BEASLEY BROADCAST GROUP INC 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYS IS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Overview We are a multi-platform media company whose primary business is operating radio stations throughout the United States. We offer local and national advertisers integrated marketing solutions across audio, digital and event platforms. 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, and Tampa-Saint Petersburg, FL. We refer to each group of stations in each market as a market cluster. Unless the context otherwise requires, all references in this report to the “Company,” “we,” “us” or “our” are to Beasley Broadcast Group, Inc. and its subsidiaries. Cautionary Note Regarding Forward-Looking Statements This report contains “forward-looking statements” about the Company within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future, not past, events. All statements other than statements of historical fact included in this document are forward-looking statements. These forward-looking statements are based on the current beliefs and expectations of the Company’s management and are subject to known and unknown risks and uncertainties. Forward-looking statements, which address the Company’s expected business and financial performance and financial condition, among other matters, contain words such as: “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “may,” “will,” “plans,” “projects,” “could,” “should,” “would,” “seek,” “forecast,” or other similar expressions. Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking 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 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; • the ability of the Company to develop compelling and differentiated digital content, products and services; • audience acceptance of the Company’s content, particularly its audio programs; • the ability of the Company to respond to changes in technology, standards and services that affect the audio industry; • the Company’s dependence on federally issued licenses subject to extensive federal regulation; • actions by the FCC or new legislation affecting the audio industry; • increases to royalties the Company pays to copyright owners or the adoption of legislation requiring royalties to be paid to record labels and recording artists; • the Company’s dependence on selected market clusters of stations for a material portion of its net revenue; • credit risk on the Company’s accounts receivable; • the risk that the Company’s FCC licenses and/or goodwill could become impaired; 23 Table of Contents • the Company’s substantial debt levels and the potential effect of restrictive debt covenants on the Company’s operational flexibility and ability to pay dividends; • the potential effects of hurricanes on the Company’s corporate offices and stations; • the failure or destruction of the internet, satellite systems and transmitter facilities that the Company depends upon to distribute its programming; • disruptions or security breaches of the Company’s information technology infrastructure and information systems; • the loss of key personnel; • the Company’s ability to integrate acquired businesses and achieve fully the strategic and financial objectives related thereto and their impact on the Company’s financial condition and results of operations; • the fact that the Company is controlled by the Beasley family, which creates difficulties for any attempt to gain control of the Company; and • other economic, business, competitive, and regulatory factors affecting the businesses of the Company, including those set forth in the Company’s filings with the SEC. Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. We do not intend, and undertake no obligation, to update any forward-looking statement. Financial Statement Presentation The following discussion provides a brief description of certain key items that appear in our financial statements and general factors that impact these items. Net Revenue. Our net revenue is primarily derived from the sale of commercial spots to advertisers directly or through national, regional or local advertising agencies. Revenues are reported at the amount we expect to be entitled to receive under the contract. Local revenue generally consists of commercial advertising sales, digital advertising sales and other sales to advertisers in a station’s local market, either directly to the advertiser or through the advertiser’s agency. National revenue generally consists of commercial advertising sales through advertiser agencies. National advertiser agencies generally purchase advertising for multiple markets. National sales are generally facilitated by our national representation firm, which serves as our agent in these transactions. Our net revenue is generally determined by the advertising rates that we are able to charge and the number of advertisements that we can broadcast without jeopardizing listener levels. Advertising rates are primarily based on the following factors: • a station’s audience share in the demographic groups targeted by advertisers as measured principally by periodic reports issued by Nielsen Audio; • the number of stations, as well as other forms of media, in the market competing for the attention of the same demographic groups; • the supply of, and demand for, radio advertising time; and • the size of the market. Our net revenue is affected by general economic conditions, competition and our ability to improve operations at our radio market clusters. Seasonal revenue fluctuations are also common in the radio broadcasting industry and are primarily due to variations in advertising expenditures by local and national advertisers. Our revenues typically are lowest in the first calendar quarter of the year. In addition, our revenues tend to fluctuate between years, consistent with, among other things, increased advertising expenditures in even-numbered years by political candidates, political parties and special interest groups. This political spending typically is heaviest during the fourth quarter of such years. We use trade sales agreements to reduce cash paid for operating costs and expenses by exchanging advertising airtime for goods or services; however, we endeavor to minimize trade revenue in order to maximize cash revenue from our available airtime. 