What changed in this filing

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Item 1. Financial Statements

2023-05-11 compared with 2022-11-14 · 183 added, 335 removed, 265 unchanged (66% of the section changed)

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share amounts) 2023 2022

4 unchanged sentences

Depreciation and amortization 159 115

Loss (gain) on disposal of assets 26 — 71 ( 78 )

Gain on disposal of assets ( 39 ) —

Total operating expenses 9,241 9,225

OPERATING (LOSS) INCOME ( 169 ) 1,790 ( 1,435 ) 4,963

OTHER EXPENSE:

Interest expense ( 2,404 ) ( 2,895 ) ( 8,185 ) ( 8,134 )

Loss on debt extinguishment — — — ( 81 )

LOSS BEFORE INCOME TAXES ( 2,573 ) ( 1,105 ) ( 9,620 ) ( 3,252 )

OPERATING LOSS ( 1,906 ) ( 1,112 )

OTHER INCOME (EXPENSE):

Interest expense, net ( 103 ) ( 2,077 )

Other income 129 —

Total other income (expense) 26 ( 2,077 )

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES ( 1,880 ) ( 3,189 )

PROVISION FOR INCOME TAXES 75 73

NET LOSS FROM CONTINUING OPERATIONS ( 1,955 ) ( 3,262 )

DISCONTINUED OPERATIONS:

Loss from discontinued operations before income taxes ( 152 ) ( 1,041 )

Income tax benefit from discontinued operations — 10

NET LOSS FROM DISCONTINUED OPERATIONS ( 152 ) ( 1,031 )

CONSOLIDATED NET LOSS ( 2,107 ) ( 4,293 )

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NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ ( 2,697 ) $ ( 5,131 )

Basic and diluted net loss per share attributable to common shareholders $ ( 0.21 ) $ ( 0.26 ) $ ( 1.14 ) $ ( 0.77 )

Basic and diluted weighted average number of common shares outstanding 16,853 7,201 10,778 7,168

Net loss per share attributable to common shareholders - basic and diluted:

Continuing operations $ ( 0.10 ) $ ( 0.54 )

Discontinued operations $ ( 0.01 ) $ ( 0.14 )

Net loss per share attributable to common shareholders - basic and diluted:

$ ( 0.11 ) $ ( 0.68 )

Weighted average common shares outstanding:

Basic 24,718 7,558

Diluted 24,718 7,558

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

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CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

2023 December 31,

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Cash and cash equivalents $ 10,605 $ 10,925

Accounts receivable, net of allowance for doubtful accounts of $ 195 and $ 313 , respectively

Restricted cash 4,407 4,376

Accounts receivable, net of allowance for credit losses of $ 102 and $ 122 , respectively

Prepaid expenses 1,378 979

Other current assets 375 341

Current assets of discontinued operations 199 1,066

Total current assets 24,150 26,255

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Total assets $ 104,485 $ 96,705

LIABILITIES AND EQUITY (DEFICIT)

LIABILITIES AND EQUITY

CURRENT LIABILITIES:

Accounts payable and accrued expenses $ 3,721 $ 3,880

Current maturities of long-term debt 3,672 2,754

Accrued salaries and commissions 1,054 875

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Operating lease liabilities 1,423 1,816

Income taxes payable 3,008 3,008

Other current liabilities 162 35

Current liabilities of discontinued operations 66 659

Total current liabilities 10,642 11,098

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OPERATING LEASE LIABILITIES, NET OF CURRENT 14,194 3,808

ASSET RETIREMENT OBLIGATIONS 7,827 7,267

DEFERRED INCOME TAXES 2,558 2,483

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26,929 26,339

EQUITY (DEFICIT):

Class A common stock, $0.01 par value;

authorized 170,000,000 shares;

issued and outstanding 16,238,279 shares and 3,056,757 shares at September 30, 2022, and December 31, 2021, respectively

issued and outstanding 20,611,873 shares and 20,443,138 shares at March 31, 2023, and December 31, 2022, respectively 207 207

Class B common stock, $ 0.01 par value;

authorized 50,000,000 shares;

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

issued and outstanding 5,413,197 shares at March 31, 2023, and December 31, 2022

Class C common stock, $ 0.01 par value;

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Accumulated deficit ( 15,799 ) ( 13,102 )

Total equity (deficit) 1,982 ( 16,571 )

Total liabilities and equity (deficit) $ 139,924 $ 148,210

Total equity 44,077 46,976

Total liabilities and equity $ 104,485 $ 96,705

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

MEDIACO HOLDING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

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

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Issuance of class A to employees, officers and directors 564,548 6 — — 363 — 369

Repurchase of class A common shares ( 395,813 ) ( 6 ) — — ( 565 ) — ( 571 )

Preferred stock dividends — — — — — ( 590 ) ( 590 )

BALANCE, MARCH 31, 2023 20,611,873 $ 207 5,413,197 $ 54 $ 59,615 $ ( 15,799 ) $ 44,077

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 )

Net loss — — — — — ( 2,651 ) ( 2,651 )

Issuance of class A to employees, officers and directors 197,324 2 — — 305 — 307

Conversion of convertible promissory notes 12,910,657 129 — — 29,775 — 29,904

Preferred stock dividends — — — — — ( 838 ) ( 838 )

BALANCE, SEPTEMBER 30, 2022 16,238,279 $ 162 5,413,197 $ 54 $ 54,755 $ ( 52,989 ) $ 1,982

BALANCE, DECEMBER 31, 2021

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

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 )

Net loss — — — — — ( 1,188 ) ( 1,188 )

Sale of class A common shares 19,701 — — — 180 — 180

Issuance of class A to employees, officers and directors 222,956 3 — — 791 — 794

Preferred stock dividends — — — — — ( 709 ) ( 709 )

BALANCE, SEPTEMBER 30, 2021 3,071,001 $ 31 5,413,197 $ 54 $ 22,802 $ ( 37,362 ) $ ( 14,475 )

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2023 2022

CASH FLOWS FROM OPERATING ACTIVITIES:

Net loss $ ( 9,847 ) $ ( 3,498 )

Consolidated net loss $ ( 2,107 ) $ ( 4,293 )

Loss from discontinued operations, net of tax 152 1,031

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

Loss on debt extinguishment — 81

Depreciation and amortization 159 115

Amortization of debt discount 487 471

Amortization of deferred financing costs, including original issue discount — 161

Noncash interest expense — 168

Noncash lease expense 651 527

Provision for bad debts ( 27 ) 40

Accretion of asset retirement obligation 586 526

Allowance for credit losses ( 20 ) 59

Provision for deferred income taxes 75 73

Noncash compensation 634 1,447

Loss (gain) on sale of property and equipment 71 ( 78 )

Other noncash items 82 —

Changes in assets and liabilities

1 unchanged sentence

Prepaid expenses and other current assets ( 432 ) ( 85 )

Other assets ( 377 ) ( 398 )

Accounts payable and accrued liabilities 104 351

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Other liabilities 133 1,070

Net cash provided by continuing operating activities 818 4,618

Net cash provided by discontinued operating activities 160 43

Net cash provided by operating activities 978 4,661

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Purchases of internally-created software ( 312 ) ( 741 )

Proceeds from the sale of property and equipment — 146

Net cash used in continuing investing activities ( 549 ) ( 744 )

Net cash used in discontinued investing activities — ( 72 )

Net cash used in investing activities ( 549 ) ( 816 )

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of long-term debt ( 1,836 ) ( 3,000 )

Proceeds from long-term debt — 4,000

Payments for debt-related costs — ( 354 )

Proceeds from issuance of class A common stock — 180

Repurchases of class A common stock ( 571 ) —

Settlement of tax withholding obligations ( 109 ) ( 1,116 )

Net cash (used in) provided by financing activities ( 3,210 ) 329

INCREASE IN CASH AND CASH EQUIVALENTS ( 242 ) 3,224

CASH AND CASH EQUIVALENTS:

Net cash used in continuing financing activities ( 680 ) ( 1,116 )

Net cash used in discontinued financing activities ( 38 ) ( 93 )

Net cash used in financing activities ( 718 ) ( 1,209 )

INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 289 ) 2,636

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

Beginning of period 15,301 6,121

End of period 15,012 8,757

Cash, cash equivalents and restricted cash of discontinued operations — —

Cash, cash equivalents and restricted cash of continuing operations at end of period $ 15,012 $ 8,757

SUPPLEMENTAL DISCLOSURES:

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MediaCo Holding Inc.

(“MediaCo” or the “Company”) is an owned and operated multi-media company formed in Indiana in 2019, focused on radio, outdoor, and digital advertising.

Our assets consist of two radio stations, WQHT-FM and WBLS-FM (the “Stations”), which serve the New York City demographic market area that primarily targets Black, Hispanic, and multi-cultural consumers, as well as approximately 3,500 outdoor advertising displays in the Southeast (Georgia, Alabama, South Carolina and Florida) and the Mid-Atlantic (Kentucky, West Virginia and Ohio) regions of the United States.

We derive our revenues primarily from radio, outdoor, and digital advertising sales, but we also generate revenues from events, including sponsorships and ticket sales, licensing, and syndication.

(“MediaCo” or the “Company”) is an owned and operated multi-media company formed in Indiana in 2019, focused on radio and digital advertising, premium programming and events.

Our assets consist of two radio stations, WQHT(FM) and WBLS(FM) (the “Stations”), which serve the New York City demographic market area that primarily targets Black, Hispanic, and multi-cultural consumers.

We derive our revenues primarily from radio and digital advertising sales, but we also generate revenues from events, including sponsorships and ticket sales, licensing, and syndication.

On December 9, 2022, Fairway Outdoor LLC, FMG Kentucky, LLC and FMG Valdosta, LLC (collectively, “Fairway”), all of which were wholly owned direct and indirect subsidiaries of MediaCo, entered into an Asset Purchase Agreement (the “Purchase Agreement”), with The Lamar Company, L.L.C., a Louisiana limited liability company (the “Purchaser”), pursuant to which we sold our Fairway outdoor advertising business to the Purchaser.

The transactions contemplated by the Purchase Agreement closed as of the date of the Purchase Agreement.

We have classified the related assets and liabilities associated with our Fairway business as discontinued operations in our condensed consolidated balance sheets and the results of our Fairway business have been presented as discontinued operations in our condensed consolidated statements of operations for all periods presented through December 9, 2022 as the sale represented a strategic shift in our business that had a major effect on our operations and financial results.

Unless otherwise noted, discussion in the notes to condensed consolidated financial statements refers to the Company’s continuing operations.

See Note 2 — Discontinued Operations for additional information.

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, into 12.9 million shares of the Company's Class A common stock.

Basis of Presentation and Consolidation

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In the opinion of management, all adjustments necessary for fair presentation (including normal recurring adjustments) have been included.

Cash and Cash Equivalents

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

Cash, Cash Equivalents and Restricted Cash

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.

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

Restricted cash represents amounts held in escrow related to the disposition of the Fairway business and amounts held as collateral for a letter of credit entered into in connection with the lease in New York City for our radio operations and corporate offices.

Fair Value Measurements

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We have no assets or liabilities for which fair value is measured on a recurring basis using Level 3 inputs.

The Company has certain assets that are measured at fair value on a non-recurring basis including those described in Note 2, Intangible Assets and Goodwill, and are adjusted to fair value only when the carrying values are more than the fair values.

The Company has certain assets that are measured at fair value on a non-recurring basis including those described in Note 3, Intangible Assets, and are adjusted to fair value only when the carrying values are more than the fair values.

The categorization of the framework used to price the assets is considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 3 for more discussion).

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The Company believes the current carrying value of its long-term debt approximates its fair value.

Allowance for Credit Losses

An allowance for credit losses is recorded based on management’s judgment of the collectability of trade receivables.

When assessing the collectability of receivables, management considers, among other things, customer type (agency versus non-agency), historical loss experience, existing and expected future economic conditions and aging category.

