Beasley Broadcast 10Q 2022 Q3 Quarterly report

Beasley Broadcast (BBGI) 10-Q2022 Q3 Quarterly report

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UNITED STATES

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

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

Commission File

No. 000-29253

BEASLEY BROADCAST GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		65-0960915
(State of Incorporation)		(I.R.S. Employer Identification Number)

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.

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, 12,887,080 Shares Outstanding as of October 31, 2022

Class B Common Stock, $0.001 par value, 16,662,743 Shares Outstanding as of October 31, 2022

INDEX


		Page No.
PART I

FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements.		1

	Notes to Condensed Consolidated Financial Statements.		5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.		12

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.		20

Item 4.	Controls and Procedures.		20

PART II OTHER INFORMATION

Item 1.	Legal Proceedings.		21

Item 1A.	Risk Factors.		21

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.		21

Item 3.	Defaults Upon Senior Securities.		21

Item 4.	Mine Safety Disclosures.		21

Item 5.	Other Information.		21

Item 6.	Exhibits.		22

SIGNATURES			23

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)


	December 31,			September 30,
	2021			2022
ASSETS
Current assets:
Cash and cash equivalents	$	51,378,642		$	32,848,868
Accounts receivable, less allowance for doubtful accounts of $1,720,477 in 2021 and $1,638,970 in 2022		53,378,437			46,696,748
Prepaid expenses		4,044,056			9,969,112
Other current assets		3,397,418			3,903,381

Total current assets		112,198,553			93,418,109
Property and equipment, net		49,843,166			55,712,057
Operating lease right-of-use assets		34,155,175			39,539,899
Finance lease right-of-use assets		320,000			310,000
FCC licenses		508,413,913			503,003,909
Goodwill		28,596,547			23,661,996
Other intangibles, net		22,697,207			21,743,423
Other assets		5,863,501			7,593,606

Total assets	$	762,088,062		$	744,982,999

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable	$	6,995,081		$	12,817,393
Operating lease liabilities		7,693,831			8,105,416
Finance lease liabilities		1,945			—
Other current liabilities		29,811,226			26,510,182

Total current liabilities		44,502,083			47,432,991
Due to related parties		372,193			93,409
Long-term debt, net of current installments and unamortized debt issuance costs		293,789,892			285,104,981
Operating lease liabilities		28,747,450			38,707,218
Deferred tax liabilities		115,689,317			111,463,989
Other long-term liabilities		15,904,829			15,896,624

Total liabilities		499,005,764			498,699,212
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; 16,249,312 issued and 12,696,857 outstanding in 2021; 16,512,312 issued and 12,887,080 outstanding in 2022		16,248			16,510
Class B common stock, $0.001 par value; 75,000,000 shares authorized; 16,662,743 issued and outstanding in 2021 and 2022		16,662			16,662
Additional paid-in capital		150,896,611			151,765,950
Treasury stock, Class A common stock; 3,552,455 shares in 2021; 3,625,232 shares in 2022		(29,021,360	)		(29,129,451	)
Retained earnings		142,220,494			124,672,915
Accumulated other comprehensive loss		(1,046,357	)		(1,058,799	)

Total stockholders’ equity		263,082,298			246,283,787

Total liabilities and stockholders’ equity	$	762,088,062		$	744,982,999

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BEASLEY BROADCAST GROUP, INC.

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


	Three Months Ended September 30,
	2021			2022
Net revenue	$	62,902,935		$	63,823,288

Operating expenses:
Operating expenses (including stock-based compensation of $100,688 in 2021 and $60,892 in 2022 and excluding depreciation and amortization shown separately below)		51,186,064			51,511,699
Corporate expenses (including stock-based compensation of $150,650 in 2021 and $209,202 in 2022)		3,980,815			5,132,362
Depreciation and amortization		2,843,350			2,456,646

Total operating expenses		58,010,229			59,100,707

Operating income		4,892,706			4,722,581
Non-operating income (expense):
Interest expense		(7,021,577	)		(6,621,540	)
Other income, net		12,186			1,166,430

