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Item 7. Management’s Discussion and Analysis

2024-02-16 compared with 2023-03-27 · 111 added, 135 removed, 258 unchanged (49% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

MANAGEMENT’S DISCUSSION AND ANALYS IS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

We are a multi-platform media company whose primary business is operating radio stations throughout the United States.

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We own and operate stations in the following markets:

Atlanta, GA, Augusta, GA, Boston, MA, Charlotte, NC, Detroit, MI, Fayetteville, NC, Fort Myers-Naples, FL, Las Vegas, NV, Middlesex, NJ, Monmouth, NJ, Morristown, NJ, Philadelphia, PA, Tampa-Saint Petersburg, FL, and Wilmington, DE.

We refer to each group of stations in each market as a market cluster.

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and its subsidiaries.

COVID-19 Pandemic

Beginning in early 2020, we were impacted by deteriorating general economic conditions resulting from the COVID-19 pandemic that caused a downturn in the advertising industry.

The decreased demand for advertising materially negatively impacted our results of operations, liquidity and financial condition in 2020, and to a lesser extent, in 2021 and 2022.

In response to the COVID-19 pandemic, beginning in March 2020, we implemented certain expense control initiatives, such as reductions in compensation for management and other employees, reductions in planned capital expenditures, negotiated vendor pricing reductions, furloughs and headcount reductions for certain employees and suspensions of new employee hiring and travel and entertainment expenses.

These initiatives reduced our expenses throughout the remainder of 2020, and certain of these expense reductions continued during 2021 and 2022.

Our board of directors also suspended future quarterly dividend payments until it is determined that resumption of dividend payments is in the best interest of our stockholders.

The extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments, which are uncertain and unpredictable.

Accordingly, it is reasonably possible that these uncertainties could materially impact the Company’s significant accounting estimates related to, but not limited to, allowance for doubtful accounts, impairment of Federal Communications Commission (“FCC”) licenses and goodwill, and determination of right-of-use assets.

Cautionary Note Regarding Forward-Looking Statements

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The Company undertakes no obligation to update or revise any forward-looking statements.

Index to Financial Statements

Forward-looking statements involve a number of risks and uncertainties, and actual results or events may differ materially from those projected or implied in those statements.

Factors that could cause actual results or events to differ materially from these forward-looking statements include, but are not limited to:

the effects of the COVID-19 pandemic, including its potential effects on the economic environment and the Company’s results of operations, liquidity and financial condition, and the increased risk of impairments of the Company’s FCC licenses and/or goodwill;

external economic forces that could have a material adverse impact on the Company’s advertising revenues and results of operations;

• the Company's ability to comply with the continued listing standards of the Nasdaq Global Market;

• risks from social and natural catastrophic events;

• external economic forces and conditions that could have a material adverse impact on the Company’s advertising revenues and results of operations;

• the ability of the Company’s stations to compete effectively in their respective markets for advertising revenues;

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We do not intend, and undertake no obligation, to update any forward-looking statement.

Index to Financial Statements

Financial Statement Presentation

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• it involves a significant level of estimation uncertainty;

Index to Financial Statements

• changes in the estimate or different estimates that could have been selected have had or are reasonably likely to have a material impact on our results of operations or financial condition.

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We continually evaluate our ability to collect our accounts receivable.

Our ongoing evaluation includes review of specific accounts at our stations, the current financial condition of our customers and our historical write-off experience.

This ongoing evaluation requires management judgment, and if we had made different assumptions about these factors, the allowance for doubtful accounts could have been materially different.

We determine the allowance for credit losses based on historical information, relative improvements or deteriorations in the age of the accounts receivable and changes in current economic conditions and reasonable and supportable forecasts of future economic conditions.

This ongoing evaluation requires management judgment, and if we had made different assumptions about these factors, the allowance for credit losses could have been materially different.

Property and Equipment.

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If we determine it is more likely than not that our FCC licenses are impaired, then we are required to perform a quantitative impairment test.

