BOSTON OMAHA Corp - Quarter Report: 2021 September (Form 10-Q)

bomn20210930_10q.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(MARK ONE)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-38113

BOSTON OMAHA CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware

27-0788438

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer Identification No.)

1601 Dodge Street, Suite 3300, Omaha, Nebraska 68102

(Address of principal executive offices, Zip Code)

(857) 256-0079

(Registrant’s telephone number, including area code)

Securities registered under Section 12(b) of the Exchange Act:

Title of Class	Trading Symbol	Name of Exchange on Which Registered
Class A common stock, $0.001 par value per share	BOMN	The Nasdaq Stock Market LLC (NASDAQ Capital Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☐

Non-accelerated filer	☒	Smaller reporting company	☒

		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 28,593,952 shares of Class A common stock and 1,055,560 shares of Class B common stock as of November 11, 2021.

Table of Contents

BOSTON OMAHA CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD ENDED September 30, 2021

TABLE OF CONTENTS

	Page
Part I – Financial Information	4
Item 1. Consolidated Financial Statements (Unaudited).	4
Consolidated Balance Sheets – September 30, 2021 and December 31, 2020	4
Consolidated Statements of Operations – Three and Nine Months Ended September 30, 2021 and September 30, 2020	6
Consolidated Statements of Changes in Stockholders’ Equity – September 30, 2021 and September 30, 2020	7
Consolidated Statements of Cash Flows – Nine Months Ended September 30, 2021 and September 30, 2020	9
Notes to Consolidated Financial Statements	12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.	35
Item 3. Quantitative and Qualitative Disclosures About Market Risk.	57
Item 4. Controls and Procedures.	57
Part II – Other Information	59
Item 1. Legal Proceedings.	59
Item 1A. Risk Factors.	59
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.	59
Item 3. Defaults Upon Senior Securities.	59
Item 4. Mine Safety Disclosures.	59
Item 5. Other Information.	59
Item 6. Exhibits.	59
Exhibit Index	60
Signatures	61

References in this Quarterly Report on Form 10-Q to “the Company,” “our Company,” “we,” “us,” ”our” and “Boston Omaha” refer to Boston Omaha Corporation and its consolidated subsidiaries, unless otherwise noted.

Table of Contents

BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Financial Statements

Unaudited

For the Nine Months Ended September 30, 2021 and 2020

Table of Contents

BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Balance Sheets
Unaudited

*ASSETS*

	*September 30,*		*December 31,*
	*2021*		*2020*

Current Assets:
Cash and cash equivalents	$	115,759,021	$	44,665,972
Restricted cash		1,899		280,269
Investments held in trust - special purpose acquisition company		138,742,756		138,716,226
Accounts receivable, net		4,478,191		4,041,563
Other receivables		5,808,864		-
Interest receivable		15,752		286,768
Short-term investments		4,978,644		7,050,675
Note receivable from affiliate		-		20,000,000
Marketable equity securities		80,275,103		64,036,482
U. S. Treasury trading securities		50,997,180		37,767,945
Funds held as collateral assets		8,553,485		10,006,075
Prepaid expenses		2,671,059		2,197,342

Total Current Assets		412,281,954		329,049,317

Property and Equipment, net		56,224,333		48,508,272

Other Assets:
Goodwill		129,357,746		124,446,446
Intangible assets, net		42,675,946		44,373,909
Investments		19,316,769		19,448,519
Investments in unconsolidated affiliates		61,869,228		20,913,896
Deferred policy acquisition costs		686,189		690,555
Right of use assets		56,125,523		52,849,492
Other		2,835,539		427,020

Total Other Assets		312,866,940		263,149,837

Total Assets	$	781,373,227	$	640,707,426

See accompanying notes to the unaudited consolidated financial statements.

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BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Balance Sheets (Continued)
Unaudited

*LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY*

	*September 30,*		*December 31,*
	*2021*		*2020*

Current Liabilities:
Accounts payable and accrued expenses	$	8,814,966	$	6,825,081
Short-term payables for business acquisitions		346,041		771,916
Lease liabilities		4,035,257		4,354,664
Funds held as collateral		8,553,485		10,006,075
Unearned premiums		4,739,170		3,955,363
Current maturities of long-term debt		1,220,005		1,282,504
Deferred underwriting fee payable		4,759,615		4,759,615
Deferred revenue		2,008,240		1,915,031

Total Current Liabilities		34,476,779		33,870,249

Long-term Liabilities:
Asset retirement obligations		2,161,530		2,282,273
Lease liabilities		51,196,344		47,581,933
Long-term debt, less current maturities		20,955,530		21,775,146
Other long-term liabilities		1,666,824		116,104
Warrants liability		6,391,482		8,431,315
Deferred tax liability		14,054,017		57,000

Total Liabilities		130,902,506		114,114,020

Redeemable Noncontrolling Interest		146,920,362		145,027,149

Stockholders' Equity:
Preferred stock, $.001 par value, 1,000,000 shares authorized, 0 shares issued and outstanding		-		-
Class A common stock, $.001 par value, 38,838,884 shares authorized, 28,520,555 and 26,175,555 shares issued and outstanding, respectively		28,521		26,176
Class B common stock, $.001 par value, 1,161,116 shares authorized, 1,055,560 shares issued and outstanding		1,056		1,056
Additional paid-in capital		479,387,302		424,204,641
Retained earnings (accumulated deficit)		24,133,480		(42,665,616	)

Total Stockholders' Equity		503,550,359		381,566,257

Total Liabilities, Redeemable Noncontrolling Interest, and Stockholders' Equity	$	781,373,227	$	640,707,426

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Statements of Operations
Unaudited

	*For the Three Months Ended*						*For the Nine Months Ended*
	*September 30,*						*September 30,*
	*2021*			*2020*			*2021*			*2020*

Revenues:
Billboard rentals, net	$	8,023,065		$	7,121,957		$	23,129,582		$	20,991,755
Broadband services		3,773,729			1,144,343			11,329,220			2,575,676
Premiums earned		2,031,575			2,880,544			5,554,297			9,538,183
Insurance commissions		584,082			382,493			1,642,962			1,065,013
Investment and other income		85,696			77,499			226,986			338,953

Total Revenues		14,498,147			11,606,836			41,883,047			34,509,580

Costs and Expenses:
Cost of billboard revenues (exclusive of depreciation and amortization)		2,992,251			2,780,359			8,927,528			8,472,265
Cost of broadband revenues (exclusive of depreciation and amortization)		742,082			129,414			2,352,724			379,073
Cost of insurance revenues (exclusive of depreciation and amortization)		1,029,576			1,758,451			3,031,391			5,367,231
Employee costs		4,544,796			3,311,885			13,312,992			9,542,845
Professional fees		2,552,762			630,604			4,670,926			2,582,961
General and administrative		2,497,301			1,649,056			7,136,217			4,978,443
Amortization		1,137,736			1,031,805			3,508,445			3,012,641
Depreciation		1,668,984			978,672			4,066,451			2,744,376
Loss on disposition of assets		61,478			20,751			119,904			89,685
Accretion		32,179			36,462			96,717			105,964

Total Costs and Expenses		17,259,145			12,327,459			47,223,295			37,275,484

Net Loss from Operations		(2,760,998	)		(720,623	)		(5,340,248	)		(2,765,904	)

Other Income (Expense):
Interest income		24,839			104,125			645,741			884,125
Dividend income		106,815			106,716			322,785			967,864
Equity in income of unconsolidated affiliates		359,203			1,342,826			935,488			2,406,151
Other investment income (loss)		(32,990,929	)		2,845,323			85,694,668			(18,717,680	)
Remeasurement of warrant liability		(1,019,917	)		-			2,039,835			-
Interest expense		(233,561	)		(212,196	)		(702,546	)		(600,631	)

Net Income (Loss) Before Income Taxes		(36,514,548	)		3,466,171			83,595,723			(17,826,075	)
Income tax benefit (provision)		7,735,913			-			(14,230,999	)		-

Net Income (Loss)		(28,778,635	)		3,466,171			69,364,724			(17,826,075	)
Noncontrolling interest in subsidiary loss (income)		2,502,541			(2,500	)		(2,565,628	)		(42,184	)

Net Income (Loss) Attributable to Common Stockholders	$	(26,276,094	)	$	3,463,671		$	66,799,096		$	(17,868,259	)

Basic Net Income (Loss) per Share	$	(0.89	)	$	0.13		$	2.32		$	(0.71	)

Diluted Net Income (Loss) per Share	$	(0.89	)	$	0.13		$	2.32		$	(0.71	)

Basic Weighted Average Class A and Class B Common Shares Outstanding		29,576,115			27,231,115			28,751,500			25,145,700

Diluted Weighted Average Class A and Class B Common Shares Outstanding		29,576,115			27,271,014			28,825,428			25,145,700

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity
Unaudited

	*No. of shares*
	*Class A Common Stock*		*Class B Common Stock*		*Class A Common Stock*		*Class B Common Stock*		*Additional Paid-in Capital*			*Accumulated Deficit*			*Total*

Beginning Balance, December 31, 2019		22,455,100		1,055,560	$	22,455	$	1,056	$	367,029,421		$	(21,811,947	)	$	345,240,985

Offering costs		-		-		-		-		(2,252	)		-			(2,252	)

Decrease in redeemable noncontrolling interest due to redemption		-		-		-		-		323,649			-			323,649

Net loss attributable to common stockholders, March 31, 2020		-		-		-		-		-			(24,734,238	)		(24,734,238	)

Ending Balance, March 31, 2020		22,455,100		1,055,560		22,455		1,056		367,350,818			(46,546,185	)		320,828,144

Stock issued for cash		3,720,455		-		3,721		-		59,546,030			-			59,549,751

Offering costs		-		-		-		-		(3,415,071	)		-			(3,415,071	)

Net income attributable to common stockholders, June 30, 2020		-		-		-		-		-			3,402,308			3,402,308

Ending Balance, June 30, 2020		26,175,555		1,055,560		26,176		1,056		423,481,777			(43,143,877	)		380,365,132

Net income attributable to common stockholders, September 30, 2020		-		-		-		-		-			3,463,671			3,463,671

Ending Balance, September 30, 2020		26,175,555		1,055,560	$	26,176	$	1,056	$	423,481,777		$	(39,680,206	)	$	383,828,803

See accompanying notes to the unaudited consolidated financial statements.

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BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Statements of Changes in Stockholders' Equity (Continued)
Unaudited

	*No. of shares*
	*Class A Common Stock*		*Class B Common Stock*		*Class A Common Stock*		*Class B Common Stock*		*Additional Paid-in Capital*			*Retained Earnings (Accumulated Deficit)*			*Total*

Beginning Balance, December 31, 2020		26,175,555		1,055,560	$	26,176	$	1,056	$	424,204,641		$	(42,665,616	)	$	381,566,257

Offering costs		-		-		-		-		(108,863	)		-			(108,863	)

Increase in redeemable noncontrolling interest		-		-		-		-		(549,989	)		-			(549,989	)

Net income attributable to common stockholders, March 31, 2021		-		-		-		-		-			84,437,627			84,437,627

Ending Balance, March 31, 2021		26,175,555		1,055,560		26,176		1,056		423,545,789			41,772,011			465,345,032

Stock issued for cash		2,345,000		-		2,345		-		58,622,655			-			58,625,000

Offering costs		-		-		-		-		(3,248,681	)		-			(3,248,681	)

Decrease in redeemable noncontrolling interest due to redemption		-		-		-		-		706,837			-			706,837

Increase in redeemable noncontrolling interest		-		-		-		-		(45,920	)		-			(45,920	)

Net income attributable to common stockholders, June 30, 2021		-		-		-		-		-			8,637,563			8,637,563

Ending Balance, June 30, 2021		28,520,555		1,055,560		28,521		1,056		479,580,680			50,409,574			530,019,831

Offering costs		-		-		-		-		(90,452	)		-			(90,452	)

Increase in redeemable noncontrolling interest		-		-		-		-		(102,926	)		-			(102,926	)

Net loss attributable to common stockholders, September 30, 2021		-		-		-		-		-			(26,276,094	)		(26,276,094	)

Ending Balance, September 30, 2021		28,520,555		1,055,560	$	28,521	$	1,056	$	479,387,302		$	24,133,480		$	503,550,359

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Statements of Cash Flows
Unaudited

	*For the Nine Months Ended*
	*September 30,*
	*2021*			*2020*
Cash Flows from Operating Activities:
Net Income (Loss)	$	69,364,724		$	(17,826,075	)
Adjustments to reconcile net loss to cash provided by operating activities:
Amortization of right of use assets		3,295,966			2,977,876
Depreciation, amortization, and accretion		7,671,614			5,862,981
Deferred income taxes		13,997,017			-
Loss on disposition of assets		119,904			89,685
Bad debt expense		13,981			322,483
Equity in earnings of unconsolidated affiliates		(935,488	)		(2,406,151	)
Remeasurement of warrant liability		(2,039,835	)		-
Other investment (income) loss		(85,694,668	)		18,717,680
Changes in operating assets and liabilities exclusive of the effects of business combinations:
Accounts receivable		(34,060	)		282,094
Interest receivable		271,016			391,935
Prepaid expenses		(380,893	)		(435,830	)
Distributions from unconsolidated affiliates		2,100,010			326,144
Deferred policy acquisition costs		4,366			1,374,423
Other assets		(67,831	)		(24,730	)
Accounts payable and accrued expenses		1,216,305			(40,677	)
Lease liabilities		(3,159,047	)		(3,082,000	)
Unearned premiums		783,807			(3,260,593	)
Deferred revenue		93,209			222,761

Net Cash Provided by Operating Activities		6,620,097			3,492,006

Cash Flows from Investing Activities:
Payments on short-term payables for business acquisitions		(425,875	)		(500	)
Principal payments received on note receivable from affiliate		20,000,000			-
Purchase of preferred units of affiliate		(55,000,000	)		-
Business acquisitions, net of cash acquired		(8,020,702	)		(12,341,242	)
Proceeds from redemption of preferred units		-			12,000,000
Investment in unconsolidated affiliate		-			(3,175,000	)
Capital expenditures		(11,464,662	)		(6,299,968	)
Proceeds from sales of investments		1,307,562,579			420,522,907
Purchase of investments		(1,242,087,233	)		(448,185,708	)

Net Cash Provided by (Used in) Investing Activities		10,564,107			(37,479,511	)

See accompanying notes to the unaudited consolidated financial statements.

