STOCKHOLDERS' EQUITY

12 Months Ended

Dec. 31, 2022

STOCKHOLDERS' EQUITY

STOCKHOLDERS' EQUITY

13. STOCKHOLDERS’ EQUITY:

On June 16, 2020, the Company’s Board of Directors authorized an amendment (the “Potential Amendment”) of Urban One's certificate of incorporation to effect a reverse stock split across all classes of common stock by a ratio of not less than one-for-two and not more than one-for-fifty at any time prior to December 31, 2021, with the exact ratio to be set at a whole number within this range as determined by the Board of Directors in its discretion. The Company’s shareholders approved the Potential Amendment at the annual meeting of the shareholders June 16, 2020. The Company has not acted on the Potential Amendment but may do so in the future as the discretion of the Board of Directors.

In August 2020, the Company entered into an arrangement (the “2020 Open Market Sales Agreement”) to sell shares, from time to time, of its Class A common stock, par value $0.001 per share (the “Class A Shares”). During the year ended December 31, 2020, the Company issued 2,859,276 shares of its Class A Shares at a weighted average price of $5.39 for approximately $14.7 million of net proceeds after associated fees and expenses. In January 2021, the Company issued and sold an additional 1,465,826 shares for approximately $9.3 million of net proceeds after associated fees and expenses, which completed the 2020 Open Market Sales Agreement. Subsequently, in January 2021, the Company entered into an arrangement (the “2021 Open Market Sale Agreement”) to sell additional Class A Shares from time to time. During the three months ended March 31, 2021, the Company issued and sold 420,439 Class A Shares for approximately $2.8 million of net proceeds after associated fees and expenses. During the three months ended June 30, 2021, the Company issued and sold an additional 1,893,126 Class A Shares for approximately $21.2 million of net proceeds after associated fees and expenses, which completed its 2021 Open Market Sales Agreement.

On May 17, 2021, the Company entered into an Open Market Sale Agreement (the “Class D Sale Agreement”) under which the Company may offer and sell, from time to time at its sole discretion, shares of its Class D common stock, par value $0.001 per share (the “Class D Shares”). On May 17, 2021, the Company filed a prospectus supplement pursuant to the Class D Sale Agreement for the offer and sale of its Class D Shares having an aggregate offering price of up to $25.0 million, that has since expired as of March 14, 2022. As of December 31, 2022, the Company has not sold any Class D Shares under the Class D Sale Agreement. The Company may from time to time also enter into new additional ATM programs and issue additional common stock from time to time under those programs.

On October 29, 2021, Alfred C. Liggins, President and Chief Executive Officer of Urban One, Inc., Catherine L. Hughes, Founder and Chairperson of Urban One, Inc., and entities affiliated with one or both of them, converted a total of 883,890 shares of Class C Common Stock from their personal holdings into 883,890 shares of Class A Common Stock, also in their personal holdings.

Common Stock

The Company has four classes of common stock, Class A, Class B, Class C and Class D. Generally, the shares of each class are identical in all respects and entitle the holders thereof to the same rights and privileges. However, with respect to voting rights, each share of Class A common stock entitles its holder to one vote and each share of Class B common stock entitles its holder to ten votes. The holders of Class C and Class D common stock are not entitled to vote on any matters. The holders of Class A common stock can convert such shares into shares of Class C or Class D common stock. Subject to certain limitations, the holders of Class B common stock can convert such shares into shares of Class A common stock. The holders of Class C common stock can convert such shares into shares of Class A common stock. The holders of Class D common stock have no such conversion rights.

Stock Repurchase Program

From time to time, the Board of Directors has authorized repurchases of shares of the Company’s Class A and Class D common stock. Under the stock repurchase program, the Company intends to repurchase shares through open market purchases, privately negotiated transactions, block purchases or otherwise in accordance with applicable federal securities laws, including Rule 10b-18 of the Securities Exchange Act of 1934 (the “Exchange Act”). Under open authorizations, repurchases may be made from time to time in the open market or in privately negotiated transactions in accordance with applicable laws and regulations. Shares are retired when repurchased. The timing and extent of any repurchases will depend upon prevailing market conditions, the trading price of the Company’s Class A and/or Class D common stock and other factors, and subject to restrictions under applicable law. When in effect, the Company executes upon stock repurchase programs in a manner consistent with market conditions and the interests of the stockholders, including maximizing stockholder value.