In 2022, we elected to perform the quantitative impairment test for our FCC licenses in all markets.

In 2023, we performed the quantitative impairment test for our FCC licenses in all markets.

The quantitative impairment test compares the fair value of our FCC licenses with their carrying amounts.

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Due to an increase in interest rates in the U.S.

economy, we tested our FCC licenses for impairment during the second quarter of 2022.

As a result of the quantitative impairment test performed as of June 30, 2022, we recorded impairment losses of $2.8 million related to the FCC licenses in our Fort Myers-Naples, FL, Las Vegas, NV, and Wilmington, DE market clusters.

The impairment losses were due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of our FCC licenses due to certain risks associated with the U.S.

The fair values of our FCC licenses were estimated using an income approach.

The income approach is based upon discounted cash flow analyses incorporating variables such as projected audio market revenues, projected growth rate for audio market revenues, projected audio market revenue shares, projected audio operating income margins, and a discount rate appropriate for the audio industry.

economy and a decrease in projected revenues, we tested our FCC licenses for impairment during the third quarter of 2023.

As a result of the quantitative impairment test performed as of September 30, 2023, we recorded impairment losses of $78.2 million related to the FCC licenses in each of our market clusters.

The impairment losses were primarily due to an increase in the discount rate due to certain risks associated with the U.S.

economy and a decrease in the projected revenues in each market cluster used in the discounted cash flow analyses to estimate the fair value of our FCC licenses.

The fair values of the FCC licenses in each of our market clusters were estimated using an income approach.

The income approach is based upon discounted cash flow analyses incorporating variables such as projected audio market revenues, projected growth rate for audio market revenues, projected audio market revenue shares, projected audio station operating income margins, and a discount rate appropriate for the audio industry.

The key assumptions used in the discounted cash flow analyses are as follows:

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Discount rate

Interest rates in the U.S.

economy continued to increase during the third quarter of 2022;

however, there were no changes to the discount rate or any other items used in the discounted cash flow analyses to estimate the fair value of the FCC licenses.

Therefore, we did not record any impairment losses related to FCC licenses during the third quarter of 2022.

We performed the annual quantitative impairment test for our FCC licenses in all markets during the fourth quarter of 2023.

As a result of the quantitative impairment test performed as of November 30, 2022, we recorded

Index to Financial Statements

impairment losses of $19.2 million related to the FCC licenses in our Boston, MA, Charlotte, NC, Fort Myers-Naples, FL, Middlesex-Monmouth-Morristown, NJ, and Wilmington, DE market clusters.

As a result of the quantitative impairment test performed as of November 30, 2023, we recorded impairment losses of $1.0 million related to the FCC licenses in our Augusta, GA, Fort Myers-Naples, FL, and Middlesex-Monmouth-Morristown, NJ market clusters.

The impairment losses were primarily due to a decrease in projected revenue in these markets.

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Revenue growth rates

(16.5)% - 24.4%

Market revenue shares at maturity

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Tampa-Saint Petersburg, FL

Wilmington, DE

As of December 31, 2023, goodwill with an aggregate carrying amount of $0.9 million represented 0.2% of our total assets.

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The loss recognized will not exceed the total amount of goodwill allocated to the reporting unit.

For the purpose of testing our goodwill for impairment, we have identified our market clusters and esports segment as our reporting units.

For the purpose of testing our goodwill for impairment, we have identified our market clusters as our reporting units.

Due to an increase in interest rates in the U.S.

economy, we tested our goodwill for impairment during the second quarter of 2022.

As a result of the quantitative impairment test performed as of June 30, 2022, we recorded impairment losses of $5.9 million related to the goodwill in our Boston, MA, Charlotte, NC, Fayetteville, NC, Fort Myers-Naples, FL, and Tampa-Saint Petersburg, FL market clusters.

The impairment losses were due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of our goodwill due to certain risks associated with the U.S.

