UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM10-Q

For the Quarterly Period Ended September 30, 2019March 31, 2020

OR

Commission FileNo. 000-29253

BEASLEY BROADCAST GROUP, INC.

(Exact Name of Registrant as Specified in Its Charter)

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:

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 RegulationS-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, anon-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 Rule12b-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 Rule12b-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, 11,212,04311,355,628 Shares Outstanding as of October 31, 2019June 22, 2020

Class B Common Stock, $0.001 par value, 16,662,743 Shares Outstanding as of October 31, 2019June 22, 2020

EXPLANATORY NOTE

As previously disclosed in its Current Report on Form8-K filed with the Securities and Exchange Commission (the “SEC”) on May 15, 2020, Beasley Broadcast Group, Inc. (the “Company”) relied on the SEC’s Order Under Section 36 of the Securities Exchange Act of 1934 Modifying Exemptions From the Reporting and Proxy Delivery Requirements for Public Companies, dated March 25, 2020 (ReleaseNo. 34-88465) (the “Order”), to delay the filing of this Quarterly Report on Form10-Q for the quarter ended March 31, 2020 (the “Quarterly Report”) due to circumstances related to the coronavirus disease 2019(COVID-19) pandemic, which have limited the ability of the Company’s employees to conduct normal business activities, including the preparation and review of the Quarterly Report. In particular, the effects of theCOVID-19 pandemic and related precautionary responses caused the Company’s employees to have limited access to the Company’s facilities and disrupted normal interactions among accounting personnel and other persons involved in the completion of the Company’s quarterly review and preparation of the Quarterly Report. These restrictions slowed the completion of the Company’s internal quarterly review, including evaluating the various impacts ofCOVID-19 on its financial statements and preparing and completing the Quarterly Report in a timely manner.

INDEX

PART II

OTHER INFORMATION

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)

BEASLEY BROADCAST GROUP, INC.

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

BEASLEY BROADCAST GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

(1)

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 Form10-K for the year ended December 31, 2018.2019. 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 Form10-Q and Article 10 of RegulationS-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) Recent Accounting PronouncementsCOVID-19

In February 2016,March 2020, coronavirus disease 2019(“COVID-19”) was recognized as a pandemic by the Financial Accounting Standards Board (“FASB”) issued guidanceWorld Health Organization. TheCOVID-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 theCOVID-19 pandemic and its related economic impact. Specifically, the Company observed a rapid increase transparencyin cancellations and comparability among organizationsa 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 recognizing lease assetstheCOVID-19 pandemic. While this disruption is currently expected to be temporary, there is considerable uncertainty around the duration however cancellations have decreased significantly and lease liabilitiessales have begun to recover throughout the month of June 2020. The Company is actively monitoring theCOVID-19 situation. However, due to continuing uncertainty regardingCOVID-19, it is impossible to predict the total impact that it will have on the balance sheetCompany. If public and disclosing key information about leasing arrangements. A lessee should recognizeprivate entities continue to implement restrictive measures, the material adverse effect on the Company’s results of operations, financial condition and cash flows could persist.

In response, the Company made safety a priority, implementing awork-at-home initiative for many of its employees, with only certain essential employees remaining in the statementstations to continue live programming. The Company also encouraged its listeners to practice social distancing and hand washing by displaying customized messages on car dashboard displays through the Quu platform. The Company delivered vital and breaking newson-air, opened its phone lines to listeners and hosted live virtual concerts on certain stations with participating artists.

To help listeners and businesses in the communities it serves, the Company launched the “We are all in this together” Community of Caring Campaign that includes:

The Company also 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. In addition, the Company plans to amend the Promissory Note (see Notes 4 and 10 for additional information regarding the Promissory Note and Amendment). The Company expects these initiatives to reduce its expenses beginning in the second quarter of 2020.

