BEASLEY BROADCAST GROUP INC 10-K

ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS 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 radio stations in the following radio markets: Atlanta, GA, Augusta, GA, Boston, MA, Charlotte, NC, Detroit, MI, Fayetteville, NC, Fort Myers-Naples, FL, Las Vegas, NV, Middlesex, NJ, Monmouth, NJ, Morristown, NJ, Philadelphia, PA, Tampa-Saint Petersburg, FL, West Palm Beach-Boca Raton, FL, and Wilmington, DE. We refer to each group of radio stations in each radio 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. 19 Table of Contents COVID-19 Pandemic 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. In 2020, we were impacted by deteriorating general economic conditions resulting from the COVID-19 pandemic that caused a downturn in the advertising industry. The decreased demand for advertising materially negatively impacted our results of operations, liquidity and financial condition. In 2021, we benefited from a general economic recovery from the COVID-19 pandemic however the continuing impact of subsequent COVID-19 variants may result in general economic conditions deteriorating again in the future. Beginning in March 2020, we implemented certain expense control initiatives, such as reductions in compensation for management and other employees, reductions in planned capital expenditures, negotiated vendor pricing reductions, furloughs and headcount reductions for certain employees and suspensions of new employee hiring and travel and entertainment expenses. These initiatives continued reducing our expenses throughout the remainder of 2020 and, to a lesser extent, during 2021, and we expect expense reductions to continue into 2022. Our board of directors also suspended future quarterly dividend payments until it is determined that resumption of dividend payments is in the best interest of our stockholders. The extent to which the COVID-19 pandemic will continue to impact our business and financial results going forward will be dependent on future developments which are uncertain and unpredictable. Accordingly, it is reasonably possible that these uncertainties could materially impact the Company’s significant accounting estimates related to, but not limited to, allowance for doubtful accounts and impairment of Federal Communications Commission (“FCC”) licenses and goodwill. As a result, many of the Company’s estimates and assumptions require increased judgment and carry a higher degree of variability and volatility. The Company’s estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements. 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 effects of the COVID-19 pandemic, including its potential effects on the economic environment and the Company’s results of operations, liquidity and financial condition, and the increased risk of impairments of the Company’s FCC licenses and/or goodwill; • external economic forces that could have a material adverse impact on the Company’s advertising revenues and results of operations; • the ability of the Company’s radio 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 radio programs; • the ability of the Company to respond to changes in technology, standards and services that affect the radio industry; • the Company’s dependence on federally issued licenses subject to extensive federal regulation; 20 Table of Contents • actions by the FCC or new legislation affecting the radio 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 radio 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; • 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 radio 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; • 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 radio 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 radio station’s audience share in the demographic groups targeted by advertisers as measured principally by periodic reports issued by Nielsen Audio; • the number of radio 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. 21 Table of Contents 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. We also continue to invest in digital support services to develop and promote our radio 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 radio 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 radio stations. We strive to control our operating expenses by centralizing certain functions at our corporate offices and consolidating certain functions in each of our radio 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. Our ongoing evaluation includes review of specific accounts at our radio stations, the current financial condition of our customers and our historical write-off experience. This ongoing evaluation requires management judgment, and if we had made different assumptions about these factors, the allowance for doubtful accounts could have been materially different. 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 2021. 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, 2021, FCC licenses with an aggregate carrying amount of $508.4 million represented 67% 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 2021, we elected to perform the quantitative impairment test for our FCC licenses in all markets. The quantitative impairment test, performed as of November 30, 2021, 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. We estimate the fair value of our FCC licenses 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. 