platform at these third-party providers could result in a service outage. Fire, floods, earthquakes, power loss, telecommunications failures, break-ins, supplier failures to meet commitments and similar events could damage these systems and cause interruptions in the hosting of our websites or services. Computer viruses, electronic break-ins or other similar disruptive problems could cause users to stop visiting our website and could cause advertisers to terminate their agreements with us. In addition, we could lose advertising revenues during these interruptions and user satisfaction could be negatively impacted if the service is slow or unavailable. If any of these circumstances occurred, our business could be harmed. Our insurance policies may not adequately compensate us for losses that may occur due to any failures of or interruptions in our systems.
Our websites and other services must accommodate high volumes of traffic and deliver frequently updated information. While we have not experienced any systems failures to date, it is possible that we may experience systems failures in the future and that such failures could have a material adverse effect on our business. In addition, our users and clients depend on internet service providers, online service providers and other website operators for access to our websites and services. Many of these providers and operators have experienced significant outages in the past, and could experience outages, delays and other difficulties due to system failures unrelated to our systems and outside of our control. Any of these system failures could harm our business, financial condition and results of operations. We are unable to predict the impacts of COVID-19 and any other future pandemic or outbreak of disease on our business.
We are unable to predict the impacts of COVID-19 and any other future pandemic or outbreak of disease on our business.
Our business and operations could be adversely affected by future health pandemics or outbreak of disease, including the COVID-19 pandemic, impacting the markets and communities in which we, our third-party vendors and customers operate. Because our Company operates in the digital advertising industry, unlike a brick and mortar-based company, predicting the impact of the COVID-19 pandemic or other future health pandemics on our Company is difficult.
The COVID-19 pandemic has affected our operations in the past and may continue to do so in the future. For example, with the COVID-19 pandemic, we experienced a pause in marketing campaigns by a limited number of clients and an adverse impact from several suppliers. We also experienced interruptions in our daily operations, including financial reporting process, as a result of certain policies and actions put into place to mitigate the effects of the COVID-19 pandemic. We expect the revenue impact on our industry could vary dramatically by vertical. For example, we would expect to see less advertising demand from the travel, leisure and hospitality verticals and more advertising demand in the health, technology, insurance, and pharmaceutical verticals. We will continue to assess the impact of the COVID-19 pandemic on our Company, however, at this time we are unable to predict all possible impacts on our Company, our operations, and our revenues.
In addition, we cannot predict the impact any future pandemic or outbreak of a disease, or a catastrophic event will have on our business partners and third-party vendors, and we may be adversely impacted as a result of the adverse impact our third-party vendors suffer. We maintain long-standing relationships with Google and others that provide access to hundreds of thousands of advertisers from which most of our Real Time Bidding and digital publishing revenue originates. Any adverse impact on the operations of those companies would have a correspondingly adverse impact on our revenues in future periods. To the extent a pandemic or other catastrophic event adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section. Any of the foregoing factors, or other cascading effects of the pandemic that are not currently foreseeable, could adversely impact our business, financial performance and condition, and results of operations.
Privacy violations could impair our business.
We have a policy against using personally identifiable information obtained from users of our websites without the user’s permission. In the past, the Federal Trade Commission has investigated companies that have used personally identifiable information without permission or in violation of a stated privacy policy. If we use personal information without permission or in violation of our policy, we may face potential liability for invasion of privacy for compiling and providing information to our corporate customers and electronic commerce merchants. In addition, legislative or regulatory requirements may heighten these concerns if businesses must notify internet users that the data may be used by marketing entities to direct product promotion and advertising to the user. Other countries and political entities, such as the EU, have adopted such legislation or regulatory requirements. The U.S. may adopt similar legislation or regulatory requirements in the future. If consumer privacy concerns are not adequately addressed, our business, financial condition and results of operations could be materially harmed.
We are subject to several regulatory risks, and any failure to comply with various regulations could adversely impact our business.
We are subject to a number of domestic and, to the extent our operations are conducted outside the U.S., foreign laws and regulations that affect companies conducting business on the internet and through other electronic means, many of which are still evolving and could be interpreted in ways that could harm our business. U.S. and foreign regulations and laws potentially affecting our business are evolving frequently. We currently have not developed our internal compliance program, nor do we have policies in place to monitor compliance. Instead, we rely on the policies of our publishing partners. If we are unable to identify all regulations to which our business is subject and implement effective means of compliance, we could be subject to enforcement actions, lawsuits and penalties, including but not limited to fines and other monetary liability or injunction that could prevent us from operating our business or certain aspects of our business. In addition, the evolving and at times overlapping regulatory regimes to which the Company is subject may change at any time. Any changes to existing laws or regulations, or the adoption of new laws or regulations, may require changes to our products or services, restrict or impose additional costs upon the conduct of our business or cause users to abandon material aspects of our services. Any such action could have a material adverse effect on our business, results of operations and financial condition.
Litigation is both costly and time-consuming, and there is no certainty of a favorable result.
We may be involved in lawsuits and regulatory actions, both in and outside the ordinary course of our business, with customers, employees and others. Due to the vagaries of litigation, the outcome of a litigation matter and the amount or range of potential loss at particular points in time may be difficult to ascertain. These types of claims, as well as other types of lawsuits to which we are subject from time to time, can distract management’s attention from core business operations and impact operating results, particularly if a lawsuit results in an unfavorable outcome, or could harm the Company’s reputation with customers, employees, investors and others. Litigation is both costly and time consuming and often results in the diversion of management time and resources. All or a portion of our costs may not be covered by insurance, and there can be no assurance that we will prevail in any such matter.
Our industry is intensely competitive, and if we do not effectively compete against current and future competitors, our business, results of operations and financial condition could be harmed.
Our industry is intensely competitive. To sustain and grow our revenue, we must continuously respond to the different trends driving our industry. We generally have flexible master services agreements in place with our customers. Such agreements allow our customers to change the amount of spend through our platform or terminate our services with limited notice. As a result, the introduction of new entrants or technology that are superior to or that achieve greater market acceptance than our products and solutions could negatively impact our revenue. In such an event, we may experience a reduction in market share and may have to respond by reducing our prices, resulting in lower profit margins for us. There has also been rapid evolution and consolidation in the marketing technology industry, and we expect this trend to continue. Larger companies typically have more assets to purchase emerging companies or technologies, which gives them a competitive edge. If we are not able to effectively compete with these consolidated companies, we may not be able to maintain our market share and may experience a reduction in our revenue.
We may be adversely affected by the effects of inflation.
Inflation has the potential to adversely affect our liquidity, business, financial condition and results of operations by increasing our overall cost structure, particularly if we are unable to achieve commensurate increases in the prices, we charge our customers. The existence of inflation in the economy has resulted in, and may continue to result in, higher interest rates and capital costs, increased costs of labor, weakening exchange rates and other similar effects. As a result of inflation, we have experienced and may continue to experience, cost increases. Although we may take measures to mitigate the impact of this inflation, if these measures are not effective, our business, financial condition, results of operations and liquidity could be materially adversely affected. Even if such measures are effective, there could be a difference between the timing of when these beneficial actions impact our results of operations and when the cost of inflation is incurred.
Our platform relies on third-party open source software components.
Failure to comply with the terms of the underlying open source software licenses could expose us to liabilities, and the combination of open source software with code that we develop could compromise the proprietary nature of our platform. Our platform utilizes software licensed to us by third-party authors under “open source” licenses and we expect to continue to utilize open source software in the future. The use of open source software may entail greater risks than the use of third-party commercial software, as open source licensors generally do not provide warranties or other contractual protections regarding infringement claims or the quality of the code. To the extent that our platform depends upon the successful operation of the open source software we use, any undetected errors or defects in this open source software could prevent the deployment or impair the functionality of our platform, delay new solution introductions, result in a failure of our platform and injure our reputation. For example, undetected errors or defects in open source software could render it vulnerable to breaches or security attacks, and, in conjunction, make our systems more vulnerable to data breaches. Furthermore, some open source licenses require that proprietary source code combined with, linked to or distributed with such open source software be released to the public, and may also prohibit charging fees for the use of the software. If we combine, link or distribute our proprietary software with open source software in a specific manner, we could, under some open source licenses, be required to release the source code of our proprietary software to the public. This could also preclude us from charging license fees. This would allow our competitors to create similar solutions with lower development effort and time and ultimately put us at a competitive disadvantage.
The effectiveness of certain services we offer depends on our ability to collect and use online data.
New tools used by consumers to limit data collection, regulatory restrictions and potential changes to web browsers and mobile operating systems affect our ability to collect such data, which could harm our operating results and financial condition. The ability of our platform to deliver high quality solutions to our customers is based on our technology’s
capability to derive relevant, actionable insights from the data that we ingest into our systems and our ability to execute marketing programs across digital channels. The future of digital data collection practices is evolving, with some prominent companies in the industry recently announcing that they will implement their own individual data collection tools and phase out others. This approach may or may not be compatible with our current operations in those channels and platforms. It is yet to be determined if there will be an industry-wide framework for targeting consumers in a digital environment. Furthermore, regulatory and legislative actions may influence which data collection tools are permitted in various jurisdictions and may further restrict our data collection efforts. Without this incremental data, we may not have sufficient insight into the consumer’s activity to provide some of our current tools, products, and services, which may impact our capacity to execute our customers’ programs efficiently and effectively. Various digital tracking tools may be deleted or blocked by consumers. The most commonly used internet browsers also allow consumers to modify their browser settings to block first-party cookies (placed directly by the publisher or website owner that the consumer intends to interact with), which are not affected by changes from web browsers and operating systems, or third-party cookies (placed by parties that do not have direct relationship with the consumer), which some browsers may block by default. Mobile devices using Android and iOS operating systems limit the ability of cookies, or similar technology, to track consumers while they are using applications other than their web browser on the device. Even if cookies and ad blockers do not ultimately have an adverse effect on our business, investor concerns about the utility and robustness of these tracking technologies could limit demand for our stock and cause its price to decline. We also partner with third-party data suppliers and publishers. When we purchase or license from third-party data suppliers, we are dependent upon our ability to obtain such data on commercially reasonable terms and in compliance with applicable regulations. If a substantial number of data suppliers were to withdraw or withhold their data from us, or if we had to terminate our ties with data suppliers either due to commercial or regulatory reasons, our ability to provide products to our customers could be materially adversely impacted, which could result in decreased revenues and operating results. We cannot provide assurance that we will be successful in maintaining our relationships with these external data source providers or that we will be able to continue to obtain data from them on acceptable terms or at all. Furthermore, we cannot provide assurance that we will be able to obtain data from alternative sources if our current sources become unavailable.
The rejection of digital advertising by consumers, through opt-in, opt-out or ad-blocking technologies or other means or the restriction on the use of third party-cookies, mobile device identifiers or other tracking technologies, could adversely affect our business, results of operations, and financial condition.
Our advertising technology division, research division, and publishing division use, in various ways, “cookies,” or small text files placed on consumer devices when an Internet browser is used, as well as mobile device identifiers, to gather data in connection with certain of their products and offerings. These cookies and mobile device identifiers may record information such as when a consumer views or clicks on an advertisement, when a consumer visits a website, the consumer’s location, and browser or other device information. Third party vendors may also share their information about consumers’ interests with us or give us permission to use their cookies and mobile device identifiers. We use data from cookies, mobile device identifiers, and other tracking technologies for various purposes, including-for our advertising technology division-helping advertisers decide whether to bid on, and how to price, an ad impression in a certain location, at a given time, for a particular consumer. Without cookies, mobile device identifiers, and other tracking technology data: (i) transactions processed through our advertising technology division would be executed with less insight into consumer activity, reducing the precision of advertisers' decisions about which impressions to purchase for an advertising campaign, which could make placement identifiers advertising through our platform less valuable, and harm our revenue; (ii) we might no longer be able to continue to provide certain products we currently offer, such as certain audience segments; (iii) vendors who help us monetize our advertising inventory on our owned and operated websites might face greater difficulty in monetizing that inventory. If our ability to use cookies, mobile device identifiers or other tracking technologies is limited, we may be required to develop or obtain additional applications and technologies to compensate for the lack of cookies, mobile device identifiers and other tracking technology data, which could be time consuming or costly to develop, less effective, and subject to additional regulation. Additionally, consumers can, with increasing ease, implement technologies that limit our ability to collect and use data to deliver advertisements or provide services or products. Cookies may be deleted or blocked by consumers. The most commonly used Internet browsers allow consumers to modify their browser settings to block first-party cookies (placed directly by the publisher or website owner that the consumer intends to interact with) or third-party cookies (placed by parties, like us, that have no direct relationship with the consumer), and some browsers block third-party cookies by default. Some prominent technology companies, including Google, have also announced intentions to discontinue the use of cookies, and to develop alternative methods and mechanisms for tracking consumers. As companies replace cookies, it is possible that such companies may rely on proprietary algorithms or statistical methods to track consumers without cookies, or may utilize log-in credentials entered by consumers into other web properties owned by these companies, such as their email services, to track web usage, including usage across multiple devices. Alternatively, such companies may build different and potentially proprietary consumer tracking methods into
their widely-used web browsers. Although we believe it is possible for our businesses to adapt and continue to provide their services and products without cookies, this transition could be more disruptive, slower, or more expensive than we currently anticipate, and could materially affect our ability to serve our customers, and our business, results of operations, and financial condition could be adversely affected. Mobile devices using Android and iOS operating systems limit the ability of cookies to track consumers while they are using applications other than their web browser on the device. As a consequence, fewer cookies may be set in browsers or be accessible in mobile devices, which could adversely affect our business. Some consumers also download “ad blocking” software on their computers or mobile devices, not only for privacy reasons, but also to counteract the adverse effect advertisements can have on the consumer experience, including increased load times, data consumption, and screen overcrowding. Ad-blocking technologies and other global privacy controls may prevent some third-party cookies, or other tracking technologies, from being stored on a consumer's computer or mobile device. If more consumers adopt these measures, it could reduce the volume or effectiveness and value of advertising, which could adversely affect our business, results of operations, and financial condition. Even if ad blockers do not ultimately have an adverse effect on our business, investor concerns about ad blockers could cause our stock price to decline.
If ad formats and digital device types develop in ways that prevent advertisements from being delivered to consumers, our business, results of operations, and financial condition may be adversely affected.
