What changed in this filing

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Item 1. Financial Statements

2023-08-10 compared with 2023-05-11 · 96 added, 57 removed, 391 unchanged (28% of the section changed)

3 unchanged sentences

Three Months Ended

June 30, Six Months Ended

(in thousands, except per share amounts) 2023 2022 2023 2022

9 unchanged sentences

Interest expense, net ( 116 ) ( 1,929 ) ( 219 ) ( 4,006 )

Other income 129 —

Other (expense) income ( 123 ) — 6 —

Total other income (expense) ( 239 ) ( 1,929 ) ( 213 ) ( 4,006 )

3 unchanged sentences

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 )

Income (loss) from discontinued operations before income taxes 9 ( 656 ) ( 143 ) ( 1,697 )

Income tax expense from discontinued operations — ( 10 ) — —

NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS 9 ( 666 ) ( 143 ) ( 1,697 )

CONSOLIDATED NET LOSS ( 421 ) ( 2,903 ) ( 2,528 ) ( 7,196 )

50 unchanged sentences

authorized 170,000,000 shares;

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

issued and outstanding 20,405,357 shares and 20,443,138 shares at June 30, 2023, and December 31, 2022, respectively

Class B common stock, $ 0.01 par value;

authorized 50,000,000 shares;

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

issued and outstanding 5,413,197 shares at June 30, 2023, and December 31, 2022

Class C common stock, $ 0.01 par value;

16 unchanged sentences

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

Net loss — — — — — ( 421 ) ( 421 )

Issuance of class A to employees, officers and directors ( 150,485 ) ( 2 ) — — 266 — 264

Repurchase of class A common shares ( 56,031 ) ( 1 ) — — ( 67 ) — ( 68 )

Preferred stock dividends — — — — — ( 596 ) ( 596 )

BALANCE, JUNE 30, 2023 20,405,357 $ 204 5,413,197 $ 54 $ 59,814 $ ( 16,816 ) $ 43,256

BALANCE, DECEMBER 31, 2021

4 unchanged sentences

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 )

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Three Months Ended March 31,

Six Months Ended June 30,

(in thousands) 2023 2022

14 unchanged sentences

Prepaid expenses and other current assets ( 703 ) ( 87 )

Other assets ( 172 ) —

Accounts payable and accrued liabilities ( 996 ) 994

1 unchanged sentence

Operating lease liabilities ( 666 ) ( 1,000 )

Income taxes ( 3,021 ) —

Other liabilities 250 1,460

Net cash provided by continuing operating activities 818 4,618

Net cash (used in) provided by continuing operating activities ( 3,671 ) 3,290

Net cash provided by discontinued operating activities 390 598

Net cash provided by operating activities 978 4,661

Net cash (used in) provided by operating activities ( 3,281 ) 3,888

CASH FLOWS FROM INVESTING ACTIVITIES:

5 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of long-term debt — ( 918 )

Repurchases of class A common stock ( 639 ) —

3 unchanged sentences

Net cash used in financing activities ( 1,006 ) ( 2,183 )

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

CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH ( 5,207 ) 410

CASH, CASH EQUIVALENTS AND RESTRICTED CASH:

5 unchanged sentences

Cash paid for interest $ — $ 3,389

Cash paid for income taxes $ 3,021 $ —

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

35 unchanged sentences

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 activity in the allowance for credit losses for the three-month and six-month periods ended June 30, 2023 and 2022 was as follows:

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Beginning Balance $ 102 $ 120 $ 122 $ 186

Change in Provision — 52 ( 20 ) ( 7 )

Write Offs — ( 52 ) — ( 59 )

Ending Balance $ 102 $ 120 $ 102 $ 120

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.

Due to the COVID-19 pandemic, the global economy and financial markets have been disrupted and there is uncertainty about the length and severity of the consequences caused by the pandemic.

The Company has considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities.

7 unchanged sentences

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.

