What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2021-02-19 compared with 2020-02-21 · 480 added, 457 removed, 594 unchanged (61% of the section changed)

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Consolidated Balance Sheets as of December 31, 2019 and

Consolidated Statements of Comprehensive Income for the Years Ended December 31,

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31,

2019 and 2020

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(the Company) as of December 31, 2020 and 2019,

the related consolidated statements of comprehensive income, equity, and cash flows for the years then ended, and the related notes and consolidated financial statement schedule (collectively referred to as the financial statements).

our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and the results of its operations and its cash flows for the years then ended, in conformity

with accounting principles generally accepted in the United States of America.

Explanatory Paragraph - Change in Accounting Principle

As discussed in Note 2 to the financial statements, the Company has changed its method of accounting for leases in 2019 due to the adoption of Accounting

Standards Codification No.

the related consolidated statements of comprehensive income (loss), equity, and cash flows for each of the two years in the period ended December 31, 2020, and the related notes and consolidated financial statement schedule (collectively

referred to as the financial statements).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations

and its cash flows for each of the two years in the period ended December 31, 2020, in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These financial statements are the responsibility of the Companys management.

Our responsibility is to express an opinion on the Companys financial

statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in

accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the

purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting.

These financial statements are the

responsibility of the Companys management.

Our responsibility is to express an opinion on the Companys financial statements based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight

Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain

reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial

As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial

Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and

performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the

financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audits also included evaluating the accounting principles used

and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters

communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to

the financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are

not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

FCC Licenses Impairment Assessment Radio Reporting Units

As disclosed in Note 5 to the consolidated financial statements, the Companys consolidated FCC licenses balance was $508.6 million as of

December 31, 2020.

During the year ended December 31, 2020, the Company recorded impairment on FCC licenses of $6.8 million.

Management performs an annual impairment test during the fourth quarter of each year which includes a

qualitative assessment as to whether it is more likely than not that an FCC license is impaired.

This qualitative assessment requires significant judgment when considering the events and circumstances that may affect the estimated fair value of the

FCC licenses.

If there are changes in market conditions, events, or other circumstances that occur during the interim periods that indicate the carrying value of its FCC licenses may be impaired, management determines whether an interim test is

FCC licenses are assessed for recoverability at the market cluster level.

Potential impairment is identified by comparing the fair value of a markets FCC licenses to its carrying value.

Fair value is estimated by management using

the Greenfield method, which is a form of the income approach, assuming a start-up scenario in which the only assets held by an investor are FCC licenses.

Managements cash flow projections for its FCC

licenses included significant judgments and assumptions relating to the market share and profit margin of an average station within a market based upon market size and station type, the forecasted growth rate of each radio market (including

long-term growth rate), and the discount rate.

We considered auditing the impairment of FCC licenses to be a critical audit matter because it

involved a high degree of subjectivity in evaluating managements estimates, judgments and assumptions, significant audit effort due to complexity in the aggregation and evaluation of significant amounts of data and the use of

valuation specialists.

Our audit procedures related to impairment of FCC licenses included the following:

Evaluated managements judgements in their assessment of identifying changes in market conditions, events

or other changes in circumstances that indicate an impairment of FCC licenses may be present;

Tested the completeness, accuracy, appropriateness of aggregation and relevance of underlying data used in the

valuation model based on the Greenfield method;

Evaluated the significant assumptions used by management, including normalized market share and profit margin

of an average station within a market based upon market size and station type, the forecasted growth rate of each radio market (including long-term growth rate), and the discount rate.

This involved evaluating whether the assumptions used by

management were reasonable considering (i) the current and past performance in the market being evaluated, (ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence

obtained in other areas of the audit;

Utilized valuation specialists to assist in evaluating the appropriateness of valuation model used, evaluating

certain assumptions applied in the valuation model, and recalculations of the discounted cash flow schedules.

Goodwill Impairment Test

Boston and Philadelphia Radio Reporting Units

As described in Note 6 to the consolidated financial statements, the Companys consolidated

goodwill balance was $28.6 million as of December 31, 2020.

Management conducts an impairment test on an annual basis.

If actual market conditions are less favorable than those projected by the industry or management, or if events occur,

or circumstances change during the interim periods that indicate the carrying value of its goodwill may be impaired, management may be required to conduct an interim test.

Potential impairment is identified by comparing the fair value of each

reporting unit to its carrying value.

As a result of the impairment test performed on the radio market clusters during the first quarter of 2020, the Company determined that the estimated fair value of each market cluster exceeded the carrying

amount by at least five percent at each market cluster as of March 31, 2020.

Management performed a qualitative assessment and did not identify any triggering events for impairment during subsequent quarters of 2020.

As a result, the Company

did not perform a quantitative test for goodwill during the subsequent quarters of 2020.

Management estimates the fair value of its radio reporting units using a discounted cash flow model.

Managements cash flow projections for its radio

reporting units includes significant judgments and assumptions relating to projected operating profit margin (including revenue and expense growth rates) and the discount rate.

We considered auditing the impairment of goodwill for the Companys Boston and Philadelphia radio

reporting units to be a critical audit matter because it involved a high degree of subjectivity in evaluating managements estimates and judgments, significant audit effort in performing procedures and evaluating evidence related to

managements cash flow projections, including significant assumptions related to projected operating profit margin (including revenue and expense growth rates) and the discount rate.

Our audit procedures related to impairment of goodwill for Boston and Philadelphia radio reporting units included the following:

Evaluated managements judgements in their assessment of identifying changes in market conditions, events

or other changes in circumstances that indicate an impairment of goodwill may be present;

Evaluated managements model for determining the fair value of its radio reporting units;

Tested the completeness, accuracy, and relevance of underlying data used in the discounted cash flow model;

Evaluated the significant assumptions used by management, including projected operating profit margin

(including revenue and expense growth rates) and the discount rate.

This involved evaluating whether the assumptions used by management were reasonable considering (i) the current and past performance in the market being evaluated,

(ii) the consistency with external market and industry data, and (iii) whether these assumptions were consistent with evidence obtained in other areas of the audit;

Utilized valuation specialists to assist in evaluating the appropriateness of the discount rate.

/s/ Crowe LLP

We have served as the Companys auditor

We have served as the Companys auditor since 2006.

Fort Lauderdale, Florida

February 19, 2021

BEASLEY BROADCAST GROUP, INC.

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Total stockholders equity

Noncontrolling interest

Noncontrolling interests

Total liabilities and equity

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BEASLEY BROADCAST GROUP, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

Operating expenses:

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Depreciation and amortization

Change in fair value of contingent consideration

Gain on dispositions

Impairment losses

Gain on dispositions

Other operating (income) expenses, net

Total operating expenses

Operating income

Operating income (loss)

Non-operating income (expense):

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Other income (expense), net

Income before income taxes

Income tax expense

Income before equity in earnings of unconsolidated affiliates

Income (loss) before income taxes

Income tax expense (benefit)

Income (loss) before equity in earnings of unconsolidated affiliates

Equity in earnings of unconsolidated affiliates, net of tax

Net income (loss)

Earnings attributable to noncontrolling interest

Net income attributable to BBGI stockholders

Net income (loss) attributable to BBGI stockholders

Other comprehensive loss:

Unrecognized actuarial gains on postretirement plans (net of income tax expense of $142,435 in

2018 and income tax benefit of $188,505 in 2019)

Reclassification of other comprehensive income due to termination of pension plan (net of income

tax benefit of $261,358)

Comprehensive income

Net income attributable to BBGI stockholders per Class A and B common share:

Unrecognized actuarial losses on postretirement plans (net of income tax benefit of $188,505 in

2019 and $355,662 in 2020)

Comprehensive income (loss)

Net income (loss) attributable to BBGI stockholders per Class A and B common share:

Dividends declared per common share

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Balances as of December 31, 2019

Change in accounting principle

Issuance of common stock

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Other comprehensive loss

Noncontrolling interest created in consolidation

Balances as of December 31, 2020

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Cash flows from operating activities:

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Stock-based compensation

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Depreciation and amortization

Change in fair value of contingent consideration

Gain on dispositions

Impairment losses

Termination of pension plan

Gain on dispositions

Other operating gain

Non-cash interest expense

Amortization of loan fees

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Proceeds from dispositions

Payments for translator licenses

Payments for investments

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Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

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Supplement disclosure of non-cash investing and financing

Class A common stock issued from treasury for debt repayment

Dividends declared but unpaid

Class A common stock returned to treasury stock

Note receivable and accrued interest converted to investment

Class A common stock issued for acquisition

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The Company also now operates an esports segment, however, it does not exceed the thresholds for separate disclosure.

