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Item 1. Financial Statements

2022-08-12 compared with 2022-05-12 · 166 added, 101 removed, 386 unchanged (41% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts) 2022 2021 2022 2021

NET REVENUES $ 16,152 $ 14,376 $ 27,687 $ 24,119

OPERATING EXPENSES:

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Total operating expenses 16,186 10,569 28,953 20,946

OPERATING LOSS

OPERATING (LOSS) INCOME ( 34 ) 3,807 ( 1,266 ) 3,173

OTHER EXPENSE:

Interest expense ( 2,783 ) ( 2,701 ) ( 5,781 ) ( 5,239 )

LOSS BEFORE INCOME TAXES

Loss on debt extinguishment — ( 81 ) — ( 81 )

(LOSS) INCOME BEFORE INCOME TAXES ( 2,817 ) 1,025 ( 7,047 ) ( 2,147 )

PROVISION FOR INCOME TAXES 86 82 149 163

CONSOLIDATED NET LOSS

CONSOLIDATED NET (LOSS) INCOME ( 2,903 ) 943 ( 7,196 ) ( 2,310 )

PREFERRED STOCK DIVIDENDS 780 669 1,618 1,303

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

Basic and diluted loss per share attributable to common shareholders

Basic and diluted weighted average number of common shares outstanding

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ ( 3,683 ) $ 274 $ ( 8,814 ) $ ( 3,613 )

Basic net (loss) income per share attributable to common shareholders $ ( 0.47 ) $ 0.02 $ ( 1.15 ) $ ( 0.51 )

Basic weighted average number of common shares outstanding 7,808 7,187 7,687 7,151

Diluted net (loss) income per share attributable to common shareholders ( 0.47 ) 0.02 ( 1.15 ) ( 0.51 )

Diluted weighted average number of common shares outstanding 7,808 7,366 7,687 7,151

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

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CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share data)

2022 December 31,

(in thousands, except share data) (Unaudited)

CURRENT ASSETS:

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Accounts receivable, net of allowance for doubtful accounts of $ 210 and $ 313 , respectively

10,490 13,756

Prepaid expenses 1,661 1,238

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Total other assets 20,569 22,006

Total assets $ 143,389 $ 148,210

LIABILITIES AND DEFICIT

16 unchanged sentences

220,000 SHARES ISSUED AND OUTSTANDING

28,628 27,010

RETAINED DEFICIT:

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authorized 170,000,000 shares;

issued and outstanding 3,157,033 shares and 3,056,757 shares at March 31, 2022, and December 31, 2021, respectively

issued and outstanding 3,130,298 shares and 3,056,757 shares at June 30, 2022, and December 31, 2021, respectively

Class B common stock, $ 0.01 par value;

authorized 50,000,000 shares;

issued and outstanding 5,413,197 shares at March 31, 2022, and December 31, 2021

issued and outstanding 5,413,197 shares at June 30, 2022, and December 31, 2021

Class C common stock, $ 0.01 par value;

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CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN RETAINED DEFICIT

Class A Common Stock

Class B Common Stock

(in thousands, except share data)

Accumulated Deficit

Class A Common Stock Class B Common Stock APIC Accumulated Deficit Total

(in thousands, except share data) Shares Amount Shares Amount

BALANCE, DECEMBER 31, 2021

3,056,757 $ 31 5,413,197 $ 54 $ 24,030 $ ( 40,686 ) $ ( 16,571 )

Net loss — — — — — ( 4,293 ) ( 4,293 )

Issuance of class A to employees, officers and directors 100,276 1 — — 343 — 344

1 unchanged sentence

BALANCE, MARCH 31, 2022 3,157,033 $ 32 5,413,197 $ 54 $ 24,373 $ ( 45,817 ) $ ( 21,358 )

Net loss — — — — — ( 2,903 ) ( 2,903 )

Issuance of class A to employees, officers and directors ( 26,735 ) ( 1 ) — — 302 — 301

Preferred stock dividends — — — — — ( 780 ) ( 780 )

BALANCE, JUNE 30, 2022

3,130,298 $ 31 5,413,197 $ 54 $ 24,675 $ ( 49,500 ) $ ( 24,740 )

BALANCE, DECEMBER 31, 2020

1,785,880 $ 18 5,413,197 $ 54 $ 20,772 $ ( 31,852 ) $ ( 11,008 )

Net loss — — — — — ( 3,253 ) ( 3,253 )

Issuance of class A to employees, officers and directors 651,670 6 — — 464 — 470

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BALANCE, MARCH 31, 2021 2,437,550 $ 24 5,413,197 $ 54 $ 21,236 $ ( 35,739 ) $ ( 14,425 )

