Item 1A. Risk Factors
Item 1A. Risk Factors
Except for the death of our founder, Chairman, President and CEO, Edward K. Christian, on August 19, 2022, as of the date of this report, there have been no material changes to the risk factors previously disclosed in response to Part 1, “Item 1A. Risk Factors,” of our annual report on Form 10-K for the year ended December 31, 2021.
Risks Related to the Radio Broadcasting Industry
We Depend on Key Personnel
Our business is partially dependent upon the performance of certain key individuals. Although we have entered into employment and non-competition agreements with certain key personnel, including on-air personalities, we cannot be certain that such key personnel will remain with the Company. We can also give no assurance that all or any of these employees will remain with the Company or will retain their audiences. Many of our key employees are at-will employees and are therefore under no legal obligation to remain with the Company. Our competitors may choose to extend offers to any of these individuals on terms which we may be unwilling to meet. In addition, any or all of our key employees may decide to leave for a variety of personal or other reasons beyond our control. Furthermore, the popularity and audience loyalty of our key on-air personalities is highly sensitive to rapidly changing public tastes. A loss of such popularity or audience loyalty is beyond our control and could limit our ability to generate revenues.
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Risks Related to the Ownership of Our Stock
The Company is No Longer Controlled by Our President, Chief Executive Officer and Chairman
As of March 4, 2022, Edward K. Christian, our President, Chief Executive Officer and Chairman, held approximately 66% of the combined voting power of our Common Stock (based on Class B Common Stock generally being entitled to ten votes per share, with certain exceptions, but not including options to acquire Class B Common Stock). As a result, Mr. Christian was generally able to control the vote on most matters submitted to the vote of stockholders and, therefore, was able to direct our management and policies, except with respect to (i) the election of the two Class A directors, (ii) those matters where the shares of our Class B Common Stock are only entitled to one vote per share, and (iii) other matters requiring a class vote under the provisions of our certificate of incorporation, bylaws or applicable law. Upon Mr. Christian’s passing on August 19, 2022, his Class B shares were transferred into an estate planning trust and that transfer resulted in an automatic conversion of each Class B share he held into one fully paid and non-assessable Class A Share. Those Class A Shares have the same voting rights as all other Class A Shares, and the estate has approximately 16% voting rights after the conversion of the shares from Class B Shares to Class A Shares. As a result of the change in control, the Company has entered into a period of significant transition and is potentially more vulnerable to activist investors or hostile takeover attempts. If the Company is unable to manage this transition effectively, it may have an adverse impact on the Company and its shareholders.
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