In March 2020, coronavirus disease 2019 (COVID-19) was recognized as a pandemic by the

World Health Organization.

The COVID-19 pandemic has resulted in a widespread health crisis that has adversely affected businesses, economies, and financial markets worldwide, and has caused significant

volatility in U.S.

and international debt and equity markets.

The Company has been impacted by deteriorating general economic conditions, which have caused a downturn in the advertising industry.

The decreased demand for advertising has negatively

impacted its net revenue, and many advertisers have reduced or ceased advertising spend due to the COVID-19 pandemic and its related economic impact.

Specifically, the Company observed a rapid increase in

cancellations and a reduction of new sales beginning midway through the month of March 2020.

The cancellations were broad-based but more severe in industries that were severely impacted by the COVID-19

Advertising sales began to recover near the end of the second quarter of 2020 and continued to recover during the remainder of 2020.

The Company is actively monitoring the COVID-19 pandemic.

this disruption is currently expected to be temporary, there is considerable uncertainty around the duration.

Thus, it is impossible to predict the total impact that it will have on the Company.

If public and private entities continue to implement

restrictive measures, the material adverse effect on the Companys results of operations, financial condition and cash flows could persist.

Beginning in March 2020, the Company 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.

initiatives continued reducing the Companys expenses throughout the remainder of 2020 and the Company expects expense reductions to continue into 2021.

The board of directors also suspended future quarterly dividend payments until it is

determined that resumption of dividend payments is in the best interest of the Companys stockholders.

The COVID-19 pandemic continues to create significant uncertainty and disruption in the global economy and financial markets.

It is reasonably possible that these uncertainties could materially impact the Companys

significant accounting estimates related to, but not limited to, allowance for doubtful accounts, impairment of FCC licenses and goodwill, and determination of

right-of-use assets.

As a result, many of the Companys estimates and assumptions require increased judgment and carry a higher degree of variability and

The Companys estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements.

Summary of Significant Accounting Policies

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The financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States

of America and include the accounts of the Company and its wholly owned subsidiaries and its investment in OutlawsXP, Inc (Outlaws).

The Company holds approximately a 90% economic interest in the Outlaws.

Net assets and results of

operations for Outlaws as of and for the year ended December 31, 2019 are not significant.

All significant inter-company transactions and balances have been eliminated.

of America and include the accounts of the Company and its wholly owned subsidiaries and its investments in OutlawsXP, Inc.

(Outlaws) and Renegades Holdings, Inc.

(Renegades).

The Company holds an approximately 90% economic

interest in Outlaws and an approximately 51% economic interest in Renegades.

Net assets and results of operations for Outlaws and Renegades as of and for the years ended December 31, 2019 and 2020 are not significant.

All significant

inter-company transactions and balances have been eliminated.

Use of Estimates

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(iv) estimates used to determine the

incremental borrowing rate to record lease liabilities and related right-of-use assets (v) the realization of deferred tax assets, and (vi) actuarial

incremental borrowing rate to record lease liabilities and related right-of-use assets (v) the realization of deferred tax assets;

and (vi) actuarial

assumptions related to the SERP.

Actual results and outcomes may differ from managements estimates and assumptions.

Cash Equivalents

Cash and Cash Equivalents

All short-term investments with an original maturity of three months or less are considered to be cash equivalents.

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For the purpose

of testing its licenses for impairment, the Company combines its licenses into reporting units based on its market clusters.

of testing its licenses for impairment, the Company combines its licenses into reporting units based on its radio market clusters.

See Note 5 for changes in the carrying amount of FCC licenses for the years ended December 31, 2019 and 2020.

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

For the purpose of testing its goodwill for impairment, the Company has identified its market clusters and the Outlaws as its reporting units.

for changes in the carrying amount of goodwill for the years ended December 31, 2018 and 2019.

For the purpose of testing its goodwill for impairment, the Company has identified its radio market clusters and the Outlaws as its reporting units.

Note 6 for changes in the carrying amount of goodwill for the years ended December 31, 2019 and 2020.

Other Intangibles

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reduced to the estimated fair value.

Other assets include investments in Quu, Inc.

(Quu) and Renegades Holdings, Inc.

(Renegades).

The Company is considered

to have the ability to exercise significant influence over the operating and financial policies of Quu and Renegades.

Therefore, the investments in Quu and Renegades are accounted for using the equity method.

The Company will recognize its share of

the earnings of Quu and Renegades in the periods for which they are reported.

Any loss in value of the investments that is other than a temporary decline will be recognized.

Other assets also include a noncontrolling interest in AUDIOis which does

not have a readily determinable fair value and therefore is recorded at cost less impairment.

Other assets include an investment in Quu, Inc.

The Company is considered to have the ability to exercise significant

influence over the operating and financial policies of Quu.

Therefore, the investment in Quu is accounted for using the equity method.

The Company will recognize its share of the earnings of Quu in the periods for which it is reported.

value of the investment that is other than a temporary decline will be recognized.

Other assets also include a noncontrolling interest in AUDIOis which does not have a readily determinable fair value and therefore is recorded at cost less

The Company evaluates the investments on a quarterly basis to identify impairment.

When the evaluation indicates that an impairment exists, the Company

will estimate the fair value of the investment and recognize an impairment loss equal to the difference between the fair value and the carrying amount of the investment.

When the evaluation indicates that an impairment exists, the Company will estimate the fair value of the investment and recognize an impairment loss equal

to the difference between the fair value and the carrying amount of the investment.

Debt Issuance Costs

issuance costs are capitalized and amortized over the life of the related debt as interest expense on a straight-line basis which approximates the effective interest method.

Unamortized debt issuance costs are reported as a direct deduction from the

carrying amount of the related debt.

The Company determines whether a contract is or contains a lease at inception.

The term for each lease agreement includes the noncancellable

period specified in the agreement together with (1) the periods covered by options to extend the lease if the Company is reasonably certain to exercise that option, (2) periods covered by an option to terminate if the Company is reasonably

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

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 lessees 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.

Debt issuance costs are capitalized and amortized over the life of the related debt as interest expense on a straight-line basis which

approximates the effective interest method.

Unamortized debt issuance costs are reported as a direct deduction from the carrying amount of the related debt.

determines whether a contract is or contains a lease at inception.

The term for each lease agreement begins on the commencement date and includes the noncancelable period specified in the agreement together with (1) the periods covered by

options to extend the lease if the Company is reasonably certain to exercise that option, (2) periods covered by an option to terminate if the Company is reasonably certain not to exercise that option and (3) period covered by an option to

extend (or not terminate) if controlled by the lessor.

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 lessees 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.

Supplemental Employee Retirement Plan

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Interest and penalties related to unrecognized tax benefits are recorded as incurred as a component of income tax expense.

Comprehensive Income

Comprehensive income consists of net income and other gains and losses affecting equity that, under accounting principles generally accepted in

the United States of America, are excluded from net income including unrecognized net actuarial gains (losses) related to the SERP.

Earnings per Share

net income per share is computed by dividing net income attributable to common stockholders of the Company by the weighted average number of common shares outstanding for the period.

Common shares outstanding include shares of both Class A and

Class B common stock, which have equal rights and privileges except with respect to voting.

Diluted net income per share reflect the potential dilution that could occur if stock options, restricted stock or other contracts to issue common stock

were exercised or converted into common stock and were not anti-dilutive.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other gains and losses affecting equity that, under accounting principles

generally accepted in the United States of America, are excluded from net income (loss) including unrecognized net actuarial gains (losses) related to the SERP.

Earnings (Loss) per Share

Basic net income (loss) per share is computed by dividing net income (loss) attributable to common stockholders of the Company by the weighted

average number of common shares outstanding for the period.