Net loss — — — — — 943 943

Issuance of class A to employees, officers and directors 390,794 4 — — 595 — 599

Preferred stock dividends — — — — — ( 669 ) ( 669 )

BALANCE, JUNE 30, 2021

2,828,344 $ 28 5,413,197 $ 54 $ 21,831 $ ( 35,465 ) $ ( 13,552 )

The accompanying notes are an integral part of these unaudited condensed consolidated statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2022 2021

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 7,196 ) $ ( 2,310 )

Adjustments to reconcile net loss to net cash provided by operating activities -

Loss on debt extinguishment — 81

Depreciation and amortization 1,834 1,959

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Prepaid expenses and other current assets ( 42 ) ( 696 )

Other assets ( 183 ) ( 416 )

Accounts payable and accrued liabilities 781 423

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CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of long-term debt ( 918 ) ( 3,000 )

Proceeds from long-term debt — 4,000

Payments for debt-related costs — ( 354 )

Settlement of tax withholding obligations ( 1,265 ) ( 164 )

Net cash used in financing activities

Net cash (used in) provided by financing activities ( 2,183 ) 482

INCREASE IN CASH AND CASH EQUIVALENTS 410 99

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(Dollars in Thousands Unless Indicated Otherwise)

March 31, 2022

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

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Unless the context otherwise requires, references to “we”, “us” and “our” refer to MediaCo and its subsidiaries.

Capital Structure Changes

On July 28, 2022, SG Broadcasting LLC ("SG Broadcasting") exercised its right to convert the outstanding principal and accrued but unpaid interest on the SG Broadcasting Promissory Notes (as defined in Note 10) of $ 28.0 million and $ 1.9 million, respectively, for 12.9 million of the Company's Class A common stock.

Basis of Presentation and Consolidation

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Cash and Cash Equivalents

We consider time deposits, money market fund shares and all highly liquid debt investment instruments with original maturities of three months or less to be cash equivalents.

We consider time deposits, money market fund shares and all highly liquid debt investment instruments with original maturities of six months or less to be cash equivalents.

At times, such deposits may be in excess of FDIC insurance limits.

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Shares of Series A preferred stock include rights to participate in dividends and distributions to common stockholders on an if-converted basis, and accordingly are considered participating securities.

During periods of undistributed losses however, no effect is given to our participating securities since they are not contractually obligated to share in

During periods of undistributed losses however, no effect is given to our participating securities since they are not contractually obligated to share in the losses.

The following is a reconciliation of basic and diluted net loss per share attributable to Class A and Class B common shareholders:

For the Three Months

Ended March 31,

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Net (loss) income $ ( 2,903 ) $ 943 $ ( 7,196 ) $ ( 2,310 )

Preferred dividends 780 669 1,618 1,303

Net loss attributable to common shareholders

Basic and diluted weighted average common shares outstanding

Net loss attributable to common shareholders

Undistributed earnings allocated to participating securities — 136 — —

Net (loss) income attributable to common shareholders $ ( 3,683 ) $ 138 $ ( 8,814 ) $ ( 3,613 )

Basic weighted average common shares outstanding 7,808 7,187 7,687 7,151

Impact of restricted stock awards — 179 — —

Diluted weighted average common shares outstanding 7,808 7,366 7,687 7,151

Basic net (loss) income attributable to common shareholders $ ( 0.47 ) $ 0.02 $ ( 1.15 ) $ ( 0.51 )

Diluted net (loss) income attributable to common shareholders $ ( 0.47 ) $ 0.02 $ ( 1.15 ) $ ( 0.51 )

On August 20, 2021, MediaCo Holding Inc.

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Riley, as agent or principal, shares of the Company’s Class A Common Stock, $ 0.01 par value per share, having an aggregate offering price of up to $ 12.5 million.

No shares were sold during the three-month period ended March 31, 2022.

Because we have incurred a net loss for the period where the Company had potentially dilutive securities, diluted net loss per common share is the same as basic net loss per common share.

The following convertible equity shares and restricted stock awards were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive.

For the Three Months

Ended March 31,

No shares were sold during the six-month period ended June 30, 2022.

The following convertible equity shares and restricted stock awards were excluded from the calculation of diluted net (loss) income per share because their effect would have been anti-dilutive.