Loss before income taxes		(2,116,685	)		(732,529	)
Income tax benefit		(515,380	)		(1,252,669	)

Income (loss) before equity in earnings of unconsolidated affiliates		(1,601,305	)		520,140
Equity in earnings of unconsolidated affiliates, net of tax		(19,018	)		(22,072	)

Net income (loss)		(1,620,323	)		498,068

Net income (loss) per Class A and Class B common share:
Basic and diluted	$	(0.06	)	$	0.02
Weighted average shares outstanding:
Basic		29,254,609			29,546,324
Diluted		29,254,609			29,715,361

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BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS (UNAUDITED)


	Nine Months Ended September 30,
	2021			2022
Net revenue	$	170,689,680		$	184,354,006

Operating expenses:
Operating expenses (including stock-based compensation of $347,968 in 2021 and $214,483 in 2022 and excluding depreciation and amortization shown separately below)		142,648,355			155,147,840
Corporate expenses (including stock-based compensation of $826,370 in 2021 and $661,691 in 2022)		11,843,958			13,933,292
Depreciation and amortization		8,646,174			7,423,648
Impairment losses		—			10,476,323
Gain on disposition		(191,988	)		—
Other operating income, net		(400,000	)		—

Total operating expenses		162,546,499			186,981,103

Operating income (loss)		8,143,181			(2,627,097	)
Non-operating income (expense):
Interest expense		(19,665,017	)		(20,293,794	)
Loss on extinguishment of long-term debt		(4,996,731	)		—
Other income, net		58,679			1,357,512

Loss before income taxes		(16,459,888	)		(21,563,379	)
Income tax benefit		(4,417,660	)		(3,874,646	)

Loss before equity in earnings of unconsolidated affiliates		(12,042,228	)		(17,688,733	)
Equity in earnings of unconsolidated affiliates, net of tax		(75,042	)		141,154

Net loss		(12,117,270	)		(17,547,579	)
Earnings attributable to noncontrolling interest		129,249			—

Net loss attributable to BBGI stockholders		(11,988,021	)		(17,547,579	)

Net loss attributable to BBGI stockholders per Class A and Class B common share:
Basic and diluted	$	(0.41	)	$	(0.60	)
Weighted average shares outstanding:
Basic and diluted		29,263,963			29,445,998

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BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)


	Nine Months Ended September 30,
	2021			2022
Cash flows from operating activities:
Net loss	$	(12,117,270	)	$	(17,547,579	)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Stock-based compensation		1,174,338			876,174
Provision for bad debts		(1,487,150	)		853,938
Depreciation and amortization		8,646,174			7,423,648
Impairment losses		—			10,476,323
Gain on disposition		(191,988	)		—
Amortization of loan fees		1,171,785			1,123,935
Loss on extinguishment of long-term debt		4,996,731			—
Deferred income taxes		(4,417,660	)		(4,232,949	)
Equity in earnings of unconsolidated affiliates		75,042			(141,154	)
Change in operating assets and liabilities:
Accounts receivable		1,685,007			5,827,751
Prepaid expenses		(6,254,604	)		(5,925,056	)
Other assets		(1,656,170	)		(1,890,763	)
Accounts payable		(5,567,791	)		5,822,312
Other liabilities		7,796,383			808,125
Other operating activities		170,172			(1,183,318	)

Net cash provided by (used in) operating activities		(5,977,001	)		2,291,387

Cash flows from investing activities:
Payment for acquisition		—			(2,000,000	)
Capital expenditures		(3,704,750	)		(11,218,937	)
Proceeds from dispositions		362,500			1,185,312
Proceeds from life insurance		3,000,000			—

Net cash used in investing activities		(342,250	)		(12,033,625	)

Cash flows from financing activities:
Issuance of debt		310,000,000			—
Payments on debt		(268,500,000	)		(8,677,500	)
Payment of debt issuance costs		(7,604,215	)		—
Reduction of finance lease liabilities		(52,629	)		(1,945	)
Purchase of treasury stock		(141,579	)		(108,091	)