Common shares outstanding include shares of both Class A and Class B common stock, which have equal rights and privileges except with respect to voting.

Diluted net income (loss)

per share reflect the potential dilution that could occur if stock options, restricted stock or other contracts to issue common stock were exercised or converted into common stock and were not anti-dilutive.

When reporting a net loss, the effect of

restrictive stock units and restricted stock is excluded under the treasury stock method as the addition of shares would be anti-dilutive.

Concentrations of Risk

Certain cash deposits with financial institutions may at times exceed FDIC insurance limits.

The radio stations located in Boston, MA, Philadelphia, PA and Tampa-Saint Petersburg, FL collectively contributed 58.8% and 60.7% of the

Companys net revenue in 2018 and 2019, respectively.

The radio stations located in Boston, MA, Detroit, MI, Philadelphia, PA and Tampa-Saint Petersburg, FL collectively contributed 66.3% of the

Companys net revenue in 2020.

The radio stations located in Boston, MA, Philadelphia, PA and Tampa-Saint Petersburg, FL collectively contributed 60.7% of the Companys net revenue in 2019.

Fair Value Measurements

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Acquisitions and Dispositions

On December 23, 2019, the Company completed the sale of certain land in Las Vegas, NV to a third party for $13.5 million.

On December 31, 2020, the Company completed the sale of certain land in Charlotte, NC to a third party for $4.65 million.

of the sale, the Company recorded a gain of $4.4 million in the fourth quarter of 2020.

On December 23, 2019, the Company

completed the sale of certain land in Boca Raton, FL to a third party for $7.1 million.

completed the sale of certain land in Las Vegas, NV to a third party for $13.5 million.

As a result of the sale, the Company recorded a gain of $7.9 million in the fourth quarter of 2019.

On November 13, 2019, the Company created a new entity called OutlawsXP, Inc.

(Outlaws) and holds 80% of the equity of

On December 2, 2019, the Company completed the sale of certain land in Boca Raton, FL to a third party for $7.1 million.

of the sale, the Company recorded a gain of $6.5 million in the fourth quarter of 2019.

On November 13, 2019, the Company

created a new entity called OutlawsXP, Inc.

(Outlaws) and holds 80% of the equity of Outlaws.

The remaining equity was acquired by Renegades Holdings, Inc.

in which the Company holds 45% of the outstanding shares (see Note 8).

On November 14, 2019, Outlaws acquired an esports team, the Houston Outlaws, from Immortals, LLC that

competes in the Overwatch League and domestic and international tournaments.

The acquisition was accounted for as a business combination and included franchise rights and other intangibles (See Note 7).

The acquisition also included goodwill (See

The acquisition of the team was financed with cash from operations and a promissory note to the seller (see Note 10).

in which the Company holds approximately 51% of the outstanding shares (see Note

On November 14, 2019, Outlaws acquired an esports team, the Houston Outlaws, from Immortals, LLC that competes in the Overwatch League and domestic and international tournaments.

The acquisition was accounted for as a

business acquisition and included franchise rights and other intangibles (see Note 7).

The acquisition also included goodwill (see Note 6).

The acquisition of the team was financed with cash from

operations and a promissory note to the seller (the Promissory Note).

On June 30, 2020, the Company entered into an amendment to the Promissory Note that replaced all previous agreements related to consideration and represents the

final amount due to the seller (see Note 10).

Outlaws also assumed a $10.0 million franchise fee payable that will be paid to the esports league over time.

has agreed to a contingent payment of $3.6 million if consideration in excess of a certain amount is paid for a new team to enter the Overwatch League between December 1, 2024 and December 1, 2029.

The Company incurred transaction

costs of $0.4 million.

The franchise fee payable was legally reduced to $6.0 million by the esports league

in December 2020 and the resulting $4.0 million gain is reported in other operating (income) expenses, net in the accompanying consolidated statement of comprehensive income (loss).

The Company incurred transaction costs of $0.4 million.

The acquisition broadened and diversified the Companys revenue base.

The current portion of the franchise fee payable is reported in other current liabilities and the noncurrent portion is reported in other

long-term liabilities in the accompanying consolidated balance sheet as of December 31, 2019.

The results of operations are consolidated in the accompanying consolidated statement of comprehensive income from the acquisition date through

December 31, 2019.

The current portion of the franchise fee payable is reported in other current liabilities, and the noncurrent portion is reported in other long-term liabilities in the

accompanying consolidated balance sheets.

The results of operations are reported in the accompanying consolidated statements of comprehensive income (loss).

The fair value of the franchise rights was estimated using an income approach.

The income approach measures the

expected economic benefits the franchise rights will provide and discounts these future benefits using a discounted cash flow model.

The discounted cash flow model incorporates variables such as revenue, revenue growth rates, operating expense

projections, and a discount rate.

The income approach measures the expected economic benefits the

franchise rights will provide and discounts these future benefits using a discounted cash flow model.

The discounted cash flow model incorporates variables such as revenue, revenue growth rates, operating expense projections, and a discount rate.

The discounted cash flow projection period of ten years was determined to be an appropriate time horizon for the analyses.

If different assumptions or estimates had been used in the income approach, the fair value

of the franchise rights could have been materially different.

If actual results are different from assumptions or estimates used in the discounted cash flow analyses, we may incur impairment losses in the future and they may be material.

was equal to the amount the purchase price exceeded the values allocated to the identifiable intangible assets.

If different assumptions or estimates had been used in the income approach, the fair value of the franchise rights could have

been materially different.

If actual results are different from assumptions or estimates used in the discounted cash flow analyses, the Company may incur impairment losses in the future and they may be material.

Goodwill was equal to the amount the

purchase price exceeded the values allocated to the identifiable intangible assets.

The amount allocated to goodwill is deductible for tax purposes.

The fair value of the promissory note and the assumed franchise fee

payable approximate the carrying value of each item as of the acquisition date.

The fair value of the contingent consideration was not considered material as of the acquisition date.

On October 25, 2019, the Company completed the sale of a radio tower in Tampa, FL and a radio tower in New Jersey to a third party for

$2.4 million.

The fair value of the Promissory Note and the assumed franchise fee payable approximate the carrying

value of each item as of the acquisition date.

On October 25, 2019, the Company completed the sale of a radio tower in Tampa, FL and

a radio tower in New Jersey to a third party for $2.4 million.

As a result of the sales, the Company recorded a gain of $2.0 million in the fourth quarter of 2019.

August 31, 2019, the Company completed the acquisition of substantially all of the assets used to operate WDMK-FM in Detroit from Urban One, Inc.

On August 31, 2019, the Company completed the acquisition of substantially all of the assets used to operate WDMK-FM in Detroit from Urban One, Inc.

for $13.5 million in cash.

The purchase price was

partially financed with $10.0 million in borrowings under the Companys revolving credit facility and partially funded with $3.5 million of cash from operations.

The acquisition

broadened and diversified the Companys local radio broadcasting platform and revenue base in the Detroit radio market.

The acquisition was accounted for as an asset acquisition.

incurred transaction costs of $0.3 million which were capitalized as a component of the assets acquired.

The assets acquired are

summarized as follows:

The purchase price was partially financed with $10.0 million in borrowings under the Companys revolving credit facility and

partially funded with $3.5 million of cash from operations.

The acquisition broadened and diversified the Companys local radio broadcasting platform and revenue base in the Detroit radio market.

The acquisition was accounted for as an

asset acquisition.

The Company incurred transaction costs of $0.3 million which were capitalized as a component of the assets acquired.

The assets acquired are summarized as follows:

Property and equipment

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result of the license cancelation, the Company recorded a gain of $3.1 million in the first quarter of 2019.

On September 27,

2018, the Company completed the acquisition of WXTU-FM in Philadelphia from Entercom Communications Corp.

for $38.0 million in cash.

The purchase price was partially financed with $35.0 million in

borrowings from the Companys term loan credit facility and partially funded with $3.0 million of cash from operations.

On July 19, 2018, the Company also entered into a local marketing agreement (LMA) with Entercom

Communications Corp.

and began operating WXTU-FM on July 23, 2018.