Three Months Ended

June 30, Six Months Ended

(in thousands) 2022 2021 2022 2021

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INTANGIBLE ASSETS AND GOODWILL

As of March 31, 2022 and December 31, 2021, intangible assets consisted of the following:

March 31, 2022

December 31, 2021

As of June 30, 2022 and December 31, 2021, intangible assets consisted of the following:

June 30, 2022 December 31, 2021

Indefinite-lived intangible assets

FCC licenses $ 63,266 $ 63,266

Trade name 733 733

Goodwill 13,102 13,102

Definite-lived intangible assets

Customer list 444 929

Total $ 77,545 $ 78,030

Valuation of Indefinite-lived Broadcasting Licenses

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therefore, they are not subject to amortization, but are tested for impairment at least annually as discussed below.

The carrying amounts of the Company’s FCC licenses were $ 63.3 million as of March 31, 2022 and December 31, 2021.

The carrying amounts of the Company’s FCC licenses were $ 63.3 million as of June 30, 2022 and December 31, 2021.

Pursuant to our accounting policy, stations in a geographic market cluster are considered a single unit of accounting.

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Fair value of our FCC licenses is estimated to be the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

To determine the fair value of our FCC licenses, the Company considers both income and market valuation method s when it performs its impairment tests.

To determine the fair value of our FCC licenses, the Company considers both income and market valuation methods when it performs its impairment tests.

Under the income method, the Company projects cash flows that would be generated by its unit of accounting assuming the unit of accounting was commencing operations in its market at the beginning of the valuation period.

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Valuation of Goodwill

All goodwill on the condensed consolidated balance sheets as of March 31, 2022 and December 31, 2021 is part of the Outdoor Advertising segment.

All goodwill on the condensed consolidated balance sheets as of June 30, 2022 and December 31, 2021 is part of the Outdoor Advertising segment.

The Company tests goodwill for impairment at least annually.

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Definite-lived intangibles

The following table presents the weighted-average useful life at March 31, 2022, and the gross carrying amount and accumulated amortization at March 31, 2022, and December 31, 2021, for our definite-lived intangible asset:

March 31, 2022

December 31, 2021

The following table presents the weighted-average useful life at June 30, 2022, and the gross carrying amount and accumulated amortization at June 30, 2022, and December 31, 2021, for our definite-lived intangible asset:

June 30, 2022 December 31, 2021

Weighted Average Remaining Useful Life

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A useful life of three years was assigned to the customer list.

Total amortization expense from definite-lived intangible assets for the three-month periods ended March 31, 2022, and 2021 was $ 0.2 million and $ 0.3 million, respectively.

Total amortization expense from definite-lived intangible assets for the three and six-month periods ended June 30, 2022 was $ 0.2 million and $ 0.5 million, respectively.

Total amortization expense from definite-lived intangible assets for the three and six-month periods ended June 30, 2021 was $ 0.3 million and $ 0.6 million, respectively.

The Company estimates amortization expense of $ 0.4 million for the remainder of the year ending December 31, 2022 and none thereafter.

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The following table presents the Company's revenues disaggregated by revenue source:

For the Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2022 % of Total 2021 % of Total 2022 % of Total 2021 % of Total

Revenue by Source:

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Outdoor Advertising (1)

3,337 20.7 % 3,238 22.5 % 6,461 23.3 % 6,210 25.7 %

Nontraditional 3,189 19.7 % 292 2.0 % 3,357 12.1 % 429 1.8 %

Digital 1,588 9.8 % 665 4.6 % 2,318 8.4 % 1,150 4.8 %

Other 1,219 7.6 % 1,268 8.9 % 2,555 9.3 % 2,462 10.2 %

Total net revenues $ 16,152 $ 14,376 $ 27,687 $ 24,119

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LONG-TERM DEBT

Long-term debt was comprised of the following at March 31, 2022, and December 31, 2021:

March 31, 2022

December 31, 2021

Long-term debt was comprised of the following at June 30, 2022, and December 31, 2021:

June 30, 2022 December 31, 2021

Senior credit facility $ 67,654 $ 68,343

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At its inception, the Senior Credit Facility included covenants pertaining to, among other things, the ability to incur indebtedness, restrictions on the payment of dividends, minimum liquidity requirements, collateral maintenance, minimum Consolidated Fixed Charge Coverage Ratio of 1.10 :1.00, and other customary restrictions.

As of March 31, 2022, a number of amendments had been entered into by the Company and GACP to modify, among other things, certain provisions relating to the repayment of the Term Loan (as defined in the Senior Credit Facility).

On May 19, 2021, the Company entered into Amendment No.

As of June 30, 2022, a number of amendments had been entered into by the Company and GACP to modify, among other things, certain provisions relating to the repayment of the Term Loan (as defined in the Senior Credit Facility).

Most recently, on May 19, 2021, the Company entered into Amendment No.

4 to its Senior Credit Facility.

