Beasley Broadcast 10Q 2023 Q3 Quarterly report

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, 2023


[ ]	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 Global 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, 13,303,369 Shares Outstanding as of October 27, 2023

Class B Common Stock, $0.001 par value, 16,662,743 Shares Outstanding as of October 27, 2023

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.	16

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	24

Item 4.	Controls and Procedures.	24

PART II OTHER INFORMATION

Item 1.	Legal Proceedings.	25

Item 1A.	Risk Factors.	25

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	26

Item 3.	Defaults Upon Senior Securities.	26

Item 4.	Mine Safety Disclosures.	26

Item 5.	Other Information.	26

Item 6.	Exhibits.	27

SIGNATURES		28

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	December 31,			September 30,
	2022			2023
ASSETS
Current assets:
Cash and cash equivalents	$	39,534,653		$	29,665,464
Accounts receivable, less allowance for credit losses of $1,876,751 in 2022 and $1,803,068 in 2023		56,683,526			47,686,751
Prepaid expenses		5,078,231			10,636,324
Other current assets		4,364,120			3,331,191
Total current assets		105,660,530			91,319,730
Property and equipment, net		55,807,047			52,479,386
Operating lease right-of-use assets		38,478,756			36,629,732
Finance lease right-of-use assets		306,667			296,667
FCC licenses		487,249,798			393,976,500
Goodwill		13,265,460			2,683,100
Other intangibles, net		8,219,939			7,493,876
Assets held for sale		-			4,827,864
Other assets		5,955,158			4,674,332
Total assets	$	714,943,355		$	594,381,187

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	19,344,621		$	15,379,755
Operating lease liabilities		8,166,394			8,342,355
Other current liabilities		29,183,630			24,624,951
Total current liabilities		56,694,645			48,347,061
Due to related parties		85,731			62,697
Long-term debt, net of unamortized debt issuance costs		285,472,107			283,612,363
Operating lease liabilities		37,485,602			35,180,442
Deferred tax liabilities		98,068,981			71,090,989
Other long-term liabilities		13,647,481			13,639,276
Total liabilities		491,454,547			451,932,828
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; 16,763,227 issued and 13,113,659 outstanding in 2022; 17,025,209 issued and 13,303,369 outstanding in 2023		16,761			17,023
Class B common stock, $0.001 par value; 75,000,000 shares authorized; 16,662,743 issued and outstanding in 2022 and 2023		16,662			16,662
Additional paid-in capital		151,948,310			152,481,469
Treasury stock, Class A common stock; 3,649,568 shares in 2022; 3,721,840 shares in 2023		(29,155,300	)		(29,225,138	)
Retained earnings		100,163,064			18,659,032
Accumulated other comprehensive income		499,311			499,311
Total stockholders' equity		223,488,808			142,448,359
Total liabilities and stockholders' equity	$	714,943,355		$	594,381,187

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (UNAUDITED)


	Three Months Ended September 30,
	2022			2023
Net revenue	$	63,823,288		$	60,119,757
Operating expenses:
Operating expenses (including stock-based compensation of $60,892 in 2022 and $37,041 in 2023 and excluding depreciation and amortization shown separately below)		51,511,699			50,117,044
Corporate expenses (including stock-based compensation of $209,202 in 2022 and $140,773 in 2023)		5,132,362			4,493,277
Depreciation and amortization		2,456,646			2,201,664
FCC licenses impairment losses		-			78,204,065
Goodwill impairment loss		-			10,582,360
Total operating expenses		59,100,707			145,598,410
Operating income (loss)		4,722,581			(85,478,653	)
Non-operating income (expense):
Interest expense		(6,621,540	)		(6,445,746	)
Other income, net		1,166,430			1,106,918
Loss before income taxes		(732,529	)		(90,817,481	)
Income tax benefit		(1,252,669	)		(23,299,388	)
Income (loss) before equity in earnings of unconsolidated affiliates		520,140			(67,518,093	)
Equity in earnings of unconsolidated affiliates, net of tax		(22,072	)		(18,744	)
Net income (loss)		498,068			(67,536,837	)
Net income (loss) per Class A and Class B common share:
Basic and diluted	$	0.02		$	(2.25	)
Weighted average shares outstanding:
Basic		29,546,324			29,962,613
Diluted		29,715,361			29,962,613

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)


	Nine Months Ended September 30,
	2022			2023
Net revenue	$	184,354,006		$	181,360,600
Operating expenses:
Operating expenses (including stock-based compensation of $214,483 in 2022 and $109,261 in 2023 and excluding depreciation and amortization shown separately below)		155,147,840			152,098,261
Corporate expenses (including stock-based compensation of $661,691 in 2022 and $424,160 in 2023)		13,933,292			13,381,403
Depreciation and amortization		7,423,648			6,626,974
FCC licenses impairment losses		4,619,772			88,245,065
Goodwill impairment losses		5,856,551			10,582,360
Total operating expenses		186,981,103			270,934,063
Operating loss		(2,627,097	)		(89,573,463	)
Non-operating income (expense):
Interest expense		(20,293,794	)		(19,764,067	)
Other income, net		1,357,512			1,684,168
Loss before income taxes		(21,563,379	)		(107,653,362	)
Income tax benefit		(3,874,646	)		(26,285,207	)
Loss before equity in earnings of unconsolidated affiliates		(17,688,733	)		(81,368,155	)
Equity in earnings of unconsolidated affiliates, net of tax		141,154			(135,877	)
Net loss		(17,547,579	)		(81,504,032	)

Net loss per Class A and Class B common share:
Basic and diluted	$	(0.60	)	$	(2.73	)
Weighted average shares outstanding:
Basic and diluted		29,445,998			29,867,820