24 Table of Contents We also continue to invest in digital support services to develop and promote our station websites, applications, and other distribution platforms. We derive revenue from our websites through the sale of advertiser promotions and advertising on our websites and the sale of advertising airtime during audio streaming of our stations over the internet. We also generate revenue from selling third-party digital products and services. Operating Expenses. Our operating expenses consist primarily of programming, engineering, sales, advertising and promotion, and general and administrative expenses incurred at our stations. We strive to control our operating expenses by centralizing certain functions at our corporate offices and consolidating certain functions in each of our market clusters. Critical Accounting Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect reported amounts and related disclosures. We consider an accounting estimate to be critical if: • it involves a significant level of estimation uncertainty; and • 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. Accounts Receivable. We continually evaluate our ability to collect our accounts receivable. 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. We are required to assess the recoverability of our property and equipment whenever an event has occurred that may result in an impairment loss. If such an event occurs, we will compare estimates of related future undiscounted cash flows to the carrying amount of the asset. If the future undiscounted cash flow estimates are less than the carrying amount of the asset, we will reduce the carrying amount to the estimated fair value. The determination of when an event has occurred and estimates of future cash flows and fair value all require management judgment. The use of different assumptions or estimates may result in alternative assessments that could be materially different. We did not identify any triggering events that may have resulted in an impairment loss on our property and equipment in 2023. However, there can be no assurance that impairments of our property and equipment will not occur in future periods. FCC Licenses. As of December 31, 2023, FCC licenses with an aggregate carrying amount of $393.0 million represented 68% of our total assets. We are required to test our FCC licenses for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that our FCC licenses might be impaired. We assess qualitative factors to determine whether it is more likely than not that our FCC licenses might be impaired. 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 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. If the carrying amounts of the FCC licenses exceed their fair value, an impairment loss is recognized in an amount equal to that excess. For the purpose of testing our FCC licenses for impairment, we combine our FCC licenses into reporting units based on our market clusters. Due to an increase in interest rates in 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 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: Revenue growth rates (1.2)% - 1.8% Market revenue shares at maturity 0.4% - 44.7% Operating income margins at maturity 19.7% - 30.4% Discount rate 10.0% 25 Table of Contents 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, 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. The fair values of our FCC licenses were estimated using an income approach. The key assumptions used in the discounted cash flow analyses are as follows: Revenue growth rates (16.5)% - 24.4% Market revenue shares at maturity 0.4% - 45.5% Operating income margins at maturity 19.7% - 29.9% Discount rate 10.0% The carrying amount of our FCC licenses for each reporting unit and the percentage by which fair value exceeded the carrying amount are as follows: Market cluster FCC licenses Excess Atlanta, GA $ 440,300 0.1 % Augusta, GA 4,776,100 — Boston, MA 95,901,400 0.7 Charlotte, NC 44,495,600 1.9 Detroit, MI 25,205,800 5.8 Fayetteville, NC 7,295,100 2.7 Fort Myers-Naples, FL 5,191,700 — Las Vegas, NV 30,145,300 2.3 Middlesex, Monmouth, Morristown, NJ 16,726,200 — Philadelphia, PA 106,737,400 0.9 Tampa-Saint Petersburg, FL 56,092,000 0.6 Goodwill. As of December 31, 2023, goodwill with an aggregate carrying amount of $0.9 million represented 0.2% of our total assets. We are required to test our goodwill for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that our goodwill might be impaired. We assess qualitative factors to determine whether it is necessary to perform a quantitative assessment for each reporting unit. If the quantitative assessment is necessary, we will determine the fair value of each reporting unit. If the fair value of any reporting unit is less than the carrying amount, we will recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. 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 as our reporting units. 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 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: Revenue growth rates (9.3)% - 1.4% Operating income margins 27.9% Discount rate 10.0% 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. Actual results can be materially different from estimates and assumptions. 