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BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)
Unaudited

	*For the Nine Months Ended*
	*September 30,*
	*2021*			*2020*

Cash Flows from Financing Activities:
Proceeds from issuance of stock	$	58,625,000		$	59,549,751
Proceeds from issuance of long-term debt		-			5,500,000
Contributions from noncontrolling interest		-			248,229
Purchase of non-controlling interest in subsidiary		(664,414	)		(1,406,409	)
Collateral release		(1,452,590	)		-
Principal payments of long-term debt		(882,115	)		(206,998	)
Offering costs		(3,447,996	)		(3,417,323	)

Net Cash Provided by Financing Activities		52,177,885			60,267,250

Net Increase in Cash, Cash Equivalents, and Restricted Cash		69,362,089			26,279,745
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period		54,952,316			16,372,032

Cash, Cash Equivalents, and Restricted Cash, End of Period	$	124,314,405		$	42,651,777

Interest Paid in Cash	$	697,699		$	585,534

Income Taxes Paid in Cash	$	-		$	-

See accompanying notes to the unaudited consolidated financial statements.

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BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)
Supplemental Schedules of Non-cash Investing and Financing Activities
Unaudited

	*For the Nine Months Ended*
	*September 30,*
	*2021*			*2020*

Increase in redeemable noncontrolling interest of broadband subsidiary	$	698,835		$	1,371,249

Decrease in redeemable noncontrolling interest of broadband subsidiary due to redemption		(706,837	)		-

Contingent consideration associated with business acquisition		1,230,000			-

Payable as consideration for business acquisition		222,500			-

Decrease in redeemable noncontrolling interest of insurance subsidiary due to redemption		-			(323,649	)

See accompanying notes to the unaudited consolidated financial statements.

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 1. ORGANIZATION AND BACKGROUND

Boston Omaha was organized on August 11, 2009 with present management taking over operations in February 2015. Our operations include (i) our outdoor advertising business with multiple billboards across Alabama, Florida, Georgia, Illinois, Iowa, Kansas, Missouri, Nebraska, Nevada, Virginia, West Virginia, and Wisconsin; (ii) our insurance business that specializes in surety bond underwriting and brokerage; (iii) our broadband business that provides high-speed broadband services to its customers, and (iv) our minority investments primarily in real estate services, homebuilding, and banking. Our billboard operations are conducted through our subsidiary, Link Media Holdings, LLC, our insurance operations are conducted through our subsidiary, General Indemnity Group, LLC, and our broadband operations are conducted through our subsidiary, Fiber is Fast, LLC.

We completed an acquisition of an outdoor advertising business and entered the outdoor advertising industry on June 19, 2015. From 2015 through 2021, we have completed eighteen additional acquisitions of outdoor advertising businesses.

On April 20, 2016, we completed an acquisition of a surety bond brokerage business. On December 7, 2016, we acquired a fidelity and surety bond insurance company. From 2017 through 2021, we completed four additional acquisitions of surety brokerage businesses.

On March 10, 2020, we completed the acquisition of a rural broadband internet provider located in Arizona. On December 29, 2020, we completed the acquisition of a second broadband internet provider located in Utah.

In our opinion, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of unaudited consolidated financial position and the unaudited consolidated results of operations for interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the interim unaudited consolidated financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the years ended December 31, 2020 and 2019 as reported in our Annual Report on Form 10-K/A, filed with the Securities and Exchange Commission, which we refer to as the “SEC,” on May 24, 2021, have been omitted.

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation Policy

The financial statements of Boston Omaha Corporation include the accounts of the Company and our consolidated subsidiaries, which are comprised of voting interest entities in which we have a controlling financial interest and variable interest entities in which we are the primary beneficiary in accordance with ASC 810, Consolidation. The equity attributable to non-controlling interests in subsidiaries is shown separately in the accompanying consolidated balance sheets. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation.

Our consolidated subsidiaries at September 30, 2021 include:

Link Media Holdings, LLC which we refer to as “LMH”

Link Media Alabama, LLC which we refer to as “LMA”

Link Media Florida, LLC which we refer to as “LMF”

Link Media Wisconsin, LLC which we refer to as “LMW”

Link Media Georgia, LLC which we refer to as “LMG”

Link Media Midwest, LLC which we refer to as “LMM”

Link Media Omaha, LLC which we refer to as “LMO”

Link Media Properties, LLC which we refer to as “LMP”

Link Media Southeast, LLC which we refer to as “LMSE”

Link Media Services, LLC which we refer to as “LMS”

General Indemnity Group, LLC which we refer to as “GIG”

The Warnock Agency, Inc. which we refer to as “Warnock”

United Casualty and Surety Insurance Company which we refer to as “UCS”

Surety Support Services, Inc. which we refer to as “SSS”

South Coast Surety Insurance Services, LLC which we refer to as “SCS”

Boston Omaha Investments, LLC which we refer to as “BOIC”

Boston Omaha Asset Management, LLC which we refer to as “BOAM”

BOAM BFR LLC which we refer to as "BOAM BFR"

BOC DFH, LLC which we refer to as “BOC DFH”

BOC OPS LLC which we refer to as "BOC OPS"

BOC Yellowstone which we refer to as "BOC Yellowstone"

BOC Yellowstone II LLC which we refer to as “BOC Yellowstone II”

BOC YAC Funding LLC which we refer to as "BOC YAC"

Fiber is Fast, LLC which we refer to as "FIF"

FIF AireBeam LLC which we refer to as “AireBeam”

FIF Utah LLC which we refer to as “FIF Utah”

Fiber Fast Homes, LLC which we refer to as "FFH"

Yellowstone Acquisition Company which we refer to as "Yellowstone"

American Contracting Services, Inc. which we refer to as "ACS"

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Reclassifications

Certain accounts in the prior year financial statements have been reclassified for comparative purposes to conform to the presentation in the current year financial statements.

Revenues

The majority of our advertising revenues are derived from contracts for advertising space on billboard structures and are accounted for under Financial Accounting Standards Board, which we refer to as the “FASB,” Accounting Standards Codification, which we refer to as “ASC,” 606, Revenue from Contracts with Customers.

Premium revenues derived from our insurance operations are subject to ASC 944, Financial Services – Insurance.

Revenue Recognition

Billboard Rentals

We generate revenue from outdoor advertising through the leasing of advertising space on billboards. The terms of the contracts range from less than one month to three years and are generally billed monthly. Revenue for advertising space rental is recognized on a straight-line basis over the term of the contract. Advertising revenue is reported net of agency commissions. Agency commissions are calculated based on a stated percentage applied to gross billing revenue for operations. Payments received in advance of being earned are recorded as deferred revenue.

Another component of billboard rentals consists of production services which include creating and printing advertising copy. Contract revenues for production services are accounted for under ASC 606, Revenue from Contracts with Customers. Revenues are recognized at a point in time upon satisfaction of the contract, which is typically less than one week.

Deferred Revenues

We record deferred revenues when cash payments are received in advance of being earned or when we have an unconditional right to consideration before satisfying our performance obligation. The term between invoicing and when a payment is due is not significant. For certain services we require payment before the product or services are delivered to the customer. The balance of deferred revenue is considered short-term and will be recognized in revenue within twelve months.

Premiums and Unearned Premium Reserves

Premiums written are recognized as revenues based on a pro-rata daily calculation over the respective terms of the policies in-force. The cost of reinsurance ceded is initially written as prepaid reinsurance premiums and is amortized over the reinsurance contract period in proportion to the amount of insurance protection provided. Premiums ceded of $353,813 and $300,679 for the nine months ended September 30, 2021 and 2020 , respectively, are included within “Premiums earned” in our consolidated statements of operations.

Commissions

We generate revenue from commissions on surety bond sales and account for commissions under ASC 606. Insurance commissions are earned from various insurance companies based upon our agency agreements with them. We arrange with various insurance companies for the provision of a surety bond for entities that require a surety bond. The insurance company sets the price of the bond. The contract with the insurance company is fulfilled when the bond is issued by the insurance agency on behalf of the insurance company. The insurance commissions are calculated based upon a stated percentage applied to the gross premiums on bonds. Commissions are recognized at a point in time, on a bond-by-bond basis as of the policy effective date and are generally nonrefundable.

Broadband Revenues

Broadband revenue is derived principally from internet services and is recognized on a straight-line basis over the term of the contract in the period the services are rendered. Revenue received or receivable in advance of the delivery of services is included in deferred revenue.

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Loss and Loss Adjustment Expenses

Unpaid losses and loss adjustment expenses represent estimates for the ultimate cost of unpaid reported and unreported claims incurred and related expenses. Estimates for losses and loss adjustment expenses are based on past experience of investigating and adjusting claims and consideration of the level of premiums written during the current and prior year. Since the reserves are based on estimates, the ultimate liability may differ from the estimated reserve. The effects of changes in estimated reserves are included within cost of insurance revenues in our results of operations in the period in which the estimates are updated. The reserves are included within accounts payable and accrued expenses in our consolidated balance sheets.

Variable Interest Entities (VIEs)

We determine whether an entity is a VIE and, if so, whether it should be consolidated by utilizing judgments and estimates that are inherently subjective. Our determination of whether an entity in which we hold a direct or indirect variable interest is a VIE is based on several factors, including whether the entity’s total equity investment at risk upon inception is sufficient to finance the entity’s activities without additional subordinated financial support. We make judgments regarding the sufficiency of the equity at risk based first on a qualitative analysis, and then a quantitative analysis, if necessary.

We analyze any investments in VIEs to determine if we are the primary beneficiary. In evaluating whether we are the primary beneficiary, we evaluate our direct and indirect economic interests in the entity. A reporting entity is determined to be the primary beneficiary if it holds a controlling financial interest in the VIE. Determining which reporting entity, if any, has a controlling financial interest in a VIE is primarily a qualitative approach focused on identifying which reporting entity has both: (i) the power to direct the activities of a VIE that most significantly impact such entity’s economic performance; and (ii) the obligation to absorb losses or the right to receive benefits from such entity that could potentially be significant to such entity. Performance of that analysis requires the exercise of judgment.

We consider a variety of factors in identifying the entity that holds the power to direct matters that most significantly impact the VIE’s economic performance including, but not limited to, the ability to direct operating decisions and activities. In addition, we consider the rights of other investors to participate in those decisions. We determine whether we are the primary beneficiary of a VIE at the time we become involved with a variable interest entity and reconsider that conclusion continually. We consolidate any VIE of which we are the primary beneficiary.

Income Taxes

We compute our year-to-date provision for income taxes by applying the estimated annual effective tax rate to year-to-date pre-tax income or loss and adjust the provision for discrete tax items recorded in the period.

Class A Common Stock Subject to Possible Redemption

As discussed in Note 17, all of the 13,598,898 Class A Common Stock sold as part of the Units in Yellowstone's Public Offering contain a redemption feature which allows for the redemption of such public shares in connection with the Yellowstone's liquidation, if there is a stockholder vote or tender offer in connection with the business combination and in connection with certain amendments to Yellowstone's second amended and restated certificate of incorporation. In accordance with SEC and its staff’s guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of the Company require common stock subject to redemption to be classified outside of permanent equity. Ordinary liquidation events, which involve the redemption and liquidation of all of the entity’s equity instruments, are excluded from the provisions of ASC 480.

Yellowstone recognizes changes in redemption value immediately as they occur and adjusts the carrying value of redeemable common stock to equal the redemption value at the end of each reporting period. Increases or decreases in the carrying amount of redeemable common stock are effected by charges against additional paid in capital and accumulated deficit. Yellowstone's Class A Common Stock subject to redemption is included within "Redeemable Noncontrolling Interest" within our consolidated Balance Sheets.

Warrants Liability

We account for warrants for shares of Yellowstone's common stock that are not indexed to Yellowstone's own stock as liabilities at fair value on the balance sheet. The warrants are subject to remeasurement at each balance sheet date and any change in fair value is recognized in our statement of operations. For issued or modified warrants that meet all of the criteria for equity classification, the warrants are required to be recorded as a component of additional paid-in capital at the time of issuance. For issued or modified warrants that do not meet all the criteria for equity classification, the warrants are required to be recorded as a liability at their initial fair value on the date of issuance, and each balance sheet date thereafter. Changes in the estimated fair value of the warrants are recognized as a non-cash gain or loss on the statements of operations. The fair value of the Public Warrants issued in connection with Yellowstone's Public Offering has been measured based on the listed market price of such Warrants (see Note 9).

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 3. RESTRICTED CASH

Restricted cash consists of the following:

	*September 30,*		*December 31,*
	*2021*		*2020*

Insurance premium escrow	$	-	$	280,269
Cash held in trust		1,899		-

Total Restricted Cash	$	1,899	$	280,269

The following table sets forth a reconciliation of cash, cash equivalents, and restricted cash reported in the consolidated statements of cash flows that agrees to the total of those amounts as presented in the consolidated statements of cash flows.

	*September 30,*		*December 31,*
	*2021*		*2020*

Cash and cash equivalents	$	115,759,021	$	44,665,972
Funds held as collateral		8,553,485		10,006,075
Restricted cash		1,899		280,269

Total Cash, Cash Equivalents, and Restricted Cash as Presented in the Consolidated Statement of Cash Flows	$	124,314,405	$	54,952,316

NOTE 4. ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

	*September 30,*			*December 31,*
	*2021*			*2020*

Trade accounts	$	3,842,133		$	3,537,864
Premiums		785,252			832,221
Allowance for doubtful accounts		(149,194	)		(328,522	)

Total Accounts Receivable, net	$	4,478,191		$	4,041,563

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

	*September 30,*			*December 31,*
	*2021*			*2020*

Structures and displays	$	45,132,713		$	42,858,525
Fiber, towers, and broadband equipment		17,861,911			11,358,650
Vehicles and equipment		3,646,803			2,522,810
Office furniture and equipment		3,889,367			2,150,729
Accumulated depreciation		(14,306,461	)		(10,382,442	)

Total Property and Equipment, net	$	56,224,333		$	48,508,272

Depreciation expense for the nine months ended September 30, 2021 and 2020 was $4,066,451 and $2,744,376, respectively. For the nine months ended September 30, 2021 and 2020, we realized losses on the disposition of assets in the amount of $119,904 and $89,685, respectively.

NOTE 6. BUSINESS ACQUISITIONS

2021 Acquisitions

During the first nine months of 2021, we completed the acquisition of billboard assets located in Kansas as well as the acquisition of a surety brokerage company located in Ohio, both accounted for as a business combinations under the provisions of ASC 805. A summary of the acquisitions is provided below.