As of March 31, 2020, the Company was in compliance with all applicable financial position a liabilitycovenants under its credit agreement. However, due to make leasethe impact of theCOVID-19 pandemic on the Company’s financial performance, the Company projected that it would not be in compliance with the First Lien Leverage Ratio (as defined in its credit agreement) financial covenant as of June 30, 2020. On June 30, 2020, the Company entered into Amendment No. 2 to the credit agreement (the “Amendment”) and now projects that it will be in compliance with all applicable financial covenants, as amended, through June 30, 2021. See Note 10 for additional information regarding the Amendment.

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

In response to theCOVID-19 pandemic, the board of directors suspended future quarterly dividend payments (the lease liability)until it is determined that resumption of dividend payments is in the best interest of the Company’s stockholders. In addition, the Amendment limits the ability of the Company to pay dividends until certain leverage-based milestones have been achieved.    

TheCOVID-19 pandemic continues to create significant uncertainty and adisruption 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 ofright-of-use asset representing its right to use the underlying asset for the lease term. There continues to beassets. As a differentiation between finance leases and operating leases, however lease assets and lease liabilities arising from operating leases should now be recognized in the statement of financial position. New disclosures are required to meet the objective of enabling users of financial statements to assess the amount, timing, and uncertainty of cash flows arising from leases. In 2018 and 2019, the FASB issued several updates to address certain practical expedients, codification improvements, and targeted improvements to the original guidance. On January 1, 2019, the Company adopted the new guidance retrospectively at the beginningresult, many of the periodCompany’s estimates and assumptions require increased judgment and carry a higher degree of adoption through a cumulative-effect adjustment. On January 1, 2019, the Company recorded a lease liability of $43.1 millionvariability andright-of-use assets of $38.8 million. volatility. The Company recorded a cumulative effect of initially applying theCompany’s estimates may change as new standard of $0.9 million on the opening balance of retained earnings. The comparativeevents occur and additional information has not been restatedemerges, and continues to be reported under the accounting guidancesuch changes are recognized or disclosed in effect for that period.

(3) Acquisitions and Dispositions

On August 31, 2019, the Company completed the acquisition of substantially all of the assets used to operateWDMK-FM in Detroit from Urban One, Inc. for $13.5 million in cash. The purchase price was partially financed with $10.0 million in borrowings from the Company’s credit facility and partially funded with $3.5 million of cash from operations. The acquisition broadened and diversified the Company’s local radio broadcasting platform and revenue base in the Detroit radio market. The acquisition was accounted for as an asset acquisition. The Company incurred transaction costs of $0.2 million which were capitalized as a component of the assets acquired.

The assets acquired are summarized as follows:its consolidated financial statements.

On March 28, 2019, the Company completed the sale of certain land and improvements in Augusta, GA to a third party for $0.5 million. As a result of the sale, the Company recorded a gain of $0.4 million in the first quarter of 2019.

On March 15, 2019, the Company agreed to cancel a broadband radio service license in Chattanooga, TN in exchange for a fee of $3.3 million received from Clearwire Spectrum Holdings LLC (“Clearwire”). The Company had previously leased the channels under the broadband radio service license to Clearwire under an agreement that ended on March 15, 2019. As a result of the license cancelation, the Company recorded a gain of $3.1 million in the first quarter of 2019.

On September 27, 2018,

Changes in the carrying amount of Federal Communications Commission (“FCC”) licenses for the three months ended March 31, 2020 are as follows:

Licenses are tested for impairment on an annual basis, or more frequently if events or changes in circumstances indicate that the Company’s licenses might be impaired. The Company assesses qualitative factors to determine whether it is more likely than not that its licenses are impaired. If the Company completeddetermines it is more likely than not that its licenses are impaired, then the acquisitionCompany is required to perform the quantitative impairment test. The quantitative impairment test compares the fair value ofWXTU-FM in Philadelphia from Entercom Communications Corp. for $38.0 million in cash. The purchase price was partially financed with $35.0 million in borrowings from the Company’s credit facility and partially fundedlicenses with $3.0 milliontheir carrying amounts. If the carrying amounts of cash from operations. On July 19, 2018,the licenses exceed their fair value, an impairment loss is recognized in an amount equal to that excess. For the purpose of testing its licenses for impairment, the Company also enteredcombines its licenses into reporting units based on its market clusters.