Amounts are written off after all normal collection efforts have been exhausted.

The activity in the allowance for credit losses for the three-month periods ended March 31, 2023 and 2022 was as follows:

Balance at beginning of period Provision Write-offs Balance at end of period

Three months ended March 31, 2022 $ 186 $ 59 $ ( 125 ) $ 120

Three months ended March 31, 2023 $ 122 $ ( 20 ) $ — $ 102

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes.

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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.

We have elected to determine the earnings allocation based on income (loss) from continuing operations.

As there is a loss from continuing operations, all potentially dilutive items were anti-dilutive and thus basic and diluted weighted-average shares are the same.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net loss $ ( 2,651 ) $ ( 1,188 ) $ ( 9,847 ) $ ( 3,498 )

Preferred dividends 838 709 2,456 2,012

Loss from continuing operations $ ( 1,955 ) $ ( 3,262 )

Preferred stock dividends ( 590 ) ( 838 )

Loss from continuing operations available to common shareholders ( 2,545 ) ( 4,100 )

Loss from discontinued operations, net of income taxes ( 152 ) ( 1,031 )

Net loss attributable to common shareholders $ ( 2,697 ) $ ( 5,131 )

Basic and diluted weighted average common shares outstanding 16,853 7,201 10,778 7,168

Basic and diluted net loss attributable to common shareholders $ ( 0.21 ) $ ( 0.26 ) $ ( 1.14 ) $ ( 0.77 )

Weighted-average shares of common stock outstanding — basic and diluted 24,718 7,558

Earnings per share of common stock attributable to common shareholders:

Net loss per share attributable to common shareholders - basic and diluted:

Continuing operations $ ( 0.10 ) $ ( 0.54 )

Discontinued operations ( 0.01 ) ( 0.14 )

Net loss per share attributable to common shareholders - basic and diluted:

$ ( 0.11 ) $ ( 0.68 )

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, having an aggregate offering price of up to $ 12.5 million.

No shares were sold during the nine-month period ended September 30, 2022.

No shares were sold during the three-month periods ended March 31, 2023 or 2022.

For the three month period ended March 31, 2023, we repurchased under a share repurchase plan 395,813 shares of Class A common stock for an aggregate of $ 0.6 million.

Subsequent to March 31, 2023 through May 4, 2023 we repurchased an additional 13,209 shares of Class A common stock under the share repurchase plan for an aggregate of $ 16 thousand.

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

September 30, Nine Months Ended

September 30,

(in thousands) 2023 2022

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Total anti-dilutive shares 25,862 12,967

Liquidity and Going Concern

The accompanying condensed consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and the satisfaction of liabilities in the normal course of business.

Pursuant to ASC Topic 205-40, “ Going Concern ,” the Company is required to evaluate whether there is substantial doubt about its ability to continue as a going concern each reporting period.

In evaluating the Company’s ability to continue as a going concern for this reporting period, management evaluated the conditions and events that could raise substantial doubt about the Company’s ability to continue as a going concern within one year of the date of the filing of these financial statements (November 14, 2022).

Management considered the Company’s ability to forecast future cash flows, current financial condition, sources of liquidity and debt service obligations due on or before November 14, 2023.

The Company has been and continues to be negatively impacted by the broad economic impact of the COVID-19 pandemic, which remains across multiple sectors, specifically disrupting logistics and global supply chains.

If apprehension persists around interest rate volatility, supply chain disruptions, and COVID-19, consumer spending may be adversely impacted, causing certain advertising categories (e.g., automotive dealers) to advertise less.

The Company expects continued negative impact on revenues and profitability for an undetermined period of time.

Management has considered these circumstances in assessing the Company’s liquidity over the next year.

Liquidity is a measure of an entity’s ability to meet potential cash requirements, maintain its assets, fund its operations, and meet the other general cash needs of its business.

The Company’s liquidity is impacted by general economic, financial, competitive, and other factors beyond its control.

The Company’s liquidity requirements consist primarily of funds necessary to pay its expenses, principally debt service and operational expenses, such as labor costs, and other related expenditures.

The Company generally satisfies its liquidity needs through cash provided by operations.

In addition, the Company has taken steps to enhance its ability to fund its operational expenses by reducing various costs and is prepared to take additional steps as necessary.

The Company has debt service obligations of approximately $ 11.1 million due under its Senior Credit Facility from November 14, 2022, the date of issuance of these financial statements, through November 14, 2023.

Because the Company’s operating results and financial condition have been adversely impacted by the broad economic impacts of the COVID-19 pandemic, the Company’s revenues and profitability may continue to decline over the next several months, as compared to the same periods of the prior year.

Because the duration and severity of the impact is unknown as of the filing of this Form 10-Q, management is unable to determine with certainty that the Company will be able to meet its liquidity needs for the next twelve months with cash and cash equivalents on hand, projected cash flows from operations, and/or additional borrowings.

Under the terms of its Senior Credit Facility, the Company has certain financial covenants.

Management is also unable to determine whether the Company will be in compliance with its debt covenants for the next twelve months.

On November 12, MediaCo entered into Amendment No.

5 to its Senior Credit Facility, which lowered the minimum liquidity requirement to $ 2.0 million through December 15, 2022 and $ 3.0 million thereafter and removed the testing requirement for the minimum consolidated fixed charge coverage ratio covenant on September 30, 2022.

There is substantial doubt that the Company will be in compliance with these covenants in subsequent periods.

If necessary, management intends to request a waiver or amendment to its Senior Credit Facility and seek additional borrowings from Standard General.

While the Company has been successful in obtaining waivers and amendments under its Senior Credit Facility and has also received additional liquidity from Standard General in the past, no assurances can be made that the Company will be successful or receive such liquidity in the future.

Additionally, management regularly reviews our portfolio of assets and may opportunistically dispose of or otherwise monetize assets when we believe it is appropriate to do so.

Based on our evaluation of ASC Topic 205-40, “ Going Concern ,”, there is substantial doubt about our ability to continue as a going concern through November 14, 2023.