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine Months Ended September 30,
	2022			2023
Cash flows from operating activities:
Net loss	$	(17,547,579	)	$	(81,504,032	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation		876,174			533,421
Provision for credit losses		853,938			1,006,830
Depreciation and amortization		7,423,648			6,626,974
FCC licenses impairment losses		4,619,772			88,245,065
Goodwill impairment losses		5,856,551			10,582,360
Amortization of loan fees		1,123,935			1,097,214
Gain on debt purchases		(1,131,346	)		(973,208	)
Deferred income taxes		(4,232,949	)		(26,977,992	)
Equity in earnings of unconsolidated affiliates		(141,154	)		135,877
Change in operating assets and liabilities:
Accounts receivable		5,827,751			7,989,945
Prepaid expenses		(5,925,056	)		(5,558,093	)
Other assets		(1,890,763	)		2,572,946
Accounts payable		5,822,312			(3,964,866	)
Other liabilities		808,125			(4,887,810	)
Other operating activities		(51,972	)		70,484
Net cash provided by (used in) operating activities		2,291,387			(5,004,885	)
Cash flows from investing activities:
Payment for acquisition		(2,000,000	)		-
Capital expenditures		(11,218,937	)		(3,060,716	)
Proceeds from dispositions		1,185,312			250,000
Net cash used in investing activities		(12,033,625	)		(2,810,716	)
Cash flows from financing activities:
Payments on debt		(8,677,500	)		(1,983,750	)
Reduction of finance lease liabilities		(1,945	)		-
Purchase of treasury stock		(108,091	)		(69,838	)
Net cash used in financing activities		(8,787,536	)		(2,053,588	)
Net decrease in cash and cash equivalents		(18,529,774	)		(9,869,189	)
Cash and cash equivalents at beginning of period		51,378,642			39,534,653
Cash and cash equivalents at end of period	$	32,848,868		$	29,665,464
Cash paid for interest	$	25,564,611		$	24,946,655
Cash paid for income taxes	$	1,547,500		$	1,353,057

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, 2022. 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)

Summary of Significant Accounting Policies

Use of Estimates

Preparing financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the period. Such estimates include: (i) the amount of allowance for credit losses; (ii) future cash flows used for testing recoverability of property and equipment; (iii) fair values used for testing Federal Communications Commission (“FCC”) licenses, goodwill and other intangibles for impairment; (iv) estimates used to determine the incremental borrowing rate to record lease liabilities and related right-of-use assets; (v) the realization of deferred tax assets; and (vi) actuarial assumptions related to the Supplemental Employee Retirement Plan. Actual results and outcomes may differ from management’s estimates and assumptions.

Accounts Receivable

Accounts receivable consist primarily of uncollected amounts due from advertisers for the sale of advertising airtime. The amounts are net of advertising agency commissions and an allowance for credit losses. The allowance for credit losses reflects management’s estimate of expected losses in accounts receivable from local advertisers and national agencies. Management determines the allowance based on historical information, relative improvements or deteriorations in the age of the accounts receivable and changes in current economic conditions and reasonable and supportable forecasts of future economic conditions. Interest is not accrued on accounts receivable.

The changes in allowance for credit losses on accounts receivable are as follows:


	Three months ended September 30,						Nine months ended September 30,
	2022			2023			2022			2023
Beginning balance	$	1,648,342		$	1,848,595		$	1,720,477		$	1,876,751
Provision for credit losses		265,187			481,016			853,938			1,006,830
Deductions		(274,559	)		(526,543	)		(935,445	)		(1,080,513	)
Ending balance	$	1,638,970		$	1,803,068		$	1,638,970		$	1,803,068

Recent Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board (“FASB”) issued guidance that will require the measurement of all expected credit losses for financial assets, including accounts receivable, held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. The guidance was initially effective for the Company for annual reporting periods beginning after December 15, 2019, and interim periods within those fiscal years. In November 2019, the FASB issued additional guidance that included a deferral of the effective date for smaller reporting companies as defined by the Securities and Exchange Commission to fiscal years beginning after December 15, 2022, and interim periods within those years. The Company

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

adopted the guidance on January 1, 2023, and the adoption did not have a material impact on the Company’s condensed consolidated financial statements.

(3)

Acquisition and Dispositions

On October 5, 2023, the Company completed the sale of substantially all of the assets used in the operations of WJBR-FM in Wilmington, DE to a third party for $5.0 million in cash. During the second quarter of 2023, due to the potential sale of these assets, the Company recorded an impairment loss of $10.0 million related to the FCC license. The Company no longer has operations in the Wilmington, DE market after completion of the disposition. However, management determined that the disposition did not represent a strategic shift that would have a significant effect on the Company’s operation and financial results, therefore the operations in the Wilmington, DE market have not been reported as discontinued operations. A summary of assets held for sale as of September 30, 2023 is as follows:


Property and equipment, net	$	77,064
FCC licenses		4,750,800
	$	4,827,864

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.

On June 22, 2022, the Company completed the acquisition of Guarantee Digital, LLC (“Guarantee”), a digital marketing agency, for $2.0 million in cash. The acquisition was accounted for as a business combination. The purchase price allocation is summarized as follows:


Property and equipment	$	3,000
Goodwill		922,000
Other intangibles		1,075,000
	$	2,000,000

Goodwill was equal to the amount the purchase price exceeded the values allocated to the tangible and identifiable intangible assets and includes the value of the assembled workforce. The goodwill was allocated to the Digital segment. The $0.9 million allocated to goodwill is deductible for tax purposes. Revenue and earnings for Guarantee are not material for all reporting periods presented in the accompanying condensed consolidated financial statements.

On April 1, 2022, the Company completed the sale of substantially all of the assets used in the operations of WWNN-AM in West Palm Beach-Boca Raton, FL to a third party for $1.25 million in cash. As a result of the sale, the Company recorded an impairment loss of $1.9 million related to the FCC license during the first quarter of 2022.

(4)

FCC Licenses

Changes in the carrying amount of FCC licenses for the nine months ended September 30, 2023 are as follows:


Balance as of January 1, 2023	$	487,249,798
Impairment losses (see below and also Note 3)		(88,245,065	)
Radio station disposition (see Note 3)		(277,433	)
Assets held for sale reclassification		(4,750,800	)
Balance as of September 30, 2023	$	393,976,500

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

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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.