Billboard Acquisition

On January 26, 2021, our subsidiary, LMO, acquired from Thomas Outdoor Advertising, Inc., which we refer to as “Thomas”, 238 billboard structures and related assets located in Kansas for a purchase price of $6,102,508 paid in cash. The acquisition was completed for the purpose of expanding our presence in the outdoor advertising market in the Midwestern United States. Due to the timing of the transaction, the initial accounting for the business combination is incomplete. The provisional purchase price allocation is based on internal information derived from our previous acquisitions in the Midwestern United States. We are still in the process of obtaining and assessing documentation of the contracts for customer relationships and detailed reports for structures and permits. Our preliminary purchase price allocation related to Thomas includes property, plant and equipment, intangibles, and goodwill of $1,706,708, $1,551,000 and $2,618,431, respectively, as well as other net assets of $226,369. The intangible assets include customer relationships and permits which have useful lives of fifteen years and ten years, respectively.

Insurance Acquisition

On April 1, 2021, our subsidiary, GIG, acquired 100% of the stock of American Contracting Services, Inc., which we refer to as "ACS", a surety brokerage company located in Ohio, for a purchase price of $3,455,000. The membership units were acquired for the purpose of expanding our presence in the surety and fidelity insurance business in the United States. The total purchase price consists of $2,225,000 of cash, ten percent of which was held back by GIG and will be disbursed, subject to any claims for indemnification, over an 18-month period, and $1,230,000 in contingent consideration. The fair value of the contingent consideration, classified in other long-term liabilities in the consolidated balance sheet, is dependent on the probability of ACS achieving certain financial performance targets. The contingent consideration ranges between zero and $1,275,000 and is payable twenty-four months following the closing date.

Due to the timing of the transaction, the initial accounting for the business combination is incomplete. In order to develop our preliminary fair values, we utilized asset information received from ACS and fair value allocation benchmarks from similar completed transactions. We are currently in the process of assessing ACS's documentation of contracts related to customer relationships; and therefore the initial allocation of the purchase price is subject to refinement. Our preliminary purchase price allocation related to ACS includes property, plant and equipment, intangibles, and goodwill of $87,780, $970,000 and $2,339,628, respectively, as well as other net assets of $57,592. The intangible assets include customer relationships and trade names and trademarks, each of which have a fifteen year useful life.

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 6. BUSINESS ACQUISITIONS (Continued)

2020 Acquisitions

During the year ended December 31, 2020, we completed two acquisitions of broadband service providers and related assets. These acquisitions were accounted for as business combinations under the provisions of ASC 805. A summary of the acquisitions is provided below.

Broadband Acquisitions

FIF AireBeam

On March 10, 2020, FIF AireBeam, LLC, our wholly-owned subsidiary, acquired substantially all of the business assets of FibAire Communications, LLC, which we refer to as "FibAire", a broadband services provider, as well as other assets used in the business operations owned by entities related to FibAire. The acquisition was accounted for as a business combination under the provisions of ASC 805. Under the terms of the asset purchase agreement, all purchased assets were sold on a debt-free basis to AireBeam. The total purchase price of $13,712,491 was paid 90% in cash and the remaining 10% of the purchase price was paid by issuing to FibAire 10% of the outstanding equity of AireBeam. During the second quarter of 2021, we purchased the non-controlling interest in AireBeam from the non-controlling owner for $664,414. The 10% interest previously owned by FibAire is included within "Redeemable Noncontrolling interest" in our consolidated Balance Sheets as of December 31, 2020.

The following is a summary of the allocation of the purchase price, which includes the final fair value allocation of the assets acquired and liabilities assumed:

	*AireBeam*
Assets Acquired
Property, plant and equipment	$	3,112,459
Customer relationships		1,480,000
Permits		260,000
Trade names and trademarks		970,000
Goodwill		7,124,158
Software		990,000
Right of use assets		337,966
Other		184,737

Total Assets Acquired		14,459,320

Liabilities Assumed
Accounts payable and deferred revenue		317,768
Lease liabilities		337,966
Other		91,095

Total Liabilities Assumed		746,829

Total	$	13,712,491

Included in our property, plant, and equipment caption are fiber, tower, and broadband equipment assets acquired in the transaction which have useful lives ranging from five to twenty years. The intangible assets include customer relationships and permits ( ten year useful life) and trade names and trademarks ( twenty year useful life).

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 6. BUSINESS ACQUISITIONS (Continued)

FIF Utah

On December 29, 2020, FIF Utah, our wholly-owned subsidiary, acquired substantially all of the business assets of Utah Broadband, LLC, a broadband services provider, which we refer to as “UBB”, as well as other assets used in the business operations owned by entities related to UBB. Under the terms of the Agreement, FIF Utah will assume only certain liabilities of UBB. The total purchase price of $26,603,700 was paid 80% in cash and the remaining 20% of the purchase price was paid by issuing to UBB 20% of the outstanding equity of FIF Utah. A portion of the cash purchase price was held in escrow to provide a source of indemnification for any breaches of the representations and warranties, covenants and other obligations of UBB under the Agreement. At any time, UBB has the option, but not the obligation, to sell FIF Utah its entire ownership interest in FIF Utah. FIF Utah would be obligated to purchase the units and pay for the purchase over a three-year period if UBB elects to exercise this option. Subject to the occurrence of certain future events, FIF Utah has the option, but not the obligation, to purchase UBB’s ownership interest in FIF Utah, with payment due in full upon exercise of the option. The purchase price for the units under either of these put/call options is based upon a multiple of earnings before interest, taxes, depreciation, amortization, and certain other expenses. The 20% interest outstanding owned by UBB is included within "Redeemable Noncontrolling interest" in our consolidated Balance Sheets.

The purchase was recorded at fair value and allocated as follows:

	*UBB*
Assets Acquired
Property, plant and equipment	$	7,319,000
Customer relationships		6,800,000
Trade names and trademarks		1,910,000
Goodwill		10,811,000
Right of use assets		3,226,355
Other		201,000

Total Assets Acquired		30,267,355

Liabilities Assumed
Accounts payable and deferred revenue		437,300
Lease liabilities		3,226,355

Total Liabilities Assumed		3,663,655

Total	$	26,603,700

During the third quarter of 2021, measurement-period adjustments were recorded to increase the fair value assigned to UBB’s property, plant and equipment by $1,149,000 and to reduce the values assigned to intangible assets and goodwill by $930,000 and $219,000, respectively. Depreciation and amortization expense were not materially impacted by the change.

Included in our property, plant, and equipment caption are fiber, tower, and broadband equipment assets acquired in the transaction which have useful lives ranging from five to twenty years. The intangible assets include customer relationships and permits (ten year useful life) and trade names and trademarks (twenty year useful life).

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 6. BUSINESS ACQUISITIONS (Continued)

Pro Forma Information

The following is the unaudited pro forma information assuming all business acquisitions occurred on January 1, 2020. For all of the business acquisitions depreciation and amortization have been included in the calculation of the pro forma information provided below, based upon the actual acquisition costs. Depreciation is computed on the straight-line method over the estimated remaining economic lives of the assets, ranging from two years to fifteen years. Amortization is computed on the straight-line method over the estimated useful lives of the assets ranging from two to fifty years.

	*For the Three Months Ended*					*For the Nine Months Ended*
	*September 30,*					*September 30,*
	*2021*			*2020*		*2021*		*2020*

Revenue	$	14,498,147		$	15,169,813	$	42,790,250	$	46,201,767

Net Income (Loss) Attributable to Common Stockholders	$	(26,276,094	)	$	4,123,386	$	66,755,499	$	(15,668,384	)

Basic Net Income (Loss) per Share	$	(0.89	)	$	0.15	$	2.32	$	(0.62	)

Diluted Net Income (Loss) per Share	$	(0.89	)	$	0.15	$	2.32	$	(0.62	)

Basic Weighted Average Class A and Class B Common Shares Outstanding		29,576,115			27,231,115		28,751,500		25,145,700

Diluted Weighted Average Class A and Class B Common Shares Outstanding		29,576,115			27,271,014		28,825,428		25,145,700

The information included in the pro forma amounts is derived from historical information obtained from the sellers of the businesses.

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 7. INTANGIBLE ASSETS

Intangible assets consist of the following:

	*September 30, 2021*							*December 31, 2020*
			*Accumulated*							*Accumulated*
	*Cost*		*Amortization*			*Balance*		*Cost*		*Amortization*			*Balance*

Customer relationships	$	48,283,484	$	(22,943,605	)	$	25,339,879	$	46,740,483	$	(20,558,751	)	$	26,181,732
Permits, licenses, and lease acquisition costs		10,948,673		(3,159,510	)		7,789,163		11,053,673		(2,412,313	)		8,641,360
Site location		849,347		(235,813	)		613,534		849,347		(193,462	)		655,885
Noncompetition agreements		626,000		(463,884	)		162,116		626,000		(386,934	)		239,066
Technology		1,128,000		(286,296	)		841,704		1,128,000		(212,250	)		915,750
Trade names and trademarks		3,852,200		(533,739	)		3,318,461		3,602,202		(369,175	)		3,233,027
Nonsolicitation agreement		28,000		(28,000	)		-		28,000		(28,000	)		-
Easements		4,611,089		-			4,611,089		4,507,089		-			4,507,089

Total	$	70,326,793	$	(27,650,847	)	$	42,675,946	$	68,534,794	$	(24,160,885	)	$	44,373,909

Future Amortization

The future amortization associated with the intangible assets is as follows:

	*September 30,*
	*2022*		*2023*		*2024*		*2025*		*2026*		*Thereafter*		*Total*

Customer relationships	$	3,218,366	$	3,218,366	$	3,218,366	$	3,218,366	$	3,218,366	$	9,248,049	$	25,339,879
Permits, licenses, and lease acquisition costs		1,002,448		1,002,448		1,002,448		995,796		968,813		2,817,210		7,789,163
Site location		56,623		56,623		56,623		56,623		56,623		330,419		613,534
Noncompetition agreements		95,208		64,903		2,005		-		-		-		162,116
Technology		99,000		99,000		99,000		99,000		99,000		346,704		841,704
Trade names and trademarks		225,567		225,567		225,567		225,567		225,567		2,190,626		3,318,461

Total	$	4,697,212	$	4,666,907	$	4,604,009	$	4,595,352	$	4,568,369	$	14,933,008	$	38,064,857

Amortization expense for the nine months ended September 30, 2021 and 2020 was $3,508,445 and $3,012,641, respectively.

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 7. INTANGIBLE ASSETS (Continued)

The weighted average amortization period, in months, for intangible assets is as follows:

Customer relationships			94
Permits, licenses, and lease acquisition costs			93
Site location			130
Noncompetition agreements			20
Technology			102
Trade names and trademarks			177

NOTE 8. INVESTMENTS, INCLUDING INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD

Short-term Investments

Short-term investments consist of certificates of deposit, U.S. Treasury securities, and corporate bonds. Certificates of deposit, U.S. Treasury securities and corporate bonds held by UCS are classified as held to maturity, mature in less than twelve months, and are reported at amortized cost which approximates fair value. Other corporate bonds are classified as trading and reported at fair value, with any unrealized holding gains and losses during the period included in earnings. For the nine months ended September 30, 2021, losses on redemptions of U.S. Treasury securities held to maturity were $63,994. For the nine months ended September 30, 2020, gains on redemptions of U.S. Treasury securities held to maturity were $7,318.

	*September 30,*		*December 31,*
	*2021*		*2020*

Certificates of deposit	$	310,044	$	1,035,827
Corporate bonds classified as trading		-		1,020,000
U.S. Treasury notes and corporate bond held to maturity		4,668,600		4,994,848

Total	$	4,978,644	$	7,050,675

Marketable Equity Securities

Our marketable equity securities are publicly traded stocks measured at fair value using quoted prices for identical assets in active markets and classified as Level 1 within the fair value hierarchy. Our marketable equity securities are held by UCS and Boston Omaha. Marketable equity securities as of September 30, 2021 and December 31, 2020 are as follows:

			*Gross*
			*Unrealized*			*Fair*
	*Cost*		*Gain (Loss)*			*Value*

Marketable equity securities, September 30, 2021	$	31,321,031	$	48,954,072		$	80,275,103

Marketable equity securities, December 31, 2020	$	68,205,548	$	(4,169,066	)	$	64,036,482

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 8. INVESTMENTS, INCLUDING INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)

U.S. Treasury Trading Securities

We classify our investments in debt securities that are bought and held principally for the purpose of selling them in the near term as trading securities. Our debt securities classified as trading are carried at fair value in the consolidated balance sheets, with the change in fair value during the period included in earnings. Interest income is recognized at the coupon rate. Debt securities classified as trading as of September 30, 2021 and December 31, 2020 are as follows:

			*Gross*
			*Unrealized*		*Fair*
	*Cost*		*Gain (Loss)*		*Value*

U.S. Treasury trading securities, September 30, 2021	$	50,995,742	$	1,438	$	50,997,180

U.S. Treasury trading securities, December 31, 2020	$	37,766,133	$	1,812	$	37,767,945

U.S. Treasury Securities held in Trust

Yellowstone's U.S. treasury securities held in the Trust Account are carried at fair value in the consolidated balance sheets, with the change in fair value during the period included in earnings. Interest income is recognized at the coupon rate.

Long-term Investments

Long-term investments consist of U.S. Treasury securities and certain equity investments. We have the intent and the ability to hold the U.S. Treasury securities to maturity, which ranges from 2022 to 2023. Our U.S. Treasury securities are stated at amortized cost which approximates fair value and are held by UCS.

Long-term investments consist of the following:

	*September 30,*		*December 31,*
	*2021*		*2020*

U.S. Treasury securities, held to maturity	$	154,265	$	286,015
Preferred stock		104,019		104,019
Voting common stock of CBT Holding Corporation		19,058,485		19,058,485

Total	$	19,316,769	$	19,448,519

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 8. INVESTMENTS, INCLUDING INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)

Equity Investments

During May 2018, we invested $19,058,485 in voting common stock of CB&T Holding Corporation, which we refer to as “CBT,” the privately held parent company of Crescent Bank & Trust. Our investment represents 14.99% of CBT’s outstanding common stock. CBT is a closely held corporation, whose majority ownership rests with one family.

During January 2018, we exchanged our convertible note receivable from Breezeway Homes, Inc., which we refer to as “Breezeway,” for 31,227 shares of preferred stock. The preferred stock is noncumulative and has a dividend rate of $.2665 per share, should dividends be declared. The preferred stock has one vote per share and is convertible into whole shares of common stock, determined according to the conversion formula contained in Breezeway’s amended and restated articles of incorporation. In addition, our investment provides us with a multi-year right to sell insurance and/or warranty products through Breezeway's software platform to its customers.

