BASIS OF PRESENTATION AND SIGNIFICANT POLICIES

3 Months Ended

Mar. 31, 2023

Organization, Consolidation and Presentation of Financial Statements [Abstract]

BASIS OF PRESENTATION AND SIGNIFICANT POLICIES

BASIS OF PRESENTATION AND SIGNIFICANT POLICIES

Audacy, Inc. (formerly Entercom Communications Corp.) was formed as a Pennsylvania corporation in 1968. On April 9, 2021, the Company changed its name to Audacy, Inc. and changed its New York Stock Exchange ticker symbol from "ETM" to "AUD."

The interim unaudited condensed consolidated financial statements included herein have been prepared by Audacy, Inc. and its subsidiaries (collectively, the “Company”) in accordance with: (i) generally accepted accounting principles (“U.S. GAAP”) for interim financial information; and (ii) the instructions of the Securities and Exchange Commission (the “SEC”) for Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for annual financial statements. In the opinion of management, the condensed consolidated financial statements reflect all adjustments considered necessary for a fair statement of the results of operations and financial position for the interim periods presented. All such adjustments are of a normal and recurring nature. The Company’s results are subject to seasonal fluctuations and, therefore, the results shown on an interim basis are not necessarily indicative of results for a full year.

This Form 10-Q should be read in conjunction with the consolidated financial statements and related notes included in the Company’s audited consolidated financial statements as of and for the year ended December 31, 2022, and filed with the SEC on March 16, 2023, as part of the Company’s Annual Report on Form 10-K (the "2022 Annual Report"). Certain information and footnote disclosures normally included in financial statements prepared in accordance with U.S. GAAP have been condensed or omitted pursuant to such rules and regulations.

There have been no material changes from Note 2, Significant Accounting Policies, as described in the notes to the Company’s consolidated financial statements contained in the 2022 Annual Report.

Going Concern

In accordance with Accounting Standards Codification ("ASC") 205-40, Going Concern, the Company continues to critically review its liquidity and anticipated capital requirements in light of the significant uncertainty created by the current macroeconomic conditions and determine whether these conditions and events, when considered in the aggregate, raise substantial doubt about its ability to continue as a going concern within twelve months after the date that the accompanying unaudited consolidated financial statements are issued.

Current macroeconomic conditions have created, and may continue to create, significant uncertainty in operations, including rising inflation and interest rates, significant volatility in financial markets, decreases in advertising revenue, and increased competition for advertising expenditures, which have had, and are expected to continue to have, a material adverse effect on the Company’s forecasted revenue. As a result, management continues to execute on cash management and strategic operational plans to manage liquidity and debt covenant compliance, including evaluating contractual obligations and workforce reductions, managing operating expenses, divesting non-strategic assets of the Company, and initiating a variety of transactions to manage the Company’s liabilities, which could include extending maturities or otherwise reorganizing the Company’s debt to decrease overall leverage. The Company is unable to predict with certainty the impact that the current macroeconomic conditions will have on its ability to consummate these transactions or maintain compliance with the financial covenants contained in the Company’s debt agreements.

As of March 31, 2023, the Company was in compliance with such debt covenants. Based on the Company’s cash and cash equivalents balance, the current maturities of its existing debt facilities, and its forecasted business plan in light of current macroeconomic conditions. The Company’s current forecast of future revenue over the next twelve months indicates that such revenue is unlikely to be sufficient for the Company to be able to maintain compliance with the financial covenants under our debt agreements for at least twelve months from the issuance of the accompanying unaudited consolidated financial statements. Failure to meet these covenant requirements in the future would cause the Company to be in default and could cause the maturity of the related debt to be accelerated and become immediately payable. This could require the Company to obtain waivers or amendments in order to maintain compliance, and there can be no assurance that any such waiver or amendment would be available on acceptable terms or at all. If the Company is unable to obtain necessary waivers or amendments and its debt is accelerated, there can be no assurance that the Company would be able to obtain replacement financing or to satisfy its obligations. This uncertainty surrounding compliance with the Company’s debt covenants raises substantial doubt regarding the Company’s ability to continue as a going concern for a period of twelve months from the issuance of the accompanying unaudited consolidated financial statements.

The accompanying unaudited consolidated financial statements have been prepared on a going concern basis, which contemplates realization of assets and satisfaction of liabilities in the ordinary course of business. As such, they do not include any adjustments to the recoverability and reclassification of recorded amounts that might be necessary should the Company be unable to continue as a going concern.

Recent Accounting Pronouncements

All new accounting pronouncements that are in effect that may impact the Company’s financial statements have been implemented. The Company does not believe that there are any other new accounting pronouncements that have been issued (other than those included in the notes to the Company’s consolidated financial statements contained in its 2022 Annual Report) that might have a material impact on the Company’s financial position, results of operations or cash flows.