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%

Due to an increase in interest rates in the U.S. economy, the Company tested its FCC licenses for impairment during the second quarter of 2022. As a result of the quantitative impairment tests performed as of June 30, 2022, the Company recorded impairment losses of $2.8 million related to the FCC licenses in its Fort Myers-Naples, FL, Las Vegas, NV, and Wilmington, DE market clusters. The impairment losses were primarily due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair values of the FCC licenses due to certain risks associated with the U.S. economy.

The fair values of the FCC licenses in the Fort Myers-Naples, FL, Las Vegas, NV, and Wilmington, DE 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		(1.9)% - 15.9%
Market revenue shares at maturity		0.6% - 44.0%
Operating income margins at maturity		19.2% - 32.6%
Discount rate		9.5%

(5)

Goodwill

Changes in the carrying amount of goodwill for the nine months ended September 30, 2023 are as follows:


Balance as of January 1, 2023	$	13,265,460
Impairment losses (see below)		(10,582,360	)
Balance as of September 30, 2023	$	2,683,100

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

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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%

Due to an increase in interest rates in the U.S. economy, the Company tested its goodwill for impairment during the second quarter of 2022. As a result of the quantitative impairment test performed as of June 30, 2022, the Company recorded impairment losses of $5.9 million related to the goodwill in its Boston, MA, Charlotte, NC, Fayetteville, NC, Fort Myers-Naples, FL and Tampa-Saint Petersburg, FL market clusters. The impairment losses were primarily due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of goodwill due to certain risks associated with the U.S. economy.

The fair values of goodwill in the Boston, MA, Charlotte, NC, Fayetteville, NC, Fort Myers-Naples, FL, and Tampa-Saint Petersburg, FL 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		(1.9)% - 11.1%
Operating income margins		5.4% - 29.8%
Discount rate		9.5%

(6)

Long-Term Debt

Long-term debt is comprised of the following:


	December 31,			September 30,
	2022			2023
Secured notes	$	290,000,000		$	287,000,000
Less unamortized debt issuance costs		(4,527,893	)		(3,387,637	)
	$	285,472,107		$	283,612,363

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 “Notes”) under an indenture dated February 2, 2021 (the “Indenture”). Interest on the Notes accrues at the rate of 8.625% per annum and is payable semiannually in arrears on February 1 and August 1 of each year. The 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. The Indenture contains 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 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. Prior to February 1, 2025, the Company will be subject to certain premiums, as defined in the Indenture, for optional or mandatory (upon certain contingent events) redemption of some or all of the Notes.

In October 2023, the Company purchased $10.0 million principal amount of the Notes for a price equal to 63% of the principal amount and recorded a gain of $3.6 million as a result of the purchase. In the second quarter of 2023, the Company purchased $3.0

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

million principal amount of the Notes for a price equal to 66% of the principal amount and recorded a gain of $1.0 million as a result of the purchase.

In the third quarter of 2022, the Company purchased $5.0 million aggregate principal amount of the Notes for an aggregate price equal to 77% of the principal amount and recorded an aggregate gain of $1.0 million as a result of the purchases. In the second quarter of 2022, the Company purchased $5.0 million aggregate principal amount of the Notes for an aggregate price equal to 96% of the principal amount and recorded an aggregate gain of $0.1 million as a result of the purchases.

(7)

Stockholders’ Equity

The changes in stockholders’ equity are as follows:


	Three months ended September 30,						Nine months ended September 30,
	2022			2023			2022			2023
Beginning balance	$	245,537,024		$	209,809,453		$	263,082,298		$	223,488,808
Stock-based compensation		270,094			177,814			876,174			533,421
Adjustment from related party transaction		(6,573	)		-			(6,573	)		-
Purchase of treasury stock		(2,384	)		(2,071	)		(108,091	)		(69,838	)
Net income (loss)		498,068			(67,536,837	)		(17,547,579	)		(81,504,032	)
Other comprehensive loss		(12,442	)		-			(12,442	)		-
Ending balance	$	246,283,787		$	142,448,359		$	246,283,787		$	142,448,359

(8)

Net Revenue

Net revenue is comprised of the following:


	Three months ended September 30,				Nine months ended September 30,
	2022		2023		2022		2023
Audio	$	52,995,670	$	48,332,715	$	153,778,711	$	146,198,774
Digital		10,241,671		11,177,881		28,769,331		33,455,935
Other		585,947		609,161		1,805,964		1,705,891
	$	63,823,288	$	60,119,757	$	184,354,006	$	181,360,600

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,
	2022		2023
Deferred revenue	$	4,696,989	$	5,356,521

Audio revenue includes revenue from the sale or trade of aired commercial spots to advertisers directly or through 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.

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


	December 31,		September 30,
	2022		2023
Trade sales receivable	$	1,564,054	$	2,032,871
Trade sales payable		806,162		823,879


	Three months ended September 30,				Nine months ended September 30,
	2022		2023		2022		2023
Trade sales revenue	$	1,481,948	$	1,441,228	$	4,358,626	$	4,288,722

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.

(9)

Stock-Based Compensation

The Beasley Broadcast Group, Inc. 2007 Equity Incentive Award Plan (the “2007 Plan”) permits the Company to issue up to 7.5 million 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, 2023		878,850		$	1.63
Granted		-			-
Vested		(8,333	)		2.01
Forfeited		-			-
Unvested as of September 30, 2023		870,517		$	1.62

As of September 30, 2023, there was $0.9 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.

(10)

Income Taxes

The Company’s effective tax rate was (171)% and (26)% for the three months ended September 30, 2022 and 2023, respectively, and (18)% and (24)% for the nine months ended September 30, 2022 and 2023, 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.

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(11)

Earnings Per Share

Earnings per share calculation information is as follows:


	Three months ended September 30,					Nine months ended September 30,
	2022		2023			2022			2023
Net income (loss) attributable to BBGI stockholders	$	498,068	$	(67,536,837	)	$	(17,547,579	)	$	(81,504,032	)
Weighted-average shares outstanding:
Basic		29,546,324		29,962,613			29,445,998			29,867,820
Effect of dilutive restricted stock units and restricted stock		169,037		-			-			-
Diluted		29,715,361		29,962,613			29,445,998			29,867,820
Net income (loss) attributable to BBGI stockholders per Class A and Class B common share – basic and diluted	$	0.02	$	(2.25	)	$	(0.60	)	$	(2.73	)

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 76,147 shares for the three months ended September 30, 2023, and 219,222 shares and 83,315 shares for the nine months ended September 30, 2022 and 2023, respectively.

