10-Q 1 bbgi-20240930.htm 10-Q 10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_______________

 

FORM 10-Q

 

[X]

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Quarterly Period Ended September 30, 2024

 

OR

 

[ ]

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from to

 

Commission File Number: 000-29253

 

BEASLEY BROADCAST GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Delaware

65-0960915

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

3033 Riviera Drive, Suite 200

Naples, Florida 34103

(Address of Principal Executive Offices and Zip Code)

 

(239) 263-5000

(Registrant's Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of Each Class

Trading Symbol

Name of Each Exchange on which Registered

Class A Common Stock, par value $0.001 per share

BBGI

Nasdaq Capital Market

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

Emerging growth company

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

 

Class A Common Stock, $0.001 par value, 938,690 Shares Outstanding as of November 1, 2024

 

Class B Common Stock, $0.001 par value, 833,137 Shares Outstanding as of November 1, 2024

 

 

 

 


 

INDEX

 

 

 

 

Page

No.

 

 

 

 

PART I

 

FINANCIAL INFORMATION

 

 

 

 

Item 1.

Condensed Consolidated Financial Statements.

 

 

 

 

 

 

 

Notes to Condensed Consolidated Financial Statements.

 

7

 

 

 

 

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

15

 

 

 

 

Item 3.

Quantitative and Qualitative Disclosures About Market Risk.

 

22

 

 

 

 

Item 4.

Controls and Procedures.

 

22

 

 

 

 

PART II

 

OTHER INFORMATION

 

 

 

 

Item 1.

Legal Proceedings.

 

24

 

 

 

 

Item 1A.

Risk Factors.

 

24

 

 

 

 

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds.

 

24

 

 

 

 

Item 3.

Defaults Upon Senior Securities.

 

24

 

 

 

 

Item 4.

Mine Safety Disclosures.

 

24

 

 

 

 

Item 5.

Other Information.

 

24

 

 

 

 

Item 6.

Exhibits.

 

25

 

 

 

 

SIGNATURES

 

26

 

 


 

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

 

 

 

December 31,

 

 

September 30,

 

 

 

2023

 

 

2024

 

ASSETS

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents

 

$

26,733,921

 

 

$

27,802,179

 

Accounts receivable, less allowance for credit losses of $1,752,058 in 2023 and
   $
1,540,801 in 2024

 

 

53,424,196

 

 

 

49,111,535

 

Prepaid expenses

 

 

4,338,503

 

 

 

8,734,475

 

Other current assets

 

 

2,150,163

 

 

 

1,927,173

 

Total current assets

 

 

86,646,783

 

 

 

87,575,362

 

Property and equipment, net

 

 

51,474,754

 

 

 

48,768,141

 

Operating lease right-of-use assets

 

 

34,767,126

 

 

 

31,348,246

 

FCC licenses

 

 

393,006,900

 

 

 

393,006,900

 

Goodwill

 

 

922,000

 

 

 

-

 

Other intangibles, net

 

 

2,722,408

 

 

 

2,138,913

 

Other assets

 

 

4,727,967

 

 

 

8,641,225

 

Total assets

 

$

574,267,938

 

 

$

571,478,787

 

 

 

 

 

 

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable

 

$

14,299,048

 

 

$

19,137,663

 

Operating lease liabilities

 

 

8,082,981

 

 

 

8,250,391

 

Other current liabilities

 

 

25,913,827

 

 

 

27,304,666

 

Total current liabilities

 

 

48,295,856

 

 

 

54,692,720

 

Due to related parties

 

 

55,019

 

 

 

31,985

 

Long-term debt, net of unamortized debt issuance costs

 

 

264,203,010

 

 

 

265,209,926

 

Operating lease liabilities

 

 

33,440,246

 

 

 

29,669,724

 

Deferred tax liabilities

 

 

71,894,915

 

 

 

68,641,044

 

Other long-term liabilities

 

 

7,400,257

 

 

 

7,400,257

 

Total liabilities

 

 

425,289,303

 

 

 

425,645,656

 

Commitments and contingencies

 

 

 

 

 

 

Stockholders' equity:

 

 

 

 

 

 

Preferred stock, $0.001 par value; 10,000,000 shares authorized; none issued

 

 

-

 

 

 

-

 

Class A Common Stock, $0.001 par value; 150,000,000 shares authorized; 869,569
   issued and
682,697 outstanding in 2023; 895,998 issued and 702,442
   outstanding in 2024(1)

 

 

17,389

 

 

 

17,917

 

Class B Common Stock, $0.001 par value; 75,000,000 shares authorized; 833,137
   issued and outstanding in 2023 and 2024(1)

 

 

16,662

 

 

 

16,662

 

Additional paid-in capital

 

 

152,794,353

 

 

 

153,567,083

 

Treasury stock, Class A Common Stock; 186,872 shares in 2023; 193,556 shares
   in 2024(1)

 

 

(29,239,179

)

 

 

(29,329,315

)

Retained earnings

 

 

25,042,926

 

 

 

21,214,300

 

Accumulated other comprehensive income

 

 

346,484

 

 

 

346,484

 

Total stockholders' equity

 

 

148,978,635

 

 

 

145,833,131

 

Total liabilities and stockholders' equity

 

$

574,267,938

 

 

$

571,478,787

 

 

(1)
The shares of Class A and Class B Common Stock have been retroactively adjusted to reflect the 1-for-20 Reverse Stock Split that occurred on September 23, 2024. See Note 15 for additional information.

 

See accompanying notes to condensed consolidated financial statements

3


 

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS (UNAUDITED)

 

 

 

Three Months Ended September 30,

 

 

 

2023

 

 

2024

 

Net revenue

 

$

60,119,757

 

 

$

58,190,116

 

Operating expenses:

 

 

 

 

 

 

Operating expenses (including stock-based compensation of $37,041 in 2023
   and $
19,995 in 2024 and excluding depreciation and amortization shown
   separately below)

 

 

50,117,044

 

 

 

49,946,133

 

Corporate expenses (including stock-based compensation of $140,773 in 2023
   and $
338,211 in 2024)

 

 

4,493,277

 

 

 

4,296,615

 

Depreciation and amortization

 

 

2,201,664

 

 

 

1,788,126

 

FCC licenses impairment losses

 

 

78,204,065

 

 

 

-

 

Goodwill impairment losses

 

 

10,582,360

 

 

 

922,000

 

Total operating expenses

 

 

145,598,410

 

 

 

56,952,874

 

Operating income (loss)

 

 

(85,478,653

)

 

 

1,237,242

 

Non-operating income (expense):

 

 

 

 

 

 

Interest expense

 

 

(6,445,746

)

 

 

(6,092,820

)

Other income (expense), net

 

 

1,106,918

 

 

 

(75,120

)

Loss before income taxes

 

 

(90,817,481

)

 

 

(4,930,698

)

Income tax benefit

 

 

(23,299,388

)

 

 

(1,309,803

)

Loss before equity in earnings of unconsolidated affiliates

 

 

(67,518,093

)

 

 

(3,620,895

)

Equity in earnings of unconsolidated affiliates, net of tax

 

 

(18,744

)

 

 

60,320

 

Net loss

 

 

(67,536,837

)

 

 

(3,560,575

)

Net loss per Class A and Class B common share(1):

 

 

 

 

 

 

Basic and diluted

 

$

(45.08

)

 

$

(2.33

)

Weighted-average shares outstanding(1):

 

 

 

 

 

 

Basic and diluted

 

 

1,498,131

 

 

 

1,529,521

 

 

(1)
Weighted-average shares outstanding used in the computation of basic and diluted Net loss per Class A and Class B common share have been retroactively adjusted to reflect the 1-for-20 Reverse Stock Split that occurred on September 23, 2024. See Note 15 for additional information.

 

See accompanying notes to condensed consolidated financial statements

4


 

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET LOSS (UNAUDITED)

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2024

 

Net revenue

 

$

181,360,600

 

 

$

173,006,119

 

Operating expenses:

 

 

 

 

 

 

Operating expenses (including stock-based compensation of $109,261 in 2023
   and $
55,912 in 2024 and excluding depreciation and amortization shown
   separately below)

 

 

152,098,261

 

 

 

148,534,924

 

Corporate expenses (including stock-based compensation of $424,160 in 2023
   and $
717,346 in 2024)

 

 

13,381,403

 

 

 

12,584,218

 

Depreciation and amortization

 

 

6,626,974

 

 

 

5,455,622

 

FCC licenses impairment losses

 

 

88,245,065

 

 

 

-

 

Goodwill impairment losses

 

 

10,582,360

 

 

 

922,000

 

Total operating expenses

 

 

270,934,063

 

 

 

167,496,764

 

Operating income (loss)

 

 

(89,573,463

)

 

 

5,509,355

 

Non-operating income (expense):

 

 

 

 

 

 

Interest expense

 

 

(19,764,067

)

 

 

(17,772,957

)

Gain on sale of investment

 

 

-

 

 

 

6,026,776

 

Other income, net

 

 

1,684,168

 

 

 

552,145

 

Loss before income taxes

 

 

(107,653,362

)

 

 

(5,684,681

)

Income tax benefit

 

 

(26,285,207

)

 

 

(1,796,019

)

Loss before equity in earnings of unconsolidated affiliates

 

 

(81,368,155

)

 

 

(3,888,662

)

Equity in earnings of unconsolidated affiliates, net of tax

 

 

(135,877

)

 

 

60,036

 

Net loss

 

 

(81,504,032

)

 

 

(3,828,626

)

Net loss per Class A and Class B common share(1):

 

 

 

 

 

 

Basic and diluted

 

$

(54.58

)

 

$

(2.52

)

Weighted-average shares outstanding(1):

 

 

 

 

 

 

Basic and diluted

 

 

1,493,391

 

 

 

1,521,204

 

 

(1)
Weighted-average shares outstanding used in the computation of basic and diluted Net loss per Class A and Class B common share have been retroactively adjusted to reflect the 1-for-20 Reverse Stock Split that occurred on September 23, 2024. See Note 15 for additional information.

 

See accompanying notes to condensed consolidated financial statements

5


 

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

 

 

Nine Months Ended September 30,

 

 

 

2023

 

 

2024

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(81,504,032

)

 

$

(3,828,626

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Stock-based compensation

 

 

533,421

 

 

 

773,258

 

Provision for credit losses

 

 

1,006,830

 

 

 

742,185

 

Depreciation and amortization

 

 

6,626,974

 

 

 

5,455,622

 

FCC licenses impairment losses

 

 

88,245,065

 

 

 

-

 

Goodwill impairment losses

 

 

10,582,360

 

 

 

922,000

 

Amortization of loan fees

 

 

1,097,214

 

 

 

1,006,916

 

Gain on sale of investment

 

 

-

 

 

 

(6,026,776

)

Gain on repurchases of long-term debt

 

 

(973,208

)

 

 

-

 

Deferred income taxes

 

 

(26,977,992

)

 

 

(3,253,871

)

Equity in earnings of unconsolidated affiliates

 

 

135,877

 

 

 

(60,036

)

Change in operating assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

7,989,945

 

 

 

3,570,476

 

Prepaid expenses

 

 

(5,558,093

)

 

 

(4,395,972

)

Other assets

 

 

2,572,946

 

 

 

(3,939,082

)

Accounts payable

 

 

(3,964,866

)

 

 

4,838,615

 

Other liabilities

 

 

(4,887,810

)

 

 

1,120,813

 

Other operating activities

 

 

70,484

 

 

 

833,136

 

Net cash used in operating activities

 

 

(5,004,885

)

 

 

(2,241,342

)

Cash flows from investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(3,060,716

)

 

 

(2,627,040

)

Proceeds from dispositions

 

 

250,000

 

 

 

-

 

Proceeds from sale of investment

 

 

-

 

 

 

6,026,776

 

Net cash provided by (used in) investing activities

 

 

(2,810,716

)

 

 

3,399,736

 

Cash flows from financing activities:

 

 

 

 

 

 

Payments on debt

 

 

(1,983,750

)

 

 

-

 

Purchase of treasury stock

 

 

(69,838

)

 

 

(90,136

)

Net cash used in financing activities

 

 

(2,053,588

)

 

 

(90,136

)

Net increase (decrease) in cash and cash equivalents

 

 

(9,869,189

)

 

 

1,068,258

 

Cash and cash equivalents at beginning of period

 

 

39,534,653

 

 

 

26,733,921

 

Cash and cash equivalents at end of period

 

$

29,665,464

 

 

$

27,802,179

 

Cash paid for interest

 

$

24,946,655

 

 

$

23,028,749

 

Cash paid for income taxes

 

$

1,353,057

 

 

$

351,975

 

 

See accompanying notes to condensed consolidated financial statements

6


 

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1)
Interim Financial Statements

 

The accompanying unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements of Beasley Broadcast Group, Inc. and its subsidiaries (the “Company”) included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023. These financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, the financial statements reflect all adjustments necessary for a fair statement of the financial position and results of operations for the interim periods presented, and all such adjustments are of a normal and recurring nature. The Company’s results are subject to seasonal fluctuations; therefore, the results shown on an interim basis are not necessarily indicative of results for the full year.

 

(2)
Recent Accounting Pronouncements

In December 2023, the Financial Accounting Standards Board (“FASB”) issued guidance which requires additional disclosures primarily related to the Company's income tax rate reconciliation and income taxes paid. The guidance is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied prospectively. The Company is currently in the process of reviewing the new guidance.

In November 2023, the FASB issued guidance which requires additional disclosures for the Company's reportable segments, primarily related to significant segment expenses. The guidance is effective for fiscal years beginning after December 15, 2023, and interim periods within the fiscal years beginning after December 15, 2024, with early adoption permitted. The amendments should be applied retrospectively to all prior periods presented in the financial statements. The Company is currently in the process of reviewing the new guidance.

(3)
Proceeds from BMI Sale

On March 8, 2024, the Company received $6.0 million related to the sale of an investment in Broadcast Music, Inc. ("BMI") and recorded a gain of $6.0 million. The gain on sale of investment is reported in the accompanying condensed consolidated statement of net loss for the nine months ended September 30, 2024. After the sale, the Company no longer holds an investment in BMI.

 

(4)
Disposition

On September 11, 2023, the Company completed the sale of substantially all of the assets used in the operations of WWWE-AM
in Atlanta, GA to a third party for $
250,000 in cash.

 

(5)
FCC Licenses

Federal Communications Commission ("FCC") licenses are tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the FCC licenses might be impaired. The Company assesses qualitative factors to determine whether it is more likely than not that its FCC licenses are impaired. If the Company determines it is more likely than not that its FCC licenses are impaired, then the Company is required to perform the quantitative impairment test. The quantitative impairment test compares the fair value of the FCC licenses with the carrying amounts of such licenses. If the carrying amounts of the FCC licenses exceed the fair value, an impairment loss is recognized in an amount equal to that excess. For the purpose of testing FCC licenses for impairment, the Company combines its licenses into reporting units based on its market clusters. The FCC license valuations are Level 3 non-recurring fair value measurements.

Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, the Company tested its FCC
licenses for impairment during the third quarter of 2023. As a result of the quantitative impairment tests performed as of September
30, 2023, the Company recorded impairment losses of $
78.2 million related to the FCC licenses in each of its market clusters. The
impairment losses were primarily due to an increase in the discount rate due to certain risks associated with the U.S. economy and a
decrease in the projected revenues in each market cluster used in the discounted cash flow analyses to estimate the fair values of the
FCC licenses.

7


BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

The fair values of the FCC licenses in each of the market clusters were estimated using an income approach. The income
approach is based upon discounted cash flow analyses incorporating variables such as projected radio market revenues, projected
growth rate for radio market revenues, projected radio market revenue shares, projected radio station operating income margins, and a
discount rate appropriate for the radio broadcasting industry.
The key assumptions used in the discounted cash flow analyses are as
follows:
 

Revenue growth rates

 

(1.2)% - 1.8%

Market revenue shares at maturity

 

0.4% - 44.7%

Operating income margins at maturity

 

19.7% - 30.4%

Discount rate

 

10.0%

During the second quarter of 2023, due to the potential sale of substantially all of the assets used in the operations of WJBR-FM
in Wilmington, DE, the Company recorded an impairment loss of $
10.0 million related to the FCC license. The Company completed the sale of WJBR-FM on October 5, 2023.

 

(6)
Goodwill

Goodwill is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the
Company’s goodwill might be impaired. The Company assesses qualitative factors to determine whether it is necessary to perform a
quantitative assessment for each reporting unit. If the quantitative assessment is necessary, the Company will determine the fair value
of each reporting unit. If the fair value of any reporting unit is less than the carrying amount, the Company will recognize an
impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss recognized will not
exceed the total amount of goodwill allocated to the reporting unit. For the purpose of testing goodwill for impairment, the Company
has identified its radio market clusters and esports as its reporting units. The goodwill valuation is a Level 3 non-recurring fair value
measurement.

Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, the Company tested its goodwill for
impairment during the third quarter of 2023. As a result of the quantitative impairment test performed as of September 30, 2023, the
Company recorded an impairment loss of $
10.6 million related to the goodwill in its Philadelphia, PA market cluster. The impairment
loss was primarily due to an increase in the discount rate due to certain risks associated with the U.S. economy and a decrease in the
projected revenues used in the discounted cash flow analysis to estimate the fair value of the goodwill.

The fair value of the goodwill in the Philadelphia, PA market cluster was estimated using an income approach. The income
approach is based upon a discounted cash flow analysis incorporating variables such as projected radio market revenues, projected
growth rate for radio market revenues, projected radio market revenue shares, projected radio station operating income margins, and a
discount rate appropriate for the radio broadcasting industry.
The key assumptions used in the discounted cash flow analysis are as
follows:

Revenue growth rates

 

(9.3)% - 1.4%

Operating income margin

 

27.9%

Discount rate

 

10.0%

 

 

(7)
Long-Term Debt

Long-term debt is comprised of the following:

 

 

December 31,

 

 

September 30,

 

 

2023

 

 

2024

 

Secured notes

 

$

267,000,000

 

 

$

267,000,000

 

Less unamortized debt issuance costs

 

 

(2,796,990

)

 

 

(1,790,074

)

 

$

264,203,010

 

 

$

265,209,926

 

 

On February 2, 2021, the Company issued $300.0 million aggregate principal amount of 8.625% senior secured notes due on February 1, 2026 (the “Existing Notes”) under an indenture dated February 2, 2021 (the “Existing Notes Indenture”). Interest on the Existing Notes accrues at the rate of 8.625% per annum and is payable semiannually in arrears on February 1 and August 1 of each

8


BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

year. The Existing Notes are secured on a first-lien priority basis by substantially all assets of the Company and its majority-owned subsidiaries and are guaranteed jointly and severally by the Company and its majority-owned subsidiaries. Prior to February 1, 2025, the Company will be subject to certain premiums, as defined in the Existing Notes Indenture, for optional or mandatory (upon certain contingent events) redemption of some or all of the Existing Notes.

 

In the second quarter of 2023, the Company repurchased $3.0 million principal amount of the Existing Notes for a price equal to 66% of the principal amount and recorded a gain of $1.0 million as a result of the repurchase.

 

Subsequent to quarter end, on October 8, 2024, the Company completed certain refinancing transactions related to the Existing Notes. See Note 16 for additional information.

 

(8)
Stockholders’ Equity

The changes in stockholders’ equity are as follows:

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

Beginning balance

 

$

209,809,453

 

 

$

149,088,151

 

 

$

223,488,808

 

 

$

148,978,635

 

Stock-based compensation

 

 

177,814

 

 

 

358,206

 

 

 

533,421

 

 

 

773,258

 

Purchase of treasury stock

 

 

(2,071

)

 

 

(52,651

)

 

 

(69,838

)

 

 

(90,136

)

Net loss

 

 

(67,536,837

)

 

 

(3,560,575

)

 

 

(81,504,032

)

 

 

(3,828,626

)

Ending balance

 

$

142,448,359

 

 

$

145,833,131

 

 

$

142,448,359

 

 

$

145,833,131

 

 

(9)
Net Revenue

 

Net revenue is comprised of the following:

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

Audio

 

$

48,332,715

 

 

$

46,889,920

 

 

$

146,198,774

 

 

$

137,748,127

 

Digital

 

 

11,177,881

 

 

 

11,300,196

 

 

 

33,455,935

 

 

 

35,257,992

 

Other

 

 

609,161

 

 

 

-

 

 

 

1,705,891

 

 

 

-

 

 

$

60,119,757

 

 

$

58,190,116

 

 

$

181,360,600

 

 

$

173,006,119

 

 

The Company recognizes revenue when it satisfies a performance obligation under a contract with an advertiser. The transaction price is allocated to performance obligations based on executed contracts, which represent relative standalone selling prices. Payment is generally due within 30 days, although certain advertisers are required to pay in advance. Revenues are reported at the amount the Company expects to be entitled to receive under the contract. The Company has elected to use the practical expedient to expense sales commissions as incurred. Payments received from advertisers before the performance obligation is satisfied are recorded as deferred revenue in the balance sheets. Substantially all deferred revenue is recognized within 12 months of the payment date.

 

 

December 31,

 

 

September 30,

 

 

2023

 

 

2024

 

Deferred revenue

 

$

4,835,984

 

 

$

7,021,361

 

 

Audio revenue includes revenue from the sale or trade of aired commercial spots to advertisers directly or through national, regional or local advertising agencies. Each commercial spot is considered a performance obligation. Revenue is recognized when the commercial spots have aired. Trade sales are recorded at the estimated fair value of the goods or services received. If commercial spots are aired before the goods or services are received, then a trade sales receivable is recorded. If goods or services are received before the commercial spots are aired, then a trade sales payable is recorded. Other revenue includes revenue from concerts, promotional events, talent fees and other miscellaneous items. Such revenue is generally recognized when the concert, promotional event, or talent services are completed.

 

9


BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

December 31,

 

 

September 30,

 

 

2023

 

 

2024

 

Trade sales receivable

 

$

1,417,692

 

 

$

1,108,842

 

Trade sales payable

 

 

481,471

 

 

 

544,231

 

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

Trade sales revenue

 

$

1,441,228

 

 

$

1,680,660

 

 

$

4,288,722

 

 

$

4,156,738

 

 

Digital revenue includes revenue from the sale of streamed commercial spots, station-owned assets and third-party products. Each streamed commercial spot, station-owned asset and third-party product is considered a performance obligation. Revenue is recognized when the commercial spots have streamed. Station-owned assets are generally scheduled over a period of time and revenue is recognized over time as the digital items are used for advertising content, except for streamed commercial spots. Third-party products are generally scheduled over a period of time with an impression target each month. Revenue from the sale of third-party products is recognized over time as the digital items are used for advertising content and impression targets are met each month. The Company assesses each digital sales order to determine if the Company is operating as the principal or an agent. The Company currently operates as the principal for digital revenue.

(10)
Stock-Based Compensation

As a result of the Reverse Stock Split effected on September 23, 2024, consistent with the terms of the 2007 Plan and outstanding awards granted under the 2007 Plan, the total number of shares of Class A Common Stock issuable upon exercise, vesting or settlement of such awards and the total number of shares of Class A Common Stock remaining available for future awards under the 2007 Plan, as well as any share-based limits in the 2007 Plan, were proportionately reduced, and any fractional shares resulting therefrom were rounded down to the nearest whole share. Furthermore, the exercise prices of any outstanding options under the 2007 Plan were proportionately increased based on the Reverse Stock Split ratio, and the resulting exercise prices were rounded up to the nearest whole cent. All share and share-related information presented in the condensed consolidated financial statements, for all periods presented, has been retroactively adjusted to reflect the Reverse Stock Split.

The 2007 Plan permits the Company to issue up to 375,000 shares of Class A Common Stock. The 2007 Plan allows for eligible employees, directors and certain consultants of the Company to receive restricted stock units, shares of restricted stock, stock options or other stock-based awards. The restricted stock units that have been granted under the 2007 Plan generally vest over one to five years of service.

A summary of restricted stock unit activity is presented below:

 

 

Units

 

 

Weighted-Average Grant-Date Fair Value

 

Unvested as of July 1, 2024

 

 

47,438

 

 

$

21.40

 

Granted

 

 

49,625

 

 

 

12.87

 

Vested

 

 

(16,667

)

 

 

13.68

 

Forfeited

 

 

(1,250

)

 

 

29.80

 

Unvested as of September 30, 2024

 

 

79,146

 

 

$

17.59

 

 

As of September 30, 2024, there was $0.8 million of total unrecognized compensation cost for restricted stock units granted under the 2007 Plan. That cost is expected to be recognized over a weighted-average period of 2.1 years.

 

(11)
Income Taxes

 

The Company’s effective tax rate was (26)% and (27)% for the three months ended September 30, 2023 and 2024, respectively, and (24)% and (32)% for the nine months ended September 30, 2023 and 2024, respectively. These rates differ from the federal statutory rate of 21% due to the effect of state income taxes and certain expenses that are not deductible for tax purposes.

10


BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(12)
Earnings Per Share

 

Earnings per share calculation information is as follows:

 

 

Three months ended September 30,

 

 

Nine months ended September 30,

 

 

2023

 

 

2024

 

 

2023

 

 

2024

 

Net loss attributable to BBGI stockholders

 

$

(67,536,837

)

 

$

(3,560,575

)

 

$

(81,504,032

)

 

$

(3,828,626

)

Weighted-average shares outstanding(1):

 

 

 

 

 

 

 

 

 

 

 

 

Basic

 

 

1,498,131

 

 

 

1,529,521

 

 

 

1,493,391

 

 

 

1,521,204

 

Effect of dilutive restricted stock units

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

Diluted

 

 

1,498,131

 

 

 

1,529,521

 

 

 

1,493,391

 

 

 

1,521,204

 

Net loss attributable to BBGI stockholders per Class A and Class B common share – basic and diluted(1)

 

$

(45.08

)

 

$

(2.33

)

 

$

(54.58

)

 

$

(2.52

)

 

(1)
Weighted-average shares outstanding used in the computation of basic and diluted Net loss attributable to BBGI stockholders per Class A and Class B common share have been retroactively adjusted to reflect the 1-for-20 Reverse Stock Split that occurred on September 23, 2024. See Note 15 for additional information.

 

The Company excluded the effect of restrictive stock units and restricted stock under the treasury stock method when reporting a net loss as the addition of shares was anti-dilutive. As a result, the Company excluded 3,807 shares and 18,379 shares for the three months ended September 30, 2023 and 2024, respectively, and 4,166 shares and 23,588 shares for the nine months ended September 30, 2023 and 2024, respectively.

(13)
Financial Instruments

The carrying amount of the Company’s financial instruments, including cash and cash equivalents, accounts receivable and accounts payable, approximates fair value due to the short-term nature of these financial instruments.

The estimated fair value of the Existing Notes, based on available market information, was $173.2 million and $158.4 million as of December 31, 2023 and September 30, 2024, respectively. The Company used Level 2 measurements under the fair value measurement hierarchy to determine the estimated fair value of the Existing Notes.

(14)
Segment Information

The Company currently operates two operating and reportable segments (Audio and Digital). The Company also operated an
esports segment until December 13, 2023. The identification of segments is consistent with how the segments report to and are
managed by the Company’s Chief Executive Officer (the Company’s Chief Operating Decision Maker). The Audio segment generates
revenue primarily from the sale of commercial advertising to customers of the Company’s stations in the following markets: Augusta, GA, Boston, MA, Charlotte, NC, Detroit, MI, Fayetteville, NC, Fort Myers-Naples, FL, Las Vegas, NV, Middlesex, NJ,
Monmouth, NJ, Morristown, NJ, Philadelphia, PA, and Tampa-Saint Petersburg, FL. The Digital segment generates revenue primarily
from the sale of digital advertising to customers of the Company’s stations and other advertisers throughout the United States.
Corporate expenses includes general and administrative expenses and certain other income and expense items not allocated to the
operating segments. Non-operating corporate items, including interest expense and income taxes, are reported in the accompanying
condensed consolidated statements of net loss.

Reportable segment information for the three months ended September 30, 2024 is as follows:

 

 

Audio

 

 

Digital

 

 

Corporate

 

 

Total

 

Net revenue

 

$

46,889,920

 

 

$

11,300,196

 

 

$

-

 

 

$

58,190,116

 

Operating expenses

 

 

39,516,786

 

 

 

10,429,347

 

 

 

-

 

 

 

49,946,133

 

Corporate expenses

 

 

-

 

 

 

-

 

 

 

4,296,615

 

 

 

4,296,615

 

Depreciation and amortization

 

 

1,566,575

 

 

 

36,801

 

 

 

184,750

 

 

 

1,788,126

 

Goodwill impairment losses

 

 

-

 

 

 

922,000

 

 

 

-

 

 

 

922,000

 

Operating income (loss)

 

$

5,806,559

 

 

$

(87,952

)

 

$

(4,481,365

)

 

$

1,237,242

 

 

11


BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

 

Audio

 

 

Digital

 

 

Corporate

 

 

Total

 

Capital expenditures

 

$

417,497

 

 

$

(8,925

)

 

$

233,617

 

 

$

642,189

 

 

Reportable segment information for the three months ended September 30, 2023 is as follows:

 

 

Audio

 

 

Digital

 

 

Other

 

 

Corporate

 

 

Total

 

Net revenue

 

$

48,332,715

 

 

$

11,177,881

 

 

$

609,161

 

 

$

-

 

 

$

60,119,757

 

Operating expenses

 

 

38,932,340

 

 

 

10,110,593

 

 

 

1,074,111

 

 

 

-

 

 

 

50,117,044

 

Corporate expenses

 

 

-

 

 

 

-

 

 

 

-

 

 

 

4,493,277

 

 

 

4,493,277

 

Depreciation and amortization

 

 

1,741,376

 

 

 

47,397

 

 

 

199,979

 

 

 

212,912

 

 

 

2,201,664

 

FCC licenses impairment losses

 

 

78,204,065

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

78,204,065

 

Goodwill impairment losses

 

 

10,582,360

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,582,360

 

Operating income (loss)

 

$

(81,127,426

)

 

$

1,019,891

 

 

$

(664,929

)

 

$

(4,706,189

)

 

$

(85,478,653

)

 

 

Audio

 

 

Digital

 

 

Other

 

 

Corporate

 

 

Total

 

Capital expenditures

 

$

1,026,120

 

 

$

1,594

 

 

$

-

 

 

$

16,817

 

 

$

1,044,531

 

 

Reportable segment information for the nine months ended September 30, 2024 is as follows:

 

 

Audio

 

 

Digital

 

 

Corporate

 

 

Total

 

Net revenue

 

$

137,748,127

 

 

$

35,257,992

 

 

$

-

 

 

$

173,006,119

 

Operating expenses

 

 

117,418,596

 

 

 

31,116,328

 

 

 

-

 

 

 

148,534,924

 

Corporate expenses

 

 

-

 

 

 

-

 

 

 

12,584,218

 

 

 

12,584,218

 

Depreciation and amortization

 

 

4,757,501

 

 

 

141,680

 

 

 

556,441

 

 

 

5,455,622

 

Goodwill impairment losses

 

 

-

 

 

 

922,000

 

 

 

-

 

 

 

922,000

 

Operating income (loss)

 

$

15,572,030

 

 

$

3,077,984

 

 

$

(13,140,659

)

 

$

5,509,355

 

 

 

Audio

 

 

Digital

 

 

Corporate

 

 

Total

 

Capital expenditures

 

$

2,080,587

 

 

$

-

 

 

$

546,453

 

 

$

2,627,040

 

 

Reportable segment information for the nine months ended September 30, 2023 is as follows:

 

 

Audio

 

 

Digital

 

 

Other

 

 

Corporate

 

 

Total

 

Net revenue

 

$

146,198,774

 

 

$

33,455,935

 

 

$

1,705,891

 

 

$

-

 

 

$

181,360,600

 

Operating expenses

 

 

118,200,967

 

 

 

30,804,774

 

 

 

3,092,520

 

 

 

-

 

 

 

152,098,261

 

Corporate expenses

 

 

-

 

 

 

-

 

 

 

-

 

 

 

13,381,403

 

 

 

13,381,403

 

Depreciation and amortization

 

 

5,253,581

 

 

 

141,364

 

 

 

595,746

 

 

 

636,283

 

 

 

6,626,974

 

FCC licenses impairment losses

 

 

88,245,065

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

88,245,065

 

Goodwill impairment losses

 

 

10,582,360

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

10,582,360

 

Operating income (loss)

 

$

(76,083,199

)

 

$

2,509,797

 

 

$

(1,982,375

)

 

$

(14,017,686

)

 

$

(89,573,463

)

 

 

Audio

 

 

Digital

 

 

Other

 

 

Corporate

 

 

Total

 

Capital expenditures

 

$

2,975,897

 

 

$

13,184

 

 

$

25,534

 

 

$

46,101

 

 

$

3,060,716

 

 

Reportable segment information as of September 30, 2024 is as follows:

 

 

Audio

 

 

Digital

 

 

Corporate

 

 

Total

 

Property and equipment, net

 

$

45,725,915

 

 

$

71,162

 

 

$

2,971,064

 

 

$

48,768,141

 

FCC licenses

 

 

393,006,900

 

 

 

-

 

 

 

-

 

 

 

393,006,900

 

Other intangibles, net

 

 

1,608,090

 

 

 

351,160

 

 

 

179,663

 

 

 

2,138,913

 

 

Reportable segment information as of December 31, 2023 is as follows:

 

12


BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

 

Audio

 

 

Digital

 

 

Other

 

 

Corporate

 

 

Total

 

Property and equipment, net

 

$

48,324,618

 

 

$

95,003

 

 

$

74,081

 

 

$

2,981,052

 

 

$

51,474,754

 

FCC licenses

 

 

393,006,900

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

393,006,900

 

Goodwill

 

 

-

 

 

 

922,000

 

 

 

-

 

 

 

-

 

 

 

922,000

 

Other intangibles, net

 

 

1,707,909

 

 

 

834,836

 

 

 

-

 

 

 

179,663

 

 

 

2,722,408

 

 

(15)
Reverse Stock Split

 

On September 23, 2024, the Company effected the Reverse Stock Split. As a result of the Reverse Stock Split, every 20 shares of the Company’s Class A Common Stock issued and outstanding were automatically converted into one share of Class A Common Stock, and every 20 shares of the Company’s Class B Common Stock issued and outstanding were automatically converted into one share of Class B Common Stock. No fractional shares of Class A Common Stock or Class B Common Stock were issued in connection with the Reverse Stock Split. Holders of Class A Common Stock or Class B Common Stock received cash in lieu of fractional shares. The Reverse Stock Split had no effect on the par value of the Company’s Class A Common Stock or Class B Common Stock, which remained $0.001 per share, and had no effect on the number of authorized shares of the Company’s Class A Common Stock or Class B Common Stock. Following the Reverse Stock Split, the Class A Common Stock continued to be traded on the Nasdaq Capital Market under the symbol “BBGI” on a split-adjusted basis beginning on September 24, 2024.

In addition, consistent with the terms of the 2007 Plan and outstanding awards granted under the 2007 Plan, the total number of shares of Class A Common Stock issuable upon exercise, vesting or settlement of such awards and the total number of shares of Class A Common Stock remaining available for future awards under the 2007 Plan, as well as any share-based limits in the 2007 Plan, were proportionately reduced, and any fractional shares resulting therefrom were rounded down to the nearest whole share. Furthermore, the exercise prices of any outstanding options under the 2007 Plan were proportionately increased based on the Reverse Stock Split ratio, and the resulting exercise prices were rounded up to the nearest whole cent. All share and share-related information presented in the condensed consolidated financial statements, for all periods presented, has been retroactively adjusted to reflect the decreased number of shares resulting from the Reverse Stock Split.

(16)
Subsequent Events

On October 8, 2024 (the “Settlement Date”), Beasley Mezzanine Holdings, LLC (the “Issuer”), a wholly owned subsidiary of the Company, and certain other of the Company’s subsidiaries, completed: (i) the exchange (the “Exchange Offer”) of $194.7 million aggregate principal amount of the Existing Notes (representing 72.9% of the aggregate principal amount outstanding of the Existing Notes) for (a) $184.9 million aggregate principal amount of the Issuer’s newly issued 9.200% Senior Secured Second Lien Notes due August 1, 2028 (the “Exchange Notes”) at an exchange ratio of 95.0% of the aggregate principal amount of the Existing Notes tendered for exchange, (b) 179,384 shares of Class A Common Stock of the Company, based upon pro rata ownership of the Exchange Notes issued by the Issuer, and (c) certain cash payments aggregating approximately $1.0 million, (ii) the purchase of $68.0 million aggregate principal amount of the Existing Notes at a purchase price of 62.5% plus accrued and unpaid interest (such offer, the “Tender Offer”) and (iii) the issuance by the Issuer of $30.9 million aggregate principal amount of 11.000% Senior Secured First Lien notes due 2028 (the “New Notes,” and such offering, the “New Notes Offer”) to holders of Existing Notes or their designees who participated in the Exchange Offer, including to certain backstop commitment parties who committed to purchase the New Notes not otherwise subscribed for. The Company received requisite consents from holders of Existing Notes to (a) adopt certain amendments (the “Proposed Amendments”) to the Existing Notes Indenture and the related security documents and (b) execute a supplemental indenture (the “Supplemental Indenture”) to the Existing Notes Indenture and each relevant ancillary document effecting the Proposed Amendments. The Company used the proceeds from the New Notes Offer of $30.0 million to fund, in part, the purchase of Existing Notes tendered in the Tender Offer.

On the Settlement Date, the Issuer entered into (i) a new indenture (the “New Notes Indenture”) governing its New Notes, which are fully and unconditionally secured by substantially all of the assets, other than certain excluded property, of the Issuer and the guarantors (the “Collateral”) on a senior secured first-priority lien basis, subject to certain exceptions, limitations and permitted liens and (ii) a new indenture (the “Exchange Notes Indenture”) governing its Exchange Notes, which are fully and unconditionally secured by liens on the Collateral on a senior secured second-priority lien basis, subject to certain exceptions, limitations and permitted liens, in each case with the guarantors thereto and Wilmington Trust, National Association, as trustee and collateral agent, with respect to both the Exchange Notes Indenture and New Notes Indenture. The New Notes Indenture and the Exchange Notes Indenture contain restrictive covenants that limit the ability of the Company and its subsidiaries to, among other things, incur additional indebtedness, guarantee indebtedness or issue disqualified stock or, in the case of such subsidiaries, preferred stock; pay dividends on, repurchase or

13


BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

make distributions in respect of our capital stock or make other restricted payments; make certain investments or acquisitions; sell, transfer or otherwise convey certain assets; create liens; enter into agreements restricting certain subsidiaries’ ability to pay dividends or make other intercompany transfers; consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; enter into transactions with affiliates; prepay certain kinds of indebtedness; and issue or sell stock of its subsidiaries.

On the Settlement Date, the Issuer also entered into the Supplemental Indenture with Wilmington Trust, National Association, as trustee and collateral agent, supplementing the Existing Notes Indenture. On the Settlement Date, the Company entered into a common stock purchase agreement for the issuance and sale of 56,864 shares of Class A Common Stock of the Company to Beasley Family Towers, LLC at an offering price of approximately $12.31 per