We reviewed our investments as of September 30, 2021 and concluded that no impairment to the carrying value was required.

Investment in Unconsolidated Affiliates

We have various investments in equity method affiliates, whose businesses are in home building, real estate, real estate services, and asset management. Our interest in these affiliates ranges from 5.6% to 49.9%. Two of the investments in affiliates, Logic Real Estate Companies, LLC, which we refer to as “Logic”, and 24th Street Holding Company, LLC, having a combined carrying amount of $781,970 as of September 30, 2021, are managed by an entity controlled by a member of our board of directors.

Dream Finders Homes, Inc.

In late December 2017, we invested $10 million in non-voting common units of Dream Finders Holdings LLC, which we refer to as “DFH”, the parent company of Dream Finders Homes, LLC, a national home builder with operations in Colorado, Florida, Georgia, Maryland, North Carolina, South Carolina, Texas and northern Virginia. During the first quarter of 2020, we obtained additional non-voting shares of DFH which increased our ownership in the company to approximately 5.6%. As a result, we began applying the equity method of accounting for our investment in DFH prospectively from January 1, 2020, the date we obtained the additional shares.

In May 2019, our subsidiary BOC DFH, LLC invested an additional $12 million in DFH through the purchase of preferred units. DFH was required to pay to us a mandatory preferred return of at least 14% per annum on such preferred units and 25% of our preferred units were convertible, at our option, into non-voting common units after May 29, 2020 and the remaining preferred units were convertible, at our option, into non-voting common units after May 29, 2021. The mandatory 14% preferred return increased if the preferred units purchased were not redeemed or converted within one year of purchase. Also, we obtained additional beneficial conversion terms if the preferred units were not redeemed by May 29, 2021. During 2020, DFH redeemed all $12 million of the preferred units purchased in May 2019.

On January 20, 2021, Dream Finders Homes, Inc. announced the pricing of its initial public offering of 9,600,000 shares of Class A common stock at the initial public offering price of $13.00 per share. Shares of Class A common stock began trading on the NASDAQ Global Select Market under the symbol “DFH” on Thursday, January 21, 2021. Concurrent with the closing of the initial public offering, all of the outstanding non-voting common units and Series A preferred units of DFH were converted into shares of Class A common stock of Dream Finders Homes, Inc., and all of the outstanding common units of DFH LLC were converted into shares of Class B common stock of Dream Finders Homes, Inc. As a result, our previous equity interest in DFH was converted into 4,681,099 shares of DFH Class A common stock, which are no longer accounted for under the equity method but marked to market each reporting period consistent with the other publicly traded equity securities we hold. In addition, one of our subsidiaries purchased 120,000 shares of DFH Class A common stock at $13.00 per share in the initial public offering.

24th Street Fund I & 24th Street Fund II

During 2020, we invested a total of $6,000,000 in two funds, 24th Street Fund I, LLC, and 24th Street Fund II, LLC, that are managed by 24th Street Asset Management LLC, a subsidiary of 24th Street Holding Company, LLC, which we currently own approximately 49.9% of both directly and indirectly through our ownership in Logic. The funds will focus on opportunities within secured lending and direct investments in commercial real estate.

Sky Harbour LLC

On September 14, 2021, our subsidiary BOC YAC Funding LLC completed the previously-announced investment of $55 million in Series B Preferred units of Sky Harbour LLC (“SHG”). Upon the successful consummation of the proposed business combination between Yellowstone Acquisition Company and SHG, these units will convert into 5,500,000 shares of the post-combination public company’s Class A common stock, at a price of $10 per share. See further discussion within Note 17.

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 8. INVESTMENTS, INCLUDING INVESTMENTS ACCOUNTED FOR USING THE EQUITY METHOD (Continued)

The following table is a reconciliation of our investments in equity affiliates as presented in investments in unconsolidated affiliates on our consolidated balance sheets, together with combined summarized financial data related to the unconsolidated affiliates:

	*September 30,*			*December 31,*
	*2021*			*2020*

Beginning of period	$	20,913,896		$	771,805
Additional investment in unconsolidated affiliates		55,000,000			16,000,000
Distributions received		(2,100,010	)		(1,433,480	)
Reclassification of investment in affiliate to marketable securities		(12,880,146	)		-
Equity in income of unconsolidated affiliates		935,488			5,575,571

End of period	$	61,869,228		$	20,913,896

Combined summarized financial data for these affiliates is as follows:

	*For the Three Months Ended*					*For the Nine Months Ended*
	*September 30,*					*September 30,*
	*2021*			*2020*		*2021*			*2020*

Revenue	$	7,055,929		$	288,403,203	$	24,854,881		$	676,336,442
Gross profit		2,464,195			44,856,872		12,467,729			99,618,080
Income from continuing operations		(2,293,107	)		23,983,417		(4,687,712	)		41,911,245
Net income		(2,538,089	)		23,429,704		(6,167,189	)		41,162,122

Note Receivable from Affiliate

On October 2, 2020, we provided an unsecured term loan of $20,000,000 to Dream Finders Holdings, LLC to be used in expanding DFH's footprint in the Southeast United States. The effective interest rate on the term loan was approximately 14% with a scheduled maturity of May 1, 2021. Monthly interest payments began on November 1, 2020 and were scheduled to continue on the first day of each month until May 1, 2021. On January 25, 2021, DFH repaid the note receivable in full including the future scheduled interest payments prior to the maturity of the note. The total prepayment, including future scheduled interest, was $20,567,776.

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 9. FAIR VALUE

The fair value hierarchy prioritizes inputs to valuation techniques used to measure fair value into three broad levels:

Level 1 — Observable inputs such as unadjusted quoted prices in active markets for identical assets or liabilities.

Level 2 — Inputs other than quoted prices in active markets that are observable either directly or indirectly, including: quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active or other inputs that are observable or can be corroborated by observable market data.

Level 3 — Unobservable inputs that are supported by little or no market data and require the reporting entity to develop its own assumptions.

At September 30, 2021 and December 31, 2020, our financial instruments included cash, cash equivalents, restricted cash, receivables, marketable securities, investments, accounts payable, and long-term debt. The carrying value of cash, cash equivalents, restricted cash, receivables, and accounts payable approximates fair value due to the short-term nature of the instruments. The fair value of long-term debt is estimated using quoted prices for similar debt (level 2 in the fair value hierarchy). At September 30, 2021, the estimated fair value of our long-term debt was $22,938,150 which exceeds the carrying amount of $22,175,535.

Warrants

We have determined that the Public Warrants issued in connection with Yellowstone's initial public offering in October 2020 are subject to treatment as a liability. We utilized a binomial lattice model to value the warrants as of their issuance date, and subsequently mark them to market based upon their observable trading price with changes in fair value recognized in the statement of operations. Our re-measurement of the Public Warrants from December 31, 2020 to September 30, 2021 resulted in a gain of $2,039,835 which is included within "Remeasurement of warrant liability" within our Consolidated Statements of Operations. The Warrants were classified as Level 1 as of September 30, 2021 and December 31, 2020.

Marketable Equity Securities

During the second quarter of 2021, we removed the discount previously placed on our shares of DFH's Class A Common Stock for the lack of marketability related to our lock-up period pursuant to Rule 144 of the Securities Act of 1933. Our shares of DFH's Class A Common Stock are included within "Marketable equity securities" within our September 30, 2021 Consolidated Balance Sheet.

On an investment life-to-date basis, we have realized net gains on the sale of equity securities within the marketable equity portfolio held at Boston Omaha of approximately $39,000,000. Of this amount, approximately $34,000,000 and $5,000,000 were realized during the nine months ended September 30, 2021 and 2020, respectively. These amounts exclude any realized gains on equity securities held within the marketable equity portfolio managed by UCS.

Investments Held in Trust - Special Purpose Acquisition Company

Assets held in the Trust Account related to Yellowstone are comprised of $138,742,756 of marketable U.S. treasury securities, all of which are classified as Level 1 within the fair value hierarchy.

Contingent Consideration associated with Business Combination

The contingent consideration recorded in conjunction with our acquisition of ACS as discussed further in Note 6 was classified as Level 3 in the fair value hierarchy as the calculation is dependent upon projected company specific inputs using a Monte Carlo simulation. In future reporting periods, we will remeasure the estimated fair value of the contingent consideration liability until settled, with subsequent changes in value reported in earnings for the respective period.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 9. FAIR VALUE (Continued)

Marketable Equity Securities, U.S. Treasury Trading Securities, and Corporate Bonds

Marketable equity securities and U.S. Treasury trading securities are reported at fair values. Substantially all of the fair value is determined using observed prices of publicly traded securities, level 1 in the fair value hierarchy.

	*Total Carrying Amount in Consolidated Balance Sheet September 30, 2021*		*Quoted Prices in Active Markets for Identical Assets*		*Realized Gains and (Losses)*		*Total Changes in Fair Values Included in Current Period Earnings (Loss)*

Marketable equity securities and U.S. Treasury trading securities	$	131,272,283	$	131,272,283	$	37,854,470	$	47,904,192

NOTE 10. ASSET RETIREMENT OBLIGATIONS

Our asset retirement obligations include the costs associated with the removal of structures, resurfacing of the land and retirement cost, if applicable, related to our outdoor advertising and broadband assets. The following table reflects information related to our asset retirement obligations:

Balance, December 31, 2020	$	2,282,273
Additions		93,775
Liabilities settled		(311,235	)
Accretion expense		96,717

Balance, September 30, 2021	$	2,161,530

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 11. CAPITAL STOCK

On May 28, 2020, we entered into an underwriting agreement, which we refer to as the “underwriting agreement,” with Wells Fargo Securities, LLC and Cowen and Company, LLC, as joint lead book-running managers for a public offering of 3,200,000 shares, which we refer to as the “firm shares,” of our Class A common stock at a public offering price of $16.00 per share. Under the terms of the underwriting agreement, we granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 480,000 shares of Class A common stock at the public offering price less underwriting discounts and commissions, which we refer to as the “option shares.” Adam Peterson and Alex Rozek, our Co-Chairmen, together with another member of our board of directors and another employee, purchased, directly or through their affiliates, an aggregate of 39,375 shares of Class A common stock in the offering at the public offering price. On June 2, 2020, we announced the completion of the public offering for a total of 3,680,000 shares, including both the firm shares and all of the option shares issued as a result of the underwriters’ exercise in full of their over-allotment option, resulting in total gross proceeds to us of approximately $58.9 million. We raised this capital to fund the planned expansion of our recently acquired fiber-to-the-home broadband, telecommunication business, to seek to grow our Link billboard business through the acquisitions of additional billboard businesses, and for general corporate purposes. We did not have current agreements, commitments or understandings for any specific material acquisitions at that time. The shares were sold in the offering pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-222853) that was declared effective on February 9, 2018, as supplemented by a prospectus supplement dated May 28, 2020.

On March 30, 2021, we filed a new shelf registration statement on Form S-3ASR (Registration No. 333-254870) which was effective upon filing with the SEC. We may, from time to time, in one or more offerings, offer and sell Class A common stock or preferred stock, various series of debt securities and/or warrants. The shelf registration statement may also be used by one or more selling security holders, to be identified in the future, of our securities. We or any selling security holders may offer these securities from time to time in amounts, at prices and on terms determined at the time of offering. We may sell these securities to or through one or more underwriters, dealers or agents or directly to purchasers on a delayed or continuous basis. Unless otherwise set forth in an applicable prospectus supplement, we intend to use the net proceeds from the sale of the securities that we offer for general corporate purposes, including, but not limited to, financing our existing businesses and operations, and expanding our businesses and operations through additional hires, strategic alliances and acquisitions. Unless otherwise set forth in a prospectus supplement, we will not receive any proceeds from the sale of securities by any selling stockholders.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 11. CAPITAL STOCK (Continued)

On April 6, 2021, we sold 2,645,000 shares of our Class A common stock, par value $.001 per share, at a price of $25.00 per share, of which 2,345,000 shares were sold by us through Wells Fargo Securities acting as the sole book running manager of the public offering. Shares sold included 345,000 shares issued as a result of the underwriters’ exercise in full of their option to purchase additional shares, and 300,000 shares were sold by a selling stockholder. The offering resulted in total gross proceeds to us of $58,625,000. We did not receive any of the proceeds from the sale of shares by the selling stockholder. The compensation to Wells Fargo Securities for sales of Class A common stock sold pursuant to the Sales Agreement was an amount equal to 5.5% of the gross proceeds. Net proceeds to us after underwriting commissions were $55,400,625. Other offering costs incurred were $133,169. The shares were sold in the offering pursuant to an automatically effective shelf registration statement that was filed with the SEC on March 30, 2021.

At September 30, 2021, there were 104,772 outstanding warrants for our Class B common stock and 784 outstanding warrants for our Class A common stock. Each share of Class B common stock is identical to the Class A common stock in liquidation, dividend and similar rights. The only differences between our Class B common stock and our Class A common stock is that each share of Class B common stock has 10 votes for each share held, while the Class A common stock has a single vote per share, and certain actions cannot be taken without the approval of the holders of the Class B common stock.

A summary of warrant activity for the nine months ended September 30, 2021 is presented in the following table.

	*Shares Under Warrants*		*Weighted Average Exercise Price*		*Weighted Average Remaining Contractual Life (in years)*		*Aggregate Intrinsic Value of Vested Warrants*

Outstanding as of December 31, 2020		105,556	$	9.95		4.50	$	1,868,341

Issued		-
Exercised		-
Expired		-

Outstanding as of September 30, 2021		105,556	$	9.95		3.75	$	3,043,179

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 12. LONG-TERM DEBT

On August 12, 2019, Link Media Holdings, Inc., (“Link”), a wholly owned subsidiary of Boston Omaha Corporation (“BOC”), which owns and operates BOC’s billboard businesses, entered into a Credit Agreement (the “Credit Agreement”) with First National Bank of Omaha (the “Lender”) under which Link could borrow up to $23,560,000 under the term loan portion of the facility and $5,000,000 under the revolving credit line of the facility (the “Credit Facility”). The Credit Agreement provides for an initial term loan (“Term Loan 1”), an incremental term loan (“Term Loan 2”) and a revolving line of credit. These loans are secured by all assets of Link and its operating subsidiaries, including a pledge of equity interests in each of Link’s subsidiaries. In addition, each of Link’s subsidiaries has joined as a guarantor to the obligations under the Credit Agreement. These loans are not guaranteed by BOC or any of BOC’s non-billboard businesses.

