The fair value of the assets received in the asset exchange was $5.8 million. The Company recorded a gain on exchange of $3.4 million.

The asset allocation is summarized as follows:


Property and equipment	$	302,336
FCC license		5,451,000

Fair value of assets received		5,753,336
Carrying amount of assets of exchanged station		(2,402,797	)

Gain on exchange	$	3,350,539

The fair value of the property and equipment was estimated using cost and market approaches. Property and equipment for which there are comparable current replacements available were valued on the basis of a cost approach. The cost approach allowed for factors such as physical depreciation as well as functional and economic obsolescence. Property and equipment for which an active used market exists, including property for which there is no longer comparable current replacements available but for which there remains an active used market, were valued using a market approach. The market approach is based on the selling prices of similar assets on the used market. As few sales reflect identical assets, the selling prices of similar assets was utilized with adjustments made for any differences such as age, condition, and options. If different assumptions or estimates had been used in the cost and market approaches, the fair value of the property and equipment could have been materially different.

The fair value of the FCC license was estimated using an income approach. The income approach measures the expected economic benefits the licenses provide and discounts these future benefits using discounted cash flow analyses. The discounted cash flow analyses assume that each license is held by a hypothetical

start-up

station and the value yielded by the discounted cash flow analyses represents the portion of the station’s value attributable solely to its license. The discounted cash flow model incorporates variables such as market revenues; the projected growth rate for market revenues; projected market revenue share; projected station operating income margins; and a discount rate appropriate for the radio broadcasting industry. The variables used in the analyses reflect historical station and market growth trends, as well as anticipated station performance, industry standards, and market conditions. The discounted cash flow projection period of ten years was determined to be an appropriate time horizon for the analyses. Stable market revenue share and operating margins are expected at the end of year three (maturity). If different assumptions or estimates had been used in the income approach, the fair value of the FCC licenses could have been materially different. If actual results are different from assumptions or estimates used in the discounted cash flow analyses, the Company may incur impairment losses in the future and they may be material.

The key assumptions used in the valuation of the FCC license are as

follows:


Revenue growth rates	0.3% - 1.5	%
Market revenue shares at maturity	5.2%
Operating income margins at maturity	23.3%
Discount rate	9.5%

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 final purchase price allocation was completed during the third 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.