Our adtech division depends upon the ability of its platform to provide advertising for a variety of digital devices, and the major operating systems or Internet browsers that run on them. The design of digital devices and operating systems or browsers is controlled by third parties that may also introduce new devices and operating systems or modify existing ones, and our access to content on certain devices may be limited. If our platform cannot operate effectively with popular devices, operating systems, or Internet browsers, our business, results of operations, and financial condition could be adversely affected.
Our intellectual property rights may be difficult to enforce and protect, which could enable others to copy or use aspects of our technology without compensating us, thereby eroding our competitive advantages and having an adverse effect on our business, results of operations, and financial condition.
We rely upon a combination of trade secrets, third-party confidentiality and non-disclosure agreements, additional contractual restrictions on disclosure and use, and trademark, copyright, patent, and other intellectual property laws to establish and protect our proprietary technology and intellectual property rights. We currently rely on copyright laws to protect computer programs related to our platform and our proprietary technologies, although to date we have not registered for statutory copyright protection. In order to bring a copyright infringement lawsuit in the United States, the copyright must be registered. Accordingly, the remedies and damages available to us for unauthorized use of our software may be limited. Historically, we have prioritized keeping our technology architecture, trade secrets, and engineering roadmap private, and as a general matter, have not patented our proprietary technology. As a result, we cannot look to patent enforcement rights to protect much of our proprietary technology. Any issued patents may be challenged, invalidated, or circumvented, and any rights granted under these patents may not actually provide adequate defensive protection or competitive advantages to us. Additionally, the process of obtaining patent protection is expensive and time-consuming, and we may not be able to prosecute all necessary or desirable patent applications at a reasonable cost or in a timely manner. While it is our policy to protect and defend our rights to our intellectual property, we cannot predict whether steps taken by us to protect our intellectual property will be adequate to prevent infringement, misappropriation, dilution, or other violations of our intellectual property rights. Third parties may knowingly or unknowingly infringe our intellectual property rights, third parties may challenge intellectual property rights held by us, and pending and future trademark and patent applications may not be approved. These claims may result in restrictions on our use of our intellectual property or the conduct of our business. In any of these cases, we may be required to expend significant time and expense to prevent infringement or to enforce our rights. We also cannot guarantee that others will not independently develop technology with the same or similar functions to any proprietary technology we rely on to conduct our business and differentiate ourselves from our competitors. Unauthorized parties may also attempt to copy or obtain and use our technology to develop applications with the same functionality as our solutions, and policing unauthorized use of our technology and intellectual property rights is difficult and may not be effective. In addition, the laws of some foreign countries may not be as protective of intellectual property rights as those of the United States, and mechanisms for enforcement of our intellectual property rights in such countries may be inadequate. If we are unable to protect our intellectual property rights (including in particular, the proprietary aspects of our platform) we may find ourselves at a competitive disadvantage to others who have not incurred the same level of expense, time and effort to create, and protect their intellectual property. Our customer agreements generally restrict the use of our confidential information solely to such customer’s use in connection with their use of our services. In spite of such limitations, reverse engineering our software or
the theft or misuse of our confidential information could occur by customers or other third parties who have access to our technology. We also endeavor to enter into agreements with our employees and contractors in order to limit access to and disclosure of our confidential information, as well as to clarify rights to intellectual property and technology associated with our business. These agreements may not effectively grant all necessary rights to any inventions that may have been developed by the employees or consultants party thereto. In addition, these agreements may not effectively prevent unauthorized use or disclosure of our confidential information, intellectual property or technology and may not provide an adequate remedy in the event of unauthorized use or disclosure of our confidential information, intellectual property, or technology. Furthermore, protecting our intellectual property is particularly challenging after our employees or our contractors end their relationship with us, and, in some cases, decide to work for our competitors. Enforceability of the non-compete agreements that we have in place is not guaranteed, and contractual restrictions could be breached without discovery or adequate remedies.
We could experience a decline in renewals or demand for our subscription-based research services.
The success of our insights business depends in part upon retaining (on both a client company and dollar basis) and enriching existing client relationships for our research products and services and for consulting services. Future declines in client retention or failure to generate demand for and new sales of our research services due to competition, changes in our offerings, or otherwise, could have an adverse effect on our results of operations and financial condition. Consulting engagements generally are project-based and non-recurring. A decline in our ability to fulfill existing or generate new consulting engagements could have an adverse effect on our results of operations and financial condition.
We may be unable to develop and offer new research products and services.
The future success of our insights business will depend in part on our ability to offer new products and services. These new products and services must successfully gain market acceptance by anticipating and identifying changes in client requirements and changes in the technology industry and by addressing specific industry and business organization sectors. The process of internally researching, developing, launching, and gaining client acceptance of a new product or service, or assimilating and marketing an acquired product or service, is risky and costly. We may not be able to introduce new, or assimilate acquired, products or services successfully. Our failure to do so would adversely affect our ability to maintain a competitive position in our market and continue to grow our business.
Our creative advertising services division may not be able to remain competitive or retain key clients.
Clients periodically review and change their advertising, marketing and corporate communications requirements and relationships. If we are unable to remain competitive or retain key clients, our business, results of operations and financial position may be adversely affected. We operate in a highly competitive industry. Key competitive considerations for retaining existing clients and winning new clients include our ability to develop solutions that meet client needs in a rapidly changing environment, the quality and effectiveness of our services and our ability to serve clients efficiently. From time to time, clients may put their advertising, marketing and corporate communications business up for competitive review. To the extent that we are not able to remain competitive or retain key clients, our revenue may be adversely affected, which could have a material adverse effect on our business, results of operations and financial position.
RISKS RELATED TO THE OWNERSHIP OF OUR SECURITIES
There is a limited public market for our Common Stock.
Our shares of common stock, par value $0.01 per share, (the "Common Stock") are currently quoted for trading on the OTCQB Market. There is a limited trading market for our shares of Common Stock and a robust trading market for our securities may not develop in the foreseeable future. If no market develops, it may be difficult or impossible for you to sell your shares if you should desire to do so. There is extremely limited and sporadic trading of our Common Stock, and no assurance can be given, when, if ever, an active trading market will develop or, if developed, that it will be sustained.
We have outstanding convertible notes, options and warrants to purchase approximately 19% of our outstanding Common Stock, which will have a dilutive effect on our existing shareholders if converted or exercised.
As of December 31, 2023, we had 171,277,959 shares of Common Stock outstanding, with convertible notes, options, and warrants outstanding to purchase an aggregate of 32,290,426 shares of Common Stock. The conversion or possible exercise of the preferred notes, warrants and/or options, would increase the total outstanding shares of Common Stock by approximately 19% at December 31, 2023, which will have a dilutive effect on our existing shareholders.
The concentration of stock ownership and control by Centre Lane, and our debt transaction with Centre Lane, may cause conflicts of interests that may adversely affect us.
We have entered into and may, in the future, enter into various debt transactions and agreements with Centre Lane, including the Centre Lane Senior Secured Credit Facility. Centre Lane has no fiduciary duty to make decisions in our best interest. Centre Lane is entitled to vote our Common Stock in accordance with its own interests, which may be contrary to our and your interests and Centre Lane is not obligated to offer us business opportunities or to offer to loan additional amounts to us. We believe that the debt transactions and agreements that we have entered into with Centre Lane are on terms that are at least as favorable as could reasonably have been obtained at such time from third parties. However, these relationships could create, or appear to create, potential conflicts of interest when our board of directors is faced with decisions that could have different implications for us and Centre Lane. The appearance of conflicts, even if such conflicts do not materialize, might adversely affect the public’s perception of us, as well as our relationship with other companies and our ability to enter into new relationships in the future, which could have a material adverse effect on our ability to do business. In addition, conflicts of interest may arise between us and Centre Lane. Centre Lane may favor its own interests over our and your interests.
Some provisions of our charter documents and Florida law may have anti-takeover effects that could discourage an acquisition of us by others, even if an acquisition would be beneficial to our shareholders and may prevent attempts by our shareholders to replace or remove our current management.
Provisions in our amended and restated articles of incorporation, as amended (the "Articles of Incorporation") and our amended and restated bylaws (the "Bylaws"), as well as provisions of Florida law, could make it more difficult for a third party to acquire us or increase the cost of acquiring us, even if doing so would benefit our shareholders, or remove our current management. These include provisions that:
•permit our Board to issue up to 20,000,000 shares of preferred stock, with any rights, preferences and privileges as they may designate;
•provide that all vacancies on our Board, including as a result of newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum;
•provide that shareholders seeking to present proposals before a meeting of shareholders or to nominate candidates for election as directors at a meeting of shareholders must provide advance notice in writing, and also satisfy requirements as to the form and content of a shareholder’s notice;
•not provide for cumulative voting rights, thereby allowing the holders of a majority of the shares of Common Stock entitled to vote in any election of directors to elect all of the directors standing for election; and
•provide that special meetings of our shareholders may be called only by the Board or by the holders of at least 40% of our securities entitled to notice of and to vote at such meetings.
These provisions may frustrate or prevent any attempts by our shareholders to replace or remove our current management by making it more difficult for shareholders to replace members of our Board, who are responsible for appointing the members of our management. Section 607.0902 of the Florida Business Corporation Act provides provisions which may discourage, delay or prevent someone from acquiring us or merging with us whether or not it is desired by or beneficial to our shareholders. As permitted under Florida law, we have elected not to be governed by this statute. Any provision of our Articles of Incorporation, our Bylaws or Florida law that has the effect of delaying or deterring a change in control could limit the opportunity for our shareholders to receive a premium for their shares of Common Stock or warrants, and could also affect the price that some investors are willing to pay for our shares of Common Stock or warrants.
Our Company has a concentration of stock ownership and control, which may have the effect of delaying, preventing or deterring a change of control.
Our Common Stock ownership is highly concentrated. As of December 31, 2023, Mr. W. Kip Speyer, our Chairman of the Board, together with members of our Board, collectively beneficially owned approximately 17.6% of our Common Stock. In addition, 10th Lane Partners LP, an affiliate of Centre Lane, beneficially owns approximately 21.2% of our Common Stock and an additional individual shareholder owns an additional 6.9% of our Common Stock. As a result of the
concentrated ownership of the Company's stock, these people collectively may be able to control all matters requiring shareholder approval, including the election of directors and approval of mergers and other significant corporate transactions. This concentration of ownership may have the effect of delaying, preventing or deterring a change in control of our Company. It could also deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our Company and it may affect the market price of our Common Stock.
We do not anticipate paying any cash dividends on our Common Stock in the foreseeable future and, as such, capital appreciation, if any, of our Common Stock will be your sole source of gain for the foreseeable future.
We do not anticipate paying any cash dividends on our Common Stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. In addition, any future loan arrangements we enter into may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our Common Stock. Therefore, there can be no assurance that any dividends on our Common Stock will ever be paid. As a result, capital appreciation, if any, of our Common Stock will be your sole source of gain for the foreseeable future.
We may issue additional shares of preferred stock in the future that may adversely impact your rights as holders of our Common Stock.
Pursuant to our Articles of Incorporation, the aggregate number of shares of capital stock which we are authorized to issue is 344,000,000 shares, of which 324,000,000 shares are Common Stock, and 20,000,000 shares are “blank check” preferred stock with such designations, rights and preferences as may be determined from time to time by our Board. Our Board is empowered, without shareholder approval, to issue one or more series of preferred stock with dividend, liquidation, conversion, voting or other rights which could dilute the interest of, or impair the voting power of, our Common Stock shareholders. As of the filing of this Annual Report on Form 10-K, there is no outstanding preferred stock.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.

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ITEM 2. PROPERTIES
ITEM 2. DESCRIPTION OF PROPERTY
The Company leases its corporate offices in Boca Raton, Florida under a long-term non-cancellable lease agreement that expired on October 31, 2021 (as amended, the "Lease"). On June 14, 2022, the Company signed a new agreement with a lease term for five years beginning upon completion of improvements to the office space by the landlord, which were completed on September 12, 2022. The annual base rent is $100,000, with a provision for a 3% increase on each anniversary of the rent commencement date. The Company has the option to renew the Lease for one additional five-year term.
As the majority of the Company's employees work remotely, we believe that our properties are sufficient to meet our current and projected business needs. We periodically review our facility requirements and may acquire new facilities, or modify, update, consolidate, dispose of or sublet existing facilities, based on evolving business needs.

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ITEM 3. LEGAL PROCEEDINGS
ITEM 3. LEGAL PROCEEDINGS
From time to time, we may become involved in legal proceedings or be subject to claims arising in the ordinary course of our business. We are not currently a party to any legal proceedings that, in the opinion of our management, are expected to have a material adverse effect on our business, financial condition, operating results or cash flows. We are, however, a party to the following actions:
Ladenburg
On July 11, 2023, Ladenburg Thalmann & Co. Inc. ("Ladenburg) filed an action against the Company for breach of contract in the United States District Court for the Southern District of Florida, Case No. 9:23-cv-81019-AMC. Ladenburg alleges that it entered into an Investment Banking Agreement (the "Agreement") with the Company on September 1, 2020. According to Ladenburg, the Agreement provided that Ladenburg would be the exclusive investment advisor and banker for the Company. Ladenburg alleges that the Agreement entitles them to a fee for any financing transactions (debt financing or merger and acquisition transactions) that the Company engaged in during the term of the contract. In April 2023, the Company informed Ladenburg of the impending Big Village Acquisition. Ladenburg now seeks $1.5 million, plus interest costs and attorneys' fees and expenses as a result of that acquisition and debt financing, claiming that it is entitled to a fee. The Company disputes the allegations and disputes that Ladenburg is entitled to receive any fee since it did not perform any work pertaining to such acquisition. The outcome of this matter is not determinable as of the date of issuance of this report.
Other Litigation
Other litigation is defined as smaller claims or litigation that are neither individually nor collectively material. It does not include lawsuits that relate to collections.
The Company is party to various other legal proceedings that arise in the ordinary course of business, separate from normal course accounts receivable collections matters. Due to the inherent difficulty of predicting the outcome of litigation and other legal proceedings, the Company cannot predict the eventual outcome of these matters, and it is reasonably possible that some of them could be resolved unfavorably to the Company. As a result, it is possible that the Company’s results of operations or cash flows in a particular fiscal period could be materially affected by an unfavorable resolution of pending litigation or contingencies. The outcome is not determinable as of the issuance of this report.

