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, 2021~~March 31, 2022


☐			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 001-36558

Townsquare Media, Inc.

(Exact name of registrant as specified in its charter)


Delaware		27-1996555
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

One Manhattanville Road
Suite 202
Purchase,	New York	10577
(Address of Principal Executive Offices, including Zip Code)

(203) 861-0900

(Registrant's telephone number, including area code)

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 per share	TSQ	The New York Stock Exchange

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 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

☐

Accelerated filer

☒

Non-accelerated filer

☐

Smaller reporting company

☒

Emerging growth company

☐

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 ☒

As of ~~October 29, 2021,~~May 3, 2022, the registrant had ~~16,740,182~~17,150,848 outstanding shares of common stock consisting of: (i) ~~12,463,545~~12,874,211 shares of Class A common stock, par value $0.01 per share; (ii) 815,296 shares of Class B common stock, par value $0.01 per share; and (iii) 3,461,341 shares of Class C common stock, par value $0.01 per share.

TOWNSQUARE MEDIA, INC.

INDEX


PART I FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)
	Consolidated Balance Sheets as of ~~September 30, 2021~~March 3 1 , 202 2 and December 31, ~~2020~~2021	2
	Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September~~ March ~~30, 2021~~ 3 1 , 202 2 and ~~2020~~2021	3
	Consolidated Statements of Stockholders' Equity for the three ~~and nine~~ months ended ~~September~~March ~~30, 2021~~3 1 , 202 2 and ~~2020~~2 021	4
	Consolidated Statements of Cash Flows for the ~~nine~~three months ended ~~September~~Marc h ~~30, 2021~~3 1 , 202 2 and ~~2020~~20 21	65
	Notes to Unaudited Consolidated Financial Statements	87
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	2520
Item 4.	Controls and Procedures	4229

PART II OTHER INFORMATION

Item 1.	Legal Proceedings	4430
Item 1A.	Risk Factors	4430
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	4430
Item 3.	Defaults upon Senior Securities	4430
Item 4.	Mine Safety Disclosures	4430
Item 5.	Other Information	4430
Item 6.	Exhibits	4531
	Signatures	4632

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TOWNSQUARE MEDIA, INC.

CONSOLIDATED BALANCE SHEETS

(in Thousands, Except Share and Per Share Data)

(unaudited)


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Current assets:	Current assets:					Current assets:
Cash and cash equivalents	Cash and cash equivalents	$	31,289	$	83,229	Cash and cash equivalents	$	50,886	$	50,505
Accounts receivable, net of allowance of $7,296 and $7,051, respectively		57,918		58,634
Accounts receivable, net of allowance of $5,643 and $6,743, respectively						Accounts receivable, net of allowance of $5,643 and $6,743, respectively	51,008		57,647
Prepaid expenses and other current assets	Prepaid expenses and other current assets	10,601		12,428		Prepaid expenses and other current assets	11,389		12,086

Total current assets	Total current assets	99,808		154,291		Total current assets	113,283		120,238
Property and equipment, net	Property and equipment, net	106,117		111,871		Property and equipment, net	105,150		106,717
Intangible assets, net	Intangible assets, net	280,211		281,160		Intangible assets, net	291,468		278,265
Goodwill	Goodwill	157,947		157,947		Goodwill	157,947		157,947
Investments	Investments	20,871		11,501		Investments	16,959		18,217
Operating lease right-of-use assets	Operating lease right-of-use assets	44,646		48,290		Operating lease right-of-use assets	42,373		42,996
Other assets	Other assets	1,502		2,948		Other assets	3,079		1,437
Restricted cash	Restricted cash	494		494		Restricted cash	494		494
Total assets	Total assets	$	711,596	$	768,502	Total assets	$	730,753	$	726,311
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:	Current liabilities:					Current liabilities:
Accounts payable	Accounts payable	$	10,517	$	9,056	Accounts payable	$	9,688	$	5,676
Deferred revenue	Deferred revenue	8,824		8,847		Deferred revenue	10,706		10,208
Accrued compensation and benefits	Accrued compensation and benefits	11,304		12,462		Accrued compensation and benefits	7,827		14,411
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	20,392		21,524		Accrued expenses and other current liabilities	25,732		22,512

Operating lease liabilities, current	Operating lease liabilities, current	7,405		7,517		Operating lease liabilities, current	7,282		7,396
Accrued interest	Accrued interest	6,301		6,350		Accrued interest	6,301		15,754
Total current liabilities	Total current liabilities	64,743		65,756		Total current liabilities	67,536		75,957
Long-term debt, net of deferred finance costs of $9,081 and $2,369, respectively		540,919		543,428
Long-term debt, net of deferred finance costs of $8,061 and $8,479, respectively						Long-term debt, net of deferred finance costs of $8,061 and $8,479, respectively	541,939		541,521
Deferred tax liability	Deferred tax liability	16,396		10,326		Deferred tax liability	21,365		20,081
Operating lease liability, net of current portion	Operating lease liability, net of current portion	40,369		44,661		Operating lease liability, net of current portion	38,079		38,743

Other long-term liabilities	Other long-term liabilities	3,357		3,576		Other long-term liabilities	6,184		425
Total liabilities	Total liabilities	665,784		667,747		Total liabilities	675,103		676,727

Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Class A common stock, par value $0.01 per share; 300,000,000 shares authorized; 12,440,045 and 14,436,065 shares issued and outstanding, respectively		124		144
Class B common stock, par value $0.01 per share; 50,000,000 shares authorized; 815,296 and 2,966,669 shares issued and outstanding, respectively		8		30
Class C common stock, par value $0.01 per share; 50,000,000 shares authorized; 3,461,341 and 1,636,341 shares issued and outstanding, respectively		35		17
Class A common stock, par value $0.01 per share; 300,000,000 shares authorized; 12,859,532 and 12,573,654 shares issued and outstanding, respectively						Class A common stock, par value $0.01 per share; 300,000,000 shares authorized; 12,859,532 and 12,573,654 shares issued and outstanding, respectively	129		126
Class B common stock, par value $0.01 per share; 50,000,000 shares authorized; 815,296 and 815,296 shares issued and outstanding, respectively						Class B common stock, par value $0.01 per share; 50,000,000 shares authorized; 815,296 and 815,296 shares issued and outstanding, respectively	8		8
Class C common stock, par value $0.01 per share; 50,000,000 shares authorized; 3,461,341 and 3,461,341 shares issued and outstanding, respectively						Class C common stock, par value $0.01 per share; 50,000,000 shares authorized; 3,461,341 and 3,461,341 shares issued and outstanding, respectively	35		35
Total common stock	Total common stock	167		191		Total common stock	172		169
Additional paid-in capital	Additional paid-in capital	300,879		369,672		Additional paid-in capital	306,046		302,724
Accumulated deficit	Accumulated deficit	(258,083)		(272,602)		Accumulated deficit	(254,411)		(256,635)
Non-controlling interest	Non-controlling interest	2,849		3,494		Non-controlling interest	3,843		3,326
Total stockholders’ equity	Total stockholders’ equity	45,812		100,755		Total stockholders’ equity	55,650		49,584
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	711,596	$	768,502	Total liabilities and stockholders’ equity	$	730,753	$	726,311

See Notes to Unaudited Consolidated Financial Statements

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(in Thousands, Except Per Share Data)

(unaudited)


		Three Months Ended September 30,				Nine Months Ended September 30, 2021					Three Months Ended March 31,
		2021		2020		2021		2020				2022		2021
Net revenue	Net revenue	$	111,280	$	95,356	$	307,379	$	262,844	Net revenue		$	100,242	$	88,761

Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Direct operating expenses, excluding depreciation, amortization, and stock-based compensation	Direct operating expenses, excluding depreciation, amortization, and stock-based compensation	75,719		71,088		211,837		207,046		Direct operating expenses, excluding depreciation, amortization, and stock-based compensation		73,763		64,527
Depreciation and amortization	Depreciation and amortization	4,821		5,248		14,546		15,293		Depreciation and amortization		4,765		4,729
Corporate expenses	Corporate expenses	6,410		6,764		15,996		20,724		Corporate expenses		4,409		4,134
Stock-based compensation	Stock-based compensation	877		430		2,833		1,611		Stock-based compensation		869		1,062
Transaction costs	Transaction costs	2		384		5,107		2,624		Transaction costs		431		4,715
Business realignment costs	Business realignment costs	484		472		740		2,639		Business realignment costs		21		190
Impairment of long-lived and intangible assets	Impairment of long-lived and intangible assets	—		1,343		95		109,058		Impairment of long-lived and intangible assets		478		—
Net (gain) loss on sale and retirement of assets	Net (gain) loss on sale and retirement of assets	(14)		92		613		80		Net (gain) loss on sale and retirement of assets		(308)		593
Total operating costs and expenses	Total operating costs and expenses	88,299		85,821		251,767		359,075		Total operating costs and expenses		84,428		79,950
Operating income (loss)		22,981		9,535		55,612		(96,231)
Operating income										Operating income		15,814		8,811
Other expense (income):	Other expense (income):									Other expense (income):
Interest expense, net	Interest expense, net	9,816		7,692		29,780		23,713		Interest expense, net		10,027		10,155
Loss (gain) on extinguishment and modification of debt		—		—		5,997		(1,159)
Other (income) expense, net		(3,078)		81		(3,455)		(653)
Loss on extinguishment and modification of debt										Loss on extinguishment and modification of debt		—		5,997
Other expense (income), net										Other expense (income), net		1,588		(337)
Income (loss) from operations before tax	Income (loss) from operations before tax	16,243		1,762		23,290		(118,132)		Income (loss) from operations before tax		4,199		(7,004)
Income tax provision (benefit)	Income tax provision (benefit)	3,349		451		6,431		(33,044)		Income tax provision (benefit)		1,458		(895)

Net income (loss)	Net income (loss)	$	12,894	$	1,311	$	16,859	$	(85,088)	Net income (loss)		$	2,741	$	(6,109)

Net income (loss) attributable to:	Net income (loss) attributable to:									Net income (loss) attributable to:
Controlling interests	Controlling interests	$	12,405	$	795	$	15,288	$	(86,537)	Controlling interests		$	2,224	$	(6,549)
Non-controlling interests	Non-controlling interests	$	489	$	516	$	1,571	$	1,449	Non-controlling interests		$	517	$	440

Basic income (loss) per share:	Basic income (loss) per share:									Basic income (loss) per share:
Attributable to common shares	Attributable to common shares	$	0.75	$	0.03	$	0.79	$	(4.68)	Attributable to common shares		$	0.13	$	(0.35)
Attributable to participating shares	Attributable to participating shares	$	0.75	$	0.03	$	0.79	$	0.08	Attributable to participating shares		$	—	$	—

Diluted income (loss) per share	Diluted income (loss) per share	$	0.64	$	0.03	$	0.71	$	(4.68)	Diluted income (loss) per share		$	0.11	$	(0.35)

Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic attributable to common shares	Basic attributable to common shares	16,386		18,683		16,917		18,627		Basic attributable to common shares		16,796		18,602
Basic attributable to participating shares	Basic attributable to participating shares	88		8,978		2,333		8,978		Basic attributable to participating shares		—		6,823
Diluted	Diluted	19,384		27,688		21,657		27,605		Diluted		19,509		18,602

Cash dividend declared per share		$	—	$	—	$	—	$	0.075

See Notes to Unaudited Consolidated Financial Statements

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in Thousands, Except Share Data)

(unaudited)

Shares of Common Stock
Class A Class B Class C
Shares Shares Shares Warrants Common
Stock Additional
Paid-in Capital Accumulated Deficit Non-
Controlling
Interest Total
Balance at January 1, 2021 14,436,065 2,966,669 1,636,341 8,977,676 $ 191 $ 369,672 $ (272,602) $ 3,494 $ 100,755
Net (loss) income — — — — — — (6,549) 440 (6,109)
Repurchase of securities (1)
(1,595,224) (2,151,373) — (8,814,980) (38) (81,912) — — (81,950)
Stock-based compensation — — — — — 1,062 — — 1,062
Common stock issued under exercise of stock options 1,022,283 — — — 10 7,936 — — 7,946
Issuance of restricted stock 11,428 — — — — — — — —
Conversion of common shares 800,000 — (800,000) — — — — — —
Balance at March 31, 2021 14,674,552 815,296 836,341 162,696 $ 163 $ 296,758 $ (279,151) $ 3,934 $ 21,704
Net income — — — — — — 9,432 642 10,074
Stock-based compensation — — — — — 894 — — 894
Common stock issued under exercise of stock options 209,873 — — — 2 1,861 — — 1,863
Share repurchase (2)
(100,000) — — — (1) (630) (769) — (1,400)
Conversion of common shares (3)
(2,625,000) — 2,625,000 — — — — — —
Cash distributions to non-controlling interests — — — — — — — (2,216) (2,216)
Balance at June 30, 2021 12,159,425 815,296 3,461,341 162,696 $ 164 $ 298,883 $ (270,488) $ 2,360 $ 30,919
Net income — — — — — — 12,405 489 12,894
Stock-based compensation — — — — — 877 — — 877
Common stock issued under exercise of stock options 128,546 — — — 1 1,121 — — 1,122
Warrants exercised (4)
152,074 — — (152,074) 2 (2) — — —
Balance at September 30, 2021 12,440,045 815,296 3,461,341 10,622 $ 167 $ 300,879 $ (258,083) $ 2,849 $ 45,812


	Shares of Common Stock
	Class A	Class B	Class C
	Shares	Shares	Shares	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Non- Controlling Interest		Total
Balance at January 1, 2022	12,573,654	815,296	3,461,341	$	169	$	302,724	$	(256,635)	$	3,326	$	49,584
Net income	—	—	—	—		—		2,224		517		2,741

Stock-based compensation	—	—	—	—		869		—		—		869
Common stock issued under exercise of stock options	94,422	—	—	1		646		—		—		647
Issuance of restricted stock (1)	191,456	—	—	2		1,807		—		—		1,809

Balance at March 31, 2022	12,859,532	815,296	3,461,341	$	172	$	306,046	$	(254,411)	$	3,843	$	55,650

(1) Includes 150,000 shares issued in the form of stock awards that vested immediately.


	Shares of Common Stock
	Class A	Class B	Class C
	Shares	Shares	Shares	Warrants	Common Stock		Additional Paid-in Capital		Accumulated Deficit		Non- Controlling Interest		Total
Balance at January 1, 2021	14,436,065	2,966,669	1,636,341	8,977,676	$	191	$	369,672	$	(272,602)	$	3,494	$	100,755
Net (loss) income	—	—	—	—	—		—		(6,549)		440		(6,109)
Conversion of common shares	800,000	—	(800,000)	—	—		—		—		—		—
Repurchase of securities (2)	(1,595,224)	(2,151,373)	—	(8,814,980)	(38)		(81,912)		—		—		(81,950)
Stock-based compensation	—	—	—	—	—		1,062		—		—		1,062
Common stock issued under exercise of stock options	1,022,283	—	—	—	10		7,936		—		—		7,946
Issuance of restricted stock	11,428	—	—	—	—		—		—		—		—

Balance at March 31, 2021	14,674,552	815,296	836,341	162,696	$	163	$	296,758	$	(279,151)	$	3,934	$	21,704

(2)On March 9, 2021, the Company repurchased all outstanding securities previously held by certain affiliates of Oaktree Capital Management L.P. (“Oaktree”), including 1,595,224 shares of Class A Common Stock, 2,151,373 shares of Class B Common Stock and 8,814,980 warrants. ~~For further discussion on the repurchase, see Note 9,~~ ~~Stockholders' Equity,~~ ~~in our Notes to Consolidated Financial Statements.~~

~~(2)~~ ~~See Note 9,~~ ~~Stockholders' Equity,~~ ~~in our Notes to Consolidated Financial Statements for further discussion related to the share repurchase.~~

~~(3)~~ On May 13, 2021, a direct holder of Class A Common Stock converted 2,625,000 shares into an equal number of Class C Common Stock. Except as expressly provided in our certificate of incorporation, the Class A common stock, Class B common stock and Class C common stock have equal economic rights and rank equally, share ratably and are identical in all respects as to all matters. Class C common stock is not redeemable, but is convertible 1:1 (including automatically upon certain transfers) into Class A common stock.

~~(4)~~ ~~See Note 9,~~ ~~Stockholders' Equity,~~ ~~in our Notes to Consolidated Financial Statements for further discussion related to warrants exercised during the period.~~

See Notes to Unaudited Consolidated Financial Statements

~~TOWNSQUARE MEDIA, INC.~~

~~CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY~~

~~(in Thousands, Except Share Data)~~

~~(unaudited)~~

Shares of Common Stock
Class A Class B Class C
Shares Shares Shares Warrants Common
Stock Additional
Paid-in Capital Accumulated
Deficit Non-
Controlling
Interest Total
Balance at January 1, 2020 14,314,092 3,011,634 1,636,341 8,977,676 $ 190 $ 367,540 $ (188,034) $ 2,740 $ 182,436
Net (loss) income — — — — — — (60,154) 577 (59,577)
Dividend declared — — — — — — (2,098) — (2,098)
Stock-based compensation — — — — — 524 — — 524
Common stock issued under exercise of stock options 5,646 — — — — 49 — — 49
Issuance of restricted stock 10,482 — — — — — — — —
Cash distributions to non-controlling interests — — — — — — — (1) (1)
Balance at March 31, 2020 14,330,220 3,011,634 1,636,341 8,977,676 $ 190 $ 368,113 $ (250,286) $ 3,316 $ 121,333
Net (loss) income — — — — — — (27,178) 356 (26,822)
Stock-based compensation — — — — — 657 — — 657
Cash distributions to non-controlling interests — — — — — — — (1,164) (1,164)
Balance at June 30, 2020 14,330,220 3,011,634 1,636,341 8,977,676 $ 190 $ 368,770 $ (277,464) $ 2,508 $ 94,004
Net income — — — — — — 795 516 1,311
Stock-based compensation — — — — — 430 — — 430
Balance at September 30, 2020 14,330,220 3,011,634 1,636,341 8,977,676 $ 190 $ 369,200 $ (276,669) $ 3,024 $ 95,745

~~See Notes to Unaudited Consolidated Financial Statements~~

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in Thousands)

(unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash flows from operating activities:	Cash flows from operating activities:					Cash flows from operating activities:
Net income (loss)	Net income (loss)	$	16,859	$	(85,088)	Net income (loss)	$	2,741	$	(6,109)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:	Adjustments to reconcile net income (loss) to net cash provided by operating activities:					Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Content rights acquired						Content rights acquired	(9,635)		—
Amortization of content rights						Amortization of content rights	803		—
Change in content rights liabilities						Change in content rights liabilities	9,635		—
Depreciation and amortization	Depreciation and amortization	14,546		15,293		Depreciation and amortization	4,765		4,729
Amortization of deferred financing costs	Amortization of deferred financing costs	1,129		1,173		Amortization of deferred financing costs	418		328
Non-cash lease income	Non-cash lease income	(106)		(178)		Non-cash lease income	(155)		(290)
Net deferred taxes and other	Net deferred taxes and other	6,070		(33,403)		Net deferred taxes and other	1,284		(1,016)
Provision for doubtful accounts	Provision for doubtful accounts	1,718		3,470		Provision for doubtful accounts	(287)		350
Stock-based compensation expense	Stock-based compensation expense	2,833		1,611		Stock-based compensation expense	869		1,062
Loss (gain) on extinguishment and modification of debt		5,997		(1,159)
Write-off of deferred financing costs		—		79
Loss on extinguishment and modification of debt						Loss on extinguishment and modification of debt	—		5,997