Due to the impact of theCOVID-19 pandemic on the U.S. economy, the Company tested its FCC licenses for impairment during the first quarter of 2020. As a local marketing agreement (“LMA”)result of the quantitative impairment test performed as of March 31, 2020, the Company recorded impairment losses of $6.8 million related to the FCC licenses in its Atlanta, GA, Middlesex, NJ, Monmouth, NJ, Morristown, NJ, Las Vegas, NV, West Palm Beach-Boca Raton, FL, and Wilmington, DE market clusters. The impairment losses were primarily due to a decrease in projected revenue in these markets due to the impact of theCOVID-19 pandemic and 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 specifically associated with Entercom Communications Corp.the Company and beganthe radio broadcasting industry.

The fair value of the FCC licenses in the Atlanta, GA, Middlesex, NJ, Monmouth, NJ, Morristown, NJ, Las Vegas, NV, West Palm Beach-Boca Raton, FL, and Wilmington, DE market clusters were estimated using an income approach. The income approach is based upon discounted cash flow analyses incorporating variables such as projected radio market revenues, projected growth rate for radio market revenues, projected radio market revenue shares, projected radio station operatingWXTU-FM on July 23, 2018. During income margins, and a discount rate appropriate for the radio broadcasting industry. The key assumptions used in the discounted cash flow analyses are as follows:

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Long-term debt is comprised of the following:

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

outstanding debt, which could have a material adverse effect on the Company’s business or results of operations. As of September 30, 2019,March 31, 2020, the Company was in compliance with all applicable financial covenants under the credit agreement. However, due to the impact of theCOVID-19 pandemic on the Company’s financial performance, the Company projected that it would not be in compliance with the First Lien Leverage Ratio financial covenant as of June 30, 2020. On June 30, 2020, the Company entered into the Amendment to its credit agreement and now projects that it will be in compliance with all applicable financial covenants, as amended, through June 30, 2021. See Note 10 for additional information regarding the Amendment.

The aggregate scheduled principal repayments of the credit facility for the remainder of 20192020 and the next fourthree years are as follows:

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Commercial advertising 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.

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

A summary of restricted stock activity is presented below:

As of September 30, 2019,March 31, 2020, there was $2.4$2.2 million of total unrecognized compensation cost for restricted stock units and shares of restricted stock granted under the 2007 Plan. That cost is expected to be recognized over a weighted-average period of 2.13.0 years.

(10)

The Company’s effective tax rate was 37%approximately 32% and 35%(21)% for the three months ended September 30, 2018March 31, 2019 and 2019, respectively, and 47% and 33% for the nine months ended September 30, 2018 and 2019,2020, respectively. These rates differ from the federal statutory rate of 21% due to the effect of state income taxes and certain expenses that are not deductible for tax purposes. The effective tax rate for the nine months ended September 30, 2018 also reflects a $1.2 million increase due to the change in fair value of contingent consideration during that time period.

BEASLEY BROADCAST GROUP, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

On May 5, 2020, the Company entered into an agreement to sell certain land in Charlotte, NC to a third party for $4.7 million. The Company expects to close on the sale and record a gain during the fourth quarter of 2020.

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

General

We are a multi-platform media company whose primary business is operating radio stations throughout the United States. We offer local and national advertisers integrated marketing solutions across audio, digital and event platforms. We own and operate radio stations in the following radio 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, West Palm Beach-Boca Raton, FL, and Wilmington, DE. We refer to each group of radio stations in each radio market as a market cluster.