Net cash provided by (used in) financing activities		33,701,577			(8,787,536	)

Net increase (decrease) in cash and cash equivalents		27,382,326			(18,529,774	)
Cash and cash equivalents at beginning of period		20,759,432			51,378,642

Cash and cash equivalents at end of period	$	48,141,758		$	32,848,868

Cash paid for interest	$	14,703,825		$	25,564,611

Cash paid for income taxes	$	1,526,303		$	1,547,500

Supplemental disclosure of non-cash investing and financing activities:
Acquisition of noncontrolling interest	$	4,490,130		$	—

Extinguishment of trade sales payable	$	934,500		$	—

Class A common stock returned to treasury stock	$	670,594		$	—

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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, 2021. 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) Acquisitions and Dispositions

On September 29, 2022, the Company entered into an asset exchange agreement with Audacy Nevada, LLC (‘Audacy”), pursuant to which the Company agreed to exchange all of its assets used or useful in the operations of

KDWN-AM

in Las Vegas, NV for all of Audacy’s assets used or useful in the operations of

KXTE-FM

in Las Vegas, NV. On September 29, 2022, the Company also entered into a local marketing agreement (“LMA”) and is scheduled to begin operating

KXTE-FM

November 14, 2022. The LMA

will end on the closing date of the asset exchange. The asset exchange, which is expected to close in the fourth quarter of 2022, is subject to approval by the Federal Communications Commission (“FCC”) and other customary closing conditions. The Company expects to record a gain on exchange upon closing of the asset exchange.

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 broadened the Company’s digital revenue base across the U.S. The acquisition was accounted for as a business combination.

The

inal purchase price allocation was completed during the third quarter of 2022 and changed from the preliminary purchase price allocation reported in the second quarter of 2022. The final 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 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.

(3) FCC Licenses

Changes in the carrying amount of FCC licenses for the nine months ended September 30, 2022 are as follows:


Balance as of January 1, 2022	$	508,413,913
Station disposition (see Note 2)		(790,232	)
Impairment losses (see below and also Note 2)		(4,619,772	)

Balance as of September 30, 2022	$	503,003,909

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

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BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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 test 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 value 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 audio market revenues, projected growth rate for audio market revenues, projected audio market revenue shares, projected audio operating income margins, and a discount rate appropriate for the audio 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%

Interest rates in the U.S. economy continued to increase during the third quarter of 2022; however there were no changes to the discount rate or any other items used in the discounted cash flow analyses to estimate the fair value of the FCC licenses. Therefore, the Company did not record any impairment losses related to FCC licenses during the third quarter of 2022.

(4) Goodwill

Changes in the carrying amount of goodwill for the nine months ended September 30, 2022 are as follows:


Balance as of January 1, 2022	$	28,596,547
Acquisition (see Note 2)		922,000
Impairment losses		(5,856,551	)

Balance as of September 30, 2022	$	23,661,996

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 audio market clusters and esports as its reporting units.

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 the goodwill in the Boston, MA, Charlotte, NC, Fayetteville, NC, Fort Myers-Naples, FL and Tampa-Saint Petersburg, FL market clusters was estimated using an income approach. The income approach is based upon discounted cash flow analyses incorporating variables such as projected audio market revenues, projected growth rate for audio market revenues, projected audio market revenue shares, projected audio operating income margins, and a discount rate appropriate for the audio 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%

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BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Interest rates in the U.S. economy continued to increase during the third quarter of 2022; however there were no changes to the discount rate or any other items used in the discounted cash flow analyses to estimate the fair value of goodwill. Therefore, the Company did not record any impairment losses related to goodwill during the third quarter of 2022.

