Item 8.01 – Other Events.
On March 4, 2020, in response to the potential effects of the COVID-19 pandemic, the Securities and Exchange Commission (the “Commission”) issued an order (the “Original Order”) pursuant to its authority under Section 36 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) (Release No. 34-88318) granting exemptions from certain provisions of that Act and the rules thereunder related to the reporting and proxy delivery requirements for certain public companies, subject to certain conditions. The Commission monitored the effects of the COVID-19 pandemic and on March 25, 2020 modified the exemptions in light of its current understanding of the circumstances. For this reason and the reasons stated in the Original Order, the Commission found that modifying the exemptions to cover filings due on or before July 1, 2020, pursuant to its authority under Section 36 the Exchange Act, is appropriate in the public interest and consistent with the protection of investors (Release No. 34-88465) (together with the Original Order, the “Order”).
Due to the impact of the COVID-19 pandemic on its business (as described in more detail below), the Company is relying on the Order issued by the Commission to extend the May 15, 2020 required filing date of its Form 10-Q. The Company will also extend the April 29, 2020 required the filing date of its Definitive Proxy Statement on Form DEF 14A (the “Proxy Statement”), including the information omitted from the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, pursuant to General Instruction G(3) of the Form 10-K (the “Part III Information”), which it expects to include in the Proxy Statement.
The effects of the COVID-19 pandemic have limited the ability of the Company’s employees to conduct normal business activities, including the preparation and review of the Form 10-Q and Proxy Statement. The Company is following the recommendations of governmental health authorities to minimize exposure risk for its employees, including having most employees work remotely. As a result of the Company’s reduced workforce due to furloughs, the limited size of the Company’s accounting staff, limited access to the Company’s facilities and certain technology systems that the Company’s staff relies on to prepare its Form 10-Q and Proxy Statement, the Company has experienced difficulties in completing the normal closing processes and internal reviews that are required to timely file the Form 10-Q and Proxy Statement. The Company expects to file the Form 10-Q on or before June 29, 2020, which is 45 days from the Form 10-Q’s original filing deadline of May 15, 2020. The Company expects to file the Proxy Statement, including the Part III Information, no later than June 13 (which is 45 days from the Proxy Statement’s original filing deadline of April 29, 2020). If the Form 10-Q and Proxy Statement are filed by June 29, 2020 and June 13, 2020, respectively, they will be deemed filed timely by the Commission.
In light of the continuing developments related to the COVID-19 pandemic, the Company intends to include the following revised risk factor discussion in the Form 10-Q, as such discussion may be updated to reflect events subsequent to the date of this report. The Company originally included a version of this risk factor in its Annual Report on Form 10-K for the year ended December 31, 2019 but is updating such risk factor to reflect new developments related to the ongoing impact of the COVID-19 pandemic on the Company’s operations.
The COVID-19 pandemic has adversely affected and could continue to adversely affect our business, financial position, results of operations, liquidity and cash flows.
The COVID-19 pandemic is adversely affecting, and is expected to continue to adversely affect, our operations. It has also impacted many of our advertisers, which have temporarily suspended operations. Our advertising revenue, and in particular cash advertising sales, makes up the majority of our revenue, and, like other radio and TV broadcast companies and similar businesses that depend on advertising spend, we are experiencing a decline in this revenue stream due to the COVID-19 pandemic. In response to this current health crisis, governmental authorities have imposed certain restrictions, including travel bans and recommendations on the limitation of social gatherings, which have directly impacted our ability to continue producing concerts and special events while those restrictions remain in place. Following a series of orders issued in our markets, New York, Los Angeles, Puerto Rico, Miami, Chicago and San Francisco, we have had to cancel events until further notice, which has reduced revenue and had a negative impact given the importance of these events to our audience and advertisers. In addition, our radio and TV station operations have been affected. Although our physical locations remain open, there is limited access and our employees are working remotely. We have also had to implement certain measures to reduce costs, including furloughing some employees. The health dangers of the COVID-19 pandemic, the length of time it will last, the impact these things will continue to have on the general economy and in the markets in which we operate, are unknowns at this time, and may be unknown for some time to come. While we believe that our radio and TV businesses will prove ultimately resilient in the face of a possible recession, the factors mentioned in the last sentence make it difficult to predict with certainty or precision the continuing negative impact of the COVID-19 pandemic on our business, financial position, results of operations, liquidity and cash flows, and that impact could continue to be material.
Forward-Looking Statements
This Current Report on Form 8-K contains forward-looking statements. These forward-looking statements, which are included in accordance with the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, may involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results and performance in future periods to be materially different from any future results or performance suggested by the forward-looking statements in this press release. Although we believe the expectations reflected in such forward-looking statements are based upon reasonable assumptions, we can give no assurance that actual results will not differ materially from these expectations. “Forward-looking” statements, as such term is defined by the Securities Exchange Commission (the “SEC”) in its rules, regulations and releases, represent our expectations or beliefs, including, but not limited to, statements concerning our operations, economic performance, financial condition, our recapitalization plan and restructuring efforts, the impact of widespread health developments, such as the ongoing COVID-19 outbreak, and the governmental, commercial, consumer and other responses thereto, growth and acquisition strategies, investments and future operational plans. Without limiting the generality of the foregoing, words such as “may,” “will,” “expect,” “believe,” “anticipate,” “intend,” “forecast,” “seek,” “plan,” “predict,” “project,” “could,” “estimate,” “might,” “continue,” “seeking” or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. These statements, by their nature, involve substantial risks and uncertainties, certain of which are beyond our control, and actual results may differ materially depending on a variety of important factors, including, but not limited to, those identified in our reports filed with the SEC including our Annual Report on Form 10-K for the year ended December 31, 2019. All forward-looking statements made herein are qualified by these cautionary statements and risk factors and there can be no assurance that the actual results, events or developments referenced herein will occur or be realized. We undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results.