As of September 30, 2021, Link has borrowed $18,060,000 through Term Loan 1 and $5,500,000 through Term Loan 2 under the Credit Facility. Principal amounts under each of Term Loan 1 and Term Loan 2 are payable in monthly installments according to a 15-year amortization schedule. These principal payments commenced on July 1, 2020 for Term Loan 1 and October 1, 2020 for Term Loan 2. Both term loans are payable in full on August 12, 2026. Term Loan 1 and Term Loan 2 have fixed interest rates of 4.25% and 3.375%, respectively, per annum.

The revolving line of credit loan facility has a $5,000,000 maximum availability. Interest payments are based on the U.S. Prime Rate minus an applicable margin ranging between 0.65% and 1.15% dependent on Link’s consolidated leverage ratio. The revolving line of credit is due and payable on August 12, 2023.

Long-term debt included within our consolidated balance sheet as of September 30, 2021 consists of Term Loan 1 and Term Loan 2 borrowings of $22,175,535, of which $1,220,005 is classified as current. There were no amounts outstanding related to the revolving line of credit as of September 30, 2021.

During the term of the Credit Facility, Link is required to comply with the following financial covenants: A consolidated leverage ratio for any test period ending on the last day of any fiscal quarter of Link (a) beginning with the fiscal quarter ended December 31, 2019 of not greater than 3.50 to 1.00, (b) beginning with the fiscal quarter ended December 31, 2020 of not greater than 3.25 to 1.00, and (c) beginning with the fiscal quarter ending December 31, 2021 and thereafter, of not greater than 3.00 to 1.0; minimum consolidated fixed charge coverage ratio of not less than 1.15 to 1.00 measured quarterly, based on a rolling four quarters, with testing that commenced as of December 31, 2019 based on the December 31, 2019 audited financial statements. The Company was in compliance with these covenants as of September 30, 2021.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 13. LEASES

We enter into operating lease contracts primarily for land and office space. Arrangements are evaluated at inception to determine whether such arrangements contain a lease. Operating leases include land lease contracts and contracts for the use of office space.

Right of use assets, which we refer to as “ROU assets,” represent the right to use an underlying asset for the lease term, and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the respective lease term. Lease expense is recognized on a straight-line basis over the lease term.

Certain of our operating lease agreements include rental payments based on a percentage of revenue and others include rental payments adjusted periodically for inflationary changes. Percentage rent contracts, in which lease expense is calculated as a percentage of advertising revenue, and payments due to changes in inflationary adjustments are included within variable rent expense, which is accounted for separately from periodic straight-line lease expense.

Many of our leases entered into in connection with land provide options to extend the terms of the agreements. Generally, renewal periods are included in minimum lease payments when calculating the lease liabilities as, for most leases, we consider exercise of such options to be reasonably certain. As a result, optional terms and payments are included within the lease liability. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The implicit rate within our lease agreements is generally not determinable. As such, we use the incremental borrowing rate, which we refer to as "IBR," to determine the present value of lease payments at the commencement of the lease. The IBR, as defined in ASC 842, is "the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment."

Operating Lease Cost

Operating lease cost for the three and nine months ended September 30, 2021 is as follows:

	*For the Three Months Ended*				*For the Nine Months Ended*
	*September 30,*				*September 30,*
	*2021*		*2020*		*2021*		*2020*		*Statement of Operations Classification*

Lease cost	$	1,675,707	$	1,574,042	$	5,196,936	$	4,758,399	Cost of billboard revenues and general and administrative
Variable and short-term lease cost		131,409		41,865		413,555		328,610	Cost of billboard revenues and general and administrative

Total Lease Cost	$	1,807,116	$	1,615,907	$	5,610,491	$	5,087,009

Supplemental cash flow information related to operating leases is as follows:

	*For the Three Months Ended*				*For the Nine Months Ended*
	*September 30,*				*September 30,*
	*2021*		*2020*		*2021*		*2020*

Cash payments for operating leases	$	1,507,763	$	1,477,218	$	5,060,018	$	4,862,521
New operating lease assets obtained in exchange for operating lease liabilities	$	74,915	$	79,451	$	7,978,907	$	744,397

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 13. LEASES (Continued)

Operating Lease Assets and Liabilities


	*September 30, 2021*		*December 31, 2020*		*Balance Sheet Classification*

Lease assets	$	56,125,523	$	52,849,492	Other Assets: Right of use assets

Current lease liabilities	$	4,035,257	$	4,354,664	Current Liabilities: Lease liabilities
Noncurrent lease liabilities		51,196,344		47,581,933	Long-term Liabilities: Lease liabilities

Total Lease Liabilities	$	55,231,601	$	51,936,597

Maturity of Operating Lease Liabilities

	*September 30, 2021*

2022	$	6,448,076
2023		6,216,628
2024		5,788,790
2025		5,482,027
2026		5,269,527
Thereafter		54,161,535

Total lease payments		83,366,583
Less imputed interest		(28,134,982	)

Present Value of Lease Liabilities	$	55,231,601

As of September 30, 2021, our operating leases have a weighted-average remaining lease term of 17.58 years and a weighted-average discount rate of 4.67%.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 14. INDUSTRY SEGMENTS

This summary presents our current segments, as described below.

General Indemnity Group, LLC

GIG conducts our insurance operations through its subsidiaries, Warnock, SSS, SCS, ACS and UCS. SSS clients are multi-state and UCS, SCS, ACS and Warnock clients are nationwide. Revenue consists of surety bond sales and insurance commissions. Currently, GIG’s corporate resources are used to support Warnock, SSS, SCS, ACS and UCS and to make additional business acquisitions in the insurance industry.

Link Media Holdings, LLC

LMH conducts our billboard rental operations. LMH billboards are located in Alabama, Florida, Georgia, Illinois, Iowa, Kansas, Missouri, Nebraska, Nevada, Virginia, West Virginia, and Wisconsin.

Fiber is Fast, LLC

FIF conducts our broadband operations. FIF provides high-speed broadband services to its customers located in Arizona, Florida and Utah.

											*Total*
Three Months Ended September 30, 2021	*GIG*			*LMH*		*FIF*		*Unallocated*			*Consolidated*

Revenue	$	2,701,353		$	8,023,065	$	3,773,729	$	-		$	14,498,147
Segment gross profit		1,671,777			5,030,814		3,031,647		-			9,734,238
Segment income (loss) from operations		(358,963	)		973,146		54,240		(3,429,421	)		(2,760,998	)
Capital expenditures		-			374,419		2,147,334		2,239,461			4,761,214
Depreciation and amortization		54,865			1,771,135		953,437		27,283			2,806,720

											*Total*
Three Months Ended September 30, 2020	*GIG*			*LMH*		*FIF*		*Unallocated*			*Consolidated*

Revenue	$	3,340,536		$	7,121,957	$	1,144,343	$	-		$	11,606,836
Segment gross profit		1,582,085			4,341,598		1,014,929		-			6,938,612
Segment income (loss) from operations		(100,811	)		323,815		26,600		(970,227	)		(720,623	)
Capital expenditures		-			604,990		1,400,310		160,215			2,165,515
Depreciation and amortization		129,497			1,671,045		209,935		-			2,010,477

											*Total*
Nine Months Ended September 30, 2021	*GIG*			*LMH*		*FIF*		*Unallocated*			*Consolidated*

Revenue	$	7,424,245		$	23,129,582	$	11,329,220	$	-		$	41,883,047
Segment gross profit		4,392,854			14,202,054		8,976,496		-			27,571,404
Segment income (loss) from operations		(1,578,567	)		1,945,573		1,320,097		(7,027,351	)		(5,340,248	)
Capital expenditures		3,044,246			7,777,058		7,203,743		2,912,817			20,937,864
Depreciation and amortization		151,358			5,224,098		2,132,012		67,428			7,574,896

										*Total*
Nine Months Ended September 30, 2020	*GIG*		*LMH*		*FIF*		*Unallocated*			*Consolidated*

Revenue	$	10,942,149	$	20,991,755	$	2,575,676	$	-		$	34,509,580
Segment gross profit		5,574,918		12,519,490		2,196,603		-			20,291,011
Segment income (loss) from operations		14,841		277,440		423,435		(3,481,620	)		(2,765,904	)
Capital expenditures		-		3,760,171		16,252,283		160,215			20,172,669
Depreciation and amortization		413,693		4,960,939		382,385		-			5,757,017

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 14. INDUSTRY SEGMENTS (Continued)

									*Total*
As of September 30, 2021	*GIG*		*LMH*		*FIF*		*Unallocated*		*Consolidated*

Accounts receivable, net	$	1,597,855	$	2,621,865	$	258,471	$	-	$	4,478,191
Goodwill		11,058,922		100,363,666		17,935,158		-		129,357,746
Total assets		56,115,005		226,389,587		69,209,029		429,659,606		781,373,227

									*Total*
As of December 31, 2020	*GIG*		*LMH*		*FIF*		*Unallocated*		*Consolidated*

Accounts receivable, net	$	1,160,424	$	2,633,711	$	247,428	$	-	$	4,041,563
Goodwill		8,719,294		97,572,994		18,154,158				124,446,446
Total assets		54,536,523		219,607,150		48,496,371		318,067,382		640,707,426

NOTE 15. RESERVES FOR LOSSES AND LOSS ADJUSTMENT EXPENSES

The following table provides a reconciliation of the beginning and ending reserve balances for losses and loss adjustment expenses ("LAE") for the nine months ended September 30:

	*2021*		*2020*
Losses and LAE at January 1	$	2,492,334	$	1,203,493

Provision for losses and LAE claims arising in:
Current year		693,750		1,182,651
Prior year		578,302		1,054,890
Total incurred		1,272,052		2,237,541
Losses and LAE payments for claims arising in:
Current year		1,065,955		594,600
Prior years		691,410		431,821
Total payments		1,757,365		1,026,421

Losses and LAE at September 30	$	2,007,021	$	2,414,613

For the nine months ended September 30, 2021, $691,410 was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There has been a $489,424 favorable prior year development during the nine months ended September 30, 2021. Reserves remaining as of September 30, 2021 for prior years are $578,302 as a result of re-estimation of unpaid losses and loss adjustment expenses. For the nine months ended September 30, 2020, $431,821 was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There was a $80,600 unfavorable prior year development during the nine months ended September 30, 2020.

Reserves remaining as of September 30, 2020 for prior years were $1,054,890 as a result of re-estimation of unpaid losses and loss adjustment expenses. In both periods, the prior years' loss development was the result of a re-estimation of amounts ultimately to be paid on prior year losses and loss adjustment expense. Original estimates are increased or decreased as additional information becomes known regarding individual claims. At September 30, 2021, we did not have any reinsurance recoverables recorded. Reinsurance recoverables were $120,000 as of September 30, 2020.

NOTE 16. CUSTODIAL RISK

As of September 30, 2021, we had approximately $92,800,945 in excess of federally insured limits on deposit with financial institutions.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Nine Months Ended September 30, 2021 and 2020

NOTE 17. SPECIAL PURPOSE ACQUISITION COMPANY

In October 2020, our subsidiary BOC Yellowstone LLC, which we refer to as “BOC Yellowstone,” served as sponsor for the underwritten initial public offering of a special purpose acquisition company named Yellowstone Acquisition Company, which we refer to as “Yellowstone.” Yellowstone sold in its public offering 13,598,898 units at a price of $10.00 per unit, each unit consisting of one share of Class A common stock and a redeemable warrant to purchase one-half of a share of Class A common stock at an exercise price of $11.50 per share. Between August and November 2020, we invested, through BOC Yellowstone, approximately $7.8 million through the purchase of 3,399,724 shares of Class B common stock and 7,719,779 non-redeemable private placement warrants, each warrant entitling us to purchase one share of Class A common stock at $11.50 per share. BOC Yellowstone, as the sponsor of Yellowstone and under the terms of the public offering, owns approximately 20% of Yellowstone's issued and outstanding common stock. The purpose of the offering is to pursue a business combination in an industry other than the three industries in which we currently own and operate businesses: outdoor advertising, surety insurance and broadband services businesses. Yellowstone allows us to pursue a minority interest in larger companies in other industries without diluting the equity interests of our Boston Omaha shareholders. Yellowstone is currently focusing on acquisition candidates in the homebuilding, home materials, financial services and commercial real estate management industries but is also able to pursue acquisition opportunities in other industries. The Units were sold at a price of $10.00 per unit, generating gross proceeds to Yellowstone of $125,000,000, and trade on the NASDAQ Stock Market, LLC under the ticker symbol “YSACU”. After the securities comprising the units began separate trading, the shares of Class A common stock and warrants were listed on NASDAQ under the symbols “YSAC” and “YSACW,” respectively.

On November 16, 2020, BOC Yellowstone transferred to BOC Yellowstone II LLC, which we refer to as “BOC Yellowstone II”, 206,250 shares of Class B common stock for no consideration. All other shares of Class B common stock are owned by BOC Yellowstone. BOC Yellowstone sold to the lead investor in Yellowstone’s IPO a membership interest in BOC Yellowstone II for a purchase price of $309,375. Upon the completion of any business combination, BOC Yellowstone has agreed to transfer the 206,250 shares of Class B common stock to this investor. Any Class B common stock ultimately distributed to the investor is subject to all restrictions imposed on BOC Yellowstone, including but not limited to, waiver of redemption rights in connection with completion of any initial business combination and rights to liquidating distributions from Yellowstone's trust account if Yellowstone fails to complete an initial business combination. Any shares held by such investor will be subject to the anti-dilution provisions for the Class B common stock and the impact thereof. BOC Yellowstone is the sole managing member of BOC Yellowstone II.

On August 1, 2021, Yellowstone entered into a business combination agreement with Sky Harbour LLC (“SHG”), a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars. Upon closing of the business combination, which is subject to a number of closing conditions, including but limited to approval of the transaction by Yellowstone’s shareholders, SHG will become a publicly traded company, and it is expected that its common stock will be listed on the NASDAQ exchange. It is currently anticipated that the combined company will have an implied pro forma equity market value of approximately $777 million at closing, assuming none of Yellowstone’s public shareholders request that their shares be redeemed.

