URBAN ONE, INC. [UONEK] Filings

10-Q 1 uone-20220930x10q.htm 10-Q

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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, 2022

Commission File No. 0-25969

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)

(301) 429-3200

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, as of the latest practicable date.


Class		Outstanding at October 28, 2022
Class A Common Stock, $.001 Par Value		9,854,682
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		33,618,227

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TABLE OF CONTENTS


		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	5
	Consolidated Statements of Comprehensive Income for the Three and Nine Months Ended September 30, 2022 and 2021 (Unaudited)	6
	Consolidated Balance Sheets as of September 30, 2022 (Unaudited) and December 31, 2021	7
	Consolidated Statement of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2022 (Unaudited)	8
	Consolidated Statement of Changes in Stockholders’ Equity for the Nine Months Ended September 30, 2021 (Unaudited)	9
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021 (Unaudited)	10
	Notes to Consolidated Financial Statements (Unaudited)	11
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	41
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 4.	Controls and Procedures	63

	PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	64
Item 1A.	Risk Factors	65
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	66
Item 3.	Defaults Upon Senior Securities	66
Item 4.	Mine Safety Disclosures	66
Item 5.	Other Information	66
Item 6.	Exhibits	66
	SIGNATURES	67

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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

This document contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, 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 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 the ongoing COVID-19 pandemic and their impact on our business and the businesses of our advertisers, including disruptions and inefficiencies in the supply chain;

●

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, including as a result of the ongoing COVID-19 pandemic, the war in Ukraine, actions taken by the Federal Reserve, and any similar future occurrences;

●

the extent of the impact of the COVID-19 pandemic (particularly in our largest markets, Atlanta; Baltimore; Charlotte; Dallas; Houston; Indianapolis; and Washington, DC), including the duration, spread, severity, and the impact of any variants, the duration and scope of any related government orders and restrictions, the impact on our employees, and the extent of the impact of the COVID-19 pandemic on overall demand for advertising across our various media;

●

local, regional, national, and international economic conditions that have fluctuated and/or deteriorated as a result of the COVID-19 pandemic, including the risks of a global recession or a recession in one or more of our key markets, the impact that these economic conditions may have on us and our customers, and our assessment of that impact;

●

our high degree of leverage, certain cash commitments related thereto, and potential inability to finance strategic transactions given fluctuations in market conditions;

●

recession and 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 in gaming business that are managed or operated by persons not affiliated with us and over which we have little or no control;

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●

regulation by the Federal Communications Commission (“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, in any gaming licenses, joint ventures or other gaming and casino investments;

●

changes in our key personnel and on-air talent;

●

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;

●

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/A, for the year ended December 31, 2021 filed October 11, 2022.

You should not place undue reliance on these forward-looking statements, which reflect our views 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.

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021

	(Unaudited)				(Unaudited)
	(In thousands, except share data)				(In thousands, except share data)

NET REVENUE	$	121,403	$	111,463	$	352,562	$	310,496
OPERATING EXPENSES:
Programming and technical including stock-based compensation of $0 and $4, and $0 and $14, respectively		29,490		29,230		86,359		80,843
Selling, general and administrative, including stock-based compensation of $5 and $0, and $5 and $31, respectively		41,076		33,102		111,850		94,599
Corporate selling, general and administrative, including stock-based compensation of $5,004 and $49, and $5,464 and $433, respectively		14,908		12,320		36,232		31,977
Depreciation and amortization		2,505		2,336		7,391		6,925
Impairment of long-lived assets		14,450		—		31,383		—
Total operating expenses		102,429		76,988		273,215		214,344
Operating income		18,974		34,475		79,347		96,152
INTEREST INCOME		415		13		474		185
INTEREST EXPENSE		15,310		15,896		47,123		49,794
(GAIN) LOSS ON RETIREMENT OF DEBT		(1,837)		—		(3,692)		6,949
OTHER INCOME, net		(2,021)		(2,120)		(13,732)		(6,166)
Income before provision for income taxes and noncontrolling interests in income of subsidiaries		7,937		20,712		50,122		45,760
PROVISION FOR INCOME TAXES		3,364		6,257		12,675		12,366
CONSOLIDATED NET INCOME		4,573		14,455		37,447		33,394
NET INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		360		579		1,831		1,645
CONSOLIDATED NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	4,213	$	13,876	$	35,616	$	31,749

BASIC NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS
Net income attributable to common stockholders	$	0.09	$	0.27	$	0.72	$	0.64