Recent Developments

In March 2020, coronavirus disease 2019(“COVID-19”) was recognized as a pandemic by the World Health Organization. TheCOVID-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. We have been impacted by deteriorating general economic conditions, which have caused a downturn in the advertising industry. The decreased demand for advertising has negatively impacted our net revenue, and many advertisers have reduced or ceased advertising spend due to theCOVID-19 pandemic and its related economic impact. Specifically, we 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 theCOVID-19 pandemic. While this disruption is currently expected to be temporary, there is considerable uncertainty around the duration however cancellations have decreased significantly and sales have begun to recover throughout the month of June 2020. We are actively monitoring theCOVID-19 situation. However, due to continuing uncertainty regardingCOVID-19, 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 our results of operations, financial condition and cash flows could persist.

In response, we made safety a priority, implementing awork-at-home initiative for many of our employees, with only certain essential employees remaining in the stations to continue live programming. We also encouraged our listeners to practice social distancing and hand washing by displaying customized messages on car dashboard displays through the Quu platform. We delivered vital and breaking newson-air, opened our phone lines to listeners and hosted live virtual concerts on certain stations with participating artists.

To help listeners and businesses in the communities we serve, we launched the “We are all in this together” Community of Caring Campaign that includes:

We also 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. We expect these initiatives to reduce our expenses beginning in the second quarter of 2020.

Due to the impact of theCOVID-19 pandemic on the U.S. economy, we tested our FCC licenses for impairment during the first quarter of 2020. As a result of the quantitative impairment test performed as of March 31, 2020, we recorded impairment losses of $6.8 million related to the FCC licenses in our Atlanta, GA, Middlesex, NJ, Monmouth, NJ, Morristown, NJ, Las Vegas, NV, West Palm Beach-Boca Raton, FL, and Wilmington, DE market clusters. The impairment losses were primarily due to a decrease in projected revenue in these markets due to the impact of theCOVID-19 pandemic and 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 specifically associated with the Company and the radio broadcasting industry.

On March 26, 2020 and April 7, 2020, we borrowed $7.5 million and $1.5 million, respectively, from our revolving credit facility as a precautionary measure to increase our cash position and preserve financial flexibility due to the uncertainty of economic conditions in the U.S. resulting from theCOVID-19 pandemic. Following the April 7, 2020 borrowing, we have no available commitments under our revolving credit facility.

As of March 31, 2020, we were in compliance with all applicable financial covenants under the credit agreement. However, due to the impact of theCOVID-19 pandemic on our financial performance, we projected that we would not be in compliance with the First Lien Leverage Ratio (as defined in its credit agreement) financial covenant as of June 30, 2020. On June 30, 2020, we entered into Amendment No. 2 to the credit agreement with certain of our lenders (the “Amendment”) and now project that we will be in compliance with all applicable financial covenants, as amended, through June 30, 2021. See “Liquidity and Capital Resources” for additional information regarding the Amendment.

In response to theCOVID-19 pandemic, the board of directors 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, the Amendment limits our ability to pay dividends until certain leverage-based milestones have been achieved.

TheCOVID-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 ofright-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.

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:

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 radio broadcasting industry and are primarily due to variations in advertising expenditures by local and national advertisers. Our revenues are typically 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 radio 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 radio stations over the internet. We also generate revenue from selling otherthird-party digital products.products and services.

radio market revenues, projected radio market revenue shares, projected radio station operating income margins, and a discount rate appropriate for the radio broadcasting industry. The key assumptions used in the discounted cash flow analyses are as follows:

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:

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 the impact of the COVID-19 pandemic, we tested our goodwill for impairment during the first quarter of 2020. We assessed qualitative factors for the esports reporting unit and did not identify any triggering events however our assessment of qualitative factors for the market clusters identified triggering events for impairment. As a result of the impairment test performed on the market clusters as of March 31, 2020, we determined that the estimated fair value of each market cluster exceeded the carrying amount by at least five percent at each market cluster as of March 31, 2020.

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 Form10-K for the year ended December 31, 2018.2019. There have been no additional material changes to our critical accounting estimates during the thirdfirst quarter of 2019.2020.

Recent Accounting Pronouncements

RecentThere were no recent accounting pronouncements are described in Note 2 to the accompanyingthat have or will have a material effect on our financial statements.condition or results of operations.