22 Table of Contents The key assumptions used in the discounted cash flow analyses are as follows: Revenue growth rates 0.3% - 13.0% Market revenue shares at maturity 0.6% - 44.0% Operating income margins at maturity 19.2% - 32.6% Discount rate 8.5% 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 broadcasting licenses Excess Atlanta, GA $ 832,300 65.2 % Augusta, GA 6,113,075 98.9 Boston, MA 137,856,160 17.6 Charlotte, NC 56,418,151 31.8 Detroit, MI 29,978,201 27.1 Fayetteville, NC 8,974,679 43.7 Fort Myers-Naples, FL 9,555,146 15.0 Las Vegas, NV 34,689,500 10.3 Middlesex, Monmouth, Morristown, NJ 21,896,900 23.6 Philadelphia, PA 119,674,192 32.6 Tampa-Saint Petersburg, PA 61,787,351 39.2 West Palm Beach-Boca Raton, FL 2,647,458 20.7 Wilmington, DE 17,990,800 7.9 As a result of the quantitative impairment test performed as of November 30, 2021, we did not record any impairment losses related to the FCC license in each of our reporting units. We believe we have made reasonable estimates and assumptions to calculate the estimated fair value of our FCC licenses, 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 sheet, we may recognize future impairment charges, the amount of which may be material. Goodwill. As of December 31, 2021, goodwill with an aggregate carrying amount of $28.6 million represented 4% 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 radio market clusters and esports as our reporting units. We did not identify any triggering events for impairment in 2021. 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. 23 Table of Contents Recent Accounting Pronouncements Recent accounting pronouncements are described in Note 2 to the accompanying financial statements. Results of Operations Year Ended December 31, 2021 Compared to the Year Ended December 31, 2020 Effective January 1, 2021, we created a digital division that generates revenue primarily from the sale of digital advertising to customers of our radio stations and other advertisers throughout the United States. As a result, we now operate three operating segments (Audio, Digital, esports) and two reportable segments (Audio, Digital). The following summary table presents a comparison of our results of operations for the years ended December 31, 2020 and 2021 with respect to certain of our key financial measures. These 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. Year ended December 31, Change 2020 2021 $ % Net revenue $ 206,143,861 $ 241,426,308 $ 35,282,447 17.1 % Operating expenses 182,181,555 199,470,185 17,288,630 9.5 Corporate expenses 15,628,370 16,578,046 949,676 6.1 Impairment losses 8,970,812 — (8,970,812 ) (100.0 ) Gain on dispositions 4,439,710 191,988 (4,247,722 ) (95.7 ) Other operating income, net 3,000,000 400,000 (2,600,000 ) (86.7 ) Interest expense 16,894,407 26,456,236 9,561,829 56.6 Loss on extinguishment of long-term debt 2,798,789 4,996,731 2,197,942 78.5 Gain on forgiveness of long-term debt — 10,000,000 10,000,000 — Income tax benefit 5,185,992 5,321,630 135,638 2.6 Net loss 18,874,156 1,535,094 (17,339,062 ) (91.9 ) Net Revenue. Net revenue increased $35.3 million during the year ended December 31, 2021 as compared to the year ended December 31, 2020. Significant factors affecting net revenue included an increase in audio revenue and digital revenue primarily due to recovery from the COVID-19 pandemic, partially offset by a decrease in political advertising and other revenue. Operating Expenses. Operating expenses increased $17.3 million during the year ended December 31, 2021 as compared to the year ended December 31, 2020. Significant factors affecting operating expenses included an increase in audio operating expenses and digital operating expenses primarily due to recovery from the COVID-19 pandemic. Corporate Expenses. Corporate expenses increased $0.9 million during the year ended December 31, 2021 as compared to the year ended December 31, 2020. The primary factors affecting corporate expenses were an increase in cash and stock-based compensation and contract services. Impairment Losses. Due to the impact of the COVID-19 pandemic on the U.S. economy, we tested our FCC licenses for impairment during the first quarter of 2020. As a result of the quantitative impairment test, we recorded impairment losses of $6.8 million related to the FCC licenses in our 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 our FCC licenses due to certain risks specifically associated with the Company and the radio broadcasting industry. On December 31, 2020, we completed the sale of certain land in our Charlotte, NC market cluster to a third party. As a result of the sale, we no longer utilize 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. Gain on Dispositions. On December 31, 2020, we completed the sale of certain land in our Charlotte, NC market cluster for $4.65 million. As a result of the sale, we recorded a gain of $4.4 million in the year ended December 31, 2020. Other Operating Income, Net. Other operating income, net for the year ended December 31, 2021 includes