On September 14, 2021, our subsidiary BOC YAC Funding LLC completed the previously-announced investment of $55 million in Series B Preferred units of SHG. Upon the successful consummation of the business combination, these units will convert into 5,500,000 shares of the post-combination public company’s Class A common stock, at a price of $10 per share. In addition, the parties will seek to raise additional funding to support the business combination through a private placement investment (“PIPE”) to be consummated at the closing of the transaction of $100 million. In addition to our $55 million investment, we have also agreed to provide to SHG a backstop valued at up to an additional $45 million through the purchase of additional shares of Yellowstone Class A common stock at a price of $10 per share if needed to meet the minimum investment condition of $150 million in cash and securities to SHG at the closing. In the event the business combination is not consummated, our investment will remain as Series B Preferred units of SHG.

The combined company expects to receive up to $238 million in gross proceeds, assuming no redemptions of Yellowstone’s existing public stockholders. This amount assumes an additional $45 million is raised in the PIPE. All SHG equityholders are retaining 100% of their equity in the combined company. The cash proceeds are expected to be used to fund the completion of four initial airport hangar campuses in addition to expansion at SHG’s location currently in operation.

We have determined that (i) Yellowstone is a Variable Interest Entity, (ii) we are the primary beneficiary, and (iii) it is appropriate to consolidate Yellowstone under applicable accounting guidance outlined within ASC 810, Consolidation. As a result, both the Founders Shares and Private Placement Warrants are eliminated in consolidation.

NOTE 18. INCOME TAXES

In the first quarter 2021, management considered new evidence, both positive and negative that could affect its view of the future realization of deferred tax assets. At March 31, 2021 we released the valuation allowance against our U.S. federal and state deferred tax assets, resulting in a non-cash benefit to income tax expense of approximately $7,171,096. In making the determination to release the valuation allowance against U.S. federal and state deferred tax assets, we considered our movement into a cumulative income position for the most recent three-year period when considering Q1 2021 income as well as tax planning strategies available to us specific to unrealized gains in our marketable equity portfolio.

NOTE 19. SUBSEQUENT EVENTS

Subsequent to September 30, 2021, Boston Omaha Corporation sold approximately $17.1 million of its marketable equity securities.

Subsequent to September 30, 2021, we sold 73,397 shares of our Class A common stock through our at the market equity offering program with Wells Fargo Securities, resulting in net proceeds of approximately $2.7 million.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

CAUTIONARY STATEMENT FOR FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, Section 21E of the Securities Exchange Act of 1934, as amended, and other federal securities laws, PARTICULARLY THOSE ANTICIPATING FUTURE FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, GROWTH, OPERATING STRATEGIES AND SIMILAR MATTERS, INCLUDING WITHOUT LIMITATION, STATEMENTS CONCERNING THE IMPACTS OF THE COVID-19 PANDEMIC ON OUR BUSINESS, OPERATIONS, RESULTS OF OPERATIONS, LIQUIDITY, INVESTMENTS AND FINANCIAL CONDITION. We have based these forward-looking statements on our current intent, expectations and projections about future events, and these forward-looking statements are not guaranteed to occur and may not occur. These forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may,” “will,” “should,” “could,” “would,” “intend,” “project,” “contemplate,” “potential,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “continue,” or the negative of such terms or other similar expressions. These statements are only predictions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other Securities and Exchange Commission filings.

THE OUTCOME OF THE EVENTS DESCRIBED IN THIS REPORT ALSO CONTAINS STATISTICAL AND OTHER INDUSTRY AND MARKET DATA RELATED TO OUR BUSINESS AND INDUSTRY THAT WE OBTAINED FROM INDUSTRY PUBLICATIONS AND RESEARCH, SURVEYS AND STUDIES CONDUCTED BY US AND THIRD PARTIES, AS WELL AS OUR ESTIMATES OF POTENTIAL MARKET OPPORTUNITIES. INDUSTRY PUBLICATIONS, THIRD-PARTY AND OUR OWN RESEARCH, SURVEYS AND STUDIES GENERALLY INDICATE THAT THEIR INFORMATION HAS BEEN OBTAINED FROM SOURCES BELIEVED TO BE RELIABLE ALTHOUGH THEY DO NOT GUARANTEE THE ACCURACY OR COMPLETENESS OF SUCH INFORMATION. THIS MARKET DATA INCLUDES PROJECTIONS THAT ARE BASED ON A NUMBER OF ASSUMPTIONS. IF THESE ASSUMPTIONS TURN OUT TO BE INCORRECT, ACTUAL RESULTS MAY DIFFER FROM THE PROJECTIONS BASED ON THESE ASSUMPTIONS. AS A RESULT, OUR MARKETS MAY NOT GROW AT THE RATES PROJECTED BY THIS DATA, OR AT ALL. THE FAILURE OF THESE MARKETS TO GROW AT THESE PROJECTED RATES MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION AND THE MARKET PRICE OF OUR COMMON STOCK.

The following discussion should be read in conjunction with our Financial Statements and related Notes thereto included elsewhere in this report. Any of the forward-looking statements that we make in this quarterly report on Form 10-Q and in other public reports and statements we make may turn out to be inaccurate as a result of our beliefs and assumptions we make in connection with the factors set forth above or because of other unidentified and unpredictable factors. IN ADDITION, OUR BUSINESS AND FUTURE RESULTS ARE SUBJECT TO A NUMBER OF OTHER FACTORS, INCLUDING THOSE FACTORS SET FORTH IN THE “risk factors” SECTION OF OUR ANNUAL REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED December 31, 2020 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") ON MARCH 29, 2021, AS AMENDED ON FORM 10-K/A AS FILED WITH THE SEC ON MAY 24, 2021. Because of these and other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements and you should not rely on such statements. We undertake no obligation to publish revised forward-looking statements to reflect the occurrence of unanticipated events or circumstances after the date hereof. These risks could cause our actual results for 2021 and beyond to differ materially from those expressed in any forward-looking statements by or on behalf of us, and could negatively affect our financial condition, liquidity and operating and stock price performance.

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Overview

We are currently engaged in outdoor billboard advertising, surety insurance and related brokerage businesses, and broadband services businesses. In addition, we hold minority investments in commercial real estate management and brokerage services, a bank focused on servicing the automotive loan market, and serve as sponsor of Yellowstone Acquisition Company ("Yellowstone"), a publicly-traded special purpose acquisition company ("SPAC").

Billboards: In June 2015, we commenced our billboard business operations through acquisitions by Link, our wholly-owned subsidiary, of smaller billboard companies located in the Southeast United States and Wisconsin. During July and August 2018, we acquired the membership interest or assets of three larger billboard companies which increased our overall billboard count to approximately 2,900 billboards. In addition, we have made additional billboard acquisitions on a smaller scale since that date. We believe that we are a leading outdoor billboard advertising company in the markets we serve in the Midwest. As of September 30, 2021, we operate approximately 3,200 billboards with approximately 6,000 advertising faces. One of our principal business objectives is to continue to acquire additional billboard assets through acquisitions of existing billboard businesses in the United States when they can be made at what we believe to be attractive prices relative to other opportunities generally available to us.

Surety Insurance: In April 2016, our surety insurance business commenced with the acquisition of a surety insurance brokerage business with a national internet-based presence. In December 2016, we completed the acquisition of UCS, a surety insurance company, which at that time was licensed to issue surety bonds in only nine states. UCS now has licenses to operate in all 50 states and the District of Columbia. In addition, over the last four years, we have also acquired additional surety insurance brokerage businesses located in various regions of the United States.

Broadband Services: In March 2020, we commenced our broadband services business with the acquisition of substantially all of the assets of FibAire and provide these services to over 7,000 customers located in Arizona. On December 29, 2020, we acquired substantially all of the business assets of UBB and provide broadband services to over 10,000 subscribers throughout Utah. In September 2021, we announced the launch of Fiber Fast Homes, LLC ("FFH"), which partners with builders, developers and build-to-rent communities to build fiber-to-the-home infrastructure and provide fiber internet service to residents. We hope to continue to expand in Arizona, Utah, and other locales.

Investments:

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Since September 2015, we have made a series of investments in commercial real estate, a commercial real estate management, brokerage and related services business as well as an asset management business. We currently own 30% of Logic and approximately 49.9% of 24th Street Holding Co., both directly and indirectly through our ownership in Logic. In addition, we have invested, through one of our subsidiaries, an aggregate of $6 million in 24th Street Fund I, LLC and 24th Street Fund II, LLC. These funds are managed by 24th Street Asset Management, LLC, a subsidiary of 24th Street Holding Co. and will focus on opportunities within secured lending and direct investments in commercial real estate.

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In December 2017, we invested $10 million in common units of DFH, the parent company of Dream Finders Homes, LLC, a national home builder with operations in Colorado, Florida, Georgia, Maryland, North Carolina, South Carolina, Texas and northern Virginia. In addition to its homebuilding operations, DFH's subsidiaries provide mortgage loan origination and title insurance services to homebuyers. In May 2019, we invested, through one of our subsidiaries, an additional $12 million in DFH through the purchase of preferred units with a mandatory preferred return of 14%. These preferred units were subsequently redeemed by DFH in 2020. On January 25, 2021, Dream Finders Homes, Inc., a wholly owned subsidiary of DFH, completed its initial public offering and implemented an internal reorganization (the “Merger”) pursuant to which Dream Finders Homes, Inc. became a holding company and sole manager of DFH. Upon completion of the Merger, our outstanding common units in DFH were converted into 4,681,099 shares of Class A Common Stock of Dream Finders Homes, Inc., and one of our subsidiaries purchased an additional 120,000 shares of Class A common stock in the initial public offering. Prior to its initial public offering, we loaned DFH $20,000,000 to assist it in financing an acquisition which was consummated prior to its initial public offering. This loan was repaid in full with interest in early 2021.

●

In May 2018, we invested, through one of our subsidiaries, approximately $19 million through the purchase of common stock of CB&T Holding Corporation, the privately-held parent company of Crescent Bank & Trust, Inc. Crescent is located in New Orleans and generates the majority of its revenues from indirect subprime automobile lending across the United States.

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In October 2020, our subsidiary BOC Yellowstone served as sponsor for the underwritten initial public offering of a special purpose acquisition company named Yellowstone. Yellowstone sold in its public offering 13,598,898 units at a price of $10.00 per unit, each unit consisting of one share of Class A common stock and a redeemable warrant to purchase one-half of a share of Class A common stock at an exercise price of $11.50 per share. Between August and November 2020, we invested, through BOC Yellowstone, approximately $7.8 million through the purchase of 3,399,724 shares of Class B common stock and 7,719,779 non-redeemable private placement warrants, each warrant entitling us to purchase one share of Class A common stock at $11.50 per share. BOC Yellowstone as the sponsor of Yellowstone and under the terms of the public offering, owns approximately 20% of the issued and outstanding common stock. On August 1, 2021, Yellowstone entered into a business combination agreement with Sky Harbour LLC ("SHG"), a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars.

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On August 1, 2021, through one of our subsidiaries, we agreed to invest $55 million directly into SHG and received Series B preferred units ("Sky Series B Preferred Units"). On September 14, 2021, we completed the $55 million transaction, purchasing the Sky Series B Preferred Units. Subject to and conditioned upon the successful consummation of the business combination with Yellowstone, this investment will convert into 5,500,000 shares of the post-combination public company's Class A common stock, valued at $10.00 per share. In the event the business combination with Yellowstone is not consummated, we will retain our Sky Series B Preferred Units.

●

We recently established a subsidiary within Boston Omaha Asset Management, LLC (“BOAM”) to operate a proposed business, which we refer to as “build for rent”, in which we would develop and own single family detached and/or townhomes for long term rental. We have recently bought parcels of land in Nevada which we hope to develop or repurpose for other uses. We are currently providing 100% of the financing for the initial stages of these projects but may consider a range of financing options in the future, such as raising third party capital to be invested alongside our capital. Once completed and stabilized, we expect that these properties will be financed with long term fixed rate debt capital. In addition to developing and managing these properties, we would also expect to provide broadband services to these homes, providing us a second or third source of potential revenue from these developments.

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In each of our businesses, we hope to expand our geographic reach and market share and seek to develop a competitive advantage and/or brand name for our services, which we hope will be a differentiating factor for customers. Our insurance market primarily services small contractors, small and medium-sized businesses and individuals required to provide surety bonds (i) in connection with their work for government agencies and others, (ii) in connection with contractual obligations, or (iii) to meet regulatory requirements and other needs. We have expanded the licensing of the UCS business to all 50 states and the District of Columbia. In outdoor advertising, our plan is to continue to grow this business through acquisitions of billboard assets. We also expect to expand our broadband services in Arizona, Utah and in other locations. We also expect to continue to make additional investments in real estate management service businesses, as well as in other businesses. In the future, we expect to expand the range of services we provide in the insurance sector, seek to continue to expand our billboard operations and broadband services and to possibly consider acquisitions of other businesses, as well as investments, in other sectors. Our decision to expand outside of these current business sectors we serve or in which we have made investments will be based on the opportunity to acquire businesses which we believe provide the potential for sustainable earnings at an attractive level relative to capital employed and, with regard to investment, we believe have the potential to provide attractive returns.

We seek to enter markets where we believe demand for our services will grow in the coming years due to certain barriers to entry and/or to anticipated long-term demand for these services. In the outdoor billboard business, government restrictions often limit the number of additional billboards that may be constructed. At the same time, advances in billboard technology provide the opportunity to improve revenues through the use of digital display technologies and other new technologies. In the surety insurance business, new insurance companies must be licensed by state agencies that impose capital, management and other strict requirements on these insurers. These hurdles are at the individual state level, with statutes often providing wide latitude to regulators to impose judgmental requirements upon new entrants. In addition, new distribution channels in certain areas of surety may provide a new opportunity. In the real estate management services market, we believe the continued growth of commercial real estate in many sections of the United States will provide opportunities for management services for the foreseeable future. We also believe our investment in both CBT and SHG provides the opportunity for each company to significantly grow its business. We invest our available capital and the surplus capital from UCS in a wide range of securities, including equity securities of large cap public companies, various corporate and government bonds and U.S. treasuries. In broadband services, we believe that our Fiber to the Home, which we refer to as "FTTH", services can compete with traditional cable operators as broadband provides higher rates of transmission and improved speed to consumers and that, once built, other competitors may be less willing to compete in communities which we serve.

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Impact of the COVID-19 Pandemic

The unprecedented and rapid spread of COVID-19 has impacted different parts of our business in different ways:

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Our billboard business incurred some overall reductions in revenue during the first half of fiscal 2020 but has returned to more normal levels in the first nine months of fiscal 2021. As most of our billboards are on roads and highways and not in airports and other mass transit hubs, shopping centers and sports arenas, our revenues for billboards were not as significantly impacted as those of certain of our competitors. As a result, billboard revenues in the first nine months of fiscal 2021 were up 10.2% from the same period in 2020.