(5) Long-Term Debt

Long-term debt is comprised of the following:


	December 31,			September 30,
	2021			2022

Secured notes	$	300,000,000		$	290,000,000
Less unamortized debt issuance costs		(6,210,108	)		(4,895,019	)

	$	293,789,892		$	285,104,981

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 the third quarter of 2022, the

Company repurchased $

5.0

million aggregate principal amount of the Notes for an aggregate price equal to

% of the principal amount and recorded an aggregate gain of $

1.0

million as a result of the repurchases

n the

second

quarter of

2022

he Company repurchased $

5.0

million aggregate principal amount of the Notes for an aggregate price equal to

% of the principal amount and recorded an aggregate gain of $

0.1

million as a result of the repurchases

(6) Stockholders’ Equity

The changes in stockholders’ equity for the three and nine months ended September 30, 2021 and 2022 are as follows:


	Three months ended September 30,						Nine months ended September 30,
	2021			2022			2021			2022

Beginning balance	$	253,307,219		$	245,537,024		$	267,101,820		$	263,082,298
Stock-based compensation		251,338			270,094			1,174,338			876,174
Adjustment from related party acquisition		—			(6,573	)		—			(6,573	)
Acquisition of noncontrolling interest		—			—			(4,490,130	)		—
Purchase of treasury stock		(4,800	)		(2,384	)		(812,173	)		(108,091	)
Net income (loss)		(1,620,323	)		498,068			(12,117,270	)		(17,547,579	)
Other comprehensive loss		—			(12,442	)		—			(12,442	)
Elimination of noncontrolling interest		—			—			1,076,849			—

Ending balance	$	251,933,434		$	246,283,787		$	251,933,434		$	246,283,787

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BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(7) Net Revenue

Net revenue is comprised of the following:


	Three months ended September 30,				Nine months ended September 30,
	2021		2022		2021		2022

Audio	$	54,043,650	$	52,995,670	$	146,988,486	$	153,778,711
Digital		8,318,112		10,241,671		22,065,183		28,769,331
Other		541,173		585,947		1,636,011		1,805,964

	$	62,902,935	$	63,823,288	$	170,689,680	$	184,354,006

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 sheet. Substantially all deferred revenue is recognized within

months of the payment date.


	December 31,		September 30,
	2021		2022

Deferred revenue	$	3,085,370	$	5,693,239


	Three months ended September 30,				Nine months ended September 30,
	2021		2022		2021		2022

Losses on receivables	$	99,836	$	274,559	$	1,797,402	$	935,445

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


	December 31,		September 30,
	2021		2022

Trade sales receivable	$	881,885	$	1,293,442
Trade sales payable		614,467		805,037


	Three months ended September 30,				Nine months ended September 30,
	2021		2022		2021		2022

Trade sales revenue	$	1,781,124	$	1,481,948	$	3,786,046	$	4,358,626

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.

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BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(8) 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, 2022		1,209,065		$	2.07
Granted		—			—
Vested		(8,333	)		1.22
Forfeited		(10,000	)		3.03

Unvested as of September 30, 2022		1,190,732		$	2.06

As of September 30, 2022, there was $1.6 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 1.8 years.

(9) Income Taxes

The Company’s effective tax rate was (24)% and (171)% for the three months ended September 30, 2021 and 2022, respectively, and (27)% and (18)% for the nine months ended September 30, 2021 and 2022, respectively. These rates differ from the federal statutory rate of 21% due to the effect of state income taxes, certain

non-taxable

income, and certain expenses that are not deductible for tax purposes.

(10) Earnings Per Share

Earnings per share calculation information is as follows:


	Three months ended September 30,					Nine months ended September 30,
	2021			2022		2021			2022

Net income (loss) attributable to BBGI stockholders	$	(1,620,323	)	$	498,068	$	(11,988,021	)	$	(17,547,579	)

Weighted-average shares outstanding:
Basic		29,254,609			29,546,324		29,263,963			29,445,998
Effect of dilutive restricted stock units and restricted stock		—			169,037		—			—

Diluted		29,254,609			29,715,361		29,263,963			29,445,998

Net income (loss) attributable to BBGI stockholders per Class A and Class B common share – basic and diluted	$	(0.06	)	$	0.02	$	(0.41	)	$	(0.60	)

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 130,195 shares for the three months ended September 30, 2021 and 130,589 shares and 219,222 shares for the nine months ended September 30, 2021 and 2022, respectively.

(11) Related Party Transaction

Loan to Interactive Life, Inc.