Three Months Ended September 30, 2019March 31, 2020 Compared to the Three Months Ended September 30, 2018March 31, 2019

The following summary table presents a comparison of our results of operations for the three months ended September 30, 2018March 31, 2019 and 20192020 with respect to certain of our key financial measures. These 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.

Net Revenue.Net revenue increased $1.0 millionwas essentially flat during the three months ended September 30, 2019March 31, 2020 as compared to the three months ended September 30, 2018.March 31, 2019. Significant factors affecting net revenue included $1.3 milliona decrease in additional revenue from our Philadelphia market clusternon-political commercial advertising, primarily due to the acquisitionimpact of theWXTU-FMCOVID-19 on September 27, 2018.pandemic during March, partially offset by an increase in political commercial advertising, digital advertising, and esports revenue. Net revenue for the three months ended September 30, 2019 was comparable to netMarch 31, 2020 also included additional revenue forfrom the same periodacquisition ofWDMK-FM in 2018 at our remaining market clusters.Detroit on August 31, 2019.

Station Operating Expenses.Station operatingOperating expenses decreased $0.9increased $3.4 million during the three months ended September 30, 2019March 31, 2020 as compared to the three months ended September 30, 2018.March 31, 2019. Significant factors affecting station operating expenses included $0.4 millionan increase in digital advertising expenses and esports expenses. The increase in operating expenses also included an increased allocation of digital expenses from corporate to the radio market clusters and additional expenses in the Philadelphia market cluster primarily due tofrom the acquisition ofWXTU-FM.WDMK-FM. Station operating expenses for the three months ended September 30, 2018 included $1.7 million of additional bad debt expense due to financial issues at United States Traffic Network. Station operating expenses for the three months ended September 30, 2019 were comparable to station operating expenses for the same period in 2018 at each of our market clusters.

Impairment Losses.Due to the impact of theCOVID-19 pandemic on the U.S. economy, we tested our FCC licenses for impairment during the first quarter of 2020. As a result of the quantitative impairment test performed as of March 31, 2020, we recorded impairment losses of $6.8 million related to the FCC licenses in our Atlanta, GA, Middlesex, NJ, Monmouth, NJ, Morristown, NJ, Las Vegas, NV, West Palm Beach-Boca Raton, FL, and Wilmington, DE market clusters. The impairment losses were primarily due to a decrease in projected revenue in these markets due to the impact of theCOVID-19 pandemic and 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 specifically associated with the Company and the radio broadcasting industry.

Interest Expense. Interest expense increased $2.0decreased $0.4 million during the ninethree months ended September 30, 2019March 31, 2020 as compared to the ninethree months ended September 30, 2018.March 31, 2019. The primary factor affecting interest expense was a decrease in interest rates that offset the increase in long-term debt outstanding.

Income Tax Expense.Expense (Benefit).Our effective tax rate was 47%approximately 32% and 33%(21)% for the ninethree months ended September 30, 2018March 31, 2019 and 2019,2020, respectively. These rates differ from the federal statutory rate of 21% due to the effect of state income taxes and certain expenses that are not deductible for tax purposes. The effective tax rate

Net Income (Loss). Net loss for the ninethree months ended September 30, 2018 also reflects a $1.2 million increase due to the change in fair value of contingent consideration during that time period.

Net Income. Net income during the nine months ended September 30, 2019March 31, 2020 was $8.7 million, an increase of $4.3$8.8 million compared to net income of $4.4$1.4 million duringfor the ninethree months ended September 30, 2018March 31, 2019 as a result of the factors described above.

Liquidity and Capital Resources

Overview. Our primary sources of liquidity are internally generated cash flow and our revolving credit facility.facility (as defined below). Our primary liquidity needs have been, and for the next twelve months and thereafter, are expected to continue to be, for working capital, debt service, and other general corporate purposes, including capital expenditures and radio station acquisitions. Historically, our capital expenditures have not been significant. In addition to property and equipment associated with radio 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 radio 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 theCOVID-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 “Credit Facility” below, the Amendment to our credit agreement limits us from paying dividends until certain leverage-based milestones have been achieved.

