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Item 1. Financial Statements

2024-05-15 compared with 2023-11-13 · 108 added, 163 removed, 362 unchanged (43% of the section changed)

3 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

(in thousands, except per share amounts) 2024 2023

4 unchanged sentences

Depreciation and amortization 133 159

Loss (gain) on disposal of assets 11 — ( 28 ) —

Gain on disposal of assets — ( 39 )

Total operating expenses 10,173 9,241

3 unchanged sentences

Other (expense) income 10 129

Total other income (expense) ( 105 ) ( 1,666 ) ( 318 ) ( 5,672 )

Total other (expense) income ( 126 ) 26

LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES ( 3,593 ) ( 1,880 )

19 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

September 30,

2024 December 31,

6 unchanged sentences

Other current assets 874 1,188

Current assets of discontinued operations 22 1,066

Total current assets 15,112 13,908

3 unchanged sentences

Operating lease right of use assets 13,529 13,614

Restricted cash 1,906 1,876

Deposits and other 2,177 1,996

4 unchanged sentences

Accounts payable and accrued expenses $ 6,662 $ 2,625

Current maturities of long-term debt 6,458 6,458

Accrued salaries and commissions 688 539

3 unchanged sentences

Other current liabilities 225 29

Current liabilities of discontinued operations 142 659

Total current liabilities 16,495 11,717

10 unchanged sentences

authorized 170,000,000 shares;

issued and outstanding 21,025,498 shares and 20,443,138 shares at September 30, 2023, and December 31, 2022, respectively

issued and outstanding 20,578,568 shares and 20,741,865 shares at March 31, 2024, and December 31, 2023, respectively

Class B common stock, $ 0.01 par value;

authorized 50,000,000 shares;

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

issued and outstanding 5,413,197 shares at March 31, 2024, and December 31, 2023

Class C common stock, $ 0.01 par value;

12 unchanged sentences

Net loss — — — — — ( 3,677 ) ( 3,677 )

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

Issuance of class A to employees, officers and directors, net ( 151,993 ) ( 4 ) — — 291 — 287

Repurchase of class A common shares ( 11,304 ) — — — ( 7 ) — ( 7 )

1 unchanged sentence

BALANCE, MARCH 31, 2024 20,578,568 $ 206 5,413,197 $ 54 $ 60,578 $ ( 27,548 ) $ 33,290

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

Net loss — — — — — ( 2,316 ) ( 2,316 )

Issuance of class A to employees, officers and directors 752,901 7 — — 367 — 374

Conversion of convertible promissory notes ( 132,760 ) ( 1 ) — — ( 104 ) — ( 105 )

Preferred stock dividends — — — — — ( 602 ) ( 602 )

BALANCE, SEPTEMBER 30, 2023 21,025,498 $ 210 5,413,197 $ 54 $ 60,077 $ ( 19,734 ) $ 40,607

BALANCE, DECEMBER 31, 2022

1 unchanged sentence

Net loss — — — — — ( 2,107 ) ( 2,107 )

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

Issuance of class A to employees, officers and directors, net 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

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

1 unchanged sentence

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2024 2023

4 unchanged sentences

Depreciation and amortization 133 159

Amortization of deferred financing costs, including original issue discount — 487

Noncash interest expense — 665

Noncash lease expense 85 651

12 unchanged sentences

Other liabilities 167 133

Net cash (used in) provided by continuing operating activities ( 3,662 ) 3,377

Net cash provided by continuing operating activities 412 818

Net cash provided by discontinued operating activities — 160

Net cash (used in) provided by operating activities ( 3,403 ) 4,725

Net cash provided by operating activities 412 978

CASH FLOWS FROM INVESTING ACTIVITIES:

5 unchanged sentences

CASH FLOWS FROM FINANCING ACTIVITIES:

Payments of long-term debt — ( 1,836 )

Repurchases of class A common stock ( 7 ) ( 571 )

9 unchanged sentences

Cash, cash equivalents and restricted cash of continuing operations at end of period $ 7,231 $ 15,012

SUPPLEMENTAL DISCLOSURES:

Cash paid for interest $ — $ 5,151

Cash paid for income taxes $ 3,021 $ —

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

5 unchanged sentences

(“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.

See Note 10 for additional information.

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.

3 unchanged sentences

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

Reclassifications

Certain amounts in the prior years’ unaudited condensed consolidated financial statements have been reclassified to conform to the current year presentation.

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 Accounting Standards Codification (“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 within one year of the date of issuance of these financial statements (May 15, 2024).