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ITEM 4. MINE SAFETY DISCLOSURE
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Effective August 19, 2022, our Common Stock commenced quotation for trading on the OTCQB Market under the symbol "BMTM". From September 19, 2021 through August 18, 2022, the Company’s Common Stock was traded on the OTC Expert Market tier of the OTC Markets under the symbol "BMTM".
The Company’s Common Stock trades at very low volumes. The approximate number of holders of record of the Company’s Common Stock as of March 29, 2024, was 407. The closing price of our Common Stock as reported on the OTCQB Market on December 29, 2023 was $0.12 per share.
The following table sets forth the high and low bid prices per share of our Common Stock as reported by the OTC Markets for the periods indicated. The following quotations reflect inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.
December 31, 2023
High Low
1st Quarter
$ 0.35 $ 0.10
2nd Quarter
$ 0.14 $ 0.04
3rd Quarter $ 0.11 $ 0.06
4th Quarter $ 0.14 $ 0.06
December 31, 2022
High Low
1st Quarter (1)
$ - $ -
2nd Quarter (2)
$ 0.001 $ 0.001
3rd Quarter $ 1.00 $ 0.001
4th Quarter
$ 0.45 $ 0.08
(1) No trading as Company was in restatement period.
(2) Limited trading as Company was in restatement period.
Dividend Policy
The Company has paid or accrued dividends on shares of preferred stock pursuant to the terms of such preferred stock. The Company has never declared nor paid any cash dividends on its Common Stock, and we do not expect to pay any cash dividends in the foreseeable future. We currently intend to retain all available funds and any future earnings to fund the development and growth of our business. The decision whether to pay cash dividends on our Common Stock will be made within the sole discretion of the Board, and will depend on the Company’s financial condition, results of operations, capital requirements and other factors that the Board considers significant. There can be no assurance that any dividends on our Common Stock will ever be paid. In addition, any future loan arrangements we enter into may contain terms prohibiting or limiting the amount of dividends that may be declared or paid on our Common Stock.
Recent Sales of Unregistered Securities
None.
Repurchases of Equity Securities
None.

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ITEM 6. SELECTED FINANCIAL DATA
ITEM 6. RESERVED

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion of our consolidated financial condition and results of operations for the years ended December 31, 2023, and 2022 should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K. Our discussion includes forward-looking statements based upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the "Risk Factors," "Cautionary Notice Regarding Forward-Looking Statements" and "Business" sections in this annual report. We use words such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,” “intend,” “may,” “will,” “should,” “could” and similar expressions to identify forward-looking statements.
Overview
Organization and Nature of Operations
Bright Mountain Media, Inc. (together with its wholly-owned subsidiaries, the “Company,” “Bright Mountain” or “we”) has an end-to-end digital media and advertising services platform that efficiently connects brands with targeted consumer demographics. We focus on digital publishing, advertising technology, consumer insights, creative and media services.
Digital Publishing
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 software programs that leverage data and proprietary algorithms to match the optimal selection of an ad with a bid price offered by advertisers.
Consumer Insights
Our consumer insights division focuses on providing primary and secondary research, competitive intelligence, and expert insight to address customers' strategic issues. We provide cutting-edge and dynamic research, offering clients a comprehensive perspective on their consumers. This insight extends to strategic guidance on the optimal timing and channels to effectively connect with target audiences. Our cutting-edge approach combines advanced data analytics, artificial intelligence, and comprehensive market research, to uncover actionable insights that drive informed decision-making.
Creative Services
Our creative services division transforms data into award-winning campaigns. We are uniquely able to leverage insights teams with highly strategic media planning and buying teams to ensure brands not only position their advertising precisely, but also yield impactful business results. Our goal is to combine data-driven decisions with creativity fueled by a deep understanding of modern culture.
Media Services
Our media services division focuses on advertisers and agencies by providing access to premium inventory, leveraging data to optimize programmatic campaigns. Our aim is to empower clients to access the most sought-after advertising spaces across diverse platforms tailored to their specific needs and preferences. Our data-driven approach ensures that ad placements are not only well-targeted, but also continuously optimized for maximum efficiency and ROI. Our commitment to combining premium inventory access with data-driven programmatic campaign optimization makes us an indispensable partner in the success of our clients' advertising and marketing endeavors.
The Company generates revenue through:
•the selling of advertisements placed on our owned and managed sites and on partner websites where we earn a share of the revenue;
•facilitating the seamless, real-time exchange of advertisements on a large scale, bridging networks of buyers (referred to as "DSPs") and networks of sellers (referred to as "SSPs");
•serving advertisers through providing access to premium resources and leveraging data to optimize programmatic campaigns, where revenue is derived from the planning and execution of creative and media marketing campaigns; and
•providing primary and secondary research, competitive intelligence, and expert insights to address customers' strategic issues, where revenue is primarily derived from providing a single integrated service for such research.
Recent Developments
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, referred to as the "Big Village Entities")), for approximately $20.0 million, plus assumed liabilities, in an all-cash transaction funded by the Centre Lane 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 own the assets acquired in the transaction. In addition, letters of employment were extended to certain legacy employees of the Big Village Entities, resulting in the employment of an additional 203 employees on April 20, 2023.
Other Developments
During 2022, the Company began scaling down its operations of Slutzky & Winshman Ltd, a digital media company located in Israel that was acquired in August 2019. This decision was made after a consistent decline in revenue. In 2023, we terminated operations in Israel and all employees were terminated.
Also in 2023, we terminated the operation of News Distribution Network, Inc., a newspaper technology company, which we also acquired in 2019, and subsequently rebranded this service as Mediahouse, also as a result of a declining revenue stream.
There were no specific costs associated with these exits. At December 31, 2023, these two entities have not yet been dissolved.
Key Factor Affecting Our Performance
Seasonal Fluctuations. Typically advertising technology companies report a material portion of their revenues during the third and fourth calendar quarter as a result of back-to-school and holiday-related advertising spend. We continue to experience this trend in our advertising technology division. Because of seasonal fluctuations, there can be no assurance that the results of any quarter or full year will be indicative of results for future years or quarters.
Limited Number of Customers. During the years ended December 31, 2023, and 2022, two and one customer(s) represented 23.0% and 37.7% of revenue, respectively. The loss of either of these customers could have a material adverse impact on our results of operations in future periods.
Managing Industry Dynamics. We operate in the rapidly evolving digital advertising industry. Advances in programmatic advertising technologies, and 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 stay ahead of evolving trends in consumer engagement with digital media, an expansive opportunity for innovation emerges. Our commitment to understanding customer needs empowers us, and our continuous pursuit of innovation enables swift adaptation to industry shifts. This approach not only facilitates the development of cutting-edge solutions, but also does so in a cost-effective manner.
As regulatory concerns accelerate the impact on existing industry standards, companies are actively seeking new methods to finely tailor their messages to target audiences. Tech companies will be limited in how they monetize personal information for advertising purposes. This trend is exemplified by two imminent developments: (1) the anticipated erosion of Google's third-party cookies and (2) the data security measures integrated into Apple iPhones. Consequently, companies must explore innovative methods to better understand their target audiences and have the tools to effectively engage with them.
Key Operating and Financial Metrics
We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. The following are the key financial and operational metrics for the years ended December 31, 2023, and 2022:
December 31,
($ in thousands) 2023 2022
Revenue $ 44,546 $ 19,580
Cost of revenue 31,766 10,493
Gross margin
12,780 9,087
General and administrative expenses 22,522 14,155
Impairment of goodwill and intangibles
17,070 -
Financing income (expense)
(8,752) (3,057)
Net loss from operations
$ (35,564) $ (8,125)
Adjusted EBITDA (1)
$ (3,932) $ (2,463)
(1) For a reconciliation of net loss to Adjusted EBITDA see “Use of Non-GAAP Financial Measures” below.
Revenue
The Company generates revenue through:
•the selling of advertisements placed on our owned and managed sites and on partner websites where we earn a share of the revenue;
•facilitating the seamless, real-time exchange of advertisements on a large scale, bridging networks of buyers (referred to as "DSPs") and networks of sellers (referred to as "SSPs");
•serving advertisers through providing access to premium resources and leveraging data to optimize programmatic campaigns, where revenue is derived from the planning and execution of creative and media marketing campaigns; and
•providing primary and secondary research, competitive intelligence, and expert insights to address customers' strategic issues, where revenue is primarily derived from providing a single integrated service for such research.
Revenue increased approximately $25.0 million, or 128%, for the year ended December 31, 2023 when compared to the same period in 2022. See below for a detailed analysis of revenue for the years ended December 31, 2023, and 2022.
Cost of Revenue
Cost of revenue includes internal labor and payment to third parties for services performed to drive revenue, which includes the publisher cost paid for ad exchange on third party sites, advertising fees, personnel costs, technology and data related costs, fees paid for content creation, influencers, writers and sales commission.
Cost of revenue increased approximately $21.3 million, or 203%, for the year ended December 31, 2023 compared to 2022. See below for a detailed analysis of cost of revenue for the years ended December 31, 2023, and 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 $8.4 million, or 59%, for the year ended December 31, 2023 compared to the year ended December 31, 2022. See below for a detailed analysis of general and administrative expenses for the years ended December 31, 2023 and 2022.
Impairment of goodwill and intangibles
Impairment of goodwill and intangibles increased approximately $17.1 million, or 100%, for the for the year ended December 31, 2023 compared to 2022.
Results of Operations
The following is our analysis of the results of operations for the years ended December 31, 2023, and 2022. This analysis should be read in conjunction with the consolidated financial statements and the notes to those statements that are included elsewhere in this Annual Report on Form 10-K.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022
Net loss from operations for the year ended December 31, 2023 was $35.6 million as compared to a net loss of $8.1 million for the year ended December 31, 2022. The following is our analysis for the period.
Year Ended December 31,
($ in thousands) 2023 2022 Change % Change
Revenue $ 44,546 $ 19,580 $ 24,966 128 % increased
Cost of revenue 31,766 10,493 21,273 203 % increased
Gross margin 12,780 9,087 3,693 41 % increased
General and administrative expense 22,522 14,155 8,367 59 % increased
Impairment of goodwill and intangibles
17,070 - 17,070 100 % increased
Loss from operations
(26,812) (5,068) (21,744) 429 % increased
Financing income (expense) (8,752) (3,057) (5,695) 186 % increased
Net loss from operations
$ (35,564) $ (8,125) $ (27,439) 338 % increased
Gross margin % 29 % 46 % (18) % (38) % decreased
Revenue
Our revenue showed an overall increase of $25.0 million, or 128%, for the year ended December 31, 2023, compared to the same period in 2022, which was driven by $31.0 million in revenue as a result of the Big Village Acquisition, and was partially offset by macroeconomic factors, coupled with an overall reduction in spending by some customers due to inflationary concerns, which led to lower than normal rates and lower earnings. The macroeconomic impacts significantly reduced direct sales by digital publishing customers as well as traffic on our website, which resulted in lower revenue in
these divisions. In addition, some vendors have changed their platforms to favor short video and other "creator" content over news and media type content during 2023. These changes reduced visitors to our site and revenue in general.
The Company focuses on digital publishing, advertising technology, consumer insights, creative and media services. Revenue generated by each division is set forth below:
(in thousands)
Year Ended December 31,
2023 2022 Change % Change
Digital publishing $ 4,130 $ 8,032 $ (3,902) (49) % decreased
Advertising technology 9,463 11,548 (2,085) (18) % decreased
Consumer insights 23,868 - 23,868 100 % increased
Creative services 5,130 - 5,130 100 % increased
Media services 1,955 - 1,955 100 % increased
$ 44,546 $ 19,580 $ 24,966 128 %
Digital Publishing
Digital publishing revenue decreased by $3.9 million, or 49%, for the year ended December 31, 2023 compared to the same period for 2022. Approximately $4.1 million, or 9%, of the Company’s revenue for the year ended December 31, 2023 was generated from our digital publishing customers compared to $8.0 million, or 41%, for the same period in 2022. This division was significantly impacted by macroeconomic factors, which reduced traffic to our website, coupled with an overall reduction in spending by some customers related to inflationary concerns and reduction in website traffic.
Advertising Technology
Advertising technology revenue decreased by $2.1 million, or 18%, for the year ended December 31, 2023 compared to the same period for 2022. Approximately $9.5 million, or 21%, of the Company’s revenue for the year ended December 31, 2023 was generated from our advertising technology customers compared to $11.5 million, or 59%, for the same period in 2022.
During the year ended December 31, 2023, approximately 100.0% of advertising technology revenue was generated in the U.S. and 0% was generated from our business in Israel, compared to 90% and 10% 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 focused more on its U.S. market in advertising technology to capitalize on more attractive revenue streams. The loss of revenue in Israel is a contributor to lower than expected growth in revenue in this category during 2023. The Company subsequently closed operations in Israel in 2023.
Consumer Insights
Consumer insights revenue, which is a new offering we acquired with the Big Village Acquisition, increased by $23.9 million, or 100%, for the year ended December 31, 2023 compared to the same period in 2022 and represented approximately 54% of the Company’s revenue for the year ended December 31, 2023.
Creative Services
Creative services revenue, which we also acquired as part of the Big Village Acquisition, increased by $5.1 million, or 100%, for the year ended December 31, 2023 compared to the same period in 2022, and represented approximately 12% of the Company’s revenue for the year ended December 31, 2023.
Media Services
Media services revenue, which we also acquired as part of the Big Village Acquisition, increased by $2.0 million, or 100%, for the year ended December 31, 2023 compared to the same period in 2022, and represented approximately 4% of the Company’s revenue for the year ended December 31, 2023.
Cost of Revenue
(in thousands)
Year Ended December 31,
2023 2022 Change % Change
Direct salaries and labor $ 7,355 $ - $ 7,355 100 % increased
Direct project and other cost 10,246 - 10,246 100 % increased
Non-direct project cost 6,371 - 6,371 100 % increased
Publisher cost 5,877 5,967 (90) (2) % decreased
Content creation 1,078 1,372 (294) (21) % decreased
Sales commission 764 880 (116) (13) % decreased
Other 75 2,274 (2,199) (97) % decreased
$ 31,766 $ 10,493 $ 21,273 203 % increased
Costs of revenue increased $21.3 million, or 203%, for the year ended December 31, 2023, compared to the same period for 2022. This increase is mainly attributable to the acquisition of the Big Village Entities during the year ended December 31, 2023.
Direct Salaries and Labor Cost
Direct salaries and labor cost was $7.4 million for the year ended December 31, 2023, and represented 23% of overall cost of revenue for this period. These costs represent salary and labor cost of employees that work directly on customer projects for our consumer insights, creative and media services, which divisions we acquired as part of our acquisition of the Big Village Entities.