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Our surety insurance business was primarily impacted by the decision we implemented in the second quarter of fiscal 2020 to cease issuing rental insurance bonds. We made this decision due to concern about the potential for increasing default rates by residential tenants. Revenues from these prepaid surety bonds are recognized over the life of the bond (typically one year) so the impact to revenues was delayed. Our surety insurance revenues in the first nine months of fiscal 2021 decreased by 32.2%, or approximately $3.5 million, from the first nine months of fiscal 2020. The other elements of our surety business were primarily impacted by a smaller decrease in demand for new bonds but claims experience to date for other contract and commercial bonds has been unaffected. We do not currently expect to issue rental insurance bonds in the future. In addition to the loss of revenues, we also significantly increased our loss reserves to provide funding for potential claims.

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Our broadband business was generally unaffected by COVID-19 and we continued to expand that business in 2020 and 2021 through the UBB acquisition in late 2020, investing capital to expand our footprint and serve additional customers in both Arizona and Utah, and starting our new FFH business.

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Our investment in Dream Finders Homes was also unaffected as Dream Finders Home’s business has increased during this period and it successfully completed an initial public offering in January 2021. Our investment in Crescent Bank and Trust, which primarily provides loans to consumers purchasing automobiles, was somewhat impacted by the pandemic but has returned to normal levels of business. Our investment in Logic Real Estate was somewhat impacted by the demand for commercial rental property in the Las Vegas market but has also returned to normal levels during the first nine months of fiscal 2021.

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Our business operations were generally unaffected by COVID-19.

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Despite the pandemic, we generated positive cash flow from operating activities in the first nine months of fiscal 2021 of approximately $6.6 million compared to $3.5 million in cash flow from operations in the first nine months of fiscal 2020.

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In April 2021, we completed a public offering of our Class A common stock and raised an additional $58.6 million in gross proceeds from the offering. Our billboard business is in compliance with its loan covenants under its term loans with its secured lender and we believe we have adequate financial resources to meet our operating and anticipated expansion and acquisition opportunities for the foreseeable future.

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As of September 30, 2021, we did not incur any impairment charges related to goodwill or long-lived assets (including operating lease right of use assets). We also did not incur any significant credit losses for the nine months ended September 30, 2021 and 2020.

We have observed an improvement in business activity beginning in the second half of 2020 and accelerating in 2021 as government-imposed restrictions on travel were relaxed, businesses which were temporarily closed or limited are fully reopening, more of the population has been vaccinated and unemployment rates are dropping. Accordingly, we are not actively pursuing additional cost saving measures, and are resuming acquisition activities and spending on capital projects.

We cannot predict the length or strength of the recovery in demand for our billboard, surety insurance and broadband businesses due to continued impact of the pandemic on the U.S. economy. Any significant resurgence of the pandemic could adversely impact our business in the future. We will continue to evaluate the impact of the COVID-19 pandemic on our business and we may access the debt and/or equity capital markets for additional liquidity, if necessary. We continue to actively monitor the situation and may take further actions that alter our business operations as may be required by federal, state or local authorities, or that we determine are in the best interests of our employees and customers.

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How We Generate Our Revenues and Evaluate Our Business

We currently generate revenues primarily through billboard advertising and related services, from the sale of surety insurance and related brokerage activities and by providing high-speed broadband services. Revenue for outdoor advertising space rental is recognized on a straight-line basis over the term of the contract and advertising revenue is reported net of agency commissions. Payments received in advance of being earned are recorded as deferred revenue. In our surety insurance business, premiums written are recognized as revenues based on a pro rata daily calculation over the respective terms of the policies in-force. Unearned premiums represent the portion of premiums written applicable to the unexpired term of the policies in-force. In connection with our surety agency business, insurance commissions are recognized at a point in time, on a bond-by-bond basis as of the policy effective date and are generally nonrefundable. In our broadband business, revenue is derived principally from internet services and is recognized on a straight-line basis over the term of the contract in the period the services are rendered. Revenue received or receivable in advance of the delivery of services is included in deferred revenue.

Segment gross profit is a key metric that we use to evaluate segment operating performance and to determine resource allocation between segments. We define segment gross profit as segment revenues less segment direct cost of services. In our billboard business, direct cost of services includes land leases, utilities, repairs and maintenance of equipment, sales commissions, contract services, and other billboard level expenses. In our surety business, direct cost of services includes commissions, premium taxes, fees and assessments, and losses and loss adjustment expenses. In our broadband business, direct costs of services includes network operations and data costs, programming costs, cell site rent and utilities, and other broadband level expenses.

Results of Operations

Three Months Ended September 30, 2021 Compared to Three Months Ended September 30, 2020

The following is a comparison of our results of operations for the three months ended September 30, 2021, which we refer to as the “third quarter of fiscal 2021,” compared to the three months ended September 30, 2020, which we refer to as the “third quarter of fiscal 2020.”

Revenues. For the third quarter of fiscal 2021 and the third quarter of fiscal 2020, our revenues in dollars and as a percentage of total revenues were as follows:

	For the Three Months Ended September 30,
	(unaudited)
	2021			2020				2021 vs 2020
			As a % of			As a % of
			Total			Total
	Amount		Revenues	Amount		Revenues		$ Variance
Revenues:
Billboard rentals, net	$	8,023,065	55.4%	$	7,121,957		61.3%	$	901,108
Broadband services		3,773,729	26.0%		1,144,343		9.9%		2,629,386
Premiums earned		2,031,575	14.0%		2,880,544		24.8%		(848,969	)
Insurance commissions		584,082	4.0%		382,493		3.3%		201,589
Investment and other income		85,696	0.6%		77,499		0.7%		8,197
Total Revenues	$	14,498,147	100.0%	$	11,606,836		100.0%	$	2,891,311

We realized total revenues of $14,498,147 during the third quarter of fiscal 2021, an increase of 24.9% over revenues of $11,606,836 during the third quarter of fiscal 2020. The increase in total revenues was largely driven by our acquisition of UBB in December 2020 and growth within our billboard business after being negatively impacted from the COVID-19 pandemic during the third quarter of fiscal 2020. These increases in revenue were partially offset by lower revenue within our UCS insurance subsidiary, mainly due to the suspension of its rental guarantee bond program. Due to the disruption in this market, we have suspended issuing new rental guarantee bonds, which could reduce future revenues at UCS. We recognize revenues for written premium over the life of the surety bond and, as a result, increased sales activities are not fully reflected in the quarter in which the surety bond is issued.

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Net billboard rentals in the third quarter of fiscal 2021 increased 12.7% from the third quarter of fiscal 2020, reflecting an improvement in rental and occupancy rates across a number of our markets after being negatively impacted by the COVID-19 pandemic in 2020. In addition, the acquisition of billboards from Thomas in the first quarter of fiscal 2021 accounted for approximately 3.6% of our billboard revenues in the third quarter of fiscal 2021.

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Revenue from broadband services in the third quarter of fiscal 2021 was $3,773,729, up from $1,144,343 in the third quarter of fiscal 2020, mainly reflecting the UBB acquisition in December 2020.

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Premiums earned from our UCS insurance subsidiary decreased 29.5% in the third quarter of fiscal 2021 when compared to the third quarter of fiscal 2020. The decrease in premiums earned was primarily due to the suspension of issuing new bonds under the rental guarantee bond program.

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Revenue from insurance commissions generated by our surety brokerage operations increased by 52.7% in the third quarter of fiscal 2021 when compared to the third quarter of fiscal 2020, mainly reflecting the ACS acquisition in April 2021 as well as an increase in bonds sold through other insurance carriers.

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Investment and other income at UCS increased 10.6% in the third quarter of fiscal 2021 from $77,499 in the third quarter of fiscal 2020.

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Expenses. For the third quarter of fiscal 2021 and the third quarter of fiscal 2020, our expenses, in dollars, and as a percentage of total revenues, were as follows:

	For the Three Months Ended September 30,
	(unaudited)
	2021			2020			2021 vs 2020
			As a % of			As a % of
			Total			Total
	Amount		Revenues	Amount		Revenues	$ Variance
Costs and Expenses:
Cost of billboard revenues	$	2,992,251	20.6%	$	2,780,359	24.0%	$	211,892
Cost of broadband revenues		742,082	5.1%		129,414	1.1%		612,668
Cost of insurance revenues		1,029,576	7.1%		1,758,451	15.2%		(728,875	)
Employee costs		4,544,796	31.4%		3,311,885	28.5%		1,232,911
Professional fees		2,552,762	17.6%		630,604	5.4%		1,922,158
Depreciation		1,668,984	11.5%		978,672	8.4%		690,312
Amortization		1,137,736	7.9%		1,031,805	8.9%		105,931
General and administrative		2,497,301	17.2%		1,649,056	14.2%		848,245
Loss on disposition of assets		61,478	0.4%		20,751	0.2%		40,727
Accretion		32,179	0.2%		36,462	0.3%		(4,283	)
Total Costs and Expenses	$	17,259,145	119.0%	$	12,327,459	106.2%	$	4,931,686

During the third quarter of fiscal 2021, we had total costs and expenses of $17,259,145, as compared to total costs and expenses of $12,327,459 in the third quarter of fiscal 2020. Total costs and expenses as a percentage of total revenues increased from 106.2% in the third quarter of fiscal 2020 to 119.0% in the third quarter of fiscal 2021, mainly due to a higher level of professional fees associated with Yellowstone entering into a business combination agreement with SHG as well as Boston Omaha's $55 million Sky Series B Preferred Units investment. In the third quarter of fiscal 2021, cost of billboard revenues, cost of insurance revenues and amortization decreased as a percentage of total revenues as compared to the third quarter of fiscal 2020. Cost of broadband revenues, employee costs, depreciation, and general and administrative expenses increased as a percentage of total revenues mainly due to the acquisition of UBB in December 2020. Loss on disposition of assets and accretion, primarily associated with our billboard and broadband services businesses, remained relatively constant as a percentage of total revenues.

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Cost of billboard revenues decreased as a percentage of billboard revenues from 39.0% in the third quarter of fiscal 2020 to 37.3% in the third quarter of fiscal 2021. The decrease was mainly related to lower ground rent expense as a percentage of billboard revenues.

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During the third quarter of fiscal 2021, cost of insurance revenues decreased by $728,875, or 41.4%, from the third quarter of fiscal 2020. The decrease was driven by lower commissions paid due to decreased revenues within UCS from both third-party agents and the sale of certain rental guarantee bonds as well as a decrease in loss reserves at UCS related to its rental guarantee bond program.

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Employee costs increased $1,232,911 from the third quarter of fiscal 2020. The increase was mainly driven by the UBB acquisition in December 2020 and the ACS acquisition in April 2021.

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Professional fees in the third quarter of fiscal 2021 were $2,552,762, or 17.6% of total revenues, as compared to $630,604, or 5.4% of total revenues, in the third quarter of fiscal 2020. The increase was mainly driven by professional fees associated with Yellowstone entering into a business combination agreement with SHG as well as Boston Omaha's $55 million Sky Series B Preferred Units investment.

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General and administrative expenses increased from $1,649,056 in the third quarter of fiscal 2020 to $2,497,301 in the third quarter of fiscal 2021, an increase of 51.4%. The increase was mainly driven by the UBB acquisition in December 2020, the consolidation of Yellowstone, and an increase in other corporate related expenses.

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Non-cash expenses in the third quarter of fiscal 2021 included $1,668,984 in depreciation expense, $1,137,736 in amortization expense, and $32,179 in accretion expense related to asset retirement obligations for certain billboard and broadband assets. The increase in depreciation and amortization expense was mainly driven by the UBB acquisition in December 2020.

Net Loss from Operations. Net loss from operations for the third quarter of fiscal 2021 was $2,760,998, or 19.0% of total revenues, as compared to a net loss from operations of $720,623, or 6.2% of total revenues, in the third quarter of fiscal 2020. The increase in net loss from operations in dollars was primarily due to costs associated with Yellowstone entering into a business combination agreement with SHG as well as Boston Omaha's $55 million Sky Series B Preferred Units investment, decreased revenue within our insurance operations, and an increase in other corporate related expenses which were partially offset by improved operations within our billboard business and the addition of our broadband services operations. Our net loss from operations included $2,838,899 from non-cash amortization, depreciation and accretion expenses in the third quarter of fiscal 2021, as compared to $2,046,939 in the third quarter of fiscal 2020.

Other Income (Expense). During the third quarter of fiscal 2021, we had net other expense of $33,753,550. Net other expense included $32,990,929 in other investment losses related to public equity securities mainly held by Boston Omaha, $1,019,917 related to the remeasurement of Yellowstone's public warrants, and interest expense of $233,561 mainly incurred under Link's term loans. These items were partially offset by $359,203 in equity in income of unconsolidated affiliates, $106,815 in dividend income mainly from public equity securities held by Boston Omaha, and interest income of $24,839. During the third quarter of fiscal 2020, we had net other income of $4,186,794, which included $2,845,323 in other investment income related to public equity securities mainly held by Boston Omaha, $1,342,826 in equity in income of unconsolidated affiliates, $106,716 in dividend income, $104,125 in interest income, and interest expense of $212,196 mainly incurred under Link's term loans.

As a result of a change in GAAP effective in 2018, we are required to include the unrealized changes in market prices of investments in public equity securities in our reported earnings. While we intend to hold our current securities for the longer term, we may in the future choose to sell them for a variety of reasons resulting in realized losses or gains.

Net Income (Loss) Attributable to Common Stockholders. We had a net loss attributable to common stockholders in the amount of $26,276,094 in the third quarter of fiscal 2021, or loss per share of $0.89, based on 29,576,115 diluted weighted average shares outstanding. This is compared to net income attributable to common stockholders of $3,463,671 in the third quarter of fiscal 2020, or income per share of $0.13, based on 27,271,014 diluted weighted average shares outstanding.

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Nine Months Ended September 30, 2021 Compared to Nine Months Ended September 30, 2020

The following is a comparison of our results of operations for the nine months ended September 30, 2021, which we refer to as the “first nine months of fiscal 2021,” compared to the nine months ended September 30, 2020, which we refer to as the “first nine months of fiscal 2020.”

