What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2023-03-27 compared with 2022-02-23 · 182 added, 148 removed, 211 unchanged (61% of the section changed)

2 unchanged sentences

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.

We own and operate stations in the following markets:

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

Unless the context otherwise requires, all references in this report to the “Company,” “we,” “us” or “our” are to Beasley Broadcast Group, Inc.

and its subsidiaries.

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.

COVID-19 Pandemic

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

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

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

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

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

The extent to which the COVID-19

pandemic will continue to impact our business and financial results going forward will be dependent on future developments which are uncertain and unpredictable.

Accordingly, it is reasonably possible that these uncertainties could materially impact the Company’s significant accounting estimates related to, but not limited to, allowance for doubtful accounts 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.

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

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

Cautionary Note Regarding Forward-Looking Statements

8 unchanged sentences

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

Index to Financial Statements

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

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

the effects of the COVID-19

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

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’s stations to compete effectively in their respective markets for advertising revenues;

the ability of the Company to develop compelling and differentiated digital content, products and services;

audience acceptance of the Company’s content, particularly its radio programs;

the ability of the Company to respond to changes in technology, standards and services that affect the radio industry;

audience acceptance of the Company’s content, particularly its audio programs;

the ability of the Company to respond to changes in technology, standards and services that affect the audio industry;

the Company’s dependence on federally issued licenses subject to extensive federal regulation;

actions by the FCC or new legislation affecting the radio industry;

actions by the FCC or new legislation affecting the audio industry;

increases to royalties the Company pays to copyright owners or the adoption of legislation requiring royalties to be paid to record labels and recording artists;

the Company’s dependence on selected market clusters of radio stations for a material portion of its net revenue;

the Company’s dependence on selected market clusters of stations for a material portion of its net revenue;

credit risk on the Company’s accounts receivable;

1 unchanged sentence

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 potential effects of hurricanes on the Company’s corporate offices and stations;

the failure or destruction of the internet, satellite systems and transmitter facilities that the Company depends upon to distribute its programming;

disruptions or security breaches of the Company’s information technology infrastructure;

disruptions or security breaches of the Company’s information technology infrastructure and information systems;

the loss of key personnel;

4 unchanged sentences

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

Index to Financial Statements

Financial Statement Presentation

2 unchanged sentences

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.

Local revenue generally consists of commercial advertising sales, digital advertising sales and other sales to advertisers in a station’s local market, either directly to the advertiser or through the advertiser’s agency.

National revenue generally consists of commercial advertising sales through advertiser agencies.

3 unchanged sentences

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;

a station’s audience share in the demographic groups targeted by advertisers as measured principally by periodic reports issued by Nielsen Audio;

the number of stations, as well as other forms of media, in the market competing for the attention of the same demographic groups;

the supply of, and demand for, radio advertising time;

7 unchanged sentences

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 continue to invest in digital support services to develop and promote our station websites, applications, and other distribution platforms.

We derive revenue from our websites through the sale of advertiser promotions and advertising on our websites and the sale of advertising airtime during audio streaming of our stations over the internet.

We also generate revenue from selling third-party digital products and services.

Operating Expenses.

Our operating expenses consist primarily of programming, engineering, sales, advertising and promotion, and general and administrative expenses incurred at our 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.

Our operating expenses consist primarily of programming, engineering, sales, advertising and promotion, and general and administrative expenses incurred at our stations.

We strive to control our operating expenses by centralizing certain functions at our corporate offices and consolidating certain functions in each of our market clusters.

Critical Accounting Estimates

2 unchanged sentences

it involves a significant level of estimation uncertainty;

Index to Financial Statements

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

1 unchanged sentence

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

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

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

13 unchanged sentences

In 2022, 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.

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

If the carrying amounts of the FCC licenses exceed their fair value, an impairment loss is recognized in an amount equal to that excess.

For the purpose of testing our FCC licenses for impairment, we combine our FCC licenses into reporting units based on our market clusters.

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.

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

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

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

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

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

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

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

Revenue growth rates

(1.9)% - 15.9%

Market revenue shares at maturity

2 unchanged sentences

Discount rate

Interest rates in the U.S.

economy continued to increase during the third quarter of 2022;

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

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

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

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

Index to Financial Statements

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

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

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

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

Revenue growth rates

Market revenue shares at maturity

Operating income margins at maturity

19.7% - 30.4%

Discount rate

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:

6 unchanged sentences

Philadelphia, PA

Tampa-Saint Petersburg, PA

West Palm Beach-Boca Raton, FL

Tampa-Saint Petersburg, FL

Wilmington, DE

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.

As of December 31, 2022, goodwill with an aggregate carrying amount of $13.3 million represented 2% of our total assets.

4 unchanged sentences

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.

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

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

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

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

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

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

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

Revenue growth rates

(1.9)% - 11.1%

Operating income margins

Discount rate

Index to Financial Statements

Interest rates in the U.S.

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

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

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

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

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

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

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

Revenue growth rates

Operating income margin

Discount rate

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

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

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

Actual results can be materially different from estimates and assumptions.

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

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

Other Intangibles.

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

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

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

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

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

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

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

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

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

Revenue growth rate(s)

Operating income margin(s)

(22.3)% - 43.5%

Discount rate

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

2 unchanged sentences

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.

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

Index to Financial Statements

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

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”).

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.