(12)

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 Notes, based on available market information, was $174.0 million and $180.1 million as of December 31, 2022 and September 30, 2023, respectively. The Company used Level 2 measurements under the fair value measurement hierarchy to determine the estimated fair value of the Notes.

(13)

Segment Information

The Company currently operates three operating segments (Audio, Digital, esports) and two reportable segments (Audio, Digital). 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: Atlanta, GA, 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 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 comprehensive income (loss).

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 loss		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

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Reportable segment information for the three months ended September 30, 2022 is as follows:


	Audio		Digital		Other			Corporate			Total
Net revenue	$	52,995,670	$	10,241,671	$	585,947		$	-		$	63,823,288
Operating expenses		42,456,844		8,237,262		817,593			-			51,511,699
Corporate expenses		-		-		-			5,132,362			5,132,362
Depreciation and amortization		1,520,168		47,882		699,969			188,627			2,456,646
Operating income (loss)	$	9,018,658	$	1,956,527	$	(931,615	)	$	(5,320,989	)	$	4,722,581


	Audio		Digital		Other		Corporate		Total
Capital expenditures	$	4,517,127	$	25,959	$	-	$	191,949	$	4,735,035

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 loss		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 for the nine months ended September 30, 2022 is as follows:


	Audio		Digital		Other			Corporate			Total
Net revenue	$	153,778,711	$	28,769,331	$	1,805,964		$	-		$	184,354,006
Operating expenses		126,507,373		25,810,560		2,829,907			-			155,147,840
Corporate expenses		-		-		-			13,933,292			13,933,292
Depreciation and amortization		4,706,333		56,959		2,096,270			564,086			7,423,648
FCC licenses impairment losses		4,619,772		-		-			-			4,619,772
Goodwill impairment losses		5,856,551		-		-			-			5,856,551
Operating income (loss)	$	12,088,682	$	2,901,812	$	(3,120,213	)	$	(14,497,378	)	$	(2,627,097	)


	Audio		Digital		Other		Corporate		Total
Capital expenditures	$	10,738,350	$	36,785	$	59,084	$	398,693	$	11,232,912

Reportable segment information as of September 30, 2023 is as follows:


	Audio		Digital		Other		Corporate		Total
Property and equipment, net	$	49,202,607	$	102,950	$	79,095	$	3,094,734	$	52,479,386
FCC licenses		393,976,500		-		-		-		393,976,500
Goodwill		-		922,000		1,761,100		-		2,683,100
Other intangibles, net		1,741,182		874,315		4,698,716		179,663		7,493,876
Assets held for sale		4,827,864		-		-		-		4,827,864

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Reportable segment information as of December 31, 2022 is as follows:


	Audio		Digital		Other		Corporate		Total
Property and equipment, net	$	51,941,687	$	112,693	$	67,751	$	3,684,916	$	55,807,047
FCC licenses		487,249,798		-		-		-		487,249,798
Goodwill		10,582,360		922,000		1,761,100		-		13,265,460
Other intangibles, net		1,841,001		992,752		5,206,523		179,663		8,219,939

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

General

We are a multi-platform media company whose primary business is operating radio stations throughout the United States. We offer local and national advertisers integrated marketing solutions across audio, digital and event platforms. We own and operate stations in the following markets: Atlanta, GA, 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. We refer to each group of stations in each market as a market cluster. Unless the context otherwise requires, all references in this report to the “Company,” “we,” “us” or “our” are to Beasley Broadcast Group, Inc. and its subsidiaries.

Cautionary Note Regarding Forward-Looking Statements

This report contains “forward-looking statements” about the Company within the meaning of the Private Securities Litigation Reform Act of 1995, which relate to future, not past, events. All statements other than statements of historical fact included in this document are forward-looking statements. These forward-looking statements are based on the current beliefs and expectations of the Company’s management and are subject to known and unknown risks and uncertainties. Forward-looking statements, which address the Company’s expected business and financial performance and financial condition, among other matters, contain words such as: “expects,” “anticipates,” “intends,” “plans,” “believes,” “estimates,” “may,” “will,” “plans,” “projects,” “could,” “should,” “would,” “seek,” “forecast,” or other similar expressions.

Forward-looking statements, by their nature, address matters that are, to different degrees, uncertain. Although the Company believes the expectations reflected in such forward-looking statements are based upon reasonable assumptions, it can give no assurance that the expectations will be attained or that any deviation will not be material. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. The Company undertakes no obligation to update or revise any forward-looking statements.

Forward-looking statements involve a number of risks and uncertainties, and actual results or events may differ materially from those projected or implied in those statements. Factors that could cause actual results or events to differ materially from these forward-looking statements include, but are not limited to:

•

external economic forces and conditions that could have a material adverse impact on the Company’s advertising revenues and results of operations;

•

the ability of the Company’s stations to compete effectively in their respective markets for advertising revenues;

•

the ability of the Company to develop compelling and differentiated digital content, products and services;

•

audience acceptance of the Company’s content, particularly its audio programs;

•

the ability of the Company to respond to changes in technology, standards and services that affect the audio industry;

•

the Company’s dependence on federally issued licenses subject to extensive federal regulation;

•

actions by the FCC or new legislation affecting the audio industry;

•

increases to royalties the Company pays to copyright owners or the adoption of legislation requiring royalties to be paid to record labels and recording artists;

•

the Company’s dependence on selected market clusters of stations for a material portion of its net revenue;

•

credit risk on the Company’s accounts receivable;

•

the risk that the Company’s FCC licenses and/or goodwill could become impaired;

•

the Company’s substantial debt levels and the potential effect of restrictive debt covenants on the Company’s operational flexibility and ability to pay dividends;

•

the potential effects of hurricanes on the Company’s corporate offices and stations;

•

the failure or destruction of the internet, satellite systems and transmitter facilities that the Company depends upon to distribute its programming;

•

disruptions or security breaches of the Company’s information technology infrastructure and information systems;

•

the loss of key personnel;

•

the Company’s ability to integrate acquired businesses and achieve fully the strategic and financial objectives related thereto and their impact on the Company’s financial condition and results of operations;

•

the fact that the Company is controlled by the Beasley family, which creates difficulties for any attempt to gain control of the Company;

•

the Company's ability to comply with the continued listing standards of the Nasdaq Global Market; and

•

other economic, business, competitive, and regulatory factors affecting the businesses of the Company, including those set forth in the Company’s filings with the SEC.

Although we believe the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. We do not intend, and undertake no obligation, to update any forward-looking statement.

Financial Statement Presentation

The following discussion provides a brief description of certain key items that appear in our financial statements and general factors that impact these items.

Net Revenue. Our net revenue is primarily derived from the sale of commercial spots to advertisers directly or through national, regional or local advertising agencies. Revenues are reported at the amount we expect to be entitled to receive under the contract. Local revenue generally consists of commercial advertising sales, digital advertising sales and other sales to advertisers in a station’s local market, either directly to the advertiser or through the advertiser’s agency. National revenue generally consists of commercial advertising sales through advertiser agencies. National advertiser agencies generally purchase advertising for multiple markets. National sales are generally facilitated by our national representation firm, which serves as our agent in these transactions.

Our net revenue is generally determined by the advertising rates that we are able to charge and the number of advertisements that we can broadcast without jeopardizing listener levels. Advertising rates are primarily based on the following factors:

•

a station’s audience share in the demographic groups targeted by advertisers as measured principally by periodic reports issued by Nielsen Audio;

•

the number of stations, as well as other forms of media, in the market competing for the attention of the same demographic groups;

•

the supply of, and demand for, radio advertising time; and

•

the size of the market.

Our net revenue is affected by general economic conditions, competition and our ability to improve operations at our radio market clusters. Seasonal revenue fluctuations are also common in the radio broadcasting industry and are primarily due to variations in advertising expenditures by local and national advertisers. Our revenues typically are lowest in the first calendar quarter of the year. In addition, our revenues tend to fluctuate between years, consistent with, among other things, increased advertising expenditures in even-numbered years by political candidates, political parties and special interest groups. This political spending typically is heaviest during the fourth quarter of such years.

We use trade sales agreements to reduce cash paid for operating costs and expenses by exchanging advertising airtime for goods or services; however, we endeavor to minimize trade revenue in order to maximize cash revenue from our available airtime.

We also continue to invest in digital support services to develop and promote our station websites, applications, and other distribution platforms. We derive revenue from our websites through the sale of advertiser promotions and advertising on our websites and the sale of advertising airtime during audio streaming of our stations over the internet. We also generate revenue from selling third-party digital products and services.

Operating Expenses. Our operating expenses consist primarily of programming, engineering, sales, advertising and promotion, and general and administrative expenses incurred at our stations. We strive to control our operating expenses by centralizing certain functions at our corporate offices and consolidating certain functions in each of our market clusters.

Critical Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make estimates and assumptions that affect reported amounts and related disclosures. We consider an accounting estimate to be critical if:

•

it involves a significant level of estimation uncertainty; and

•

changes in the estimate or different estimates that could have been selected have had or are reasonably likely to have a material impact on our results of operations or financial condition.

FCC Licenses. FCC licenses are tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that our FCC licenses might be impaired. We assess qualitative factors to determine whether it is more likely than not that our FCC licenses are impaired. If we determine it is more likely than not that one or more of our FCC licenses are impaired, then we are required to perform a quantitative impairment test. The quantitative impairment test compares the fair value of our FCC licenses with the carrying amounts. 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, we combine our FCC licenses into reporting units based on our market clusters.

Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, we tested our FCC licenses for impairment during the third quarter of 2023. As a result of the quantitative impairment tests performed as of September 30, 2023, we recorded impairment losses of $78.2 million related to the FCC licenses in each of our markets 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 our FCC licenses.

The fair values of the FCC licenses in each of our 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%

The carrying amount of our FCC licenses for each reporting unit and the percentage by which fair value exceeded the carrying amount are as follows:


Market cluster	FCC licenses		Excess
Atlanta, GA	$	440,300		-
Augusta, GA		4,978,000		-
Boston, MA		95,901,400		-
Charlotte, NC		44,495,600		-
Detroit, MI		25,205,800		-
Fayetteville, NC		7,295,100		-
Fort Myers-Naples, FL		5,447,900		-
Las Vegas, NV		30,145,300		-
Middlesex, Monmouth, Morristown, NJ		17,237,700		-
Philadelphia, PA		106,737,400		-
Tampa-Saint Petersburg, FL		56,092,000		-

Goodwill. Goodwill is tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that our goodwill might be impaired. We assess qualitative factors to determine whether it is necessary to perform a quantitative assessment for each reporting unit. If the quantitative assessment is necessary, we will determine the fair value of each reporting unit. If the fair value of any reporting unit is less than the carrying amount, we 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 our goodwill for impairment, we have identified our radio market clusters and esports as our reporting units.

Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, we tested our goodwill for impairment during the third quarter of 2023. As a result of the quantitative impairment test performed as of September 30, 2023, we recorded an impairment loss of $10.6 million related to the goodwill in our 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 our goodwill.

The fair value of the goodwill in our 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%

We believe we have made reasonable estimates and assumptions to calculate the estimated fair value of our FCC licenses and goodwill, however, these estimates and assumptions are highly judgmental in nature. Actual results can be materially different from estimates and assumptions. If actual market conditions are less favorable than those projected by the industry or by us, or if events occur or circumstances change that would reduce the estimated fair values of our indefinite-lived intangible assets below the amounts reflected on our balance sheet, we may recognize future impairment charges, the amount of which may be material. For example, if the discount rate used in our discounted cash flow analyses was increased to 10.5% without any additional changes to the other assumptions used in the discounted cash flow analyses, we would have recorded additional impairment losses of $25.1 million related to the FCC licenses in each of our market clusters.

Our remaining critical accounting estimates are described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2022. There have been no additional material changes to our critical accounting estimates during the nine months ended September 30, 2023.

Recent Accounting Pronouncements

There were no recent accounting pronouncements that have or will have a material effect on our financial condition or results of operations.

Three Months Ended September 30, 2023 Compared to the Three Months Ended September 30, 2022

The following summary table presents a comparison of our results of operations for the three months ended September 30, 2022 and 2023, with respect to certain of our key financial measures. The changes illustrated in the table are discussed in greater detail below. This section should be read in conjunction with the condensed consolidated financial statements and notes to condensed consolidated financial statements included in Item 1 of this report.

Results of Operations - Consolidated


	Three Months Ended September 30,					Change
	2022		2023			$			%
Net revenue	$	63,823,288	$	60,119,757		$	(3,703,531	)		(5.8	)%
Operating expenses		51,511,699		50,117,044			(1,394,655	)		(2.7	)%
Corporate expenses		5,132,362		4,493,277			(639,085	)		(12.5	)%
FCC licenses impairment losses		-		78,204,065			78,204,065			-
Goodwill impairment loss		-		10,582,360			10,582,360			-
Income tax benefit		1,252,669		23,299,388			22,046,719			1760.0	%
Net income (loss)		498,068		(67,536,837	)		(68,034,905	)		(13659.8	)%

Results of Operations - Segments


	Three Months Ended September 30,				Change
	2022		2023		$			%
Net revenue
Audio	$	52,995,670	$	48,332,715	$	(4,662,955	)		(8.8	)%
Digital		10,241,671		11,177,881		936,210			9.1	%
Other		585,947		609,161		23,214			4.0	%
	$	63,823,288	$	60,119,757	$	(3,703,531	)		(5.8	)%
Operating expenses
Audio	$	42,456,844	$	38,932,340	$	(3,524,504	)		(8.3	)%
Digital		8,237,262		10,110,593		1,873,331			22.7	%
Other		817,593		1,074,111		256,518			31.4	%
	$	51,511,699	$	50,117,044	$	(1,394,655	)		(2.7	)%

Net Revenue. Net revenue decreased $3.7 million during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. Audio revenue decreased $4.7 million during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, primarily due to a decrease in agency revenue. Digital revenue increased $0.9 million during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, primarily due to continued growth in the digital segment.

Operating Expenses. Operating expenses decreased $1.4 million during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022. Audio operating expenses decreased $3.5 million during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, primarily due to continued expense management in the audio segment. Digital operating expenses increased $1.9 million during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, primarily due to continued investment in the digital segment.

Corporate Expenses. Corporate expenses decreased $0.6 million during the three months ended September 30, 2023 as compared to the three months ended September 30, 2022, primarily due to an increased allocation of digital expenses to operating expenses.

Goodwill Impairment Loss. Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, we tested our goodwill for impairment during the third quarter of 2023. As a result of the quantitative impairment test we recorded an impairment loss of $10.6 million related to the goodwill in our 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.

Income Tax Benefit. Our effective tax rate was (171)% and (26)% for the three months ended September 30, 2022 and 2023, 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.

Net Income (Loss). Net loss for the three months ended September 30, 2023 was $67.5 million compared to net income of $0.5 million for the three months ended September 30, 2022, as a result of the factors described above.

Nine months ended September 30, 2023 Compared to the Nine Months Ended September 30, 2022

The following summary table presents a comparison of our results of operations for the nine months ended September 30, 2022 and 2023, with respect to certain of our key financial measures. The changes illustrated in the table are discussed in greater detail below. This section should be read in conjunction with the condensed consolidated financial statements and notes to condensed consolidated financial statements included in Item 1 of this report.

Results of Operations - Consolidated


	Nine Months Ended September 30,				Change
	2022		2023		$			%
Net revenue	$	184,354,006	$	181,360,600	$	(2,993,406	)		(1.6	)%
Operating expenses		155,147,840		152,098,261		(3,049,579	)		(2.0	)%
Corporate expenses		13,933,292		13,381,403		(551,889	)		(4.0	)%
FCC licenses impairment losses		4,619,772		88,245,065		83,625,293			1810.2	%
Goodwill impairment losses		5,856,551		10,582,360		4,725,809			80.7	%
Income tax benefit		3,874,646		26,285,207		22,410,561			578.4	%
Net loss		17,547,579		81,504,032		63,956,453			364.5	%

Results of Operations - Segments


	Nine Months Ended September 30,				Change
	2022		2023		$			%
Net revenue
Audio	$	153,778,711	$	146,198,774	$	(7,579,937	)		(4.9	)%
Digital		28,769,331		33,455,935		4,686,604			16.3	%
Other		1,805,964		1,705,891		(100,073	)		(5.5	)%
	$	184,354,006	$	181,360,600	$	(2,993,406	)		(1.6	)%
Operating expenses
Audio	$	126,507,373	$	118,200,967	$	(8,306,406	)		(6.6	)%
Digital		25,810,560		30,804,774		4,994,214			19.3	%
Other		2,829,907		3,092,520		262,613			9.3	%
	$	155,147,840	$	152,098,261	$	(3,049,579	)		(2.0	)%

Net Revenue. Net revenue decreased $3.0 million during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. Audio revenue decreased $7.6 million during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, primarily due to a decrease in agency revenue. Digital revenue increased $4.7 million during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, primarily due to continued growth in the digital segment.

Operating Expenses. Operating expenses decreased $3.0 million during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022. Audio operating expenses decreased $8.3 million during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, primarily due to continued expense management in the audio segment. Digital operating expenses increased $5.0 million during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, primarily due to continued investment in the digital segment.

Corporate Expenses. Corporate expenses decreased $0.6 million during the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, primarily due to a decrease in compensation.

FCC Licenses Impairment Losses. Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, we tested our FCC licenses for impairment during the third quarter of 2023. As a result of the quantitative impairment tests, we recorded impairment losses of $78.2 million related to the FCC licenses in each of our 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 value of FCC licenses. On August 11, 2023, we entered into an agreement to sell substantially all of the assets used in the operations of WJBR-FM in Wilmington, DE to a third party for $5.0 million in cash. As a result of entering the agreement, we recorded an impairment loss of $10.0 million related to the FCC license during the second quarter of 2023.

Due to an increase in interest rates in the U.S. economy, we tested our FCC licenses for impairment during the second quarter of 2022. As a result of the quantitative impairment tests, we recorded impairment losses of $2.8 million related to the FCC licenses in our Fort Myers-Naples, FL, Las Vegas, NV, and Wilmington, DE market clusters. The impairment losses were primarily due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of FCC licenses due to certain risks associated with the U.S. economy. On April 1, 2022, we completed the sale of substantially all of the assets used in the operations of WWNN-AM in West Palm Beach-Boca Raton, FL to a third party for $1.25 million in cash. As a result of the sale, we recorded an impairment loss of $1.9 million related to the FCC license during the first quarter of 2022.

Goodwill Impairment Losses. Due to an increase in interest rates in the U.S. economy and a decrease in projected revenues, we tested our goodwill for impairment during the third quarter of 2023. As a result of the quantitative impairment test we recorded an impairment loss of $10.6 million related to the goodwill in our 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.

Due to an increase in interest rates in the U.S. economy, we tested our goodwill for impairment during the second quarter of 2022. As a result of the quantitative impairment tests, we recorded impairment losses of $5.9 million related to the goodwill in our Boston, MA, Charlotte, NC, Fayetteville, NC, Fort Myers-Naples, FL, and Tampa-Saint Petersburg, FL market clusters. The impairment losses were primarily due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of the goodwill due to certain risks associated with the U.S. economy.

Income Tax Benefit. Our effective tax rate was (18)% and (24)% for the nine months ended September 30, 2022 and 2023, 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.

Net Loss. Net loss for the nine months ended September 30, 2023 was $81.5 million compared to a net loss of $17.5 million for the nine months ended September 30, 2022, as a result of the factors described above.

Liquidity and Capital Resources

Overview. Our primary sources of liquidity are internally generated cash flow and cash on hand. Our primary liquidity needs have been, and for the next 12 months and thereafter are expected to continue to be, for working capital, debt service, and other general corporate purposes, including capital expenditures and station acquisitions. Historically, our capital expenditures have not been significant. In addition to property and equipment associated with station acquisitions, our capital expenditures have generally been, and are expected to continue to be, related to the maintenance of our office and studio space, the maintenance of our towers and equipment, and digital products and information technology. We have also purchased or constructed office and studio space in some of our markets to facilitate the consolidation of our operations.

Our board of directors has suspended future quarterly dividend payments until it is determined that resumption of dividend payments is in the best interest of the Company’s stockholders. In addition, as discussed in “Secured Notes” below, the Indenture governing our Notes limits our ability to pay dividends.

Secured Notes. On February 2, 2021, we issued $300.0 million aggregate principal amount of 8.625% senior secured notes due on February 1, 2026 (the “Notes”) under an indenture dated February 2, 2021 (the “Indenture”). Interest on the Notes accrues at the rate of 8.625% per annum and is payable semiannually in arrears on February 1 and August 1 of each year. The 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. The Indenture contains 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 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 our assets; enter into transactions with affiliates; prepay certain kinds of indebtedness; and issue or sell stock of our subsidiaries.

In October 2023, we purchased $10.0 million principal amount of the Notes for a price equal to 63% of the principal amount and recorded a gain of $3.6 million as a result of the purchase. In the second quarter of 2023, we purchased $3.0 million principal amount of the Notes for a price equal to 66% of the principal amount and recorded a gain of $1.0 million as a result of the purchase.

From time to time, we repurchase sufficient shares of our common stock to fund withholding taxes in connection with the vesting of restricted stock units. We paid approximately $70,000 to repurchase 72,272 shares during the nine months ended September 30, 2023. From time to time, we may seek to repurchase, redeem or otherwise retire our Notes through cash purchases and/or exchanges for equity securities, in open market purchases, privately negotiated transactions, tender offers or otherwise. Such repurchases, redemptions or other transactions, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions, and other factors. The amounts involved may be material.

We expect to provide for future liquidity needs through one or a combination of the following sources of liquidity:

•

internally generated cash flow;

•

additional borrowings or notes offerings, to the extent permitted under the Indenture governing our Notes; and

•

additional equity offerings.

We believe we will have sufficient liquidity and capital resources to permit us to provide for our liquidity requirements and meet our financial obligations for the next 12 months and thereafter. However, poor financial results or unanticipated expenses could give rise to default under the Notes, additional debt servicing requirements or other additional financing or liquidity requirements sooner than we expect, and we may not secure financing when needed or on acceptable terms.

Off-Balance Sheet Arrangements. We did not have any off-balance sheet arrangements as of September 30, 2023.

Cash Flows. The following summary table presents a comparison of our cash flows for the nine months ended September 30, 2022 and 2023 with respect to certain of our key measures affecting our liquidity. The changes set forth in the table are discussed in greater detail below. This section should be read in conjunction with the condensed consolidated financial statements and notes to condensed consolidated financial statements included in Item 1 of this report.


	Nine Months Ended September 30,
	2022			2023
Net cash provided by (used in) operating activities	$	2,291,387		$	(5,004,885	)
Net cash used in investing activities		(12,033,625	)		(2,810,716	)
Net cash used in financing activities		(8,787,536	)		(2,053,588	)
Net decrease in cash and cash equivalents	$	(18,529,774	)	$	(9,869,189	)

Net Cash Provided By (Used In) Operating Activities. Net cash used in operating activities was $5.0 million during the nine months ended September 30, 2023, as compared to net cash provided by operating activities of $2.3 million during the nine months

ended September 30, 2022. The $7.3 million change in net cash used in operating activities was primarily due to an $8.3 million increase in cash paid for operating expenses and an $0.8 million decrease in cash receipts from revenue, partially offset by a $0.8 million decrease in interest payments.