DILUTED NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS
Net income attributable to common stockholders	$	0.08	$	0.25	$	0.67	$	0.59

WEIGHTED AVERAGE SHARES OUTSTANDING:
Basic		46,625,484		51,190,105		49,504,238		49,816,663
Diluted		50,206,608		55,080,394		53,171,793		53,832,135

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

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


	Three Months Ended September 30,				Nine Months Ended September 30,
	2022		2021		2022		2021

	(Unaudited)				(Unaudited)
	(In thousands)				(In thousands)

COMPREHENSIVE INCOME	$	4,573	$	14,455	$	37,447	$	33,394
LESS: COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS		360		579		1,831		1,645
COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS	$	4,213	$	13,876	$	35,616	$	31,749

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

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


	As of
	September 30, 2022		December 31, 2021
	(Unaudited)
	(In thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	85,573	$	132,245
Restricted cash		19,974		19,973
Trade accounts receivable, net of allowance for doubtful accounts of $7,925 and $8,743, respectively		127,301		127,446
Prepaid expenses		5,013		2,967
Current portion of content assets		40,288		25,883
Other current assets		8,939		4,760
Total current assets		287,088		313,274
CONTENT ASSETS, net		80,096		60,155
PROPERTY AND EQUIPMENT, net		27,529		26,291
GOODWILL		219,514		223,402
RIGHT OF USE ASSETS		34,258		38,044
RADIO BROADCASTING LICENSES		498,532		505,148
OTHER INTANGIBLE ASSETS, net		59,376		50,159
OTHER ASSETS		44,303		44,635
Total assets	$	1,250,696	$	1,261,108
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	14,318	$	14,588
Accrued interest		9,589		25,458
Accrued compensation and related benefits		8,389		10,960
Current portion of content payables		30,481		18,972
Current portion of lease liabilities		9,640		10,072
Other current liabilities		40,217		26,421
Total current liabilities		112,634		106,471
LONG-TERM DEBT, net of current portion, original issue discount and issuance costs		763,200		818,616
CONTENT PAYABLES, net of current portion		12,527		2,865
LONG-TERM LEASE LIABILITIES		26,976		31,228
OTHER LONG-TERM LIABILITIES		35,359		28,320
DEFERRED TAX LIABILITIES, net		13,984		2,473
Total liabilities		964,680		989,973
COMMITMENTS AND CONTINGENCIES
REDEEMABLE NONCONTROLLING INTERESTS		19,964		17,015

STOCKHOLDERS’ EQUITY:
Convertible preferred stock, $.001 par value, 1,000,000 shares authorized; no shares outstanding at September 30, 2022 and December 31, 2021		—		—
Common stock — Class A, $.001 par value, 30,000,000 shares authorized; 9,854,682 and 9,104,916 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		10		9
Common stock — Class B, $.001 par value, 150,000,000 shares authorized; 2,861,843 shares issued and outstanding as of September 30, 2022 and December 31, 2021		3		3
Common stock — Class C, $.001 par value, 150,000,000 shares authorized; 2,045,016 and 2,045,016 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		2		2
Common stock — Class D, $.001 par value, 150,000,000 shares authorized; 33,631,804 and 37,324,737 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively		34		37
Additional paid-in capital		996,954		1,020,636
Accumulated deficit		(730,951)		(766,567)
Total stockholders’ equity		266,052		254,120
Total liabilities, redeemable noncontrolling interests and stockholders’ equity	$	1,250,696	$	1,261,108

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

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 (UNAUDITED)


	Convertible		Common		Common		Common		Common		Additional				Total
	Preferred		Stock		Stock		Stock		Stock		Paid-In		Accumulated		Stockholders’
	Stock		Class A		Class B		Class C		Class D		Capital		Deficit		Equity

	(In thousands, except share data)
BALANCE, as of December 31, 2021	$	—	$	9	$	3	$	2	$	37	$	1,020,636	$	(766,567)	$	254,120
Consolidated net income		—		—		—		—		—		—		35,616		35,616
Stock-based compensation expense		—		1		—		—		1		5,467		—		5,469
Repurchase of 4,684,419 shares of Class D common stock		—		—		—		—		(4)		(26,482)				(26,486)
Exercise of options for 60,240 shares of common stock		—		—		—		—		—		50		—		50
Adjustment of redeemable noncontrolling interests to estimated redemption value		—		—		—		—		—		(2,717)		—		(2,717)
BALANCE, as of September 30, 2022	$	—	$	10	$	3	$	2	$	34	$	996,954	$	(730,951)	$	266,052