In May 2022, the Company provided a $250,000 loan to Interactive Life, Inc. that accrues interest at 8.625% per annum with no cash payments due until the loan’s maturity in May 2024. Interactive Life, Inc. is controlled by Mr. Joseph Harb. The Company currently holds an investment in Quu, Inc., a company that is controlled by Mr. Harb. Repayment of the loan to Interactive Life, Inc. is guaranteed by Mr. Harb with 3,333,334 shares of Class A common stock of Quu, Inc.

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BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(12) Financial Instruments

The carrying amount of the Company’s financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximate 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 $295.9 million and $223.3 million as of December 31, 2021 and September 30, 2022, 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, Tampa-Saint Petersburg, FL, and Wilmington, DE. 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, 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 three months ended September 30, 2021 is as follows:


	Audio		Digital		Other			Corporate			Total
Net revenue	$	54,043,650	$	8,318,112	$	541,173		$	—		$	62,902,935

Operating expenses		42,287,054		8,047,207		851,803			—			51,186,064
Corporate expenses		—		—		—			3,980,815			3,980,815
Depreciation and amortization		1,896,729		4,371		796,018			146,232			2,843,350

Operating income (loss)	$	9,859,867	$	266,534	$	(1,106,648	)	$	(4,127,047	)	$	4,892,706


	Audio		Digital		Other		Corporate		Total
Capital expenditures	$	1,108,934	$	—	$	—	$	42,029	$	1,150,963

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BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

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
Impairment losses		10,476,323		—		—			—			10,476,323

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 for the nine months ended September 30, 2021 is as follows:


	Audio			Digital			Other			Corporate			Total
Net revenue	$	146,988,486		$	22,065,183		$	1,636,011		$	—		$	170,689,680

Operating expenses		116,737,528			23,215,540			2,695,287			—			142,648,355
Corporate expenses		—			—			—			11,843,958			11,843,958
Depreciation and amortization		5,812,342			8,513			2,403,940			421,379			8,646,174
Gain on disposition		(191,988	)		—			—			—			(191,988	)
Other operating (income) expense, net		500,000			—			—			(900,000	)		(400,000	)

Operating income (loss)	$	24,130,604		$	(1,158,870	)	$	(3,463,216	)	$	(11,365,337	)	$	8,143,181


	Audio		Digital		Other		Corporate		Total
Capital expenditures	$	3,098,655	$	87,432	$	2,852	$	515,811	$	3,704,750

Reportable segment information as of September 30, 2022 is as follows:


	Audio		Digital		Other		Corporate		Total
Property and equipment, net	$	51,657,853	$	97,142	$	71,488	$	3,885,574	$	55,712,057
FCC licenses		503,003,909		—		—		—		503,003,909
Goodwill		19,520,896		922,000		3,219,100		—		23,661,996
Other intangibles, net		1,874,274		1,032,231		18,657,255		179,663		21,743,423

Reportable segment information as of December 31, 2021 is as follows:


	Audio		Digital		Other		Corporate		Total
Property and equipment, net	$	45,696,008	$	74,547	$	21,644	$	4,050,967	$	49,843,166
FCC licenses		508,413,913		—		—		—		508,413,913
Goodwill		25,377,447		—		3,219,100		—		28,596,547
Other intangibles, net		1,974,093		—		20,543,451		179,663		22,697,207

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 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, Tampa-Saint Petersburg, FL, and Wilmington, DE. 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:

•

the effects of the COVID-19 pandemic, including its potential effects on the economic environment and the Company’s results of operations, liquidity and financial condition, and the increased risk of impairments of the Company’s Federal Communications Commission (“FCC”) licenses and/or goodwill;

•

external economic forces 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;

•

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; 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, audio 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 market clusters. Seasonal revenue fluctuations are also common in the audio 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 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 our FCC licenses are impaired, then we are required to perform the 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, we tested our FCC licenses for impairment during the second quarter of 2022. As a result of the quantitative impairment test performed as of June 30, 2022, 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 due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of our FCC licenses due to certain risks associated with the U.S. economy.

