mdia-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

______________________________________

FORM 10-Q

______________________________________

(Mark One)


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

For the quarterly period ended June 30, 2023


o			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 001-39029

______________________________________

MEDIACO HOLDING INC.

(Exact name of registrant as specified in its charter)

______________________________________

Indiana

(State of incorporation or organization)

84-2427771

(I.R.S. Employer Identification No.)

395 Hudson Street, Floor 7

New York, New York 10014

(Address of principal executive offices)

(212) 229-9797

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

______________________________________

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


Title of each class	Trading symbol(s)	Name of each exchange on which registered
Class A common stock, $0.01 par value	MDIA	Nasdaq Capital Market

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

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 x No o

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	o	Accelerated filer	o
Non-accelerated filer	x	Smaller reporting company	x
		Emerging growth company	x

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 pursuant to Section 13(a) of the Exchange Act. o

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

The number of shares outstanding of each of MediaCo Holding Inc.’s classes of common stock, as of August 3, 2023, was:


20,402,749						Shares of Class A Common Stock, $.01 Par Value
5,413,197						Shares of Class B Common Stock, $.01 Par Value
—						Shares of Class C Common Stock, $.01 Par Value

Table of Contents

INDEX


			Page
PART I — FINANCIAL INFORMATION
Item 1. Financial Statements			3
Condensed Consolidated Statements of Operations for the three-month and six-month periods ended June 3 0 , 2023 and 2022			3
Condensed Consolidated Balance Sheets as of June 3 0 , 2023 and December 31, 2022			4
Condensed Consolidated Statements of Changes in Equity (Deficit) for the three-month and six-month periods ended June 3 0 , 2023 and 2022			5
Condensed Consolidated Statements of Cash Flows for the six -month periods ended June 3 0 , 2023 and 2022			6
Notes to Condensed Consolidated Financial Statements			7
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			17
Item 3. Quantitative and Qualitative Disclosures about Market Risk			21
Item 4. Controls and Procedures			21
PART II — OTHER INFORMATION
Item 1. Legal Proceedings			21
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			22
Item 5. Other Information			22
Item 6. Exhibits			22
SIGNATURES			23

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PART I — FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

MEDIACO HOLDING INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended June 30,				Six Months Ended June 30,
(in thousands, except per share amounts)	2023		2022		2023		2022
NET REVENUES	$	12,080	$	12,531	$	19,415	$	20,644
OPERATING EXPENSES:
Operating expenses excluding depreciation and amortization expense	11,046		11,324		18,283		17,947
Corporate expenses	1,002		1,339		2,886		3,826
Depreciation and amortization	148		100		307		215
Gain on disposal of assets	—		—		(39)		—
Total operating expenses	12,196		12,763		21,437		21,988
OPERATING LOSS	(116)		(232)		(2,022)		(1,344)
OTHER INCOME (EXPENSE):
Interest expense, net	(116)		(1,929)		(219)		(4,006)
Other (expense) income	(123)		—		6		—

Total other income (expense)	(239)		(1,929)		(213)		(4,006)
LOSS FROM CONTINUING OPERATIONS BEFORE INCOME TAXES	(355)		(2,161)		(2,235)		(5,350)
PROVISION FOR INCOME TAXES	75		76		150		149
NET LOSS FROM CONTINUING OPERATIONS	(430)		(2,237)		(2,385)		(5,499)
DISCONTINUED OPERATIONS:
Income (loss) from discontinued operations before income taxes	9		(656)		(143)		(1,697)

Income tax expense from discontinued operations	—		(10)		—		—
NET INCOME (LOSS) FROM DISCONTINUED OPERATIONS	9		(666)		(143)		(1,697)
CONSOLIDATED NET LOSS	(421)		(2,903)		(2,528)		(7,196)
PREFERRED STOCK DIVIDENDS	596		780		1,186		1,618
NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(1,017)	$	(3,683)	$	(3,714)	$	(8,814)

Net loss per share attributable to common shareholders - basic and diluted:
Continuing operations	$	(0.04)	$	(0.39)	$	(0.14)	$	(0.93)
Discontinued operations	$	0.00	$	(0.08)	$	(0.01)	$	(0.22)
Net loss per share attributable to common shareholders - basic and diluted:	$	(0.04)	$	(0.47)	$	(0.15)	$	(1.15)

Weighted average common shares outstanding:
Basic	24,947		7,808		24,927		7,687
Diluted	24,947		7,808		24,927		7,687

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

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MEDIACO HOLDING INC.