Direct Project Cost
Direct project cost was $10.2 million for the year ended December 31, 2023, and represented 32% of overall cost of revenue for this period. These costs include payments made to third-parties that are directly attributable to the completion of projects that allow for revenue recognition for our consumer insights, creative and media services, which divisions we acquired as part of our acquisition of the Big Village Entities.
Non-Direct Project Cost
Non-direct cost was $6.4 million for the year ended December 31, 2023 and represented 20% of overall cost of revenue for this period. These costs represent overall client service costs that are not specifically related to a particular project, but relate to services we acquired as part of our acquisition of the Big Village Entities.
Publisher Cost
Publisher cost was $5.9 million, which represents 18% of overall cost of revenue, and $6.0 million, or 57%, of overall cost of revenue, for the years ended December 31, 2023 and 2022, respectively. We experienced a decrease of $90,000, or 2%, for the year ended December 31, 2023 compared to the same period in 2022. These costs represent payments to media providers and website publishers.
Gross Margin
Gross margin was $12.8 million, and $9.1 million for the years December 31, 2023 and 2022. Our gross margin increased $3.7 million or 41% for the year ended December 31, 2023, when compared to the same period for 2022 Gross margin as a percentage of revenue decreased to 29% for the year ended December 31, 2023 compared to 46% for the same period of 2022.
General and Administrative Expenses
Year Ended December 31,
($ in thousands) 2023 2022 Change % Change
Personnel cost $ 10,024 $ 6,622 $ 3,402 51 % increased
Legal fees 981 231 750 325 % increased
Professional fees 4,750 3,276 1,474 45 % increased
Insurance 1,014 599 415 70 % increased
Depreciation
125 38 87 227 % increased
Amortization of intangibles
2,490 1,558 932 60 % increased
Website expense
1,193 1,257 (64) (5) % decreased
Other 1,945 574 1,371 239 % increased
Total $ 22,522 $ 14,155 $ 8,367 59 % increased
Gross margin as a percentage of general and administrative expense 57 % 64 % (7) % (12) % decreased
General and administrative expenses increased $8.4 million, or 59%, for the year ended December 31, 2023, compared to the same period in 2022. The increase is due to a combination of factors as discussed below.
Personnel Cost
Personnel cost increased by approximately $3.4 million, or 51%, for the year ended December 31, 2023 compared to the same period in 2022. This change is mainly driven by an increase in head count as a result of the acquisition of the Big Village Entities.
During the year ended December 31, 2023, the Company's headcount increased by a net amount of 136 employees, or 252%, mainly attributable to the Big Village Acquisition. Personnel cost for Big Village employees is allocated between cost of revenue and general and administrative expenses depending on their contribution to certain revenue generating projects.
The overall increase in headcount during the year ended December 31, 2023, was partially offset by a reduction in the Company's headcount by 85 employees, including 54 employees that were terminated as a reduction in force. The Company incurred severance cost of approximately $389,000 in connection with this reduction. Approximately $75,000 is included in cost of revenue with the balance of $314,000 included in general and administrative cost.
The Company incurred severance cost of approximately $50,000 associated with a headcount reduction during the same period for 2022.
We had 190 total employees as of December 31, 2023, compared to 54 total employees as of December 31, 2022.
Legal Fees
Legal fees increased by $750,000, or 325%, for the year ended December 31, 2023, compared to the same period in 2022. Approximately $711,000 of overall legal fees during 2023 represented costs associated with the Big Village Acquisition.
Professional Fees
Professional fees increased by $1.5 million, or 45%, during the year ended December 31, 2023, when compared to the same period in 2022. Approximately $1.5 million of overall professional fees during 2023 represented costs associated with the Big Village Acquisition.
Impairment of Goodwill and Intangibles
(in thousands)
Year Ended December 31,
2023 2022 Change % Change
Impairment of goodwill and intangibles $ 17,070 $ - $ 17,070 100 % increased
During the year ended December 31, 2023, the Company performed an impairment assessment on goodwill and intangibles for the Ad Network, Owned & Operated, and Insights reporting units. The assessment indicated that the carrying value was in excess of its implied fair value for the Ad Network and Owned & Operated reporting units, resulting in an impairment charge of $14.1 million and $2.9 million for goodwill and intangibles, respectively. There was no such charge for the same period in 2022. See Note 6, "Intangible Assets, Net", and Note 7, "Goodwill", to the consolidated financial statements.
Financing Expense (Income)
Year Ended December 31,
($ in thousands) 2023 2022 Change % Change
Interest expense $ 9,189 $ 4,263 $ 4,926 116 % increased
Gain on forgiveness of PPP loan - (1,137) 1,137 (100) % decreased
Other (income) expense
(437) (69) (368) 532 % increased
Total financing expense (income) $ 8,752 $ 3,057 $ 5,695 186 % increased
Financing expense increased $5.7 million, or 186%, for the year ended December 31, 2023, compared to the same period in 2022. This increase was largely attributable to a $4.9 million increase in interest expense related to the Centre Lane Senior Secured Credit Facility, which reflected higher principal and fees as a result of amendments to the Centre Lane Senior Secured Credit Facility during the year ended December 31, 2022 through the year ended December 31, 2023. In 2022, total financing expense was offset by a reduction in the Paycheck Protection Program ("PPP") loan forgiveness of $1.1 million.
Liquidity and Capital Resources
Liquidity is the ability of a company to generate sufficient cash to satisfy its needs for cash. The following table summarizes total current assets, total current liabilities and net working capital (deficit) as of December 31, 2023 as compared to December 31, 2022.
December 31,
($ in thousands) 2023 2022
Total current assets $ 19,737 $ 4,501
Total current liabilities 30,802 17,851
Net working capital deficit $ (11,065) $ (13,350)
As of December 31, 2023, we had a cash balance of $4.0 million compared with a cash balance of $316,000 as of December 31, 2022. The Company’s liquidity needs, and a discussion of how it intends to meet those needs, is discussed below. See -“Going Concern.”
During the year ended December 31, 2023 and 2022, the Company received $8.6 million and $3.1 million, respectively, in debt financing from the Centre Lane Senior Secured Financing Facility. The use of the funds was for general working capital needs and to fund the Big Village Acquisition.
Going Concern
Historically, the Company has incurred losses, which has resulted in an accumulated deficit of approximately $149.8 million as of December 31, 2023. Cash flows used in operating activities were $4.7 million and $3.1 million for the years ended December 31, 2023, and 2022, respectively. As of December 31, 2023, the Company had a working capital deficit of approximately $11.1 million, inclusive of $4.0 million in cash and cash equivalents.
The Company’s ability to continue as a going concern is dependent upon its ability to meet its liquidity needs through a combination of factors. During the next year, we anticipate that we will need approximately $8.6 million to meet our contractual obligations in addition to amounts needed for our working capital needs. The Company is currently exploring several strategic alternatives, including restructuring or refinancing its debt, or seeking additional debt, including borrowing under the Centre Lane Senior Secured Credit Agreement or raising equity capital. The ability to access the capital markets is also dependent upon the volume and market price of the Company's stock, which cannot be assured. Other measures include reducing or delaying certain business activities, or reducing general and administrative expenses, including a reduction in headcount. The ultimate success of these plans is not guaranteed.
The Company's current cash and working capital, as of the filing of this Annual Report on Form 10-K, is not expected to be sufficient to fund its anticipated level of operations over the next twelve months. As a result, such matters create a substantial doubt regarding the Company’s ability to meet its financial needs and continue as a going concern.
The accompanying 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.
Financing Arrangement Summary
Centre Lane Senior Secured Credit Facility
On June 5, 2020, the Company and its subsidiaries entered into to the Amended and Restated Senior Secured Credit Agreement between themselves, the lenders party thereto and Centre Lane Partners Master Credit Fund II, L.P., as Administrative Agent and Collateral Agent (“Centre Lane Partners”), as amended (the “Credit Agreement”). The Credit Agreement has been amended numerous times to change the terms, including the amounts outstanding, the interest rate, the maturity date and other payment terms.
The outstanding principal owed to Centre Lane Partners was $70.2 million and $33.1 million as of December 31, 2023 and 2022, respectively, which matures on April 20, 2026. Of the amount outstanding at December 31, 2023, $879,000, $3.0 million, $879,000 and $879,000 are due on March 31, 2024, June 30, 2024, September 30, 2024 and December 31, 2024, respectively. The balance of $64.6 million is due in 2025 or later.
The amount due under the Credit Agreement bears interest of 7.0% per annum plus the Secured Overnight Financing Rate ("SOFR"). At December 31, 2023, the SOFR was 5.39%, thus the overall interest rate on this facility was 12.39% per annum at December 31, 2023.
Interest is paid in kind at 12.39% per annum on approximately $34.1 million of the amount owed under the Credit Agreement, and at 15% per annum on $29.2 million of the amount owed under the Credit Agreement. With respect to the remaining $6.9 million owed under the facility, interest is paid in kind at 4% per annum and in cash at the SOFR plus 3.0% (for a total interest rate of 8.39% per annum at December 31, 2023).
Effective July 1, 2024, the $34.1 million outstanding under the Centre Lane Senior Secured Credit Facility will bear interest at 7.0% per annum, plus the SOFR plus 5.0%.
For a full description of the Centre Lane Senior Secured Credit Facility, see Note 10, "Centre Lane Senior Secured Credit Facility," to the consolidated financial statements.
10% Convertible Promissory Note
During November 2018, the Company issued a 10% convertible promissory note (the "Convertible Note") in the amount of $80,000 to the Chairman of the Board, a related party. The Convertible Note is unsecured, matured five years from issuance and was convertible at the option of the holder into shares of our common stock at any time prior to maturity at a conversion price of $0.40 per share. The outstanding principal and interest of the Convertible Note was due and payable in November 2023. At December 31, 2023, approximately $119,000 inclusive of principal and interest is due and payable, and the outstanding principal continues to accrue interest.
For a full description of the Convertible Note, see Note 11, "10% Convertible Promissory Note" to the consolidated financial statements.
Summary of Cash Flows
The following table summarizes cash flow activities during the years ended December 31, 2023, and 2022:
Year Ended December 31,
($ in thousands) 2023 2022
Cash flow used in operating activities $ (4,658) $ (3,115)
Cash flow used in investing activities (14) (14)
Cash flow provided by financing activities 8,353 2,664
Net increase (decrease) in cash and cash equivalents, net of impact of exchange rates
$ 3,689 $ (466)
Operating Activities
Our largest source of operating cash is cash collections from customers from revenue. Our primary uses of our operating cash, are for cost of revenue expenses, personnel-related expenditures and other general administrative expenses.
For the year ended December 31, 2023, 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 $35.6 million, adjusted for non-cash charges of $2.5 million for amortization of intangible assets, $2.1 million of amortization of debt discount, $17.1 million impairment of goodwill and intangibles, $6.7 million in interest paid in kind on the Centre Lane Senior Secured Credit Facility, $58,000 for the allowance of expected credit losses, $196,000 for stock option compensation expense, and a $2.1 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $1.3 million increase in accounts receivables, a $735,000 decrease in accounts payable and accrued expenses, a decrease in other liabilities of $472,000, a decrease in prepaid expenses and other current assets of $360,000, and a $701,000 decrease in deferred revenue.
For the year ended December 31, 2022, cash used in operating activities was $3.1 million. The primary factors affecting our operating cash flows during the period were our net loss of $8.1 million, adjusted for non-cash charges of
$1.6 million for amortization of intangible assets, $1.2 million of amortization of debt discount, $144,000 of stock-based compensation expense, $89,000 of stock compensation for the Oceanside shares, $84,000 for the allowance for expected credit losses, $1.1 million from the gain on forgiveness of PPP loans and a $121,000 net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $119,000 decrease in accounts receivable, a $695,000 increase in prepaid and other current assets, a $487,000 decrease in accounts payable and accrued expenses, a $698,000 increase in other liabilities, a $466,000 decrease in interest payable on the Centre Lane Senior Secured Credit Facility, and a $426,000 decrease in deferred revenue.
Investing Activities
Cash used in investing activities of $14,000 and $14,000 for the year ended December 31, 2023, and 2022, respectively, was due entirely to the purchase of property and equipment.
Financing Activities
During the year ended December 31, 2023 and 2022, the Company drew $8.6 million and $3.1 million, respectively, of debt financing from the Centre Lane Senior Secured Credit Facility, which was primarily used for working capital needs, which increased as a result of the Big Village Acquisition, offset by a $270,000 and $0 repayment of principal on the Centre Lane Senior Secured Credit Facility during the year ended December 31, 2023 and 2022, respectively.
Contractual Obligations and Commitments
The following table represents our contractual obligations as of December 31, 2023, aggregated by type:
Total Due in less than 1 year Due 1-3 years Due 3-5 years More than 5 years
($ in thousands)
Operating lease $ 303 $ 64 $ 239 $ - $ -
Finance lease
60 18 42 - -
10% Convertible Promissory Notes 80 80 - - -
Interest payable - 10% Convertible Promissory Notes 39 39 - - -
Centre Lane Senior Secured Credit Facility 70,228 5,592 64,636 - -
Interest payable - Centre Lane Senior Secured Credit Facility 2,777 2,777 - - -
$ 73,487 $ 8,570 $ 64,917 $ - $ -
The Company’s liquidity needs, and a discussion of how it intends to meet those needs, is discussed above. See -“Going Concern.”
Use of Non-GAAP Financial Measures
Non-GAAP results are presented only as a supplement to the financial statements and for use within management's discussion and analysis based on U.S. generally accepted accounting principles ("GAAP"). The non-GAAP financial information is provided to enhance the reader's understanding of the Company's financial performance, but non-GAAP measures should not be considered in isolation or as a substitute for financial measures calculated in accordance with GAAP.
All of the items included in the reconciliation from net loss before taxes to EBITDA and from EBITDA to Adjusted EBITDA are either (i) non-cash items (e.g., depreciation, amortization of purchased intangibles, stock-based compensation, etc.) or (ii) items that management does not consider to be useful in assessing the Company's ongoing operating performance (e.g., M&A costs, income taxes, gain on sale of investments, loss on disposal of assets, etc.). In the case of the non-cash items, management believes that investors can better assess the Company's operating performance if the measures are presented without such items because, unlike cash expenses, these adjustments do not affect the Company's ability to generate free cash flow or invest in its business.
We use, and we believe investors benefit from the presentation of, EBITDA and Adjusted EBITDA in evaluating our operating performance because it provides us and our investors with an additional tool to compare our operating
performance on a consistent basis by removing the impact of certain items that management believes do not directly reflect our core operations. We believe that EBITDA is useful to investors and other external users of our financial statements in evaluating our operating performance because EBITDA is widely used by investors to measure a company's operating performance without regard to items such as interest expense, taxes, and depreciation and amortization, which can vary substantially from company to company depending upon accounting methods and book value of assets, capital structure and the method by which assets were acquired.
Because not all companies use identical calculations, the Company's presentation of non-GAAP financial measures may not be comparable to other similarly titled measures of other companies. However, these measures can still be useful in evaluating the Company's performance against its peer companies because management believes the measures provide users with valuable insight into key components of GAAP financial disclosures.
A reconciliation of net loss before taxes to non-GAAP EBITDA and Adjusted EBITDA is as follows:
Year Ended December 31,
($ in thousands) 2023 2022
Net loss before tax plus: $ (35,564) $ (8,125)
Depreciation expense 125 38
Amortization of intangibles
2,490 1,558
Impairment of goodwill and intangibles
17,070 -
Amortization of debt discount 2,074 1,199
Other interest expense 27 14
Interest expense - Centre Lane Senior Secured Credit Facility and Convertible Promissory Notes- related party 7,088 3,050
EBITDA (6,690) (2,266)
Stock compensation expense 196 233
Non-recurring professional fees
1,462 657
Non-recurring legal fees
711 -
Gain on forgiveness of PPP loan - (1,137)
Non-restructuring severance expense 389 50
Adjusted EBITDA $ (3,932) $ (2,463)
Critical Accounting Policies
Critical Accounting 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 consolidated financial statements include, valuation of goodwill and intangible assets, allowance for current expected credit losses, the determination of the relative selling prices of our services, percentage of completion for revenue recognition, estimates of amortization period for intangible assets, estimates of depreciation period for property and equipment, discount rates used in the valuation of right-of-use assets and lease liabilities, litigation reserves, the valuation of equity-based transactions, valuation of the Center Lane Senior Secured Facility carrying value regarding debt modification or extinguishment, and the valuation allowance on deferred tax assets.
Critical accounting policies are those policies that management believes are very important to the portrayal of our financial position and results of operations, and that require management to make estimates that are difficult, subjective or otherwise complex. Based on these criteria, management has identified the following critical accounting policies:
Revenue Recognition
The Company recognizes revenue in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification No. 606, Revenue from Contracts with Customers, (ASC 606). The Company recognizes revenue at a point in time when control is transferred to the customer or over time as a percentage of completion or otherwise in accordance with the terms of the contract. Cash received by the Company prior to when control of services is transferred to the customer is recorded as deferred revenue.
To determine revenue recognition for arrangements that the Company determines are within the scope of ASC 606, the Company performs the following five steps:
(i) identify the contract(s) with a customer;
(ii) identify the performance obligations in the contract;
(iii) determine the transaction price;
(iv) allocate the transaction price to the performance obligations in the contract; and
(v) recognize revenue when (or as) the Company satisfies a performance obligation.
The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the services it provides to the customer. At contract inception, once the contract is determined to be within the scope of ASC 606, the Company assesses the services promised within each contract and determines those that are performance obligations and assesses whether each promised service is distinct. The Company then recognizes revenue when (or as) the performance obligation is satisfied.
The Company generates revenue as follows:
•selling of advertisements placed on the Company’s owned and managed sites, as well as from advertisements placed on partner websites, for which the Company earns a share of the revenue;
•facilitating the real-time buying and selling of advertisements at scale between networks of buyers, known as DSPs and sellers known as SSPs;
•serving advertisers and agencies by providing access to premium resources and leveraging data to optimize programmatic campaigns, where revenue is derived from the planning and execution of creative and media marketing campaigns; and
•providing primary and secondary research, competitive intelligence and expert insight to address customer's strategic issues, where revenue is primarily derived from providing a single integrated service for research.
Digital publishing and advertising technology revenues are generated by audiences seeing or clicking on digital advertisements utilizing several advertising partners. The Company recognizes revenue once the performance obligation is satisfied at a point in time, on a gross basis, net of adjustments based on the number of advertisements delivered. Customers are billed monthly or billing is generated via custom content production and extensions on our social media platforms.
Consumer insights revenues are generated by providing primary and secondary research, competitive intelligence, and expert insight to address customers' strategic issues. The Company recognizes revenue as the services are rendered, by applying the percentage of completion method on a cost-to-cost basis to measure progress toward satisfaction of the performance obligation. Progress toward satisfaction of the performance obligation is measured based on costs incurred to-date relative to the total estimated costs expected to be incurred in providing services. The Company does not include costs that do not contribute to its progress toward satisfying its promise to the customer.
Creative services revenues are generated by delivering campaign services to customers. Some of our contracts with customers contain multiple performance obligations. For these contracts, we account for the individual performance
obligations separately if they are distinct. If recurring services are performed, the Company recognizes revenue as the services are rendered over time, generally on a ratable basis over the contract term beginning on the date that the service is made available to the customer. For campaign services that require a one-time deliverable, we recognize revenue once the performance obligation is satisfied at a point in time.
Media services revenues are generated through the access to programmatic campaigns. The Company recognizes revenue as the services are rendered over time, on a ratable basis over the contract term, beginning on the date that the service is made available to the customer.
There is no significant initial cost incurred to obtain contracts with customers.
Deferred Revenue
The Company records deferred revenue when cash payments are received in advance of performance obligations. The Company expects to recognize the deferred revenue in the following period when it transfers its services and, therefore, satisfies its performance obligation to the customer.
Cost of Revenue
Cost of revenue includes internal labor and payment to third parties for services performed to drive revenue, which includes the publisher cost paid for ad exchange on third party sites, advertising fees, personnel costs, technology and data related costs, fees paid for content creation, influencers, writers and sales commission.
Leases
The Company determines whether an arrangement contains a lease at inception in accordance with FASB Accounting Standards Codification No. 842, Leases, (ASC 842). A contract is, or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Right-of-use (“ROU”) assets represent our right to use an underlying asset for the lease term, and lease liabilities represent our obligation to make lease payments arising from the lease. Lease ROU assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at the commencement date. As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. We do not include options to extend or terminate the lease term unless it is reasonably certain that we will exercise any such options. We recognize rent expense under our operating leases on a straight-line basis, variable lease costs such as operating costs and property taxes are expensed as incurred. For finance leases, we record interest expense on the lease liability in addition to amortizing the right-of-use asset (generally straight-line) over the shorter of the lease term or the useful life of the right-of-use asset.
Accounts Receivable and Allowances
Accounts receivable represent receivables from customers in the ordinary course of business and are recorded in accordance with FASB Accounting Standards Codification No. 310, Receivables, (ASC 310). Receivables are recorded at the invoice amount on the date revenue is recognized and are presented net of the allowance for current expected credit losses in the accompanying consolidated balance sheets. Certain receivables are subject to adjustments from traffic settlements that are deducted from open invoices. Our receivables are not interest bearing and not collateralized.
Unbilled receivables are the results of timing differences between billings to clients and is included in accounts receivable.
The allowance for current expected credit losses is based on our assessment of the collectability of customer accounts. We regularly review our receivables that remain outstanding past their applicable payment terms and establish an allowance for potential write-offs by considering factors including historical experience, credit quality, age of the accounts receivable balances, and current and forecasted economic conditions that may affect a customer’s ability to pay.
The policy for determining past due status is based on the contractual payment terms of each customer, which are generally net 30 or net 60 days. Once collection efforts by the Company are exhausted, the determination for charging off uncollectible receivables is made. Expected credit losses are recorded as general and administrative expenses on our consolidated statements of operations and comprehensive loss.
Property and Equipment, Net
Property and equipment are recorded at cost, less accumulated depreciation in accordance with FASB Accounting Standards Codification No. 360, Property, Plant and Equipment, (ASC 360). Depreciation is computed using the straight-line method based on the estimated useful lives of the related assets. Leasehold improvements are amortized over the lesser of the lease term or the useful life of the improvements. When assets are sold or retired, the applicable cost and accumulated depreciation or amortization are removed from the accounts. The resulting gains or losses are reflected in the combined statements of operations and comprehensive loss.
Goodwill
We account for goodwill under FASB Accounting Standards Codification No. 350, Goodwill and Other, (ASC 350). Goodwill represents the cost in excess of the fair value of the net assets acquired in a business combination. We allocate goodwill to reporting units based on the expected benefit from business combination. The Company categorizes goodwill into three reporting units: “Owned & Operated”, “Ad Network” and “Insights”.
Goodwill is tested for impairment at the reporting unit level on an annual basis and on an interim basis if an event occurs or circumstances change that would more likely than not reduce the fair value of a reporting unit below its carrying value, which are determined through a qualitative assessment.
A qualitative assessment includes consideration of the economic, industry, and market conditions in addition to the overall financial performance of the Company and these assets. If our qualitative assessment does not conclude that it is more likely than not that the estimated fair value of the reporting unit is greater than the carrying value, we perform a quantitative analysis. In a quantitative test, the fair value of a reporting unit is determined based on a discounted cash flow analysis and further analyzed using other methods of valuation. A discounted cash flow analysis requires us to make various assumptions, including assumptions about future cash flows, growth rates and discount rates. The assumptions about future cash flows and growth rates are based on our long-term projections. Assumptions used in our impairment testing are consistent with our internal forecasts and operating plans. Our discount rate is based on our debt structure, adjusted for current market conditions. If the fair value of the reporting unit exceeds its carrying amount, there is no impairment. To the extent the carrying amount exceeds its fair value, an impairment charge of the reporting unit’s goodwill would be necessary. See Note 7, Goodwill to the consolidated financial statements for details regarding goodwill impairment.
Intangible Assets
We account for intangibles under FASB Accounting Standards Codification No. 350, Goodwill and Other, (ASC 350). Intangible assets acquired in a business combination or an asset acquisition are recorded at fair value on the date of acquisition and amortized over their estimated useful lives.
Intangible assets include trade name, customer relationships, IP/technology and non-compete agreements.
The Company’s trade name and customer relationships are amortized on a straight-line basis over a useful life of five to ten years. IP/technology is amortized on a straight-line basis over a useful life of ten years. Non-compete agreements are amortized on a straight-line basis over the length of each agreement, typically between three to five years. The Company reviews for impairment indicators of finite-lived intangibles and other long-lived assets as described below in “Amortization and Impairment of Long-Lived Assets.”
Amortization and Impairment of Long-Lived Assets
Long-lived assets, such as property, equipment, right-of-use assets, and intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Upon such an occurrence, recoverability of assets to be held and used is measured by comparing the carrying amount of an asset to forecasted undiscounted future net cash flows expected to be generated by the asset. If the carrying amount of the asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. For long-lived assets held for sale, assets are written down to fair value, less cost to sell. Fair value is determined based on discounted cash flows, appraised values or management’s estimates, depending upon the nature of the assets. See Note 6, Intangibles, to the consolidated financial statements for details regarding impairment of intangibles.
Website Development Costs
The Company accounts for its website development costs in accordance with FASB Accounting Standards Codification No. 350, Website Development Costs (ASC 350). These costs, if any, are included in intangible assets in the accompanying consolidated balance sheets. Upgrades or enhancements that add functionality are capitalized while other costs during the operating stage are expensed as incurred. The Company amortizes the capitalized website development costs over an estimated life of five years.
During the year ended December 31, 2023, and 2022, all website development costs have been expensed. While it is likely that we will have significant amortization expense as we continue to acquire websites, we believe that intangible assets represent costs incurred by the acquired website to build value prior to acquisition and the related amortization and impairment charges of assets, if applicable, are not ongoing costs of doing business.
Stock-Based Compensation
We account for stock based compensation in accordance with FASB Accounting Standards Codification No. 718, Compensation - Stock Compensation (ASC 718). ASC 718 addresses accounting for share-based awards, including stock options, restricted stock, performance shares and warrants. Stock-based compensation for stock option grants to employees and non-employees is based on the fair value of the award on the date of grant. We record forfeitures as they occur. The Company calculates stock compensation expense using the graded vesting method, which begins expensing each tranche on the expense begin date through the vesting date. This will result in front-loaded expenses, and is included in general and administrative expenses in the consolidated statements of operations.
Compensation cost is recognized over the requisite service period, which is generally the vesting period, and is included in general and administrative expenses in the consolidated statements of operations. The Company estimates the fair value of stock options using the Black-Scholes valuation model. The expected life represents the term the options granted are expected to be outstanding. The expected volatility is determined using the historical volatility of similar publicly traded companies. The risk-free interest rate is based on the U.S. Treasury rate in effect at the time of grant.
Income Taxes
We use the asset and liability method to account for income taxes. Under this method, deferred income taxes are determined based on the differences between the tax basis of assets and liabilities and their reported amounts in the consolidated financial statements which will result in taxable or deductible amounts in future years and are measured using the currently enacted tax rates and laws in the period those differences are expected to reverse. A valuation allowance is provided to reduce net deferred tax assets to the amount that, based on available evidence, is more likely than not to be realized.
The Company follows the provisions of FASB Accounting Standards Codification No. 740, Income Taxes (ASC 740). When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying consolidated balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. Interest and penalties associated with unrecognized tax expenses are recognized as tax expenses in the consolidated statements of operations and comprehensive loss.
Segment Reporting
Consistent with FASB Accounting Standards Codification No. 280, Segment Reporting (ASC 280), our Chief Financial Officer reviews financial information presented on a consolidated basis for purposes of allocating resources and evaluating financial performance. Our components are digital publishing, advertising technology, consumer insights, creative and media services. There are no segment managers who are held accountable by the Chief Financial Officer, or
anyone else, for operations, operating results and planning for levels or components below the consolidated unit level. Accordingly, we determined we have one operating and reportable segment.
Off Balance Sheet Arrangements
As of December 31, 2023 and 2022, there were no off-balance sheet arrangements between us and any other entity that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to shareholders.
Foreign Currency
We translate the financial statements of our foreign subsidiaries, which have a functional currency in the respective country’s local currency, to U.S. dollars using month-end exchange rates for assets and liabilities and actual exchange rates for revenue, costs and expenses on the date of the transaction. Translation gains and losses as a result of consolidation are included in accumulated other comprehensive income. Transaction gains and losses are included within “general and administrative expense” on the consolidated statements of operations and comprehensive loss.

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

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company’s consolidated financial statements and related notes, together with the report of independent registered public accounting firm, appear starting at pages of this Annual Report on Form 10-K for the years ended December 31, 2023, and 2022, and are incorporated by reference in this Item 8.

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.

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ITEM 9A. CONTROLS AND PROCEDURES
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company’s management, with the participation of the Company’s Chief Executive Officer and Chief Financial Officer, have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of December 31, 2023. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that as of the period ended December 31, 2023, our disclosure controls and procedures are adequate to provide assurance at a reasonable level that the information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosures.
Management's Annual Report on Internal Control over Financial Reporting
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 degree of compliance with the policies or procedures may
deteriorate. We continue to review our internal control over financial reporting and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.
Under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in “Internal Control - Integrated Framework (2013)” issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO").
As the Company integrates the operations acquired through the Big Village Acquisition, there is a risk of identifying deficiencies in our overall internal controls. Our focus is on implementing and maintaining effective financial management systems and internal controls, an ongoing process. However, given that all such controls are not yet fully operational, management has concluded that a material weakness exists in the Company’s internal controls over financial reporting, rendering them ineffective at December 31, 2023.
Notwithstanding the material weaknesses described below, we have performed additional analyses and other procedures to enable management to conclude that our consolidated financial statements included in this Form 10-K fairly represent, in all material respects, our financial condition and results of operations as of and for the year ended December 31, 2023.
Outlined below are the material weaknesses identified by management, along with the remedial actions planned.
Material Weaknesses
A material weakness is a deficiency, or a combination of deficiencies, in internal controls over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis. As of December 31, 2023, management identified certain material weaknesses.
As the Company continues to integrate the operations assumed as part of the Big Village Acquisition, we have identified deficiencies in our overall internal controls, specifically as identified below:
•Inadequate controls related to revenue recognition, cost of revenue, and the accounts payable and accrual process
leading to potential omission or misstatement of material transactions impacting financial statements; and
•Ineffectiveness of the Company’s information technology systems and controls concerning financial information.
To address these weaknesses, the Company has initiated a remediation plan comprising the following measures:
•Updating the information technology general controls ("ITGC") risk assessment to incorporate operations from the Big Village Acquisition;
•Examination of information technology systems to ascertain necessary updates to support the financial reporting process;
•Collaboration with a third-party company to ensure SOX compliance, establish and document controls related to revenue recognition, accounts payable, and other processes to enhance internal controls over financial reporting; and
•Expansion of our finance department through the hiring of certified public accountants with prior auditing experience, knowledge of SEC filings and technical issues. In the year ended December 31, 2023, two additional certified public accountants were onboarded, tasked with month end close oversights and SEC reporting. We believe this will strengthen our finance department as we work towards strong internal controls and provide guidance beyond the finance functions for those we rely on to provide information to support our financial reporting process.
We will continue to monitor and evaluate the effectiveness of our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary.
Management had previously identified the following material weaknesses, which caused management to conclude that as of December 31, 2022 our internal controls over financial reporting were not effective at the reasonable assurance level:
In conducting an analysis of the Centre Lane Senior Secured Credit Facility, errors were identified in connection with the accounting related to Amendments No. 8 - 15 of the Centre Lane Senior Secured Credit Facility, which resulted in the understatement of interest payable and interest expense for each of the interim quarterly periods ended June 30, 2022, and September 30, 2022 and the year-to-date 2022 period.
During the year ended December 31, 2023, the Company implemented its remediation plan to enhance controls relating to the accounting of its debt arrangements that includes the following:
•Internal interest calculations are prepared and compared to the model provided by the external evaluators, along with outstanding principal and carrying value;
•Quarterly statements are being received from Centre Lane Partners where the balances are compared to internal schedules;
•Monthly journal entries for interest expense and supporting documentation are being reviewed by an individual independent of its preparation as part of the month end close; 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.
Due to the measures implemented to enhance controls relating to the accounting of the Company's debt as described above, at December 31, 2023, management concluded that such weakness did not exist at December 31, 2023. We will continue to monitor and evaluate the effectiveness of our internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary.
This Annual Report on Form 10-K does not include an attestation report of the Company’s registered independent public accounting firm on management’s assessment regarding internal controls over financial reporting due to the exemption from such requirements established by rules of the SEC for smaller reporting companies.
Changes in Internal Control over Financial Reporting
Other than the matters set forth above, there were no changes in our internal control over financial reporting identified in management’s evaluation pursuant to Rules 13a-15(d) or 15d-15(d) of the Exchange Act during the quarter ended December 31, 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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ITEM 9B. OTHER INFORMATION
ITEM 9B. OTHER INFORMATION
None.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors
Our Board currently consists of four members. Each director is elected at our annual meeting of shareholders and holds office until the next annual meeting of shareholders, or until his or her successor is elected and qualified. If any director resigns, dies or is otherwise unable to serve out his or her term, or if the board increases the number of directors, the board may fill any vacancy by a vote of a majority of the directors then in office. A director elected to fill a vacancy shall serve for the unexpired term of his or her predecessor.
The following table sets forth the names, ages and positions of our directors:
Name
Age
Position
W. Kip Speyer
75 Chairman of the Board of Directors
Matthew Drinkwater
50 Director and Chief Executive Officer
Harry D. Schulman
72 Director
Jeff Hirsch
65 Director
W. Kip Speyer has been our Chairman of the Board since May 2010. Mr. Speyer also served as our Chief Executive Officer from May 2010 to December 2021. From 2005 to 2009, Mr. Speyer served as a director, the president and chief executive officer of Speyer Door and Window, LLC, which was sold to Haddon Windows, LLC (SecuraSeal, LLC, AccuWeld Corporation) in December 2009. From October 2002 to May 2005, Mr. Speyer was a private investor. Mr. Speyer was president and chief executive officer of Intelligent Systems Software, Inc. from October 2000 through June 2002, whereby Mr. Speyer became chief executive officer of ICAD, Inc. (NASDAQ: ICAD) which was a combination of ISSI and Howtek, Inc. (NASDAQ: HOWT). Mr. Speyer was the president and chief executive officer of Galileo Corporation (NASDAQ: GAEO) from 1998 to 1999. Galileo Corporation changed its name to NetOptix (NASDAQ: OPTX) and was merged with Corning Corporation (NYSE: GLW) in a stock purchase in May 2000. From 1996 to 1998 Mr. Speyer was the president of Leisegang Medical Group, three medical device companies owned by Galileo Corporation. Prior to joining Galileo Corporation, Mr. Speyer founded Leisegang Medical, Inc. and served as its president and chief executive officer from 1986 to 1996. Leisegang Medical, Inc. was a company specializing in medical devices for women’s health. Mr. Speyer is a graduate of Northeastern University, Boston, Massachusetts, where he earned a Bachelor of Science Degree in Business Administration in 1972. Mr. W. Kip Speyer is active in many local charities and is the father of Mr. Todd F. Speyer, our Senior Vice President of Revenue Operations and previously a member of our Board through March 31, 2023.
We believe that Mr. Speyer possesses attributes that qualify him to serve as a member of our Board, including his extensive experience as the chief executive officer and/or chairman of the board of directors of other public companies.
Matthew Drinkwater has been a member of our Board since January 2022 and was appointed Chief Executive Officer in December 2021. Mr. Drinkwater has an extensive track record of adding value to the companies he has worked for over his professional career in several key senior executive and sales roles at companies such as Buzzfeed Inc. (NASDAQ: BZFD), Twitter Inc., Groupon Inc. (NASDAQ: GRPN), Yahoo and America Online (AOL). Mr. Drinkwater is a digital executive with extensive, progressively advancing leadership experience at iconic high tech brands. Mr. Drinkwater was a member of Revenue Collective, a private organization for commercial growth operators, from 2020 to 2021. Mr. Drinkwater served as the Senior Vice President, International from 2017 to 2019 and General Manager, International from 2019 to 2020 for BuzzFeed Inc. He also was in Agency Development and Global Accounts at Twitter from 2015 to 2017 and head of Twitter’s Global Online Sales in San Paolo, Brazil from 2013 to 2015. Mr. Drinkwater served as Vice President of Groupon East Coast from 2011 to 2013 and Senior Director of Sales, New England and Canada at Yahoo from 2009 to 2011. Mr. Drinkwater holds a B.A. in Economics from College of the Holy Cross.
We believe that Mr. Drinkwater possesses attributes that qualify him to serve as a member of our Board, including his experience serving in key management roles at public companies and extensive knowledge of the tech industry.
Harry D. Schulman has been a member of our Board since November 2019. Mr. Schulman has been President of HDS Consulting LLC since 2008. Prior to this role, Mr. Schulman was an Operating Partner for Baird Capital Partners, a private equity firm managing over $3 billion in assets, assisting in creating sector strategy and finding executive leadership.
Mr. Schulman also formerly served as President and Chief Executive Officer of Applica Incorporated, a public company and distributor of small household appliances. For more than 20 years, Mr. Schulman has served on multiple boards including Baird Capital Partners, Hancock Fabrics, Inc., O2 Media, Inc., Q.E.P Co., Inc. and HeZhong International Holdings. Mr. Schulman holds a Master’s degree in International Business from the University of Miami and a Bachelor’s degree in Business from the University of Dayton.
We believe that Mr. Schulman possesses attributes that qualify him to serve as a member of our Board, including his extensive experience serving on the boards of multiple companies.
Jeff Hirsch has been a member of our Board since August 2023. Mr. Hirsch has over 25 years in technology, business, and sales organization development, brand strategy, and investor relations. Since April 2023, he has served as a consultant and as the Managing Partner of Aperiam, a firm that invests in ad tech. From July 2016 to April 2023, he held various leadership roles at PubMatic (NASDAQ: PUBM), a digital marketing company, including serving as Chief Commercial Officer from 2019 until April 2023. He also held prior executive roles as President of CPXi (now Digital Remedy), Chief Executive Officer of AudienceScience, Chief Marketing Officer of SundaySky, SVP of ValueClick, and was a founder and Chief Revenue Officer of Fastclick (NASDAQ: FSTC). Mr. Hirsch graduated from the University of California Santa Barbara with a B.A. in Experimental Psychology.
We believe that Mr. Hirsch possesses attributes that qualify him to serve as a member of our Board, including his extensive experience in management, strategy, and investor relations in our industry.
Director Independence
Our Board has determined that Mr. Schulman and Mr. Hirsch qualify as “independent” directors within the meaning of the NYSE listing standards. The NYSE independence definition includes a series of objective tests regarding a director’s independence and requires that the Board make an affirmative determination that a director has no relationship with us that would interfere with such director’s exercise of independent judgment in carrying out the responsibilities of a director.
There are currently no family relationships among any of our directors or executive officers. Mr. W. Kip Speyer serves as Chairman of the Board and is the father of Mr. Todd F. Speyer, our Senior Vice President of Revenue Operations and previously a member of our Board through March 31, 2023.
Executive Officers
Below are the names, ages, and positions of our current executive officers:
Name
Age
Position
Matthew Drinkwater
50 Chief Executive Officer and Director
Ethan Rudin
49 Chief Financial Officer
The following is certain biographical information describing the business experience of Mr. Rudin, who does not serve as a director. The biography of Mr. Drinkwater appears earlier in this section. See “Directors” above.
Ethan Rudin has served as our Chief Financial Officer since October 2023. Prior to joining us, Mr. Rudin served as the Chief Financial Officer of Boundless Network, a private equity-backed promotional products distribution platform since November 2022. Mr. Rudin previously served as the Chief Financial Officer of BuildDirect Technologies, an online building materials retailer, from January 2021 to September 2022. Prior to joining BuildDirect Technologies, Mr. Rudin served as the Chief Financial Officer of Greenlane Holdings Inc., a distribution platform for premium vaporization products, from February 2019 to August 2020. Prior to joining Greenlane Holdings Inc., Mr. Rudin served in various roles at Napster/Rhapsody International Inc., an online music streaming platform, from August 2013 to December 2017, including as a special advisor to the Chief Executive Officer and as the Chief Financial Officer, Global Head of Label Relations & Business Development. Mr. Rudin earned his Bachelor of Arts in Economics from Tufts University in 1996 and his Masters of Business Administration from Columbia University Business School in 2022.
Code of Business Conduct and Ethics
In order to clearly set forth our commitment to conduct our operations in accordance with our high standards of business ethics and applicable laws and regulations, our Board adopted a Code of Business Conduct and Ethics (the “Code of Conduct”), which is applicable to all directors, officers and employees. The Code of Conduct includes our insider
trading policies and procedures. A copy of the Code of Conduct is available on our website under the Investor Relations tab at www.brightmountainmedia.com. You may also obtain a printed copy of our Code of Conduct, without charge, by sending a written request to our principal offices at 6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487. Amendments or waivers of the Code of Conduct will be provided on our website within four business days following the date of the amendment or waiver.
Audit Committee. We have a separately designated standing audit committee of the Board (the “Audit Committee”) established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The current members of the Audit Committee are Harry Schulman (chair) and Jeff Hirsch. All members of the Audit Committee have been determined by the Board to be independent within the meaning of the NYSE corporate governance standards. The Board has determined that Mr. Schulman qualifies as an “audit committee financial expert,” as defined in Item 407 of Regulation S-K.
The Audit Committee assists the Board with fulfilling its oversight responsibility relating to:
•the integrity of the Company’s financial statements and financial reporting process;
•the Company’s systems of internal controls;
•the performance of the Company’s accounting function and independent auditors; and
•the independent auditor’s qualifications and independence.
Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934 requires that the Company’s directors, officers and persons who beneficially own 10% or more of the Company’s common stock file with the SEC initial reports of ownership and reports of changes in ownership of our stock and our other equity securities. To the Company’s knowledge, based solely on a review of the copies of such reports furnished to the Company and written representations that no other reports were required, during the year ended December 31, 2023 and for prior fiscal years, all such filing requirements applicable to any person who served as a director, officer, or greater than 10% beneficial owner during the year ended December 31, 2023 were complied with except that the following persons are in the process of filing Form 3s and/or Form 4s to report (i) joining the Company as an executive officer or director, (ii) a grant of shares of common stock in connection with their services to the Board of Directors, or (iii) a grant of options to purchase shares of common stock in connection with their employment: Mr. W. Kip Speyer, Mr. Drinkwater, Ms. Martinez, Mr. Schulman, Mr. Hirsch, Ms. Parizek, Ms. Tibbits, and Mr. Todd F. Speyer.

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ITEM 11. EXECUTIVE COMPENSATION
ITEM 11. EXECUTIVE COMPENSATION
Our named executive officers for the fiscal year ended December 31, 2023 (the “named executive officers”) are:
•Matthew Drinkwater, Chief Executive Officer and Director;
•Ethan Rudin, Chief Financial Officer; and
•Miriam Martinez, former Chief Financial Officer.
Summary Compensation Table
The following table summarizes the compensation paid to our named executive officers for the years ended December 31, 2023, and 2022.
Name and Principal Position Year Salary Bonus Option Awards(1)
Total
Matt Drinkwater(2)
2023 317,500 62,679 * 380,179
Chief Executive Officer 2022 250,000 - * 250,000
Ethan Rudin(3)
2023 67,708 - * 67,708
Chief Financial Officer 2022 - - - -
Miriam Martinez(4)
2023 222,952 - - 222,952
Former Chief Financial Officer 2022 85,240 - * 85,240
* Indicates that the grant date fair value of the option grant was less than one dollar.
(1) The amounts included in the Option Awards column reflects the aggregate fair market value of stock options to purchase our common stock on the grant date pursuant to FASB ASC Topic 718. All stock options set forth below were granted with an exercise price equal to the fair market value of the common stock on the date of the grant.
(2) Mr. Drinkwater's annual base salary was increased to $400,000 effective June 1, 2023. He agreed to a 10% reduction in his base salary between September 2023 and December 31, 2023, which was contemporaneous with temporary salary reductions for Wild Sky Media employees.
(3) Mr. Rudin was appointed Chief Financial Officer effective October 18, 2023.
(4) Ms. Martinez transitioned from Chief Financial Officer to Principal Financial Officer on October 18, 2023 for a period of 60 days and then went on a leave of absence. On March 6, 2024, she ended her employment by the Company.
Outstanding Equity Awards at Fiscal Year End
The following table sets forth the outstanding equity awards held by our named executive officers as of December 31, 2023.
Option Awards
Name
Number of Securities Underlying Unexercised Options Exercisable
Number of Securities Underlying Unexercised Options Unexercisable
Option Exercise Price (in $)
Option Expiration Date
Matthew Drinkwater 375,000 (1) 125,000 (1) $ 0.01 December 1, 2031
62,500 187,500 (2) $ 0.01 May 25, 2032
Ethan Rudin - 325,000 (3) $ 0.10 October 27, 2033
Miriam Martinez
112,500 112,500 (4) $ 0.20 August 14, 2032
(1) On December 1, 2021, Mr. Drinkwater was granted options to purchase 500,000 shares of common stock. These options (i) vested 25% on each of November 30, 2021, November 30, 2022, and November 30, 2023, and (ii) will vest 25% on November 30, 2024.
(2) On May 25, 2022, Mr. Drinkwater was granted options to purchase 250,000 shares of common stock. These options (i) vested 25% on May 25, 2023 and (ii) will vest 25% on each of May 25, 2024, May 25, 2025, and May 25, 2026.
(3) On October 27, 2023, Mr. Rudin was granted options to purchase 325,000 shares of common stock. These options will vest 25% on each of October 27, 2024, October 27, 2025, October 27, 2026, and October 27, 2027.
(4) On August 15, 2022, Ms. Martinez was granted options to purchase 225,000 shares of common stock. These options vested 25% on August 14, 2023. The vesting for 25% of the unvested options was accelerated effective March 6, 2024 when she ended her employment.
Executive Employment Agreements and Other Arrangements
Matthew Drinkwater
Effective December 1, 2021, we entered into an Executive Employment Agreement with Matthew Drinkwater, our Chief Executive Officer. His employment contract's term is for three years. His annual base salary is $250,000, and he has a discretionary bonus target of $250,000 subject to the achievement of certain year-over-year revenue and EBITDA performance metrics, with half of the bonus tied to the achievement of each of these goals. Additionally, Mr. Drinkwater was granted 500,000 options to purchase an equal number of shares of the Company's common stock at $0.01 per share. If Mr. Drinkwater is terminated without cause, he is entitled to severance equal to his base salary for the balance of the term of his contract. Finally, following Mr. Drinkwater's termination from the Company for any reason, he will be subject to a customary non-solicitation covenant for two years.
Ethan Rudin
On October 4, 2023, we entered into an Executive Employment Agreement with Ethan Rudin, our Chief Financial Officer. Pursuant to his employment contract, his annual base salary is $325,000, and he has a discretionary bonus target equivalent to 25% of his base salary subject to the achievement of certain performance metrics. In addition to his base salary and bonus, Mr. Rudin is eligible to participate in all of the Company's benefit plans offered from time to time, subject to satisfying eligibility requirements. Additionally, Mr. Rudin was granted options to purchase 325,000 shares of
the Company's common stock with an exercise price equal to the fair market value of our common stock on the date of grant. If Mr. Rudin is terminated without cause, subject to complying with certain conditions, he is entitled to severance equal to his annual salary payable in six equal monthly installments. Pursuant to the terms of the employment agreement, Mr. Rudin is bound by customary non-competition and non-solicitation covenants during his period of employment and for a period of one year after the date his employment with the Company terminates.
Director Compensation Table
On August 15, 2023, our Board of Directors adopted a new compensation policy for the directors of the board. Under the terms of the director compensation policy, directors will receive quarterly cash compensation of $10,000 for service as a director and additional cash compensation of $5,000 for service as chair of the board or of one or more of the Board's committees. The cash compensation payments are effective April 1, 2023 with payments commencing in October 2023. The director compensation policy, which was clarified on March 22, 2023, provides 100,000 shares of common stock per year for independent directors on a pro-rata basis for 2023 based on an individual's start date.
Commencing January 1, 2024, directors will receive options to purchase 100,000 shares of our common stock at an exercise price equal to the fair market value of our common stock on the first business day of the year. Such options will vest in full on December 31 of the same year.
Additionally, the Company reimburses each director for fees, travel, and expenses related to their attendance of Board and Committee meetings, if and when incurred, and for income taxes incurred on their respective stock grants.
The following table summarizes the compensation earned by our directors for their services as members of our Board for the year ended December 31, 2023. The information in the following table excludes any reimbursement of out-of-pocket travel and lodging expenses which we may have paid.
Name
Fees Earned in Cash
($)
Stock
Awards ($)(1)
All Other Compensation ($)(8)
Total
($)
W. Kip Speyer(2)
$ 45,000 $ - $ 62,500 $ 107,500
Pamela Parizek(3)
45,000 6,000 1,800 52,800
Harry D. Schulman(4)
45,000 6,000 1,800 52,800
Gretchen Tibbits(5)
- 2,482 745 3,227
Todd Speyer(6)
- 15,000 175,000 190,000
Jeff Hirsch(7)
15,000 2,285 686 17,971
(1) The stock awards column represents the aggregate grant date fair value of awards earned during the calendar year determined pursuant to FASB ASC Topic 718.
(2) Mr. Kip Speyer is not an independent director of our board and while he will receive cash compensation of $45,000 for services provided for the period between April 1, 2023 through December 31, 2023, he will not receive any stock compensation for services provided in the year ended December 31, 2023.
(3) Ms. Parizek resigned from the Board of Directors effective January 18, 2024. The stock awards column for Ms. Parizek represents 100,000 shares of Company common stock granted for services provided in the year ended December 31, 2023.
(4) The stock awards column for Mr. Schulman represents 100,000 shares of common stock granted for services provided in the year ended December 31, 2023.
(5) Ms. Tibbits resigned from the Board of Directors effective June 1, 2023. Ms. Tibbits will not receive cash compensation for her service on the board as her resignation predates the changes in our compensation policy which allows for such compensation. The stock awards column for Ms. Tibbits represents 41,370 shares of common stock granted for services provided for the period from January 1, 2023 through May 31, 2023.
(6) Mr. Todd Speyer resigned as a director effective March 31, 2023 and continues to be employed by the Company. The stock awards column for Mr. Todd Speyer represents 100,000 shares of common stock granted in connection with his resignation from the board on March 31, 2023. Mr. Todd Speyer will not be reimbursed for income taxes incurred on his stock grant as his resignation predates the change in our compensation policy which allows for cash reimbursement.
(7) Mr. Hirsch was appointed a member of the Board of Directors effective August 15, 2023. The stock awards column for Mr. Hirsch represents 38,082 shares of common stock granted for services provided for the period from August 15, 2023 through December 31, 2023.
(8) All other compensation represents (i) amounts paid to each director who received shares of the Company's common stock as 2023 director compensation to compensate such director for income taxes due with respect to the value of such stock; and (ii) salary paid to each of Mr. W. Kip Speyer and to Mr. Todd Speyer earned during 2023 in the amount of $62,500 and $175,000, respectively.

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
Securities Authorized for Issuance Under Equity Compensation Plan
The following table provides information as of December 31, 2023 with respect to all of our compensation plans under which equity securities are authorized for issuance:
Number of Securities To Be Issued Upon Exercise of Outstanding Options, Warrants and Rights
Weighted Average Exercise Price of Outstanding Options, Warrants and Rights(1)
Number of Securities Remaining Available for Future Issuance under Equity Compensation Plans (Excluding Securities Reflected in Column (a))
Plan Category
(a)
(b)
(c)
Equity compensation plans approved by shareholders
- $
- -
Equity compensation plans not approved by shareholders(2)
10,728,360 $
0.12 11,771,640
Total
10,728,360 $
0.12 11,771,640
(1) This number reflects the weighted-average exercise price of outstanding options and has been calculated exclusive of outstanding restricted stock unit awards issued under our Stock Option Plan.
(2) The below shows Stock Option Plans not approved by stockholders under which grants remain outstanding.
Stock Option Plan Outstanding Options
2013 Stock Option Plan
215,000 No further grants can be made under this plan
2015 Stock Option Plan
266,000 No further grants can be made under this plan
2019 Stock Option Plan
633,227 No further grants can be made under this plan
2022 Stock Option Plan
9,614,133 Current plan
10,728,360
2022 Stock Option Plan
On April 14, 2022, the Board of Directors of the Company and the Compensation Committee of the Board adopted and approved the 2022 Bright Mountain Media Stock Option Plan (the “Stock Option Plan”). The Stock Option Plan provides for the grant of awards to eligible employees, directors and consultants in the form of stock options. The purpose of the Stock Option Plan is to provide an incentive to attract and retain directors, officers, consultants, advisors and employees whose services are considered valuable, to encourage a sense of proprietorship and to stimulate an active interest of such persons into our development and financial success. The Stock Option Plan has a term of 10 years and
authorizes the issuance of up to 22,500,000 shares of the Company’s common stock. As of December 31, 2023, 11,771,640 shares were remaining under the Stock Option Plan for the future issuance.
Security Ownership of Certain Beneficial Owners and Management
Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. In accordance with the SEC rules, shares of our common stock that may be acquired upon exercise or vesting of equity awards within 60 days of the date of the table below are deemed beneficially owned by the holders of such options and are deemed outstanding for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage of ownership of any other person.
As of March 29, 2024, 172,382,586 shares of our common stock were issued and 171,557,411 shares were outstanding. The following table sets forth information with respect to the beneficial ownership of our common stock as of March 29, 2024, by (i) each of our directors and named executive officers, (ii) all of our directors and executive officers as a group, and (iii) each shareholder known by us to be the beneficial owner of more than 5% of our common stock. To the best of our knowledge, except as otherwise indicated, each of the persons named in the table has sole voting and investment power with respect to the shares of common stock beneficially owned by such person, except to the extent such power may be shared with a spouse. To our knowledge, none of the shares listed below are held under a voting trust or similar agreement, except as noted. To our knowledge, there is no arrangement, including any pledge by any person of our securities or any of our parents, the operation of which may at a subsequent date result in a change in control of our company.
Unless otherwise noted below, the address of each person listed on the table is c/o Bright Mountain Media, Inc., 6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487.
Name and Address of Beneficial Owner(1)
Amount and Nature of Beneficial Ownership
Percentage of Outstanding Common Stock Owned(2)
Matthew Drinkwater(3)
500,000 *
Ethan Rudin - *
Miriam Martinez(3)
112,500 *
W. Kip Speyer(4)
31,393,157 18.3 %
Harry Schulman(5)
172,500 *
Jeff Hirsch
- *
All executive officers and directors as a group (6 persons)(6)
32,178,157 18.7 %
Beneficial Ownership of 5% or more:
*
W. Kip Speyer(4)
31,393,157 18.3 %
10th Lane Partners, LP(7)
36,551,993 21.3 %
Centre Lane Partners Master Credit Fund II, LP(8)
15,150,000 8.8 %
BV Agency, LLC(9)
21,401,993 12.5 %
Andrew Handwerker(10)
9,060,388 5.3 %
* Represents beneficial ownership of less than 1%.
(1) Except as otherwise indicated, the address of each beneficial owner is c/o Bright Mountain Media, Inc. 6400 Congress Avenue, Suite 2050, Boca Raton, Florida 33487.
(2) The percentage of beneficial ownership of the Company is calculated based on 171,557,411 shares of common stock issued and outstanding as of March 29, 2024.
(3) Represents shares underlying exercisable options to purchase shares of common stock.
(4) Includes 62,500 shares underlying exercisable options to purchase common stock. The amount for Mr. W. Kip Speyer excludes 200,000 shares that could have been issued in connection with the conversion of $80,000 of convertible notes, which have matured and remain outstanding but are no longer convertible.
(5) Includes 7,500 shares underlying exercisable options to purchases shares of common stock.
(6) Includes 682,500 shares underlying exercisable options to purchase shares of common stock.
(7) Based on a Schedule 13G/A filed on May 10, 2023 by 10th Lane Partners, LP and Centre Lane Partners Master Credit Fund II, L.P., consists of 21,401,993 shares held of record by BV Agency, LLC and 15,150,000 shared held of record by Centre Lane Partners Master Credit Fund II, LP. 10th Lane Partners, LP is the Investment Adviser for these funds and has sole voting and dispositive power of these shares. The address for 10th Lane Partners, LP is 60 East 42nd Street, Suite 2220, New York, New York 10165.