On March 7, 2022, the Board of Directors authorized and approved a share repurchase program for up to $25 million of the currently outstanding shares of the Company’s Class A and/or Class D common stock over a period of 24 months. On December 6, 2022, the Board of Directors authorized and approved a share repurchase program for up to an additional $10 million of the currently outstanding shares of the Company’s Class A and/or Class D common stock. During the year ended December 31, 2022, the Company repurchased 4,779,969 shares of Class D common stock in the amount of approximately $25.0 million at an average price of $5.24 per share. The Company did not repurchase any Shares of Class A common stock during the year ended December 31, 2022. As of December 31, 2022, the Company had approximately $10.0 million remaining under its most recent and open authorization with respect to its Class A and Class D common stock. During the year ended December 31, 2021, the Company did not repurchase any shares of Class A common stock and repurchased 6,715 shares of Class D common stock in the amount of $39,000 at an average price of $5.80 per share. 

On September 27, 2022, the Compensation Committee authorized the repurchase up to $500,000 worth of shares in the aggregate from employees who want to sell in connection with the Company’s most recent employee stock grant. During the year ended December 31, 2022, the Company repurchased 13,577 shares of Class D common stock in the amount of $57,000 at an average price of $4.23 per share. Giving effect to the repurchases, the Company has $443,000 remaining under its most recent and open authorization. 

In addition, the Company has limited but ongoing authority to purchase shares of Class D common stock (in one or more transactions at any time there remain outstanding grants) under the Company’s 2009 Stock Plan and 2019 Equity and Performance Incentive Plan (both as defined below). This limited authority is used to satisfy any employee or other recipient tax obligations in connection with the exercise of an option or a share grant under the 2009 Stock Plan and the 2019 Equity and Performance Incentive Plan, to the extent that the Company has capacity under its financing agreements (i.e., its current credit facilities and indentures) (each a “Stock Vest Tax Repurchase”). During the years ended December 31, 2022 and 2021, the Company executed Stock Vest Tax Repurchases of 344,702 shares of Class D Common Stock in the amount of approximately $1.5 million at an average price of $4.29 per share and 515,162 shares of Class D Common Stock in the amount of $931,000 at an average price of $1.81 per share, respectively.

Stock Option and Restricted Stock Grant Plan

The Company’s 2009 stock option and restricted stock plan (the “2009 Stock Plan”) was originally approved by the stockholders at the Company’s annual meeting on December 16, 2009. The Company had the authority to issue up to 8,250,000 shares of Class D Common Stock under the 2009 Stock Plan. Since its original approval, from time to time, the Board of Directors adopted and as required, our stockholders approved certain amendments to and restatement of the 2009 Stock Plan (the “Amended and Restated 2009 Stock Plan”). The amendments under the Amended and Restated 2009 Stock Plan primarily affected (i) the number of shares with respect to which options and restricted stock grants may be granted under the 2009 Stock Plan and (ii) the maximum number of shares that can be awarded to any individual in any one calendar year. In 2015, the Board of Directors adopted, and our stockholders approved an amendment that replenished the authorized plan shares, increasing the number of shares of Class D common stock available for grant back up to 8,250,000 shares. The new stock option and restricted stock plan (“2019 Equity and Performance Incentive Plan”), currently in effect was approved by the stockholders at the Company’s annual meeting on May 21, 2019. The Board of Directors adopted, and on May 21, 2019, our stockholders approved, the 2019 Equity and Performance Incentive Plan which was funded with

5,500,000 shares of Class D Common Stock. On June 23, 2021, the Company’s Board of Directors authorized an amendment of the Urban One 2019 Equity and Performance Incentive Plan to increase the number of shares available for grant and to provide the grant of Class A as well as Class D shares. The amendment was approved by the Company’s shareholders and added 5,519,575 shares of Class D Shares and added 2,000,000 Class A Shares. As of December 31, 2022, 3,656,278 shares of Class D common stock and 1,250,000 shares of Class A common stock were available for grant under the 2019 Equity and Performance Incentive Plan. The Company uses an average life for all option awards. The Company settles stock options upon exercise by issuing stock.

On September 27, 2022, the Compensation Committee of the Board of Directors of the Company awarded Catherine Hughes, Chairperson, 201,961 restricted shares of the Company’s Class D common stock, and stock options to purchase 101,702 shares of the Company’s Class D common stock. The grants were effective September 27, 2022, and immediately vested on September 27, 2022.

On September 27, 2022, the Compensation Committee awarded Catherine Hughes, Chairperson, 281,250 restricted shares of the Company’s Class A common stock. The grant was effective September 27, 2022, and cliff vests January 5, 2025.

On June 12, 2019, the Compensation Committee awarded Catherine Hughes, Chairperson, 427,148 restricted shares of the Company’s Class D common stock, and stock options to purchase 189,843 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and vested on January 6, 2021.