Based on its current projections of future cash flows, current financial condition, sources of liquidity and debt service obligations due on or before May 15, 2025, the Company believes it has the ability to meet its obligations for at least one year from the date of issuance of these condensed consolidated financial statements.

In the 2023 Form 10-K filed on April 1, 2024, the Company stated that it had substantial doubt about its ability to continue as a going concern within one year after the date the financial statements were issued.

As a result of the consummation of the transactions contemplated by the asset purchase agreement and related debt and equity issuances discussed in Note 10, the conditions described in the 2023 Form 10-K that raised substantial doubt about whether the Company would continue as a going concern no longer exist.

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.

MediaCo considers 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, classified in current assets, 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, which expires in August 2039, classified in long-term assets.

Restricted cash at March 31, 2024 and December 31, 2023 consisted of $ 1.4 million and $ 1.3 million, respectively, held in escrow related to the Company's disposition of the Fairway business, classified in current assets, and $ 1.9 million as of March 31, 2024 and December 31, 2023 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, which expires in October 2039, and included in the line item Deposits and Other in the condensed consolidated balance sheets.

Fair Value Measurements

12 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 and nine-month periods ended September 30, 2023 and 2022 was as follows:

The activity in the allowance for credit losses for the three-month periods ended March 31, 2024 and 2023 was as follows:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Beginning Balance $ 353 $ 122

15 unchanged sentences

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Loss from continuing operations $ ( 3,677 ) $ ( 1,955 )

15 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 nine-month periods ended September 30, 2023 or 2022.

For the nine month period ended September 30, 2023, we repurchased under a share repurchase plan 584,604 shares of Class A common stock for an aggregate of $ 0.7 million.

Subsequent to September 30, 2023 through November 2, 2023 we repurchased an additional 10,229 shares of Class A common stock under the share repurchase plan for an aggregate of $ 7 thousand.

No shares were sold during the three-month periods ended March 31, 2024 or 2023.

For the three month period ended March 31, 2024, we repurchased under a share repurchase plan 11,304 shares of Class A common stock for an immaterial amount.

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

September 30, Nine Months Ended

September 30,

(in thousands) 2024 2023

Convertible Emmis promissory note 9,423 4,742

Convertible Standard General promissory notes — 4,693 — 2,543

Series A convertible preferred stock 41,546 20,926

1 unchanged sentence

Total anti-dilutive shares 51,115 25,862

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.

It also modifies the impairment model for available-for-sale debt securities and provides a simplified accounting model for purchased financial assets with credit deterioration since their origination.

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

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.

Recent Accounting Pronouncements Not Yet Implemented

In December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which is intended to enhance the transparency and decision usefulness of income tax disclosures by enhancing information about how an entity’s operations and related tax risks and its tax planning and operation opportunities affect its tax rate and prospects for future cash flows.

This guidance is effective for fiscal years beginning after December 31, 2024, with early adoption permitted.

Adoption allows for prospective application, with retrospective application permitted.

We are currently assessing the impact this standard will have on our condensed consolidated financial statements, including, but not limited to, our income taxes footnote disclosure.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures to update reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance.

This update is effective beginning with the Company’s 2024 fiscal year annual reporting period, with early adoption permitted.

We are currently assessing the impact this standard will have on our condensed consolidated financial statements.

DISCONTINUED OPERATIONS

7 unchanged sentences

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 financial results of Fairway are presented as income from discontinued operations on our condensed consolidated statements of operations.

The following table presents the financial results of Fairway:

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Net revenues $ — $ —

1 unchanged sentence

Operating expenses excluding depreciation and amortization expense — 152

Depreciation and amortization — 807 — 2,426

Loss on disposal of assets — 26 — 71

Total operating expenses — 152

4 unchanged sentences

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

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

September 30, 2023 December 31, 2022

Accounts receivable, net — 1,026

Total current assets of discontinued operations 22 1,066

Accounts payable and accrued expenses 142 659

Total current liabilities of discontinued operations 142 659

INTANGIBLE ASSETS

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

September 30, 2023 December 31, 2022

As of March 31, 2024 and December 31, 2023, intangible assets consisted of the following:

March 31, 2024 December 31, 2023

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 September 30, 2023 and December 31, 2022.

The carrying amounts of the Company’s FCC licenses were $ 63.3 million as of March 31, 2024 and December 31, 2023.