life insurance proceeds of $3.0 million related to the death of George Beasley, the Company’s former Chairman, in June 2021, partially offset by certain payments totaling $1.5 million that were paid in accordance with Mr. Beasley’s employment contract, payments of $0.6 million for consulting services related to the COVID-19 pandemic and expenses of $0.5 million related to the early termination of a programming 24 Table of Contents contract. Other operating income, net for the year ended December 31, 2020 includes a legal reduction of $4.0 million in the franchise fee payable to the esports league, partially offset by payments of $1.0 million for consulting services related to the COVID-19 pandemic. Interest Expense. Interest expense increased $9.6 million during the year ended December 31, 2021, as compared to the year ended December 31, 2020. The primary factors affecting interest expense were an increase in long-term debt outstanding and the applicable interest rate. Loss on Extinguishment of Long-Term Debt. We recorded a loss on extinguishment of long-term debt of $5.0 million during the year ended December 31, 2021, resulting from the issuance of secured notes on February 2, 2021 and the use of proceeds to repay the credit facility. We recorded a loss on modification of long-term debt of $2.8 million during the year ended December 31, 2020, resulting from an amendment to our credit agreement. Gain on Forgiveness of Long-Term Debt. We recorded a gain on forgiveness of long-term debt of $10.0 million during the year ended December 31, 2021, resulting from forgiveness of the PPP loan in November 2021, as described in “Liquidity and Capital Resources – PPP Loan” below. Income Tax Benefit. Our effective tax rate was approximately (22)% and (79)% for the years ended December 31, 2020 and 2021, 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, 2021 was $1.5 million compared to net loss of $18.9 million for the year ended December 31, 2020 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 radio station acquisitions. Historically, our capital expenditures have not been significant. In addition to property and equipment associated with radio 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 radio 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. In response to the COVID-19 pandemic, our board of directors has suspended future quarterly dividend payments until it is determined that resumption of dividend payments is in the best interest of the Company’s stockholders. 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 repay the credit facility, the promissory note, and a loan from George Beasley (see Note 9 to the accompanying financial statements) 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 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. PPP Loan . On March 1, 2021, we entered into a loan with Synovus Bank for $10.0 million pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”). The loan bore interest at a rate of 1.0% per annum and was scheduled to mature on March 1, 2026. Principal and interest payments were deferred, with interest accruing, until after the period in which we were allowed to apply for loan forgiveness pursuant to the PPP. In September 2021, we submitted an application for forgiveness, and, in November 2021, the loan was forgiven in full. Credit Facility. 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. 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. As noted above, the credit facility was repaid on February 2, 2021, using a portion of the proceeds from the Notes offering. 25 Table of Contents On November 14, 2019, we acquired a majority interest in an esports team and issued a promissory note for $16.5 million to the seller. On June 30, 2020, we entered into an amendment to the promissory note applicable to the remaining balance. As amended, the promissory note bore cash-pay interest at 5% per annum payable quarterly in arrears and additional payment-in-kind interest at 10% per annum. The promissory note had a remaining balance of $5.5 million as of December 31, 2020. As noted above, the promissory note was repaid on February 2, 2021, using a portion of the proceeds from the Notes offering. In June 2020, George Beasley, our former 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 loan’s maturity in December 2023. Mr. 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 we failed to maintain a minimum liquidity amount under the then-existing credit facility. As noted above, the loan from Mr. Beasley was repaid on February 2, 2021, using a portion of the proceeds from the Notes offering. From time to time, we repurchase sufficient shares of our common stock to fund withholding taxes in connection with the vesting of restricted stock units and shares of restricted stock. We paid $0.2 million to repurchase 63,468 shares during the year ended December 31, 2021. 