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• the Company made a principal payment of $ 3.0 million to reduce borrowings outstanding under the Senior Credit Facility;

no quarterly scheduled principal payments are required through and including the quarter ending March 31, 2022 ;

• no quarterly scheduled principal payments are required through and including the quarter ending June 30, 2022;

• the Minimum Consolidated Fixed Charge Coverage Ratio (as defined in the Senior Credit Facility) was reduced to 1.00 :1.00 from April 1, 2020 through and including December 31, 2022, with it increasing to 1.10 :1.00 on and after January 1, 2023;

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Therefore, the incremental annual interest rate of 1.0 % applied during this period and additional interest payments of $ 0.2 million were paid in kind during the three-month period ended March 31, 2022, all of which were added to the principal balance outstanding.

Incremental interest of $ 0.1 million was accrued at March 31, 2022 and was paid in kind after April 1, 2022.

As of March 31, 2022, there was $ 68.5 million outstanding under the Senior Credit Facility, carried net of a total unamortized discount of $ 1.6 million.

For the period from April 1, 2022 to June 30, 2022, the incremental annual interest rate of 1.0 % did not apply as the principal balance outstanding was less than the minimum borrowing base.

As of June 30, 2022, there was $ 67.7 million outstanding under the Senior Credit Facility, carried net of a total unamortized discount of $ 1.5 million.

MediaCo is in compliance with the debt covenants as of June 30, 2022 and anticipates being in compliance in future periods.

Emmis Convertible Promissory Note

The Emmis Convertible Promissory Note carries interest at a base rate equal to the interest on any senior credit facility, including any applicable paid in kind rate, or if no senior credit facility is outstanding, of 6.0 %, plus an additional 1.0 % on any payment of interest in kind and, without regard to whether the Company pays such interest in kind, an additional increase of 1.0 % following the second anniversary of the date of issuance and additional increases of 1.0 % following each successive anniversary thereafter.

The Emmis Convertible Promissory Note (as defined below) carries interest at a base rate equal to the interest on any senior credit facility, including any applicable paid in kind rate, or if no senior credit facility is outstanding, of 6.0 %, plus an additional 1.0 % on any payment of interest in kind and, without regard to whether the Company pays such interest in kind, an additional increase of 1.0 % following the second anniversary of the date of issuance and additional increases of 1.0 % following each successive anniversary thereafter.

Because the Senior Credit Facility prohibits the Company from paying interest in cash on the Emmis Convertible Promissory Note, the Company has been accruing interest since inception using the rate applicable if the interest will be paid in kind.

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The Emmis Convertible Promissory Note matures on November 25, 2024.

As of March 31, 2022, the principal balance outstanding under the Emmis Convertible Promissory Note was $ 6.2 million.

As of June 30, 2022, the principal balance outstanding under the Emmis Convertible Promissory Note was $ 6.2 million.

Second Amended and Restated SG Broadcasting Promissory Note, Additional SG Broadcasting Promissory Note and May 2021 SG Broadcasting Promissory Note

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On March 18, 2022, the Company and SG Broadcasting agreed to amend the May 2021 SG Broadcasting Promissory Note to extend the Company’s ability to draw the remaining $ 3.0 million on the May 2021 SG Broadcasting Promissory Note from June 30, 2022 to June 30, 2023.

As of March 31, 2022, there was a total of $ 27.6 million outstanding under the SG Broadcasting Promissory Notes and the May 2021 SG Broadcasting Promissory Note.

Based on amounts outstanding at March 31, 2022, mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:

As of June 30, 2022, there was a total of $ 28.0 million outstanding under the SG Broadcasting Promissory Notes and the May 2021 SG Broadcasting Promissory Note.

On July 28, 2022, SG Broadcasting exercised its right to convert the outstanding principal and accrued but unpaid interest on the SG Broadcasting Promissory Notes of $ 28.0 million and $ 1.9 million, respectively, for 12.9 million of the Company's Class A common stock.

Based on amounts outstanding at June 30, 2022, mandatory principal payments of long-term debt for the next five years and thereafter are summarized below:

Year ended December 31,

Senior Credit Facility

SG Broadcasting Notes

Total Payments

Senior Credit Facility Emmis Note SG Broadcasting Notes Total Payments

Remainder of 2022

$ 1,836 $ — $ — $ 1,836

2023 3,672 — — 3,672

2024 62,146 6,154 — 68,300

2025 — — 28,011 28,011

Total $ 67,654 $ 6,154 $ 28,011 $ 101,819

REGULATORY, LEGAL AND OTHER MATTERS

1 unchanged sentence

In the opinion of management of the Company, however, there are no legal proceedings pending against the Company that we believe are likely to have a material adverse effect on the Company.