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 September 30, 2023, and the gross carrying amount and accumulated amortization at September 30, 2023 and December 31, 2022, for our definite-lived intangible assets:

September 30, 2023 December 31, 2022

The following table presents the weighted-average useful life at March 31, 2024, and the gross carrying amount and accumulated amortization at March 31, 2024 and December 31, 2023, for our definite-lived intangible assets:

March 31, 2024 December 31, 2023

Weighted Average Remaining Useful Life

4 unchanged sentences

They cost $ 1.7 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 months ended September 30, 2023 was $ 0.1 million and $ 0.2 million, respectively.

There was no amortization expense from definite-lived intangible assets for the three and nine months ended September 30, 2022.

Total amortization expense from definite-lived intangible assets for each of the three months ended March 31, 2024 and 2023 was $ 0.1 million.

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

Year ending December 31, Amortization Expense

2023 (from October 1) $ 79

After 2027 141

2024 (from April 1) $ 260

Total $ 1,397

31 unchanged sentences

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

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

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

Three Months Ended March 31,

2024 % of Total 2023 % 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 September 30, 2023 and December 31, 2022.

Long-term debt was comprised of the note payable to Emmis of $ 6.5 million at March 31, 2024 and December 31, 2023 and was classified as current at March 31, 2024 and December 31, 2023 as the note matures within the next 12 months.

Emmis Convertible Promissory Note

3 unchanged sentences

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

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

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

As of March 31, 2024, the principal balance outstanding under the Emmis Convertible Promissory Note was $ 6.5 million.

Based on amounts outstanding at March 31, 2024, mandatory principal payments of long-term debt are $ 6.5 million in 2024.

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.

On September 15, 2023, the Company received a deficiency letter (the “Nasdaq Letter”) from the Nasdaq Listing Qualifications Department (the “Staff”) notifying the Company that, for the last 31 consecutive business days preceding the date of the Nasdaq Letter, the closing bid price for the Company’s common stock was below the minimum $1.00 per share required for continued listing on The Nasdaq Capital Market pursuant to Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Price Requirement”).

The Nasdaq deficiency letter has no immediate effect on the listing of the Company’s common stock, and its common stock will continue to trade on The Nasdaq Capital Market under the symbol “MDIA” at this time.

In accordance with Nasdaq Listing Rule 5810(c)(3)(A)(ii), the Company has been given 180 calendar days, or until March 13, 2024, to regain compliance with the Minimum Bid Price Requirement.

If at any time before March 13, 2024, the bid price of the Company’s common stock closes at $1.00 per share or more for a minimum of 10 consecutive business days, the Staff will provide written confirmation that the Company has achieved compliance.

If the Company does not regain compliance with the Minimum Bid Price Requirement by March 13, 2024, the Company may be afforded a second 180 calendar day period to regain compliance.

To qualify, the Company would be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, except for the Minimum Bid Price Requirement.

In addition, the Company would be required to notify Nasdaq of its intent to cure the deficiency during the second compliance period.

The Company would then be afforded the second 180 calendar day period to regain compliance, unless it does not appear to Nasdaq that it is possible for the Company to cure the deficiency.

If the Company does not regain compliance with the Minimum Bid Price Requirement by the end of the compliance period (or the second compliance period, if applicable), the Company’s common stock will become subject to delisting.

In the event that the Company receives notice that its common stock is being delisted, the Nasdaq listing rules permit the Company to appeal a delisting determination by the Staff to a hearings panel.

The Company intends to monitor the closing bid price of its common stock and may, if appropriate, consider available options to regain compliance with the Minimum Bid Price Requirement, including initiating a reverse stock split.

However, there can be no assurance that the Company will be able to regain compliance with the Minimum Bid Price Requirement or will otherwise be in compliance with other Nasdaq Listing Rules.

The effective tax rate for the nine months ended September 30, 2023 and 2022 was 5 % and 3 %, respectively.

Our effective tax rate for the nine months ended September 30, 2023 differs from the statutory tax rate primarily due to the recognition of additional valuation allowance.

Accounting Standards Codification paragraph 740-10 clarified the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute of the financial statement recognition and measurement of a tax position taken or expected to be taken within a tax return.

On September 15, 2023, the Company received a notification letter from the Nasdaq Listing Qualifications Department (the “Staff”) notifying the Company that, because the closing bid price for the Company's Class A common stock was below $1.00 for 30 consecutive business days, the Company no longer met the minimum bid price requirement for continued listing on The Nasdaq Capital Market under Nasdaq Marketplace Rule 5550(a)(2), requiring a minimum bid price of $1.00 per share (the “Minimum Bid Price Requirement”).