Trade activity, net	Trade activity, net	(9,994)		(6,550)		Trade activity, net	(654)		(3,652)
Impairment of long-lived and intangible assets	Impairment of long-lived and intangible assets	95		109,058		Impairment of long-lived and intangible assets	478		—
Net loss on sale and retirement of assets		613		80
Net (gain) loss on sale and retirement of assets						Net (gain) loss on sale and retirement of assets	(308)		593

Gain on insurance recoveries	Gain on insurance recoveries	(362)		(1,206)		Gain on insurance recoveries	(11)		(225)
Gain on lease settlement	Gain on lease settlement	(233)		—		Gain on lease settlement	—		(233)
Gain on sale of investment and investment related transactions		(446)		—
Unrealized gain on investment		(2,924)		—

Unrealized loss on investment						Unrealized loss on investment	1,508		—
Other	Other	289		6		Other	8		3
Changes in assets and liabilities, net of acquisitions:	Changes in assets and liabilities, net of acquisitions:					Changes in assets and liabilities, net of acquisitions:
Accounts receivable	Accounts receivable	(1,148)		9,397		Accounts receivable	7,049		12,212
Prepaid expenses and other assets	Prepaid expenses and other assets	3,259		(2,032)		Prepaid expenses and other assets	735		3,115
Accounts payable	Accounts payable	1,409		(3,103)		Accounts payable	2,861		6,461
Accrued expenses	Accrued expenses	(569)		10,538		Accrued expenses	(4,056)		(5,765)
Accrued interest	Accrued interest	(49)		6,204		Accrued interest	(9,453)		2,681
Other long-term liabilities	Other long-term liabilities	(789)		(352)		Other long-term liabilities	(29)		(791)
Net cash provided by operating activities - continuing operations	Net cash provided by operating activities - continuing operations	38,197		23,838		Net cash provided by operating activities - continuing operations	8,566		19,450
Net cash used in operating activities - discontinued operations	Net cash used in operating activities - discontinued operations	(33)		(390)		Net cash used in operating activities - discontinued operations	—		(33)
Net cash provided by operating activities	Net cash provided by operating activities	38,164		23,448		Net cash provided by operating activities	8,566		19,417

Cash flows from investing activities:	Cash flows from investing activities:					Cash flows from investing activities:
Payments for acquisitions, net of cash acquired						Payments for acquisitions, net of cash acquired	(1,650)		—
Purchase of property and equipment	Purchase of property and equipment	(7,840)		(11,254)		Purchase of property and equipment	(2,765)		(1,860)
Purchase of investments	Purchase of investments	(278)		(400)		Purchase of investments	—		(128)
Purchase of Bitcoin held as an investment						Purchase of Bitcoin held as an investment	(4,997)		—
Proceeds from insurance recoveries	Proceeds from insurance recoveries	362		1,313		Proceeds from insurance recoveries	11		225
Proceeds from sale of investments and investment related transactions		716		—

Proceeds from sale of assets	Proceeds from sale of assets	955		212		Proceeds from sale of assets	593		316

Net cash used in investing activities	Net cash used in investing activities	(6,085)		(10,129)		Net cash used in investing activities	(8,808)		(1,447)

Cash flows from financing activities:	Cash flows from financing activities:					Cash flows from financing activities:
Repayment of term loans	Repayment of term loans	(272,381)		(9,951)		Repayment of term loans	—		(272,381)
Repurchase of 2023 Notes	Repurchase of 2023 Notes	(273,416)		(3,573)		Repurchase of 2023 Notes	—		(273,416)
Proceeds from the issuance of 2026 Notes	Proceeds from the issuance of 2026 Notes	550,000		—		Proceeds from the issuance of 2026 Notes	—		550,000
Prepayment fee on 2023 Notes	Prepayment fee on 2023 Notes	(4,443)		—		Prepayment fee on 2023 Notes	—		(4,443)
Deferred financing costs	Deferred financing costs	(9,027)		—		Deferred financing costs	—		(8,133)
Repurchase of Oaktree securities	Repurchase of Oaktree securities	(80,394)		—		Repurchase of Oaktree securities	—		(80,394)
Transaction costs related to Oaktree securities repurchase	Transaction costs related to Oaktree securities repurchase	(1,556)		—		Transaction costs related to Oaktree securities repurchase	—		(242)
Borrowings under the revolving credit facility		—		50,000
Repayment of borrowings under the revolving credit facility		—		(50,000)
Dividend payments		(60)		(4,201)

Proceeds from stock options exercised	Proceeds from stock options exercised	10,931		49		Proceeds from stock options exercised	647		7,946
Repurchase of stock		(1,400)		—
Cash distribution to non-controlling interests		(2,216)		(1,164)

Repayments of capitalized obligations	Repayments of capitalized obligations	(57)		(34)		Repayments of capitalized obligations	(24)		(18)
Net cash used in financing activities		(84,019)		(18,874)
Net cash provided by (used) in financing activities						Net cash provided by (used) in financing activities	623		(81,081)

Cash and cash equivalents and restricted cash:	Cash and cash equivalents and restricted cash:					Cash and cash equivalents and restricted cash:
Net decrease in cash, cash equivalents and restricted cash		(51,940)		(5,555)
Net increase (decrease) in cash, cash equivalents and restricted cash						Net increase (decrease) in cash, cash equivalents and restricted cash	381		(63,111)
Beginning of period	Beginning of period	83,723		85,161		Beginning of period	50,999		83,723
End of period	End of period	$	31,783	$	79,606	End of period	$	51,380	$	20,612

TOWNSQUARE MEDIA, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)

(in Thousands)

(unaudited)


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Supplemental Disclosure of Cash Flow Information:	Supplemental Disclosure of Cash Flow Information:					Supplemental Disclosure of Cash Flow Information:
Cash payments:	Cash payments:					Cash payments:
Interest	Interest	$	28,693	$	16,780	Interest	$	18,909	$	7,150
Income taxes	Income taxes	634		1,311		Income taxes	48		70

Supplemental Disclosure of Non-cash Activities:	Supplemental Disclosure of Non-cash Activities:					Supplemental Disclosure of Non-cash Activities:
Dividends declared, but not paid during the period		$	—	$	22

Investments acquired in exchange for advertising (1)	Investments acquired in exchange for advertising (1)	6,438		2,300		Investments acquired in exchange for advertising (1)	$	250	$	5,100
Property and equipment acquired in exchange for advertising (1)	Property and equipment acquired in exchange for advertising (1)	1,945		3,648		Property and equipment acquired in exchange for advertising (1)	211		912
Accrued capital expenditures	Accrued capital expenditures	120		826		Accrued capital expenditures	384		283

Accrued financing fees	Accrued financing fees	150		—		Accrued financing fees	—		1,043
Deferred payment for software licenses		—		853
Accrued transaction cost for securities repurchased						Accrued transaction cost for securities repurchased	—		1,312

Supplemental Disclosure of Cash Flow Information relating to Leases:	Supplemental Disclosure of Cash Flow Information relating to Leases:					Supplemental Disclosure of Cash Flow Information relating to Leases:
Cash paid for amounts included in the measurement of operating lease liabilities, included in operating cash flows	Cash paid for amounts included in the measurement of operating lease liabilities, included in operating cash flows	$	7,695	$	8,236	Cash paid for amounts included in the measurement of operating lease liabilities, included in operating cash flows	$	2,546	$	2,773
Right-of-use assets obtained in exchange for operating lease obligations	Right-of-use assets obtained in exchange for operating lease obligations	$	2,246	$	9,416	Right-of-use assets obtained in exchange for operating lease obligations	1,177		1,067

Reconciliation of cash, cash equivalents and restricted cash	Reconciliation of cash, cash equivalents and restricted cash					Reconciliation of cash, cash equivalents and restricted cash
Cash and cash equivalents	Cash and cash equivalents	$	31,289	$	79,112	Cash and cash equivalents	$	50,886	$	20,118
Restricted cash	Restricted cash	494		494		Restricted cash	494		494
		$	31,783	$	79,606		$	51,380	$	20,612

(1) Represents total advertising services ~~to be~~ provided by the Company in exchange for equity interests and property and equipment acquired during each of the ~~nine~~three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively. As the advertising services are performed, revenue related to the services provided is reflected as a component of Trade activity, net within net cash provided by operating activities. As of September 30, 2021 and September 30, 2020, $0.1 million and $1.2 million, respectively, in advertising services remained to be provided in future periods in exchange for equity interests that were acquired during each of the nine months ended September 30, 2021 and 2020. Refer to Note 6, ~~Investments, in the accompanying Notes to Consolidated Financial Statements for additional information related to our investments.~~

See Notes to Unaudited Consolidated Financial Statements

TOWNSQUARE MEDIA, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1. Organization and Basis of Presentation

Description of the Business

Townsquare ~~Media, Inc. (together with its consolidated subsidiaries, except as the context may otherwise require, "we," "us," "our," "Company," or "Townsquare")~~ is a community-focused digital media and digital marketing solutions ~~and~~company with market leading local radio ~~company~~stations, principally focused outside the ~~Top~~top 50 markets in the ~~U.S.~~U.S.. Our integrated and diversified products and solutions enable local, regional and national advertisers to target audiences across multiple platforms, including digital, mobile, social, video, streaming, e-commerce, radio and events. Our assets ~~as of September 30, 2021,~~ include ~~Townsquare Interactive,~~ a subscription digital marketing services ~~subscription~~ business (“Townsquare Interactive”), providing ~~websites,~~website design, creation and hosting, search engine optimization, social platforms and online reputation management for approximately ~~25,950~~27,850 small to medium sized businesses; a robust digital advertising division (“Townsquare Ignite,” or “Ignite”), a powerful combination of a) an owned and operated portfolio of more than 330 local news and entertainment websites and mobile apps along with a network of leading national music and entertainment brands, collecting valuable first party data and b) a proprietary digital programmatic advertising technology stack with an in-house demand and data management platform; and ~~Townsquare Media, our~~a portfolio of ~~322~~321 local terrestrial radio stations in 67 ~~cities with corresponding~~U.S. markets strategically situated outside the Top 50 markets in the United States. Our portfolio includes local ~~news and entertainment websites and apps including legendary~~media brands such as WYRK.com, WJON.com, and NJ101.5.com ~~along with a network of~~, and premier national music brands ~~including~~such as XXLmag.com, TasteofCountry.com, UltimateClassicRock.com, and Loudwire.com.

The U.S. economy and financial markets may continue to experience volatility due to the COVID-19 pandemic, including as a result of the development of COVID-19 variants, vaccination rates and government legislative and regulatory responses. The effects of the COVID-19 pandemic began to impact our operations in early March 2020, and included significant advertising cancellations and material declines in the purchase of new advertising by our clients. Declines in forecasted traditional broadcast revenue in the markets in which we operate, the impact of the COVID-19 pandemic on market and economic conditions, and the corresponding impacts to our risk premium, contributed to approximately $107.1 million impairments to the carrying values of our FCC license intangible assets during the first half of 2020, of which $28.7 million and $78.4 million was recognized during the three months ended June 30, 2020 and March 31, 2020, respectively. Additionally, we canceled nearly all live events beginning in March 2020. At the end of the first quarter of 2020, we reduced our workforce through the termination or layoff of approximately 135 full-time employees.

As local public health conditions have improved, we experienced recoveries in advertising revenue, following the sequential improvements we observed during each of the third and the fourth quarters of 2020. However, revenue continues to remain below the levels we experienced during the same period in 2019, with the exception of our Townsquare Interactive segment. Net revenue for the Townsquare Interactive segment has increased $15.0 million, or 33%, as compared to the first nine months of 2019 due to continued net subscriber growth throughout the COVID-19 pandemic. While we resumed certain live events beginning in the second quarter of 2021, there continues to be a level of uncertainty surrounding the scheduling of live events.

During the first nine months of 2021, we continued the precautionary measures that were instituted in 2020 to address the potential impact to our consolidated financial position, consolidated results of operations, and liquidity, including wage reduction efforts such as the temporary suspension of the Company’s match on employee contributions to the Company’s defined contribution plan, the deferral of the payment of certain payroll taxes until December 31, 2021 and 2022 under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and controlling non-essential capital expenditures. Additionally, our board of directors determined to cease payment of quarterly cash dividends, following the payment of our 2020 first quarter dividend of $2.1 million, paid on May 15, 2020.

The full extent of the COVID-19 pandemic impact will depend on future actions and outcomes, all of which remain fluid and cannot be predicted with confidence, including the scope, severity and duration of the pandemic, the short-term and long-term economic impacts of the COVID-19 pandemic (including the continued effect on advertising activity, consumer discretionary spending and our employees in the markets in which we operate), further actions taken to mitigate the impact of the pandemic, and the pace of continued economic and financial market recovery when the COVID-19 pandemic subsides, among others.

Basis of Presentation

The accompanying Unaudited Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and related notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, ~~2020~~2021 (the ~~"2020~~"2021 Annual Report on Form 10-K"). The accompanying unaudited interim Consolidated Financial Statements include the consolidated accounts of the Company and its wholly-owned subsidiaries, with all significant intercompany balances and transactions eliminated in consolidation. These financial statements have been prepared in accordance with Generally Accepted Accounting Principles in the United States ("U.S. GAAP") for interim financial information and with the instructions to Form 10-Q. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. All adjustments (consisting only of normal, recurring adjustments) necessary for a fair presentation of results of operations and financial condition as of the end of the interim periods have been included. The results of operations for the three ~~and nine~~ months ended ~~September 30, 2021,~~March 31, 2022, cash flows for the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, and the Company’s financial condition as of such date are not necessarily indicative of the results of operations or cash flows that can be expected for, or the Company’s financial condition as of, any other interim period or for the fiscal year ending December 31, ~~2021.~~2022. The Consolidated Balance Sheet as of December 31, ~~2020~~2021 is derived from the audited Consolidated Financial Statements at that date.

Segment Reporting

The Company’s operations are organized internally by the types of products and services provided. In December of 2021, the Company changed its reporting segments in order to reflect its strategic focus, organizational structure and the information reviewed by its Chief Operating Decision Maker ("CODM") as a digital media and digital marketing solutions company with market leading radio stations, represented by 3 segments: Subscription Digital Marketing Solutions, which includes the results of the Company’s subscription digital marketing solutions business, Townsquare Interactive; Digital Advertising, which includes digital advertising on its owned and operated digital properties and its digital programmatic advertising platform; and Broadcast Advertising, which includes our local, regional and national advertising products and solutions delivered via terrestrial radio broadcast, and other miscellaneous revenue that is associated with its broadcast advertising platform. The remainder of the Company’s business is reported in the Other category, which includes owned and operated live events. The Company has presented segment information for the three months ended March 31, 2021 in conformity with the current period’s segment information.

Reclassification

The presentation of non-cash lease (income) expense as a component of adjustments to reconcile net income to net cash flows from operating activities for the ~~nine~~three months ended ~~September 30, 2020,~~March 31, 2021, has been reclassified to conform with the current period's presentation. The reclassification had no impact on net cash provided by operating activities.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses and related disclosures of contingent assets and liabilities. On an ongoing basis, the Company evaluates its significant estimates, including those related to assumptions used in determining the fair value of assets and liabilities acquired in a business combination,impairment testing of intangible assets, valuation and impairment testing of long-lived tangible assets and investments, the present value of leasing arrangements,share-based payment expense and the calculation of allowance for doubtful accounts and income taxes. The Company bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the result of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

Actual amounts and results may differ materially from these estimates under different assumptions or conditions.

Note 2. Summary of Significant Accounting Policies

~~Except as stated below, there~~There have been no significant changes in the Company’s accounting policies since December 31, ~~2020.~~2021. For the Company's detailed accounting policies please refer to the Consolidated Financial Statements and related notes thereto included in the Company's ~~2020~~2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on March 16, ~~2021.~~

~~Recently Adopted Accounting Standards~~

~~In January 2020, the FASB issued ASU 2020-01,~~ Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815)-Clarifying the Interactions between Topic 321, Topic 323, and Topic 815, which clarifies certain interactions between the guidance to account for certain equity securities under Topic 321, the guidance to account for investments under the equity method of accounting in Topic 323, and the guidance in Topic 815, which could change how an entity accounts for an equity security under the measurement alternative or a forward contract or purchased option to purchase securities that, upon settlement of the forward contract or exercise of the purchased option, would be accounted for under the equity method of accounting or the fair value option in accordance with Topic 825, Financial Instruments. The new guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company accounts for its equity securities without readily determinable fair values under the measurement alternative election of ASC 321, whereby the Company can elect to measure an equity security without a readily determinable fair value, that does not qualify for the practical expedient to estimate fair

value (net asset value), at its cost minus impairment, if any. The ASU also allows the use of a qualitative assessment when analyzing impairment of equity securities without readily determinable fair values. The Company adopted this standard effective January 1, 2021, which did not have a material impact on the Company’s Consolidated Financial Statements.

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Accounting Standards Update 2019-12-Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~, which simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic 740. The amendments also improve consistent application of and simplify GAAP for other areas of Topic 740 by clarifying and amending existing guidance. The new guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted this standard effective January 1, 2021, which did not have a material impact on the Company’s Consolidated Financial Statements.2022.

Recently Issued Standards That Have Not Yet Been Adopted

~~In May 2021, the FASB issued Accounting Standards Update 2021-04,~~ Earnings Per Share (Topic 260), Debt— Modifications and Extinguishments (Subtopic 470-50), Compensation—Stock Compensation (Topic 718), and Derivatives and Hedging— Contracts in Entity’s Own Equity (Subtopic 815-40), which requires that a modification of an equity-classified warrant that does not cause the warrant to become liability-classified to be accounted for as an exchange of the original warrant for a new warrant. This guidance applies whether the modification is structured as an amendment to the terms and conditions of the warrant or as termination of the original warrant and issuance of a new warrant. The effect of the modification is measured as the difference between the fair value of the modified warrant and the fair value of that warrant immediately before modification. The new guidance is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, including adoption in an interim period. The Company expects to adopt this standard in the first quarter of 2022 and does not expect its adoption to have a material impact on the Company’s Consolidated Financial Statements.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which adds a new Topic 326 to the Codification and removes the thresholds that companies apply to measure credit losses on financial instruments measured at amortized cost, such as loans, receivables, and held-to-maturity debt securities. The guidance will remove all recognition thresholds and will require companies to recognize an allowance for credit losses for the difference between the amortized cost basis of a financial instrument and the amount of amortized cost that the company expects to collect over the instrument's contractual life. The new guidance is effective for smaller reporting companies for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption, either of the entire standard or only the provisions that eliminate or modify requirements, is permitted. The Company expects to adopt the new guidance in the first quarter of 2023. The Company is continuing to assess the impact on its Consolidated Financial Statements, if any.