Furthermore, depending on the duration and severity of the impacts on our businesses discussed above, we may record impairments of assets in the future.

Recent Accounting Pronouncements Not Yet Implemented

Recent Accounting Pronouncements Adopted

In June 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-13, Financial Instruments – Credit Losses , which introduces new guidance for an approach based on using expected losses to estimate credit losses on certain types of financial instruments.

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Instruments in scope include loans, held-to-maturity debt securities and net investments in leases as well as reinsurance and trade receivables.

This standard will be effective for us as of January 1, 2023.

We do not expect the adoption of the new standard to have a significant impact on our condensed consolidated financial statements.

INTANGIBLE ASSETS AND GOODWILL

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

September 30, 2022 December 31, 2021

We adopted this standard on January 1, 2023.

The adoption of the new standard did not have a significant impact on our condensed consolidated financial statements.

DISCONTINUED OPERATIONS

On December 9, 2022, Fairway entered into the Purchase Agreement with the Purchaser.

The transactions contemplated by the Purchase Agreement closed as of the date of the Purchase Agreement.

The purchase price was $ 78.6 million, subject to certain customary adjustments, paid at closing in cash.

The sale resulted in a pre-tax gain of $ 46.9 million in the fourth quarter of 2022.

In accordance with ASC 205-20-S99-3, Allocation of Interest to Discontinued Operations , the Company elected to allocate interest expense to discontinued operations where the debt is not directly attributed to the Fairway business.

Interest expense was allocated based on a ratio of net assets discontinued to the sum of consolidated net assets plus consolidated debt.

In addition, upon closing we entered into a transition service agreement with the Purchaser to support the operations after the divestiture for immaterial fees.

This agreement commenced with the close of the transaction and was terminated at the end of the initial term in February 2023.

The financial results of Fairway are presented as income from discontinued operations on our condensed consolidated statements of operations through December 9, 2022, when the sale was completed.

The following table presents the financial results of Fairway:

Three Months Ended

Net revenues $ — $ 3,422

OPERATING EXPENSES

Operating expenses excluding depreciation and amortization expense 152 2,709

Depreciation and amortization — 815

Loss on disposal of assets — 18

Total operating expenses 152 3,542

Loss from operations of discontinued operations ( 152 ) ( 120 )

Interest and other, net — ( 921 )

Loss from discontinued operations, before income taxes ( 152 ) ( 1,041 )

Income tax benefit — 10

Loss from discontinued operations, net of income taxes $ ( 152 ) $ ( 1,031 )

The following table presents the aggregate carrying amounts of assets and liabilities of discontinued operations for Fairway in the consolidated balance sheets:

March 31, 2023 December 31, 2022

Accounts receivable, net 163 1,026

Total current assets of discontinued operations 199 1,066

Accounts payable and accrued expenses 66 659

Total current liabilities of discontinued operations 66 659

INTANGIBLE ASSETS

As of March 31, 2023 and December 31, 2022, intangible assets consisted of the following:

March 31, 2023 December 31, 2022

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 201 929

Software 1,369 1,437

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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 September 30, 2022 and December 31, 2021.

The carrying amounts of the Company’s FCC licenses were $ 63.3 million as of March 31, 2023 and December 31, 2022.

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

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In our case, radio stations in a geographic market cluster are considered a single unit of accounting.

Valuation of Goodwill

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

The Company tests goodwill for impairment at least annually.

W e have the option to first assess qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying value as a basis for determining whether it is necessary to perform an annual quantitative goodwill impairment test.

We perform this assessment annually as of October 1, unless indicators of impairment exist at an interim period.

When performing a quantitative assessment for impairment, the Company uses a market approach to determine the fair value of the reporting unit.

Management determines the fair value for the reporting unit by multiplying the cash flows of the reporting unit by an estimated market multiple.

Management believes this methodology for valuing outdoor advertising businesses is a common approach and believes that the multiples used in the valuation are reasonable given our peer comparisons, analyst reports, and market transactions.

To corroborate the fair values determined using the market approach described above, management also uses an income approach, which is a discounted cash flow method to determine the fair value of the reporting unit.

If the carrying value of a reporting unit’s goodwill exceeds its fair value, the Company recognizes an impairment charge equal to the difference in the statement of operations.

Valuation of Trade Name

As a result of the purchase of our Outdoor Advertising segment, the Company acquired the trade name “Fairway”.

The trade name is well known in the industry and is being retained for continued market use following the acquisition.

This trade name favorably factors into customer purchasing decisions.

For the purchase price allocation, the trade name was valued using the relief from royalty method.

This method is based on what a company would be willing to pay for a royalty in order to exploit the related benefits of the trade name.

The value of the trade name is determined by discounting the inherent after-tax royalty savings associated with ownership or possession of the trade name.

The valuation assigned to the trade name as a result of the purchase price accounting was $ 0.7 million.

We assess the trade name annually for impairment on October 1 of each year, unless indications of impairment exist during an interim period.

Definite-lived intangibles

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

September 30, 2022 December 31, 2021

The following table presents the weighted-average useful life at March 31, 2023, and the gross carrying amount and accumulated amortization at March 31, 2023 and December 31, 2022, for our definite-lived intangible assets:

March 31, 2023 December 31, 2022

Weighted Average Remaining Useful Life

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Gross Carrying

Customer list 0.2 $ 2,906 $ 2,705 $ 201 $ 2,906 $ 1,977 $ 929

Software 5.2 $ 1,495 $ 126 $ 1,369 $ 1,495 $ 58 $ 1,437

The customer list was acquired as part of the purchase of our Outdoor Advertising segment and was valued as part of the purchase price allocation performed at closing.

Customer relationships represent a source of repeat business.

The information contained in such relationships usually includes the preferences of the customer, the buying patterns of the customer, and the history of purchases that have been made by the customer.

In calculating the value of Fairway Outdoors’ customer relationships, we employed the multiperiod excess earnings method of the income approach, which estimates value based on the present value of future economic benefits.

This methodology resulted in a valuation of $ 2.9 million.