The effective tax rate for the three months ended March 31, 2022, and 2021 was 1 % and 3 %, respectively.

Our effective tax rate for the three months ended March 31, 2022 differs from the statutory tax rate primarily due to the recognition of additional valuation allowance.

On April 1, 2022, the Company received a deficiency letter (the “Nasdaq Letter”) from the Nasdaq Listing Qualifications Department, notifying the Company that the Company is not in compliance with Nasdaq Listing Rule 5550(b)(3), which requires the Company to maintain net income from continuing operations of $ 0.5 million from continuing operations in the most recently completed fiscal year, or in two of the three most recently completed fiscal years (the “Minimum Net Income Requirement”), nor is it in compliance with either of the alternative listing standards, market value of listed securities or stockholders’ equity.

The Company’s failure to comply with the Minimum Net Income Requirement was based on the Company’s filing of its Annual Report on Form 10-K for the year ended December 31, 2021, reporting net loss from continuing operations of $ 6.1 million.

Pursuant to the Nasdaq Letter, the Company had 45 calendar days from the date of the Nasdaq Letter to submit a plan to regain compliance, and submitted such a plan during this period.

The plan was accepted and Nasdaq granted an extension of up to 180 calendar days from the date of the Nasdaq Letter to evidence compliance.

In the event the Company fails to regain compliance within the plan period, the Company would have the right to a hearing before an independent panel.

The hearing request would stay any suspension or delisting action pending the conclusion of the hearing process and the expiration of any additional extension period granted by the panel following the hearing.

The Company intends to take all reasonable measures available to regain compliance under the Nasdaq Listing Rules and remain listed on Nasdaq.

One component of the Company's plan to evidence compliance, as accepted by Nasdaq, is the conversion by the holder of the SG Broadcasting Promissory Notes of the entire amount of outstanding principal and accrued but unpaid interest into shares of the Company's Class A common stock.

On July 28, 2022, the holder exercised its right under the SG Broadcasting Promissory Notes to convert the outstanding principal and accrued but unpaid interest on the SG Broadcasting Promissory Notes of $ 28.0 million and $ 1.9 million, respectively, for 12.9 million shares of the Company's Class A common stock.

Neither the Nasdaq Letter nor the Company’s noncompliance have an immediate effect on the listing or trading of the Company’s common stock, which will continue to trade on The Nasdaq Capital Market under the symbol “MDIA.”

The effective tax rate for the six months ended June 30, 2022, and 2021 was 2 % and 8 %, respectively.

Our effective tax rate for the six months ended June 30, 2022 differs from the statutory tax rate primarily due to the recognition of additional valuation allowance.

We determine if an arrangement is a lease at inception.

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Operating lease assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

As our leases do not provid e an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at commencement date in determining the present value of lease payments.

We use the implicit rate if it is readily determinable.

Our lease terms may include options to extend or terminate the lease, which we treat as exercised when it is reasonably certain and there is a significant economic incentive to exercise that option.

Our O utdoor A dvertising segment treats evergreen leases as though they will be automatically renewed at the end of each term.

Our Outdoor Advertising segment treats evergreen leases as though they will be automatically renewed at the end of each term.

Operating lease expense for operating lease assets is recognized on a straight-line basis over the lease term.

Variable lease payments, which represent lease payments that vary due to changes in facts or circumstances occurring after the commencement date other than the passage of time, are expensed in the period in which the obligation for these payments was incurred.

Variable lease expense for the three months ended March 31, 2022, and 2021 was $ 0.1 million.

Variable lease expense for the six months ended June 30, 2022 and 2021 was $ 0.1 million.

Variable lease expense for the three months ended June 30, 2022 and 2021 was not material.

We elected not to apply the recognition requirements of ASC 842, “ Leases” , to short-term leases, which are deemed to be leases with a lease term of twelve months or less.

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We elected this policy for all classes of underlying assets.

Short-term lease expense recognized in the three months ended March 31, 2022, and 2021 was not material.

Short-term lease expense recognized in the three and six months ended June 30, 2022 and 2021 was not material.