In accordance with Nasdaq Listing Rule 5810(c)(3)(A)(ii), the Company was given 180 calendar days, or until March 13, 2024, to regain compliance with the Minimum Bid Price Requirement.

The Company did not achieve compliance during that period.

On March 14, 2024, the Company received a notification letter from the Staff notifying the Company that that it had been granted an additional 180 days, or until September 9, 2024, to regain compliance with the Minimum Bid Price Requirement, based on meeting the continued listing requirement for market value of publicly held shares and all other applicable requirements for initial listing on The Nasdaq Capital Market with the exception of the bid price requirement, and the Company’s written notice of its intention to cure the deficiency during the second compliance period.

On April 17, 2024, the Company received a notification letter from the Staff indicating that the Company has regained compliance with Nasdaq’s Minimum Bid Price Requirement and the matter is closed.

The effective tax rate for the three months ended March 31, 2024 and 2023 was 2 % and 4 %, respectively.

Our effective tax rate for the three months ended March 31, 2024 differs from the statutory tax rate primarily due to the recognition of additional valuation allowance.

ASC paragraph 740-10 clarified the accounting for uncertainty in income taxes by prescribing a recognition threshold and measurement attribute of the financial statement recognition and measurement of a tax position taken or expected to be taken within a tax return.

For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

The amount recognized is measured as the largest benefit that reaches greater than 50% likelihood of being realized upon ultimate settlement.

During this quarter, we recorded approximately $ 374 thousand of gross tax liability for uncertain tax positions related to federal and state income tax returns filed.

In 2023, we recorded approximately $ 390 thousand of gross tax liability for uncertain tax positions related to federal and state income tax returns filed.

Additionally, we recognize accrued interest and penalties related to unrecognized tax benefits as components of our income tax provision.

As of September 30, 2023, the amount of interest accrued was approximately $ 15 thousand, which did not include the federal tax benefit of interest deductions.

As of March 31, 2024, the amount of interest accrued was approximately $ 34 thousand, which did not include the federal tax benefit of interest deductions.

We determine if an arrangement is a lease at inception.

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

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

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

11 unchanged sentences

We elected this policy for all classes of underlying assets.

Short-term lease expense recognized in the three and nine months ended September 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.

Short-term lease expense recognized in the three months ended March 31, 2024 and 2023 was not material.

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.

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2023 2022 2023 2022

Operating lease cost $ 634 $ 952

1 unchanged sentence

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

September 30, 2023 December 31, 2022

March 31, 2024 December 31, 2023

Weighted average remaining lease term - operating leases (in years) 13.8 14.0

Weighted average discount rate - operating leases 11.5 % 11.4 %

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

As of March 31, 2024, the annual minimum lease payments of our operating lease liabilities were as follows:

Year ending December 31,

2023 (from July 1)

2024 (from April 1)

After 2028 26,560

7 unchanged sentences

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.

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

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 September 30, 2023 under the Emmis Convertible Promissory Note was $ 6.0 million.

The Company recognized interest expense of $ 0.4 million and $ 0.6 million related to the Emmis Convertible Promissory Note for the nine months ended September 30, 2023 and 2022, respectively.

The Company recognized no interest expense related to the SG Broadcasting Promissory Notes for the nine months ended September 30, 2023 and $ 1.8 million for the nine months ended September 30, 2022.

As a result of the transaction described above, on November 25, 2019, we issued a convertible promissory notes to Emmis (such note, the “Emmis Convertible Promissory Note”) in the amount of $ 5.0 million.

Through December 31, 2022, there were annual interest amounts paid in kind on the Emmis Convertible Promissory Note such that the principal balances outstanding as of December 31, 2022 was $ 6.0 million.

For the year ended December 31, 2023, interest of $ 0.5 million was paid-in-kind and added to the principal balance outstanding.

Consequently, the principal amount outstanding as of December 31, 2023 and March 31, 2024 under the Emmis Convertible Promissory Note was $ 6.5 million.

The Company recognized interest expense of $ 0.2 million and $ 0.1 million related to the Emmis Convertible Promissory Note for the three months ended March 31, 2024 and 2023, respectively.

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 $ 1.8 million and $ 2.5 million, respectively, for the nine months ended September 30, 2023 and 2022.