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

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 (UNAUDITED)


	Convertible		Common		Common		Common		Common		Additional				Total
	Preferred		Stock		Stock		Stock		Stock		Paid-In		Accumulated		Stockholders’
	Stock		Class A		Class B		Class C		Class D		Capital		Deficit		Equity

	(In thousands, except share data)
BALANCE, as of December 31, 2020	$	—	$	4	$	3	$	3	$	38	$	991,769	$	(804,919)	$	186,898
Consolidated net income		—		—		—		—		—		—		31,749		31,749
Repurchase of 519,347 shares of Class D common stock		—		—		—		—		(1)		(943)		—		(944)
Issuance of 3,779,391 shares of Class A common stock		—		4		—		—		—		33,273		—		33,277
Adjustment of redeemable noncontrolling interests to estimated redemption value		—		—		—		—		—		(3,671)		—		(3,671)
Exercise of options for 219,756 shares of common stock		—		—		—		—		—		366		—		366
Stock-based compensation expense		—		—		—		—		—		478		—		478
BALANCE, as of September 30, 2021	$	—	$	8	$	3	$	3	$	37	$	1,021,272	$	(773,170)	$	248,153

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

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URBAN ONE, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS


	Nine Months Ended
	September 30,
	2022		2021

	(Unaudited)
	(In thousands)
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net income	$	37,447	$	33,394

Adjustments to reconcile net income to net cash from operating activities:
Depreciation and amortization		7,391		6,925
Amortization of debt financing costs		1,503		1,776
Amortization of content assets		30,990		30,356
Amortization of launch assets		3,142		1,003
Bad debt expense		(63)		825
Deferred income taxes		11,511		12,366
Amortization of right of use assets		6,589		5,760
Non-cash lease liability expense		2,994		3,299
Non-cash interest expense		—		158
Impairment of long-lived assets		31,383		—
Stock-based compensation		5,469		478
Non-cash fair value adjustment of Employment Agreement Award		2,196		2,698
Non-cash income on PPP loan forgiveness		(7,575)		—
(Gain) loss on retirement of debt		(3,692)		6,949
Gain on asset exchange agreement		—		404

Effect of change in operating assets and liabilities, net of assets acquired:
Trade accounts receivable		208		(8,574)
Prepaid expenses and other current assets		(2,279)		(149)
Other assets		(5,197)		(30,863)
Accounts payable		(270)		3,488
Accrued interest		(15,869)		2,212
Accrued compensation and related benefits		(2,571)		(5,641)
Other liabilities		(75)		1,975
Payment of launch support		(5,000)		—
Payments for content assets		(44,165)		(32,575)
Net cash flows provided by operating activities		54,067		36,264
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment		(5,256)		(4,182)
Proceeds from sale of broadcasting assets		3,080		8,000
Acquisition of broadcasting assets		(25,000)		—
Net cash flows (used in) provided by investing activities		(27,176)		3,818
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of 2017 credit facility		—		(317,332)
Proceeds from issuance of Class A common stock, net of fees		—		33,277
Repayment of 2018 credit facility		—		(129,935)
Proceeds from exercise of stock options		50		366
Repurchase of 2028 Notes		(45,527)		—
Payment of dividends to noncontrolling interest members of Reach Media		(1,599)		(1,000)
Repurchase of common stock		(26,486)		(944)
Proceeds from 2028 Notes		—		825,000
Proceeds from PPP Loan		—		7,505
Debt refinancing costs		—		(11,157)
Repayment of MGM National Harbor Loan		—		(57,889)
Repayment of 7.375% Notes		—		(2,984)
Repayment of 8.75% Notes		—		(347,016)
Net cash flows used in financing activities		(73,562)		(2,109)
(DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH		(46,671)		37,973
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period		152,218		73,858
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	$	105,547	$	111,831

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for:
Interest	$	61,414	$	45,649
Income taxes, net of refunds	$	945	$	782

NON-CASH OPERATING, FINANCING AND INVESTING ACTIVITIES:
Assets acquired under Audacy asset exchange	$	—	$	28,193
Liabilities recognized under asset exchange/asset acquisition	$	1,240	$	2,669
Right of use asset and lease liability additions	$	1,487	$	5,708
Non-cash launch additions	$	13,750	$	—
Non-cash content asset additions	$	21,171	$	—
Adjustment of redeemable noncontrolling interests to estimated redemption value	$	2,717	$	3,671