On September 27, 2022, the Compensation Committee awarded Alfred Liggins, Chief Executive Officer, 336,602 restricted shares of the Company’s Class D common stock, and stock options to purchase 169,503 shares of the Company’s Class D common stock. The grants were effective September 27, 2022, and immediately vested on September 27, 2022.

On September 27, 2022, the Compensation Committee awarded Alfred Liggins, Chief Executive Officer, 468,750 restricted shares of the Company’s Class A common stock. The grant was effective September 27, 2022, and cliff vests January 5, 2025.

On June 12, 2019, the Compensation Committee awarded Alfred Liggins, Chief Executive Officer and President, 711,914 restricted shares of the Company’s Class D common stock, and stock options to purchase 316,406 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and vested on January 6, 2021.

On September 27, 2022, the Compensation Committee awarded Peter Thompson, Chief Financial Officer, 115,248 restricted shares of the Company’s Class D common stock, and stock options to purchase 58,036 shares of the Company’s Class D common stock. The grants were effective September 27, 2022, and immediately vested on September 27, 2022.

On September 27, 2022, the Compensation Committee awarded Peter Thompson, Chief Financial Officer, 150,000 restricted shares of the Company’s Class D common stock. The grant was effective September 27, 2022, and cliff vests January 5, 2025.

On June 12, 2019, the Compensation Committee awarded Peter Thompson, Chief Financial Officer, 243,750 restricted shares of the Company’s Class D common stock, and stock options to purchase 108,333 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and vested on January 6, 2021.

On September 27, 2022, the Compensation Committee awarded David Kantor, Chief Executive Officer – Radio Division, 100,160 restricted shares of the Company’s Class D common stock, and stock options to purchase 50,438 shares of the Company’s Class D common stock. The grants were effective September 27, 2022, and immediately vested on September 27, 2022.

On June 12, 2019, the Compensation Committee awarded David Kantor, Chief Executive Officer – Radio Division, 211,838 restricted shares of the Company’s Class D common stock, and stock options to purchase 94,150 shares of the Company’s Class D common stock. The grants were effective June 5, 2020 and vested on January 6, 2021.

On September 27, 2022, the Compensation Committee awarded Karen Wishart, Chief Administrative Officer, 39,007 restricted shares of the Company’s Class D common stock, and stock options to purchase 19,643 shares of the Company’s Class D common stock. The grants were effective September 27, 2022, and immediately vested on September 27, 2022.

On September 27, 2022, the Compensation Committee awarded C. Kristopher Simpson, General Counsel, 23,936 restricted shares of the Company’s Class D common stock, and stock options to purchase 12,054 shares of the Company’s Class D common stock. The grants were effective September 27, 2022, and immediately vested on September 27, 2022

On September 27, 2022, the Compensation Committee awarded 195,032 restricted shares of the Company’s Class D common stock, and stock options to purchase 208,298 shares of the Company’s Class D common stock to certain employees pursuant to the Company’s long-term incentive plan. The grants were effective September 27, 2022 with various vest dates of January 5, 2023, March 31, 2023 and September 29, 2023.

Pursuant to the terms of each of our stock plans and subject to the Company’s insider trading policy, a portion of each recipient’s vested shares may be sold in the open market for tax purposes on or about the vesting dates.

The Company measures compensation cost for all stock-based awards at fair value on date of grant and recognizes the related expense over the service period for awards expected to vest. The restricted stock-based awards do not participate in dividends until fully vested. The fair value of stock options is determined using the BSM. Such fair value is recognized as an expense over the service period, net of estimated forfeitures, using the straight-line method. Estimating the number of stock awards that will ultimately vest requires judgment, and to the extent actual forfeitures differ substantially from our current estimates, amounts will be recorded as a cumulative adjustment in the period the estimated number of stock awards are revised. We consider many factors when estimating expected forfeitures, including the types of awards, employee classification and historical experience. Actual forfeitures may differ substantially from our current estimate.

The Company’s use of the BSM to calculate the fair value of stock-based awards incorporates various assumptions including volatility, expected life, and interest rates. For options granted, the BSM determines: (i) the term by using the simplified “plain-vanilla” method as allowed under SAB No. 110; (ii) a historical volatility over a period commensurate with the expected term, with the observation of the volatility on a daily basis; and (iii) a risk-free interest rate that was consistent with the expected term of the stock options and based on the U.S. Treasury yield curve in effect at the time of the grant.

Stock-based compensation expense for the years ended December 31, 2022 and 2021, was approximately $6.6 million and $565,000, respectively.