As of September 30, 2023 and December 31, 2022, unpaid cumulative dividends were $ 1.9 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

On August 11, 2020, the board of directors of the Company unanimously authorized the entry into a certain Management Agreement (the “Billboard Agreement”) between Fairway Outdoor LLC (a subsidiary of the Company, “Fairway”) and Billboards LLC (an affiliate of Standard General, “Billboards”).

Under the Billboard Agreement, Fairway will manage the billboard business of Billboards in exchange for payments of $ 25 thousand per quarter and reimbursement of all out-of-pocket expenses incurred by Fairway in the performance of its duties under the Billboard Agreement.

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 and $ 0.2 million of out-of-pocket expenses were incurred for the nine months ended September 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.

Dividends on Series A Convertible Preferred Stock held by SG Broadcasting were $ 0.7 million and $ 0.6 million, respectively, for the three months ended March 31, 2024 and 2023.

As of March 31, 2024 and December 31, 2023, unpaid cumulative dividends were $ 0.9 million and $ 0.2 million, respectively, and included in the balance of preferred stock in the accompanying condensed consolidated balance sheets.

On April 16, 2024, SG Broadcasting exercised its right to entirely convert $ 29.6 million of the outstanding balance on the MediaCo Series A Preferred Shares for 20.7 million shares of the Company’s Class A common stock.

Consulting Agreements & Other Activity

In October 2023, we entered into agreements with five consultants that are currently employed by affiliates of Standard General.

Four of the agreements have a term that expires on February 1, 2024 and are billed at hourly rates between $ 150 and $ 250 per hour.

One of the agreements had a term that expired on February 1, 2024 and was billed at an hourly rate of $ 125 per hour.

Three of the agreements have a term that expires on May 31, 2024 and are billed at rates of $ 6,000 , $ 8,400 , and $ 12,000 per month.

One agreement may be terminated at any time by either party and is billed at $ 18,000 per month, plus expenses.

As of September 30, 2023, $ 13 thousand of fees were incurred related to these agreements.

For the three months ended March 31, 2024, $ 0.2 million of fees were incurred related to these agreements.

In March 2024, we made payments of $ 15,000 to the National Association of Investment Companies, of which a member of our board of directors is the President & CEO.

SUBSEQUENT EVENTS

On October 11, 2023, Rahsan-Rahsan Lindsay, the Chief Executive Officer of the Company, resigned as an officer of the Company and as a member of the Board of Directors of the Company, both effective on such date.

To facilitate the transition of Mr.

Lindsay’s duties, he remained as consultant to the Company through October 31, 2023.

In connection with Mr.

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

Lindsay received, upon execution of a customary release, a lump sum cash payment of $ 119,516 , which is equal to two months of the cash portion of Mr.

Lindsay’s current base salary, plus an additional amount relating to accrued paid time off.

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

The Separation Agreement also provided that Mr.

Lindsay and the Company will enter into a consulting agreement covering the period through October 31, 2023, during which Mr.

Lindsay was available to provide consulting services to the Company on an as needed basis for a lump sum payment of $ 33,242 , payable within thirty days after the date of the consulting agreement.

On October 12, 2023, the Company announced the appointment of Kudjo Sogadzi, the Company’s current Chief Operating Officer as interim President of the Company.

There were no other subsequent events other than the stock repurchases discussed in Note 1.

On April 17, 2024, MediaCo, and its wholly-owned subsidiary MediaCo Operations LLC, a Delaware limited liability company (“Purchaser”), entered into an asset purchase agreement (the “Asset Purchase Agreement”) with Estrella Broadcasting, Inc., a Delaware corporation (“Estrella”), and SLF LBI Aggregator, LLC, a Delaware limited liability company (“Aggregator”) and affiliate of HPS Investment Partners, LLC (“HPS”), pursuant to which Purchaser purchased substantially all of the assets of Estrella and its subsidiaries (other than certain broadcast assets owned by Estrella and its subsidiaries (the “Estrella Broadcast Assets”)) (the “Purchased Assets”), and assumed substantially all of the liabilities (the “Assumed Liabilities”) of Estrella and its subsidiaries.

Estrella operates seven television stations located in California, Texas, New York, Colorado, Illinois, and Florida as well as 12 radio stations in California and Texas.

MediaCo provided the following consideration for the Purchased Assets:

A warrant (the “Warrant”) to purchase up to 28,206,152 shares of MediaCo’s Class A Common Stock, par value $ 0.01 per share (“Class A Common Stock”);

60,000 shares of a newly designated series of MediaCo’s preferred stock designated as “Series B Preferred Stock” (the “Series B Preferred Stock”);

A term loan in the principal amount of $ 30.0 million under the Second Lien Credit Agreement (as defined below) (the “Second Lien Term Loan”);

An aggregate cash payment in the amount of approximately $ 30.0 million to be used, in part, for the repayment of certain indebtedness of Estrella and payment of certain Estrella transaction expenses.

Other key terms and agreements related to this transaction are summarized below.

Option Agreement

On April 17, 2024, in connection with the Transactions contemplated by the Asset Purchase Agreement (the “Transactions”), MediaCo and Purchaser entered into an Option Agreement (the “Option Agreement”) with Estrella and certain subsidiaries of Estrella pursuant to which (i) Purchaser was granted the option to purchase 100 % of the equity interests of certain subsidiaries of Estrella holding the Estrella Broadcast Assets (the “Option Subsidiaries Equity”) in exchange for 7,051,538 shares of Class A Common Stock, and (ii) Estrella was granted the right to put the Option Subsidiaries Equity to Purchaser for the same consideration beginning six months after the date of the closing of the Transactions (the “Closing Date”).

The Option Agreement is subject to FCC approval.

First Lien Term Loan

In order to finance the Transactions, MediaCo and its direct and indirect subsidiaries entered into a maximum $ 45.0 million first lien term loan credit facility, dated April 17, 2024 (the “First Lien Credit Agreement”), with White Hawk Capital Partners, LP, as term agent thereunder, and the lenders party thereto.

Under the terms of the First Lien Credit Agreement, MediaCo received an initial term loan of $ 35.0 million on April 17, 2024 (the “Initial Loan”) and was provided with a subsequent delayed draw facility of up to $ 10.0 million that may be provided for additional working capital purposes under certain conditions (the “Delayed Draw” and the loans thereunder, the “Delayed Draw Term Loans”).

The Initial Loan and Delayed Draw Term Loans are collectively referred to as the “First Lien Term Loans.” The proceeds of the Initial Loan were used to finance the Transactions, pay off certain existing indebtedness in connection therewith and pay related fees and transaction costs.

The Initial Loan will mature on April 17, 2029, and each Delayed Draw Term Loan will mature on the date that is two years after the drawing of such Delayed Draw Term Loan.

First Lien Term Loans will be subject to monthly amortization payments equal to 0.8333 % of the initial principal amount of the First Lien Term Loans, and monthly interest payments at a rate of SOFR + 6.00 %.

The Delayed Draw Term Loans have an unused lien fee of 1 % and a delayed draw term loan upfront fee of 3 %.

As of May 9, 2024, $ 5 million remains to be drawn on the Delayed Draw Term Loans.

The First Lien Term Loans are subject to a borrowing base in accordance with the terms of the First Lien Credit Agreement.

Second Lien Term Loan

In addition, MediaCo and its direct and indirect subsidiaries entered into a $ 30.0 million second lien term loan credit facility, dated April 17, 2024 (the “Second Lien Credit Agreement”), with HPS as term agent, and the lenders party thereto.

Under the terms of the Second Lien Credit Agreement, MediaCo was deemed to receive the Second Lien Term Loan of $ 30.0 million on April 17, 2024 in exchange for the Transactions.

The Second Lien Term Loan will mature on April 17, 2029 and will be subject to monthly interest payments at a rate of SOFR + 6.00 %.

The Second Lien Term Loans are subject to a borrowing base in accordance with the terms of the Second Lien Credit Agreement.

MediaCo is currently paying the variable SOFR interest in cash while the fixed rate portion is paid in-kind.

Network Affiliation and Supply Agreements

On April 17, 2024, in connection with the Transactions, Purchaser entered into a Network Program Supply Agreement (the “Network Program Supply Agreement”) with certain subsidiaries of Estrella that operate radio broadcast stations (the “Radio Stations”).

Pursuant to the Network Program Supply Agreement, Purchaser has agreed to license certain programs and other material to the Radio Stations for distribution on the Radio Stations’ broadcast channels.

On April 17, 2024, in connection with the Transactions, Purchaser entered into a Network Affiliation Agreement (the “Network Affiliation Agreement”) with certain subsidiaries of Estrella that operate television broadcast stations (the “TV Stations”).

Pursuant to the Network Affiliation Agreement, Purchaser has agreed to license certain programs and other material to the TV Stations for distribution on the TV Stations’ broadcast channels.

There were no other subsequent events other than the conversion of MediaCo Series A Preferred Shares for shares of the Company’s Class A common stock discussed in Note 9.

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