For periods with 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

June 30, Six Months Ended

2023 2022 2023 2022

Loss from continuing operations $ ( 430 ) $ ( 2,237 ) $ ( 2,385 ) $ ( 5,499 )

1 unchanged sentence

Loss from continuing operations available to common shareholders ( 1,026 ) ( 3,017 ) ( 3,571 ) ( 7,117 )

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

Income (loss) from discontinued operations, net of income taxes 9 ( 666 ) ( 143 ) ( 1,697 )

Net loss attributable to common shareholders $ ( 1,017 ) $ ( 3,683 ) $ ( 3,714 ) $ ( 8,814 )

11 unchanged sentences

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 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.

No shares were sold during the six-month periods ended June 30, 2023 or 2022.

For the six month period ended June 30, 2023, we repurchased under a share repurchase plan 451,844 shares of Class A common stock for an aggregate of $ 0.6 million.

Subsequent to June 30, 2023 through August 3, 2023 we repurchased an additional 15,542 shares of Class A common stock under the share repurchase plan for an aggregate of $ 17 thousand.

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.

Three Months Ended

June 30, Six Months Ended

(in thousands) 2023 2022 2023 2022

22 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Net revenues $ — $ 3,621 $ — $ 7,043

4 unchanged sentences

Total operating expenses ( 9 ) 3,423 143 6,965

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

Income (loss) from operations of discontinued operations 9 198 ( 143 ) 78

Interest and other, net — ( 854 ) — ( 1,775 )

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 )

Income (loss) from discontinued operations, before income taxes 9 ( 656 ) ( 143 ) ( 1,697 )

Income tax expense — ( 10 ) — —

Income (loss) from discontinued operations, net of income taxes $ 9 $ ( 666 ) $ ( 143 ) $ ( 1,697 )

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

June 30, 2023 December 31, 2022

Accounts receivable, net — 1,026

3 unchanged sentences

INTANGIBLE ASSETS

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

March 31, 2023 December 31, 2022

As of June 30, 2023 and December 31, 2022, intangible assets consisted of the following:

June 30, 2023 December 31, 2022

Indefinite-lived intangible assets

6 unchanged sentences

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, 2023 and December 31, 2022.

The carrying amounts of the Company’s FCC licenses were $ 63.3 million as of June 30, 2023 and December 31, 2022.

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

16 unchanged sentences

Definite-lived intangibles

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

The following table presents the weighted-average useful life at June 30, 2023, and the gross carrying amount and accumulated amortization at June 30, 2023 and December 31, 2022, for our definite-lived intangible assets:

June 30, 2023 December 31, 2022

Weighted Average Remaining Useful Life

4 unchanged sentences

They cost $ 1.3 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-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.

Total amortization expense from definite-lived intangible assets for the three and six months ended June 30, 2023 was $ 0.1 million.

There was no amortization expense from definite-lived intangible assets for the three and six months ended June 30, 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

Year ending December 31, Amortization Expense

2023 (from July 1) $ 123

After 2027 91

32 unchanged sentences

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

Three Months Ended March 31,

2023 % of Total 2022 % of Total

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

2023 % of Total 2022 % of Total 2023 % of Total 2022 % of Total

Revenue by Source:

6 unchanged sentences

LONG-TERM DEBT

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

Long-term debt was comprised of the note payable to Emmis of $ 6.0 million at June 30, 2023 and December 31, 2022.

Emmis Convertible Promissory Note

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.

The Company has been accruing interest since inception using the rate applicable if the interest will be paid in kind.

The Emmis Convertible Promissory Note is convertible, in whole or in part, into MediaCo Class A common stock at the option of Emmis and 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.

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

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.

As of June 30, 2023, the principal balance outstanding under the Emmis Convertible Promissory Note was $ 6.0 million.

Based on amounts outstanding at June 30, 2023, mandatory principal payments of long-term debt are $ 6.0 million in 2024.

Senior Secured Term Loan Agreement

3 unchanged sentences

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.

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 expired on June 30, 2023, with no amounts outstanding thereunder as of December 31, 2022 or June 30, 2023.