CONDENSED CONSOLIDATED BALANCE SHEETS


	June 30, 2023		December 31, 2022
(in thousands, except share data)	(Unaudited)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	6,890	$	10,925
Restricted cash	3,204		4,376
Accounts receivable, net of allowance for credit losses of $102 and $122, respectively	8,432		8,568
Prepaid expenses	1,435		979
Other current assets	589		341
Current assets of discontinued operations	38		1,066
Total current assets	20,588		26,255
PROPERTY AND EQUIPMENT, NET	1,115		581
INTANGIBLE ASSETS, NET	64,425		64,703
OTHER ASSETS:
Operating lease right of use assets	14,196		5,088
Deposits and other	395		78
Total other assets	14,591		5,166

Total assets	$	100,719	$	96,705
LIABILITIES AND EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses	$	3,152	$	3,880

Accrued salaries and commissions	538		875
Deferred revenue	1,563		825
Operating lease liabilities	1,081		1,816
Income taxes payable	—		3,008
Other current liabilities	288		35
Current liabilities of discontinued operations	126		659
Total current liabilities	6,748		11,098
LONG TERM DEBT, NET OF CURRENT	5,950		5,950
OPERATING LEASE LIABILITIES, NET OF CURRENT	14,268		3,808

DEFERRED INCOME TAXES	2,633		2,483
OTHER NONCURRENT LIABILITIES	339		51

Total liabilities	29,938		23,390
COMMITMENTS AND CONTINGENCIES
SERIES A CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK, $0.01 PAR VALUE, 10,000,000 SHARES AUTHORIZED; 260,000 SHARES ISSUED AND OUTSTANDING	27,525		26,339
EQUITY:
Class A common stock, $0.01 par value; authorized 170,000,000 shares; issued and outstanding 20,405,357 shares and 20,443,138 shares at June 30, 2023, and December 31, 2022, respectively	204		207
Class B common stock, $0.01 par value; authorized 50,000,000 shares; issued and outstanding 5,413,197 shares at June 30, 2023, and December 31, 2022	54		54
Class C common stock, $0.01 par value; authorized 30,000,000 shares; none issued	—		—
Additional paid-in capital	59,814		59,817
Accumulated deficit	(16,816)		(13,102)
Total equity	43,256		46,976
Total liabilities and equity	$	100,719	$	96,705

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

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MEDIACO HOLDING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY

(Unaudited)


	Class A Common Stock			Class B Common Stock			APIC		Accumulated Deficit		Total
(in thousands, except share data)	Shares	Amount		Shares	Amount
BALANCE, DECEMBER 31, 2022	20,443,138	$	207	5,413,197	$	54	$	59,817	$	(13,102)	$	46,976
Net loss	—	—		—	—		—		(2,107)		(2,107)
Issuance of class A to employees, officers and directors	564,548	6		—	—		363		—		369
Repurchase of class A common shares	(395,813)	(6)		—	—		(565)		—		(571)
Preferred stock dividends	—	—		—	—		—		(590)		(590)
BALANCE, MARCH 31, 2023	20,611,873	$	207	5,413,197	$	54	$	59,615	$	(15,799)	$	44,077
Net loss	—	—		—	—		—		(421)		(421)
Issuance of class A to employees, officers and directors	(150,485)	(2)		—	—		266		—		264
Repurchase of class A common shares	(56,031)	(1)		—	—		(67)		—		(68)
Preferred stock dividends	—	—		—	—		—		(596)		(596)
BALANCE, JUNE 30, 2023	20,405,357	$	204	5,413,197	$	54	$	59,814	$	(16,816)	$	43,256






BALANCE, DECEMBER 31, 2021	3,056,757	$	31	5,413,197	$	54	$	24,030	$	(40,686)	$	(16,571)
Net loss	—	—		—	—		—		(4,293)		(4,293)
Issuance of class A to employees, officers and directors	100,276	1		—	—		343		—		344
Preferred stock dividends	—	—		—	—		—		(838)		(838)
BALANCE, MARCH 31, 2022	3,157,033	$	32	5,413,197	$	54	$	24,373	$	(45,817)	$	(21,358)
Net loss	—	—		—	—		—		(2,903)		(2,903)
Issuance of class A to employees, officers and directors	(26,735)	(1)		—	—		302		—		301
Preferred stock dividends	—	—		—	—		—		(780)		(780)
BALANCE, JUNE 30, 2022	3,130,298	$	31	5,413,197	$	54	$	24,675	$	(49,500)	$	(24,740)