During the term of the LMA, the Company included net revenues and operating expenses, including the associated LMA fee from operating WXTU-FM, in its consolidated financial statements.

The LMA ended on September 27, 2018.

The acquisition broadened and diversified the Companys local radio broadcasting platform and revenue base in the

Philadelphia radio market.

The acquisition was accounted for as a business combination.

The Company incurred transaction costs of

$0.1 million.

The purchase price allocation is summarized as follows:

Property and Equipment

Other intangibles

The fair value of the property and equipment was estimated using cost and market approaches.

equipment for which there are comparable current replacements available were valued on the basis of a cost approach.

The cost approach allowed for factors such as physical depreciation as well as functional and economic obsolescence.

equipment for which an active used market exists, including property for which there is no longer comparable current replacements available but for which there remains an active used market, were valued using a market approach.

The market approach

is based on the selling prices of similar assets on the used market.

As few sales reflect identical assets, the selling prices of similar assets was utilized with adjustments made for any differences such as age, condition, and options.

assumptions or estimates had been used in the cost or market approaches, the fair value of the property and equipment could have been materially different.

The fair value of the FCC license was estimated using an income approach.

The income approach measures the expected economic benefits the

licenses provide and discounts these future benefits using discounted cash flow analyses.

The discounted cash flow analyses assume that each license is held by a hypothetical start-up radio station, and the

value yielded by the discounted cash flow analyses represents the portion of the radio stations value attributable solely to its license.

The discounted cash flow model incorporates variables such as radio market revenues;

the projected growth

rate for radio market revenues;

projected radio market revenue share;

projected radio station operating income margins;

and a discount rate appropriate for the radio broadcasting industry.

The variables used in the analyses reflect historical radio

station and market growth trends, as well as anticipated radio station performance, industry standards, and market conditions.

The discounted cash flow projection period of ten years was determined to be an appropriate time horizon for the analyses.

Stable market revenue share and operating margins are expected at the end of year three (maturity).

If different assumptions or estimates had been used in the income approach, the fair value of the FCC licenses could have been materially different.

If actual results are different from assumptions or estimates used in the discounted cash flow analyses, we may incur impairment losses in the future and they may be material.

The key assumptions used in the valuation of the FCC licenses are as follows:

Revenue growth rates

Market revenue shares at maturity

Operating income margins at maturity

Discount rate

Goodwill was equal to the amount the purchase price exceeded the values allocated to the tangible and

identifiable intangible assets.

The $10.1 million allocated to goodwill is deductible for tax purposes.

The following unaudited pro

forma information for the year ended December 31, 2018 assumes that the acquisition of WXTU-FM in Philadelphia had occurred on January 1, 2018.

This unaudited pro forma information has been prepared

based on estimates and assumptions, which management believes are reasonable, and are not necessarily indicative of what would have occurred had the acquisition been completed on January 1, 2018 or of results that may occur in the future.

Operating income

Basic and diluted net income per share

Property and Equipment

Property and equipment is comprised of the following:

5 unchanged sentences

Less accumulated depreciation and amortization

The Company recorded depreciation and amortization expense of $6.6 million and $7.3 million for the

The Company recorded depreciation expense of $6.9 million and $7.4 million for the

years ended December 31, 2019 and 2020, respectively.

1 unchanged sentence

Balance as of January 1, 2019

Acquisitions of translator licenses

Business acquisition (see Note 3)

Balance as of December 31, 2018

Asset acquisition (see Note 3)

1 unchanged sentence

Balance as of December 31, 2019

The Company performed its annual impairment test for its FCC licenses as of November 30, 2019.

result of the impairment test, the Company recorded impairment losses of $12.4 million related to the FCC licenses in its Atlanta, GA and West Palm Beach-Boca Raton, FL market clusters for the year ended December 31, 2019.

The impairment

losses were primarily due to a reduced share of projected revenue in these markets.

The Company believes the impairment losses are indicative of trends in the industry and are not unique to the Company or its operations.

The fair value of the FCC license in Atlanta, GA and in West Palm Beach-Boca Raton, FL market clusters was estimated using an income approach.

The income approach is based upon discounted cash flow analyses incorporating variables such as projected radio market revenues, projected growth rate for radio market revenues, projected radio market revenue share, projected radio station

operating income margins, and a discount rate appropriate for the radio broadcasting industry.

Impairment losses

Balance as of December 31, 2020

Licenses are tested for impairment on an annual basis, or more frequently if events or changes in

circumstances indicate that the Companys licenses might be impaired.

The Company assesses qualitative factors to determine whether it is more likely than not that its licenses are impaired.

If the Company determines it is more likely than not

that its licenses are impaired, then the Company is required to perform a quantitative impairment test.

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

If the carrying amounts of

the licenses exceed their fair value, an impairment loss is recognized in an amount equal to that excess.

For the purpose of testing its licenses for impairment, the Company combines its licenses into reporting units based on its radio market

Due to the impact of the COVID-19 pandemic on the U.S.

economy, the Company tested its

FCC licenses for impairment during the first quarter of 2020.

As a result of the quantitative impairment test, the Company recorded impairment losses of $6.8 million related to the FCC licenses in its Atlanta, GA, Las Vegas, NV,

Middlesex-Monmouth-Morristown, NJ, West Palm Beach-Boca Raton, FL, and Wilmington, DE radio market clusters.

The impairment losses were primarily due to a decrease in projected revenue in these markets due to the impact of the COVID-19 pandemic and an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of the FCC licenses due to certain risks specifically associated with the Company and the

radio broadcasting industry.

The fair values were estimated using an income approach.

The income approach is based upon discounted cash flow analyses incorporating variables such as projected radio market revenues, projected growth rate for radio

market revenues, projected radio market revenue shares, projected radio station operating income margins, and a discount rate appropriate for the radio broadcasting industry.

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

Revenue growth rates

(14.1)% - 7.9%

Market revenue shares at maturity

Operating income margins at maturity

26.5% - 35.4%

Discount rate

The Company did not identify any triggering events for impairment during the second quarter of 2020.

The Company elected to perform the quantitative impairment test for its FCC licenses in all markets during the third quarter of 2020.

result of the quantitative impairment test performed as of September 30, 2020, the Company recorded no impairment losses related to its FCC licenses in any of its reporting units.

The fair values were estimated using the income approach.

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

Revenue growth rates

Market revenue shares at maturity

Operating income margins at maturity

19.5% - 33.3%

Discount rate

The Company did not identify any triggering events for impairment during the fourth quarter of 2020.

On December 31, 2020, the Company completed the sale of certain land in Charlotte, NC to a third party for $4.65 million.

result of the sale, the Company no longer utilizes one FCC license in that market.

Therefore, the carrying amount of $2.2 million was recorded in impairment losses during the fourth quarter of 2020.

The Company performed its annual impairment test for its FCC licenses in 2019 as of

November 30, 2019.

As a result of the impairment test, the Company recorded impairment losses of $12.4 million related to the FCC licenses in its Atlanta, GA and West Palm Beach-Boca Raton, FL radio market clusters for the year ended

December 31, 2019.

The impairment losses were primarily due to a reduced share of projected revenue in these markets.

The Company believed the impairment losses were indicative of trends in the industry and are not unique to the Company or its

The fair value of the FCC license in Atlanta, GA and in West Palm Beach-Boca Raton, FL radio market clusters was estimated using the income approach.

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

4 unchanged sentences

Discount rate

Changes in the carrying amount of goodwill for the years ended December 31, 2018 and 2019 are as follows:

There were no changes in the carrying amount of goodwill for the year ended December 31, 2020.

Changes in the carrying amount of goodwill

for the year ended December 31, 2019 are as follows:

Balance as of January 1, 2019

1 unchanged sentence

Balance as of December 31, 2019

Business acquisition (see Note 3)

Balance as of December 31, 2019

Other Intangibles

1 unchanged sentence

Advertiser relationships

Assembled workforce

Franchise rights

Sponsorship base

Sports program rights

Other intangibles with indefinite lives

1 unchanged sentence

Advertiser relationships

Advertiser lists

Assembled workforce

Franchise rights

Sponsorship base

Sports program rights

Other intangibles with indefinite lives

The Company recorded amortization expense of $0.5 million for each of the years ended December 31,

2018 and 2019.