Credit Facility. On November 17, 2017 we and our wholly owned subsidiary, Beasley Mezzanine Holdings, LLC, entered into a credit agreement (the “credit agreement”) with U.S. Bank, National Association, as administrative agent and collateral agent, providing for a term loan B facility in the amount of $225.0 million (the “term loan facility”) and a revolving credit facility of $20.0 million (the “revolving credit facility,” and together with the term loan facility, the “credit facility”). On September 27, 2018, we borrowed an additional $35.0 million from the term loan facility. The proceeds were used for the acquisition ofWXTU-FM in Philadelphia. On August 31, 2019, we borrowed $10.0 million from our revolving credit facility. The proceeds were used for the acquisition of substantially all of the assets used to operateWDMK-FM in Detroit. On March 26, 2020 and April 7, 2020, we borrowed $7.5 million and $1.5 million, respectively, from our revolving credit facility as a precautionary measure to increase our cash position and preserve financial flexibility due to the uncertainty of economic conditions in the U.S. resulting from theCOVID-19 pandemic. Following the April 7, 2020 borrowing, we have no available commitments under our revolving credit facility.

As of September 30, 2019,March 31, 2020, the credit facility consisted of athe term loan facility with a remaining balance of $243.0$238.0 million and a revolving credit facility with an outstanding balance of $10.0$18.5 million and a maximum commitment of $20.0 million. As of September 30, 2019,March 31, 2020, we had $10.0$1.5 million in available commitments under ourthe revolving credit facility. AtAs of March 31, 2020, at our option, the credit facility may bearbore interest at either (i) the London Interbank Offered Rate (“LIBOR”) plus a margin of 4.0% or (ii) the base rate (as defined in the credit agreement) plus a margin of 3.0%. The LIBOR interest rate for the term loan is subject to a 1% floor and the base rate is subject to a 2% floor. Interest payments are, for loans based on LIBOR, due at the end of each applicable interest period unless the interest period is longer than three months, in which case they are due at the end of each three month period. Interest payments for loans based on the base rate are due quarterly. The revolving credit facility carried interest, based on LIBOR, at 6.0%4.9% as of September 30, 2019March 31, 2020 and matures on November 17, 2022. The term loan carried interest, based on LIBOR, at 6.0%4.9% as of September 30, 2019March 31, 2020 and matures on November 1, 2023.

As of March 31, 2020, the credit agreement requiresrequired mandatory prepayments equal to 50% of Excess Cash Flow (as defined in the credit agreement) when our Total Leverage Ratio (as defined in the credit agreement) is greater than 3.5x; mandatory prepayments equal to 25% of Excess Cash Flow when our Total Leverage Ratio is less than or equal to 3.5x but greater than 3.0x; and no mandatory prepayments when our Total Leverage Ratio is less than or equal to 3.0x. Mandatory prepayments of Excess Cash Flow are due approximately 95 days after year end. The credit agreement also requiresrequired mandatory prepayments for defined amounts from net proceeds of asset sales, net insurance proceeds, and net proceeds of certain debt issuances.

Failure to comply with financial covenants, scheduled interest payments, scheduled principal repayments, or any other terms of our credit agreement, as amended by the Amendment, could result in the acceleration of the maturity of our outstanding debt, which could have a material adverse effect on our business or results of operations. The credit facility is secured by substantially all assets of the Company and its subsidiaries and is guaranteed jointly and severally by the Company and its subsidiaries. If we default under the terms of the credit agreement, the Company and its subsidiaries may be required to perform under their guarantees. As of March 31, 2020, the maximum amount of undiscounted payments the Company and its applicable subsidiaries would have been required to make in the event of default was $256.5 million. The guarantees for the credit facility expire on November 17, 2022 for the revolving credit facility and on November 1, 2023 for the term loan facility.

The aggregate scheduled principal repayments of the credit facility for the remainder of 2020 and the next three years are as follows: