MDIA 10-K & 10-Q changes, risk factors and insider trading

We use artificial intelligence ("AI") in our business, and challenges in managing its use could result in reputational harm, competitive disadvantage, legal liability, and adverse effects on our results of operations.

AI solutions are increasingly integrated into our business operations and are expected to become even more important to our operations over time. Our competitors or other third parties may adopt AI more quickly or more effectively than we do, which could impair our ability to compete and negatively impact our results of operations. Additionally, if our AI-generated content, analyses, search results, or recommendations are, or are alleged to be, inaccurate, biased, infringing, harmful, or otherwise deficient, our business, reputation, financial condition, and results of operations could be adversely affected.

AI also raises emerging ethical and legal challenges, including issues related to the use of copyrighted material and potential violations of name, image, and likeness rights. If our use of AI becomes controversial, we could face brand or reputational harm, competitive disadvantage, or legal liability. In addition, the rapid evolution of AI will require significant resources to develop, test and maintain our platforms, offerings, services, and features to help us ensure responsible implementation and to minimize unintended, harmful impacts.

The legal and regulatory framework for AI technologies is also evolving rapidly and uncertain. Federal, state, and foreign governments and authorities have introduced or are currently considering laws and regulations governing AI. Existing laws and regulations may be interpreted in ways that impact our use of AI, and industry standards and best practices remain unsettled. As a result, implementation standards and enforcement practices are likely to remain uncertain for the foreseeable future. We cannot predict the impact that future laws, regulations, standards, or market expectations may have on our business. Compliance costs could be significant and may increase our operating expenses, including through imposing additional AI reporting obligations. Any such increase in operating expenses, as well as any actual or perceived failure to comply with such laws and regulations, could adversely affect our business, financial condition and results of operations.

We have recognized, and could continue to recognize, impairment charges on our goodwill and broadcast licenses. Any such future charges could adversely impact our results of operations.

As of December 31, 2025, our intangible assets comprised 62% of our total assets. During 2025, we recognized non-cash impairment charges of $3.2 million related to the annual testing of our FCC licenses. Also, during the year ended December 31, 2025, we recognized non-cash impairment charges of $19.9 million related to impairment of goodwill for our audio segment. No impairment was recognized during 2024 related to our intangible assets.

Not less than annually, and more frequently if necessary, we are required to evaluate our goodwill and broadcast licenses to determine if the estimated fair value of these intangible assets is less than book value. If the estimated fair value of these intangible assets is less than book value, we will be required to record additional non-cash expense to write down the book value of the intangible asset to the estimated fair value. We cannot make any assurances that any required impairment charges in the future will not have a material adverse effect on our statement of operations.

While we intend to refinance such indebtedness on a long-term basis, there can be no assurance that we will be able to refinance any maturing indebtedness, that such refinancing would be on terms as favorable as the terms of the maturing indebtedness, or that we will be able to otherwise obtain funds by selling assets or raising equity to make required payments on maturing indebtedness.

If we are not able to comply with the applicable continued listing requirements or standards of The Nasdaq Stock Market LLC, Nasdaq could delist our Class A common stock, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

If we are not able to comply with the applicable continued listing requirements or standards of The Nasdaq Stock Market LLC, Nasdaq could delist our Class A common stock, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.

On December 19, 2025, the Company received a deficiency letter (the “Notice”) from the Nasdaq Listing Qualifications Department notifying the Company that, based upon the closing bid price of the Company’s Class A common stock for the last 30 consecutive business days, the Company is not currently in compliance with the requirement to maintain a minimum bid price of $1.00 per share for continued listing on The Nasdaq Capital Market, as set forth in Nasdaq Listing Rule 5550(a)(2) (the “Minimum Bid Requirement”).

The Notice has no immediate effect on the continued listing status of our Class A common stock on The Nasdaq Capital Market, and, therefore, the Company’s listing remains fully effective. In accordance with Nasdaq Listing Rule 5810(c)(3)(A), the Company is provided a compliance period of 180 calendar days from the date of the Notice, or until June 17, 2026, to regain compliance with the Minimum Bid Requirement. To regain compliance, the closing bid price of our Class A common stock must meet or exceed $1.00 per share for a minimum of ten consecutive business days prior to June 17, 2026. If the Company is not in compliance with the Minimum Bid Requirement by June 17, 2026, the Company may be afforded a second 180 calendar day compliance period. To qualify for this additional compliance period, the Company will be required to meet the continued listing requirement for market value of publicly held shares and all other initial listing standards for The Nasdaq Capital Market, with the exception of the Minimum Bid Price requirement. In addition, the Company would be required to notify Nasdaq of its intent to cure the deficiency during the second compliance period. The Company would then be afforded the second 180 calendar day period to regain compliance, unless it does not appear to Nasdaq that it is possible for the Company to cure the deficiency.

If we are unable to satisfy the requirements of Nasdaq for continued listing, MediaCo Class A common stock would be subject to delisting from that market, and we might or might not be eligible to list our shares on another market. Such delisting could negatively impact us by, among other things, having an adverse impact on the trading and reducing the liquidity and market price of our Class A common stock.

As a smaller reporting company we are permitted to take advantage of certain exemptions from reporting and disclosure requirements, including exemption from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, if either (i) the market value of our stock held by non-affiliates is less than $250.0 million or (ii) our annual revenue is less than $100.0 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700.0 million as of the prior June 30. Also, we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and reduced disclosure obligations regarding executive compensation in this Annual Report on Form 10-K, as well as in our periodic reports and proxy statements. We cannot predict whether investors will find MediaCo Class A common stock less attractive because we may rely on these exemptions. If some investors find MediaCo Class A common stock less attractive as a result, there may be a less active trading market for MediaCo Class A common stock, and its stock price may be lower or more volatile.

Asset Impairment

Goodwill

Goodwill impairment is assessed at the reporting unit level by comparing the fair value of each reporting unit to its carrying value. If the carrying value of a reporting unit exceeds its estimated fair value, an impairment charge is recognized for the amount of the excess in the statement of operations. Fair value is generally estimated using a combination of an income approach and a market approach. Under the income approach, fair value is estimated using a discounted cash flow methodology based on projected future operating results. Under the market approach, fair value is estimated by applying appropriate market multiples derived from comparable companies or transactions to the reporting unit’s financial metrics.

Goodwill is reviewed for impairment at least annually, or more frequently if events or changes in circumstances indicate that the carrying value of a reporting unit may exceed its fair value. The Company performs its annual impairment assessment as of October 1. As of October 1, 2025, the Company performed a qualitative assessment for its audio and video reporting units and concluded that it was more likely than not that the fair value of each reporting unit exceeded its carrying amount. Due to a significant decline in the Company’s stock price during the fourth quarter of 2025, the Company identified a triggering event and performed quantitative impairment tests as of December 31, 2025 for both reporting units. Based on the quantitative testing, the Company determined that the fair value of the audio reporting unit was less than its carrying amount and recorded a goodwill impairment charge of $19.9 million; no impairment was identified for the video reporting unit. We estimated the reporting unit’s fair value on a going concern basis in the context of a potential asset sale transaction based on a valuation report prepared by a third-party valuation firm who used a combination of an income approach, which employs a discounted cash flow model, and a market approach, which based the valuation on earnings multiples of comparable publicly traded digital media businesses.

The goodwill impairment assessment requires significant management judgment, particularly in estimating the fair value of reporting units and developing forecasts of future operating results used in discounted cash flow analyses. Key assumptions used in these analyses include projected future cash flows, revenue and profitability measures such as EBITDA, long-term growth rates, and the weighted-average cost of capital used to determine discount rates. These assumptions are based on historical performance, expected market conditions, industry trends, and other factors management believes are reasonable under the circumstances.

The estimated fair value of the Company’s reporting units is sensitive to changes in key assumptions, including projected cash flows, long-term growth rates, and discount rates. As of December 31, 2025, the audio reporting unit was fully written down to its estimated fair value of zero. In contrast, the video reporting unit’s estimated fair value exceeded its carrying amount of $8.4 million by 11.1%, making it less sensitive to reasonably possible changes in key assumptions. While decreases in projected cash flows or growth rates, or increases in discount rates, would reduce estimated fair values, the extent of such changes would need to be significant to result in impairment for the video reporting unit. Because these assumptions are interrelated, changes in one may be accompanied by changes in others, and the combined effect could be material. Actual results may differ materially from the assumptions used in the Company’s impairment assessments.

Long-lived Assets

We evaluate the carrying value of our long-lived assets, including both intangible and tangible assets, for impairment whenever events or changes in circumstances indicate that the carrying value of an asset or asset group may not be recoverable.

The impairment assessment process requires significant management judgment, particularly in estimating projected undiscounted cash flows used in the recoverability assessment and, when required, the fair values of asset groups and in developing forecasts of future operating results used in undiscounted and, when applicable, discounted cash flow analyses. Key assumptions used in these analyses include projected future cash flows, revenue and profitability measures such as EBITDA, long-term growth rates, and when applicable, the weighted-average cost of capital used to determine discount rates. These assumptions are based on historical performance, expected market conditions, industry trends, and other factors management believes are reasonable under the circumstances.

The estimated fair values of our reporting units and long-lived assets are sensitive to changes in these key assumptions when a fair value analysis is required. Holding other assumptions constant, a decrease in projected cash flows or long-term growth rates, or an increase in discount rates, would reduce estimated fair values and could result in impairment charges. Conversely, improvements in operating performance, higher growth rates, or a reduction in discount rates would increase estimated fair values and reduce the likelihood of impairment. As the recoverability test for the current period was satisfied based on projected undiscounted cash flows, a fair value analysis was not required. Given the significant excess of projected undiscounted cash flows over carrying amount for these long-lived asset groups, the risk of impairment is limited, and reasonably possible changes in key assumptions are unlikely to result in impairment. While increases in discount rates or decreases in projected future cash flows would reduce estimated fair values, such changes would need to be substantial before the fair values would approach or fall below their carrying amounts. Because the assumptions used in our impairment analyses are interrelated, changes in one assumption may be accompanied by changes in others, and the combined impact of such changes creates a heightened risk that we could be required to record additional non-cash impairment charges, which could be material to our consolidated results of operations. Actual results may differ materially from the assumptions used in our impairment assessments.

Indefinite-lived Intangible Assets

As of December 31, 2025 and 2024, we have approximately $162.8 million and $166.0 million, respectively, recorded for FCC licenses, which represented approximately 56% and 51%, respectively, of our total assets. We would not be able to operate our TV and radio stations without the related FCC license for each property. FCC broadcast licenses are renewed every eight years; consequently, we continually monitor our stations’ compliance with the various regulatory requirements. Historically, each of our FCC licenses has been renewed at the end of its respective period, and we expect that each FCC license will continue to be renewed in the future. We consider our FCC licenses to be indefinite-lived intangibles.

We do not amortize indefinite-lived intangible assets, but rather test for impairment at least annually or more frequently if events or circumstances indicate that an asset may be impaired. Under Accounting Standards Codification (“ASC”) 350-30, each FCC broadcast license is generally considered a separate unit of account for impairment testing. The Company evaluates each individual broadcast license as its own unit of account unless licenses are operated together as a single, inseparable revenue-producing asset. The Company treats each FCC license as a separate unit of account except for its two New York stations, which are simulcast and operate as a single revenue-producing asset. These two licenses are therefore aggregated and tested as one unit of account for impairment proposes.

For the years ended December 31, 2025 and 2024, we completed our annual impairment tests on October 1 of each year and will continue to perform our assessments on this date in future years. For our annual FCC broadcast licenses impairment test in 2025, we concluded that their fair values exceeded their carrying values, except for five broadcast licenses. For the five broadcast licenses whose fair value did not exceed its carrying value, we recorded an impairment charge of $3.2 million in 2025. Due to a significant decline in the Company’s stock price during the fourth quarter of 2025, the Company identified a triggering event and performed an additional quantitative impairment test as of December 31, 2025, resulting in no additional impairment charges.

The fair value of our FCC licenses is estimated to be the value that would be received to sell an asset in an orderly transaction between market participants at the measurement date. To determine the fair value of our FCC licenses, the Company uses both income and market based approach methods when it performs its impairment tests. Under the income method, the Company projects cash flows that would be generated by its unit of accounting assuming the unit of accounting was commencing operations in its respective market at the beginning of the valuation period. This cash flow stream is discounted using an income-based approach to determine both the value of the FCC license units and the fair value of our indefinite-lived intangible assets. Under the market based approach the Company analyzed recent sales and offering prices of similar properties to arrive at an indication of the most probable selling price of the subject property. The Company assumes the competitive situation that exists in the unit of accounting’s market remains unchanged, with the exception that the unit of accounting commenced operations at the beginning of the valuation period. In doing so, the Company extracts the value of going concern and any other assets acquired, and strictly values the FCC license. Major assumptions involved in this analysis include market revenue, market revenue growth rates, unit of accounting audience share, unit of accounting revenue share, and the discount rate. The fair value of FCC licenses is particularly sensitive to changes in these assumptions, especially market revenue growth rates and the discount rate. A decrease in projected revenues or an increase in the discount rate would reduce the estimated fair value of FCC licenses and could increase the likelihood of an impairment charge, while favorable changes in these assumptions would increase estimated fair value. A 100 basis point increase in our discount rate or a 10% decline in market revenues (holding all other assumptions in the fair value model constant) would result in an aggregate impairment charge of approximately $6.1 million or less. Each of these assumptions may change in the future based upon changes in general economic conditions, audience behavior, consummated transactions, and numerous other variables that may be beyond our control. The projections incorporated into our license valuations take then-current economic conditions into consideration. Due to the interrelated nature of these assumptions and the inherent subjectivity involved, changes in one assumption may be accompanied by changes in others, and actual results may differ materially from those used in our estimates.

As a result of the annual impairment assessment of the Company’s FCC licenses as of October 1, 2025, we recorded a $3.2 million impairment charge.

Below are some of the key assumptions used in our income method annual impairment assessments and our quantitative impairment test as of December 31, 2025 due to a significant decline in the Company’s stock price during the fourth quarter of 2025:

Significant judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. We assess each tax position to determine whether it is more‑likely‑than‑not that the position will be sustained upon examination by the relevant taxing authorities based on the technical merits of the position. If a tax position does not meet the more‑likely‑than‑not threshold, no tax benefit is recorded. For positions that do meet the threshold, we recognize the largest amount of tax benefit that is more‑likely‑than‑not to be realized upon ultimate settlement. This evaluation requires judgment in interpreting complex tax laws, assessing available information, and considering the potential outcomes of tax examinations. Our assessment incorporates factors such as the facts and circumstances of each position, changes in tax law, the status of ongoing audits, and developments in case law.

Although we believe our reserves are reasonable, we cannot provide assurance that the final tax outcome of these matters will not be different from that which is reflected in our historical income tax provisions and accruals. We adjust these reserves in light of changing facts and circumstances, such as the closing of a tax audit or the refinement of an estimate. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences will impact the provision for income taxes in the period in which such determination is made. The provision for income taxes includes the impact of reserve provisions and changes to reserves that are considered appropriate, as well as the related net interest.

•On May 1, 2025, Estrella Media, Inc. exercised its Put Right, and MediaCo acquired 100% of the equity interests of Estrella and certain of its subsidiaries. As a result of this transaction, Estrella became a wholly owned subsidiary of the Company and has been fully consolidated since that date.

•Digital and streaming initiatives saw meaningful growth, with revenue from digital platforms increasing 181% year-over-year, supported by expanded over-the-top distribution and social monetization.

•Net loss of $66.2 million increased $64.9 million, or 4986%, during 2025 compared to Net loss of $1.3 million in 2024.

•Cash flows provided by operating activities of $2.0 million increased $21.8 million, or 110%, during 2025 compared to 2024.

Operating expenses excluding depreciation and amortization expense increased during the year ended December 31, 2025. The increase was primarily driven by approximately $3.0 million in operating expenses related to the full-year impact of the Estrella Acquisition, a $28.8 million rise in digital platform costs associated with growth in digital revenue, $3.6 million in higher production costs, $2.2 million in professional services, $1.6 million in rent, $1.1 million in music licensing fees, and $1.5 million in other costs. These increases were partially offset by decreases of $1.8 million in employee-related expenses and $2.8 million in advertising and promotional spending.