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

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MEDIACO HOLDING INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended June 30,
(in thousands)	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Consolidated net loss	$	(2,528)	$	(7,196)
Less: Loss from discontinued operations, net of tax	143		1,697
Adjustments to reconcile net loss to net cash provided by operating activities -

Depreciation and amortization	307		215
Amortization of deferred financing costs, including original issue discount	—		324
Noncash interest expense	—		664
Noncash lease expense	1,283		1,065
Allowance for credit losses	(20)		(7)

Provision for deferred income taxes	150		149
Noncash compensation	979		1,789

Other noncash items	429		—
Changes in assets and liabilities
Accounts receivable	156		3,155
Prepaid expenses and other current assets	(703)		(87)
Other assets	(172)		—
Accounts payable and accrued liabilities	(996)		994
Deferred revenue	738		68
Operating lease liabilities	(666)		(1,000)
Income taxes	(3,021)		—
Other liabilities	250		1,460
Net cash (used in) provided by continuing operating activities	(3,671)		3,290
Net cash provided by discontinued operating activities	390		598
Net cash (used in) provided by operating activities	(3,281)		3,888
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(624)		(27)
Purchases of internally-created software	(296)		(925)

Net cash used in continuing investing activities	(920)		(952)
Net cash used in discontinued investing activities	—		(343)
Net cash used in investing activities	(920)		(1,295)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt	—		(918)



Repurchases of class A common stock	(639)		—
Settlement of tax withholding obligations	(329)		(1,172)
Net cash used in continuing financing activities	(968)		(2,090)
Net cash used in discontinued financing activities	(38)		(93)
Net cash used in financing activities	(1,006)		(2,183)
CHANGE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(5,207)		410
CASH, CASH EQUIVALENTS AND RESTRICTED CASH:
Beginning of period	15,301		6,121
End of period	10,094		6,531
Less: Cash, cash equivalents and restricted cash of discontinued operations	—		—
Cash, cash equivalents and restricted cash of continuing operations at end of period	$	10,094	$	6,531
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	—	$	3,389
Cash paid for income taxes	$	3,021	$	—

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

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MEDIACO HOLDING INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousands Unless Indicated Otherwise)

(Unaudited)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Organization

MediaCo Holding Inc. (“MediaCo” or the “Company”) is an owned and operated multi-media company formed in Indiana in 2019, focused on radio and digital advertising, premium programming and events.

Our assets consist of two radio stations, WQHT(FM) and WBLS(FM) (the “Stations”), which serve the New York City demographic market area that primarily targets Black, Hispanic, and multi-cultural consumers. We derive our revenues primarily from radio and digital advertising sales, but we also generate revenues from events, including sponsorships and ticket sales, licensing, and syndication.

On December 9, 2022, Fairway Outdoor LLC, FMG Kentucky, LLC and FMG Valdosta, LLC (collectively, “Fairway”), all of which were wholly owned direct and indirect subsidiaries of MediaCo, entered into an Asset Purchase Agreement (the “Purchase Agreement”), with The Lamar Company, L.L.C., a Louisiana limited liability company (the “Purchaser”), pursuant to which we sold our Fairway outdoor advertising business to the Purchaser. The transactions contemplated by the Purchase Agreement closed as of the date of the Purchase Agreement.

We have classified the related assets and liabilities associated with our Fairway business as discontinued operations in our condensed consolidated balance sheets and the results of our Fairway business have been presented as discontinued operations in our condensed consolidated statements of operations for all periods presented through December 9, 2022 as the sale represented a strategic shift in our business that had a major effect on our operations and financial results. Unless otherwise noted, discussion in the notes to condensed consolidated financial statements refers to the Company’s continuing operations. See Note 2 — Discontinued Operations for additional information.

Unless the context otherwise requires, references to “we”, “us” and “our” refer to MediaCo and its subsidiaries.

Basis of Presentation and Consolidation

Our condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). All significant intercompany balances and transactions have been eliminated. In the opinion of management, all adjustments necessary for fair presentation (including normal recurring adjustments) have been included.

Cash, Cash Equivalents and Restricted Cash

We consider time deposits, money market fund shares and all highly liquid debt investment instruments with original maturities of three months or less to be cash equivalents. At times, such deposits may be in excess of FDIC insurance limits. Restricted cash represents amounts held in escrow related to the disposition of the Fairway business and amounts held as collateral for a letter of credit entered into in connection with the lease in New York City for our radio operations and corporate offices.