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

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URBAN ONE, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

(a)

Organization

Urban One, Inc. (a Delaware corporation referred to as “Urban One”) and its subsidiaries (collectively, the “Company”) is an urban-oriented, multi-media company that primarily targets African-American and urban consumers. Our core business is our radio broadcasting franchise which is the largest radio broadcasting operation that primarily targets African-American and urban listeners. As of September 30, 2022, we owned and/or operated 66 independently formatted, revenue producing broadcast stations (including 55 FM or AM stations, 9 HD stations, and the 2 low power television stations we operate), located in 13 of the most populous African-American markets in the United States. While a core source of our revenue has historically been and remains the sale of local and national advertising for broadcast on our radio stations, our strategy is to operate the premier multi-media entertainment and information content platform targeting African-American and urban consumers. Thus, we have diversified our revenue streams by making acquisitions and investments in other complementary media properties. Our diverse media and entertainment interests include TV One, LLC (“TV One”), which operates two cable television networks targeting African-American and urban viewers, TV One and CLEO TV; our 80.0% ownership interest in Reach Media, Inc. (“Reach Media”) which operates the Rickey Smiley Morning Show and our other syndicated programming assets, including the Get Up! Mornings with Erica Campbell Show, Russ Parr Morning Show and the DL Hughley Show; and Interactive One, LLC (“Interactive One”), our wholly owned digital platform serving the African-American community through social content, news, information, and entertainment websites, including its Cassius and Bossip, HipHopWired and MadameNoire digital platforms and brands. We also hold a minority ownership interest in MGM National Harbor, a gaming resort located in Prince George’s County, Maryland. Through our national multi-media operations, we provide advertisers with a unique and powerful delivery mechanism to communicate with African-American and urban audiences.

Our core radio broadcasting franchise operates under the brand “Radio One.” We also operate other media brands, such as TV One, CLEO TV, Reach Media and Interactive One, while developing additional branding reflective of our diverse media operations and our targeting of African-American and urban audiences.

As part of our consolidated financial statements, consistent with our financial reporting structure and how the Company currently manages its businesses, we have provided selected financial information on the Company’s four reportable segments: (i) radio broadcasting; (ii) Reach Media; (iii) digital; and (iv) cable television. (See Note 7 – Segment Information.)

(b)

Interim Financial Statements

The interim consolidated financial statements included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). In management’s opinion, the interim financial data presented herein include all adjustments (which include only normal recurring adjustments) necessary for a fair presentation. Certain information and footnote disclosures normally included in the financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted pursuant to such rules and regulations.

Results for interim periods are not necessarily indicative of results to be expected for the full year. This Form 10-Q should be read in conjunction with the consolidated financial statements and notes thereto included in the Company’s 2021 Annual Report on Form 10-K/A filed October 11, 2022.

(c)

Financial Instruments

Financial instruments as of September 30, 2022 and December 31, 2021, consisted of cash and cash equivalents, restricted cash, trade accounts receivable, asset-backed credit facility, and long-term debt. The carrying amounts approximated fair value for each of these financial instruments as of September 30, 2022 and December 31, 2021, except for the Company’s long-term debt. On January 25, 2021, the Company borrowed $825 million in aggregate principal amount of senior secured notes due February 2028 (the “2028 Notes”). The 7.375% 2028 Notes had a carrying value of approximately $775.0 million and fair value of approximately $652.9 million as of September 30, 2022, and had a carrying value of approximately $825.0 million and fair value of approximately $851.8 million as of December 31, 2021. The fair values of the 2028 Notes, classified as Level 2 instruments, were determined based on the trading values

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of these instruments in an inactive market as of the reporting date. On June 1, 2021, the Company borrowed approximately $7.5 million on a new PPP loan (as defined in Note 4 – Long-Term Debt). During the three months ended June 30, 2022, the PPP loan and related accrued interest was forgiven and recorded as other income in the amount of $7.6 million. The PPP Loan had a carrying value of approximately $7.5 million and fair value of approximately $7.5 million as of December 31, 2021. The fair value of the PPP Loan, classified as a Level 2 instrument, was determined based on the fair value of a similar instrument as of the reporting date using updated interest rate information derived from changes in interest rates since inception to the reporting date. There was no balance outstanding on the Company’s asset-backed credit facility as of September 30, 2022 and December 31, 2021.

