Bright Mountain Media, Inc.

Previous wording

The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2024. In addition to historical consolidated financial information, this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and in the section "Cautionary Statement Regarding Forward-Looking Information", those discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2024, and those discussed in any subsequent filing we make with the SEC.

Current wording

The following discussion and analysis of our financial condition and results of our operations should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this report and in our Annual Report on Form 10-K for the year ended December 31, 2025. In addition to historical consolidated financial information, this discussion contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those discussed below. Factors that could cause or contribute to these differences include, but are not limited to, those identified below, and in the section "Cautionary Statement Regarding Forward-Looking Information", those discussed in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2025, and those discussed in any subsequent filing we made with the SEC.

Previous wording

Limited Number of Customers. During the nine months ended September 30, 2025 one customer represented 14.4% of revenue. During the nine months ended September 30, 2024 one customer represented 13.4% of revenue. The loss of this customer could have a material adverse impact on our results of operations in future periods.

Current wording

Limited Number of Customers. During the three months ended March 31, 2026, three customers represented 48.9% of revenue. During the three months ended March 31, 2025, one customer represented 15.4% of revenue. The loss of these customers could have a material adverse impact on our results of operations in future periods.

Previous wording

We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. The following is our analysis for the three and nine months ended September 30, 2025 and 2024:

Current wording

We monitor the following key financial and operational metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate business plans, and make strategic decisions. The following is our analysis for the three months ended March 31, 2026 and 2025:

Previous wording

Cost of revenue decreased by $78,000, or 1%, for the three months ended September 30, 2025 compared to the same period in 2024. Cost of revenue increased by $3.3 million, or 12%, for the nine months ended September 30, 2025, compared to the same period in 2024. See below for a detailed analysis of cost of revenue for the three and nine months ended September 30, 2025, and 2024.

Current wording

Cost of revenue decreased by $264,000, or 3%, for the three months ended March 31, 2026, compared to the same period in 2025. See below for a detailed analysis of cost of revenue for the three months ended March 31, 2026 and 2025.

Previous wording

General and administrative expenses decreased by $315,000, or 7%, for the three months ended September 30, 2025 compared to the same period in 2024. General and administrative expenses decreased by $2.3 million, or 16%, for the nine months ended September 30, 2025, compared to the same period in 2024. See below for a detailed analysis of general and administrative expenses for the three and nine months ended September 30, 2025 and 2024.

Current wording

General and administrative expenses decreased by $2.0 million, or 43%, for the three months ended March 31, 2026, compared to the same period in 2025. See below for a detailed analysis of general and administrative expenses for the three months ended March 31, 2026 and 2025.

Previous wording

Net loss for the quarter ended September 30, 2025 was $2.8 million as compared to a net loss of $3.3 million for the same period in 2024. The following is our analysis for the period:

Current wording

Net loss for the quarter ended March 31, 2026 was $1.3 million as compared to a net loss of $3.2 million for the same period in 2025. The following is our analysis for the period:

Previous wording

Our revenue decreased by $211,000, or 1%, for the three months ended September 30, 2025, compared to the same period in 2024. The Company focuses on digital publishing, advertising technology, consumer insights, creative services, and media services. Changes in revenue generated by each such division are set forth below:

Current wording

Revenue decreased by $227,000, or 2%, for the three months ended March 31, 2026, compared to the same period in 2025. The Company focuses on digital publishing, advertising technology, consumer insights, creative services, and media services. Changes in revenue generated by each such division are set forth below:

Previous wording

Digital publishing revenue decreased by $239,000, or 46%, for the three months ended September 30, 2025, compared to the same period in 2024. Approximately $280,000, or 2%, of the Company’s revenue for the three months ended September 30, 2025, was generated from our digital publishing customers, compared to $519,000, or 4%, for the same period in 2024. 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.

Current wording

Digital publishing revenue decreased by $302,000, or 52%, for the three months ended March 31, 2026, compared to the same period in 2025. Approximately $281,000, or 2%, of the Company’s revenue for the three months ended March 31, 2026, was generated from our digital publishing customers, compared to $583,000, or 4%, for the same period in 2025. This reduction was primarily due to macroeconomic factors, which reduced traffic to our website, coupled with an overall reduction in spending by some customers related to inflationary concerns.

Previous wording

Advertising technology revenue increased by $412,000, or 9%, for the three months ended September 30, 2025, compared to the same period in 2024. Approximately $5.1 million, or 36%, of the Company’s revenue for the three months ended September 30, 2025, was generated from our advertising technology customers compared to $4.7 million, or 33%, for the same period in 2024. This growth was driven by our ability to leverage our resources to attract top advertisers, which in turn allowed us to onboard premium publishers. This led to an increase in volume, as well as rates and overall revenue.