The fair values of our goodwill were estimated using an income approach.

economy and a decrease in projected revenues, we tested our goodwill for impairment during the third quarter of 2023.

As a result of the quantitative impairment test performed as of September 30, 2023, we recorded an impairment loss of $10.6 million related to the goodwill in our Philadelphia, PA market cluster.

The impairment loss was primarily due to an increase in the discount rate due to certain risks associated with the U.S.

economy and a decrease in the projected revenues used in the discounted cash flow analysis to estimate the fair value of our goodwill.

The fair value of the goodwill in our Philadelphia, PA market cluster was estimated using an income approach.

The income approach is based upon discounted cash flow analyses incorporating variables such as projected audio market revenues, projected growth rate for audio market revenues, projected audio market revenue shares, projected audio station operating income margins, and a discount rate appropriate for the audio industry.

The key assumptions used in the discounted cash flow analyses are as follows:

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Discount rate

Index to Financial Statements

Interest rates in the U.S.

economy continued to increase during the third quarter of 2022, however, there were no changes to the discount rate or any other items used in the discounted cash flow analyses to estimate the fair value of goodwill.

Therefore, we did not record any impairment losses related to goodwill during the third quarter of 2022.

We performed the annual quantitative impairment test for our goodwill in all markets during the fourth quarter of 2022.

As a result of the quantitative impairment test, we recorded an impairment loss of $8.9 million related to the goodwill in our Boston, MA market cluster.

The impairment loss was primarily due to a decrease in projected revenue in Boston.

The fair value of our goodwill was estimated using an income approach.

The key assumptions used in the discounted cash flow analysis are as follows:

Revenue growth rates

Operating income margin

Discount rate

In addition, as a result of a quantitative impairment test in the esports segment, we recorded an impairment loss of $1.5 million related to the goodwill in the esports segment.

The impairment loss was primarily due to a decrease in projected revenue in the esports segment.

We believe we have made reasonable estimates and assumptions to calculate the estimated fair value of our FCC licenses and goodwill, however, these estimates and assumptions are highly judgmental in nature.

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If actual market conditions are less favorable than those projected by the industry or by us, or if events occur or circumstances change that would reduce the estimated fair value of our indefinite-lived intangible assets below the amounts reflected on our balance sheets, we may recognize future impairment charges, the amount of which may be material.

For example, if the discount rate used in our discounted cash flow analyses was increased to 10.0% without any additional changes to the other assumptions used in the discounted cash flow analyses, we would have recorded additional impairment losses of $20.5 million related to the FCC licenses in each of our market clusters except Atlanta, GA.

Other Intangibles.

As of December 31, 2022, other intangibles with an aggregate carrying amount of $8.2 million represented 1% of our total assets.

Other intangibles include advertiser relationships, franchise rights, trade names, and brands.

For the purpose of testing other intangibles for impairment, we have identified our market clusters, and digital and esports segments as our reporting units.

We performed a quantitative impairment test for our franchise rights in the esports segment as of December 31, 2022.

As a result of the test, we recorded an impairment loss of $12.8 million.

The impairment loss was primarily due to a decrease in projected revenue in the esports segment.

The fair values of the franchise rights were estimated using an income approach.

The income approach is based upon discounted cash flow analyses incorporating variables such as projected revenue, projected growth rate for revenue, projected operating income margins, and a discount rate appropriate for the esports industry.

The key assumptions used in the discounted cash flow analyses are as follows:

Revenue growth rate(s)

Operating income margin(s)

(22.3)% - 43.5%

Discount rate

For example, as of November 30.

2023, if the discount rate used in our discounted cash flow analyses was increased to 10.5% without any additional changes to the other assumptions used in the discounted cash flow analyses, we would have recorded additional impairment losses of $20.4 million related to the FCC licenses in each of our market clusters.

We are required to determine whether a contract is or contains a lease at inception.

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We calculate the term for each lease agreement to include the noncancellable period specified in the agreement together with:

(1) the periods covered by options to extend the lease if we are reasonably certain to exercise that option, (2) the periods covered by an option to terminate if we

Index to Financial Statements

are reasonably certain not to exercise that option and (3) the period covered by an option to extend (or not terminate) if controlled by the lessor.

(1) the periods covered by options to extend the lease if we are reasonably certain to exercise that option, (2) the periods covered by an option to terminate if we are reasonably certain not to exercise that option and (3) the period covered by an option to extend (or not terminate) if controlled by the lessor.

The assessment of whether we are reasonably certain to exercise an option to extend a lease requires significant judgement surrounding contract-based factors, asset-based factors, entity-based factors and market-based factors.

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Corporate expenses

Impairment losses

FCC licenses impairment losses

Goodwill impairment losses

Other impairment losses

Gain on exchange

Other operating income, net

Loss on extinguishment of long-term debt

Gain on forgiveness of long-term debt

Other income, net

Extinguishment of franchise fee

Gain on repurchases of long-term debt

Income tax benefit

Index to Financial Statements

Results of Operations - Segments

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Operating expenses

Net revenue increased $15.0 million during the year ended December 31, 2022 as compared to the year ended December 31, 2021.

Audio revenue increased $6.6 million during the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily due to recovery from the COVID-19 pandemic and political advertising for the 2022 elections.

Digital revenue increased $8.0 million during the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily due to continued growth in the digital segment and the acquisition of Guarantee Digital, LLC (“Guarantee”).

Net revenue decreased $9.3 million during the year ended December 31, 2023 as compared to the year ended December 31, 2022.

Audio revenue decreased $13.6 million during the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to a decrease in agency revenue including political advertising.

Digital revenue increased $4.7 million during the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to continued growth in the digital segment.

Operating Expenses.

Operating expenses increased $13.8 million during the year ended December 31, 2022 as compared to the year ended December 31, 2021.

Audio operating expenses increased $9.4 million during the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily due to recovery from the COVID-19 pandemic.

Digital operating expenses increased $4.0 million during the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily due to continued investment in the digital segment and the acquisition of Guarantee.

Operating expenses decreased $5.0 million during the year ended December 31, 2023 as compared to the year ended December 31, 2022.

Audio operating expenses decreased $9.4 million during the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to continued expense management in the audio segment.

Digital operating expenses increased $4.4 million during the year ended December 31, 2023 as compared to the year ended December 31, 2022, primarily due to continued investment in the digital segment.

Corporate Expenses.

Corporate expenses increased $1.4 million during the year ended December 31, 2022 as compared to the year ended December 31, 2021, primarily due to a decreased allocation of digital expenses to operating expenses.

Impairment Losses.

As a result of our annual quantitative impairment tests performed during the fourth quarter of 2022, we recorded impairment losses of $19.2 million related to the FCC licenses in our Boston, MA, Charlotte, NC, Fort Myers-Naples, FL, Middlesex-Monmouth-Morristown, NJ, and Wilmington, DE market clusters, an impairment loss of $8.9 million related to the goodwill in our Boston, MA market cluster and an impairment loss of $1.5 million related to goodwill in the esports segment.

The impairment losses were primarily due to a decrease in projected revenue in these markets and the esports segment.

We also performed a quantitative impairment test for our franchise rights in the esports segment during the fourth quarter of 2022.

As a result of the test, we recorded an impairment loss of $12.8 million primarily due to a decrease in projected revenue in the esports segment.

Corporate expenses during the year ended December 31, 2023 were comparable to the year ended December 31, 2022.

FCC Licenses Impairment Losses.

As a result of our annual quantitative impairment test performed during the fourth quarter of 2023, we recorded impairment losses of $1.0 million related to the FCC licenses in our Augusta, GA, Fort Myers-Naples, FL, and Middlesex-Monmouth-Morristown, NJ market clusters.

The impairment losses were primarily due to a decrease in projected revenue in these markets.