(d)

Revenue Recognition

In accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from Contracts with Customers,” the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services. In general, our spot advertising (both radio and cable television) as well as our digital advertising continues to be recognized when aired and delivered. For our cable television affiliate revenue, the Company grants a license to the affiliate to access its television programming content through the license period, and the Company earns a usage-based royalty when the usage occurs. Finally, for event advertising, the performance obligation is satisfied at a point in time when the activity associated with the event is completed.

Within our radio broadcasting and Reach Media segments, the Company recognizes revenue for broadcast advertising at a point in time when a commercial spot runs. The revenue is reported net of agency and outside sales representative commissions. Agency and outside sales representative commissions are calculated based on a stated percentage applied to gross billing. Generally, clients remit the gross billing amount to the agency or outside sales representative, and the agency or outside sales representative remits the gross billing, less their commission, to the Company. For our radio broadcasting and Reach Media segments, agency and outside sales representative commissions were approximately $4.6 million and $4.3 million for the three months ended September 30, 2022 and 2021, respectively. Agency and outside sales representative commissions were approximately $12.6 million and $12.0 million for the nine months ended September 30, 2022 and 2021, respectively.

Within our digital segment, including Interactive One, which generates the majority of the Company’s digital revenue, revenue is principally derived from advertising services on non-radio station branded but Company-owned websites. Advertising services include the sale of banner and sponsorship advertisements. Advertising revenue is recognized at a point in time either as impressions (the number of times advertisements appear in viewed pages) are delivered or when “click through” purchases are made, where applicable. In addition, Interactive One derives revenue from its affiliate partners, in which it provides third-party clients with services including digital platforms and related expertise. Revenue is recognized primarily as a share of the third party’s reported revenue.

Our cable television segment derives advertising revenue from the sale of television air time to advertisers and recognizes revenue at a point in time when the advertisements are run. To the extent there is a shortfall in contracts where the ratings were guaranteed, a portion of the revenue is deferred until the shortfall is settled, typically by providing additional advertising units generally within one year of the original airing. Our cable television segment also derives revenue from affiliate fees under the terms of various multi-year affiliation agreements based on a per subscriber fee multiplied by the most recent subscriber counts reported by the applicable affiliate. The Company recognizes the affiliate fee revenue at a point in time as its performance obligation to provide the programming is met. The Company has a right of payment each month as the programming services and related obligations have been satisfied. For our cable television segment, agency and outside sales representative commissions were approximately $4.8 million and $4.0 million for the three months ended September 30, 2022 and 2021, respectively. Agency and outside sales representative commissions were approximately $15.3 million and $12.3 million for the nine months ended September 30, 2022 and 2021, respectively.

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Revenue by Contract Type

The following chart shows the sources of our net revenue for the three and nine months ended September 30, 2022 and 2021:

Three Months Ended September 30,

Nine Months Ended September 30,

2022

2021

URBAN ONE, INC. [UONEK] Filings
URBAN ONE, INC. [UONE] Filings
10-Q	[2022-11-04]
10-Q	[2022-08-12]
10-Q	[2022-05-09]
10-K	[2022-03-15]
10-Q	[2021-11-04]
10-Q	[2021-08-13]
10-Q	[2021-05-14]
10-K	[2021-03-31]
10-Q	[2020-11-12]
10-Q	[2020-07-31]
10-Q	[2020-05-29]
10-K	[2020-04-29]
10-Q	[2019-11-12]
10-Q	[2019-08-02]
10-Q	[2019-05-10]
10-K	[2019-03-18]
10-Q	[2018-11-07]
10-Q	[2018-08-08]
10-Q	[2018-05-09]
10-K	[2018-03-16]
10-Q	[2017-11-08]
10-Q	[2017-08-08]
10-Q	[2017-05-08]
10-K	[2017-03-10]
10-Q	[2016-11-04]
10-Q	[2016-08-08]
10-Q	[2016-05-06]
10-K	[2016-03-14]
10-Q	[2015-11-09]
10-Q	[2015-08-07]
10-Q	[2015-05-04]
10-K	[2015-02-17]
10-Q	[2014-11-14]
10-Q	[2014-08-08]
10-Q	[2014-05-09]
10-K	[2014-03-31]
10-Q	[2013-11-14]
10-Q	[2013-08-19]

URBAN ONE, INC. [UONEK] Filings

URBAN ONE, INC. [UONE] Filings