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

The software was developed internally by our Radio segment and represents our updated website and mobile application, which offer increased functionality and opportunities to grow and interact with our audience.

The software was developed internally by our radio operations and represents our updated website and mobile application, which offer increased functionality and opportunities to grow and interact with our audience.

They cost $ 1.5 million to develop and useful lives of five years and seven years were assigned to the application and website, respectively.

Total amortization expense from definite-lived intangible assets for the three and nine-month periods ended September 30, 2022 was $ 0.2 million and $ 0.7 million, respectively.

Total amortization expense from definite-lived intangible assets for the three and nine-month periods ended September 30, 2021 was $ 0.3 million and $ 0.9 million, respectively.

The Company estimates amortization expense of $ 0.3 million for the remainder of the year ending December 31, 2022 and $ 0.2 million each year for the next five years.

Total amortization expense from definite-lived intangible assets for the three-month period ended March 31, 2023 was $ 0.1 million.

There was no amortization expense from definite-lived intangible assets for the three-month period ended March 31, 2022.

The Company estimates amortization expense each of the next five years as follows:

Year ended December 31, Amortization Expense

2023 (from April 1) $ 202

After 2027 130

Total $ 1,369

The Company generates revenue from the sale of services including, but not limited to:

(i) on-air commercial broadcast time, (ii) display advertising on outdoor structures, (iii) non-traditional revenues including event-related revenues and event sponsorship revenues, and (iv) digital advertising.

(i) on-air commercial broadcast time, (ii) non-traditional revenues including event-related revenues and event sponsorship revenues, and (iii) digital advertising.

Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue.

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Advertising revenues presented in the condensed consolidated financial statements are reflected on a net basis, after the deduction of advertising agency fees, usually at a rate of 15 % of gross revenues.

Radio Advertising

Spot Radio Advertising

On-air broadcast revenue is recognized when or as performance obligations under the terms of a contract with a customer are satisfied.

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

Outdoor Advertising

Our outdoor advertising business has approximately 3,500 faces consisting of bulletins, posters, and digital billboards.

Bulletins are generally large, illuminated advertising structures that are located on major highways and target vehicular traffic.

Posters are generally smaller advertising structures that are located on major traffic arteries and city streets and target vehicular and pedestrian traffic.

Digital billboards are computer controlled LED displays where six to eight advertisers rotate continuously, each one having seven to ten seconds to display a static image.

Digital billboards are generally located on major traffic arteries and streets.

A substantial portion of this revenue is lessor revenue derived from operating leases accounted for under ASC 842, “ Leases .” Rental revenue is recognized on a straight-line basis over the term of the respective lease.

Nontraditional

Nontraditional revenues principally consist of ticket sales and sponsorship of events our stations conduct in their local market.

These revenues are recognized when our performance obligations are fulfilled, which generally coincides with the occurrence of the related event.

Digital revenue relates to revenue generated from the sale of digital marketing services (including display advertisements and video pre-roll and sponsorships, but excluding digital billboard advertisements) to advertisers on Company-owned websites and applications from revenue generated from content distributed across other digital platforms.

Digital revenue relates to revenue generated from the sale of digital marketing services (including display advertisements and video pre-roll and sponsorships) to advertisers on Company-owned websites and from revenue generated from content distributed across other digital platforms.

Digital revenues are generally recognized as the digital advertising is delivered.

Other revenue includes barter revenue, network revenue, and production revenue.

Syndication revenue relates to revenue generated from the sale of rights to broadcast shows we produce as well as revenues from syndicated shows we broadcast for a fee.

Syndication revenues are generally recognized ratably over the term of the contract.

Events and Sponsorships

Events and Sponsorships revenues principally consist of ticket sales and sponsorship of events our stations conduct in their local market.

These revenues are recognized when our performance obligations are fulfilled, which generally coincides with the occurrence of the related event.

Other revenue includes barter revenue, network revenue, talent fee revenue and other revenue.

The Company provides advertising broadcast time in exchange for certain products and services, including on-air radio programming.

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This network revenue is recognized as we broadcast the advertisements.

In connection with certain outdoor advertising arrangements, the customer may request that the Company produce the billboard wrap (commonly printed on a vinyl material) displaying the customer’s advertisement on our outdoor structure.

This production revenue is recognized as the deliverable is made available to the customer or attached to our outdoor structure.

Other revenue also includes the management fee received from Billboards LLC (see Note 10 ).

Talent fee revenue are fees earned for appearances by our talent, which is recognized when our performance obligations are fulfilled, which generally coincides with the occurrence of the related appearance.

Other revenue is comprised of brand integrations, custom on-air shows, or other amounts earned that do not fit in any other category and are recognized when our performance obligations are fulfilled.

Disaggregation of revenue

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

Three Months Ended September 30, Nine Months Ended September 30,

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

Three Months Ended March 31,

2023 % of Total 2022 % of Total

Revenue by Source:

Radio Advertising $ 6,029 51.0 % $ 8,073 45.3 % $ 19,025 48.1 % $ 21,941 52.3 %

Outdoor Advertising (1)

3,273 27.7 % 3,197 17.9 % 9,734 24.6 % 9,407 22.4 %

Nontraditional 276 2.3 % 4,206 23.6 % 3,633 9.2 % 4,635 11.1 %

Spot Radio Advertising $ 4,769 65.0 % $ 6,177 76.1 %

Digital 974 13.3 % 730 9.0 %

Syndication 605 8.2 % 413 5.1 %

Events and Sponsorships 156 2.1 % 7 0.1 %

Other 831 11.4 % 786 9.7 %

Total net revenues $ 7,335 $ 8,113

(1) A substantial portion of this revenue is from lessor revenue derived from operating leases accounted for under ASC 842, “ Leases .”

LONG-TERM DEBT

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

September 30, 2022 December 31, 2021

Senior credit facility $ 66,737 $ 68,343

Notes payable to Emmis 6,124 6,154

Notes payable to SG Broadcasting — 27,574

Current maturities ( 3,672 ) ( 2,754 )

Unamortized original issue discount ( 1,306 ) ( 1,790 )

Total long-term debt, net of current portion and debt discount $ 67,883 $ 97,527

Senior secured term loan agreement

The Company has a five-year senior secured term loan agreement (the “Senior Credit Facility”) with GACP Finance Co., LLC (“GACP”), a Delaware limited liability company, as administrative agent and collateral agent.