Due to an increase in interest rates in the U.S.

economy, we tested our FCC licenses and goodwill for impairment during the second quarter of 2022.

As a result of the quantitative impairment tests, we recorded impairment losses of $2.8 million related to the FCC licenses in our Fort Myers-Naples, FL, Las Vegas, NV, and Wilmington, DE market clusters and impairment losses of $5.9 million related to the goodwill in our Boston, MA, Charlotte, NC, Fayetteville, NC, Fort Myers-Naples, FL, and Tampa-Saint Petersburg, FL market clusters.

The impairment losses were primarily due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of FCC licenses and goodwill due to certain risks associated with the U.S.

economy and a decrease in projected revenues, we tested our FCC licenses for impairment during the third quarter of 2023.

As a result of the quantitative impairment test, we recorded impairment losses of $78.2 million related to the FCC licenses in each of our market clusters.

The impairment losses were primarily due to an increase in the discount rate due to certain risks associated with the U.S.

economy and a decrease in the projected revenues in each market cluster used in the discounted cash flow analyses to estimate the fair value of FCC licenses.

On August 11, 2023, we entered into an agreement to sell substantially all of the assets used in the operations of WJBR-FM in Wilmington, DE to a third party for $5.0 million in cash.

As a result of entering into the agreement, we recorded an impairment loss of $10.0 million related to the FCC license during the second quarter of 2023.

As a result of our annual quantitative impairment test performed during the fourth quarter of 2022, we recorded impairment losses of $19.2 million related to the FCC licenses in our Boston, MA, Charlotte, NC, Fort Myers-Naples, FL, Middlesex-Monmouth-Morristown, NJ, and Wilmington, DE market clusters.

The impairment losses were primarily due to a decrease in projected revenue in these markets.

Due to an increase in interest rates in the U.S.

economy, we tested our FCC licenses for impairment during the second quarter of 2022.

The impairment losses were primarily due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of FCC licenses due to certain risks associated with the U.S.

On April 1, 2022, we completed the sale of substantially all of the assets used in the operations of WWNN-AM in West Palm Beach-Boca Raton, FL to a third party for $1.25 million in cash.

As a result of the sale, we recorded an impairment loss of $1.9 million related to the FCC license during the first quarter of 2022.

Index to Financial Statements

Goodwill Impairment Losses.

Due to an increase in interest rates in the U.S.

economy and a decrease in projected revenues, we tested our goodwill for impairment during the third quarter of 2023.

As a result of the quantitative impairment test, we recorded an impairment loss of $10.6 million related to the goodwill in our Philadelphia, PA market cluster.

The impairment loss was primarily due to an increase in the discount rate due to certain risks associated with the U.S.

economy and a decrease in the projected revenues in each market cluster used in the discounted cash flow analysis to estimate the fair value of goodwill.

As a result of our annual quantitative impairment test performed during the fourth quarter of 2022, we recorded an impairment loss of $8.9 million related to the goodwill in our Boston, MA market cluster and an impairment loss of $1.5 million related to

goodwill in the esports segment.

The impairment losses were primarily due to a decrease in projected revenue in the Boston, MA market and the esports segment.

Due to an increase in interest rates in the U.S.

economy, we tested our goodwill for impairment during the second quarter of 2022.

As a result of the quantitative impairment test, we recorded impairment losses of $5.9 million related to the goodwill in our Boston, MA, Charlotte, NC, Fayetteville, NC, Fort Myers-Naples, FL, and Tampa-Saint Petersburg, FL market clusters.

The impairment losses were primarily due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of goodwill due to certain risks associated with the U.S.

Other Impairment Losses.

We also performed a quantitative impairment test for our franchise rights in the esports segment during the fourth quarter of 2022.

As a result of the test, we recorded an impairment loss of $12.8 million primarily due to a decrease in projected revenue in the esports segment.

Gain on Exchange.

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As a result of the exchange, we recorded a gain on exchange of $3.4 million in 2022.