Fair Value Measurements

Fair value is the exchange price to sell an asset or transfer a liability (an exit price) in an orderly transaction between market participants at the measurement date. The Company uses market data or assumptions market participants would use in pricing the asset or liability, including assumptions about risk and the risks inherent in the inputs to the valuation technique. These inputs may be readily observable, corroborated by market data, or generally unobservable. The Company utilizes valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs. We have no assets or liabilities for which fair value is measured on a recurring basis using Level 3 inputs.

The Company has certain assets that are measured at fair value on a non-recurring basis including those described in Note 3, Intangible Assets, and are adjusted to fair value only when the carrying values are more than the fair values. The categorization of the framework used to price the assets is considered a Level 3 measurement due to the subjective nature of the unobservable inputs used to determine the fair value (see Note 3 for more discussion).

The Company’s long-term debt is not actively traded and is considered a Level 3 measurement. The Company believes the current carrying value of its long-term debt approximates its fair value.

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Allowance for Credit Losses

An allowance for credit losses is recorded based on management’s judgment of the collectability of trade receivables. When assessing the collectability of receivables, management considers, among other things, customer type (agency versus non-agency), historical loss experience, existing and expected future economic conditions and aging category. Amounts are written off after all normal collection efforts have been exhausted. The activity in the allowance for credit losses for the three-month and six-month periods ended June 30, 2023 and 2022 was as follows:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Beginning Balance	$	102	$	120	$	122	$	186
Change in Provision	—		52		(20)		(7)
Write Offs	—		(52)		—		(59)
Ending Balance	$	102	$	120	$	102	$	120

Estimates

The preparation of financial statements requires management to make estimates and assumptions that affect the amounts reported in the unaudited condensed consolidated financial statements and accompanying notes. The Company has considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.

Earnings Per Share

Our basic and diluted net loss per share is computed using the two-class method. The two-class method is an earnings allocation that determines net income per share for each class of common stock and participating securities according to their participation rights in dividends and undistributed earnings or losses. Shares of Series A preferred stock include rights to participate in dividends and distributions to common stockholders on an if-converted basis, and accordingly are considered participating securities. During periods of undistributed losses, however, no effect is given to our participating securities since they are not contractually obligated to share in the losses. We have elected to determine the earnings allocation based on income (loss) from continuing operations. For periods with a loss from continuing operations, all potentially dilutive items were anti-dilutive and thus basic and diluted weighted-average shares are the same. The following is a reconciliation of basic and diluted net loss per share attributable to Class A and Class B common shareholders:


	Three Months Ended June 30,				Six Months Ended June 30,
	2023		2022		2023		2022
Numerator:
Loss from continuing operations	$	(430)	$	(2,237)	$	(2,385)	$	(5,499)
Less: Preferred stock dividends	(596)		(780)		(1,186)		(1,618)

Loss from continuing operations available to common shareholders	(1,026)		(3,017)		(3,571)		(7,117)
Income (loss) from discontinued operations, net of income taxes	9		(666)		(143)		(1,697)
Net loss attributable to common shareholders	$	(1,017)	$	(3,683)	$	(3,714)	$	(8,814)

Denominator:
Weighted-average shares of common stock outstanding — basic and diluted	24,947		7,808		24,927		7,687







Earnings per share of common stock attributable to common shareholders:
Net loss per share attributable to common shareholders - basic and diluted:
Continuing operations	$	(0.04)	$	(0.39)	$	(0.14)	$	(0.93)
Discontinued operations	0.00		(0.08)		(0.01)		(0.22)
Net loss per share attributable to common shareholders - basic and diluted:	$	(0.04)	$	(0.47)	$	(0.15)	$	(1.15)

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On August 20, 2021, MediaCo Holding Inc. entered into an At Market Issuance Sales Agreement with B. Riley Securities, Inc. (“B. Riley”), pursuant to which the Company may offer and sell, from time to time through or to B. Riley, as agent or principal, shares of the Company’s Class A Common Stock, having an aggregate offering price of up to $12.5 million. No shares were sold during the six-month periods ended June 30, 2023 or 2022.

For the six month period ended June 30, 2023, we repurchased under a share repurchase plan 451,844 shares of Class A common stock for an aggregate of $0.6 million. Subsequent to June 30, 2023 through August 3, 2023 we repurchased an additional 15,542 shares of Class A common stock under the share repurchase plan for an aggregate of $17 thousand.

The following convertible equity shares and restricted stock awards were excluded from the calculation of diluted net loss per share because their effect would have been anti-dilutive.


	Three Months Ended June 30,		Six Months Ended June 30,
(in thousands)	2023	2022	2023	2022
Convertible Emmis promissory note	5,563	1,352

SEC Form 10-Q filed by Mediaco Holding Inc.