Note 3. Revenue Recognition

The following tables present a disaggregation of our revenue by reporting segment and revenue from political sources and all other sources (in thousands) for the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020:~~2021:


		Three Months Ended September 30, 2021								Three Months Ended September 30, 2020									Three Months Ended March 31, 2022
		Advertising		Townsquare Interactive		Live Events		Total		Advertising		Townsquare Interactive		Live Events		Total			Subscription Digital Marketing Solutions		Digital Advertising		Broadcast Advertising		Other		Total
Net Revenue (ex Political)	Net Revenue (ex Political)	$	86,827	$	21,130	$	2,748	$	110,705	$	72,659	$	18,181	$	66	$	90,906	Net Revenue (ex Political)	$	21,850	$	29,181	$	47,714	$	1,065	$	99,810
Political	Political	575		—		—		575		4,450		—		—		4,450		Political	—		46		386		—		432
Net Revenue	Net Revenue	$	87,402	$	21,130	$	2,748	$	111,280	$	77,109	$	18,181	$	66	$	95,356	Net Revenue	$	21,850	$	29,227	$	48,100	$	1,065	$	100,242

108


		Nine Months Ended September 30, 2021								Nine Months Ended September 30, 2020									Three Months Ended March 31, 2021
		Advertising		Townsquare Interactive		Live Events		Total		Advertising		Townsquare Interactive		Live Events		Total				Subscription Digital Marketing Solutions		Digital Advertising		Broadcast Advertising		Other		Total
Net Revenue (ex Political)	Net Revenue (ex Political)	$	241,305	$	60,347	$	3,949	$	305,601	$	202,116	$	51,595	$	2,469	$	256,180	Net Revenue (ex Political)		$	18,997	$	25,076	$	44,242	$	7	$	88,322
Political	Political	1,778		—		—		1,778		6,664		$	—	$	—	6,664		Political		$	—	$	—	439		—		439
Net Revenue	Net Revenue	$	243,083	$	60,347	$	3,949	$	307,379	$	208,780	$	51,595	$	2,469	$	262,844	Net Revenue		$	18,997	$	25,076	$	44,681	$	7	$	88,761

Revenue from contracts with customers is recognized as an obligation until the terms of a customer contract are satisfied; generally this occurs with the transfer of control as we satisfy contractual performance obligations over time. Our contractual performance obligations include the performance of digital marketing solutions, placement of internet-based advertising campaigns, broadcast of commercials on our owned and operated radio stations, ~~placement of internet-based advertising campaigns, performance of digital marketing solutions,~~ and the operation of live events. Revenue is measured at contract inception as the amount of consideration we expect to receive in exchange for transferring goods or providing services. Our contracts are at a fixed price at inception and do not include any variable consideration or financing components by normal course of business practice. Sales, value add, and other taxes that are collected concurrently with revenue producing activities, are excluded from revenue.

The primary sources of net revenue are the sale of digital and broadcast advertising solutions on our ~~radio stations,~~ owned and operated ~~websites, third party~~ websites, radio stations’ online streams, and mobile ~~applications. We offer precision customer targeting solutions to advertisers~~applications, radio stations, and on third party websites through ~~Townsquare Ignite,~~our in-house digital programmatic advertising platform. Through our digital programmatic advertising ~~platform.~~platform, we are able to hyper-target audiences for our local, regional and national advertisers by combining first and third party audience and geographic location data, providing them the ability to reach a high percentage of their online audience. We deliver these solutions across desktop, mobile, connected TV, email, paid search and social media platforms utilizing display, video and native executions. We also offer subscription digital marketing solutions ~~on a subscription basis~~ under the brand name Townsquare Interactive to small and mid-sized local and regional businesses in ~~small and mid-sized~~ markets outside the top 50 across the United States, including the markets in which we operate radio stations. ~~In addition, we offer a diverse range of live events which we create, promote,~~Townsquare Interactive includes traditional and ~~produce. These live events include concerts, expositions~~mobile-enabled website development and ~~other experiential events. Our live events also generate net revenue through the sale of sponsorships, food~~hosting services, e-commerce platforms, search engine and ~~other concessions, merchandise~~online directory optimization services, online reputation monitoring, social media management, and ~~other ancillary products and services.~~website retargeting.

Political net revenue includes the sale of advertising for political advertisers. Contracted performance obligations under political contracts consist of the broadcast and placement of digital advertisements. Management views political revenue separately based on the episodic nature of election cycles and local issues calendars.

Our net revenue varies throughout the year. Historically our first calendar quarter produces the lowest net revenue for the year, as advertising expenditures generally decline following the winter holidays. However, due to the COVID-19 pandemic, the seasonality of our net revenue for the year ended December 31, 2020 was materially impacted and our second quarter produced our lowest net revenue for 2020. During even-numbered years, net revenue generally includes increased advertising expenditures by political candidates, political parties and special interest groups. Political spending is typically highest during the fourth quarter. Our operating results in any period may be affected by incurring advertising and promotion expenses that typically do not have an effect on net revenue generation until future periods, if at all.

Net revenue for ~~broadcast commercials~~digital and ~~digital~~broadcast advertisements are recognized as the contractual performance obligations for Townsquare services are satisfied. We measure progress towards the satisfaction of our contractual performance obligations in accordance with the contractual arrangement. We recognize the associated contractual revenue as delivery takes place and the right to invoice for services performed is met.

Our advertising contracts are short-term (less than one year) and payment terms are generally net 30-60 days for ~~local~~traditional customer contracts and net 60-90 days for national agency customer contracts. Our billing practice is to invoice customers on a monthly basis for services delivered to ~~date.~~date (representing the right to invoice). Our contractual arrangements do not include rights of return and do not include any significant judgments by nature of the products and services.

Net revenue from digital subscription-based contractual performance obligations is recognized ratably over time as our performance obligations are satisfied. Subscription-based service fees are typically billed in advance of the month of service at a fixed monthly fee that is contractually agreed upon at contract inception. The measure of progress in such arrangements is the number of days of successful delivery of the contracted service.

Live events net revenue is recognized as events are conducted and our contractual performance obligations are satisfied. Our live events include mostly single day events, but some are multi-day in duration. We measure progress towards the satisfaction of contractual performance obligations on a daily basis, measured by the successful delivery of the event and

honoring customer admissions and vendor event commitments. Live event ticket purchase prices are due at the point of purchase and are nonrefundable. Live event tickets are often sold in advance of the events; in the case of advanced ticket sales, we defer the recognition of consideration received until we satisfy the future performance obligation. Live event contractual arrangements do not include any variable consideration, financing components, or significant judgments.

For all customer contracts, we evaluate whether we are the principal (i.e., report revenue on a gross basis) or the agent (i.e., report revenue on a net basis). Generally, we report revenue for advertising placed on Townsquare properties on a gross basis (the amount billed to our customers is recorded as revenue, and the amount paid to our publishers is recorded as a cost of revenue). We are the principal because we control the advertising inventory before it is transferred to our customers. Our control is evidenced by our sole ability to monetize the advertising inventory, being primarily responsible to our customers, having discretion in establishing pricing, or a combination of these factors. We also generate revenue through agency relationships in which revenue is reported net of agency commissions. Agency commissions are calculated based on a stated percentage applied to gross billing revenue for advertisers that use agencies.

~~No impairment losses arose from any contracts with customers during the three and nine months ended September 30, 2021 and 2020.~~

The following tables provides information about receivables, contract assets and contract liabilities from contracts with customers (in thousands):

September 30,
2021
December 31, 2020
Receivables $ 57,918 $ 58,634
Short-term contract liabilities (deferred revenue) $ 8,824 $ 8,847
Contract Acquisition Costs $ 5,412 $ 4,824


		September 30, 2020		December 31, 2019			March 31, 2022		December 31, 2021
Receivables	Receivables	$	54,235	$	67,463	Receivables	$	51,008	$	57,647
Short-term contract liabilities (deferred revenue)	Short-term contract liabilities (deferred revenue)	$	9,169	$	8,086	Short-term contract liabilities (deferred revenue)	$	10,706	$	10,208
Contract Acquisition Costs	Contract Acquisition Costs	$	4,704	$	4,037	Contract Acquisition Costs	$	5,843	$	5,428

We receive payments from customers based upon contractual billing schedules; accounts receivable ~~are recognized~~is recorded when the right to consideration becomes unconditional. Contract receivables are recognized in the period the Company provides services when the Company’s right to consideration is unconditional. Payment terms vary by the type and location of our ~~customers~~customer and the products or services offered. Payment terms for amounts invoiced are typically net 30-60 days.

Our contract liabilities include cash payments received or due in advance of satisfying our performance obligations and digital subscriptions in which payment is received in advance of the service and month. These contract liabilities are recognized as revenue as the related performance obligations are satisfied. As of ~~September 30, 2021,~~March 31, 2022, and December 31, ~~2020,~~2021, the balance in the contract liabilities was ~~$8.8~~$10.7 million and $10.2 million, respectively. The ~~decrease~~increase in the contract liabilities balance at ~~September 30, 2021~~March 31, 2022 is primarily driven ~~by $0.9 million and $7.4 million of recognized revenue for the three and nine months ended September 30, 2021, respectively, offset~~ by cash payments received or due in advance of satisfying our performance ~~obligations.~~obligations, offset by $6.4 million of recognized revenue for the three months ended March 31, 2022. For the three ~~and nine~~ months ended ~~September 30, 2020,~~March 31, 2021, we recognized ~~$0.2 million and $6.6~~$5.8 million of revenue that was previously included in our deferred revenue ~~balance, respectively.~~balance. No significant changes in the time frame of the satisfaction of contract liabilities have occurred during the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022.

Our capitalized contract acquisition costs include amounts related to sales commissions paid for signed contracts with perceived durations exceeding one year. We defer the related sales commission costs and amortize such costs to expense in a manner that is consistent with how the related revenue is recognized over the duration of the related contracts. We have evaluated the average customer contract duration (initial term and any renewals) to determine the appropriate amortization period for these contractual arrangements. Capitalized contract acquisition costs are recognized in prepaid expenses and other current assets in the accompanying consolidated balance sheets. As of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, we had a balance of ~~$5.4~~$5.8 million and ~~$4.8~~$5.4 million, respectively, in capitalized contract acquisition costs and recognized ~~$1.1~~$1.2 million and ~~$3.2~~$0.9 million of amortization for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, respectively. ~~For the three and nine months ended September 30, 2020, we recognized $1.0 million and $2.7 million of amortization, respectively.~~ No

impairment losses have been recognized or changes made to the time frame for performance of the obligations related to deferred contract assets during the three ~~and nine~~ months ended ~~September 30, 2021~~March 31, 2022 and ~~2020.~~2021.

Arrangements with Multiple Performance Obligations

In contracts with multiple performance obligations, we identify each performance obligation and evaluate whether the performance obligations are distinct within the context of the contract at contract inception. When multiple performance obligations are identified, we identify how control transfers to the customer for each distinct contract obligation and determine the period when the obligations are satisfied. If obligations are satisfied in the same period, no allocation of revenue is deemed to be necessary. In the event performance obligations within a bundled contract do not run concurrently, we allocate revenue to each performance obligation based on its relative standalone selling price. We generally determine standalone selling prices based on the prices charged to customers or by using expected cost-plus margins. Performance obligations that are not distinct at contract inception are combined.

Performance Obligations

We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which we recognize revenue at the amount to which we have the right to invoice for services performed as amounts related to those performance obligations with expected durations of greater than one year are at a fixed price per unit and do not include any upfront or minimum payments requiring any estimation or allocation of revenue.

Note 4. Acquisitions, Divestitures

Acquisitions and Divestitures

On March 24, 2022, the Company executed an asset purchase agreement to acquire Cherry Creek Broadcasting LLC (“Cherry Creek”) for $18.8 million. Simultaneously, due to FCC ownership limitations, the Company will divest 6 radio stations in Missoula, MT and place 2 radio stations in Tri-Cities, WA in a divestiture trust. Following the acquisition and divestitures, the Company will add assets including 35 local radio stations in 9 markets, increasing our portfolio of market leading local radio stations to 356 in 74 markets. The acquisition is currently expected to close during the second or third quarters of 2022, pending regulatory approval.

In early March of 2022, Townsquare Media of Flint, Inc. closed on the sale of the assets associated with the radio broadcast station WLCO-AM.

Note 4.5. Property and Equipment, net

Property and equipment, net consisted of the following (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
Land and improvements	Land and improvements	$	20,521	$	21,512	Land and improvements	$	20,429	$	20,558
Buildings and leasehold improvements	Buildings and leasehold improvements	54,888		54,471		Buildings and leasehold improvements	55,393		55,192
Broadcast equipment	Broadcast equipment	93,372		90,324		Broadcast equipment	96,971		95,962
Computer and office equipment	Computer and office equipment	21,382		20,480		Computer and office equipment	22,153		21,819
Furniture and fixtures	Furniture and fixtures	22,012		21,657		Furniture and fixtures	22,200		22,130
Transportation equipment	Transportation equipment	20,415		19,918		Transportation equipment	20,442		20,427
Software development costs	Software development costs	33,796		30,721		Software development costs	35,930		34,776
Total property and equipment, gross	Total property and equipment, gross	266,386		259,083		Total property and equipment, gross	273,518		270,864
Less accumulated depreciation and amortization	Less accumulated depreciation and amortization	(160,269)		(147,212)		Less accumulated depreciation and amortization	(168,368)		(164,147)
Total property and equipment, net	Total property and equipment, net	$	106,117	$	111,871	Total property and equipment, net	$	105,150	$	106,717

Depreciation and amortization expense for property and equipment was $4.5 million and ~~$5.0~~$4.4 million for the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively and $13.7 million and $14.6 million for the nine months ended September 30, 2021 and 2020,~~ respectively.

During the three months ended ~~September 30, 2021, a building and portion of~~March 31, 2022 the Company sold land in ~~the Boise, ID market was sold for $0.6~~Bismarck, ND, recognizing a $0.3 million ~~an amount consistent with its current net carrying values.~~gain on sale. During the ~~nine~~three months ended ~~September 30,~~March 31, 2021 the Company sold a portion of land in Portsmouth, NH, recognizing a $0.6 million net loss on sale.

There were no impairment charges related to long-lived assets for the nine months ended September 30, 2021 and $1.2 million in total non-cash impairment charges related to long-lived assets for the nine months ended September 30, 2020 within the San Angelo, TX market and the Live Events business.

The Company had no material right of use assets related to its finance leases as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020.~~2021.

Note 5.6. Goodwill and Other Intangible Assets

Indefinite-lived intangible assets

Indefinite-lived assets consist of FCC broadcast licenses, goodwill, and ~~FCC broadcast licenses. For goodwill impairment testing, the Company has selected December 31~~st ~~as the annual testing date.~~ I~~n addition~~digital assets related to ~~the annual impairment test, the Company regularly assesses whether a triggering event has occurred, which would require interim impairment testing. As of December 31, 2020, the fair values of~~ our ~~National Digital, Townsquare Ignite, Analytical Services, Townsquare Interactive and Live Events reporting units were~~investment in excess of their respective carrying values by approximately 138%, 231%, 795%, 300% and 118%, respectively. The local advertising businesses reporting unit had no goodwill as of December 31, 2020 and September 30, 2021, respectively.Bitcoin.

The Company considered whether any events have occurred or circumstances have changed from the last quantitative analysis performed as of December 31, 2020 that would indicate that the fair value of the Company's reporting units may be below their carrying amounts. Based on such analysis, the Company determined that there have been no indicators that the fair value of its reporting units may be below their carrying amounts as of September 30, 2021.FCC Broadcast Licenses

~~There were no changes in the carrying value of the Company's goodwill during the nine months ended September 30, 2021.~~

~~The following table represents goodwill by segment (in thousands):~~

Advertising Townsquare
Interactive Live Events Total
Balance at September 30, 2021 $ 76,964 $ 77,000 $ 3,983 $ 157,947

FCC licenses represent a substantial portion of the Company’s total assets. The FCC licenses are renewable in the ordinary course of business, generally for a maximum of eight years. The fair value of FCC licenses is primarily dependent on the future cash flows of the radio markets and other assumptions, including, but not limited to, forecasted revenue growth rates, profit margins and a risk-adjusted discount rate. The Company has selected December 31st as the annual testing date.

The Company evaluates its FCC licenses for impairment annually or more frequently if events or changes in circumstances indicate that the assets might be impaired. Due to ~~continued declines~~changes in forecasted traditional broadcast revenue in the markets in which we operate in, ~~as they continue to recover from the COVID-19 pandemic,~~ the Company quantitatively evaluated the fair value of its FCC licenses at March 31, ~~2021. Based on the results of the impairment assessment of our FCC licenses as of March 31, 2021 we had no impairment charge for the three months ended March 31, 2021.~~

At September 30, 2021, the Company considered whether any events have occurred or circumstances have changed from the quantitative analysis performed as of March 31, 2021 that would indicate further declines in the fair values of our FCC licenses. Our analysis included updates to the calculation of the weighted average cost of capital and the consideration of changes in the radio broadcast markets where our FCC licenses are utilized. Based on such analysis, the Company determined that there have been no indicators that our FCC licenses may be further impaired as of September 30, 2021.2022.

The key assumptions used in applying the direct valuation method as of March 31, ~~2021~~2022 are summarized as follows:


		March 31, 2021			March 31, 2022
Discount Rate	Discount Rate	10.1%		Discount Rate	10.2%
Long-term Revenue Growth Rate	Long-term Revenue Growth Rate	0.0%		Long-term Revenue Growth Rate	0.0%
		Low	High		Low	High
Mature Market Share*	Mature Market Share*	20.5%	96.0%	Mature Market Share*	19.3%	94.7%
Operating Profit Margin	Operating Profit Margin	18.0%	48.0%	Operating Profit Margin	20.0%	47.0%

* Market share assumption used when reliable third-party data is available. Otherwise, Company results and forecasts are utilized.

Unfavorable changes in key assumptions utilized in the impairment assessment of our FCC licenses may affect future testing results. For example, keeping all other assumptions constant, a 100-basis point increase in the weighted average cost of capital as of the date of our last quantitative assessment would ~~have caused~~cause the estimated fair values of our FCC licenses to decrease by ~~$55.1~~$72.8 million, which would have resulted in an impairment charge of ~~$5.6~~$5.7 million. Assumptions used to estimate the fair value of our FCC licenses are also dependent upon the expected performance and growth of our traditional broadcast operations. In the event ~~that~~ our broadcast revenue experiences ~~further~~ actual or anticipated declines, ~~including as a result of the COVID-19 pandemic,~~ such declines will have a negative impact on the estimated fair value of our FCC licenses, and the Company could recognize additional impairment charges, which could be material.

Goodwill

For goodwill impairment testing, the Company has selected December 31st as the annual testing date. In addition to the annual impairment test, the Company regularly assesses whether a triggering event has occurred, which would require interim impairment testing. As of December 31, 2021, the fair values of our National Digital, Townsquare Ignite, Analytical Services, Townsquare Interactive and Live Events reporting units were in excess of their respective carrying values by approximately 703%, 164%, 281%, 497% and 117%, respectively. The local advertising businesses reporting unit had no goodwill as of December 31, 2021.

The Company considered whether any events have occurred or circumstances have changed from the last quantitative analysis performed as of December 31, 2021 that would indicate that the fair value of the Company's reporting units may be below their carrying amounts. Based on such analysis, the Company determined that there have been no indicators that the fair value of its reporting units may be below their carrying amounts as of March 31, 2022.

There were no changes in the carrying value of the Company's goodwill during the three months ended March 31, 2022.

The following table represents goodwill by segment (in thousands):


	Subscription Digital Marketing Solutions		Digital Advertising		Broadcast Advertising		Other		Total



Balance at March 31, 2022	$	77,000	$	76,964	$	—	$	3,983	$	157,947

Digital Assets

During the quarter ended March 31, 2022, the Company invested an aggregate of $5.0 million in Bitcoin. Digital assets are accounted for as indefinite-lived intangible assets in accordance with ASC 350, Intangibles - Goodwill and Other, included as a component of intangible assets, net on the Consolidated Balance Sheet. We have ownership of and control over our digital assets and we use third-party custodial services to secure it. Any decrease in the digital assets fair values below our carrying values at any time subsequent to acquisition requires the Company to recognize impairment charges. No upward revisions for any market price increases are recognized until a sale of the digital assets occurs.

The fair value of the digital assets was based upon quoted prices (unadjusted) on the active exchange that the Company determined was the principal market for our digital assets, Level 1 measurements under the fair value measurement hierarchy established under Fair Value Measurement (Topic 820). The Company performed an analysis to identify whether events or changes in circumstances, principally decreases in the quoted prices on the active exchange, indicated that it was more likely than not that our digital assets were impaired. In determining if an impairment had occurred, the Company considered the lowest market price of one unit of digital asset quoted on the active exchange since the date the Company acquired the digital assets. Any observed declines in the market values of our digital assets below their current carrying values results in an impairment loss equal to the difference between the digital assets carrying values and the lowest observed market price, even if the overall market values of these assets subsequently increase.

During the quarter ended March 31, 2022, the Company recorded a total of $0.4 million in impairment losses resulting from changes in the fair value of the Company's digital assets observed during the period. As of March 31, 2022, the carrying value of the Company's digital assets is $4.6 million. The Company views its investment in Bitcoin as liquid due to the ability to readily convert the investment to cash through sale on an active exchange. Had the Company sold its investment in Bitcoin on March 31, 2022, it would have sold its investment for approximately $6.2 million.

Definite-lived intangible assets

The Company’s definite-lived intangible assets were acquired primarily in various acquisitions as well as in connection with the acquisition of software and music licenses.

Content Rights

The Company enters into multi-year content licensing agreements pursuant to which the Company is required to make payments over the term of the license agreement. These licensing agreements are accounted for as a license of program material in accordance with ASC 920-350, Broadcasters - Intangibles - Goodwill and Other. The Company capitalizes the content licenses and records a related liability at fair value, which includes a discount, on the effective date of the respective license agreement. Amortization of capitalized content licenses is included as a component of direct operating expenses in the Consolidated Statement of Operations. The difference between the gross and net liability is amortized over the term of the license agreements and reflected as a component of interest expense. The Company entered into an additional multi-year content license agreement which commenced on April 1, 2022.

The following tables present details of our intangible assets as of ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, respectively (in thousands):

September 30, 2021
Weighted Average Useful Life (in Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Intangible Assets:
FCC licenses Indefinite $ 276,991 $ — $ 276,991
Customer and advertising relationships 2 6,540 (5,283) 1,257
Leasehold interests 10 1,085 (993) 92
Tower space 2 454 (444) 10
Trademarks 8 2,598 (1,274) 1,324
Software license fees 2 853 (316) 537
Total $ 288,521 $ (8,310) $ 280,211


	March 31, 2022
	Weighted Average Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible Assets:
FCC licenses	Indefinite	$	275,321	$	—	$	275,321
Digital assets	Indefinite	4,646		—		4,646
Content rights and other intangible assets	1 - 10	21,165		(9,664)		11,501







Total		$	301,132	$	(9,664)	$	291,468

December 31, 2020
Weighted Average Useful Life (in Years) Gross Carrying Amount Accumulated Amortization Net Carrying Amount
Intangible Assets:
FCC licenses Indefinite $ 277,013 $ — $ 277,013
Customer and advertising relationships 3 6,540 (4,793) 1,747
Leasehold interests 11 1,085 (970) 115
Tower space 3 454 (439) 15
Trademarks 9 2,761 (1,218) 1,543
Software license fees 3 853 (126) 727
Total $ 288,706 $ (7,546) $ 281,160


	December 31, 2021
	Weighted Average Useful Life (in Years)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Intangible Assets:
FCC licenses	Indefinite	$	275,321	$	—	$	275,321
Other intangible assets	2 - 10	11,530		(8,586)		2,944






Total		$	286,851	$	(8,586)	$	278,265

Amortization ~~expense~~ for definite-lived intangible assets was $1.1 million and $0.3 million for ~~each of~~ the three months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020, respectively and $0.8 million and $0.7 million for the nine months ended September 30, 2021 and 2020,~~ respectively.

Estimated future amortization expense for each of the five succeeding fiscal years and thereafter as of ~~September 30, 2021~~March 31, 2022 is as follows (in thousands):


2021 (remainder)		$	275
2022		1,101
2022 (remainder)				2022 (remainder)	$	3,234
2023	2023	837		2023	4,048
2024	2024	168		2024	3,380
2025	2025	168		2025	168
2026				2026	168
Thereafter	Thereafter	671		Thereafter	503
		$	3,220		$	11,501

Note 6.7. Investments

Long-term ~~investments primarily consists of minority holdings in early-stage businesses. As management does not exercise significant~~ control over operating and financial policies of the investees, the investments are not consolidated or accounted for under the equity method of accounting. The initial valuation of the equity securities was based upon an estimate of market value at the time of investment or upon a combination of a valuation analysis using observable inputs categorized as Level 2 and performing a discounted cash flows analysis, using unobservable inputs categorized as Level 3 within the ASC 820 framework. In accordance with ASC 321, Investments - Equity Securities, ~~for investments without readily determinable fair values,~~ the Company measures its equity securities at cost minus impairment, as their fair values are not readily determinable and the investments do not qualify for the net asset value per share practical expedient. The Company monitors its investments for any subsequent observable price changes in orderly transactions for the identical or a similar investment of the same investee, at which time the Company ~~adjusts~~would adjust the then current carrying values of the related investment. Additionally, the Company evaluates its investments for any indicators of impairment.

Equity securities measured at cost minus impairment

During the ~~nine~~three months ended ~~September 30, 2021,~~March 31, 2022, the Company ~~made 2 new investments in businesses for $1.1 million and~~ acquired an additional ~~$5.3 million and~~ $0.3 million interest in ~~additional interests in 2~~an existing ~~investees, respectively.~~investee. There were no impairment charges recorded for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021, ~~and 2020,~~ respectively.

~~In early~~Equity securities measured at fair value

On July 2, 2021, ~~the Company noted an observable price change in an orderly transaction for~~ one of ~~its~~the Company's investees ~~following a series of transactions through which the investee~~ completed its registration with the SEC ~~of shares of its common stock. As~~and became a result, the Company's investment is no longer measured at cost minus impairment and the carrying value of the investment is measured at its fair value with changes in fair value reflected in net income. As of the date of the completion of the transactions, the fair value of the Company's investment was $7.6 million, as compared to it previous carrying value of $3.2 million.

publicly traded company. Based on the market price of the investee's common stock as of ~~September 30, 2021,~~March 31, 2022, the fair value of the Company's investment in the common stock of the investee was approximately ~~$6.1~~$1.8 million resulting in a total unrealized ~~net gain~~loss of ~~$2.9~~$1.5 million during the three months ~~September 30, 2021~~ended March 31, 2022, included as a component of other ~~income. Additionally, the Company received a $0.2 million cash payment in connection with the completion of the transactions related to the investee's registration of its common stock.~~expense (income). The fair value of the investee's common stock as of ~~September 30, 2021,~~March 31, 2022, was based upon quoted prices (unadjusted) in active markets for identical equity securities, Level 1 measurements under the fair value measurement hierarchy established under Fair Value Measurement (Topic 820).

1614

Note 7.8. Long-Term Debt

Total debt outstanding is summarized as follows (in thousands):


		September 30, 2021		December 31, 2020			March 31, 2022		December 31, 2021
2026 Notes	2026 Notes	$	550,000	$	—	2026 Notes	$	550,000	$	550,000
2023 Notes		—		273,416
Term Loans		—		272,381
Debt before deferred financing costs		$	550,000	$	545,797

Deferred financing costs	Deferred financing costs	(9,081)		(2,369)		Deferred financing costs	(8,061)		(8,479)

Total long-term debt	Total long-term debt	$	540,919	$	543,428	Total long-term debt	$	541,939	$	541,521

On January 6, 2021, the Company completed the private offering and sale of $550.0 million aggregate principal amount of 6.875% senior secured notes due 2026 (the “2026 Notes”) at an issue price of 100.0%. The net proceeds from the 2026 Notes, together with cash on hand, were used to repay: (i) all outstanding borrowings under the 2015 senior secured credit facility, which included a seven year $275.0 million term loan facility (the “Term Loans”) with $272.4 million principal amount outstanding and $2.1 million in accrued interest, (ii) all of the outstanding $273.4 million of principal amount of 6.5% Unsecured Senior Notes due in 2023 (the “2023 Notes”), a prepayment premium of $4.4 million, and $5.1 million in accrued interest, and (iii) fees and expenses related thereto. The Company also terminated its revolving credit facility and all other obligations thereunder were repaid effective January 6, 2021. The 2026 Notes bear interest at a rate of 6.875% and mature on February 1, 2026. Interest on the 2026 Notes is payable semi-annually in cash in arrears on February 1 and August 1 of each year, commencing on August 1, 2021.

The Company incurred approximately $13.6 million of fees and expenses in connection with the issuance of the 2026 Notes, of which approximately $9.4 million were capitalized and are being amortized over the remaining term of the 2026 Notes using the effective interest method. The Company recognized a $4.9 million loss on the early extinguishment of debt during the three months ended March 31, 2021, comprised of a $3.1 million portion of the 2023 Notes prepayment premium and the write-off of $1.8 million of unamortized debt discount and deferred financing fees previously capitalized in connection with the senior secured credit facility and 2023 Notes. The Company recognized a $1.1 million loss on the modification of Terms Loans and 2023 Notes during the three months ended March 31, 2021, which is primarily related to a portion of fees and expenses incurred related to the issuance of the 2026 Notes.

The Company’s obligations under the 2026 Notes are guaranteed by substantially all of its subsidiaries and assets. The Company may redeem the 2026 Notes in whole or in part, at its option, at a redemption price equal to 100% of the principal amount, subject to the following redemption prices, plus accrued and unpaid interest, if any to, but excluding, the redemption date:


Period	Price
Prior to February 1, 2023	at an applicable make-whole premium
Beginning February 1, 2023	103.438	%
Beginning February 1, 2024	101.719	%
Beginning February 1, 2025 and thereafter	100.000	%

Change of Control

If the Company experiences certain change of control events, holders of the 2026 Notes may require the Company to repurchase all or part of their 2026 Notes at 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

Certain Covenants

The 2026 Notes indenture contains restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things:

•incur additional indebtedness;

•declare or pay dividends, redeem stock or make other distributions to stockholders;

•make investments; create liens or use assets as security in other transactions;

•merge or consolidate, or sell, transfer, lease or dispose of substantially all of our assets;

•enter into transactions with affiliates;

•sell or transfer certain assets; and

•agree to certain restrictions on the ability of restricted subsidiaries to make payments to the Company.

Certain of these covenants will be suspended if the 2026 Notes are assigned an investment grade rating by Standard & Poor’s Investors Ratings Services, Moody’s Investors Service, Inc. or Fitch Ratings, Inc. and no event of default has occurred and is continuing.

The Company was in compliance with its covenants under the 2026 Notes indenture as of ~~September 30, 2021.~~March 31, 2022.

As of ~~September 30, 2021,~~March 31, 2022, based on available market information, the estimated fair value of the 2026 Notes was ~~$579.6~~$560.3 million. The Company used Level 2 measurements under the fair value measurement hierarchy established under Fair Value Measurement (Topic 820).

Annual maturities of the Company's long-term debt as of ~~September 30, 2021~~March 31, 2022 are as follows (in thousands):


2021 (remainder)		$	—
2022		—
2022 (remainder)				2022 (remainder)	$	—
2023	2023	—		2023	—
2024	2024	—		2024	—
2025	2025	—		2025	—
2026	2026	550,000		2026	550,000
		$	550,000
					$	550,000

Note 8.9. Income Taxes

The Company's effective tax rate for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was approximately ~~20.6%~~34.7% and ~~25.6%~~12.8%, respectively. The ~~Company's effective tax rate for the nine months ended September 30, 2021 and 2020 was approximately 27.6% and 28.0%, respectively. The decrease~~increase in the effective tax rate for the three months ended ~~September 30, 2021~~March 31, 2022 is primarily driven by discrete items for the period, including ~~changes~~unrealized losses on investments in ~~the valuation allowance due to the utilization of capital loss carryforwards and stock options exercised and forfeited.~~equity securities.

The effective tax rate may vary significantly from period to period, and can be influenced by many factors. These factors include, but are not limited to, changes to the statutory rates in the jurisdictions where the Company has operations and changes in the valuation of deferred tax assets and liabilities. The difference between the effective tax rate and the federal statutory rate of 21% primarily relates to certain non-deductible items, state and local income taxes and the valuation allowance for deferred tax assets.

~~Note 9. Stockholders' Equity~~

The table below presents a summary, as of September 30, 2021, of our authorized and outstanding common stock, and securities convertible into common stock, excluding options issued under our 2014 Omnibus Incentive Plan.

Security 1
Par Value Per Share Number Authorized Number Outstanding Description
Class A common stock $ 0.01 300,000,000 12,440,045 NaN vote per share.
Class B common stock $ 0.01 50,000,000 815,296
NaN votes per share.2
Class C common stock $ 0.01 50,000,000 3,461,341
No votes.2
Warrants 10,622
Each warrant is exercisable for 1 share of Class A common stock, at an exercise price of $0.0001 per share. The aggregate exercise price for all warrants currently outstanding is $1.3
Total 400,000,000 16,727,304
1 Each of the shares of common stock, including the shares of Class A common stock issuable upon exercise of the warrants, have equal economic rights.
2 Each share converts into 1 share of Class A common stock upon transfer or at the option of the holder, subject to certain conditions, including compliance with FCC rules.
3 The warrants are fully vested and exercisable for shares of Class A common stock, subject to certain conditions, including compliance with FCC rules.

The foregoing share totals include 212,605 shares of restricted Class A common stock, subject to vesting terms, but exclude 4,829,289 of Class A common stock and 3,670,509 of Class B common stock issuable upon exercise of stock options which have an exercise price between $4.79 and $10.08 per share, as of September 30, 2021. Additionally, the Company is authorized to issue 50,000,000 shares of undesignated preferred stock.

~~Stock Repurchase Agreement~~

On January 24, 2021, the Company entered into a stock repurchase agreement with certain affiliates of Oaktree Capital Management L.P. (“Oaktree”) to repurchase 606,484 shares of the Company’s Class A common stock, 2,151,373 shares of the Company’s Class B common stock, and 7,242,143 warrants to purchase Class A Common Stock, or such greater number of securities as the Company may elect. On March 9, 2021, the repurchase was consummated and the Company elected to repurchase all of the outstanding securities held by Oaktree, including 1,595,224 shares of Class A Common Stock, 2,151,373 shares of Class B Common Stock and 8,814,980 warrants for an aggregate purchase price of $80.4 million, or $6.40 per security.

In connection with the closing under the stock repurchase agreement, on March 8, 2021, the Company and Oaktree entered into a settlement agreement (the “Settlement Agreement”), pursuant to which, among other things, the Company agreed to pay $4.5 million to Oaktree as follows: (i) $1.5 million on April 1, 2021; (ii) $1.0 million on July 1, 2021; (iii) $1.0 million on October 1, 2021; and (iv) $1.0 million on November 10, 2021. The Settlement Agreement also includes customary mutual releases from claims, demands, and damages related to the stock repurchase agreement. The $4.5 million due under the terms of the Settlement Agreement is reflected as a component of transaction costs for the nine months ended September 30, 2021. All amounts due under the terms of the Settlement Agreement were paid as of September 30, 2021.

Total consideration and fees in the aggregate amount of $82.0 million related to the repurchase of the shares and warrants from Oaktree are reflected as a reduction in capital during the nine months ended September 30, 2021. The shares were retired upon repurchase.

~~Stock Repurchase~~

On June 2, 2021, the Company repurchased 100,000 shares of Class A common stock from its Chief Executive Officer at a price of $14.00 per share. The shares were previously issued at a grant date fair value of $6.31. The difference between the grant date fair value and the repurchase price is reflected as an increase in accumulated deficit during the three months ended June 30, 2021.

~~Exercise of Warrants to Purchase Common Stock~~

~~On August~~ 16 ~~2021, a warrant holder exercised 152,074 warrants at an exercise price of $0.0001 per share and received 152,074 shares of Class A common stock.~~

~~Stock-based Compensation~~

The Company’s 2014 Omnibus Incentive Plan (the “2014 Incentive Plan”) provides grants of stock options, stock appreciation rights, restricted stock, other stock-based awards and other cash-based awards. Directors, officers and other employees of the Company and its subsidiaries, as well as others performing consulting or advisory services for the Company, are eligible for grants under the 2014 Incentive Plan. The purpose of the 2014 Incentive Plan is to provide incentives that will attract, retain and motivate high-performing officers, directors, employees and consultants by providing them with appropriate incentives and rewards either through a proprietary interest in our long-term success or compensation based on their performance in fulfilling their personal responsibilities.

On January 25, 2021, the Board of Directors determined that it was in the best interest of the Company and its stockholders to amend the Company’s 2014 Omnibus Incentive Plan to increase the number of shares of common stock available for grant under the 2014 Incentive Plan from 12,000,000 shares to 27,000,000 shares (the “Amendment”). Subsequently, on January 25, 2021, the Board of Directors submitted the Amendment to certain stockholders affiliated with Oaktree for approval. By written consent delivered to the Company on January 27, 2021, the Oaktree-affiliated stockholders, representing approximately 52.4% of the voting power of the Company, approved the Amendment. As of September 30, 2021, 16,624,382 shares were available for grant.

~~Stock Option Activity~~

~~During the first nine months of 2021, eligible option holders tendered 1,360,702 options to purchase 1,360,702 shares of Townsquare common stock.~~

~~The following table summarizes stock option activity during the nine months ended September 30, 2021:~~

Options Weighted Average Exercise Price Weighted Average Remaining Contractual Life (years) Aggregate Intrinsic Value (in thousands)
Outstanding at December 31, 2020 11,234,078 $ 7.92 4.99 $ 1,062
  Granted 45,000 $ 10.08 — —
  Exercised (1,360,702) $ 8.03 — $ 3,950
  Forfeited and expired (1,418,577) $ 8.46 — —
Outstanding at September 30, 2021 8,499,799 $ 7.83 5.25 $ 44,596
Exercisable at September 30, 2021 5,356,257 $ 8.58 3.35 $ 24,045

~~The maximum contractual term of stock options is 10 years.~~

For the three months ended September 30, 2021 and 2020, the Company recognized approximately $0.9 million and $0.4 million, respectively, of stock-based compensation expense with respect to options and shares of restricted stock granted. For the nine months ended September 30, 2021 and 2020, the Company recognized approximately $2.8 million and $1.6 million, respectively. As of September 30, 2021, total unrecognized stock-based compensation expense related to our stock options and restricted stock was $6.0 million and $0.7 million, respectively, and is expected to be recognized over a weighted average period of 3.0 and 1.11 years, respectively.

Note 10. Net Income (Loss) Per Share

Basic earnings (loss) per common share (“EPS”) is generally calculated as income available to common shareholders divided by the weighted average number of common shares outstanding. Diluted EPS is generally calculated as income available to common shareholders divided by the weighted average number of common shares outstanding plus the dilutive effect of common share equivalents. ~~The Company has determined that our warrants are a participating security, as defined, in accordance with ASC Topic 260,~~ ~~Earnings Per Share. Although these warrants are subject to restrictions on exercise, they participate in the undistributed earnings of the Company and therefore, our presentation reflects the two-class method.~~

The following table sets forth the computations of basic and diluted net income (loss) per share for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands, except per share data):

Three Months Ended
September 30, Nine Months Ended September 30,
2021 2020 2021 2020
Numerator:
Net income (loss) $ 12,894 $ 1,311 $ 16,859 $ (85,088)
Net income from non-controlling interest 489 516 1,571 1,449
Net income (loss) attributable to controlling interest $ 12,405 $ 795 $ 15,288 $ (86,537)
Denominator:
Weighted average shares of common stock outstanding 16,386 18,683 16,917 18,627
Weighted average shares of participating securities outstanding 88 8,978 2,333 8,978
Total weighted average basic shares outstanding 16,474 27,661 19,250 27,605
Effect of dilutive common stock equivalents 2,910 27 2,407 —
Weighted average diluted common shares outstanding 19,384 27,688 21,657 27,605
Basic income (loss) per share:
Attributable to common shares $ 0.75 $ 0.03 $ 0.79 $ (4.68)
Attributable to participating shares (1)
$ 0.75 $ 0.03 $ 0.79 $ 0.08
Diluted income (loss) per share $ 0.64 $ 0.03 $ 0.71 $ (4.68)


	Three Months Ended March 31,
		2022		2021

Numerator:
Net income (loss)		$	2,741	$	(6,109)
Net income from non-controlling interest		517		440
Net income (loss) attributable to controlling interest		$	2,224	$	(6,549)






Denominator:
Weighted average shares of common stock outstanding		16,796		18,602
Weighted average shares of participating securities outstanding		—		6,823
Total weighted average basic shares outstanding		16,796		25,425
Effect of dilutive common stock equivalents		2,713		—
Weighted average diluted common shares outstanding		19,509		18,602

Basic income (loss) per share:
Attributable to common shares		$	0.13	$	(0.35)
Attributable to participating shares (1)		$	—	$	—



Diluted income (loss) per share		$	0.11	$	(0.35)

(1) On March 9, 2021, the Company repurchased 8,814,980 warrants outstanding from Oaktree ~~and on~~On August 16, 2021, a warrant holder exercised 152,074 warrants, and on December 14, 2021, a warrant holder exercised 10,622 warrants, each as more fully discussed in Note 9,11, Stockholders' ~~Equity~~.Equity, included in the Company's 2021 Annual Report on Form 10-K. For the three months ended March 31, 2022, there were no warrants outstanding. Income (loss) attributable to participating shares and diluted income (loss) per share for ~~the nine months ended September 30,~~ 2021 was calculated utilizing the weighted-average ~~method.~~method, as applicable.

The Company had the following dilutive securities that were not included in the computation of diluted net income (loss) per share as they were considered anti-dilutive (in thousands):


		Three Months Ended September 30,		Nine Months Ended September 30,			Three Months Ended March 31,
		2021	2020	2021	2020			2022	2021
Stock options	Stock options	45	9,152	26	9,152	Stock options		45	9,847
Restricted Stock	Restricted Stock	—	210	—	296	Restricted Stock		—	311
Warrants	Warrants	—	8,978	—	8,978	Warrants		—	6,823
Shares expected to be issued under the 2021 Employee Stock Purchase Plan						Shares expected to be issued under the 2021 Employee Stock Purchase Plan		78	—

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Note 11. Segment Reporting

Operating segments are organized internally by type of products and services provided. Based on the information reviewed by the Company's CEO in his capacity as ~~Chief Operating Decision Maker ("CODM"),~~CODM, the Company has identified 3 ~~reportable operating segments, which are~~segments: Subscription Digital Marketing Solutions, Digital Advertising ~~which includes broadcast~~ and ~~digital advertising products and solutions, Townsquare Interactive, which~~Broadcast Advertising. The remainder of our business is ~~our digital marketing solutions business and Live Events, which is comprised of~~reported in the ~~Company’s live events, including concerts, expositions and other experiential events. The Company has concluded that each of these operating segments shall be presented separately.~~ Other category.

The Company operates in 1 geographic area. The Company's assets and liabilities are managed within markets outside the ~~small and mid-sized markets~~top 50 across the United States where the Company conducts its business and are reported internally in the same manner as the Consolidated Financial Statements; thus, no additional information regarding assets and liabilities of the Company’s reportable segments is produced for the Company's CEO or included in these Consolidated Financial Statements. Intangible assets consist principally of FCC broadcast licenses and other definite-lived intangible assets and primarily support the Company’s Broadcast Advertising segment. For further information see Note 5,6, Goodwill and Other Intangible Assets, Net. The Company does not have any material inter-segment sales.

The Company's management evaluates segment operating income, which excludes unallocated corporate expenses and the impact of certain items that are not directly attributable to the reportable segments' underlying operating performance, and primarily includes expenses related to corporate stewardship and administration activities, transaction related costs and non-cash impairment charges.

The following tables present the Company's reportable segment results for the three months ended ~~September 30, 2021~~March 31, 2022 (in thousands):


		Advertising		Townsquare Interactive		Live Events		Corporate and Other Reconciling Items		Total			Subscription Digital Marketing Solutions		Digital Advertising		Broadcast Advertising		Other		Corporate and Other Reconciling Items		Total
Net revenue	Net revenue	$	87,402	$	21,130	$	2,748	$	—	$	111,280	Net revenue	$	21,850	$	29,227	$	48,100	$	1,065	$	—	$	100,242
Direct operating expenses, excluding depreciation, amortization and stock-based compensation	Direct operating expenses, excluding depreciation, amortization and stock-based compensation	58,381		14,954		2,384		—		75,719		Direct operating expenses, excluding depreciation, amortization and stock-based compensation	15,476		21,011		36,438		838		—		73,763
Depreciation and amortization	Depreciation and amortization	3,306		143		41		1,331		4,821		Depreciation and amortization	277		65		3,145		38		1,240		4,765
Corporate expenses	Corporate expenses	—		—		—		6,410		6,410		Corporate expenses	—		—		—		—		4,409		4,409
Stock-based compensation	Stock-based compensation	75		128		2		672		877		Stock-based compensation	132		15		87		3		632		869
Transaction costs	Transaction costs	—		—		—		2		2		Transaction costs	—		—		—		—		431		431
Business realignment costs	Business realignment costs	—		—		7		477		484		Business realignment costs	—		—		—		6		15		21
Impairment of long-lived and intangible assets												Impairment of long-lived and intangible assets	—		—		7		120		351		478
Net gain on sale and retirement of assets	Net gain on sale and retirement of assets	—		—		—		(14)		(14)		Net gain on sale and retirement of assets	—		—		(272)		—		(36)		(308)
Operating income (loss)	Operating income (loss)	$	25,640	$	5,905	$	314	$	(8,878)	$	22,981	Operating income (loss)	$	5,965	$	8,136	$	8,695	$	60	$	(7,042)	$	15,814

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The following table presents the Company's reportable segment results for the three months ended ~~September 30, 2020 (in thousands):~~

Advertising Townsquare Interactive Live Events Corporate and Other Reconciling Items Total
Net revenue $ 77,109 $ 18,181 $ 66 $ — $ 95,356
Direct operating expenses, excluding depreciation, amortization and stock-based compensation 58,235 12,694 159 — 71,088
Depreciation and amortization 3,856 131 128 1,133 5,248
Corporate expenses — — — 6,764 6,764
Stock-based compensation 37 16 2 375 430
Transaction costs — — — 384 384
Business realignment cost — — 284 188 472
Impairment of long-lived and intangible assets 768 — 575 — 1,343
Net loss on sale and retirement of assets — — — 92 92
Operating income (loss) $ 14,213 $ 5,340 $ (1,082) $ (8,936) $ 9,535

~~The following tables present the Company's reportable segment results for the nine months ended September 30,~~March 31, 2021 (in thousands):

Advertising Townsquare Interactive Live Events Corporate and Other Reconciling Items Total
Net revenue $ 243,083 $ 60,347 $ 3,949 $ — $ 307,379
Direct operating expenses, excluding depreciation, amortization and stock-based compensation 166,551 42,144 3,142 — 211,837
Depreciation and amortization 10,170 840 127 3,409 14,546
Corporate expenses — — — 15,996 15,996
Stock-based compensation 297 411 11 2,114 2,833
Transaction costs — — — 5,107 5,107
Business realignment costs — — 25 715 740
Impairment of long-lived and intangible assets — — — 95 95
Net loss on sale and retirement of assets — — — 613 613
Operating income (loss) $ 66,065 $ 16,952 $ 644 $ (28,049) $ 55,612

~~The following tables present the Company's reportable segment results for the nine months ended September 30, 2020 (in thousands):~~


		Advertising		Townsquare Interactive		Live Events		Corporate and Other Reconciling Items		Total			Subscription Digital Marketing Solutions		Digital Advertising		Broadcast Advertising		Other		Corporate and Other Reconciling Items		Total
Net revenue	Net revenue	$	208,780	$	51,595	$	2,469	$	—	$	262,844	Net revenue	$	18,997	$	25,076	$	44,681	$	7	$	—	$	88,761
Direct operating expenses, excluding depreciation, amortization and stock-based compensation	Direct operating expenses, excluding depreciation, amortization and stock-based compensation	168,527		36,414		2,105		—		207,046		Direct operating expenses, excluding depreciation, amortization and stock-based compensation	13,065		17,814		33,581		67		—		64,527
Depreciation and amortization	Depreciation and amortization	10,740		398		393		3,762		15,293		Depreciation and amortization	416		224		3,270		45		774		4,729
Corporate expenses	Corporate expenses	—		—		—		20,724		20,724		Corporate expenses	—		—		—		—		4,134		4,134
Stock-based compensation	Stock-based compensation	116		63		7		1,425		1,611		Stock-based compensation	155		21		127		6		753		1,062
Transaction costs	Transaction costs	—		—		—		2,624		2,624		Transaction costs	—		—		—		—		4,715		4,715
Business realignment costs		—		—		284		2,355		2,639
Impairment of long-lived and intangible assets		108,483		—		575		—		109,058
Business realignment cost												Business realignment cost	—		—		—		14		176		190

Net loss on sale and retirement of assets	Net loss on sale and retirement of assets	—		—		—		80		80		Net loss on sale and retirement of assets	—		—		—		—		593		593
Operating (loss) income		$	(79,086)	$	14,720	$	(895)	$	(30,970)	$	(96,231)
Operating income (loss)												Operating income (loss)	$	5,361	$	7,017	$	7,703	$	(125)	$	(11,145)	$	8,811

Note 12. ~~Related Party Transactions~~Subsequent Events

~~The Company has a strategic partnership and services agreement with a company affiliated with the Chairman of Townsquare’s Board of Directors. Under the agreement,~~On April 29, 2022, the Company ~~provides certain professional and administrative services including, IT, accounting and human resources support, business development, and engineering and consulting services. Prior to April 2021,~~voluntarily repurchased $9.3 million of its 2026 Notes at par plus accrued interest. The repurchased notes were canceled by the Company received a monthly service fee of $5,000 and reimbursement of any direct expenses, as applicable, however, effective April 1, 2021, the agreement was terminated. During the three months ended September 30, 2020, the Company recorded total fees in the aggregate of approximately $0.01 million related to services provided under the terms of the agreement. For the nine months ended September 30, 2021 and 2020, the Company recorded total fees in the aggregate of approximately $0.02 million and $0.1 million, respectively related to services provided under the terms of the agreement.Company.

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

The following management’s discussion and analysis is intended to provide the reader with an overall understanding of our financial condition, results of operations, cash flows and sources and uses of cash. This section also includes general information about our business and a discussion of our management’s analysis of certain trends, risks and opportunities in our industry. In addition, we also provide a discussion of accounting policies that require critical judgments and estimates. This discussion should be read in conjunction with our Unaudited Consolidated Financial Statements and related notes appearing elsewhere in this quarterly report.

Note About Forward-Looking Statements

This report includes estimates, projections, statements relating to our business plans, objectives and expected operating results that are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). Forward-looking statements often discuss our current expectations and projections relating to our financial condition, results of operations, plans, objectives, future performance and business. You can identify forward-looking statements by the fact that they do not relate strictly to historical or current facts. These statements may include words such as “aim,” “anticipate,” “estimate,” “expect,” “forecast,” “outlook,” “potential,” “project,” “projection,” “plan,” “intend,” “seek,” “believe,” “may,” “could,” “would,” “will,” “should,” “can,” “can have,” “likely,” the negatives thereof and other words and terms. Actual events or results may differ materially from the results anticipated in these forward-looking statements as a result of a variety of factors. While it is impossible to identify all such factors, factors that could cause actual results to differ materially from those estimated by us include the impact of general economic conditions in the United States, or in the specific markets in which we currently do business i~~ncluding as a result of the COVID-19 pandemic, (the extent of which will depend on future actions and outcomes that are highly uncertain and cannot be predicted,~~ including ~~the scope, severity and duration of the pandemic, the actions taken to contain the pandemic or mitigate its impact,~~supply chain disruptions, inflation, labor shortages and the direct and indirect economic and financial market effects of the pandemic, the containment measures and the pace of the economic and financial market recovery), any civil unrest or violence, the impact of several material weaknesses in internal control over financial reporting that have been identified, which resulted in the restatement of certain of our Consolidated Financial Statements and created additional risks and uncertainties, including limiting our access to certain capital markets activities and increasing litigation risk,effect on advertising activity, industry conditions, including existing competition and future competitive technologies, the popularity of radio as a broadcasting and advertising medium, cancellations, disruptions or postponements of advertising schedules in response to national or world events, including the COVID-19 pandemic, our ability to develop and maintain digital technologies and hire and retain technical and sales talent, our dependence on key personnel, our capital expenditure requirements, our continued ability to identify suitable acquisition targets, and consummate and integrate any future acquisitions, legislative or regulatory requirements, risks and uncertainties relating to our leverage and changes in interest rates, our ability to obtain financing at times, in amounts and at rates considered appropriate by us, our ability to access the capital markets as and when needed and on terms that we consider favorable to us and other factors discussed in this section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in this report and under “Risk Factors” in our ~~2020~~2021 Annual Report on Form 10-K, as well as other risks discussed from time to time in our filings with the SEC. Many of these factors are beyond our ability to predict or control. In addition, as a result of these and other factors, our past financial performance should not be relied on as an indication of future performance. The cautionary statements referred to in this section also should be considered in connection with any subsequent written or oral forward-looking statements that may be issued by us or persons acting on our behalf. The forward-looking statements included in this report are made only as of the date hereof or as of the date specified herein. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Format of Presentation

~~Townsquare~~Townsquare is a community-focused digital media and digital marketing solutions ~~and~~company with market leading local radio ~~company~~stations, principally focused outside the ~~Top~~top 50 markets in the ~~U.S.~~United States. Our integrated and diversified products and solutions enable local, regional and national advertisers to target audiences across multiple platforms, including digital, mobile, social, video, streaming, e-commerce, radio and events. Our assets ~~as of September 30, 2021,~~ include a subscription digital marketing ~~subscription~~services business ~~(Townsquare Interactive)~~(“Townsquare Interactive”), providing ~~websites,~~website design, creation and hosting, search engine optimization, social platforms and online reputation management as well as other monthly digital services for approximately ~~25,950~~27,850 small to medium sized ~~businesses,~~businesses; a robust digital advertising division (“Townsquare Ignite,” or “Ignite”), a powerful combination of a) an owned and operated portfolio of more than 330 local news and entertainment websites and mobile apps along with a network of leading national music and entertainment brands, collecting valuable first party data and b) a proprietary digital programmatic advertising technology stack with an in-house demand and data management ~~platform (Townsquare Ignite),~~platform; and a portfolio of ~~322~~321 local terrestrial radio stations in 67 U.S. markets ~~with more than 330 corresponding~~strategically situated outside the Top 50 markets in the United States. Our portfolio includes local ~~news~~ media brands such as WYRK.com, WJON.com and ~~entertainment websites~~ NJ101.5.com,and ~~apps, along with a network of~~premier national music brands such as XXLmag.com, TasteofCountry.com, UltimateClassicRock.com,and websites. Many of our radio stations are considered market leaders and we also participate in the digital, mobile, video and social media arena. In addition, we create, promote and produce a diverse range of live events, including, concerts, expositions and other experiential events within and beyond our radio markets.Loudwire.com.

2520

~~Our integrated and~~We believe that our diversified product ~~and service offerings enable local, regional and national advertisers to target audience engagement across multiple platforms, including on-air, online and at live events. We believe~~offering substantially differentiates us from our ~~product and service offerings, combined with our leading market position in small and mid-sized markets, enable~~competition. This diversification allows us to ~~generate higher total net~~provide superior solutions to our advertisers and engaging experiences for our audience, underpins our growth strategy and, we believe, helps to mitigate the risks associated with advertising revenue ~~per audience member than radio station owners focused on larger markets.~~dependency.

The Company has identified three operating segments, which are Subscription Digital Marketing Solutions, Digital Advertising ~~including broadcast~~ and ~~digital advertising products and solutions, Townsquare Interactive,~~Broadcast Advertising. The remainder of our ~~digital marketing solutions~~ business ~~and Live Events, including concerts, expositions and other experiential events.~~is reported in the Other category.

~~Advertising~~Subscription Digital Marketing Solutions

Our ~~Advertising~~Subscription Digital Marketing Solutions segment ~~includes the broadcast operations of~~encompasses Townsquare Interactive, our ~~radio stations, together with our owned and operated websites and the various~~subscription digital ~~advertising~~marketing solutions we offer, including Townsquare Ignite, our digital programmatic advertising platform. Our primary sources of net revenue are the sale of advertising on our radio stations, owned and operated websites, radio stations’ online streams and mobile applications. Additionally, we offer precision customer targeting solutions to advertisers through Ignite. Combining first and third-party audience and geographic location data, Ignite is able to hyper-target audiences for our local, regional and national advertisers, providing them the ability to reach a high percentage of their online audience. Ignite delivers these solutions across desktop, mobile, connected TV, email, paid search and social media platforms utilizing display, video and native executions.

Our sales of advertisements are primarily affected by the demand for advertising from local, regional and national advertisers and the advertising rates we charge. Advertising demand and rates are based primarily on our ability to attract audiences to our various products in the demographic groups targeted by advertisers, as measured principally by various services on a periodic basis. We endeavor to develop strong audience loyalty and believe that the diversification of formats on our radio stations and websites helps to insulate our radio stations and websites from the effects of changes in musical tastes of the public with respect to any particular format. We believe that the sale of our online and mobile advertisements, which currently have rates per advertisement that are less than those of terrestrial radio advertisements, has not negatively impacted our terrestrial radio advertising net revenue. Should a significant and sudden shift in demand for these products toward online and mobile occur, there could be a material adverse impact on our financial condition and results of operations if we are unable to increase rates accordingly. However, we believe that as a result of our strong brands and quality online and mobile offerings we are well positioned to increase rates as demand increases for these products.

~~Townsquare Interactive~~

business. Townsquare Interactive offers digital marketing solutions, on a subscription basis, to small and ~~mid-sized local and regional businesses~~medium-sized business (“SMBs”) in ~~small and mid-sized~~ markets outside the top 50 across the United States, including but importantly not limited to the markets in which we operate radio stations. ~~Our primary source~~We offer a variety of Townsquare Interactive net revenue is traditional and mobile-enabled website development and hosting services, e-commerce solutions, search engine organic traffic and online directory optimization services, online reputation monitoring, social media management, appointment scheduling services, email marketing services, and website retargeting often packaged together as a comprehensive digital marketing ~~solution.~~solutions, which enables SMBs to choose the optimal features for their specific business.

~~Live Events~~Digital Advertising

Our Digital Advertising segment, marketed externally as Townsquare Ignite, is a combination of our owned and operated digital properties, our proprietary digital programmatic advertising platform, and an in-house demand and data management platform collecting valuable first party data.

Broadcast Advertising

Our primary source of ~~Live Events~~Broadcast Advertising net revenue is the sale of advertising on our local radio stations to local, regional and national spot advertisers, and national network advertisers. We believe we are the largest and best-capitalized owner and operator of radio stations focused solely on markets outside the top 50 markets in the United States. Given the stability of radio’s audience, its broad reach and its relatively low cost as compared to competing advertising media such as television, we believe radio continues to offer an attractive value proposition to advertisers. The price point for radio advertising on a cost per thousand basis is lower than most other local media that deliver similar scale. This makes radio more affordable and accessible for the type of small and mid-sized businesses typically found in our local markets outside the top 50 markets in the U.S.

Other

We report the remainder of our revenue in the Other category, and it includes revenue from our live events. Our primary source of live events net revenue is ticket sales. Our ~~Live Events~~live events also generate substantial ~~net~~ revenue through the sale of sponsorships, food and other concessions, merchandise and other ancillary products and services. Live Event ticket pricing is based on consumer demand for each event and the geographic location and target audience demographic of each event. Unforeseen events such as inclement weather conditions can have an adverse impact on our net revenue. In certain cases, we mitigate this risk with insurance policies, which cover a portion of lost revenue as a result of unforeseen events including inclement weather. Legislative and regulatory responsesDue to the COVID-19 pandemic ~~required us to cancel nearly all live events beginning in March 2020. We resumed certain live events during~~we cancelled the ~~second quarter~~majority of ~~2021, however there continues to be uncertainty surrounding the scheduling of~~scheduled live events in ~~light of the COVID-19 pandemic.~~2020, and operated a significantly reduced schedule in 2021.

Overall

We strive to maximize our net revenue by managing our advertising inventory and adjusting prices based on supply and demand, and by broadening our base of advertisers and subscribers. Our selling and pricing activities are based on demand for our advertising inventory and, in general, we respond to this demand by varying prices rather than by varying our target inventory levels. The optimal number of advertisements available for sale depends on the platform and in the case of our radio stations, their online streams and mobile applications, the programming format ofgenerate a ~~particular radio station. Each~~majority of our advertising revenue by selling directly to local advertisers, as well as to local and regional advertising agencies which affords us the opportunity to better present our products, ~~has a general target level of available inventory. We seek to broaden our base of advertisers in each~~cross-sell products and more directly influence their advertising and marketing expenditure decisions. A significant percentage of our ~~markets by providing a wide array~~advertising revenue is generated from the sale of ~~audience demographic segments across our platforms, thereby providing each of our potential advertisers with an effective means of reaching a targeted demographic group.~~

~~Our~~ advertising ~~contracts are generally short-term. In~~to the ~~media industry, companies, including ours, sometimes utilize barter agreements that exchange advertising time for goods or~~automotive, financial services, ~~such as travel or lodging, instead of cash.~~health services, entertainment, and retail industries.

Our most significant expenses are sales personnel, programming, digital, marketing and promotional, engineering, and general and administrative expenses. We strive to control these expenses by closely monitoring and managing each of our local markets and through efficiencies gained from the centralization of finance, accounting, legal and human resources functions and management information systems. We also use our scale and diversified geographic portfolio to negotiate favorable rates with vendors where feasible.

A portion of our expenses are variable. These variable expenses primarily relate to sales costs, such as commissions and inventory costs, as well as certain programming costs, such as music license fees, and certain costs related to production. ~~Marketing and promotions expenses are discretionary and are primarily incurred in an effort to maintain and/or increase our audience share.~~ Other programming, digital, engineering and general and administrative expenses are primarily fixed costs.

Seasonality

Our ~~net~~ revenue varies throughout the year. ~~Historically,~~Typically, we expect that our first calendar quarter ~~produces~~will produce the lowest net revenue for the year, as advertising expenditures generally decline following the winter holidays. ~~However, due to the COVID-19 pandemic, the seasonality of our net revenue for the year ended December 31, 2020 was materially impacted and our second quarter produced our lowest net revenue for 2020.~~ During even-numbered years, net revenue generally includes increased advertising expenditures by political candidates, political parties and special interest groups. Political spending is typically highest during the fourth quarter. Our operating results in any period may be affected by the incurrence of advertising and promotion expenses that typically do not have an effect on net revenue generation until future periods, if at all.

Macroeconomic Indicators

The U.S. economy and financial markets may continue to experience volatility due to the COVID-19 pandemic, including as a result of the development of COVID-19 variants, vaccination rates and government legislative and regulatory responses. The effects of the COVID-19 pandemic began to impact our operations in early March 2020, and included significant advertising cancellations and material declines in the purchase of new advertising by our clients. Declines in forecasted traditional broadcast revenue in the markets in which we operate, the impact of the COVID-19 pandemic on market and economic conditions, and the corresponding impacts to our risk premium, contributed to approximately $107.1 millionclients, impairments to the carrying values of our FCC ~~license intangible assets during~~licenses and the ~~first half~~cancellation of ~~2020, of which $28.7 million and $78.4 million was recognized during the three months ended June 30, 2020 and March 31, 2020, respectively. Additionally, we canceled nearly all~~ live ~~events beginning in March 2020. At the end of the first quarter of 2020, we reduced our workforce through the termination or layoff of approximately 135 full-time employees.~~

events. As local public health conditions ~~have~~ improved, ~~we experienced recoveries in~~our advertising revenue following the sequential improvements we observed during each of the third and the fourth quarters of 2020. However, revenue continues to remain below the levels we experienced during the same period in 2019, with the exception of our Townsquare Interactive segment. Net revenue for the Townsquare Interactive segment has increased $15.0 million, or 33%, as compared to the first nine months of 2019 due to continued net subscriber growth throughout the COVID-19 pandemic. While we resumed certain live events during the second quarter of 2021, there continues to be a level of uncertainty surrounding the scheduling of live events.

The ~~full extent~~continued impact of the COVID-19 pandemic, ~~impact will depend on future actions and outcomes, all of which remain fluid and cannot be predicted with confidence,~~ including the scope, severity and duration of the pandemic, the short-term and long-term economic impacts of the COVID-19 pandemic (including the continued effect on advertising activity, consumer discretionary spending and our employeesany increases in ~~the markets in which we operate),~~infection rates, new variants, further actions taken to mitigate the impact of the pandemic and the pace of continued economic ~~and financial market~~ recovery ~~when the COVID-19 pandemic subsides, among others.~~cannot be estimated.

OVERVIEW OF OUR PERFORMANCE

~~Changes in our Business~~

~~Recent Developments~~

On January 6, 2021, the Company completed the private offering and sale of $550.0 million aggregate principal amount of 6.875% senior secured notes due 2026 (the “2026 Notes”) at an issue price of 100.0%. The net proceeds from the 2026 Notes, together with cash on hand, were used to repay: (i) all outstanding borrowings under the 2015 senior secured credit facility, which included a seven year $275.0 million term loan facility (the "Term Loans") with $272.4 million principal amount outstanding and $2.1 million in accrued interest, (ii) all of the outstanding $273.4 million of principal amount of 6.5% Unsecured Senior Notes due in 2023 (the “2023 Notes”), a prepayment premium of $4.4 million, and $5.1 million in accrued interest, and (iii) fees and expenses related thereto. The Company also terminated its revolving credit facility and all other obligations thereunder were repaid effective January 6, 2021.

The Company incurred approximately $13.6 million of fees and expenses in connection with the issuance of the 2026 Notes, of which approximately $9.4 million were capitalized and are being amortized over the remaining term of the 2026 Notes using the effective interest method. The Company recognized a $4.9 million loss on the early extinguishment of debt during the three months ended March 31, 2021, due to a $3.1 million portion of the 2023 Notes prepayment premium and the write-off of $1.8 million of unamortized debt discount and deferred financing fees previously capitalized in connection with the senior secured credit facility and 2023 Notes. The Company recognized a $1.1 million loss on the modification of Terms Loans and 2023 Notes during the three months ended March 31, 2021, which is primarily related to a portion of fees and expenses incurred related to the issuance of the 2026 Notes.

~~Refer to Note 7,~~ ~~Long-term Debt, in the accompanying Notes to Consolidated Financial Statements for additional information related to our 2026 Notes.~~

~~Stock Repurchase~~

On January 24, 2021, the Company entered into a stock repurchase agreement with certain affiliates of Oaktree Capital Management L.P. (“Oaktree”) to repurchase 606,484 shares of the Company’s Class A common stock, 2,151,373 shares of the Company’s Class B common stock and 7,242,143 warrants to purchase Class A Common Stock, or such greater number of securities as the Company may elect. On March 9, 2021, the repurchase was consummated and the Company elected to repurchase all of the outstanding securities held by Oaktree, including 1,595,224 shares of Class A Common Stock, 2,151,373 shares of Class B Common Stock and 8,814,980 warrants for an aggregate purchase price of $80.4 million, or $6.40 per security.

~~customary mutual releases from claims, demands, and damages related to the stock repurchase agreement. All amounts due under the terms of the Settlement Agreement were paid as of September 30, 2021.~~

~~Refer to Note 9,~~ ~~Stockholders' Equity, in the accompanying Notes to Consolidated Financial Statements for additional information related to the stock repurchase.~~

Highlights of Our Financial Performance

Certain key financial developments in our business for the three months ended ~~September 30, 2021~~March 31, 2022 as compared to the same period in ~~2020~~2021 are summarized below:

•Net revenue increased ~~$15.9~~$11.5 million, or ~~16.7%~~12.9%, primarily driven by a ~~$10.3~~$4.2 million increase in our Digital Advertising net revenue, a $3.4 million increase in our Broadcast Advertising net revenue as a result of increases in the purchase of new advertising by our clients and an increase of $2.9 million in our ~~Townsquare Interactive~~Subscription Digital Marketing Solutions net revenue as a result of additional ~~subscribers, and an increase of $2.7 million in our Live Events net revenue as we resumed certain live events.~~

•Excluding revenue related to political advertising of $0.6 million and $4.5 million, and Live Events net revenue of $2.7 million and $0.1 million for each of the three months ended September 30, 2021 and 2020, respectively, net revenue increased $17.1 million or 18.8% to $108.0 million.

•Excluding revenue related to political advertising of $0.6 million and $4.5 million for the three months ended September 30, 2021 and 2020, respectively, net revenue increased $19.8 million, or 21.8% to $110.7 million and Advertising net revenue increased $14.2 million, or 19.5%, to $86.8 million.subscribers.

•Operating income increased ~~$13.4~~$7.0 million, or ~~141.0%~~79.5%, for the three months ended ~~September 30, 2021.~~March 31, 2022. Operating income increased due to an increase in net revenue of ~~$15.9~~$11.5 million, a decrease in transaction cost of $4.3 million, primarily due to $4.5 million paid under the terms of the March 2021 settlement agreement with certain affiliates of Oaktree Capital Management L.P. (the “Settlement Agreement”), partially offset by a ~~$4.6~~$9.2 million increase in direct operating expenses. ~~Our~~

•The Broadcast Advertising segment reported operating income of ~~$25.6~~$8.7 million for the three months ended March 31, 2022, which represents an increase of ~~$11.4~~$1.0 million as compared to operating income of ~~$14.2~~$7.7 million for the ~~three months ended September 30, 2020,~~same period in 2021, primarily due to a ~~$10.3~~$3.4 million increase in net ~~revenue. Townsquare Interactive’s~~revenue, partially offset by an increase of $2.9 million in direct operating expenses. Subscription Digital Marketing Solutions reported operating income ~~for the three months ended September 30, 2021 was $5.9~~of $6.0 million, an increase of $0.6 million from the ~~same period in 2020,~~three months ended March 31, 2021, primarily due to growth in net subscribers. Our ~~Live Events~~Digital Advertising segment reported operating income of ~~$0.3 million, as compared to an operating loss of $1.1 million for the three months ended September 30, 2020, an increase of $1.4 million as we resumed live events.~~

~~Certain key financial developments in our business for the nine months ended September 30, 2021, as compared to the same period in 2020 are summarized below:~~

•Net revenue for the nine months ended September 30, 2021 as compared to the same period in 2020, increased $44.5 million, or 16.9%, primarily driven by an increase of $34.3 million in our Advertising net revenue as a result of an increase in the purchase of new advertising by our clients, an increase of $8.8 million in our Townsquare Interactive net revenue due to additional net subscribers, and a $1.5 million increase in our Live Events net revenue as a result of more live events held during the nine months ended September 30, 2021 than the prior year period.

•Excluding revenue related to political advertising of $1.8 million and $6.7 million and Live Events net revenue of $3.9 million and $2.5 million for each of the nine months ended September 30, 2021 and 2020, respectively, net revenue increased $47.9 million, or 18.9%, to $301.7 million.

•Excluding revenue related to political advertising of $1.8 million and $6.7 million for the nine months ended September 30, 2021 and 2020, respectively, net revenue increased $49.4 million, or 19.3% to $305.6 million and Advertising net revenue increased $39.2 million, or 19.4%, to $241.3 million.

•Operating income increased $151.8 million as compared to an operating loss of $96.2 million for the nine months ended September 30, 2020 to operating income of $55.6 million for the nine months ended September 30, 2021. Operating income increased for the nine months ended September 30, 2021 due to an increase of $44.5 million in net revenue as discussed above; a decrease of $109.0 million of total impairment charges; and a decrease of $4.7 million of corporate expenses, primarily due to lower professional fees. Our Advertising segment reported operating

income of $66.1 million which represents an increase of $145.2 million from the nine months ended September 30, 2020 due to a $34.3 million increase in net revenue as discussed above; impairment charges of $108.5 million in 2020 that did not repeat in 2021; and a decrease in direct operating expenses of $2.0 million. Townsquare Interactive’s operating income for the nine months ended September 30, 2021 was $17.0$8.1 million, an increase of ~~$2.2~~$1.1 million from the same period in 2020 due to net subscriber growth. Our Live Events segment reported operating income of $0.6 million, an increase of $1.5 million from the nine months ended September 30, 2020 due to more live event activity.

•Cash and cash equivalents decreased $51.9 million from $83.2 million as of December 31, 2020 to $31.3 million as of September 30, 2021. Excluding the $80.4 million in cash consideration paid for the repurchase of the Oaktree securities, cash and cash equivalents increased $28.5 million at September 30, 2021, as compared to December 31, 2020.a year ago.

3022

Consolidated Results of Operations

Three months ended ~~September 30, 2021~~March 31, 2022 compared to three months ended ~~September 30, 2020~~March 31, 2021

The following table summarizes our historical consolidated results of operations:


($ in thousands)	($ in thousands)	Three Months Ended September 30,								($ in thousands)	Three Months Ended March 31,
Statement of Operations Data:	Statement of Operations Data:	2021		2020		$ Change		% Change		Statement of Operations Data:	2022		2021		$ Change		% Change
Net revenue	Net revenue	$	111,280	$	95,356	$	15,924	16.7	%	Net revenue	$	100,242	$	88,761	$	11,481	12.9	%

Operating costs and expenses:	Operating costs and expenses:									Operating costs and expenses:
Direct operating expenses, excluding depreciation, amortization, and stock-based compensation	Direct operating expenses, excluding depreciation, amortization, and stock-based compensation	75,719		71,088		4,631		6.5	%	Direct operating expenses, excluding depreciation, amortization, and stock-based compensation	73,763		64,527		9,236		14.3	%
Depreciation and amortization	Depreciation and amortization	4,821		5,248		(427)		(8.1)	%	Depreciation and amortization	4,765		4,729		36		0.8	%
Corporate expenses	Corporate expenses	6,410		6,764		(354)		(5.2)	%	Corporate expenses	4,409		4,134		275		6.7	%
Stock-based compensation	Stock-based compensation	877		430		447		104.0	%	Stock-based compensation	869		1,062		(193)		(18.2)	%
Transaction costs	Transaction costs	2		384		(382)		(99.5)	%	Transaction costs	431		4,715		(4,284)		(90.9)	%
Business realignment costs	Business realignment costs	484		472		12		2.5	%	Business realignment costs	21		190		(169)		(88.9)	%
Impairment of long-lived and intangible assets	Impairment of long-lived and intangible assets	—		1,343		(1,343)		(100.0)	%	Impairment of long-lived and intangible assets	478		—		478		**
Net (gain) loss on sale and retirement of assets	Net (gain) loss on sale and retirement of assets	(14)		92		(106)		**		Net (gain) loss on sale and retirement of assets	(308)		593		(901)		**
Total operating costs and expenses	Total operating costs and expenses	88,299		85,821		2,478		2.9	%	Total operating costs and expenses	84,428		79,950		4,478		5.6	%
Operating income	Operating income	22,981		9,535		13,446		141.0	%	Operating income	15,814		8,811		7,003		79.5	%
Other expense (income):	Other expense (income):									Other expense (income):
Interest expense, net	Interest expense, net	9,816		7,692		2,124		27.6	%	Interest expense, net	10,027		10,155		(128)		(1.3)	%

Other (income) expense, net		(3,078)		81		(3,159)		**
Income from operations before tax		16,243		1,762		14,481		**
Income tax provision		3,349		451		2,898		**
Loss on extinguishment and modification of debt										Loss on extinguishment and modification of debt	—		5,997		(5,997)		**
Other expense (income), net										Other expense (income), net	1,588		(337)		1,925		**
Income (loss) from operations before tax										Income (loss) from operations before tax	4,199		(7,004)		11,203		**
Income tax provision (benefit)										Income tax provision (benefit)	1,458		(895)		2,353		**

Net income		$	12,894	$	1,311	$	11,583	**
Net income (loss)										Net income (loss)	$	2,741	$	(6,109)	$	8,850	**

** not meaningful

Segment Results

The following table presents the Company's reportable segment net revenue and direct operating expenses for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ (in thousands):

Net Revenue Direct Operating Expenses
Three Months Ended September 30, Three Months Ended September 30,
2021 2020 $ Change % Change 2021 2020 $ Change % Change
Advertising $ 87,402 $ 77,109 $ 10,293 13.3 % $ 58,381 $ 58,235 $ 146 0.3 %
Townsquare Interactive 21,130 18,181 2,949 16.2 % 14,954 12,694 2,260 17.8 %
Live Events 2,748 66 2,682 ** 2,384 159 2,225 **
Total $ 111,280 $ 95,356 $ 15,924 16.7 % $ 75,719 $ 71,088 $ 4,631 6.5 %


	Net Revenue								Direct Operating Expenses
	Three Months Ended March 31,								Three Months Ended March 31,
	2022		2021		$ Change		% Change		2022		2021		$ Change		% Change
Subscription Digital Marketing Solutions	$	21,850	$	18,997	$	2,853	15.0	%	$	15,476	$	13,065	$	2,411	18.5	%
Digital Advertising	29,227		25,076		4,151		16.6	%	21,011		17,814		3,197		17.9	%
Broadcast Advertising	48,100		44,681		3,419		7.7	%	36,438		33,581		2,857		8.5	%
Other	1,065		7		1,058		**		838		67		771		**
Total	$	100,242	$	88,761	$	11,481	12.9	%	$	73,763	$	64,527	$	9,236	14.3	%

3123

Net Revenue

Net revenue for the three months ended ~~September 30, 2021~~March 31, 2022 increased ~~$15.9~~$11.5 million, or ~~16.7%~~12.9%, as compared to the same period in ~~2020.~~2021. Our Digital Advertising net revenue for the three months ended ~~September 30, 2021~~March 31, 2022 increased ~~$10.3~~$4.2 million, or ~~13.3%~~16.6%, as compared to the same period in ~~2020,~~2021 and our Broadcast Advertising net revenue increased $3.4 million, or 7.7%, as ~~a result of~~compared to the same period in 2021 due to increases in the purchase of new advertising by our ~~clients, partially offset by lower political advertising revenues.~~clients. Our ~~Townsquare Interactive~~Subscription Digital Marketing Solutions net revenue for the three months ended ~~September 30, 2021~~March 31, 2022 increased $2.9 million, or ~~16.2%~~15.0%, as compared to the same period in ~~2020 primarily~~2021 due in part to the addition of ~~net subscribers, including~~ approximately ~~1,000~~1,050 additional net subscribers during the ~~third~~first quarter of ~~2021. Our Live Events net revenue increased $2.7 million in the three months ended September 30, 2021, as compared to the same period in 2020 as we resumed operating certain live events in 2021.~~2022.

Direct Operating Expenses

Direct operating expenses for the three months ended ~~September 30, 2021~~March 31, 2022 increased by ~~$4.6~~$9.2 million, or ~~6.5%~~14.3%, as compared to the same period in ~~2020.~~2021. Our Digital Advertising direct operating expenses for the three months ended ~~September 30, 2021~~March 31, 2022 increased ~~$0.1~~$3.2 million, or ~~0.3%~~17.9%, ~~essentially flat. Our Townsquare Interactive~~while our Subscription Digital Marketing Solutions direct operating expenses for the three months ended ~~September 30, 2021~~March 31, 2022 increased ~~$2.3~~$2.4 million, or ~~17.8%~~18.5%, as compared to the same period in ~~2020.~~2021. The increase was primarily driven by increases in headcount related expenses to support revenue and subscriber growth. Our ~~Live Events~~Broadcast Advertising direct operating expenses for the three months ended ~~September 30, 2021~~March 31, 2022 increased ~~$2.2~~$2.9 million, or 8.5%, as compared to the same period in ~~2020.~~2021. The increase was was primarily driven by ~~resuming live events during the period.~~higher compensation.

Depreciation and Amortization

Depreciation and amortization expense for the three months ended ~~September 30, 2021 decreased $0.4 million, or 8.1%,~~March 31, 2022 increased 0.8% as compared to the same period in ~~2020, due to lower amortization of leasehold improvements.~~2021, essentially flat.

Corporate Expenses

Corporate expenses are of a general corporate nature or managed on a corporate basis. These costs (net of allocations to the business segments) primarily represent corporate stewardship and administration activities. Corporate expenses for the three months ended ~~September 30, 2021 decreased $0.4~~March 31, 2022 increased $0.3 million, or ~~5.2%~~6.7%, as compared to the same period in ~~2020~~2021 primarily due to ~~lower~~higher professional fees.

Stock-based Compensation

Stock-based compensation expense for the three months ended ~~September 30, 2021 increased $0.4~~March 31, 2022 decreased $0.2 million, or ~~104.0%~~18.2%, primarily due to ~~options granted in December~~the impact of ~~2020.~~forfeitures.

Transaction Costs

Transaction costs for the three months ended ~~September 30, 2021~~March 31, 2022 decreased ~~$0.4~~$4.3 million as compared to the same period in ~~2020~~2021, primarily due to ~~fees incurred~~the $4.5 million Settlement Agreement executed in ~~2020 related to the acquisition~~March of ~~a radio station which closed in early October 2020.~~2021.

Impairment of Long-Lived and Intangible Assets

The Company recorded total impairment charges of $0.5 million related to our long-lived and intangible assets during the three months ended March 31, 2022. We recorded a total of $0.4 million in impairment losses resulting from changes in the fair value of the Company's digital assets. For further discussion, see Note 6, Goodwill and Other Intangible Assets in the Notes to Unaudited Consolidated Financial Statements.

The Company did not record any impairment charges related to our ~~intangible~~long-lived and ~~long-lived~~intangible assets during the three months ended ~~September 30,~~March 31, 2021. During the three months ended September 30, 2020, the Company recorded $1.3 million of impairment charges related to operating lease right-of-use assets in our Princeton, NJ market due to the consolidation of office space as well as the disposal of certain long-lived assets utilized in the Live Events business.

3224

Interest Expense, net

The following table illustrates the components of our interest expense, net for the periods indicated (in thousands):


		Three Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021

2026 Notes	2026 Notes	$	9,348	$	—	2026 Notes	$	9,453	$	9,033
2023 Notes	2023 Notes	—		4,443		2023 Notes	—		642
Term Loans	Term Loans	8		2,877		Term Loans	—		161

Capital leases and other	Capital leases and other	5		5		Capital leases and other	156		8
Deferred financing costs and discounts	Deferred financing costs and discounts	455		414		Deferred financing costs and discounts	418		328
Interest income	Interest income	—		(47)		Interest income	—		(17)
Interest expense, net	Interest expense, net	$	9,816	$	7,692	Interest expense, net	$	10,027	$	10,155

Other ~~Income,~~expense (income), net

Other ~~income,~~expense (income), net includes unrealized ~~gains~~losses related to measuring the fair value of one of the Company's ~~investees that completed its registration with the SEC of shares of its common stock.~~investees. Based on the market price of the investee's common stock as of ~~September 30, 2021,~~March 31, 2022, the fair value of the Company's investment in the common stock of the investee was approximately ~~$6.1 million, as compared to it previous carrying value of $3.2~~$1.8 million, resulting in ana net unrealized ~~gain~~loss of ~~$2.9~~$1.5 million ~~as of September 30, 2021. Additionally, the Company also received a $0.2 million cash payment~~ during the three months ended ~~September 30, 2021, in connection with the completion of the transactions related to the investee's registration of its common stock.~~March 31, 2022. See Note 6,7, Investments, in our Notes to Consolidated Financial Statements for further discussion related to this investment.

Provision (benefit) for income taxes

We recognized an income tax provision of ~~$3.3~~$1.5 million for the three months ended ~~September 30, 2021,~~March 31, 2022, as compared to ~~$0.5~~an income tax benefit $0.9 million for the same period in ~~2020.~~2021. Our effective tax rate for the three months ended ~~September 30,~~March 31, 2022 and 2021 ~~and 2020~~ was approximately ~~20.6%~~34.7% and ~~25.6%~~12.8%, respectively. The ~~decrease~~increase in the effective tax rate is primarily driven by discrete items for the period, including ~~changes~~unrealized losses on investments in ~~the valuation allowance due to the utilization of capital loss carryforwards and stock options exercised and forfeited.~~

equity securities.

Our effective tax rate may vary significantly from period to period and can be influenced by many factors. These factors include, but are not limited to, changes to statutory rates in the jurisdictions where we have operations and changes in the valuation of deferred tax assets and liabilities. The difference between the effective tax rate and the federal statutory rate of 21%, primarily relates to certain non-deductible items, state and local income taxes and the valuation allowance for deferred tax assets.

~~Consolidated Results of Operations~~

~~Nine months ended September 30, 2021 compared to nine months ended September 30, 2020~~

~~The following table summarizes our historical consolidated results of operations:~~

($ in thousands) Nine Months Ended
September 30,
Statement of Operations Data: 2021 2020 $ Change % Change
Net revenue $ 307,379 $ 262,844 $ 44,535 16.9 %
Direct operating expenses, excluding depreciation, amortization, and stock-based compensation 211,837 207,046 4,791 2.3 %
Depreciation and amortization 14,546 15,293 (747) (4.9) %
Corporate expenses 15,996 20,724 (4,728) (22.8) %
Stock-based compensation 2,833 1,611 1,222 75.9 %
Transaction costs 5,107 2,624 2,483 94.6 %
Business realignment costs 740 2,639 (1,899) (72.0) %
Impairment of long-lived and intangible assets 95 109,058 (108,963) **
Net loss on sale and retirement of assets 613 80 533 **
    Total operating costs and expenses 251,767 359,075 (107,308) (29.9) %
    Operating income (loss) 55,612 (96,231) 151,843 **
Other expense (income):
Interest expense, net 29,780 23,713 6,067 25.6 %
Loss (gain) on extinguishment and modification of debt 5,997 (1,159) 7,156 **
Other income, net (3,455) (653) (2,802) 429.1 %
   Income (loss) from continuing operations before income taxes 23,290 (118,132) 141,422 **
Income tax provision (benefit) 6,431 (33,044) 39,475 **
Net income (loss) $ 16,859 $ (85,088) $ 101,947 **

** not meaningful

~~Segment Results~~

~~The following table presents the Company's reportable segment net revenue and direct operating expenses for the nine months ended September 30, 2021 and 2020 (in thousands):~~

Net Revenue Direct Operating Expenses
Nine Months Ended
September 30, Nine Months Ended
September 30,
2021 2020 $ Change % Change 2021 2020 $ Change % Change
Advertising $ 243,083 $ 208,780 $ 34,303 16.4 % $ 166,551 $ 168,527 $ (1,976) (1.2) %
Townsquare Interactive 60,347 51,595 8,752 17.0 % 42,144 36,414 5,730 15.7 %
Live Events 3,949 2,469 1,480 59.9 % 3,142 2,105 1,037 49.3 %
Total $ 307,379 $ 262,844 $ 44,535 16.9 % $ 211,837 $ 207,046 $ 4,791 2.3 %

~~Net Revenue~~

Net revenue for the nine months ended September 30, 2021, increased $44.5 million, or 16.9%, as compared to the same period in 2020. Our Advertising net revenue for the nine months ended September 30, 2021, increased $34.3 million, or 16.4%, as compared to the same period in 2020 as a result of increases in the purchase of new advertising by our clients, partially offset by lower political advertising revenues. Our Townsquare Interactive net revenue for the nine months ended September 30, 2021, increased $8.8 million, or 17.0%, as compared to the same period in 2020 primarily due to incremental net subscribers, including approximately 3,200 net subscribers added during the nine months ended September 30, 2021. Our Live Events segment revenue increased $1.5 million, or 59.9%, in the nine months ended September 30, 2021, as compared to the same period in 2020 driven by an increase in certain live events held during the period.

~~Direct Operating Expenses~~

Direct operating expenses for the nine months ended September 30, 2021, increased by $4.8 million, or 2.3%, as compared to the same period in 2020. Our Townsquare Interactive direct operating expenses for the nine months ended September 30, 2021, increased $5.7 million, or 15.7%, as compared to the same period in 2020. The increase was primarily driven by increases in headcount related expenses to support revenue and subscriber growth. Our Advertising direct operating expenses for the nine months ended September 30, 2021, decreased $2.0 million, or 1.2%, as compared to the same period in 2020. This decrease was primarily driven by lower music license fees and lower provisions for bad debt. Our Live Events direct operating expenses for the nine months ended September 30, 2021, increased $1.0 million, or 49.3%, as compared to the same period in 2020. This increase was primarily driven by an increase in certain live events activity held during the period, as compared to the same period a year ago where events were cancelled beginning in March 2020, as a result of the COVID-19 pandemic.

~~Depreciation and Amortization~~

Depreciation and amortization expense for the nine months ended September 30, 2021, decreased $0.7 million, or 4.9%, as compared to the same period in 2020 due to decreases in the amortization of software development costs due to the timing of new projects launched as compared to the same period a year ago, the disposal of certain long-lived assets previously utilized in the Live Events business in the third quarter of 2020, and lower amortization of leasehold improvements.

~~Corporate Expenses~~

Corporate expenses are of a general corporate nature or managed on a corporate basis. These costs (net of allocations to the business segments) primarily represent corporate stewardship and administration activities. Corporate expenses for the nine months ended September 30, 2021, decreased $4.7 million, or 22.8%, as compared to the same period in 2020, primarily due to lower compensation costs and professional fees.

~~Stock-based Compensation~~

Stock-based compensation expense for the nine months ended September 30, 2021, increased $1.2 million, or 75.9%, as compared to the same period in 2020 primarily due to options granted in December of 2020.

~~Transaction Costs~~

Transaction costs for the nine months ended September 30, 2021, increased $2.5 million as compared to the same period in 2020 primarily due to $4.5 million due under the terms of the Settlement Agreement, partially offset by fees incurred in 2020 to amend the Company's Term Loans.

~~Business Realignment Costs~~

Business realignment costs for the nine months ended September 30, 2021, decreased $1.9 million or 72.0% as compared to the same period in 2020, primarily as a result of employee-related costs incurred during the nine months ended September 30, 2020 as a result of headcount reductions in response to the COVID-19 pandemic that did not recur in 2021.

~~Impairment of Long-Lived and Intangible Assets~~

The Company did not record any material impairment charges related to our intangible and long-lived assets during the nine months ended September 30, 2021, as compared to total impairment charges of $109.1 million for the nine months ended September 30, 2020, primarily as a result of FCC license impairment charges of $28.7 million and $78.4 million that were recognized during the three months ended June 30, 2020 and March 31, 2020, respectively. The $28.7 million impairment charge recorded during the three months ended June 30, 2020 related to FCC licenses in 35 of our 67 local markets, and was primarily driven by changes in the market data utilized in determining the discount rate applied in the valuation of our FCC licenses which drove an increase in the weighted average cost of capital. The changes in data were driven by an increase in market volatility and industry bond yields, a direct result of the impact of the COVID-19 pandemic on market and economic conditions. During the three months ended March 31, 2020, the Company recorded $78.4 million of FCC license impairment charges in 46 of our 67 local markets due to declines in the purchase of advertising by our clients, primarily as a result of the COVID-19 pandemic.

Unfavorable changes in key assumptions utilized in the impairment assessment of our FCC licenses may affect future testing results. For example, keeping all other assumptions constant, a 100-basis point increase in the weighted average cost of capital as of the date of our last quantitative assessment performed as of March 31, 2021 would have caused the estimated fair values of our FCC licenses to decrease by $55.1 million, which would have resulted in an impairment charge of $5.6 million. Assumptions used to estimate the fair value of our FCC licenses are also dependent upon the expected performance and growth of our traditional broadcast operations. In the event that our broadcast revenue experiences further actual or anticipated declines, including as a result of the COVID-19 pandemic, such declines will have a negative impact on the estimated fair value of our FCC licenses, and the Company could recognize additional impairment charges, which could be material.

The Company also recorded total impairment charges of $2.0 million related to long-lived assets in certain markets, including the disposal of certain long-lived assets previously utilized in the Live Events business during the nine months ended September 30, 2020.

~~Net Loss on Sale of Assets~~

~~During the nine months ended September 30, 2021, the Company recognized a $0.6 million loss on the sale of a portion of land in Portsmouth, NH.~~

~~Interest Expense, net~~

~~The following table illustrates the components of our interest expense, net for the periods indicated (in thousands):~~

Nine Months Ended
September 30,
2021 2020
2026 Notes $ 27,834 $ —
2023 Notes 642 13,449
Term Loans 161 9,178
Revolver — 351
Capital leases and other 33 14
Deferred financing costs and discounts 1,129 1,252
Interest income (19) (531)
Interest expense, net $ 29,780 $ 23,713

~~Loss / gain on Extinguishment and Modification of Debt~~

During the nine months ended September 30, 2021, the Company recognized a $4.9 million and a $1.1 million loss on the early extinguishment and modification of debt, respectively. The $4.9 million loss on the early extinguishment of debt is comprised of a $3.1 million portion of the 2023 Notes prepayment premium and the write-off of $1.8 million of unamortized debt discount and deferred financing fees previously capitalized in connection with the senior secured credit facility and the 2023 Notes. The $1.1 million loss on the modification of debt was primarily related to a portion of fees and expenses related to the issuance of the 2026 Notes.

On May 19, 2020, the Company voluntarily repurchased $4.7 million of its 2023 Notes at a market price below par, plus accrued interest, which were then canceled, recognizing a net gain of $1.2 million during the nine months ended September 30, 2020.

~~Other Income, net~~

Other income, net includes unrealized gains related to measuring the fair value of one of the Company's investees that completed its registration with the SEC of shares of its common stock. Based on the market price of the investee's common stock as of September 30, 2021, the fair value of the Company's investment in the common stock of the investee was approximately $6.1 million, as compared to it previous carrying value of $3.2 million, resulting in an unrealized gain of $2.9 million, as of September 30, 2021. Additionally, the Company also received an $0.2 million cash payment during the three months ended September 30, 2021, in connection with the completion of the transactions related to the investee's registration of its common stock. See Note 6, ~~Investments,~~ ~~in our Notes to Consolidated Financial Statements for further discussion related to this investment.~~

~~Provision (benefit) for income taxes~~

We recognized an income tax provision of $6.4 million for the nine months ended September 30, 2021, as compared to an income tax benefit of $33.0 million for the same period in 2020. Our effective tax rate for the period was approximately 27.6% for the nine months ended September 30, 2021 as compared to 28.0% for the nine months ended September 30, 2020.

Our effective tax rate may vary significantly from period to period and can be influenced by many factors. These factors include, but are not limited to, changes to statutory rates in the jurisdictions where we have operations and changes in the valuation of deferred tax assets and liabilities. The difference between the effective tax rate and the federal statutory rate of 21.0%, primarily relates to certain non-deductible items, state and local income taxes and the valuation allowance for deferred tax assets.

3725

Liquidity and Capital Resources

The following table summarizes our change in cash and cash equivalents (in thousands):


		Nine Months Ended September 30,					Three Months Ended March 31,
		2021		2020			2022		2021
Cash and cash equivalents	Cash and cash equivalents	$	31,289	$	79,112	Cash and cash equivalents	$	50,886	$	20,118
Restricted cash	Restricted cash	494		494		Restricted cash	494		494

Cash provided by operating activities	Cash provided by operating activities	38,164		23,448		Cash provided by operating activities	8,566		19,417
Cash used in investing activities	Cash used in investing activities	(6,085)		(10,129)		Cash used in investing activities	(8,808)		(1,447)
Cash used in financing activities		(84,019)		(18,874)
Net decrease in cash and cash equivalents and restricted cash		$	(51,940)	$	(5,555)
Cash provided by (used in) financing activities						Cash provided by (used in) financing activities	623		(81,081)
Net increase (decrease) in cash and cash equivalents and restricted cash						Net increase (decrease) in cash and cash equivalents and restricted cash	$	381	$	(63,111)

Operating Activities

Net cash provided by operating activities was $8.6 million for the three months ended March 31, 2022, as compared to $19.4 million for the same period in 2021. This decrease was primarily related to increases in payments for interest due to the February 1 interest payment on the 2026 Notes and changes in accounts receivable in 2022, as compared to 2021, due to the impacts of the COVID-19 pandemic on the prior period; partially offset by net income in 2022 of $2.7 million, as compared to a net loss of $6.1 million in 2021.

Investing Activities

Net cash used in investing activities was $8.8 million for the three months ended March 31, 2022 as compared to $1.4 million for the same period in 2021. The increase in net cash used in investing activities was primarily due to the purchases of Bitcoin in 2022, payments related to the pending acquisition of Cherry Creek and increases in purchases of property and equipment.

Financing Activities

Net cash provided by financing activities was $0.6 million for the three months ended March 31, 2022, as compared to $81.1 million in net cash used in financing activities for the same period in 2021. Net cash used in financing activities in 2021 was due to: the repayment of $557.4 million of principal amount of the 2023 unsecured senior notes and term loan facility, including total accrued interest of $7.2 million and a $4.4 million prepayment premium; cash consideration for the Company's repurchase of the outstanding shares and warrants of Oaktree in the amount of $80.4 million; offset by the issuance of $550.0 million of the 2026 Notes, net of fees and proceeds from stock option exercises.

Sources of Liquidity and Anticipated Cash Requirements

We fund our working capital requirements through a combination of cash flows from our operating, investing, and financing activities. Based on current and anticipated levels of operations and conditions in our markets and industry, we believe that our cash on hand and cash flows from our operating, investing, and financing activities will enable us to meet our working capital, capital expenditures, debt service, and other funding requirements for at least one year from the date of this report. These historical sources of funds have been and could continue to be impacted by the COVID-19 pandemic. Future capital requirements may be materially different than those currently planned in our budgeting and forecasting activities and depend on many factors, some of which are beyond our control. In particular during the period of uncertainty related to the COVID-19 pandemic, we have focused on and will continue to monitor our ~~liquidity as described further under “COVID-19 Response” below.~~ liquidity.