The Company recorded amortization expense of $0.5 million and $3.5 million for the years ended

December 31, 2019 and 2020, respectively.

Estimated future amortization expense related to intangible assets subject to amortization for the next five years and thereafter is as follows:

On August 22, 2019, the Company contributed an additional $1.5 million in cash to Quu, Inc.

(Quu), a technology company,

in exchange for an additional 10,000,000 shares.

On August 22, 2019, the Company contributed an additional $1.5 million in cash to Quu in exchange for an additional 10,000,000

The Company also received a warrant to acquire 16,949,306 shares of Quu common stock that terminates on August 22, 2029.

As a result of the additional investment, the Company holds approximately

35% of the outstanding shares of Quu.

On August 22, 2019, the Company adjusted the initial investment to fair value and recognized a loss of $0.1 million.

As of December 31, 2019, the carrying amount of the investment in Quu is

$2.2 million.

As a result of the additional investment, the Company holds approximately 35% of the outstanding shares of Quu.

August 22, 2019, the Company adjusted the initial investment to fair value and recognized a loss of $0.1 million.

The Companys share of earnings from Quu is reported in equity in earnings of unconsolidated affiliates, net of tax in

the accompanying consolidated statements of comprehensive income (loss) for the years ended December 31, 2019 and 2020.

The carrying amount of the investment in Quu was $2.2 million and $2.1 million as of December 31, 2019 and

2020, respectively.

On March 1, 2019, the Company (i) issued 235,296 shares of Class A common stock with a fair value of

2 unchanged sentences

The Company acquired an additional 416,666 shares in the third quarter of 2019 for $0.5 million in cash.

As of December 31, 2019, the Company holds approximately 45% of the outstanding shares

As of December 31, 2019, the Company held approximately 45% of the outstanding shares

of Renegades and the carrying amount of the investment in Renegades is $5.7 million.

1 unchanged sentence

As a result of the additional investment in

January 2020, the Company is currently evaluating if control was obtained and will finalize its conclusion in the first quarter of 2020.

The Companys share of earnings from Quu and Renegades is reported in equity in earnings of unconsolidated affiliates, net of tax in the

accompanying consolidated statement of comprehensive income for the year ended December 31, 2019.

January 2020, the Company obtained control of Renegades and consolidated the accounts of Renegades in the accompanying financial statements as of and for the year ended December 31, 2020.

Other Current Liabilities

1 unchanged sentence

Accrued payroll expenses

Income taxes payable

Deferred revenue

Income taxes payable

Trade sales payable

Franchise fee payable

Dividends payable

Trade sales payable

Deferred rent

Other accrued expenses

6 unchanged sentences

Less current installments

As of December 31, 2019, the credit facility consisted of a term loan facility with a remaining balance

of $239.0 million and a revolving credit facility with an outstanding balance of $11.0 million and a maximum commitment of $20.0 million.

As of December 31, 2019, the Company had $9.0 million in available commitments under its

revolving credit facility.

At the Companys option, the credit facility may bear interest at either (i) the London Interbank Offered Rate (LIBOR) plus a margin of 4.0% or (ii) the base rate plus a margin of 3.0%.

interest rate for the term loan is subject to a 1% floor and the base rate is subject to a 2% floor.

Interest payments are, for loans based on LIBOR, due at the end of each applicable interest period unless the interest period is longer than three

months, in which case they are due at the end of each three month period.

Interest payments for loans based on the base rate are due quarterly.

The revolving credit facility carried interest, based on LIBOR, at 5.8% as of December 31, 2019 and

matures on November 17, 2022.

The term loan carried interest, based on LIBOR, at 5.8% as of December 31, 2019 and matures on November 1, 2023.

On August 31, 2019, the Company borrowed $10.0 million under its revolving credit

The proceeds were used for the acquisition of substantially all of the assets used to operate WDMK-FM in Detroit.

As of December 31, 2018, the credit facility consisted of a term loan with a remaining balance of $252.0 million and a revolving

credit facility with a maximum commitment of $20.0 million.

On February 2, 2021, the Company 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, commencing on August 1, 2021.

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.

The Company used the net proceeds from the Notes, to refinance the credit facility and the Amended Promissory Note and to repay the loan from Mr.

George Beasley (see Note 18) and

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 otherwise dispose of all or substantially all of its assets;

enter into transactions with affiliates;

prepay certain kinds of

indebtedness;

and issue or sell stock of its subsidiaries.

Current installments of long-term debt have been updated as of December 31, 2020 to reflect the subsequent refinancing of long-term debt.

As of December 31, 2019, the credit facility consisted of a term loan facility with a remaining balance of $239.0 million and a

revolving credit facility with an outstanding balance of $11.0 million and a maximum commitment of $20.0 million.

The term loan facility and revolving credit facility carried interest, based on LIBOR, at 5.8% as of December 31, 2019.

The credit agreement requires mandatory prepayments equal to 50% of Excess Cash Flow (as defined in the credit agreement) when the

Companys Total Leverage Ratio (as defined in the credit agreement) is greater than 3.5x;

mandatory prepayments equal to 25% of Excess Cash Flow when the Total Leverage Ratio is less than or equal to 3.5x but greater than 3.0x;

and no mandatory

prepayments when the Total Leverage Ratio is less than or equal to 3.0x.

Mandatory prepayments of Excess Cash Flow are due 95 days after year end.

The credit agreement also requires mandatory prepayments for defined amounts from net proceeds of

asset sales, net insurance proceeds, and net proceeds of debt issuances.

The credit agreement requires the Company to comply with certain

financial covenants which are defined in the credit agreement.

These financial covenants include a First Lien Leverage Ratio that will be tested at the end of each quarter.

The maximum First Lien Leverage Ratio is 5.75x for December 31, 2019

and 5.25x for March 31, 2020 and thereafter.

The credit facility is secured by substantially all assets of the Company and its

subsidiaries and is guaranteed jointly and severally by the Company and its subsidiaries.

If the Company defaults under the terms of the credit agreement, the Company and its subsidiaries may be required to perform under their guarantees.

December 31, 2019, the maximum amount of undiscounted payments the Company and its applicable subsidiaries would have been required to make in the event of default was $250.0 million.

The guarantees for the credit facility expire on

November 17, 2022 for the revolving credit facility and on November 1, 2023 for the term loan facility.

Failure to comply with

financial covenants, scheduled interest payments, scheduled principal repayments, or any other terms of the credit agreement could result in the acceleration of the maturity of the Companys outstanding debt, which could have a material adverse

effect on the Companys business or results of operations.

As of December 31, 2019, the Company was in compliance with all applicable financial covenants under the credit agreement.

On November 14, 2019, Outlaws issued a promissory note for $16.5 million to the seller for partial acquisition of an esports team

(see Note 3).

The note has a remaining balance of $13.5 million as of December 31, 2019 and bears interest at 5% per annum.

Interest is payable quarterly in arrears.

Principal payments are due each month for the first quarter of 2020 and

each quarter thereafter until repaid in full on December 31, 2021.

The aggregate scheduled principal repayments of the credit

facility and promissory note for the next four years are as follows:

The Company leases office space in several markets.

Some leases are for the entire building, while others are for certain office space in a

The Company also rents land beneath a building owned by the Company in Augusta, GA.

The Company leases radio towers for the

majority of its radio stations.

Leases for FM radio stations are generally to install broadcast equipment on a radio tower and in a transmitter building adjacent to the radio tower.

Leases for AM radio stations are generally for the entire radio

tower array and the adjacent transmitter building.

The Company also leases tower space to install translator equipment.

Certain rental

agreements for office space and radio towers contain non-lease components such as common area maintenance and utilities.

The Company elected to apply the practical expedient that permits lessees to make an

accounting policy election to account for each separate lease component of an office space and radio tower lease contract and its associated non-lease components as a single lease component.

Certain rental

agreements for office space and radio towers also include taxes and insurance which are not considered lease components.

Consideration for office space and radio tower leases generally includes monthly payments

with either a fixed annual increase or a variable annual increase based on a consumer price index.