•Our ability to comply with financial covenants in our First Lien Credit Agreement and Second Lien Credit Agreement;

The key developments in our business for the six months ended June 30, 2026 are summarized below:

•Net revenues of $65.4 million increased $6.1 million, or 10%, during the six months ended June 30, 2026 compared to net revenues of $59.3 million during the six months ended June 30, 2025.

•Operating loss of $12.4 million increased $1.0 million, or 8%, during the six months ended June 30, 2026 compared to operating loss of $11.5 million during the six months ended June 30, 2025.

•Net loss of $18.0 million increased $2.0 million, or 12%, during the six months ended June 30, 2026 compared to net loss of $16.0 million during the six months ended June 30, 2025.

•Cash flows used in operating activities of $2.8 million, represent a decrease of $1.9 million, or 210%, during the six months ended June 30, 2026 compared to cash flows used in operating activities of $0.9 million during the six months ended June 30, 2025.

•Adjusted EBITDA for the six months ended June 30, 2026 was $1.1 million decreasing 61% compared to Adjusted EBITDA of $2.9 million for the six months ended June 30, 2025.

Change in fair value of warrant shares liability:

Warrant shares liability decreased during the three and six months ended June 30, 2026, as the warrants were no longer outstanding and, therefore, no mark-to-market accounting was required.

Other income, net:

Other income decreased during the three months ended June 30, 2026 compared with the three months ended June 30, 2025, primarily due to the absence of a one-time employee retention tax credit received in the prior-year period. These unfavorable variances were partially offset by increased revenue recognized under the Company's managed services agreement. As a result, other income declined from the prior-year period, reflecting the nonrecurring nature of the employee retention tax credit.

Other income increased during the six months ended June 30, 2026 compared to the prior year primarily driven by a gain on a lease modification, interest and penalty income related to an equity clawback, income from managed services agreements under which the Company began providing accounting and other services on April 17, 2025, and sublease income from one of the Company’s facilities that commenced in the first quarter of 2025 and was partially offset by the non-cash mark-to-market gain and the one-time employee retention tax credit received in the prior year.

Provision for income taxes decreased during the three months ended June 30, 2026 compared to the prior year due to changes in the deferred tax liability and an adjustment for interest and penalties accrued.

Provision for income taxes increased during the six months ended June 30, 2026 compared to the prior year due to changes in the deferred tax liability and an increase in interest and penalties accrued.

Revenue from our Audio Segment decreased $7.6 million and operating expenses decreased $0.8 million, respectively, during the six months ended June 30, 2026 compared to the same period in 2025, driven primarily as a result of the decrease in spot and other revenue and decreases in operating expenses such as professional services fees.

Revenue and operating expenses from our Video Segment increased $13.7 million and $7.3 million, respectively, during the six months ended June 30, 2026 compared to the same period in 2025. These increases were primarily in digital revenue and increases in impression, distribution and production costs.

Operating expenses related to Corporate and other increased to $3.7 million for the six months ended June 30, 2026 compared to $3.1 million for the six months ended June 30, 2025, primarily due to an increase in employee related costs, and corporate insurance charges.

Additionally, in August 2026, the Company entered into a second amendment to the First Lien Credit Agreement that extended the maturity dates of the $10.0 million in Delayed Draw Term Loans from July 30, 2026 to October 31, 2026. On August 14, 2026, the Company also received a waiver from WhiteHawk Capital Partners, LP, and HPS, as administrative and collateral agents, and the lenders party thereto, with respect to the Company’s failure to satisfy the Audio Adjusted EBITDA covenant under its First Lien Credit Agreement and Second Lien Credit Agreement for the quarter ended June 30, 2026. The Company has implemented and continues to assess a companywide cost and expense reduction initiative to improve its’ EBITDA. The Company intends to refinance the Delayed Draw Term Loans on a long-term basis, repay the outstanding balance using cash flow from operations, or obtain additional investments.