Other Operating Income, Net.

Other operating income, net for the year ended December 31, 2021 includes life insurance proceeds of $3.0 million related to the death of Mr.

George Beasley, the Company’s former Chairman, in June 2021, partially offset by certain payments totaling $1.5 million that were accrued in accordance with Mr.

Beasley’s employment contract, payments of $0.6 million for consulting services related to the COVID-19 pandemic and expenses of $0.5 million related to the early termination of a programming contract.

Loss on Extinguishment of Long-Term Debt.

We recorded a loss on extinguishment of long-term debt of $5.0 million during the year ended December 31, 2021, resulting from the issuance of the secured notes on February 2, 2021 and the use of proceeds to refinance in full our previously oustanding credit facility.

Gain on Forgiveness of Long-Term Debt.

We recorded a gain on forgiveness of long-term debt of $10.0 million during the year ended December 31, 2021, resulting from forgiveness of the PPP loan in November 2021, as described in “Liquidity and Capital Resources — PPP Loan” below.

Other Income, Net.

In the third quarter of 2022, we repurchased $5.0 million aggregate principal amount of the Notes for an aggregate price equal to 77% of the principal amount and recorded an aggregate gain of $1.0 million as a result of the repurchases.

In the second quarter of 2022, we repurchased $5.0 million aggregate principal amount of the Notes for an aggregate price equal to 96% of the principal amount and recorded an aggregate gain of $0.1 million as a result of the repurchases.

Extinguishment of Franchise Fee.

Due to the termination of the esports league the remaining $6.0 million franchise fee payable to the esports league was forgiven during the fourth quarter of 2023.

Gain on Repurchases of Long-Term Debt.

In the fourth quarter of 2023, we purchased $20.0 million aggregate principal amount of the Notes for an aggregate price equal to 65% of the principal amount and recorded an aggregate gain of $6.8 million as a result of the purchases.

In the second quarter of 2023, we purchased $3.0 million principal amount of the Notes for a price equal to 66% of the principal amount and recorded a gain of $1.0 million as a result of the purchase.

In the third quarter of 2022, we purchased $5.0 million aggregate principal amount of the Notes for an aggregate price equal to 77% of the principal amount and recorded an aggregate gain of $1.0 million as a result of the purchases.

In the second quarter of 2022, we purchased $5.0 million aggregate principal amount of the Notes for an aggregate price equal to 96% of the principal amount and recorded an aggregate gain of $0.1 million as a result of the purchases.

Income Tax Benefit.

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We have also purchased or constructed office and studio space in some of our markets to facilitate the consolidation of our operations.

In response to the COVID-19 pandemic, our board of directors has suspended future quarterly dividend payments until it is determined that resumption of dividend payments is in the best interest of the Company’s stockholders.

Our board of directors has suspended future quarterly dividend payments until it is determined that resumption of dividend payments is in the best interest of the Company’s stockholders.

In addition, as discussed in “Secured Notes” below, the Indenture governing our Notes limits our ability to pay dividends.

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On February 2, 2021, we issued $300.0 million aggregate principal amount of 8.625% senior secured notes due on February 1, 2026 (the “Notes”) under an indenture dated February 2, 2021 (the “Indenture”).

Index to Financial Statements

Interest on the Notes accrues at the rate of 8.625% per annum and is payable semiannually in arrears on February 1 and August 1 of each year.

The Notes are secured on a first-lien priority basis by substantially all assets of the Company and its majority owned subsidiaries and are guaranteed jointly and severally by the Company and its majority owned subsidiaries.

We used the net proceeds from the Notes, to refinance in full our previously outstanding credit facility, to repay a previously outstanding promissory note and loan from George Beasley (see Note 10 to the accompanying financial statements) and to pay related accrued interest, fees and expenses.

We used the net proceeds from the Notes, to refinance in full our previously outstanding credit facility, to repay a previously outstanding promissory note and loan from George Beasley and to pay related accrued interest, fees and expenses.