Current wording

Advertising technology revenue increased by $2.4 million, or 57%, for the three months ended March 31, 2026, compared to the same period in 2025. Approximately $6.6 million, or 48%, of the Company’s revenue for the three months ended March 31, 2026, was generated from our advertising technology customers compared to $4.2 million, or 30%, for the same period in 2025. This growth was driven by our ability to leverage our resources to attract top advertisers, which in turn allowed us to onboard premium publishers. This led to anincreasein volume, as well as rates and overall revenue.

Previous wording

Consumer insights revenue decreased by $403,000, or 6%, for the three months ended September 30, 2025, compared to the same period in 2024. Approximately $6.4 million, or 46%, of the Company’s revenue for the three months ended September 30, 2025 was generated from our consumer insights customers compared to $6.8 million, or 48%, for the same period in 2024.

Current wording

Consumer insights revenue decreased by $2.0 million, or 28%, for the three months ended March 31, 2026, compared to the same period in 2025. Approximately $5.0 million, or 36%, of the Company’s revenue for the three months ended March 31, 2026, was generated from our consumer insights customers compared to $7.0 million, or 49%, for the same period in 2025. This decrease was driven by a decrease in contract value for certain larger tier revenue customers.

Previous wording

Creative services revenue decreased by $607,000, or 11%, for the nine months ended September 30, 2025, compared to the same period in 2024. Approximately $4.7 million, or 11%, of the Company’s revenue for the nine months ended September 30, 2025 was generated from our creative services customers compared to $5.3 million, or 13% for the same period in 2024. This decrease was primarily related to a decrease in the number of projects for smaller tier revenue customers.

Current wording

Creative services revenue increased by $490,000, or 33%, for the three months ended March 31, 2026, compared to the same period in 2025. Approximately $2.0 million, or 14%, of the Company’s revenue for the three months ended March 31, 2026, was generated from our creative services customers compared to $1.5 million, or 11% for the same period in 2025. This increase was driven by an increase in the number of projects for smaller tier revenue customers.

Previous wording

Media services revenue increased by $138,000, or 23%, for the three months ended September 30, 2025, compared to the same period in 2024. Approximately $728,000, or 5%, of the Company’s revenue for the three months ended September 30, 2025, was generated from our media services customers compared to $590,000, or 4%, for the same period in 2024. This increase was primarily related to the timing of customer needs.

Current wording

Media services revenue decreased by $829,000, or 99%, for the three months ended March 31, 2026, compared to the same period in 2025. Approximately $12,000, or 0.1%, of the Company’s revenue for the three months ended March 31, 2026, was generated from our media services customers compared to $841,000, or 6%, for the same period in 2025.

Previous wording

Cost of revenue decreased by $78,000, or 1%, for the three months ended September 30, 2025, compared to the same period for 2024. This decrease is due to the factors discussed below:

Current wording

Cost of revenue decreased by $264,000, or 3%, for the three months ended March 31, 2026, compared to the same period in 2025. This decrease was due to the factors discussed below:

Previous wording

Direct salaries and labor cost decreased by $394,000, or 7%, for the nine months ended September 30, 2025, when compared to the same period in 2024. Approximately $5.2 million, or 16%, of the Company's cost of revenue for the nine months ended September 30, 2025 was a result of direct salaries and labor cost compared to $5.6 million, or 22% for the same period in 2024. These costs represent salary and labor cost of employees that work directly on customer projects for our consumer insights, creative services, and media services divisions.

Current wording

Direct salaries and labor cost decreased by $1.4 million, or 80%, for the three months ended March 31, 2026, compared to the same period in 2025. Approximately $371,000, or 4%, of the Company's cost of revenue for the three months ended March 31, 2026, was a result of direct salaries and labor cost compared to $1.8 million or 18%, for the same period in 2025. This decrease was related to our continued efforts to decrease headcount. These costs represent salary and labor cost of employees who work directly on customer projects for our consumer insights, creative services, and media services divisions.

Previous wording

Direct project cost increased by $1.7 million, or 19%, for the nine months ended September 30, 2025, when compared to the same period in 2024. Approximately $10.9 million, or 34%, of the Company's cost of revenue for the nine months ended September 30, 2025 was a result of direct project cost compared to $9.2 million, or 32%, during the same period in 2024. This increase was related to an increase in customer contracts. 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 services, and media services divisions.