The Senior Credit Facility bears interest at a rate equal to the London Interbank Offered Rate ("LIBOR"), plus 7.5 %, with a 2.0 % LIBOR floor and a 1.0 % incremental interest rate paid in kind under certain circumstances (as discussed below).

The Senior Credit Facility matures on November 25, 2024.

Prior to subsequent amendments discussed below, the Senior Credit Facility required interest payments on the first business day of each calendar month, and quarterly payments on the principal in an amount equal to one and one quarter percent of the initial aggregate principal amount were due on the last day of each calendar quarter.

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 September 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.

Under the terms of Amendment No.

• SG Broadcasting agreed to contribute up to $ 7.0 million to the Company in the form of subordinated debt, with $ 3.0 million contributed at closing, $ 1.0 million contributed on June 1, 2021, and up to an additional $ 3.0 million to be contributed through June 30, 2022, if necessary, to satisfy certain conditions described in Amendment No.

• 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 September 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;

• for purposes of calculating compliance with the Minimum Consolidated Fixed Charge Coverage Ratio, Consolidated EBITDA (as defined in the Senior Credit Facility) includes certain amounts contributed by SG Broadcasting in the form of subordinated debt or equity, including those described above;

• for purposes of calculating the Company’s borrowing base under the Senior Credit Facility, the multiple applied to Billboard Cash Flow (as defined in the Senior Credit Facility) increased from 3.5 to 5.0 and the advance rate applied to the radio stations’ FCC licenses increased from 60 % to 70 %;

• at any time the multiple applied to Billboard Cash Flow exceeds 3.5 or the advance rate applied to the radio stations’ FCC licenses exceeds 60 %, an incremental annual interest rate of 1.0 % applies and is paid in kind monthly;

• certain specified events of default were waived;

• an amendment fee of $ 0.4 million was paid in cash.

For the period May 19, 2021 through March 31, 2022, the multiple applied to billboard cash flow was in excess of 3.5 x and the advance rate applied to the Company's FCC licenses exceeded 60 % in order for the Company to achieve minimal compliance with its loan to value covenant.

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.

For the period from April 1, 2022 to September 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 September 30, 2022, there was $ 66.7 million outstanding under the Senior Credit Facility, carried net of a total unamortized discount of $ 1.3 million.

On November 12, 2022, MediaCo entered into Amendment No.

There is substantial doubt that the Company will be in compliance with these covenants in subsequent periods.

See further discussion in Note 1.

Long-term debt was comprised of the note payable to Emmis of $ 6.0 million at March 31, 2023 and December 31, 2022.

Emmis Convertible Promissory Note

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

As of September 30, 2022, the principal balance outstanding under the Emmis Convertible Promissory Note was $ 6.1 million.

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

The Second Amended and Restated SG Broadcasting Promissory Note and Additional SG Broadcasting Promissory Note (the “SG Broadcasting Promissory Notes”) carry 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 %, and 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 SG Broadcasting Promissory Notes mature on May 25, 2025.

Additionally, interest under the SG Broadcasting Promissory Notes is payable in kind through maturity, and is convertible into MediaCo Class A common stock at the option of SG Broadcasting at a strike price equal to the thirty day volume weighted average price of the MediaCo Class A common stock on the date of conversion.

On May 19, 2021, the Company issued to SG Broadcasting a subordinated convertible promissory note (the “May 2021 SG Broadcasting Promissory Note”), in return for which SG Broadcasting contributed $ 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.

The May 2021 SG Broadcasting 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 %, and an additional increase of 1.0 % on November 25, 2021 and additional annual increases of 1.0 % following each successive anniversary thereafter.

The May 2021 SG Broadcasting Promissory Note matures on May 25, 2025 and interest is payable in kind through maturity.

Subject to prior shareholder approval of the issuance of the shares, the May 2021 SG Broadcasting Promissory Note is convertible into MediaCo Class A common stock at the option of SG Broadcasting at a strike price equal to the thirty day volume weighted average price of the MediaCo Class A common stock on the date of conversion.

On June 1, 2021, SG Broadcasting contributed $ 1.0 million to the Company under the May 2021 SG Broadcasting Promissory Note as required by Amendment No.

4 to the Senior Credit Facility.

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.

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 September 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 Emmis Note Total Payments

Remainder of 2022

$ 918 $ — $ 918

2023 3,672 — 3,672

2024 62,147 6,124 68,271

Thereafter — — —

Total $ 66,737 $ 6,124 $ 72,861

As of March 31, 2023, the principal balance outstanding under the Emmis Convertible Promissory Note was $ 6.0 million.

Based on amounts outstanding at March 31, 2023, mandatory principal payments of long-term debt are $ 6.0 million in 2024.

Senior Secured Term Loan Agreement

Until December 9, 2022, the Company had a five-year senior secured term loan agreement (the “Senior Credit Facility”) with GACP Finance Co., LLC, (“GACP”) a Delaware limited liability company, as administrative agent and collateral agent.

On December 9, 2022, following the consummation of the transactions contemplated by the Purchase Agreement, the Company repaid in full, without penalty, all of its obligations under the Senior Credit Facility, which was terminated at that time.

SG Broadcasting Promissory Notes

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 (as defined below) of $ 28.0 million and $ 1.9 million, respectively, for 12.9 million shares of the Company’s Class A common stock.

The SG Broadcasting Promissory Notes were terminated at that time, except for one such promissory note issued on May 19, 2021 (the “May 2021 SG Broadcasting Promissory Note”), which remains outstanding, but with no amounts outstanding thereunder as of December 31, 2022 or March 31, 2023.

REGULATORY, LEGAL AND OTHER MATTERS

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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.

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.

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 of $ 28.0 million and $ 1.9 million, respectively, for 12.9 million shares of the Company's Class A common stock.