The Indenture contains restrictive covenants that limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, guarantee indebtedness or issue disqualified stock or, in the case of such subsidiaries, preferred stock;

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enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany transfers;

consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;

consolidate, merge, sell or

otherwise dispose of all or substantially all of our assets;

enter into transactions with affiliates;

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and issue or sell stock of our subsidiaries.

From time to time, we repurchase sufficient shares of our common stock to fund withholding taxes in connection with the vesting of restricted stock units and shares of restricted stock.

We paid $0.1 million to repurchase 97,113 shares during the year ended December 31, 2022.

In the fourth quarter of 2023, we repurchased $20.0 million aggregate principal amount of the Notes for an aggregate price equal to 65% of the principal amount and recorded an aggregate gain of $6.8 million as a result of the repurchases.

In the second quarter of 2023, we repurchased $3.0 million principal amount of the Notes for a price equal to 66% of the principal amount and recorded a gain of $1.0 million as a result of the repurchase.

From time to time, we repurchase sufficient shares of our common stock to fund withholding taxes in connection with the vesting of restricted stock units.

We paid approximately $84,000 to repurchase 87,873 shares during the year ended December 31, 2023.

From time to time, we may seek to repurchase, redeem or otherwise retire our Notes through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise.

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We did not have any off-balance sheet arrangements as of December 31, 2023.

Index to Financial Statements

The following summary table presents a comparison of our cash flows for the years ended December 31, 2022 and 2023 with respect to certain of our key measures affecting our liquidity.

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Net cash provided by (used in) operating activities

Net cash used in investing activities

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Net cash provided by (used in) investing activities

Net cash used in financing activities

Net decrease in cash and cash equivalents

Net Cash Provided By (Used In) Operating Activities.

Net cash provided by operating activities was $11.1 million during the year ended December 31, 2022, as compared to net cash used in operating activities of $1.9 million during the year ended December 31, 2021.

Significant factors affecting the $13.1 million increase in net cash provided by operating activities included a $15.5 million increase in cash receipts from revenue and a $10.5 million decrease in cash paid for operating expenses, partially offset by an $11.1 million increase in interest payments and a $1.6 million increase in cash paid for corporate expenses.

Net Cash Used In Investing Activities.

Net cash used in investing activities during the year ended December 31, 2022 included payments of $13.4 million for capital expenditures and a payment of $2.0 million for the acquisition of Guarantee, partially offset by proceeds of $1.2 million from a station disposition.

Net cash used in investing activities for the same period in 2021 included payments of $4.5 million for capital expenditures, partially offset by proceeds of $3.0 million from life insurance.

Net Cash Provided By (Used In) Financing Activities.

Net cash used in financing activities during the year ended December 31, 2022 included Notes repurchases of $8.7 million.

Net cash provided by financing activities for the same period in 2021 included proceeds of $300.0 million from the issuance of the Notes and proceeds from the $10.0 million PPP loan, partially offset by credit facility and promissory note repayments of $263.5 million, repayment of the $5.0 million loan provided by George Beasley, and payments of $7.6 million for debt issuance costs related to the Notes.

Net cash used in operating activities was $4.7 million during the year ended December 31, 2023, as compared to net cash provided by operating activities of $11.1 million during the year ended December 31, 2022.

Significant factors affecting the $15.8 million decrease in net cash used in operating activities included a $13.9 million increase in cash paid for operating expenses and a $3.3 million decrease in cash receipts from revenue.

Net Cash Provided By (Used In) Investing Activities.

Net cash provided by investing activities during the year ended December 31, 2023 included proceeds of $11.1 million from two station dispositions and a termination payment from the esports league, partially offset by $4.2 million for capital expenditures.

Net cash used in investing activities for the year ended December 31, 2022 included payments of $13.4 million for capital expenditures and a payment of $2.0 million for the acquisition of Guarantee, partially offset by proceeds of $1.2 million from a station disposition.