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, 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. 26 Table of Contents Leases. We are required to determine whether a contract is or contains a lease at inception. Our analysis includes whether the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. This consideration involves judgment with respect to whether we have the right to obtain substantially all of the economic benefits from the use of the identified asset and whether we have the right to direct the use of the identified asset. 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 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. These factors are evaluated based on the facts and circumstances at the time we enter a lease agreement. The lease liabilities and the related right-of-use assets are calculated based on the present value of the lease payments using (1) the rate implicit in the lease or (2) the lessee’s incremental borrowing rate (“IBR”). IBR is defined as the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. See Note 10 to the accompanying financial statements. Supplemental Employee Retirement Plan. The costs and liabilities of the Supplemental Employee Retirement Plan (“SERP”) are determined using actuarial valuations. An actuarial valuation involves making various assumptions that include the discount rate and mortality rates. The discount rate is based on matching the cash flows of the SERP to the FTSE Pension Discount Curve. The mortality assumptions are based on the mortality tables and mortality improvement scales which are selected based on the most recent study of the Society of Actuaries. The SERP is frozen so future employment does not change the benefit amounts. Actual results will differ from results which are estimated based on assumptions. See Note 11 to the accompanying financial statements. Recent Accounting Pronouncements Recent accounting pronouncements are described in Note 2 to the accompanying financial statements. Results of Operations Year Ended December 31, 2023 Compared to the Year Ended December 31, 2022 The following summary table presents a comparison of our results of operations for the years ended December 31, 2022 and 2023, with respect to certain of our key financial measures. The changes illustrated in the table are discussed in greater detail below. This section should be read in conjunction with the financial statements and notes to financial statements included in Item 8 of this report. Results of Operations - Consolidated Year Ended December 31, Change 2022 2023 $ % Net revenue $ 256,381,018 $ 247,109,258 $ (9,271,760 ) -3.6 % Operating expenses 213,236,063 208,247,221 (4,988,842 ) -2.3 % Corporate expenses 18,001,359 18,246,731 245,372 1.4 % FCC licenses impairment losses 23,799,383 89,214,665 65,415,282 274.9 % Goodwill impairment losses 16,253,087 10,582,360 (5,670,727 ) -34.9 % Other impairment losses 12,822,000 — (12,822,000 ) -100.0 % Gain on exchange 3,350,539 — (3,350,539 ) -100.0 % Extinguishment of franchise fee — 6,000,000 6,000,000 — Gain on repurchases of long-term debt 1,131,346 7,807,875 6,676,529 590.1 % Income tax benefit 17,787,434 24,287,366 6,499,932 36.5 % Net loss 42,057,430 75,120,138 33,062,708 78.6 % Results of Operations - Segments 27 Table of Contents Year Ended December 31, Change 2022 2023 $ % Net revenue Audio $ 213,036,307 $ 199,481,868 $ (13,554,439 ) -6.4 % Digital 40,755,164 45,417,296 4,662,132 11.4 % Other 2,589,547 2,210,094 (379,453 ) -14.7 % $ 256,381,018 $ 247,109,258 $ (9,271,760 ) -3.6 % Operating expenses Audio $ 173,011,492 $ 163,608,414 $ (9,403,078 ) -5.4 % Digital 36,398,687 40,844,592 4,445,905 12.2 % Other 3,825,884 3,794,215 (31,669 ) -0.8 % $ 213,236,063 $ 208,247,221 $ (4,988,842 ) -2.3 % Net Revenue. 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 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 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 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. 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. 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. economy. 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. 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 28 Table of Contents 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. economy. 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. On December 22, 2022, we completed an asset exchange with Audacy Nevada, LLC, pursuant to which we agreed to exchange all of the assets used or useful in the operations of KDWN-AM in Las Vegas, NV for all of the assets used or useful in the operations of KXTE-FM in Las Vegas, NV. As a result of the exchange, we recorded a gain on exchange of $3.4 million in 2022. 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. Our effective tax rate was approximately (30)% and (24)% for the year ended December 31, 2022 and 2023, respectively. These rates differ from the federal statutory rate of 21% due to the effect of state income taxes, certain non-taxable income, and certain expenses that are not deductible for tax purposes. Net Loss. Net loss for the year ended December 31, 2023 was $75.1 million compared to a net loss of $42.1 million for the year ended December 31, 2022, as a result of the factors described above. Liquidity and Capital Resources Overview. Our primary sources of liquidity is internally generated cash flow and cash on hand. Our primary liquidity needs have been, and for the next twelve months and thereafter are expected to continue to be, for working capital, debt service, and other general corporate purposes, including capital expenditures and station acquisitions. Historically, our capital expenditures have not been significant. In addition to property and equipment associated with station acquisitions, our capital expenditures have generally been, and are expected to continue to be, related to the maintenance of our office and studio space, the maintenance of our towers and equipment, and digital products and information technology. We have also purchased or constructed office and studio space in some of our markets to facilitate the consolidation of our operations. 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. Secured Notes. 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”). 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 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; pay dividends on, repurchase or make distributions in respect of our capital stock or make other restricted payments; make certain investments or acquisitions; sell, transfer or otherwise convey certain assets; create liens; enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany transfers; consolidate, merge, sell or 29 Table of Contents otherwise dispose of all or substantially all of our assets; enter into transactions with affiliates; prepay certain kinds of indebtedness; and issue or sell stock of our subsidiaries. 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. Such repurchases, redemptions or other transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material. We expect to provide for future liquidity needs through one or a combination of the following sources of liquidity: • internally generated cash flow; • additional borrowings or notes offerings, to the extent permitted under the Indenture governing our Notes; and • additional equity offerings. We believe we will have sufficient liquidity and capital resources to permit us to provide for our liquidity requirements and meet our financial obligations for the next twelve months and thereafter. However, poor financial results or unanticipated expenses could give rise to default under the Notes, additional debt servicing requirements or other additional financing or liquidity requirements sooner than we expect, and we may not secure financing when needed or on acceptable terms. Off-Balance Sheet Arrangements. We did not have any off-balance sheet arrangements as of December 31, 2023. Cash Flows . 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. The changes set forth in the table are discussed in greater detail below. This section should be read in conjunction with the financial statements and notes to financial statements included in Item 8 of this report. Year ended December 31, 2022 2023 Net cash provided by (used in) operating activities $ 11,147,084 $ (4,678,549 ) Net cash provided by (used in) investing activities (14,177,688 ) 6,870,446 Net cash used in financing activities (8,813,385 ) (14,992,629 ) Net decrease in cash and cash equivalents $ (11,843,989 ) $ (12,800,732 ) Net Cash Provided By (Used In) Operating Activities. 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 30 Table of Contents Beasley Broadcasting Management, LLC We lease our principal executive offices in Naples, FL from Beasley Broadcasting Management, LLC, which is held by a trust for the benefit of Caroline Beasley, Bruce G. Beasley, Brian E. Beasley, and other members of the Beasley family. 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 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. Beasley, and other members of the Beasley family. The lease agreement expires on August 31, 2024. Rental expense was $0.2 million for the year ended December 31, 2023. Beasley Family Towers, LLC 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 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. 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. We lease office space for our stations in Fayetteville, NC from BFT. The lease agreement expires on August 31, 2030. Rental expense was $0.1 million for the year ended December 31, 2023. GGB Augusta, LLC We lease land for our stations in Augusta, GA from GGB Augusta, LLC, which is held by a trust for the benefit of Caroline Beasley, Bruce G. Beasley, Brian E. Beasley, and other members of the Beasley family. The lease agreement expires on October 31, 2028. Rental expense was approximately $52,000 for the year ended December 31, 2023. GGB Las Vegas, LLC We lease office space for our stations in Las Vegas, NV from GGB Las Vegas, LLC, which is controlled by members of the Beasley family. The lease agreement expires on December 31, 2028. Rental expense was $0.2 million for the year ended December 31, 2023. Wintersrun Communications, LLC 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. Beasley and other members of the Beasley family and partially owned directly by Bruce G. Beasley and Brian E. Beasley. 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. We lease a tower for one station in Augusta, GA from Wintersrun. The lease agreement expires on October 15, 2025. Rental expense was approximately $31,000 for the year ended December 31, 2023. Quu, Inc. 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. In May 2022, we provided a $250,000 loan to Interactive Life, Inc. that accrues interest at 8.625% per annum with no cash payments due until the loan’s maturity in May 2024. Interactive Life, Inc. is controlled by Mr. Joseph Harb. We currently hold an investment in Quu, Inc., a company that is controlled by Mr. Harb. Repayment of the loan to Interactive Life, Inc. is guaranteed by Mr. Harb with 3,333,334 shares of Class A common stock of Quu, Inc. 31 Table of Contents Inflation 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. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS Not required for smaller reporting companies. 32 Table of Contents