Current wording

Direct project cost decreased by $2.4 million, or 67%, for the three months ended March 31, 2026, compared to the same period in 2025. Approximately $1.2 million, or 12%, of the Company's cost of revenue for the three months ended March 31, 2026, was a result of direct project cost compared to $3.6 million, or 37%, during the same period in 2025. This decrease was related to a decrease in customer contracts. 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 services, and media services divisions.

Previous wording

Non-direct project cost decreased by $229,000, or 13%, for the three months ended September 30, 2025 when compared to the same period in 2024. Approximately $1.5 million, or 16%, of the Company's cost of revenue for the three months ended September 30, 2025, was a result of non-direct project cost compared to $1.8 million, or 18%, for the same period in 2024. This decrease is related to our continued efforts to decrease headcount. These costs represent overall client service costs that are not specifically related to a particular project, but relate to services for our consumer insights, creative services, and media services divisions.

Current wording

Non-direct project cost increased by $1.4 million, or 143%, for the three months ended March 31, 2026, compared to the same period in 2025. Approximately $2.4 million, or 25%, of the Company's cost of revenue for the three months ended March 31, 2026, was a result of non-direct project cost compared to $1.0 million, or 10%, for the same period in 2025. This increase is consistent with the increase noted in revenue from our creative services division. These costs represent overall client service costs that are not specifically related to a particular project, but relate to services for our consumer insights, creative services, and media services divisions.

Previous wording

Direct project cost decreased by $613,000, or 20%, for the three months ended September 30, 2025 when compared to the same period in 2024. Approximately $2.4 million, or 25%, of the Company's cost of revenue for the three months ended September 30, 2025, was a result of direct project cost compared to $3.0 million, or 31%, during the same period in 2024. This decrease was consistent with the decrease in revenue from our consumer insights division. 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 services, and media services divisions.

Current wording

Publisher cost increased by $1.9 million, or 62%, for the three months ended March 31, 2026, compared to the same period in 2025. Approximately $4.9 million, or 51%, of the Company's cost of revenue for the three months ended March 31, 2026, was a result of publisher cost compared to $3.0 million, or 31%, for the same period in 2025. This increase is consistent with the increase noted in revenue from our advertising technology division. These costs represent payments to media providers and website publishers.

Previous wording

Gross margin was $11.6 million and $10.9 million for the nine months ended September 30, 2025 and 2024, respectively. Our gross margin increased $617,000, or 6%, for the nine months ended September 30, 2025, when compared to the same period of 2024. Gross margin as a percentage of revenue decreased to 27% for the nine months ended September 30, 2025, compared to 28% for the same period of 2024 due to the higher cost of revenue.

Current wording

Gross margin was $4.3 million and $4.3 million for the three months ended March 31, 2026, and 2025, respectively. Our gross margin remained consistent for the three months ended March 31, 2026, when compared to the same period of 2025. Gross margin as a percentage of revenue increased to 31% for the three months ended March 31, 2026, compared to 30% for the same period of 2025 due to the slight decrease in cost of revenue.

Previous wording

General and administrative expenses decreased by $315,000, or 7%, for the three months ended September 30, 2025, compared to the same period in 2024. The decrease is due to a combination of factors as discussed below:

Current wording

General and administrative expenses decreased by $2.0 million, or 43%, for the three months ended March 31, 2026, compared to the same period in 2025. The decrease was due to a combination of factors as discussed below:

Previous wording

Personnel cost decreased by $270,000, or 14%, for the three months ended September 30, 2025, compared to the same period in 2024. This change was mainly driven by a decrease in the Company's head count by a net change of 28 employees. The Company employee's headcount was 113 and 141 at September 30, 2025 and 2024, respectively.

Current wording

Personnel cost decreased by $173,000, or 9%, for the three months ended March 31, 2026, compared to the same period in 2025. This change was mainly driven by a decrease in the Company's head count by a net change of 17 employees. The Company's employee headcount was 99 and 116 at March 31, 2026 and 2025, respectively.

Previous wording

Legal fees increased by $302,000, or 191%, for the three months ended September 30, 2025, compared to the same period in 2024. This increase was due largely to payments made as part of the ongoing litigation with Ladenburg. See Note 16, Commitments and Contingencies, to the consolidated financial statements.

Current wording

Legal fees decreased by $1.6 million, or 347%, for the three months ended March 31, 2026, compared to the same period in 2025. This decrease was due largely to a $1.1 million gain related to a non-recurring settlement of ongoing litigation with Ladenburg. See Note 15, Commitments and Contingencies, to the consolidated financial statements.