The Company granted a total of 884,061 stock options during the year ended December 31, 2022 and granted a total of 40,917 stock options during the year ended December 31, 2021. The per share weighted-average fair value of options granted during the years ended December 31, 2022 and 2021, was $2.82 and $2.77, respectively.

These fair values were derived using the BSM with the following weighted-average assumptions:

	For the Years Ended December 31,
	2022		2021
Average risk-free interest rate	2.79	%	0.68	%
Expected dividend yield	—	%	—	%
Expected lives	5.69 years		5.16 years
Expected volatility	79.92	%	82.04	%

Transactions and other information relating to stock options for the years December 31, 2022 and 2021 are summarized below:

				Weighted-Average
				Remaining	Aggregate
	Number of	Weighted-Average		Contractual Term	Intrinsic
	Options	Exercise Price		(In Years)	Value
Outstanding at December 31, 2020	4,018,991	$	2.11	6.48	$	41,000
Grants	40,917		4.32	—		—
Exercised	(229,756)		1.70	—		—
Forfeited/cancelled/expired/settled	(59,239)		1.27	—		—
Outstanding at December 31, 2021	3,770,913	$	2.18	5.68	$	4,659,601
Grants	884,061		4.22	—		—
Exercised	(60,240)		0.83	—		—
Forfeited/cancelled/expired/settled	—		—	—		—
Balance as of December 31, 2022	4,594,734	$	2.59	5.72	$	5,871,492
Vested and expected to vest at December 31, 2022	4,542,266		2.57	5.68		5,871,492
Unvested at December 31, 2022	465,798		4.23	9.74		—
Exercisable at December 31, 2022	4,128,936		2.40	5.24		5,871,492

The aggregate intrinsic value in the table above represents the difference between the Company’s stock closing price on the last day of trading during the year ended December 31, 2022, and the exercise price, multiplied by the number of shares that would have been received by the holders of in-the-money options had all the option holders exercised their options on December 31, 2022. This amount changes based on the fair market value of the Company’s stock.

There were 60,240 and 229,756 options exercised during the years ended December 31, 2022 and 2021, respectively. A total of 439,180 and 903,643 options vested during the years ended December 31, 2022 and 2021, respectively.  

As of December 31, 2022, approximately $1.1 million of total unrecognized compensation cost related to stock options is expected to be recognized over a weighted-average period of 16 months. The weighted-average fair value per share of shares underlying stock options was $1.66 at December 31, 2022.

The Company granted 1,357,687 and 101,057 restricted shares of Class D common stock during the years ended December 31, 2022 and 2021, respectively.

The Company granted 750,000 restricted shares of Class A common stock during the year ended December 31, 2022. The Company did not grant any restricted shares of Class A common stock during the year ended December 31, 2021. 

On July 5, 2022, each of the Company’s four non-executive directors received 11,848 shares of restricted stock, valued at $50,000 based upon the closing price of the Company’s Class D common stock on the grant date. The shares vest in equal portions over two years. On July 6, 2021, each of the four non-executive directors received 9,671 shares of restricted stock, valued at $50,000 based upon the closing price of the Company’s Class D common stock on the grant date. The shares vest in equal portions over two years.

Transactions and other information relating to restricted stock grants for the years ended December 31, 2022 and 2021 are summarized below:

		Average
		Fair Value
		at Grant
	Shares	Date
Unvested at December 31, 2020	1,723,561	$	0.83
Grants	101,057		3.22
Vested	(1,748,562)		0.83
Forfeited/cancelled/expired	—		—
Unvested at December 31, 2021	76,056	$	3.90
Grants	1,357,687		4.27
Vested	(999,479)		4.25
Forfeited/cancelled/expired	—		—
Unvested at December 31, 2022	434,264	$	4.27

For awards of Class A common stock during the years ended December 31, 2022 and 2021, the Company granted 750,000 shares of restricted stock on September 27, 2022, at an average fair value at grant date of $5.39 per share. There were no shares that vested or were cancelled during the period. There were 750,000 unvested shares of restricted Class A common stock as of December 31, 2022 with an average fair value at grant date of $5.39.  

Restricted stock grants for Class D shares were and are included in the Company’s outstanding share numbers on the effective date of grant. As of December 31, 2022, approximately $1.4 million of total unrecognized compensation cost related to restricted stock grants was expected to be recognized over a weighted-average period of 13 months.

Restricted stock grants for Class A shares were and are included in the Company’s outstanding share numbers on the effective date of grant. As of December 31, 2022, approximately $3.6 million of total unrecognized compensation cost related to restricted stock grants is expected to be recognized over a weighted-average period of 24 months.