The impact of operating leases to our condensed consolidated financial statements was as follows:

Three Months Ended

June 30, Six Months Ended

2022 2021 2022 2021

Operating lease cost $ 1,271 $ 1,257 $ 2,568 $ 2,504

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Right-of-use assets obtained in exchange for new operating lease liabilities 173 314 365 314

As of March 31,

As of December 31,

June 30, 2022 December 31, 2021

Weighted average remaining lease term - operating leases (in years) 8.4 8.5

Weighted average discount rate - operating leases 9.6 % 9.4 %

As of March 31, 2022, the annual minimum lease payments of our operating lease liabilities were as follows:

As of June 30, 2022, the annual minimum lease payments of our operating lease liabilities were as follows:

Year ending December 31,

Remainder of 2022

After 2026 12,924

Total lease payments 28,621

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Total recorded lease liabilities $ 19,491

Our outdoor advertising business generates lessor revenue derived from operating leases accounted for under ASC 842, “Leases.” Minimum fixed lease consideration under non-cancelable operating leases for each of the next five years and thereafter, excluding variable lease consideration, as of March 31, 2022, is as follows:

Year ending December 31,

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Liabilities settled ( 64 )

Balance at March 31, 2022

Balance at June 30, 2022

SEGMENT INFORMATION

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The accounting policies as described in the summary of significant accounting policies included in the Company’s Annual Report filed on Form 10-K for the year ended December 31, 2021, and in Note 1 to these condensed consolidated financial statements, are applied consistently across segments.

Three Months Ended March 31, 2022

Outdoor Advertising

The following tables present the Company's segment results for the three and six months ended June 30, 2022 and 2021:

Three Months Ended June 30, 2022 Radio Outdoor Advertising All Other Consolidated

Net revenues $ 12,531 $ 3,621 $ — $ 16,152

Operating expenses excluding depreciation and amortization expense 11,324 2,592 — 13,916

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Operating income (loss) $ 1,121 $ 184 $ ( 1,339 ) $ ( 34 )

Three Months Ended March 31, 2021

Outdoor Advertising

Three Months Ended June 30, 2021 Radio Outdoor Advertising All Other Consolidated

Net revenues $ 10,851 $ 3,525 $ — $ 14,376

Operating expenses excluding depreciation and amortization expense 5,739 2,079 — 7,818

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Operating income (loss) $ 4,929 $ 723 $ ( 1,845 ) $ 3,807

Outdoor Advertising

March 31, 2022

Six Months Ended June 30, 2022 Radio Outdoor Advertising All Other Consolidated

Net revenues $ 20,644 $ 7,043 $ — $ 27,687

Operating expenses excluding depreciation and amortization expense 17,947 5,301 — 23,248

Corporate expenses — — 3,826 3,826

Depreciation and amortization 187 1,647 — 1,834

Loss on disposal of assets — 45 — 45

Operating income (loss) $ 2,510 $ 50 $ ( 3,826 ) $ ( 1,266 )

Six Months Ended June 30, 2021 Radio Outdoor Advertising All Other Consolidated

Net revenues $ 17,353 $ 6,766 $ — $ 24,119

Operating expenses excluding depreciation and amortization expense 11,030 4,549 — 15,579

Corporate expenses — — 3,486 3,486

Depreciation and amortization 374 1,585 — 1,959

Gain on disposal of assets — ( 78 ) — ( 78 )

Operating income (loss) $ 5,949 $ 710 $ ( 3,486 ) $ 3,173

Total Assets Radio Outdoor Advertising Consolidated

June 30, 2022 $ 87,047 $ 56,342 $ 143,389

December 31, 2021 90,485 57,725 148,210

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Transaction Agreement with Emmis and SG Broadcasting

On June 28, 2019 , MediaCo entered into a Contribution and Distribution Agreement with Emmis and SG Broadcasting, pursuant to which (i) Emmis contributed the assets of its radio stations WQHT-FM and WBLS-FM, in exchange for $ 91.5 million in cash, a $ 5.0 million note and 23.72 % of the common stock of MediaCo, (ii) Standard General purchased 76.28 % of the common stock of MediaCo, and (iii) the common stock of MediaCo received by Emmis was distributed pro rata in a taxable dividend to Emmis’ shareholders on January 17, 2020.

On June 28, 2019, MediaCo entered into a Contribution and Distribution Agreement with Emmis Communications Corporation ("Emmis") and SG Broadcasting, pursuant to which (i) Emmis contributed the assets of its radio stations WQHT-FM and WBLS-FM, in exchange for $ 91.5 million in cash, a $ 5.0 million note and 23.72 % of the common stock of MediaCo, (ii) Standard General purchased 76.28 % of the common stock of MediaCo, and (iii) the common stock of MediaCo received by Emmis was distributed pro rata in a taxable dividend to Emmis’ shareholders on January 17, 2020.

The common stock of MediaCo acquired by Standard General is entitled to ten votes per share and the common stock acquired by Emmis and distributed to Emmis’ shareholders is entitled to one vote per share.

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The Management Agreement was terminated in November 2021 at the expiration of the initial term.

For the three months ended March 31, 2021, MediaCo recorded $ 0.3 million of management fee expense, which is included in corporate expenses in the accompanying condensed consolidated statements of operations.