Previous wording

Website expenses decreased by $153,000, or 44%, for the three months ended September 30, 2025, compared to the same period in 2024. This decrease was related to a reclassification of certain components of software costs from website expenses to cost of revenue.

Current wording

Data processing expenses decreased by $252,000, or 40%, for the three months ended March 31, 2026, compared to the same period in 2025. This decrease was related to a reclassification of certain components of software costs from website expenses to cost of revenue.

Previous wording

As of September 30, 2025, we had a cash balance of $553,000 and a restricted cash balance of $1.9 million compared with a cash balance of $2.5 million and a restricted cash balance of $1.9 million as of December 31, 2024. The Company’s liquidity needs, and a discussion of how it intends to meet those needs, is discussed below. See – “Going Concern.”

Current wording

As of March 31, 2026, we had a cash balance of $594,000 and a restricted cash balance of $1.9 million, compared with a cash balance of $1.4 million and a restricted cash balance of $1.9 million as of December 31, 2025. Subsequent decreases in restricted cash associated with the settlement agreement entered into with Ladenburg are discussed further in Note 15, Commitments and Contingencies, and Note 20, Subsequent Events, to the consolidated financial statements. The Company’s liquidity needs, and a discussion of how it intends to meet those needs, is discussed below. See "Going Concern" below.

Previous wording

Historically, the Company has incurred losses, which have resulted in an accumulated deficit of approximately $177.0 million as of September 30, 2025. Cash flows provided by (used in) operating activities were $347,000 and $(451,000) for the nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, the Company had a working capital deficit of approximately $17.3 million, inclusive of $553,000 in cash and cash equivalents and $1.9 million in restricted cash.

Current wording

Historically, the Company has incurred losses, which have resulted in an accumulated deficit of approximately $181.6 million as of March 31, 2026. Cash flows used in operating activities were $196,000 and $350,000 for the three months ended March 31, 2026 and 2025, respectively. As of March 31, 2026, the Company had a working capital deficit of approximately $96.2 million inclusive of $594,000 in cash and cash equivalents and $1.9 million in restricted cash.

Previous wording

The Company's current cash and working capital, as of the filing of this Quarterly Report on Form 10-Q, are 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 obligations and continue as a going concern. 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 $5.2 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 Facility, or raising equity capital. The ability to access the capital markets depends, in part, upon the volume and market price of the Company's stock, which cannot be assured. Other measures include reducing or delaying certain business activities, and reducing general and administrative expenses, including a reduction in headcount. The ultimate success of these plans is not guaranteed.

Current wording

The Company's current cash and working capital, as of the filing of this Quarterly Report on Form 10-Q, are 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 obligations and continue as a going concern. 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 $88.3 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 Facility, or raising equity capital. The ability to access the capital markets depends, in part, upon the volume and market price of the Company's stock, which cannot be assured. Other measures include reducing or delaying certain business activities, and reducing general and administrative expenses, including a reduction in headcount. The ultimate success of these plans is not guaranteed.

Previous wording

As of September 30, 2025, Centre Lane Partners has loaned the Company $39.9 million through Amendments One through Eight (the "Second Out Loans"), Amendments Nine through Sixteen (the "First Out Loans"), and Amendments Seventeen and Twenty-One (the "Third Out Loans").

Current wording

As of March 31, 2026, in addition to the acquisition financing provided to the Company effective June 1, 2020, Centre Lane Partners had loaned the Company an additional $39.9 million through Amendments One through Eight (the “Second Out Loans”), Amendments Nine through Sixteen and Nineteen (the “First Out Loans”), and Amendments Seventeen and Twenty-One (the “Third Out Loans”) to provide liquidity to fund operations.

Previous wording

Effective September 30, 2025, the Company, the Lenders, and Centre Lane Partners entered into the Twenty-Third Amendment to the Credit Agreement, which applied the following adjustments to loans with outstanding payments due on September 30, 2025, including the following temporary modifications:

Current wording

Effective September 30, 2025, the Company, the Lenders, and Centre Lane Partners entered into the Twenty-Third Amendment to the Credit Agreement, which applied the following adjustments to loans with outstanding payments due on September 30, 2025, including the following modifications:

Previous wording

Incurring an amendment fee equal to 25 basis points of the First Out Loans, approximately $8,000, which was added to the principal balance as of September 30, 2025;

Current wording

Incurring an amendment fee equal to 25 basis points of the First Out Loans, approximately $8,000, which was added to the principal balance of the First Out Loans as of September 30, 2025;

Previous wording

Following the payments made on September 30, 2025, all loan terms, including cash interest and PIK rates, will revert to the terms established under the Twenty-Second Amendment.

Current wording

Following payments made on September 30, 2025, all loan terms, including cash interest and PIK rates, reverted to the terms established under the Twenty-Second Amendment. Quarterly amortization payments resumed and were due on December 31, 2025.

Previous wording

Media services revenue increased by $642,000, or 36%, for the nine months ended September 30, 2025, compared to the same period in 2024. Approximately $2.4 million, or 6%, of the Company’s revenue for the nine months ended September 30, 2025 was generated from our media services customers compared to $1.8 million, or 5%, for the same period in 2024. This increase was primarily related to the timing of customer needs and the moving of certain projects from year-end 2024 to the first three quarters of 2025.

Current wording

Deferring the Second Out Loans amortization payment due on March 31, 2026, to the maturity date of the Second Out Loans, which is December 20, 2026.

Previous wording

The following table summarizes cash flow activities during the nine months ended September 30, 2025 and 2024:

Current wording

The following table summarizes cash flow activities during the three months ended March 31, 2026 and 2025:

Previous wording

For the nine months ended September 30, 2025, cash provided by operating activities was $347,000 The primary factors affecting our operating cash flows during the period were our net loss of $10.1 million, adjusted for non-cash charges of $1.4 million for amortization of intangible assets, $1.7 million of amortization of debt discount, $7.0 million in interest paid in kind on the Centre Lane Senior Secured Credit Facility, and a $4,000 net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $2.4 million increase in deferred revenue and a $706,000 decrease in accounts receivable, partially offset by a $1.6 million decrease in accounts payable and accrued expenses and a $1.5 million decrease in other liabilities.

Current wording

For the three months ended March 31, 2026, cash used in operating activities was $0.2 million. The primary factors affecting our operating cash flows during the period were our net loss of $1.3 million, adjusted for non-cash charges of $445,000 for amortization of intangible assets, $460,000 of amortization of debt discount, $2.6 million in interest paid-in-kind on the Centre Lane Senior Secured Credit Facility, and a $2.5 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $4.5 million decrease in accounts payable and accrued expenses and a $665,000 decrease in other liabilities, partially offset by a $1.6 million increase in deferred revenue and a $839,000 decrease in accounts receivable.

Previous wording

For the nine months ended September 30, 2024, cash used in operating activities was $451,000. The primary factors affecting our operating cash flows during the period were our net loss of $13.2 million, adjusted for non-cash charges of $1.4 million for amortization of intangible assets, $2.2 million of amortization of debt discount, $6.9 million in interest paid in kind on the Centre Lane Senior Secured Credit Facility, $191,000 for stock compensation expense, and a $1.8 million net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $2.3 million increase in accounts receivable, a $543,000 decrease in accounts payable, and a $363,000 decrease in other liabilities, partially offset by a $200,000 increase in deferred revenue.

Current wording

For the three months ended March 31, 2025, cash used in operating activities was $350,000. The primary factors affecting our operating cash flows during the period were our net loss of $3.2 million, adjusted for non-cash charges of $485,000 for amortization of intangible assets, $633,000 of amortization of debt discount, $2.3 million in interest paid in kind on the Centre Lane Senior Secured Credit Facility, and a $585,000 net change in operating assets and liabilities. The primary drivers of the changes in operating assets and liabilities were a $3.9 million decrease in accounts payable and a $543,000 decrease in other liabilities, partially offset by a $3.5 million increase in deferred revenue and a $762,000 decrease in accounts receivable.

Previous wording

Cash used in investing activities of $30,000 and $100,000 for the nine months ended September 30, 2025 and 2024, respectively, was attributable to $30,000 and $14,000, respectively, for the purchase of property and equipment, and $86,000 for website enhancements during the nine months ended September 30, 2024.

Current wording

For the three months ended March 31, 2026, cash used in investing activities was $0. For the three months ended March 31, 2025, cash used in investing activities was $10,000, attributable to the purchase of property and equipment.

Previous wording

During the nine months ended September 30, 2024, the Company used cash of $971,000 in financing activities, which is largely attributable to repayment of principal on the Centre Lane Senior Secured Credit Facility of $879,000.

Current wording

For the three months ended March 31, 2026, cash used in financing activities was $581,000, which was primarily attributable to repayments of principal on the Centre Lane Senior Secured Credit Facility.