12 unchanged sentences

Year Ended December 31, 2022 Compared to the Year Ended December 31, 2021

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, 2021 and 2022, with respect to certain of our key financial measures.

These changes illustrated in the table are discussed in greater detail below.

The changes illustrated in the table are discussed in greater detail below.

This section should be read in conjunction with the financial statements and notes to financial statements included in Item 8 of this report.

Results of Operations — Consolidated

Year Ended December 31,

2 unchanged sentences

Impairment losses

Gain on dispositions

Gain on exchange

Other operating income, net

Interest expense

Loss on extinguishment of long-term debt

Gain on forgiveness of long-term debt

Other income, net

Income tax benefit

Index to Financial Statements

Results of Operations — Segments

Year Ended December 31,

Operating expenses

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

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.

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

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

Operating Expenses.

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

Significant factors affecting operating expenses included an increase in audio operating expenses and digital operating expenses primarily due to recovery from the COVID-19

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

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

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.

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

Impairment Losses.

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.

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

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

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

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

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

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

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

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

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

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

Index to Financial Statements

Gain on Exchange.

On December 22, 2022, we completed an asset exchange with Audacy Nevada, LLC, pursuant to which we agreed to exchange all of the assets used or useful in the operations of KDWN-AM in Las Vegas, NV for all of the assets used or useful in the operations of KXTE-FM in Las Vegas, NV.

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

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

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

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.

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

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

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

Loss on Extinguishment of Long-Term Debt.

We recorded a loss on extinguishment of long-term debt of $5.0 million during the year ended December 31, 2021, resulting from the issuance of 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.

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

Gain on Forgiveness of Long-Term Debt.

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

Other Income, Net.

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

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

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 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.

Our effective tax rate was approximately (79)% and (30)% for the year ended December 31, 2021 and 2022, 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 for the year ended December 31, 2022 was $42.1 million compared to a net loss of $1.5 million for the year ended December 31, 2021, as a result of the factors described above.

Liquidity and Capital Resources

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.

In addition to property and equipment associated with station acquisitions, our capital expenditures have generally been, and are expected to continue to be, related to the maintenance of our office and studio space, the maintenance of our towers and equipment, and digital products and information technology.

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

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 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.

1 unchanged sentence

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

Index to Financial Statements

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

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

We used the net proceeds from the Notes, to 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.

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

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;

8 unchanged sentences

and issue or sell stock of our subsidiaries.

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.

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.

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

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

Such repurchases, redemptions or other transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors.

The amounts involved may be material.

We expect to provide for future liquidity needs through one or a combination of the following sources of liquidity:

4 unchanged sentences

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.

Sheet Arrangements.

We did not have any off-balance

sheet arrangements as of December 31, 2021.

Off-Balance Sheet Arrangements.

We did not have any off-balance sheet arrangements as of December 31, 2022.

Index to Financial Statements

The following summary table presents a comparison of our cash flows for the years ended December 31, 2021 and 2022 with respect to certain of our key measures affecting our liquidity.

4 unchanged sentences

Net cash used in investing activities

Net cash provided by financing activities

Net increase in cash and cash equivalents

Net cash provided by (used in) financing activities

Net increase (decrease) in cash and cash equivalents

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

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

Net Cash Used In Investing Activities.

Net cash used in investing activities during the year ended December 31, 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

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.

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

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

Net Cash Provided By (Used In) Financing Activities.

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

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

Related Party Transactions

6 unchanged sentences

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.

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

Beasley, Brian E.

3 unchanged sentences

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.

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

Beasley, Brian E.

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

Beasley and other

Index to Financial Statements

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

Beasley, Brian E.

2 unchanged sentences

Rental expense was $0.8 million for the year ended December 31, 2022.

We lease office space for our radio stations in Fayetteville, NC from BFT.

We lease office space for our stations in Fayetteville, NC from BFT.

The lease agreement expires on August 31, 2030.

1 unchanged sentence

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.

We lease land for our stations in Augusta, GA from GGB Augusta, LLC, which is held by a trust for the benefit of Caroline Beasley, Bruce G.

Beasley, Brian E.

2 unchanged sentences

Rental expense was approximately $48,000 for the year ended December 31, 2022.

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.

We lease office space for our stations in Las Vegas, NV from GGB Las Vegas, LLC, which is controlled by members of the Beasley family.

The lease agreement expires on December 31, 2023.

1 unchanged sentence

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.

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

Beasley, Brian E.

2 unchanged sentences

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, 2022.

We lease a tower for one radio station in Augusta, GA from Wintersrun.

We lease a tower for one station in Augusta, GA from Wintersrun.

The lease agreement expires on October 15, 2025.

Rental expense was approximately $31,000 for the year ended December 31, 2022.

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.

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 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).

Loan to Interactive Life, Inc.

In May 2022, we provided a $250,000 loan to Interactive Life, Inc.

that accrues interest at 8.625% per annum with no cash payments due until the loan’s maturity in May 2024.

Interactive Life, Inc.

is controlled by Mr.

We currently hold an investment in Quu, Inc., a company that is controlled by Mr.

Repayment of the loan to Interactive Life, Inc.

is guaranteed by Mr.

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

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

1 unchanged sentence

Not required for smaller reporting companies.

Index to Financial Statements

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

What changed 10-K

Item 7. Management’s Discussion and Analysis