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, 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.

The effective tax rate for the six months ended June 30, 2023 and 2022 was 7 % and 3 %, respectively.

Our effective tax rate for the six months ended June 30, 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.

13 unchanged sentences

We elected this policy for all classes of underlying assets.

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

Short-term lease expense recognized in the three and six months ended June 30, 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.

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2023 2022 2023 2022

Operating lease cost $ 1,107 $ 638 $ 2,059 $ 1,275

1 unchanged sentence

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

March 31, 2023 December 31, 2022

June 30, 2023 December 31, 2022

Weighted average remaining lease term - operating leases (in years) 14.1 7.0

Weighted average discount rate - operating leases 11.4 % 5.9 %

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

As of June 30, 2023, the annual minimum lease payments of our operating lease liabilities were as follows:

Year ending December 31,

Remainder of 2023

2023 (from July 1)

After 2027 28,915

12 unchanged sentences

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.

1 unchanged sentence

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.

Consequently, the principal amount outstanding as of December 31, 2022 and June 30, 2023 under the Emmis Convertible Promissory Note was $ 6.0 million.

The Company recognized interest expense of $ 0.3 million and $ 0.4 million related to the Emmis Convertible Promissory Note for the six months ended June 30, 2023 and 2022, respectively.

The Company recognized no interest expense related to the SG Broadcasting Promissory Notes for the six months ended June 30, 2023 and $ 1.5 million for the six months ended June 30, 2022.

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

9 unchanged sentences

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 $ 0.6 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.

Dividends on Series A Convertible Preferred Stock held by SG Broadcasting were $ 1.2 million and $ 1.6 million, respectively, for the six months ended June 30, 2023 and 2022.

As of June 30, 2023 and December 31, 2022, unpaid cumulative dividends were $ 1.3 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.

3 unchanged sentences

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.

$ 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.

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

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.

On July 11, 2023, Bradford A.

Tobin, the President, Chief Operating Officer, General Counsel and Secretary of MediaCo, resigned as an officer of the Company, effective on such date.

To facilitate the transition of Mr.

Tobin’s duties, he remained an employee of the Company, serving in an advisory position, through August 11, 2023.

In connection with Mr.

Tobin’s resignation, he and the Company entered into a Separation and Release Agreement, dated July 11, 2023 (the “Separation Agreement”), pursuant to which Mr.

Tobin received, in lieu of any compensation to which he would have been entitled under his Employment Agreement dated February 9, 2022 (the “Employment Agreement”), a lump sum cash payment equal to (i) $ 175,000 , which is equal to six months of the cash portion of Mr.

Tobin’s current base salary, plus (ii) $ 19,000 , as payment of the cost of six months of COBRA benefits.

In addition, the vesting of all equity awards held by Mr.

Tobin was accelerated to the date of his separation, in accordance with the Employment Agreement.

The Separation Agreement is subject to a customary release and customary confidentiality, non-disparagement and other provisions.

The Separation Agreement also provided that Mr.

Tobin and the Company entered into a consulting agreement covering the period from August 12, 2023 through November 11, 2023, during which Mr.

Tobin will be available to provide consulting services to the Company for up to ten hours per week on an as needed basis at an hourly rate.

Also on July 11, 2023, the Company announced the appointment of Kudjo Sogadzi, age 40, as the Company’s Chief Operating Officer, effective July 14, 2023.

Sogadzi will join the Company as an at-will employee and shall receive (i) an annual base salary of $ 200,000 , (ii) a grant, made on the Start Date, of Class A common shares of the Company totaling $ 150,000 , with the number of Shares calculated using a 5-day VWAP ending on the date prior to the Start Date, which Shares shall vest annually in three equal tranches on the first three anniversaries of the Start Date, and (iii) the potential to earn a discretionary annual bonus, subject to approval by the Board of Directors and Compensation Committee of the Board, with a target amount of 50 % of his annual base salary.

There were no other subsequent events other than the stock repurchases 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