For the six months ended June 30, 2021, MediaCo recorded $ 0.6 million of management fee expense, which is included in corporate expenses in the accompanying condensed consolidated statements of operations.

The Employee Leasing Agreement was terminated in January 2021 at the expiration of the initial term.

Convertible Promissory Notes

As a result of the transaction described above, on November 25, 2019, we issued convertible promissory notes to both Emmis and SG Broadcasting in the amounts of $ 5.0 million and $ 6.3 million, respectively.

On February 28, 2020, the Company and SG Broadcasting amended and restated the SG Broadcasting Promissory Note such that the maximum aggregate principal amount issuable under the note was increased from $ 6.3 million to $ 10.3 million.

Also on February 28, 2020, SG Broadcasting loaned an additional $ 2.0 million to the Company pursuant to the amended note for working capital purposes.

On March 27, 2020, the Company and SG Broadcasting further amended and restated the SG Broadcasting Promissory Note such that the maximum aggregate principal amount issuable under the note was increased from $ 10.3 million to $ 20.0 million.

On March 27, 2020, SG Broadcasting loaned an additional $ 3.0 million to the Company pursuant to the Second Amended and Restated SG Promissory Note for working capital purposes.

On August 28, 2020, SG Broadcasting loaned an additional $ 8.7 million to the Company pursuant to the Second Amended and Restated SG Promissory Note for working capital purposes, bringing the total principal amount outstanding to $ 20.0 million.

On September 30, 2020, SG Broadcasting loaned an additional $ 0.3 million to the Company pursuant to the Additional SG Broadcasting Promissory Note for working capital purposes.

On November 25, 2020, annual interest of $ 0.5 million and $ 1.1 million was paid in kind and added to the principal balances of the Emmis Convertible Promissory Note and the SG Broadcasting Promissory Note, respectively.

On May 19, 2021, the Company issued to SG Broadcasting the May 2021 SG Broadcasting Promissory Note, in return for which SG Broadcasting loaned $ 3.0 million to the Company to make the prepayment of Senior Credit Facility debt required under Amendment No.

As a result of the transaction described above, on November 25, 2019, we issued convertible promissory notes to both Emmis (such note, the "Emmis Convertible Promissory Note") and SG Broadcasting (such note, the "November 2019 SG Broadcasting Promissory Note") in the amounts of $ 5.0 million and $ 6.3 million, respectively.

On February 28, 2020, the Company and SG Broadcasting amended and restated the November 2019 SG Broadcasting Promissory Note such that the maximum aggregate principal amount issuable under the note was increased from $ 6.3 million to $ 10.3 million.

Also on February 28, 2020, SG Broadcasting loaned an additional $ 2.0 million to the Company pursuant to the November 2019 SG Broadcasting Promissory Note for working capital purposes.

On March 27, 2020, the Company and SG Broadcasting further amended and restated the November 2019 SG Broadcasting Promissory Note (as so amended and restated, the "Second Amended and Restated SG Broadcasting Promissory Note") such that the maximum aggregate principal amount issuable under the note was increased from $ 10.3 million to $ 20.0 million.

On March 27, 2020, SG Broadcasting loaned an additional $ 3.0 million to the Company pursuant to the Second Amended and Restated SG Broadcasting Promissory Note for working capital purposes.

On August 28, 2020, SG Broadcasting loaned an additional $ 8.7 million to the Company pursuant to the Second Amended and Restated SG Broadcasting Promissory Note for working capital purposes, bringing the total principal amount outstanding to $ 20.0 million.

On September 30, 2020, SG Broadcasting loaned an additional $ 0.3 million to the Company pursuant to an additional promissory note (the "Additional SG Broadcasting Promissory Note") for working capital purposes.

On November 25, 2020, annual interest of $ 0.5 million and $ 1.1 million was paid in kind and added to the principal balances of the Emmis Convertible Promissory Note and the November 2019 and Additional SG Broadcasting Promissory Notes, respectively.

On May 19, 2021, the Company issued to SG Broadcasting an additional promissory note (the "May 2021 SG Broadcasting Promissory Note" and, collectively with the November 2019 and Additional SG Broadcasting Promissory Notes, the "SG Broadcasting Promissory Notes"), in return for which SG Broadcasting loaned $ 3.0 million to the Company to make the prepayment of Senior Credit Facility debt required under Amendment No.

Up to $ 7.0 million may be borrowed pursuant to the May 2021 SG Broadcasting Promissory Note.

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4 to the Senior Credit Facility.

On September 30, 2021, annual interest of $ 25 thousand on the Second Amended Promissory Note was paid in kind and added to the principal balance outstanding.

