MediaCo Holding(MDIA) - 2025 Q2 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements The company presents unaudited condensed consolidated financial statements for the periods ended June 30, 2025 Condensed Consolidated Statements of Operations The company reports a significant revenue increase driven by the Estrella Acquisition but continues to post a net loss Consolidated Statements of Operations Highlights (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Revenues | $31,245 | $26,202 | $59,275 | $32,908 | | Operating Loss | $(6,785) | $(13,326) | $(11,468) | $(16,793) | | Net Loss | $(8,800) | $(48,307) | $(17,406) | $(51,984) | | Net Loss Attributable to Common Shareholders | $(9,078) | $(49,263) | $(17,881) | $(53,663) | | Net Loss Per Share (basic and diluted) | $(0.11) | $(0.75) | $(0.23) | $(1.19) | Condensed Consolidated Balance Sheets Total assets decreased while total equity increased, primarily due to warrant reclassification and lower liabilities Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $37,783 | $39,276 | | Goodwill | $28,338 | $28,338 | | Other Intangible Assets, Net | $177,322 | $178,889 | | Total Assets | $315,150 | $325,501 | | Total Current Liabilities | $70,055 | $57,291 | | Long Term Debt, Net | $66,698 | $70,172 | | Total Liabilities | $217,899 | $242,980 | | Total Equity | $97,251 | $82,521 | Condensed Consolidated Statements of Cash Flows Net cash used in operations decreased significantly, while financing activities shifted from a source to a use of cash Consolidated Cash Flow Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net Cash Used in Operating Activities | $(893) | $(24,711) | | Net Cash Used in Investing Activities | $(277) | $(6,986) | | Net Cash (Used in) Provided by Financing Activities | $(320) | $37,012 | | Change in Cash, Cash Equivalents and Restricted Cash | $(1,490) | $5,315 | Notes to Condensed Consolidated Financial Statements Notes detail the Estrella Acquisition, new debt facilities, and the establishment of new Audio and Video segments - On April 17, 2024, the company completed the Estrella Acquisition, purchasing substantially all assets of Estrella Broadcasting, Inc, including its network, content, digital, and commercial operations[22] - On May 1, 2025, a Put Right was exercised by Estrella Media, Inc, resulting in MediaCo acquiring 100% of the equity interests of Estrella's broadcast assets in exchange for 7,051,538 shares of Class A common stock, making Estrella a wholly-owned subsidiary[29][59] - The company now manages its operations through two business segments: Audio (radio stations in NYC, LA, Houston, Dallas) and Video (Estrella's television stations)[120] Disaggregated Revenue - Six Months Ended June 30, 2025 (in thousands) | Revenue Source | Audio | Video | Consolidated | | :--- | :--- | :--- | :--- | | Spot Radio & TV Advertising | $23,330 | $11,779 | $35,109 | | Digital | $1,255 | $17,731 | $18,986 | | Syndication | $1,314 | $— | $1,314 | | Events and Sponsorships | $637 | $50 | $687 | | Other | $2,392 | $787 | $3,179 | | Total net revenues | $28,928 | $30,347 | $59,275 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses significant revenue growth and a narrower operating loss driven by the Estrella Acquisition - Net revenues increased by $26.4 million (80%) for the six months ended June 30, 2025, compared to the same period in 2024, primarily due to the Estrella Acquisition[142] - Operating loss for the six months ended June 30, 2025, decreased by $5.3 million (32%) to $11.5 million, reflecting revenue growth and a significant reduction in corporate expenses related to the prior year's acquisition[142][147] - The company's Audio segment revenue increased by $5.0 million, and the Video segment revenue increased by $21.4 million for the six months ended June 30, 2025, compared to the prior year, driven by the acquisition[156][158] - As of June 30, 2025, the company had cash of $5.4 million and negative working capital of $32.3 million, with management anticipating meeting liquidity needs for the next twelve months[162][163] Reconciliation of Net Loss to Adjusted EBITDA (in thousands) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Loss | $(8,521) | $(48,125) | $(17,406) | $(51,984) | | EBITDA | $(2,690) | $(42,730) | $(5,772) | $(46,236) | | Adjusted EBITDA | $1,791 | $(5,222) | $2,918 | $(4,499) | Quantitative and Qualitative Disclosures about Market Risk The company is exempt from these disclosures as a smaller reporting company - As a smaller reporting company, MediaCo is not required to provide quantitative and qualitative disclosures about market risk[169] Controls and Procedures Disclosure controls were deemed ineffective due to a material weakness related to the Estrella acquisition accounting - The CEO and CFO concluded that disclosure controls and procedures were not effective as of June 30, 2025[171] - A material weakness was identified related to the accounting for the Estrella business combination, including insufficient oversight of valuation specialists and lack of competent resources for complex accounting[174] - Remediation efforts include hiring additional qualified accounting personnel, enhancing training, implementing new controls for complex transactions, and engaging third-party experts[175] PART II — OTHER INFORMATION Legal Proceedings Management reports no pending legal proceedings expected to have a material adverse effect on the company - The company reports no pending legal proceedings that are expected to have a material adverse effect on the business[179] Risk Factors No material changes to risk factors have occurred since the last annual report - No material changes to the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024, have occurred[180] Unregistered Sales of Equity Securities, Use of Proceeds and Issuer Purchases of Equity Securities The company reports no unregistered sales, use of proceeds, or issuer purchases of equity securities - None reported for the quarter[181] Other Information No directors or officers adopted, modified, or terminated Rule 10b5-1 trading arrangements during the quarter - No company directors or officers adopted, modified, or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the quarter[184] Exhibits This section lists filed exhibits, including officer certifications and Inline XBRL data files - The report includes certifications from the Principal Executive Officer and Principal Financial Officer, as well as Inline XBRL documents[186]