Leases with variable annual increases based on a consumer price index are initially measured using the index at the commencement date.

changes to variable increases based on a consumer price index will be recognized in the statement of operations in the period of change.

The lease term begins at the commencement date and is determined on that date based on the noncancelable term of

the lease, together with periods covered by an option to extend the lease if the Company is reasonably certain to exercise that option.

When evaluating whether the Company is reasonably certain to exercise an option to extend the lease, the Company

is required to assess all relevant factors that create an economic incentive for the Company to exercise the extension.

The Company rents

certain office equipment, such as copiers, in several markets.

Consideration for office equipment leases generally includes fixed monthly payments for the lease term.

The lease term begins at the commencement date and is determined on that date

based on the noncancelable term of the lease.

Office equipment leases generally do not include options to extend the lease.

received several vehicles through acquisitions that have completed the original lease term and are now leased on a month to month basis.

The vehicles are expected to be acquired or returned to the lessor within twelve months.

The Company has made an

accounting policy election to not record leases with a term of 12 months or less on its balance sheet.

Instead, the Company recognizes lease payments as an expense on a straight-line basis over the lease term.

The various discount rates used to calculate lease liabilities and

right-of-use assets are based on the Companys incremental borrowing rate due to the rate implicit in the leases being not readily determinable.

The Companys

incremental borrowing rate is the rate of interest that the Company 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.

The Company used the current

borrowing rate on its credit facility, adjusted for the effects of collateralization, to determine the various rates it would pay to finance similar transactions over similar time periods.

The Company leases certain office space and radio towers from related parties.

The current lease expiration dates range from December 2020

through December 2038, and annual rental expense ranges from $11,000 to $0.2 million.

Related party right-of-use assets and lease liabilities are included in the

amounts reported on the accompanying balance sheet as of December 31, 2019 and future minimum payments for related party leases are included in the tables below.

See Note 18 for further information regarding related party leases.

The Company elected to apply a package of practical expedients that allows it not to reassess (i) whether any expired or existing

contracts are or contain leases, (ii) lease classification for any expired or existing leases, and (iii) initial direct costs for any expired or existing leases.

Certain amounts related to finance leases previously reported in the 2018 financial statements have been reclassified to conform to the 2019

presentation.

The following table summarizes lease information as of and for the year ended December 31, 2019:

On June 30, 2020, the Company entered into the Amendment with certain of its lenders.

The Amendment amended and modified the credit

agreement to, among other things, (i) increase the interest rate applicable to the term loans and revolving credit facility by 25 basis points per annum, (ii) add fees of 300 basis points payable on December 31, 2021 and 150 basis

points payable on December 31, 2022, (provided the credit agreement was not refinanced prior to such time), (iii) impose additional reporting requirements, (iv) revise the Excess Cash Flow prepayment requirement such that when the Total

Leverage Ratio was greater than 4.5x, 75% of Excess Cash Flow must be prepaid, with such prepayment amounts stepping down to 50%, 25% and 0% upon achievement of certain Total Leverage Ratio milestones, and (v) reduce the flexibility to incur

certain additional indebtedness, liens and investments and make certain restricted payments, subject to the achievement of certain leverage-based milestones.

In connection with the Amendment, the Company recorded a loss on modification of long-term

debt of $2.8 million during the second quarter of 2020.

Additionally, the Amendment modified the financial covenant to remove the

maximum First Lien Leverage Ratio previously tested quarterly through the fiscal quarter ended March 31, 2020.

In its place, the Amendment added (i) a minimum liquidity covenant of $8.5 million (the Minimum Liquidity

Amount), which was to be tested every other week until the Total Leverage Ratio was less than 5.0x, (ii) a minimum EBITDA (as defined in the credit agreement, as amended by the Amendment) covenant, which was to be tested monthly through

June 30, 2021 and (iii) a maximum First Lien Leverage Ratio covenant, which was to be tested quarterly beginning with the fiscal quarter ending September 30, 2021.

The Amendment also modified the definition of Consolidated EBITDA to

remove certain add-backs with respect to the calculation of Consolidated EBITDA and EBITDA for financial covenants and other similar calculations and reduced the amount of cash that could be netted for the

calculation of the First Lien Leverage Ratio for purposes of testing the First Lien Leverage Ratio financial covenant, when applicable.

As of December 31, 2020, the credit facility consisted of a term loan facility with a remaining balance of $238.0 million and a

revolving credit facility with an outstanding balance of $20.0 million and a maximum commitment of $20.0 million.

As of December 31, 2020, the Company had no available commitments under its revolving credit facility.

Following the

entry into the Amendment as described above, at the Companys option, the credit facility bore interest at either (i) the London Interbank Offered Rate (LIBOR) plus a margin of 4.25% or (ii) the base rate (as defined in

the credit agreement) plus a margin of 3.25%.

The LIBOR interest rate for the term loan was subject to a 1% floor and the base rate was subject to a 2% floor for the term loan facility and a 0% floor for the revolving credit facility.

payments were, for loans based on LIBOR, due at the end of each applicable interest period unless the interest period was longer than three months, in which case they were due at the end of each three-month period.

Interest payments for loans based

on the base rate were due quarterly.

The revolving credit facility carried interest, based on LIBOR, at 4.4% as of December 31, 2020.

The term loan carried interest, based on LIBOR, at 5.25% as of December 31, 2020.

The credit facility was

secured by substantially all assets of the Company and its subsidiaries and was guaranteed jointly and severally by the Company and its subsidiaries.

As of December 31, 2020, the maximum amount of undiscounted payments the Company and its

applicable subsidiaries would have been required to make in the event of default was $258.0 million.

As noted above, the credit facility was repaid on February 2, 2021, using a portion of the proceeds from the Notes offering.

Also, as a condition to entering into the Amendment, George Beasley, the Companys Chairman, provided a $5.0 million loan to the

Company that accrued payment-in-kind interest at 6% per annum with no cash payments due until the loans maturity in December 2023.

Beasley and GGB Family

Limited Partnership also each entered into standby letters of credit in combined aggregate face amount of $5.0 million in favor of U.S.

Bank, National Association for the benefit of the Company as a source of backup liquidity in the event that

the Company failed to maintain the Minimum Liquidity Amount.

As noted above, the loan was repaid on February 2, 2021, using a portion of the proceeds from the Notes offering.

On November 14, 2019, the Company acquired a majority interest in an esports team and issued the Promissory Note for $16.5 million

to the seller.

The Promissory Note had a remaining balance of $13.5 million as of December 31, 2019.

On June 30, 2020, the Company entered into an amendment to the Promissory Note (as amended, the Amended Promissory Note)

applicable to the remaining balance of $10.0 million.

The Amended Promissory Note bore cash-pay interest at 5% per annum payable quarterly in arrears and additional payment-in-kind interest at 10% per annum.

On July 8, 2020, the Company issued an initial stock payment of 1,276,596 shares of Class A common stock at a fixed price of $2.35 per share that reduced

the principal amount of the Amended Promissory Note by $2.25 million.

The shares were issued at $1.99 per share and the $0.3 million difference between the fair value of the shares and the principal reduction was recorded as additional

interest expense.

For subsequent stock issuances, which were scheduled to begin on June 30, 2021, the principal reduction amount would have been the lesser of (i) the value of the stock issued based on

20-day moving average on the day prior to issuance or (ii) the principal reduction amount, which was 50% of the value of the stock based on a fixed price of $2.35 per share.

As noted above,

the Amended Promissory Note was repaid on February 2, 2021, using a portion of the proceeds from the Notes offering.

The Company leases office space, radio towers and office equipment.

Discount rates are based on the Companys incremental borrowing rate

due to the rate implicit in the leases being not readily determinable.

The Company used the current borrowing rate on its credit facility, adjusted for the effects of collateralization, to determine the various rates it would pay to finance similar

transactions over similar time periods.

The following table summarizes lease information:

Year ended December 31,

Operating lease cost

1 unchanged sentence

Amortization of

right-of-use assets

Interest on lease liabilities

right-of-use asset

Interest on lease liability

Short-term lease cost

2 unchanged sentences

Operating cash flows from operating leases

Operating cash flows from finance leases

Financing cash flows from finance leases

Operating cash flows from finance lease

Financing cash flows from finance lease

assets obtained in exchange for new operating lease liabilities

1 unchanged sentence

Weighted-average remaining lease term operating leases

Weighted-average remaining lease term finance leases

Weighted-average remaining lease term finance lease

Weighted-average discount rate operating leases

Weighted-average discount rate finance leases

As of December 31, 2019, future minimum payments for operating and finance leases for

the next five years and thereafter are summarized as follows:

Weighted-average discount rate finance lease

As of December 31, 2020, future minimum payments for operating and finance leases for the next five years

and thereafter are summarized as follows:

Total lease payments

1 unchanged sentence

Present value of lease liabilities

As of December 31, 2018, future minimum payments for operating and finance leases for the next five years

and thereafter were summarized as follows:

Employee Benefit Plans

4 unchanged sentences

However, the Internal Revenue Code limited contributions to $19,000 and $19,500 (or $25,000 and $26,000 if aged 50 years or older) in 2019 and 2020, respectively.

matching contributions have been made to the defined contribution plan in 2018 and 2019.

matching contributions were made to the defined contribution plan in 2019 and 2020.

Supplemental Employee Retirement Plan

The benefit obligations related to the frozen SERP of $9.0 million and $9.7 million are reported in other long-term

liabilities in the consolidated balance sheets as of December 31, 2018 and 2019, respectively.

The Company contributed $0.4 million to the SERP in both 2018 and 2019.

Defined Benefit Plan

Effective May 31, 2017, the Company terminated the Greater Media, Inc.

Pension Plan (the Pension Plan).

In January 2018, a

payment of $52.0 million was made from the trust to an insurance company to purchase annuities for the remaining participants who elected to receive annuity payments.

As a result of the termination, the Company recognized a $1.0 million

gain that was recorded in corporate expenses for the year ended December 31, 2018.

This completed the recognition in earnings of the amount related to the Pension Plan that remained in accumulated other comprehensive income in the prior year.

The Company contributed $0.2 million to the Pension Plan in 2018.

The following tables summarize the SERP as of and for the year

ended December 31, 2019:

The benefit obligations related to the frozen SERP of $9.7 million and $10.8 million are reported in other long-term liabilities in

the consolidated balance sheets as of December 31, 2019 and 2020, respectively.

The Company contributed $0.4 million and $0.5 million to the SERP in 2019 and 2020, respectively.

The SERP is summarized as follows:

Year ended December 31,

Change in Projected Benefit Obligation

1 unchanged sentence

Interest cost

Actuarial (gain) loss

Actuarial loss

Benefits paid

6 unchanged sentences

Funded status

Unrecognized net actuarial (gain) loss

Unrecognized net actuarial loss

Cumulative employer contributions in excess of the net periodic pension cost

4 unchanged sentences

Amounts Recognized in Accumulated Other Comprehensive Income

Net actuarial loss (gain)

Net actuarial loss

Total (before tax effects)

10 unchanged sentences

Other Changes in Plan Assets and Benefit Obligations Recognized in Other Comprehensive

Net actuarial (gain) loss

Net actuarial loss

Total recognized in other comprehensive income (before tax effects)

12 unchanged sentences

Estimated contributions for 2021

The following tables summarize the Pension Plan and SERP as of and for the year ended December 31, 2018:

Change in Projected Benefit Obligation

Benefit obligation at beginning of year

Interest cost

Actuarial (gain) loss

Benefits paid

Benefit obligation at end of year

Change in Plan Assets

Fair value of plan assets at beginning of year

Actual return on plan assets

Employer contribution

Benefits paid

Fair value of plan assets at end of year

Funded status

Unrecognized net actuarial (gain) loss

Cumulative employer contributions in excess of the net periodic pension cost

Amounts Recognized in the Statement of Financial Position

Current liabilities

Noncurrent liabilities

Net amount recognized

Amounts Recognized in Accumulated Other Comprehensive Income

Net actuarial loss (gain)

Total (before tax effects)

Information for Pension Plans with an Accumulated Benefit Obligation in excess of Plan

Projected benefit obligation

Accumulated benefit obligation

Weighted-average assumptions for Disclosure

Discount rate

Net periodic benefit cost

Interest cost

Recognized actuarial (gain) loss due to settlements

Net periodic benefit cost

Other Changes in Plan Assets and Benefit Obligations Recognized in Other

Comprehensive Income

Net actuarial (gain) loss

Recognized actuarial (gain) loss due to settlements

Total recognized in other comprehensive income (before tax effects)

Total recognized in net benefit cost and other comprehensive income (before tax effects)

Amounts Expected to be Recognized in Net Periodic Cost in the Coming

(Gain) loss recognition

Prior service cost recognition

Net initial obligation (asset) recognition

Weighted-average assumptions used to determine Net Periodic Benefit

Discount rate

Expected return on plan assets

Stockholders Equity

The Company has two classes of common stock:

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of Class A common stock are entitled by class vote, exclusive of other stockholders, to elect two of the Companys directors, with each Class A share being entitled to one vote.

In the election of the other six directors and all other

matters submitted to the stockholders for a vote, the holders of Class A shares and Class B shares shall vote as a single class, with each Class A share being entitled to one vote and each Class B share entitled to ten votes.

The Companys credit agreement permits it to repurchase sufficient shares of its common stock to fund withholding taxes in

connection with the vesting of restricted stock, subject to compliance with financial covenants, up to an aggregate amount of $2.5 million per year.

In the election of the other seven directors and all

other matters submitted to the stockholders for a vote, the holders of Class A shares and Class B shares shall vote as a single class, with each Class A share being entitled to one vote and each Class B share entitled to ten

From time to time, the Company repurchases sufficient shares of its common stock to fund withholding taxes in connection with the

vesting of restricted stock units and shares of restricted stock.

The Company paid $0.1 million to repurchase 37,106 shares in 2020.

The Companys credit agreement restricts its ability to pay cash dividends and to repurchase additional shares of its common stock.

credit agreement does permit, however, (i) dividends of up to an aggregate amount of $7.5 million each year if its Total Leverage Ratio is greater than 3.5x and up to an aggregate amount of $10.0 million each year if its Total

Leverage Ratio is less than or equal to 3.5x, (ii) an amount equal to its excess cash flow each year that is not required to prepay the credit agreement, subject to maintaining a Total Leverage Ratio of no greater than 3.75x and

(iii) unlimited dividends each year if its Total Leverage Ratio is less than 3.5x and its First Lien Leverage Ratio is less than 2.5x.

The Company paid cash dividends of $5.5 million in 2019 and $2.8 million in 2020.

December 9, 2019, the Company declared a cash dividend of $0.05 per share on its Class A and Class B common stock.

The dividend of $1.4 million in the aggregate was paid on January 10, 2020, to stockholders of record on

December 31, 2019.

However, in response to the COVID-19 pandemic, the board of directors suspended future quarterly dividend payments until it is determined that resumption of dividend payments is in the best interest of the Companys stockholders.

addition, the Indenture governing the Notes limits the ability of the Company to pay dividends.

Revenue is comprised of the following:

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Other revenue

The Company recognizes revenue when it satisfies a performance obligation under a contract with an advertiser.

The Company recognizes revenue when it satisfies a performance obligation under a contract

with an advertiser.

The transaction price is allocated to performance obligations based on executed contracts which represent relative standalone selling prices.

Payment is generally due within 30 days although certain advertisers are required to pay in advance.

Payment is generally due within 30 days although certain advertisers are required to

pay in advance.

Revenues are reported at the amount the Company expects to be entitled to receive under the contract.

The Company has elected to use the practical expedient to expense sales commissions as incurred.

Payments received from advertisers before the

performance obligation is satisfied are recorded as deferred revenue in the balance sheet.

Payments received from advertisers

before the performance obligation is satisfied are recorded as deferred revenue in the balance sheet.

Substantially all deferred revenue is recognized within twelve months of the payment date.

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Revenue from the sale of third-party products is recognized over time as the digital items are used for advertising content and impression targets are met each month.

Other revenue includes revenue from concerts, promotional events, talent fees and other miscellaneous items.

Revenue is generally recognized

when the event is completed, as the promotional events are completed, or as the talent services are completed.