On November 25, 2021, annual interest of $ 0.6 million and $ 2.2 million was paid in kind and added to the principal balances of the Emmis Convertible Promissory Note and the SG Broadcasting Promissory Note, respectively.

Consequently, the principal amount outstanding as of March 31, 2022 and December 31, 2021 under the Emmis Convertible Promissory Note and the SG Broadcasting Promissory Notes was $ 6.2 million and $ 27.6 million, respectively.

The Company recognized interest expense of $ 0.2 million and $ 0.1 million related to the Emmis Convertible Promissory Note for the three months ended March 31, 2022, and 2021, respectively.

The Company recognized interest expense of $ 0.8 million and $ 0.5 million related to the SG Promissory Notes for the three months ended March 31, 2022, and 2021, respectively.

On September 30, 2021, annual interest of $ 25 thousand on the November 2019 and Additional SG Broadcasting Promissory Notes was paid in kind and added to the principal balance outstanding.

On May 19, 2022, annual interest of $ 0.4 million was paid in kind and added to the principal balance of the SG Broadcasting Promissory Notes.

Consequently, the principal amount outstanding as of June 30, 2022 under the Emmis Convertible Promissory Note and the SG Broadcasting Promissory Notes was $ 6.2 million and $ 28.0 million, respectively.

The Company recognized interest expense of $ 0.4 million and $ 0.3 million related to the Emmis Convertible Promissory Note for the six months ended June 30, 2022, and 2021, respectively.

The Company recognized interest expense of $ 1.5 million and $ 1.1 million related to the SG Broadcasting Promissory Notes for the six months ended June 30, 2022, and 2021, respectively.

The terms of these notes are described in Note 4.

On July 28, 2022, SG Broadcasting exercised its right under the SG Broadcasting Promissory Notes to convert the outstanding principal and accrued but unpaid interest on the SG Broadcasting Promissory Notes.

Convertible Preferred Stock

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The Series A Preferred Shares are participating securities and we calculate earnings per share using the two-class method.

Dividends on Series A Convertible Preferred Stock held by SG Broadcasting were $ 0.8 million and $ 0.6 million, respectively, for the three months ended March 31, 2022, and 2021.

As of March 31, 2022, and December 31, 2021, unpaid cumulative dividends were $ 1.0 million and $ 0.2 million, respectively, and included in the balance of preferred stock in the accompanying condensed consolidated balance sheets.

Dividends on Series A Convertible Preferred Stock held by SG Broadcasting were $ 1.6 million and $ 1.3 million, respectively, for the six months ended June 30, 2022, and 2021.

As of June 30, 2022, and December 31, 2021, unpaid cumulative dividends were $ 1.8 million and $ 0.2 million, respectively, and included in the balance of preferred stock in the accompanying condensed consolidated balance sheets.

Loan Proceeds Participation Agreement

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The Billboard Agreement has an effective date of August 1, 2020, a term of three years , and customary provisions on limitation of liability and indemnification.

$ 25 thousand of income was recognized and $ 0.1 million of out-of-pocket expenses were incurred for the three months ended March 31, 2022 in relation to the Billboard Agreement, all of which was outstanding at March 31, 2022.

SUBSEQENT EVENTS

On April 1, 2022, MediaCo Holding Inc.

(the “Company”) received a deficiency letter (the “Nasdaq Letter”) from the Nasdaq Listing Qualifications Department, notifying the Company that the Company is not in compliance with Nasdaq Listing Rule 5550(b)(3), which requires the Company to maintain net income from continuing operations of $ 0.5 million from continuing operations in the most recently completed fiscal year, or in two of the three most recently completed fiscal years (the “Minimum Net Income Requirement”), nor is it in compliance with either of the alternative listing standards, market value of listed securities or stockholders’ equity.

Pursuant to the Nasdaq Letter, the Company has 45 calendar days from the date of the Nasdaq Letter to submit a plan to regain compliance, and intends to submit such a plan during this period.

If it accepts the plan, Nasdaq can grant an extension of up to 180 calendar days from the date of the Nasdaq Letter to evidence compliance.

In the event the plan is not accepted by the Nasdaq staff, or in the event the plan is granted but the Company fails to regain compliance within the plan period, the Company would have the right to a hearing before an independent panel.

The Company intends to take all reasonable measures available to regain compliance under the Nasdaq Listing Rules and remain listed on Nasdaq.

$ 50 thousand of income was recognized and $ 105 thousand of out-of-pocket expenses were incurred for the six months ended June 30, 2022 in relation to the Billboard Agreement, $ 16 thousand of which was outstanding at June 30, 2022.

SUBSEQUENT EVENTS

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-Q

Item 1. Financial Statements