The fair values of the FCC licenses in our 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 audio market revenues, projected growth rate for audio market revenues, projected audio market revenue shares, projected audio operating income margins, and a discount rate appropriate for the audio 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%

Interest rates in the U.S. economy continued to increase during the third quarter of 2022; however there were no changes to the discount rate or any other items used in the discounted cash flow analyses to estimate the fair value of the FCC licenses. Therefore, we did not record any impairment losses related to FCC licenses during the third quarter of 2022.

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	$	832,300		13.1	%
Augusta, GA		6,113,075		57.1
Boston, MA		137,856,160		0.2
Charlotte, NC		56,418,151		9.4
Detroit, MI		29,978,201		8.2
Fayetteville, NC		8,974,679		9.3
Fort Myers-Naples, FL		9,131,300		—
Las Vegas, NV		33,655,100		—
Middlesex, Monmouth, Morristown, NJ		21,896,900		1.6
Philadelphia, PA		119,674,192		11.2
Tampa-Saint Petersburg, FL		61,787,351		16.7
Wilmington, DE		16,686,500		—

Goodwill. We are required to test our goodwill 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 market clusters and esports as our reporting units.

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 test performed as of June 30, 2022, 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 due to an increase in the discount rate used in the discounted cash flow analyses to estimate the fair value of our goodwill due to certain risks associated with the U.S. economy.

The fair values of the goodwill in our 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 audio market revenues, projected growth rate for audio market revenues, projected audio market revenue shares, projected audio operating income margins, and a discount rate appropriate for the audio 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%

Interest rates in the U.S. economy continued to increase during the third quarter of 2022, however there were no changes to the discount rate or any other items used in the discounted cash flow analyses to estimate the fair value of goodwill. Therefore, we did not record any impairment losses related to goodwill during the third quarter of 2022.

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 value 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.

Our remaining critical accounting estimates are described in Item 7 of our Annual Report on Form 10-K for the year ended December 31, 2021. There have been no additional material changes to our critical accounting estimates during the nine months ended September 30, 2022.

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, 2022 Compared to the Three Months Ended September 30, 2021

The following summary table presents a comparison of our results of operations for the three months ended September 30, 2021 and 2022, 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 financial statements and notes to financial statements included in Item 1 of this report.

Results of Operations - Consolidated


	Three Months Ended September 30,					Change
	2021			2022		$		%
Net revenue	$	62,902,935		$	63,823,288	$	920,353		1.5	%
Operating expenses		51,186,064			51,511,699		325,635		0.6
Corporate expenses		3,980,815			5,132,362		1,151,547		28.9
Other income, net		12,186			1,166,430		1,154,244		9471.9
Income tax benefit		515,380			1,252,669		737,289		143.1
Net income (loss)		(1,620,323	)		498,068		2,118,391		130.7

Results of Operations - Segments


	Three Months Ended September 30,				Change
	2021		2022		$			%
Net revenue
Audio	$	54,043,650	$	52,995,670	$	(1,047,980	)		(1.9	)%
Digital		8,318,112		10,241,671		1,923,559			23.1
Other		541,173		585,947		44,774			8.3

	$	62,902,935	$	63,823,288	$	920,353			1.5

Operating expenses
Audio	$	42,287,054	$	42,456,844	$	169,790			0.4	%
Digital		8,047,207		8,237,262		190,055			2.4
Other		851,803		817,593		(34,210	)		(4.0	)

	$	51,186,064	$	51,511,699	$	325,635			0.6

Net Revenue. Net revenue increased $0.9 million during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021. Audio revenue decreased $1.0 million during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021, primarily due to a decrease in national agency revenue. Digital revenue increased $1.9 million during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021, primarily due to continued growth in the digital segment and the acquisition of Guarantee Digital, LLC (“Guarantee”).

Operating Expenses. Operating expenses for each segment during the three months ended September 30, 2022 were comparable to the same period in 2021. Digital operating expenses included an increase during the three months ended September 30, 2022 due to the acquisition of Guarantee.