The Note Conversion increased the Company’s stockholders’ equity by approximately $ 29.9 million.

As a result, the Company regained compliance with the stockholders’ equity requirement based upon the transactions and events described above.

On August 1, 2022, Nasdaq sent the Company a letter confirming conditional compliance with Listing Rule 5550(b)(1), reminding the Company that it must maintain compliance on a go forward basis (the “Nasdaq Compliance Letter”).

The Company understands that Nasdaq will continue to monitor the Company’s ongoing compliance with the stockholders’ equity requirement.

In the event the Company fails to maintain compliance within the plan period, the Company may be subject to delisting from Nasdaq.

The Company would have the right to a hearing before an independent panel with respect to a delisting decision, which hearing request would stay the decision pending the conclusion of the hearing process.

Neither the Nasdaq Letter nor the Nasdaq Compliance Letter, 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 nine months ended September 30, 2022, and 2021 was ( 2 )% and ( 8 )%, respectively.

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

The effective tax rate for the three months ended March 31, 2023 and 2022 was 4 % and 2 %, respectively.

Our effective tax rate for the three months ended March 31, 2023 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.

We have operating leases for office space, sites upon which advertising structures are built, tower space, equipment and automobiles expiring at various dates through October 2049.

We have operating leases for office space and tower space expiring at various dates through August 2039.

Some leases have options to extend and some have options to terminate.

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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 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 nine months ended September 30, 2022 and 2021 was $ 0.1 million.

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

None of our leases contain variable lease payments.

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 and nine months ended September 30, 2022 and 2021 was not material.

Short-term lease expense recognized in the three months ended March 31, 2023 and 2022 was not material.

On November 18, 2022, the Company entered into a lease agreement in New York City for our radio operations and corporate offices with a lease commencement date of February 1, 2023 and a noncancellable lease term through August 2039.

This resulted in a right of use asset of $ 10.4 million and an operating lease liability of $ 10.4 million when recorded at lease commencement.

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Operating lease cost $ 952 $ 637

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Right-of-use assets obtained in exchange for new operating lease liabilities 10,391 —

September 30, 2022 December 31, 2021

March 31, 2023 December 31, 2022

Weighted average remaining lease term - operating leases (in years) 13.6 7.0

Weighted average discount rate - operating leases 11.2 % 5.9 %

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

As of March 31, 2023, the annual minimum lease payments of our operating lease liabilities were as follows:

Year ending December 31,

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Total recorded lease liabilities $ 15,617

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 September 30, 2022, is as follows:

Year ending December 31,

Remainder of 2022

ASSET RETIREMENT OBLIGATIONS

The Company’s asset retirement obligations include the costs associated with the removal of its structures, resurfacing of the land, and retirement cost, if applicable, related to the Company’s outdoor advertising portfolio.

The following table reflects information related to our asset retirement obligations.

Balance at December 31, 2021

Additions to asset retirement obligations 51

Accretion expense 586

Liabilities settled ( 77 )

Balance at September 30, 2022

SEGMENT INFORMATION

The Company’s operations are aligned into two business segments:

Radio and Outdoor Advertising.

Radio includes the operations and results of WQHT-FM and WBLS-FM, and Outdoor Advertising includes the operations and results of the Fairway businesses acquired in December 2019 and additional acquisitions thereafter.

The Company groups activities that are not considered operating segments in the “All Other” category.

These business segments are consistent with the Company’s management of these businesses and its financial reporting structure.

Corporate expenses, including transaction costs, are not allocated to reportable segments.

The Company’s segments operate exclusively in the United States.

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.

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

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

Net revenues $ 8,270 $ 3,555 $ — $ 11,825

Operating expenses excluding depreciation and amortization expense 6,983 2,619 — 9,602

Corporate expenses — — 1,460 1,460

Depreciation and amortization 85 821 — 906

Loss on disposal of assets — 26 — 26

Operating income (loss) $ 1,202 $ 89 $ ( 1,460 ) $ ( 169 )

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

Net revenues $ 14,361 $ 3,459 $ — $ 17,820

Operating expenses excluding depreciation and amortization expense 10,467 2,073 — 12,540

Corporate expenses — — 2,422 2,422

Depreciation and amortization 179 889 — 1,068

Gain on disposal of assets — — — —

Operating income (loss) $ 3,715 $ 497 $ ( 2,422 ) $ 1,790

Nine Months Ended September 30, 2022 Radio Outdoor Advertising All Other Consolidated

Net revenues $ 28,914 $ 10,598 $ — $ 39,512

Operating expenses excluding depreciation and amortization expense 24,930 7,920 — 32,850

Corporate expenses — — 5,286 5,286

Depreciation and amortization 272 2,468 — 2,740

Loss on disposal of assets — 71 — 71

Operating income (loss) $ 3,712 $ 139 $ ( 5,286 ) $ ( 1,435 )

Nine Months Ended September 30, 2021 Radio Outdoor Advertising All Other Consolidated

Net revenues $ 31,714 $ 10,225 $ — $ 41,939

Operating expenses excluding depreciation and amortization expense 21,497 6,622 — 28,119

Corporate expenses — — 5,908 5,908

Depreciation and amortization 553 2,474 — 3,027

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

Operating income (loss) $ 9,664 $ 1,207 $ ( 5,908 ) $ 4,963

Total Assets Radio Outdoor Advertising Consolidated

September 30, 2022 $ 84,843 $ 55,081 $ 139,924

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

RELATED PARTY TRANSACTIONS

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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.

The sale closed on November 25, 2019, at which time MediaCo and Emmis also entered into a management agreement (the “Management Agreement”), an employee leasing agreement (the “Employee Leasing Agreement”) and certain other ancillary agreements.

The Management Agreement with Emmis Operating Company was for an initial term of two years (cancellable by MediaCo after 18 months) under which Emmis provided various services to us, including accounting, human resources, information technology, legal, public reporting and tax.

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

For the nine months ended September 30, 2021, MediaCo recorded $ 0.9 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 (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.