Net Cash Used In Investing Activities. Net cash used in investing activities during the nine months ended September 30, 2023 included payments of $3.1 million for capital expenditures. Net cash used in investing activities for the same period in 2022 included payments of $11.2 million for capital expenditures and a payment of $2.0 million for the acquisition of Guarantee Digital, LLC, partially offset by proceeds of $1.2 million from a station disposition.

Net Cash Used In Financing Activities. Net cash used in financing activities during the nine months ended September 30, 2023 included Notes purchases of $2.0 million. Net cash used in financing activities for the same period in 2022 included Notes purchases of $8.7 million.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not required for smaller reporting companies.

ITEM 4. CONTROLS AND PROCEDURES.

Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we have evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(b) as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that these disclosure controls and procedures are effective as of the end of the period covered by this report.

There were no changes in our internal controls over financial reporting during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

PART II OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

We currently and from time to time are involved in ordinary routine litigation and are the subject of threats of litigation that are incidental to the conduct of our business. These include indecency claims and related proceedings at the FCC, as well as claims and threatened claims by private third parties. However, we are not a party to any lawsuit or other proceedings, or the subject of any threatened lawsuit or other proceedings, which, in the opinion of management, is likely to have a material adverse effect on our financial condition or results of operations.

ITEM 1A. RISK FACTORS.

There have been no material changes to the risks affecting our Company as previously disclosed in Item 1A, “Risk Factors” of our annual report on Form 10-K for the year ended December 31, 2022, other than the update noted below.

There can be no assurance that we will be able to comply with the continued listing standards of the Nasdaq Global Market.

Our Class A common stock is currently listed for trading on the Nasdaq Global Market, and we must satisfy certain continued listing requirements to maintain the listing. On April 27, 2023, we received a written notice (the “April Notice”) from the Listing Qualifications Department of The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, for the last 30 consecutive business days, the bid price for our Class A common stock had closed below the $1.00 per share minimum bid price requirement for continued inclusion on the Nasdaq Global Market pursuant to Nasdaq Listing Rule 5450(a)(1) (the “Minimum Bid Price Requirement”). On May 19, 2023, we received a notice from Nasdaq notifying us that we had regained compliance with the Minimum Bid Price Requirement and that the matter was closed.

On October 13, 2023, we received a written notice (the “October Notice”) from the Listing Qualifications Department of Nasdaq notifying us that, for the last 30 consecutive business days, the bid price for our Class A common stock had closed below the Minimum Bid Price Requirement. In accordance with Nasdaq rules, we have been provided 180 calendar days, or until April 10, 2024, to regain compliance. The October Notice is only a notification of deficiency, not of imminent delisting, and has no current effect on the listing or trading of our securities on the Nasdaq Global Market.

We intend to actively monitor the closing bid price of our Class A common stock and will consider all reasonable available options to regain compliance with the Minimum Bid Price Requirement, which may include transferring the listing to the Nasdaq Capital Market and/or seeking stockholder approval to effect a reverse stock split. There can be no assurance that we will regain compliance with the Minimum Bid Price Requirement during the 180-day compliance period, secure a second 180-day period to regain compliance, maintain compliance with the other Nasdaq listing requirements or be successful in appealing any delisting determination.

If we are delisted from Nasdaq but obtain a substitute listing for our Class A common stock, it will likely be on a market with less liquidity, and therefore experience potentially more price volatility than experienced on Nasdaq. Stockholders may not be able to sell their shares of our Class A common stock on any such substitute market in the quantities, at the times, or at the prices that could potentially be available on a more liquid trading market. As a result of these factors, if our Class A common stock is delisted from Nasdaq, the value and liquidity of our Class A common stock would likely be significantly adversely affected.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Repurchases of Equity Securities

The following table presents information with respect to purchases we made of our Class A common stock during the three months ended September 30, 2023.


Period	Total Number of Shares Purchased		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Approximate Dollar Value of Shares That May Yet Be Purchased Under the Program
July 1 – 31, 2023		-	$	-		-		-
August 1 – 31, 2023		1,954	$	1.06		-		-
September 1 – 30, 2023		-	$	-		-		-
Total		1,954

On March 27, 2007, our board of directors approved the Beasley Broadcast Group, Inc. 2007 Equity Incentive Award Plan (the “2007 Plan”). The original 10-year term of the 2007 Plan ended on March 27, 2017. Our stockholders approved an amendment to the 2007 Plan at the Annual Meeting of Stockholders on June 8, 2017 to, among other things, extend the term of the 2007 Plan until March 27, 2027. The 2007 Plan permits us to purchase sufficient shares to fund withholding taxes in connection with the vesting of restricted stock units. All shares purchased during the three months ended September 30, 2023 were purchased to fund withholding taxes in connection with the vesting of restricted stock units.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION.

None.

ITEM 6. EXHIBITS.


Exhibit Number		Description
31.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) (17 CFR 240.15d-14(a)).
31.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a) (17 CFR 240.15d-14(a)).
32.1		Certification of Chief Executive Officer pursuant to Rule 13a-14(b)/15d-14(b) (17 CFR 240.15d-14(b)) and 18 U.S.C. Section 1350.
32.2		Certification of Chief Financial Officer pursuant to Rule 13a-14(b)/15d-14(b) (17 CFR 240.15d-14(b)) and 18 U.S.C. Section 1350.
101.INS		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH		XBRL Taxonomy Extension Schema Document.
101.CAL		XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF		XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB		XBRL Taxonomy Extension Label Linkbase Document.
101.PRE		XBRL Taxonomy Extension Presentation Linkbase Document.
104		Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		BEASLEY BROADCAST GROUP, INC.

Dated: November 3, 2023		/s/ Caroline Beasley
		Name: Caroline Beasley
		Title: Chief Executive Officer (principal executive officer)

Dated: November 3, 2023		/s/ Marie Tedesco
		Name: Marie Tedesco
		Title: Chief Financial Officer (principal financial and accounting officer)

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Good

Beasley Broadcast (BBGI) 10-Q2023 Q3 Quarterly report

Content analysis