Other revenue includes revenue from esports, concerts, promotional events, talent fees and other miscellaneous items.

Revenue is generally

recognized when the event is completed, as the promotional events are completed, or as the talent services are completed.

Stock-Based Compensation

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A summary of restricted stock unit activity is presented below:

Weighted-Average

Grant-Date Fair

Unvested as of January 1, 2019

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A summary of restricted stock activity is presented below:

Weighted-Average

Grant-Date Fair

Unvested as of January 1, 2019

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That cost is expected to be recognized over a weighted-average period of 2.8 years.

Income tax expense is as follows:

Income tax expense (benefit) is as follows:

Year ended December 31,

Income tax expense differs from the amounts that would result from applying the federal statutory rate of 21%

to the Companys income before taxes as follows:

Income tax expense (benefit) differs from the amounts that would result from applying the federal statutory

rate of 21% to the Companys income (loss) before taxes as follows:

Year ended December 31,

Expected tax expense

Expected tax expense (benefit)

State income taxes, net of federal benefit

Gain on merger

Tax rate adjustments

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Net deferred tax liabilities

As of December 31, 2019, the Company has state net operating losses of $1.5 million, which expire in

As of December 31, 2018 and 2019, the Company does not have any material unrecognized tax benefits and accordingly has not

recorded any interest or penalties related to unrecognized tax benefits.

The Company and its subsidiaries file a consolidated federal income tax return and various state returns.

These returns remain subject to examination by taxing authorities for

all years after 2015.

In the fourth quarter of 2019, the Internal Revenue Service completed an examination of the Companys 2015, 2016 and 2017 federal income tax returns that resulted in no changes to the returns.

As of December 31, 2020, the Company has state net operating losses of $25.2 million, which expire

in various years through 2040.

The CARES Act, among other things, permits federal net operating losses incurred in 2018, 2019, and 2020 to be carried back to each of the five preceding tax years to generate a refund of previously paid income taxes.

The Company intends to carry back federal net operating losses of $24.1 million from 2020 under the CARES Act to recover $5.1 million of federal taxes paid in 2018 and 2019.

As of December 31, 2020, the Company has a current federal

tax liability of $3.1 million and current state liabilities of $0.3 million due from 2019 (see Note 9).

As of December 31,

2019 and 2020, the Company does not have any material unrecognized tax benefits and accordingly has not recorded any interest or penalties related to unrecognized tax benefits.

The Company and its subsidiaries file a consolidated federal income tax

return and various state returns.

These returns remain subject to examination by taxing authorities for all years after 2016.

In the fourth quarter of 2019, the Internal Revenue Service completed an examination of the Companys 2015, 2016 and

2017 federal income tax returns that resulted in no changes to the returns.

Earnings Per Share

Net income per share calculation information is as follows:

Net income (loss) per share calculation information is as follows:

Year ended December 31,

Net income (loss) attributable to BBGI stockholders

Weighted-average shares outstanding:

Effect of dilutive restricted stock

Net income attributable to BBGI stockholders per Class A and Class B common share

Basic weighted shares outstanding

Effect of dilutive restricted stock units and restricted stock

Net income (loss) per Class A and Class B common share basic

Net income (loss) per Class A and Class B common share diluted

The Company excluded the effect of restrictive stock units and restricted stock under the treasury stock

method as the addition of shares were anti-dilutive when reporting a net loss.

The number of shares excluded were 29,406 for year ended December 31, 2020.

Related Party Transactions

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Rental expense was $0.2 million and $0.1 million for the years ended December 31, 2019 and 2020, respectively.

The Company sold the tower for one radio station in Augusta, GA to BFT for $1.3 million

then leased back the tower.

The lease met the criteria to be recorded as a finance lease, however based on the terms of the lease agreement, the $0.8 million gain on sale was deferred and was recognized as the finance lease right-of-use asset was amortized.

On October 25, 2019, the tower was sold to an unrelated party, and the unamortized deferred gain was recognized.

Rental expense was

approximately $13,000 and $11,000 for the years ended December 31, 2018 and 2019, respectively.

The Company leases several towers

for one radio station in Boca Raton, FL from BFT.

The lease agreement expires on April 30, 2021.

The Company leases several towers for one radio station in Boca Raton, FL from BFT.

lease agreement expires on April 30, 2021.

Rental expense was $0.1 million for each of the years ended December 31, 2019 and 2020.

Lease payments are currently offset by the

partial recognition of a deferred gain on sale from the sale of these towers to BFT in 2006, therefore no rental expense was reported for these towers for the years ended December 31, 2018 and 2019.

Lease payments are currently offset by the partial recognition of a deferred gain on sale from the sale

of these towers to BFT in 2006, therefore no rental expense was reported for these towers for the years ended December 31, 2019 and 2020.

The Company leases towers for 19 radio stations in various markets from BFT.

The lease agreements expire on various dates through

December 28, 2020.

As of December 28, 2020, all lease agreements had expired.

Rental expense was $0.4 million for each of the years ended December 31, 2019 and 2020.

The Company leases land for its radio stations in Augusta, GA from GGB Augusta, LLC which is held by a trust for the benefit of

Caroline Beasley, Bruce G.

GGB Augusta, LLC

The Company leases land for its radio 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.

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The lease agreement expires on November 1, 2023.

Rental expense was approximately $45,000 and $44,000 for the years ended December 31, 2018

and 2019, respectively.

Rental expense was approximately $44,000 and $41,000 for the years ended December 31, 2019 and

2020, respectively.

GGB Estero, LLC

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LLC under a recapitalization plan.

Subsequent to the transactions above, the Company continues to maintain its ownership interest at approximately 20% of the outstanding units.

In January 2020, LN2 DB, LLC completed a study of its patents, which

concluded that none of them had any significant remaining market value.

In January 2020, LN2 DB, LLC completed a study of its patents, which concluded that none of them had any significant remaining market value.

Therefore, LN2 DB, LLC may decide to dissolve itself in the near future.

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Wintersrun Communications, LLC

The Company sold the tower for one radio station in Charlotte, NC to Wintersrun Communications, LLC, which is partially held by a trust for the

benefit of Caroline Beasley, Bruce G.

The Company sold the tower for one radio station in Charlotte, NC to Wintersrun Communications, LLC, which is partially held by a

trust for the benefit of Caroline Beasley, Bruce G.

Beasley, Brian E.

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Beasley and Brian E.

Beasley, for $0.4 million then leased back the tower under an agreement

which expires on December 31, 2025.

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.

Beasley, for $0.4 million then leased back the tower under

an agreement which expires on December 31, 2025.

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.

Rental expense was $0.1 million for each of the years ended December 31, 2019 and 2020.

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expense was approximately $31,000 for each of the years ended December 31, 2019 and 2020.

George Beasley

As a condition to entering into the Amendment (see Note 10), George Beasley, the Companys Chairman, provided a $5.0 million loan to

the Company that accrued payment-in-kind interest at 6% per annum with no cash payments due until the loans maturity in December 2023.

Beasley and GGB

Family Limited Partnership also each entered into standby letters of credit in combined aggregate face amount of $5.0 million in favor of U.S.

Bank, National Association for the benefit of the Company as a source of backup liquidity that could

have been drawn by U.S.

Bank, National Association in the event that the Company fails to maintain the Minimum Liquidity Amount.

The loan was repaid on February 2, 2021, using a portion of the proceeds from the Notes offering (see Note 10).

Commitments and Contingencies

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The carrying amount of

the Companys term loan as of December 31, 2018 was $252.6 million which approximated fair value based on current market interest rates.

the Companys long-term debt as of December 31, 2019 was $263.5 million which approximated fair value based on current market interest rates.

BEASLEY BROADCAST GROUP, INC.

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Year ended December 31, 2019:

Allowance for doubtful accounts (deducted from accounts receivable)

Allowance for doubtful accounts

(deducted from accounts receivable)

Valuation allowance for deferred tax assets

Year ended December 31, 2020:

Allowance for doubtful accounts (deducted from accounts receivable)

Allowance for doubtful accounts

(deducted from accounts receivable)

Valuation allowance for deferred tax assets

2 unchanged sentences

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 8. Financial Statements and Supplementary Data