(8) Based on a Schedule 13G/A filed on May 10, 2023 by 10th Lane Partners, LP and Centre Lane Partners Master Credit Fund II, L.P., Centre Lane Partners Master Credit Fund II LP is the record holder of 15,150,000 shares but disclaims ownership of these shares as 10th Lane Partners LP is the Investment Adviser for this fund and has sole voting and dispositive power of these shares. The address for 10th Lane Partners, LP is 60 East 42nd Street, Suite 2220, New York, New York 10165.
(9) Based on a Schedule 13G/A filed on May 10, 2023 by 10th Lane Partners, LP and Centre Lane Partners Master Credit Fund II, L.P., BV Agency, LLC is the record holder of 21,401,993 shares. 10th Lane Partners LP is the Investment Adviser for this fund and has sole voting and dispositive power of these shares. The address for 10th Lane Partners, LP is 60 East 42nd Street, Suite 2220, New York, New York 10165.
(10) Mr. Handwerker has sole voting and dispositive power with respect to 4,078,388 shares and shared voting and dispositive power with respect to 4,732,000 shares. This information is based on a Schedule 13G/A filed on April 9, 2018, but has been adjusted to exclude 250,000 shares of underlying warrants that were exercisable at the time the Schedule 13G/A was filed but have since expired according to the Company's records. The address for Andrew Handwerker is 4399 Pine Tree Drive, Boynton Beach, Florida 33436.

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
Related Party Transaction Policy
Under its written charter, the Audit Committee of our Board of Directors is responsible for reviewing and approving related party transactions (as defined in Item 404 of Regulation S-K). Our management is responsible for bringing any such transaction to the attention of the Audit Committee. In approving or rejecting any such transaction, the Audit Committee considers the relevant facts and circumstances, including the material terms of the transaction, risks, benefits, costs, availability of other comparable services or products and, if applicable, the impact on a director’s independence.
Preferred Stock Purchases
Cash dividends paid during the year ended December 31, 2023 and 2022 was $0 and $5,000, respectively.
At December 31, 2023, accrued unpaid preference dividends on the preferred stock were $691,000. This amount is payable to Mr. W. Kip Speyer, a director of the Company.
Convertible Notes
During November 2018, we issued and sold Mr. W. Kip Speyer, a director of the Company, two five-year unsecured convertible notes in the aggregate principal amount of $80,000. These notes, which were convertible at the option of the holder at any time prior to maturity at a conversion price of $0.40 per share, matured in November 2023, but remain outstanding. We used the proceeds from these notes for working capital.
The highest outstanding principal amount of the convertible notes held by Mr. W. Kip Speyer was $80,000 during the year ended December 31, 2023. Accrued interest owed to Mr. W. Kip Speyer was $39,000 as of December 31, 2023.
Centre Lane Partners
Centre Lane Partners Master Credit Fund II, L.P. ("Centre Lane Partners"), who sold the Wild Sky business to the Company in June 2020 and beneficially owns more than 5% of the common stock of the Company, partnered and assisted the Company from a liquidity perspective during the year ended December 31, 2023. This relationship has been determined to qualify as a related party. A related party is a party that can exercise significant influence over the Company in making financial and/or operating decisions. Through December 31, 2023, the Company has entered into nineteen amendments to the Amended and Restated Senior Secured Credit Agreement between it and Centre Lane Partners (the “Credit Agreement”).
The highest total amount of related party debt including fees and interest paid in kind capitalized owed to Centre Lane Partners was $70.2 million at December 31, 2023. Interest paid during the year was $425,000 in cash, and $6.7 million paid in kind.
Employment Matters
On February 8, 2023, the Company and Mr. W. Kip Speyer memorialized Mr. W. Kip Speyer’s continued service as Chairman of the Board of Directors. Also, the Company and Mr. W. Kip Speyer memorialized the expiration date for Mr.
W. Kip Speyer’s employment agreement with the Company as April 1, 2023. See the Director Compensation table above for Mr. W. Kip Speyer’s total compensation for the year ended December 31, 2023.
Mr. Todd F. Speyer, who is the son of Mr. W. Kip Speyer, our Chairman of the Board, is employed by the Company as Senior Vice President of Revenue Operations. Mr. Todd F. Speyer was previously a member of our Board through March 31, 2023. We are not a party to an employment agreement with Mr. Todd Speyer. His compensation was determined by the compensation committee, based upon industry norms. We paid Mr. Todd Speyer $175,000 for his services as an employee of the Company during the year ended December 31, 2023. We did not pay Mr. Todd Speyer any amounts for his services as a director during the year ended December 31, 2023.

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Principal Accountant Fees and Services
WithumSmith+Brown, PC ("Withum") has served as the Company's independent registered public accounting firm for the years ended December 31, 2023 and 2022.
The following table sets forth the fees for professional audit services and other services rendered by Withum for the years ended December 31, 2023 and 2022, respectively.
December 31, 2023 December 31, 2022
Audit Fees(1)
$ 790,261 $ 450,137
Audit-Related Fees(2)
32,319 48,854
Tax Fees(3)
37,704 895
All Other Fees(4)
- -
Total
$ 860,284 $ 499,886
(1) Audit Fees. Audit Fees include fees of audits for our annual financial statements, reviews of the related quarterly financial statements, and services that are normally provided by the independent accountants in connection with statutory and regulatory filings or engagements, including reviews of documents filed with the SEC. This category also includes advice on audit and accounting matters that arose during, or as a result of, the audit or the review of interim financial statements.
(2) Audit-Related Fees. Audit Related Fees include assurance and related services by the independent registered public accounting firm that are reasonably related to the performance of the audit or review of our financial statements or acquisition audits and are not reported above under “Audit Fees.” The services for the fees disclosed under this category include consultation regarding our correspondence with the Securities and Exchange Commission and other accounting consulting.
(3) Tax Fees. Tax Fees consist of professional services rendered by our independent registered public accounting firm for tax compliance and tax advice. The services for the fees disclosed under this category include tax return preparation and technical tax advice. The Company’s tax return for the year ended December 31, 2023 has not been completed as of the date of this filing.
(4) All Other Fees. All Other Fees consist of fees for professional services or costs not otherwise reported in Audit Fees, Audit-Related Fees or Tax Fees. No such fees were incurred during the years ended December 31, 2023 and 2022.
Policy for Approval of Audit and Permitted Non-Audit Services
Our Board of Directors has adopted a procedure for pre-approval of all fees charged by our independent registered public accounting firm. Under the procedure, the Audit Committee of the Board approves the engagement letter with respect to audit, tax, and review services. Other fees are subject to pre-approval by the Audit Committee. The fees paid to the auditors with respect to 2023 and 2022 were pre-approved by the Audit Committee.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) Financial Statements
The financial statements and notes are listed in the Index to Consolidated Financial Statements on page of this Annual Report on Form 10-K and are included in Part II, Item 8 of this Annual Report on Form 10-K.
(a)(2) Financial Statement Schedules
All financial statement schedules are omitted because they are not applicable or the required information is included in the Consolidated Financial Statements or notes thereto listed in the Index to Consolidated Financial Statements, starting on page of this Annual Report on Form 10-K.
(a)(3) Exhibits
The following exhibits listed in the Exhibit Index below are filed as part of, and incorporated by reference into, this Annual Report on Form 10-K.
EXHIBIT INDEX
Incorporated by Reference Filed or
Furnished
No. Exhibit Description Form Date Filed Number Herewith
2.1 Share Exchange Agreement and Plan of Merger dated July 31, 2019 by and among Bright Mountain Media, Inc., Bright Mountain Israel Acquisition Ltd. (a to be formed entity), Slutzky & Winshman Ltd. and the shareholders of Slutzky & Winshman, Ltd.
8-K 8/1/19 2.1
2.2 Merger Agreement and Plan of Merger dated November 8, 2019 by and among Bright Mountain Media, Inc. BMTMZ, and News Distribution Network, Inc.
8-K 11/21/19 2.1
3.1 Amended and Restated Articles of Incorporation, filed March 11, 2013
X
3.2 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed July 9, 2013
8-K 7/9/13 3.3
3.3 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed November 21, 2013
8-K 11/16/13 3.4
3.4 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed December 27, 2013
8-K 12/30/13 3.4
3.5 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed February 25, 2014
10-K 3/31/14 3.5
3.6 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed July 10, 2014
8-K 7/28/14 3.6
3.7 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed September 24, 2014
10-K/A 4/1/15 3.5
3.8 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed March 20, 2015
X
3.9 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed October 27, 2015
8-K 12/4/15 3.7
3.10 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed September 16, 2016
X
3.11 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed September 6, 2017
X
3.12 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed September 29, 2017
X
3.13 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed November 5, 2018
8-K 11/13/18 3.10
3.14 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed July 31, 2019
X
3.15 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed September 3, 2019
X
3.16 Articles of Amendment to the Amended and Restated Articles of Incorporation, filed December 23, 2019
X
3.17 Amended and Restated Bylaws
10 1/31/13 3.2
4.1 Form of unit warrant 2018 private placement
10-K 4/2/18 4.1
4.2 Form of placement agent warrant 2018 private placement
10-K 4/2/18 4.2
4.3 Specimen common stock certificate
10-K 5/14/20 4.3
4.4 Form of unit warrant 2019 private placement
8-K 1/14/19 4.1
4.5 Form of placement agent warrant 2019 private placement
8-K 1/14/19 4.2
4.6 Description of Securities
X
10.1 2013 Stock Option Plan
10-Q
11/13/13 10.18
10.2 2015 Stock Option Plan
8-K
5/27/15 10.36
10.3 2019 Stock Option Plan
10-K
12/23/21 10.4
10.4 2022 Stock Option Plan
8-K 4/20/22 10.3
10.5 Amendment to Lease Agreement dated August 8, 2018 for registrant’s principal executive offices
10-Q 11/20/18 10.1
10.6 Membership Interest Purchase Agreement dated June 5, 2020 between Centre Lane Partners Master Credit Fund II and Bright Mountain Media, Inc.
8-K 6/8/20 10.1
10.7 Credit Agreement dated as of June 5, 2020 by and among CL Media Holdings, LLC, as the Borrower, the Financial Institutions thereto and Centre Lane Partners Master Fund II, L.P. as Agent
8-K 6/8/20 10
10.8 Form of Warrant for November 2019 Private Placement
8-K 2/4/20 10.2
10.9 First Amendment to an Amended and Restated Senior Credit Agreement dated April 26, 2021.
8-K 4/30/21 10.1
10.10 Second Amendment to an Amended and Restated Senior Credit Facility Agreement dated May 26, 2021.
8-K 6/2/21 10.1
10.11 Third Amendment to Amended and Restated Senior Credit Facility Agreement dated December 20, 2021
8-K 8/18/21 10.1
10.12 Fourth Amendment to Amended and Restated Senior Secured Credit Agreement dated August 31, 2021
8-K 9/7/21 10.1
10.13 Fifth Amendment to Amended and Restated Senior Secured Credit Agreement dated October 8, 2021
8-K 10/8/21 10.1
10.14 Sixth Amendment to Amended and Restated Senior Secured Credit Agreement dated November 5, 2021
8-K 11/5/21 10.1
10.15 Seventh Amendment to an Amended and Restated Senior Secured Credit Agreement dated December 23, 2021
8-K 12/29/21 10.1
10.16 Eighth Amendment to an Amended and Restated Senior Secured Credit Agreement dated January 26, 2022
8-K 1/20/22 10.1
10.17 Ninth Amendment to an Amended and Restated Senior Secured Credit Agreement dated February 11, 2022
8-K 2/17/22 10.1
10.18 Annex A to the Credit Agreement dated February 11, 2022
8-K 2/17/22 10.2
10.19 Tenth Amendment to an Amended and Restated Senior Secured Credit Agreement dated March 11, 2022
8-K 3/16/22 10.1
10.20 Annex A to the Credit Agreement dated March 11, 2022
8-K 3/16/22 10.2
10.21 Eleventh Amendment to an Amended and Restated Senior Secured Credit Agreement dated March 25, 2022
8-K 3/31/22 10.1
10.22 Annex A to the Credit Agreement dated March 25, 2022
8-K 3/31/22 10.2
10.23 Twelfth Amendment to an Amended and Restated Senior Secured Credit Agreement dated April 15, 2022
8-K 4/20/22 10.1
10.24 Annex A to the Credit Agreement dated April 15, 2022
8-K 4/20/22 10.2
10.25 Thirteenth Amendment to an Amended and Restated Senior Secured Credit Agreement dated May 10, 2022
8-K 5/16/22 10.1
10.26 Annex A to the Credit Agreement dated May 10, 2022
8-K 5/16/22 10.2
10.27 Fourteenth Amendment to an Amended and Restated Senior Secured Credit Agreement dated June 10, 2022
8-K 6/16/22 10.1
10.28 Annex A to the Credit Agreement dated June 10, 2022
8-K 6/16/22 10.2
10.29 Fifteenth Amendment to an Amended and Restated Senior Secured Credit Agreement dated July 8, 2022
8-K 7/13/22 10.1
10.30 Annex A to the Credit Agreement dated July 8, 2022
8-K 7/13/22 10.2
10.31 Sixteenth Amendment to an Amended and Restated Senior Secured Credit Agreement dated February 10, 2023
8-K 2/16/23 10.1
10.32 Annex A to the Credit Agreement dated February 10, 2023
8-K 2/16/23 10.2
10.33 Seventeenth Amendment to Amended and Restated Senior Secured Credit Agreement, dated April 20, 2023
8-K
4/23/23 10.1
10.34 Eighteenth Amendment to Amended and Restated Senior Secured Credit Agreement, dated July 28, 2023
X
10.35 Nineteenth Amendment to Amended and Restated Senior Secured Credit Agreement, dated July 28, 2023
8-K
8/3/23 10.1
10.36 Annex A to the Credit Agreement, dated July 28, 2023
8-K
8/3/23 10.2
10.37 Employment Agreement by and between the Company and Ethan Rudin
X
10.38 Employment Agreement by and between the Company and Matthew Drinkwater
8-K
12/17/21 10.1
21.1 List of subsidiaries
X
23.1 Consent of WithumSmith+Brown, PC
X
31.1 Certification of the Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)
X
31.2 Certification of the Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)
X
32.1* Certification of the Principal Executive Officer and the Principal Financial Officer pursuant to Section 1350
X
32.2* Certification of the Chief Financial Officer and Principal Financial and Accounting Officer pursuant to Section 1350
X
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* 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.