Net Cash Used In Financing Activities.

Net cash used in financing activities during the year ended December 31, 2023 included Notes purchases of $14.9 million.

Net cash used in financing activities for the year ended December 31, 2022 included Notes purchases of $8.7 million.

Related Party Transactions

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Beasley, and other members of the Beasley family.

The lease agreement expires on May 31, 2023.

The lease agreement expires on December 31, 2031.

Rental expense was $0.3 million for the year ended December 31, 2023.

Beasley Family Properties, LLC

On September 30, 2021, the office space leased from GGB Estero, LLC for our stations in Fort Myers, FL was transferred to Beasley Family Properties, LLC, which is held by a trust for the benefit of Caroline Beasley, Bruce G.

We lease office space for our stations in Fort Myers, FL from Beasley Family Properties, LLC, which is held by a trust for the benefit of Caroline Beasley, Bruce G.

Beasley, Brian E.

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Beasley Family Towers, LLC

We lease towers for 16 stations in various markets from Beasley Family Towers, LLC (“BFT”), which is partially held by a trust for the benefit of Caroline Beasley, Bruce G.

We leased towers for 19 stations in various markets from Beasley Family Towers, LLC (“BFT”), which is partially held by a trust for the benefit of Caroline Beasley, Bruce G.

Beasley, Brian E.

Beasley and other

Index to Financial Statements

members of the Beasley family and partially owned directly by Caroline Beasley, Bruce G.

Beasley and other members of the Beasley family and partially owned directly by Caroline Beasley, Bruce G.

Beasley, Brian E.

Beasley and other members of the Beasley family.

The lease agreements expire on various dates through December 31, 2038.

During the fourth quarter of 2023, BFT sold 18 of the towers to an unrelated third party.

As a result, the leases are no longer considered related party transactions.

The remaining lease agreement for the tower that is still owned by BFT expires on January 31, 2026.

Rental expense was $0.8 million for the year ended December 31, 2023.

6 unchanged sentences

Beasley, and other members of the Beasley family.

The lease agreement expires on November 1, 2023.

The lease agreement expires on October 31, 2028.

Rental expense was approximately $52,000 for the year ended December 31, 2023.

4 unchanged sentences

Wintersrun Communications, LLC

We sold a tower for one station in Charlotte, NC to Wintersrun Communications, LLC, which is partially held by a trust for the benefit of Caroline Beasley, Bruce G.

We leased a tower for one station in Charlotte, NC from Wintersrun Communications, LLC ("Wintersrun"), which is partially held by a trust for the benefit of Caroline Beasley, Bruce G.

Beasley, Brian E.

1 unchanged sentence

Beasley and Brian E.

Beasley, for $0.4 million then leased back the tower under an agreement which expires on December 31, 2045.

The lease met the criteria to be recorded as a finance lease, however based on the terms of the lease agreement the $0.3 million gain on sale was deferred and will be recognized as the finance lease right-of-use asset is depreciated.

During the fourth quarter of 2023, Wintersrun sold the tower to an unrelated third party.

As a result, the lease is no longer considered a related party transaction.

Rental expense was $0.1 million for the year ended December 31, 2023.

2 unchanged sentences

Rental expense was approximately $31,000 for the year ended December 31, 2023.

We currently hold an investment in Quu, Inc.

("Quu"), a company that provides us with access to an application for digital revenue.

Payments to Quu for access to the application were $0.4 million for the year ended December 31, 2023.

Loan to Interactive Life, Inc.

7 unchanged sentences

Harb with 3,333,334 shares of Class A common stock of Quu, Inc.

For the years ended December 31, 2021 and 2022, inflation has affected our performance in terms of higher costs for operating expenses, however, the exact impact cannot be reasonably determined.

For the years ended December 31, 2022 and 2023, inflation has affected our performance in terms of higher costs for operating expenses;

however, the exact impact cannot be reasonably determined.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

Not required for smaller reporting companies.

Index to Financial Statements

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis