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SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

Commission File No. 0-25969

Graphic

URBAN ONE, INC.

(Exact name of registrant as specified in its charter)

Delaware

52-1166660

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

1010 Wayne Avenue,

14th Floor

Silver Spring, Maryland 20910

(Address of principal executive offices)

(301429-3200

Registrant’s telephone number, including area code

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

Title of each class:

    

Trading Symbol(s)

    

Name of each exchange on which registered:

Class A Common Stock

 

UONE

 

NASDAQ Stock Market

Class D Common Stock

 

UONEK

 

NASDAQ Stock 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 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, is as of the latest practicable date.

Class

    

Outstanding at December 18, 2023

 

Class A Common Stock, $.001 Par Value

 

9,853,672

 

Class B Common Stock, $.001 Par Value

 

2,861,843

 

Class C Common Stock, $.001 Par Value

 

2,045,016

 

Class D Common Stock, $.001 Par Value

 

34,116,485

 

TABLE OF CONTENTS

Page

PART I. FINANCIAL INFORMATION

Item 1.

Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)

5

Consolidated Statements of Comprehensive (Loss) Income for the Three and Nine Months Ended September 30, 2023 and 2022 (Unaudited)

6

Consolidated Balance Sheets as of September 30, 2023 (Unaudited) and December 31, 2022

7

Consolidated Statement of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2023 (Unaudited)

8

Consolidated Statement of Changes in Stockholders’ Equity for the Three and Nine Months Ended September 30, 2022 (Unaudited)

9

Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2023 and 2022 (Unaudited)

10

Notes to Consolidated Financial Statements (Unaudited)

11

Item 2.

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

37

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

57

Item 4.

Controls and Procedures

57

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

59

Item 1A.

Risk Factors

59

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

60

Item 3.

Defaults Upon Senior Securities

60

Item 4.

Mine Safety Disclosures

60

Item 5.

Other Information

60

Item 6.

Exhibits

60

SIGNATURES

61

2

CERTAIN DEFINITIONS

Unless otherwise noted, throughout this report, the terms “Urban One,” the “Company,” “we,” “our” and “us” refer to Urban One, Inc. together with its subsidiaries.

Cautionary Note Regarding Forward-Looking Statements

Our disclosure and analysis in this quarterly report on Form 10-Q concerning our operations, cash flows and financial position, contain forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended. These forward-looking statements do not relay historical facts, but rather reflect our current expectations concerning future operations, results and events. All statements other than statements of historical fact are “forward-looking statements” including any projections of earnings, revenues or other financial items; any statements of the plans, strategies and objectives of management for future operations; any statements concerning proposed new activities, services or developments; any statements regarding future economic conditions or performance; any statements of belief; and any statements of assumptions underlying any of the foregoing. You can identify some of these forward-looking statements by our use of words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “likely,” “may,” “estimates” and similar expressions. You can also identify a forward-looking statement in that such statements discuss matters in a way that anticipates operations, results or events that have not already occurred but rather will or may occur in future periods. We cannot guarantee that we will achieve any forward-looking plans, intentions, results, operations or expectations. Because these statements apply to future events, they are subject to risks and uncertainties, some of which are beyond our control that could cause actual results to differ materially from those forecasted or anticipated in the forward-looking statements. These risks, uncertainties and factors include (in no particular order), but are not limited to:

public health crises, epidemics and pandemics such as COVID-19 and other future pandemics and their impact on our business and the businesses of our advertisers, including disruptions and inefficiencies in the supply chain;
lingering impacts of the COVID-19 pandemic (particularly in our largest markets, Atlanta; Baltimore; Charlotte; Dallas; Houston; Indianapolis; and Washington, DC), including changes in social and business dynamics and the impact of any variants and reduced government stimulus, the impact on our employees, and the extent of the impact of the changes in social and business dynamics on overall demand for advertising across our various media;
recession, economic volatility, financial market unpredictability and fluctuations in the United States and other world economies that may affect our business and financial condition, and the business and financial conditions of our advertisers;
our degree of leverage, certain cash commitments related thereto, and potential inability to finance strategic transactions given fluctuations in market conditions;
fluctuations in the local economies of the markets in which we operate (particularly our largest markets, Atlanta; Baltimore; Charlotte; Dallas; Houston; Indianapolis; and Washington, DC) could negatively impact our ability to meet our cash needs;
risks associated with the implementation and execution of our business diversification strategy, including our strategic actions with respect to expansion into gaming;
risks associated with our investments or potential investment in gaming businesses that are managed or operated by persons not affiliated with us and over which we have little or no control;
regulation by the FCC relative to maintaining our broadcasting licenses, enacting media ownership rules and enforcing of indecency rules;
regulation by certain gaming commissions relative to maintaining our interests, or our creditors’ ability to foreclose on collateral that includes our interests in any gaming licenses, joint ventures or other gaming and casino investments;
changes in our key personnel and on-air talent;

3

increases in competition for and in the costs of our programming and content, including on-air talent and content production or acquisitions costs;
financial losses that may be incurred due to impairment charges against our broadcasting licenses, goodwill, and other intangible assets;
increased competition for advertising revenues with other radio stations, broadcast and cable television, newspapers and magazines, outdoor advertising, direct mail, internet radio, satellite radio, smart phones, tablets, and other wireless media, the internet, social media, and other forms of advertising;
the impact of our acquisitions, dispositions and similar transactions, as well as consolidation in industries in which we and our advertisers operate;
developments and/or changes in laws and regulations, such as the California Consumer Privacy Act or other similar federal or state regulation through legislative action and revised rules and standards;
disruptions to our technology network including computer systems and software, whether by man-made or other disruptions of our operating systems, structures or equipment, including as we further develop alternative work arrangements, as well as natural events such as pandemic, severe weather, fires, floods and earthquakes;
material weaknesses identified in our internal control over financial reporting which, if not remediated, could result in material misstatements in our consolidated financial statements;
failure to meet the continued listing standards of Nasdaq, which could cause our common stock to be delisted, and which could have a material adverse effect on the liquidity and market price of our common stock and expose the Company to litigation; and
other factors mentioned in our filings with the Securities and Exchange Commission (“SEC”) including the factors discussed in detail in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 (“Form 10-K”) filed June 30, 2023.

You should not place undue reliance on these forward-looking statements, which reflect our views based only on information currently available to us as of the date of this report. We undertake no obligation to publicly update or revise any forward-looking statements because of new information, future events or otherwise.

4

URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except share and per share data)

(Unaudited)

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2023

    

2022

    

2023

    

2022

    

NET REVENUE

$

117,825

$

121,250

$

357,346

$

352,038

OPERATING EXPENSES:

 

 

 

 

Programming and technical, including stock-based compensation of $10, $0, $80, and $0, respectively

 

33,913

 

29,490

 

100,384

 

86,359

Selling, general and administrative, including stock-based compensation of $210, $5, $523, and $5, respectively

 

40,352

 

40,923

 

127,157

 

111,326

Corporate selling, general and administrative, including stock-based compensation of $1,998, $5,109, $7,213, and $5,569, respectively

 

12,416

 

14,886

 

37,546

 

36,775

Depreciation and amortization

 

1,808

 

2,505

 

6,291

 

7,391

Impairment of goodwill, intangible assets, and long-lived assets

 

85,448

15,450

 

124,304

 

30,355

Total operating expenses

 

173,937

 

103,254

 

395,682

 

272,206

Operating (loss) income

 

(56,112)

 

17,996

 

(38,336)

 

79,832

INTEREST INCOME

 

2,256

 

415

 

4,488

474

INTEREST EXPENSE

 

13,983

 

15,310

 

42,023

47,123

GAIN ON RETIREMENT OF DEBT

1,837

2,356

3,692

OTHER INCOME, NET

 

75

 

2,021

 

96,535

13,732

(Loss) income from consolidated operations before (benefit from) provision for income taxes

 

(67,764)

 

6,959

 

23,020

 

50,607

(BENEFIT FROM) PROVISION FOR INCOME TAXES

 

(16,778)

 

3,213

 

5,259

12,803

NET (LOSS) INCOME FROM CONSOLIDATED OPERATIONS

(50,986)

3,746

17,761

37,804

LOSS FROM UNCONSOLIDATED JOINT VENTURE

(2,728)

(2,728)

NET (LOSS) INCOME

 

(53,714)

 

3,746

 

15,033

 

37,804

NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

697

 

277

 

2,000

1,553

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

$

(54,411)

$

3,469

$

13,033

$

36,251

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS (per share)

 

 

 

 

Basic

$

(1.14)

$

0.07

$

0.27

$

0.73

Diluted

$

(1.14)

$

0.07

$

0.26

$

0.68

WEIGHTED AVERAGE SHARES OUTSTANDING:

Basic

47,722,263

46,625,484

47,592,010

49,504,238

Diluted

47,722,263

50,206,608

50,358,881

53,171,793

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

5

URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

(Unaudited)

Three Months Ended September 30, 

Nine Months Ended September 30, 

    

2023

    

2022

    

2023

    

2022

NET (LOSS) INCOME

$

(53,714)

$

3,746

$

15,033

$

37,804

OTHER COMPREHENSIVE (LOSS) INCOME, BEFORE TAX:

Unrealized (loss) gain on available-for-sale securities

(7,500)

3,000

Income tax benefit (expense) related to unrealized (loss) gain on available-for-sale securities

1,804

(725)

Reclassification adjustment for realized gain included in net income

(96,826)

Income tax provision related to reclassification for realized gain

23,599

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX

(5,696)

(73,227)

2,275

COMPREHENSIVE (LOSS) INCOME

$

(53,714)

$

(1,950)

$

(58,194)

$

40,079

LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS

 

697

 

277

 

2,000

 

1,553

COMPREHENSIVE (LOSS) INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS

$

(54,411)

$

(2,227)

$

(60,194)

$

38,526

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

6

URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

As of

    

September 30, 2023

    

December 31, 2022

(Unaudited)

ASSETS

 

  

 

  

CURRENT ASSETS:

 

  

 

  

Cash and cash equivalents

$

195,723

$

75,404

Restricted cash

 

479

 

26,475

Trade accounts receivable, net of allowance for expected credit losses of $7,638 and $9,223

 

131,305

 

142,045

Prepaid expenses

 

7,896

 

8,729

Current portion of content assets

 

38,677

 

34,003

Other current assets

 

19,456

 

8,750

Total current assets

 

393,536

 

295,406

CONTENT ASSETS, NET

 

72,703

 

86,378

PROPERTY AND EQUIPMENT, NET

 

29,959

 

28,258

GOODWILL

 

216,599

 

216,599

RIGHT OF USE ASSETS

 

29,440

 

31,879

RADIO BROADCASTING LICENSES

 

380,269

 

488,419

OTHER INTANGIBLE ASSETS, NET

 

50,038

 

55,193

DEBT SECURITIES - available-for-sale, at fair value; amortized cost of $0 and $40,000 at September 30, 2023 and December 31, 2022

136,826

INVESTMENT IN UNCONSOLIDATED JOINT VENTURE

14,352

OTHER ASSETS

 

5,154

 

5,688

Total assets

$

1,192,050

$

1,344,646

LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY

 

 

CURRENT LIABILITIES:

 

 

Accounts payable

$

17,151

$

17,196

Accrued interest

 

8,965

 

23,111

Accrued compensation and related benefits

 

8,036

 

17,421

Current portion of content payables

 

24,665

 

26,718

Current portion of lease liabilities

 

10,283

 

8,690

Other current liabilities

 

36,387

 

39,682

Total current liabilities

 

105,487

 

132,818

LONG-TERM DEBT, net of original issue discount and issuance costs

 

715,636

 

739,000

CONTENT PAYABLES, net of current portion

 

3,228

 

10,365

LONG-TERM LEASE LIABILITIES

 

20,520

 

25,545

OTHER LONG-TERM LIABILITIES

 

26,807

 

34,856

DEFERRED TAX LIABILITIES, NET

 

19,841

 

39,389

Total liabilities

 

891,519

 

981,973

COMMITMENTS AND CONTINGENCIES

REDEEMABLE NONCONTROLLING INTERESTS

 

21,824

 

31,923

STOCKHOLDERS’ EQUITY:

 

 

Convertible preferred stock, $.001 par value, 1,000,000 shares authorized; no shares outstanding at September 30, 2023 and December 31, 2022

 

 

Common stock — Class A, $.001 par value, 30,000,000 shares authorized; 9,853,672 and 9,854,682 shares issued and outstanding at September 30, 2023 and December 31, 2022,

 

10

 

