Interim Financial Statements

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

(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, 2019. 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.

The unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries and its investments in OutlawsXP, Inc. (“Outlaws”) and Renegades Holdings, Inc. (“Renegades”). The Company holds an approximately 90% economic interest in Outlaws and an approximately 51% economic interest in Renegades. Net assets and results of operations for Outlaws and Renegades as of and for the three and nine months ended September 30, 2020 are not significant. All significant inter-company transactions and balances have been eliminated.

COVID-19

In March 2020, coronavirus disease 2019

(“COVID-19”)

was recognized as a pandemic by the World Health Organization. The

COVID-19

pandemic has resulted in a widespread health crisis that has adversely affected businesses, economies, and financial markets worldwide, and has caused significant volatility in U.S. and international debt and equity markets. The Company has been impacted by deteriorating general economic conditions, which have caused a downturn in the advertising industry. The decreased demand for advertising has negatively impacted its net revenue, and many advertisers have reduced or ceased advertising spend due to the

COVID-19

pandemic and its related economic impact. Specifically, the Company observed a rapid increase in cancellations and a reduction of new sales beginning midway through the month of March 2020. The cancellations were broad-based but more severe in industries that were severely impacted by the

COVID-19

pandemic. Sales began to recover during the second quarter of 2020 and

have

continued to recover during the third quarter of 2020. The Company is actively monitoring the

COVID-19

pandemic. While this disruption is currently expected to be temporary, there is considerable uncertainty around the duration. Thus, it is impossible to predict the total impact that it will have on the Company. If public and private entities continue to implement restrictive measures, the material adverse effect on the Company’s results of operations, financial condition and cash flows could persist.

Beginning in March 2020, the Company implemented certain expense control initiatives, such as reductions in compensation for management and other employees, reductions in planned capital expenditures, negotiated vendor pricing reductions, furloughs and headcount reductions for certain employees and suspensions of new employee hiring and travel and entertainment expenses. The Company expects these initiatives to continue reducing its expenses throughout the remainder of 2020. The board of directors also 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, in June 2020, the Company entered into Amendment No. 2 to its credit agreement (the “Amendment”) which limits the ability of the Company to pay dividends until certain leverage-based milestones have been achieved. In June 2020, the Company also entered into an amendment to the Promissory Note (as defined below). See Note 4 for additional information.

The

COVID-19

pandemic continues to create significant uncertainty and disruption in the global economy and financial markets. It is reasonably possible that these uncertainties could materially impact the Company’s significant accounting estimates related to, but not limited to, allowance for doubtful accounts, impairment of FCC licenses and goodwill, and determination of

right-of-use

assets. As a result, many of the Company’s estimates and assumptions require increased judgment and carry a higher degree of variability and volatility. The Company’s estimates may change as new events occur and additional information emerges, and such changes are recognized or disclosed in its consolidated financial statements.