As of ~~September 30, 2021,~~March 31, 2022, we had ~~$540.9~~$541.9 million of outstanding indebtedness, net of deferred financing costs of ~~$9.1~~$8.1 million.

Based on the terms of our 2026 Notes, as of ~~September 30, 2021,~~March 31, 2022, we expect our debt service requirements to be approximately $37.8 million over the next twelve months. ~~In addition, as~~See Note 8, Long-Term Debt, in our Notes to Consolidated Financial Statements for additional information related to our 2026 Notes.

As of ~~September 30, 2021~~March 31, 2022 we had ~~$31.3~~$50.9 million of cash and cash equivalents, and ~~$57.9~~$51.0 million of receivables from customers, which historically have had an average collection cycle of approximately 55 days. We had restricted cash of $0.5 million at ~~September 30, 2021~~March 31, 2022 and December 31, ~~2020,~~2021, that was held as collateral in connection with certain agreements. From time to time, such restricted funds could be returned to us or we could be required to pledge additional cash.

During the ~~nine months ended September 30, 2021,~~first quarter of 2022, the Company repurchased all of the outstanding securities held by Oaktree, including 1,595,224 shares of Class A Common Stock, 2,151,373 shares of Class B Common Stock and 8,814,980 warrants to purchase Class A common stock forinvested an aggregate ~~purchase price~~ of ~~$80.4~~$5.0 million in Bitcoin. The Company believes in the long-term potential of digital assets as an investment. The Company may increase or ~~$6.40 per security,~~decrease its holdings of digital assets at any time based on our view of market conditions. For any digital assets held now or in the future, any declines in the market values of these assets below their current carrying values may result in non-cash impairment charges even if the overall market values of these assets subsequently increase. See Note 6, Goodwill and ~~incurred fees~~Other Intangible Assets, in our Notes to Consolidated Financial Statements for additional information related to ~~the repurchase of the securities in the amount of $1.6 million.~~

our Bitcoin.

In connection with the closing under the stock repurchase agreement, on March 8, 2021, the Company and Oaktree entered into the Settlement Agreement, pursuant to which, among other things, the Company agreed to pay $4.5 million to Oaktree as follows: (i) $1.5 million on April 1, 2021; (ii) $1.0 million on July 1, 2021; (iii) $1.0 million on October 1, 2021; and (iv) $1.0 million on November 10, 2021. The $4.5 million due under the terms of the Settlement Agreement is reflected as a component of transaction costs for the nine months ended September 30, 2021. All amounts due under the terms of the Settlement Agreement were paid as of September 30, 2021.

Our anticipated uses of cash in the near term include working capital needs, interest payments, the acquisition of Cherry Creek, other obligations, and capital expenditures. The Company believes that the cash generated by its operations should be sufficient to meet its liquidity needs for at least the next 12 months. However, our ability to fund our working capital needs, debt payments, other obligations, capital expenditures, and to comply with financial covenants under our debt agreements, depends on our future operating performance and cash flow, which are in turn subject to prevailing economic conditions, increases or decreases in advertising spending, changes in the highly competitive industry in which we operate, which may be rapid, and other factors, many of which are beyond our control. To the extent that current and anticipated future sources of liquidity are insufficient to fund our future business activities and requirements, we may be required to seek additional equity or debt financing. The sale of additional equity would result in additional dilution to our stockholders, while the incurrence of debt financing would result in debt service obligations. Such debt instruments also could introduce covenants that might restrict our operations. We cannot assure you that we could obtain additional financing on favorable terms or at all.

Additionally, on a continuing basis, we evaluate and consider strategic acquisitions and divestitures to enhance our strategic and competitive position as well as our financial performance. Any future acquisitions, joint ventures or other similar transactions may require additional capital, which may not be available to us on acceptable terms, if at all.

We closely monitor the impact of capital and credit market conditions on our liquidity as ~~related~~it relates to our ~~floating rate~~ debt. We also routinely monitor the changes in the financial condition of our customers and the potential impact on our results of operations.

COVID-19 Response

In response to the ~~ongoing~~ challenges and uncertainty in the ~~U.S.~~ economy, ~~and~~ financial markets, and the Company’s business ~~resulting from~~brought on by the COVID-19 pandemic, we have maintained certain precautionary measures that were instituted in 2020 to address the potential impact to our consolidated financial position, consolidated results of operations, and ~~liquidity, including wage reduction efforts such as the temporary suspension of the Company’s match on employee contributions to the Company’s defined contribution plan,~~liquidity. These precautionary measures include the deferral of the payment of certain payroll taxes until December 31, ~~2021 and~~ 2022 under the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) and controlling non-essential capital expenditures. Additionally, our board of directors determined to cease payment of quarterly cash dividends, following the payment of our first quarter dividend of $2.1 million on May 15, 2020..

~~Operating Activities~~

Net cash provided by operating activities was $38.2 million for the nine months ended September 30, 2021, as compared to $23.4 million for the same period in 2020. This increase was primarily related to: net income in 2021 of $16.9 million, as compared to a net loss of $85.1 million in 2020; partially offset by changes in working capital due to changes in accounts receivable in 2021, as compared to 2020 as a result of the COVID-19 pandemic and the impact on advertising revenue in the prior period; increases in payments for accrued expenses primarily due to the timing of payments and lower accrued interest due to the timing of the August 1 interest payment on the 2026 Notes.

~~Investing Activities~~

Net cash used in investing activities was $6.1 million for the nine months ended September 30, 2021 as compared to $10.1 million for the same period in 2020. The decrease in net cash used in investing activities was primarily due to decreases in the purchase of property and equipment.

~~Financing Activities~~

Net cash used in financing activities was $84.0 million for the nine months ended September 30, 2021, as compared to $18.9 million for the same period in 2020. Net cash used in financing activities during 2021 was due to: the repayment of $557.4 million of principal amount of the 2023 Notes and Term Loans, including total accrued interest of $7.2 million and a $4.4 million prepayment premium; cash consideration for the Company's repurchase of the outstanding shares and warrants of Oaktree in the amount of $80.4 million; offset by the issuance of $550.0 million of the 2026 Notes, net of fees and expenses and proceeds from stock option exercises. Net cash used by financing activities during the nine months ended September 30, 2020 included the required $9.9 million 2019 excess free cash flow payment on our Term Loan and the May 2020 voluntary repurchase of $4.7 million of our 2023 Notes for $3.6 million.

~~Financing Facilities~~Other Liquidity Matters

~~The following is a discussion of significant factors affecting~~Material changes to our ~~liquidity and use of capital resources. For further discussion, see Note 7,~~ ~~Long-Term Debt~~ commitments from those included in ~~the~~our 2021 Annual Report on Form 10-K are discussed in Note 6, Goodwill and Other Intangible Assets - Content Rights, in our Notes to ~~Unaudited~~ Consolidated Financial Statements.

~~2026 Notes~~

On January 6, 2021, the Company completed the private offering and sale of $550.0 million aggregate principal amount of 6.875% senior secured notes due 2026, the 2026 Notes, at an issue price of 100.0%. The net proceeds from the 2026 Notes, together with cash on hand, were used to repay: (i) all outstanding borrowings under the 2015 senior secured credit facility, which included seven year $275.0 million Term Loans with $272.4 million principal amount outstanding and $2.1 million in accrued interest, (ii) all of the outstanding $273.4 million of principal amount of 2023 Notes, a prepayment

premium of $4.4 million, and $5.1 million in accrued interest, and (iii) fees and expenses related thereto. The Company also terminated its revolving credit facility and all other obligations thereunder were repaid effective January 6, 2021. The 2026 Notes bear interest at a rate of 6.875% and mature on February 1, 2026. Interest on the 2026 Notes is payable semi-annually in cash in arrears on February 1 and August 1 of each year, commencing on August 1, 2021.


~~Period~~	~~Price~~
~~Prior to February 1, 2023~~	~~at an applicable make-whole premium~~
~~Beginning February 1, 2023~~	~~103.438~~	%
~~Beginning February 1, 2024~~	~~101.719~~	%
~~Beginning February 1, 2025 and thereafter~~	~~100.000~~	%

At any time prior to February 1, 2023, the Company may redeem up to 40% of the aggregate principal amount of the 2026 Notes with the net cash proceeds of one or more equity offerings, at a price equal to 106.875% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the redemption date. If the Company experiences certain change of control events, holders of the 2026 Notes may require the Company to repurchase all or part of their 2026 Notes at 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

~~Change of Control~~

~~Certain Covenants~~

~~The 2026 Notes indenture contains restrictive covenants that limit the ability of the Company and its restricted subsidiaries to, among other things:~~

•~~incur additional indebtedness;~~

•~~declare or pay dividends, redeem stock or make other distributions to stockholders;~~

•~~make investments; create liens or use assets as security in other transactions;~~

•~~merge or consolidate, or sell, transfer, lease or dispose of substantially all of our assets;~~

•~~enter into transactions with affiliates;~~

•~~sell or transfer certain assets; and~~

•~~agree to certain restrictions on the ability of restricted subsidiaries to make payments to the Company.~~

~~The Company was in compliance with its covenants under the 2026 Notes indenture as of September 30, 2021.~~

Off-Balance Sheet Arrangements

We have no material off-balance sheet arrangements or transactions.

Critical Accounting Policies and Estimates

assets and liabilities. On an ongoing basis, we evaluate our significant estimates, including those related to determining the fair value of assets and liabilities acquired in a business combination, impairment testing of intangible assets, valuation and impairment testing of long-lived tangible assets, the present value of leasing arrangements, share-based payment expense and the calculation of allowance for doubtful accounts and income taxes. We base our estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the result of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our estimates may change, however, as new events occur and additional information is obtained, and any such changes will be recognized in the Consolidated Financial Statements. Actual results could differ from such estimates, and any such differences may be material to our financial statements.

We believe the accounting policies and estimates discussed within “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our ~~2020~~2021 Annual Report on Form 10-K reflects our more significant judgments and estimates used in the preparation of the Consolidated Financial Statements. There have been no material changes to the critical accounting policies and estimates as filed in such report.

Recent Accounting Standards

For a discussion of accounting standards updates that have been adopted or will be adopted in the future, please refer to Note 2, Summary of Significant Accounting Policies of the Notes to Unaudited Consolidated Financial Statements included under Item 1.

4128

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our ~~management, with the participation of our~~ Chief Executive Officer (“CEO”) and Chief Financial Officer ~~evaluated~~(“CFO”), with the assistance of other members of management, have reviewed the effectiveness of our disclosure controls and procedures ~~(as defined under Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act)~~ as of the end of the ~~quarter ended September 30, 2021.~~period covered by this report. Our disclosure controls and procedures are intended to ensure that information required to be disclosed by the Company in the reports it files or submits under the Exchange Act is (1) recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms and (2) accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure. Based on this ~~evaluation,~~review, our ~~Chief Executive Officer~~CEO and ~~our Chief Financial Officer~~CFO have concluded that ~~our~~the disclosure controls and procedures were ~~not~~ effective as of ~~September 30, 2021 due to the material weaknesses in~~March 31, 2022.

Because of its inherent limitations, internal control over financial reporting ~~summarized below and disclosed in our 2020 Annual Report on Form 10-K.~~

~~Material Weakness~~

~~A material weakness~~may not prevent or detect every misstatement. An evaluation of effectiveness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the company’s annual or interim financial statements will not be prevented or detected on a timely basis. As disclosed in our 2020 Annual Report on Form 10-K, we identified several material weaknesses in our internal control over financial reporting which included:

•~~Control Activities~~ ~~- Management did not have adequate selection and development of effective control activities, general controls over technology and effective policies and procedures. These deficiencies attributed~~subject to the ~~following individual control activities:~~

•~~Ineffective Information Technology General Controls~~ - The Company’s information technology general controls over certain key IT systems were not designed properly and did not operate effectively. Specifically: (i) user access controls did not restrict users’ access privileges commensurate with their assigned authority and responsibility; and (ii) user access reviews were not performed sufficiently throughout the period related to certain key IT systems.

•~~Ineffective detective controls over Revenue Recognition~~ - a lack of effectively designed and implemented detective controls over recorded revenue, including procedures over the existence, completeness and accuracy of data used to support accounts related to revenue and accounts receivable included in the financial statement close process.

•~~Income Tax~~ - Inadequate design and controls over the documentation and review relating to income tax accounting and disclosures for the significant components of deferred tax assets and liabilities and assessment of the company’s valuation allowance.

•~~Inadequate design and maintenance of effective detective controls over Period end Financial Reporting, including review controls over journal entries, reconciliations and account analyses~~ ~~- lack of effectively designed and implemented monitoring controls to detect potential misstatements to period end financial statements.~~

These deficiencies are attributed to various ineffective controls design and control activities, which are fully disclosed in our 2020 Annual Report on Form 10-K. These material weaknesses, individually or in the aggregate, could result in misstatements of accounts or disclosuresrisk that ~~would each result in a material misstatement of the interim or annual Consolidated Financial Statements that would not be prevented or detected.~~

~~Remediation Plans~~

~~Management is actively engaged in the implementation of remediation plans to address~~ the controls ~~contributing to~~may become inadequate because of changes in conditions, or that the material weaknesses. Our remediation actions are outlined in our 2020 Annual Report on Form 10-K. We believe those measures will remediate the control deficiencies, but management continues to assess the need for any additional steps to remediate the underlying causes that give rise to the material weaknesses. The material weaknesses will not be considered remediated until the applicable controls operate for a sufficient perioddegree of time and management has concluded, through testing, that these controls are operating effectively. There is no assurance that additional remediation steps will not be necessary. Accordingly, the material weaknesses in our internal controlcompliance with policies or procedures may decrease over ~~financial reporting had not been fully remediated as of September 30, 2021.~~

Notwithstanding the identified material weaknesses, management believes the Consolidated Financial Statements included in this Quarterly Report on Form 10-Q fairly present, in all material respects, our results of operations and cash flows for the three and nine months ended September 30, 2021 and our financial condition as of such date, in accordance with U.S. GAAP.time.

Changes in Internal Control Over Financial Reporting

~~Except in connection with our remediation plans, there~~There were no changes in our internal ~~control~~controls over financial reporting that occurred during the ~~quarter~~three months ended ~~September 30, 2021~~March 31, 2022 that ~~have~~ materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Inherent Limitations on Effectiveness of Controls

There are inherent limitations in the effectiveness of any control system, including the potential for human error and the possible circumvention or overriding of controls and procedures. Additionally, judgments in decision-making can be faulty and breakdowns can occur because of a simple error or mistake. An effective control system can provide only reasonable, not absolute, assurance that the control objectives of the system are adequately met. Accordingly, the management of the Company, including its Chief Executive Officer and Chief Financial Officer, does not expect that the control system can prevent or detect all error or fraud. Finally, projections of any evaluation or assessment of effectiveness of a control system to future periods are subject to the risks that, over time, controls may become inadequate because of changes in an entity’s operating environment or deterioration in the degree of compliance with policies or procedures.

4329

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There is no current material pending litigation to which we are a party and no material legal proceedings were terminated, settled or otherwise resolved during the three ~~and nine~~ months ended ~~September 30, 2021.~~March 31, 2022. In the normal course of business, the Company is subject to various regulatory proceedings, lawsuits, claims and other matters related to intellectual property, personal injury, employee, or other matters. These matters are subject to many uncertainties and outcomes are not predictable with assurance. However, we do not believe that the ultimate resolution of these matters will have a material adverse effect on our financial position or results of operations.

Item 1A. Risk Factors

Please refer to Part I, Item 1A, “Risk Factors,” in our ~~2020~~2021 Annual Report on Form 10-K for information regarding known material risks that could affect our results of operations, financial condition and liquidity. In addition to these risks, other risks that we presently do not consider material, or other unknown risks, could materially adversely impact our business, financial condition and results of operations in a future period.

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

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

4430

Item 6. Exhibits

See Exhibit Index.

EXHIBIT INDEX


Exhibit						Description

31.1*						Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

31.2*						Certification of Chief Executive Officer pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934, as amended

32.1**						Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350

32.2**						Certification of Chief Executive Officer pursuant to 18 U.S.C. 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)

* Filed herewith

** Furnished herewith

4531

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.



			TOWNSQUARE MEDIA, INC.
Date: ~~November 5, 2021~~May 10, 2022
By:			/s/ Stuart Rosenstein
			Name: Stuart Rosenstein
			Title: Executive Vice President & Chief Financial Officer

By:			/s/ Robert Worshek
			Name: Robert Worshek
			Title: Senior Vice President, Chief Accounting Officer

4632


	Advertising		Townsquare Interactive		Live Events		Total



Balance at September 30, 2021	$	76,964	$	77,000	$	3,983	$	157,947


Security 1	Par Value Per Share		Number Authorized	Number Outstanding	Description
Class A common stock	$	0.01	300,000,000	12,440,045	NaN vote per share.
Class B common stock	$	0.01	50,000,000	815,296	NaN votes per share.2
Class C common stock	$	0.01	50,000,000	3,461,341	No votes.2
Warrants				10,622	Each warrant is exercisable for 1 share of Class A common stock, at an exercise price of $0.0001 per share. The aggregate exercise price for all warrants currently outstanding is $1.3
Total			400,000,000	16,727,304
1 Each of the shares of common stock, including the shares of Class A common stock issuable upon exercise of the warrants, have equal economic rights.
2 Each share converts into 1 share of Class A common stock upon transfer or at the option of the holder, subject to certain conditions, including compliance with FCC rules.
3 The warrants are fully vested and exercisable for shares of Class A common stock, subject to certain conditions, including compliance with FCC rules.


	Options	Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (years)	Aggregate Intrinsic Value (in thousands)




Outstanding at December 31, 2020	11,234,078	$	7.92	4.99	$	1,062
Granted	45,000	$	10.08	—	—
Exercised	(1,360,702)	$	8.03	—	$	3,950
Forfeited and expired	(1,418,577)	$	8.46	—	—
Outstanding at September 30, 2021	8,499,799	$	7.83	5.25	$	44,596

Exercisable at September 30, 2021	5,356,257	$	8.58	3.35	$	24,045


($ in thousands)	Nine Months Ended September 30,
Statement of Operations Data:	2021		2020		$ Change		% Change
Net revenue	$	307,379	$	262,844	$	44,535	16.9	%

Direct operating expenses, excluding depreciation, amortization, and stock-based compensation	211,837		207,046		4,791		2.3	%
Depreciation and amortization	14,546		15,293		(747)		(4.9)	%
Corporate expenses	15,996		20,724		(4,728)		(22.8)	%
Stock-based compensation	2,833		1,611		1,222		75.9	%
Transaction costs	5,107		2,624		2,483		94.6	%
Business realignment costs	740		2,639		(1,899)		(72.0)	%
Impairment of long-lived and intangible assets	95		109,058		(108,963)		**
Net loss on sale and retirement of assets	613		80		533		**
Total operating costs and expenses	251,767		359,075		(107,308)		(29.9)	%
Operating income (loss)	55,612		(96,231)		151,843		**
Other expense (income):
Interest expense, net	29,780		23,713		6,067		25.6	%
Loss (gain) on extinguishment and modification of debt	5,997		(1,159)		7,156		**
Other income, net	(3,455)		(653)		(2,802)		429.1	%
Income (loss) from continuing operations before income taxes	23,290		(118,132)		141,422		**
Income tax provision (benefit)	6,431		(33,044)		39,475		**


Net income (loss)	$	16,859	$	(85,088)	$	101,947	**