Corporate Expenses. Corporate expenses increased $1.2 million during the three months ended September 30, 2022 as compared to the three months ended September 30, 2021, primarily due to a decreased allocation of digital expenses to operating expenses and an increase in compensation.

Other Income, Net. We repurchased $5.0 million aggregate principal amount of our 8.625% senior secured notes due on February 1, 2026 (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 repurchases in the third quarter of 2022.

Income Tax Benefit. Our effective tax rate was approximately (24)% and (171)% for the three months ended September 30, 2021 and 2022, respectively. These rates differ from the federal statutory rate of 21% due to the effect of state income taxes, certain non-taxable income, and certain expenses that are not deductible for tax purposes.

Net Income (Loss). Net income for the three months ended September 30, 2022 was $0.5 million compared to net loss of $1.6 million for the three months ended September 30, 2021, as a result of the factors described above.

Nine Months Ended September 30, 2022 Compared to the Nine Months Ended September 30, 2021

The following summary table presents a comparison of our results of operations for the nine months ended September 30, 2021 and 2022, 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 financial statements and notes to financial statements included in Item 1 of this report.

Results of Operations - Consolidated


	Nine Months Ended September 30,				Change
	2021		2022		$			%
Net revenue	$	170,689,680	$	184,354,006	$	13,664,326			8.0	%
Operating expenses		142,648,355		155,147,840		12,499,485			8.8
Corporate expenses		11,843,958		13,933,292		2,089,334			17.6
Impairment losses		—		10,476,323		10,476,323			—
Other operating income, net		400,000		—		(400,000	)		(100.0	)
Loss on extinguishment of long-term debt		4,996,731		—		(4,996,731	)		(100.0	)
Other income, net		58,679		1,357,512		1,298,833			2213.5
Income tax benefit		4,417,660		3,874,646		(543,014	)		(12.3	)
Net loss		12,117,270		17,547,579		5,430,309			44.8

Results of Operations - Segments


	Nine Months Ended September 30,				Change
	2021		2022		$		%
Net revenue
Audio	$	146,988,486	$	153,778,711	$	6,790,225		4.6	%
Digital		22,065,183		28,769,331		6,704,148		30.4
Other		1,636,011		1,805,964		169,953		10.4

	$	170,689,680	$	184,354,006	$	13,664,326		8.0

Operating expenses
Audio	$	116,737,528	$	126,507,373	$	9,769,845		8.4	%
Digital		23,215,540		25,810,560		2,595,020		11.2
Other		2,695,287		2,829,907		134,620		5.0

	$	142,648,355	$	155,147,840	$	12,499,485		8.8

Net Revenue. Net revenue increased $13.7 million during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. Audio revenue increased $6.8 million during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, primarily due to continued recovery from the COVID-19 pandemic. Digital revenue increased $6.7 million during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, primarily due to continued growth in the digital segment and the acquisition of Guarantee.

Operating Expenses. Operating expenses increased $12.5 million during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021. Audio operating expenses increased $9.8 million during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, primarily due to continued recovery from the COVID-19 pandemic. Digital operating expenses increased $2.6 million during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, primarily due to continued investment in the digital segment and the acquisition of Guarantee.

Corporate Expenses. Corporate expenses increased $2.1 million during the nine months ended September 30, 2022 as compared to the nine months ended September 30, 2021, primarily due to a decreased allocation of digital expenses to operating expenses and an increase in compensation.

Impairment Losses. Due to an increase in interest rates in the U.S. economy, we tested our FCC licenses and goodwill 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 and 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 FCC licenses and goodwill 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.

Other Operating Income, Net. Other operating income, net for the nine months ended September 30, 2021 includes life insurance proceeds of $3.0 million related to the death of Mr. George Beasley, the Company’s former Chairman, in June 2021, partially offset by certain payments totaling $1.5 million that were accrued in accordance with Mr. Beasley’s employment contract, payments of $0.6 million for consulting services related to the COVID-19 pandemic and expenses of $0.5 million related to the early termination of a programming contract.