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, 2021. Cash Flows . The following summary table presents a comparison of our cash flows for the years ended December 31, 2020 and 2021 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, 2020 2021 Net cash provided by (used in) operating activities $ 4,214,316 $ (1,907,227 ) Net cash used in investing activities (3,845,616 ) (1,136,268 ) Net cash provided by financing activities 1,742,561 33,662,705 Net increase in cash and cash equivalents $ 2,111,261 $ 30,619,210 Net Cash Provided By (Used In) Operating Activities. Net cash used in operating activities was $1.9 million during the year ended December 31, 2021, as compared to net cash provided by operating activities of $4.2 million during the year ended December 31, 2020. Significant factors affecting the $6.1 million increase in net cash used in operating activities included a $33.8 million increase in cash paid for operating expenses, partially offset by a $27.5 million increase in cash receipts from revenue. Net Cash Used In Investing Activities. Net cash used in investing activities during the year ended December 31, 2021 included payments of $4.5 million for capital expenditures, partially offset by proceeds of $3.0 million from life insurance. Net cash used in investing activities for the same period in 2020 included payments of $7.5 million for capital expenditures and payments of $1.0 million for investments, partially offset by proceeds of $4.6 million from dispositions. Net Cash Provided By Financing Activities. Net cash provided by financing activities during the year ended December 31, 2021 included proceeds of $300.0 million from the issuance of the Notes and proceeds from the $10.0 million PPP loan, partially offset by credit facility and promissory note repayments of $263.5 million, repayment of the $5.0 million loan provided by George Beasley, and payments of $7.6 million for debt issuance costs related to the Notes. Net cash provided by financing activities for the same period in 26 Table of Contents 2020 included proceeds of $9.0 million from borrowings under our revolving credit facility and proceeds from the $5.0 million loan provided by George Beasley, partially offset by credit facility and promissory note repayments of $6.75 million, payments of $2.8 million for cash dividends, and payments of $2.6 million for debt issuance costs related to the amendment to our credit agreement. Related Party Transactions 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 May 31, 2023. Rental expense was $0.2 million for the year ended December 31, 2021. Beasley Family Properties, LLC On September 30, 2021, the office space leased from GGB Estero, LLC for our radio stations in Fort Myers, FL was transferred to Beasley Family Properties, LLC, which is held by a trust for the benefit of Caroline Beasley, Bruce G. Beasley, Brian E. Beasley, and other members of the Beasley family. The lease agreement expires on August 31, 2024. Rental expense was $0.1 million for the year ended December 31, 2021. Beasley Family Towers, LLC We lease towers for 17 radio 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. The lease agreements expire on various dates through December 31, 2038. Rental expense was $0.8 million for the year ended December 31, 2021. We lease office space for our radio 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, 2021. GGB Augusta, LLC We lease land for our 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. Beasley, and other members of the Beasley family. The lease agreement expires on November 1, 2023. Rental expense was approximately $45,000 for the year ended December 31, 2021. GGB Estero, LLC We leased office space for our radio stations in Fort Myers, FL from GGB Estero, 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 office space was transferred to Beasley Family Properties, LLC on September 30, 2021. Rental expense was $0.2 million for the year ended December 31, 2021. GGB Las Vegas, LLC We lease office space for our radio 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, 2023. Rental expense was $0.2 million for the year ended December 31, 2021. Wintersrun Communications, LLC We sold a 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. Beasley and other members of the Beasley family and partially owned directly by Bruce G. Beasley and Brian E. Beasley, for $0.4 million then leased back the tower under an agreement which expires on December 31, 2045. The lease met the criteria to be recorded as a finance lease, however based on the terms of the lease agreement the $0.3 million gain on sale was deferred and will be recognized as the finance lease right-of-use asset is depreciated. Rental expense was $0.1 million for the year ended December 31, 2021. We lease a tower for one radio station in Augusta, GA from Wintersrun. The lease agreement expires on October 16, 2025. Rental expense was approximately $31,000 for the year ended December 31, 2021. Loan from George Beasley In June 2020, George Beasley, our former 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 loan’s maturity in December 2023. Mr. Beasley and GGB Family 27 Table of Contents 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 failed to maintain a minimum liquidity amount under the then-existing credit facility. The loan was repaid on February 2, 2021, using a portion of the proceeds from the Notes offering (see Note 9 to the accompanying financial statements). Inflation For the years ended December 31, 2020 and 2021, 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. 28 Table of Contents