10

Common stock — Class B, $.001 par value, 150,000,000 shares authorized; 2,861,843 shares issued and outstanding at September 30, 2023 and December 31, 2022

 

3

 

3

Common stock — Class C, $.001 par value, 150,000,000 shares authorized; 2,045,016 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

2

 

2

Common stock — Class D, $.001 par value, 150,000,000 shares authorized; 34,095,198 and 33,618,227 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

34

 

34

Accumulated other comprehensive income

73,227

Additional paid-in capital

 

1,001,046

 

993,484

Accumulated deficit

 

(722,388)

 

(736,010)

Total stockholders’ equity

 

278,707

 

330,750

Total liabilities, redeemable noncontrolling interests and stockholders’ equity

$

1,192,050

$

1,344,646

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

7

URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023

(In thousands, except share data)

(Unaudited)

Convertible

Common

Common

Common

Common

Accumulated Other

Additional

Total

Preferred

Stock

Stock

Stock

Stock

Comprehensive

 Paid-In

Accumulated

Stockholders’

    

Stock

    

Class A

    

Class B

    

Class C

    

Class D

    

Income

Capital

    

Deficit

    

Equity

BALANCE, as of December 31, 2022

$

$

10

$

3

$

2

$

34

$

73,227

$

993,484

$

(736,010)

$

330,750

Cumulative effect of accounting change

589

589

BALANCE, as of January 1, 2023

$

$

10

$

3

$

2

$

34

$

73,227

$

993,484

$

(735,421)

$

331,339

Net (loss)

(2,922)

(2,922)

Stock-based compensation expense

2,558

2,558

Repurchase of 256,442 shares of Class D common stock

(1,324)

(1,324)

Vesting of share-based payment awards upon grant

3,234

3,234

Adjustment of redeemable noncontrolling interests to estimated redemption value

 

 

 

 

 

 

(1,308)

 

 

(1,308)

BALANCE, as of March 31, 2023

$

$

10

$

3

$

2

$

34

$

73,227

$

996,644

$

(738,343)

$

331,577

Net income

70,366

70,366

Stock-based compensation expense

1,305

1,305

Repurchase of 18,459 shares of Class D common stock

(111)

(111)

Sale of MGM investment

(73,227)

(73,227)

Adjustment of redeemable noncontrolling interests to estimated redemption value

 

 

 

 

 

 

1,621

 

 

1,621

BALANCE, as of June 30, 2023

$

$

10

$

3

$

2

$

34

$

$

999,459

$

(667,977)

$

331,531

Net (loss)

(54,411)

(54,411)

Stock-based compensation expense

1,006

1,006

Repurchase of 38,371 shares of Class D common stock

(195)

(195)

Adjustment of redeemable noncontrolling interests to estimated redemption value

 

 

 

 

 

776

 

 

776

BALANCE, as of September 30, 2023

$

$

10

$

3

$

2

$

34

$

$

1,001,046

$

(722,388)

$

278,707

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

8

URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2022

(In thousands, except share data)

(Unaudited)

Convertible

Common

Common

Common

Common

Accumulated Other

Additional

Total

Preferred

Stock

Stock

Stock

Stock

Comprehensive

Paid-In

Accumulated

Stockholders’

    

Stock

    

Class A

    

Class B

    

Class C

    

Class D

    

Income

Capital

    

Deficit

    

Equity

BALANCE, as of December 31, 2021

$

$

9

$

3

$

2

$

37

$

54,950

$

1,018,996

$

(770,353)

$

303,644

Net income

 

 

 

 

 

 

 

16,488

 

16,488

Stock-based compensation expense

 

 

 

 

 

124

 

 

124

Repurchase of 2,649 shares of Class D common stock

 

 

 

 

 

 

(10)

 

 

(10)

Adjustment of redeemable noncontrolling interests to estimated redemption value

 

 

 

 

 

 

(871)

 

 

(871)

Other comprehensive income, net of tax

 

 

 

 

 

7,896

 

 

 

7,896

BALANCE, as of March 31, 2022

$

$

9

$

3

$

2

$

37

$

62,846

$

1,018,239

$

(753,865)

$

327,271

Net income

 

 

 

 

 

 

 

16,294

 

16,294

Stock-based compensation expense

 

 

 

 

 

336

 

 

336

Repurchase of 4,684,419 shares of Class D common stock