Loss on Extinguishment of Long-Term Debt. We recorded a loss on extinguishment of long-term debt of $5.0 million during the nine months ended September 30, 2021, resulting from the issuance of the Notes on February 2, 2021 and the use of proceeds to repay our credit facility.

Other Income, Net. In the third quarter of 2022, we repurchased $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 repurchases. In the third quarter of 2022, we repurchased $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 repurchases.

Income Tax Benefit. Our effective tax rate was approximately (27)% and (18)% for the nine months ended September 30, 2021 and 2022, respectively. These rates differ from the federal statutory rate of 21% due to the effect of state income taxes, certain non-taxable income, and certain expenses that are not deductible for tax purposes.

Net Loss. Net loss for the nine months ended September 30, 2022 was $17.5 million compared to a net loss of $12.1 million for the nine months ended September 30, 2021, 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 audio 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.

In response to the COVID-19 pandemic, 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 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 the third quarter of 2022, we repurchased $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 repurchases. In the second quarter of 2022, we repurchased $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 repurchases.

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 $0.1 million to repurchase 72,777 shares during the nine months ended September 30, 2022. 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, 2022.

Cash Flows. The following summary table presents a comparison of our cash flows for the nine months ended September 30, 2021 and 2022 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 financial statements and notes to financial statements included in Item 1 of this report.


	Nine Months Ended September 30,
	2021			2022
Net cash provided by (used in) operating activities	$	(5,977,001	)	$	2,291,387
Net cash used in investing activities		(342,250	)		(12,033,625	)
Net cash provided by (used in) financing activities		33,701,577			(8,787,536	)

Net increase (decrease) in cash and cash equivalents	$	27,382,326		$	(18,529,774	)

Net Cash Provided By (Used In) Operating Activities. Net cash provided by operating activities was $2.3 million during the nine months ended September 30, 2022, as compared to net cash used in operating activities of $6.0 million during the nine months ended September 30, 2021. Significant factors affecting the $8.3 million increase in net cash provided by operating activities included a $17.2 million increase in cash receipts from revenue and a $4.6 million decrease in cash paid for operating expenses, partially offset by an $11.1 million increase in interest payments and a $2.3 million increase in cash paid for corporate expenses.

Net Cash Used In Investing Activities. Net cash used in investing activities during the nine months ended September 30, 2022 included payments of $11.2 million for capital expenditures and a payment of $2.0 million for the acquisition of Guarantee, partially offset by proceeds of $1.2 million from a station disposition. Net cash used in investing activities for the same period in 2021 included payments of $3.7 million for capital expenditures, partially offset by proceeds of $3.0 million from life insurance.

Net Cash Provided By (Used In) Financing Activities. Net cash used in financing activities during the nine months ended September 30, 2022 included Notes repurchases of $8.7 million. Net cash provided by financing for the same period in 2021 included proceeds of $300.0 million from the issuance of the Notes and proceeds from a $10.0 million loan pursuant to the Paycheck Protection Program under the Coronavirus Aid, Relief, and Economic Security Act, partially offset by credit facility and promissory note repayments of $263.5 million, the repayment of a $5.0 million loan provided by George Beasley, and payments of $7.6 million for debt issuance costs related to the Notes.

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 control over financial reporting during the quarter ended September 30, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control 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, 2021.

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, 2022.


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, 2022		—		—		—		—
August 1 – 31, 2022		1,954	$	1.22		—		—
September 1 – 30, 2022		—		—		—		—

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 ten 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 and shares of restricted stock. All shares purchased during the three months ended September 30, 2022 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 7, 2022	/s/ Caroline Beasley
	Name:	Caroline Beasley
	Title:	Chief Executive Officer (principal executive officer)

Dated: November 7, 2022	/s/ Marie Tedesco
	Name:	Marie Tedesco
	Title:	Chief Financial Officer (principal financial and accounting officer)

Positive
Negative
Uncertain
Constraining
Legalese
Litigous
Readability	8th grade Avg

Large accelerated filer

Accelerated filer

Non-accelerated
filer

Smaller reporting company

Emerging growth company