On June 1, 2021, SG Broadcasting loaned $ 1.0 million to the Company under the May 2021 SG Broadcasting Promissory Note as required by Amendment No.

4 to the Senior Credit Facility.

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 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 Notes, respectively.

Through December 31, 2021, there were additional borrowings from SG Broadcasting and annual interest amounts paid in kind on the Emmis Convertible Promissory Note and SG Broadcasting Promissory Notes such that the principal balances outstanding as of December 31, 2021 were $ 6.2 million and $ 27.6 million, respectively.

In addition to the November 2019 SG Broadcasting Promissory Note, we issued additional promissory notes to evidence our indebtedness to SG Broadcasting (collectively with the November 2019 SG Broadcasting Promissory Note, the “SG Broadcasting Promissory Notes”).

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.

On July 28, 2022, SG Broadcasting exercised its right under the SG Broadcasting Promissory Notes to fully convert the outstanding principal and accrued but unpaid interest into the Company’s Class A common stock.

The SG Broadcasting Promissory Notes were terminated at that time, except for the May 2021 SG Broadcasting Promissory Note, which remains outstanding, but with no amounts outstanding thereunder as of December 31, 2022 or March 31, 2023.

On August 19, 2022, Emmis exercised its right under the Emmis Convertible Promissory Note to convert $ 30 thousand of the outstanding principal for 11 thousand shares of the Company’s Class A common stock.

Consequently, the principal amount outstanding as of September 30, 2022 under the Emmis Convertible Promissory Note was $ 6.1 million.

The Company recognized interest expense of $ 0.6 million and $ 0.5 million related to the Emmis Convertible Promissory Note for the nine months ended September 30, 2022, and 2021, respectively.

The Company recognized interest expense of $ 1.8 million related to the SG Broadcasting Promissory Notes for both the nine months ended September 30, 2022, and 2021.

The terms of these notes are described in Note 4.

On November 25, 2022, annual interest of $ 0.8 million was paid in kind and added to the principal balance of the Emmis Convertible Promissory Note.

On December 21, 2022, Emmis exercised its right under the Emmis Convertible Promissory Note to convert $ 0.9 million of the outstanding principal and $ 0.1 million of accrued but unpaid interest for 0.8 million shares of the Company’s Class A common stock.

Consequently, the principal amount outstanding as of December 31, 2022 and March 31, 2023 under the Emmis Convertible Promissory Note was $ 6.0 million.

The Company recognized interest expense of $ 0.1 million and $ 0.2 million related to the Emmis Convertible Promissory Note for the three months ended March 31, 2023 and 2022, respectively.

The Company recognized no interest expense related to the SG Broadcasting Promissory Notes for the three months ended March 31, 2023 and $ 0.8 million for the three months ended March 31, 2022.

The terms of these Emmis Convertible Promissory Note is described in Note 5.

Convertible Preferred Stock

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On December 13, 2022, dividends of $ 3.4 million were paid in kind.

The payment in kind increased the accrued value of the preferred stock and no additional shares were issued as part of this payment.

The payment in kind increased the accrued value of the preferred stock and 80,000 additional shares were issued as part of this payment.

MediaCo Series A Preferred Shares are redeemable for cash at the option of SG Broadcasting at any time on or after June 12, 2025, and so the shares are classified outside of permanent equity.

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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 $ 2.5 million and $ 2.0 million, respectively, for the nine months ended September 30, 2022, and 2021.

As of September 30, 2022, and December 31, 2021, unpaid cumulative dividends were $ 2.6 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

On April 22, 2020, MediaCo and Emmis entered into a certain Loan Proceeds Participation Agreement (the “LPPA”) pursuant to which (i) Emmis agreed to use certain of the proceeds of the loan Emmis received pursuant to the Paycheck Protection Program (“PPP”) under Division A, Title I of the CARES Act to pay certain wages of employees leased to MediaCo pursuant to the Employee Leasing Agreement, between Emmis and MediaCo, (ii) Emmis agreed to waive up to $ 1.5 million in reimbursement obligations of MediaCo to Emmis under the Employee Leasing Agreement to the extent that the PPP Loan is forgiven, and (iii) MediaCo agreed to promptly pay Emmis an amount equal to 31.56 % of the amount of the PPP Loan, if any, that Emmis is required to repay, up to the amount of the reimbursement obligations forgiven under (ii) above.

Standard General L.P., on behalf of all of the funds for which it serves as an investment advisor, agreed to guaranty MediaCo’s obligations under the LPPA.

During 2021, Emmis received notification the full amount of the loan was forgiven.

Dividends on Series A Convertible Preferred Stock held by SG Broadcasting were $ 0.6 million and $ 0.8 million, respectively, for the three months ended March 31, 2023 and 2022.

As of March 31, 2023 and December 31, 2022, unpaid cumulative dividends were $ 0.7 million and $ 0.1 million, respectively, and included in the balance of preferred stock in the accompanying condensed consolidated balance sheets.

On December 28, 2022, SG Broadcasting exercised its right to partially convert $ 4.0 million of the outstanding balance on the MediaCo Series A Preferred Shares for 3.3 million shares of the Company’s Class A common stock.

Management Agreement for Billboards LLC

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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.

$ 0.1 million of income was recognized for the nine months ended September 30, 2022 and 2021.

$ 0.2 million and $ 0.1 million of out-of-pocket expenses were incurred for the nine months ended September 30, 2022 and 2021, respectively, in relation to the Billboard Agreement, $ 0.1 million of which was outstanding at September 30, 2022 and December 31, 2021.

$ 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.

On December 9, 2022, in connection with the sale of the assets held by Fairway, the Billboard Agreement was terminated pursuant to mutual agreement between Fairway and Billboards.

SUBSEQUENT EVENTS

On November 12, 2022 , MediaCo entered into Amendment No.

There is substantial doubt that the Company will be in compliance with these covenants in subsequent periods.

See further discussion in Note 1.

In April 2023, we paid the full amount of outstanding federal income taxes payable of $ 3.0 million.

There were no other subsequent events other than those discussed in Note 1.

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