Revenues. For the first nine months of fiscal 2021 and the first nine months of fiscal 2020, our revenues in dollars and as a percentage of total revenues were as follows:

	For the Nine Months Ended September 30,
	(unaudited)
	2021			2020			2021 vs 2020
			As a % of			As a % of
			Total			Total
	Amount		Revenues	Amount		Revenues	$ Variance
Revenues:
Billboard rentals, net	$	23,129,582	55.2%	$	20,991,755	60.8%	$	2,137,827
Broadband services		11,329,220	27.1%		2,575,676	7.5%		8,753,544
Premiums earned		5,554,297	13.3%		9,538,183	27.6%		(3,983,886	)
Insurance commissions		1,642,962	3.9%		1,065,013	3.1%		577,949
Investment and other income		226,986	0.5%		338,953	1.0%		(111,967	)
Total Revenues	$	41,883,047	100.0%	$	34,509,580	100.0%	$	7,373,467

We realized total revenues of $41,883,047 during the first nine months of fiscal 2021, an increase of 21.4% over revenues of $34,509,580 during the first nine months of fiscal 2020. The increase in total revenues was largely driven by our acquisition of FibAire in March 2020, our acquisition of UBB in December 2020, and growth within our billboard business after being negatively impacted from the COVID-19 pandemic during the first nine months of fiscal 2020. These increases in revenue were partially offset by lower revenue within our UCS insurance subsidiary, mainly due to the suspension of its rental guarantee bond program. Due to the disruption in this market, we have suspended issuing new rental guarantee bonds, which could reduce future revenues at UCS. We recognize revenues for written premium over the life of the surety bond and, as a result, increased sales activities are not fully reflected in the quarter in which the surety bond is issued.

●

Net billboard rentals in the first nine months of fiscal 2021 increased 10.2% from the first nine months of fiscal 2020, reflecting an improvement in rental and occupancy rates across a number of our markets after being negatively impacted by the COVID-19 pandemic in 2020. In addition, the acquisition of billboards from Thomas in the first quarter of fiscal 2021 accounted for approximately 3.3% of our billboard revenues in the first nine months of fiscal 2021.

●

Revenue from broadband services in the first nine months of fiscal 2021 was $11,329,220, up from $2,575,676 in the first nine months of fiscal 2020, mainly reflecting the FibAire acquisition in March 2020 and the UBB acquisition in December 2020.

●

Premiums earned from our UCS insurance subsidiary decreased 41.8% in the first nine months of fiscal 2021 when compared to the first nine months of fiscal 2020. The decrease in premiums earned was primarily due to the suspension of issuing new bonds under the rental guarantee bond program.

●

Revenue from insurance commissions generated by our surety brokerage operations increased by 54.3% in the first nine months of fiscal 2021 when compared to the first nine months of fiscal 2020, mainly reflecting the ACS acquisition in April 2021 as well as an increase in bonds sold through other insurance carriers.

●

Investment and other income at UCS decreased 33.0% in the first nine months of fiscal 2021 from $338,953 in the first nine months of fiscal 2020.

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Expenses. For the first half of fiscal 2021 and the first half of fiscal 2020, our expenses, in dollars, and as a percentage of total revenues, were as follows:

	For the Nine Months Ended September 30,
	(unaudited)
	2021			2020			2021 vs 2020
			As a % of			As a % of
			Total			Total
	Amount		Revenues	Amount		Revenues	$ Variance
Costs and Expenses:
Cost of billboard revenues	$	8,927,528	21.3%	$	8,472,265	24.5%	$	455,263
Cost of broadband revenues		2,352,724	5.6%		379,073	1.1%		1,973,651
Cost of insurance revenues		3,031,391	7.3%		5,367,231	15.6%		(2,335,840	)
Employee costs		13,312,992	31.8%		9,542,845	27.6%		3,770,147
Professional fees		4,670,926	11.2%		2,582,961	7.5%		2,087,965
Depreciation		4,066,451	9.7%		2,744,376	8.0%		1,322,075
Amortization		3,508,445	8.4%		3,012,641	8.7%		495,804
General and administrative		7,136,217	17.0%		4,978,443	14.4%		2,157,774
Loss on disposition of assets		119,904	0.3%		89,685	0.3%		30,219
Accretion		96,717	0.2%		105,964	0.3%		(9,247	)
Total Costs and Expenses	$	47,223,295	112.8%	$	37,275,484	108.0%	$	9,947,811

During the first nine months of fiscal 2021, we had total costs and expenses of $47,223,295, as compared to total costs and expenses of $37,275,484 in the first nine months of fiscal 2020. Total costs and expenses as a percentage of total revenues increased from 108.0% in the first nine months of fiscal 2020 to 112.8% in the first nine months of fiscal 2021, mainly due to a higher level of professional fees associated with Yellowstone entering into a business combination agreement with SHG as well as Boston Omaha's $55 million Sky Series B Preferred Units investment. In the first nine months of fiscal 2021, cost of billboard revenues and cost of insurance revenues decreased as a percentage of total revenues as compared to the first nine months of fiscal 2020. Cost of broadband revenues, employee costs, depreciation and general and administrative expenses increased as a percentage of total revenues mainly due to the FibAire acquisition in March 2020, the UBB acquisition in December 2020, and the consolidation of Yellowstone. Amortization, loss on disposition of assets and accretion, primarily associated with our billboard and broadband services businesses, remained relatively constant as a percentage of total revenues.

●

Cost of billboard revenues decreased as a percentage of billboard revenues from 40.4% in the first nine months of fiscal 2020 to 38.6% in the first nine months of fiscal 2021. The decrease was mainly related to lower ground rent expense as a percentage of billboard revenues.

●

During the first nine months of fiscal 2021, cost of insurance revenues decreased by $2,335,840, or 43.5%, from the first nine months of fiscal 2020. The decrease was driven by lower commissions paid due to decreased revenues within UCS from both third-party agents and the sale of certain rental guarantee bonds as well as a decrease in loss reserves at UCS related to its rental guarantee bond program.

●

Employee costs increased $3,770,147 from the first nine months of fiscal 2020. The increase is mainly driven by the FibAire acquisition in March 2020, the UBB acquisition in December 2020, and the ACS acquisition in April 2021.

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●

Professional fees in the first nine months of fiscal 2021 were $4,670,926, or 11.2% of total revenues, as compared to $2,582,961, or 7.5% of total revenues, in the first nine months of fiscal 2020. The increase was mainly driven by professional fees associated with Yellowstone entering into a business combination agreement with SHG as well as Boston Omaha's $55 million Sky Series B Preferred Units investment.

●

General and administrative expenses increased from $4,978,443 in the first nine months of fiscal 2020 to $7,136,217 in the first nine months of fiscal 2021, an increase of 43.3%. The increase was mainly driven by the FibAire acquisition in March 2020, the UBB acquisition in December 2020, the consolidation of Yellowstone, and an increase in other corporate related expenses.

●

Non-cash expenses in the first nine months of fiscal 2021 included $4,066,451 in depreciation expense, $3,508,445 in amortization expense, and $96,717 in accretion expense related to asset retirement obligations for certain billboard and broadband assets. The increase in depreciation and amortization expense was mainly driven by the addition of our broadband services business.

Net Loss from Operations. Net loss from operations for the first nine months of fiscal 2021 was $5,340,248, or 12.8% of total revenues, as compared to a net loss from operations of $2,765,904, or 8.0% of total revenues, in the first nine months of fiscal 2020. The increase in net loss from operations in dollars was primarily due to costs associated with Yellowstone entering into a business combination agreement with SHG as well as Boston Omaha's $55 million Sky Series B Preferred Units investment, decreased revenue within our insurance operations, and an increase in other corporate related expenses which were partially offset by improved operations within our billboard business and the addition of our broadband services operations. Our net loss from operations included $7,671,613 from non-cash amortization, depreciation and accretion expenses in the first nine months of fiscal 2021, as compared to $5,862,981 in the first nine months of fiscal 2020.

Other Income (Expense). During the first nine months of fiscal 2021, we had net other income of $88,935,971. Net other income included $85,694,668 from in other investment income related to public equity securities mainly held by Boston Omaha, $2,039,835 related to the remeasurement of Yellowstone's public warrants, $935,488 in equity in income of unconsolidated affiliates, interest income of $645,741 primarily derived from our short term loan to DFH, and $322,785 in dividend income mainly from public equity securities held by Boston Omaha. These items were partially offset by interest expense of $702,546 mainly incurred under Link's term loans. During the first nine months of fiscal 2020, we had net other expense of $15,060,171, which included $18,717,680 in other investment losses related to public equity securities mainly held by Boston Omaha, $2,406,151 in equity in income of unconsolidated affiliates, $967,864 in dividend income, $884,125 in interest income, and interest expense of $600,631 mainly incurred under Link's term loans.

Net Income (Loss) Attributable to Common Stockholders. We had net income attributable to common stockholders in the amount of $66,799,096 in the first nine months of fiscal 2021, or income per share of $2.32, based on 28,825,428 diluted weighted average shares outstanding. This is compared to a net loss attributable to common stockholders of $17,868,259 in the first nine months of fiscal 2020, or a loss per share of $0.71, based on 25,145,700 diluted weighted average shares outstanding.

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Results of Operations by Segment

The following tables report results for the following three segments in which we operate, billboards, insurance and broadband, for the third quarter of fiscal 2021 and the third quarter of fiscal 2020:

Results of Billboard Operations

	For the Three Months Ended September 30,
	(unaudited)
	2021				2020
				As a % of				As a % of
				Segment				Segment
				Operating				Operating
	Amount			Revenues	Amount			Revenues
Operating Revenues
Billboard rentals, net	$	8,023,065		100.0%	$	7,121,957		100.0%
Cost of Revenues
Ground rents		1,587,875		19.8%		1,479,596		20.8%
Utilities		307,646		3.8%		297,782		4.2%
Commissions paid		755,323		9.4%		688,780		9.6%
Other costs of revenues		341,407		4.3%		314,201		4.4%
Total cost of revenues		2,992,251		37.3%		2,780,359		39.0%
Gross margin		5,030,814		62.7%		4,341,598		61.0%
Other Operating Expenses
Employee costs		1,410,669		17.6%		1,364,457		19.2%
Professional fees		112,773		1.4%		202,027		2.8%
Depreciation		910,845		11.3%		843,575		11.9%
Amortization		860,290		10.7%		827,470		11.6%
General and administrative		673,286		8.4%		736,763		10.4%
Accretion		28,712		0.4%		34,740		0.5%
Loss on disposition of assets		61,093		0.8%		8,751		0.1%
Total expenses		4,057,668		50.6%		4,017,783		56.4%
Segment Income from Operations		973,146		12.1%		323,815		4.6%
Interest expense, net		(226,560	)	(2.8%)		(209,432	)	(3.0%)
Net Income Attributable to Common Stockholders	$	746,586		9.3%	$	114,383		1.6%

Comparison of the Third Quarter of Fiscal 2021 to the Third Quarter of Fiscal 2020. In the third quarter of fiscal 2021, there was a 12.7% increase in net billboard revenues from the third quarter of fiscal 2020, reflecting an improvement in rental and occupancy rates across a number of our markets after being negatively impacted by the COVID-19 pandemic in 2020. In addition, the acquisition of billboards from Thomas in the first quarter of fiscal 2021 accounted for approximately 3.6% of our billboard revenues in the third quarter of fiscal 2021. The key factors affecting our billboard operations results during the third quarter of fiscal 2020 were as follows:

●

Ground rent expense decreased as a percentage of total segment operating revenues from 20.8% in the third quarter of fiscal 2020 to 19.8% in the third quarter of fiscal 2021.

●

Commissions paid as a percentage of total segment operating revenues decreased slightly from 9.6% in the third quarter of fiscal 2020 to 9.4% in the third quarter of fiscal 2021.

●

Employee costs as a percentage of total segment operating revenues decreased from 19.2% in the third quarter of fiscal 2020 to 17.6% in the third quarter of fiscal 2021.

●

General and administrative expenses decreased as a percentage of total segment operating revenues from 10.4% in the third quarter of fiscal 2020 to 8.4% in the third quarter of fiscal 2021.

●

Depreciation and amortization expense increased by $67,270 and $32,820, respectively, from the third quarter of fiscal 2020. The increases are primarily due to the Thomas acquisition in the first quarter of fiscal 2021.

●

Net interest expense of $226,560 in the third quarter of fiscal 2021 compared to net interest expense $209,432 in the third quarter of fiscal 2020. Net interest expense was related to Link's $18 million and $5.5 million term loans, which commenced in August 2019 and August 2020, respectively.

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Results of Insurance Operations

	For the Three Months Ended September 30,
	(unaudited)
	2021				2020
				As a % of				As a % of
				Segment				Segment
				Operating				Operating
	Amount			Revenues	Amount			Revenues
Operating Revenues
Premiums earned	$	2,031,575		75.2%	$	2,880,544		86.2%
Insurance commissions		584,082		21.6%		382,493		11.5%
Investment and other income		85,696		3.2%		77,499		2.3%
Total operating revenues		2,701,353		100.0%		3,340,536		100.0%
Cost of Revenues
Commissions paid		602,180		22.3%		845,380		25.3%
Premium taxes, fees, and assessments		61,735		2.3%		98,243		2.9%
Losses and loss adjustment expense		365,661		13.5%		814,828		24.4%
Total cost of revenues		1,029,576		38.1%		1,758,451		52.6%
Gross margin		1,671,777		61.9%		1,582,085		47.4%
Other Operating Expenses
Employee costs		1,304,238		48.3%		1,072,551		32.1%
Professional fees		65,363		2.4%		69,507		2.1%
Depreciation		7,804		0.3%		5,835		0.2%
Amortization		47,061		1.8%		123,662		3.7%
General and administrative		606,274		22.4%		411,341		12.3%
Total expenses		2,030,740		75.2%		1,682,896		50.4%
Segment Loss from Operations		(358,963	)	(13.3%)		(100,811	)	(3.0%)
Interest income, net		5		0.0%		5		0.0%
Other investment income (loss)		(1,687,112	)	(62.4%)		1,773,862		53.1%
Net Income (Loss) Attributable to Common Stockholders	$	(2,046,070	)	(75.7%)	$	1,673,056		50.1%

Comparison of the Third Quarter of Fiscal 2021 to the Third Quarter of Fiscal 2020. In the third quarter of fiscal 2021, total operating revenues declined by 19.1% as compared to the third quarter of fiscal 2020, mainly due to the suspension of UCS's rental guarantee bond program. The key factors affecting our insurance operations results during the third quarter of fiscal 2021 were as follows:

●

Premiums earned from our UCS insurance subsidiary in the third quarter of fiscal 2021 decreased 29.5% from the third quarter of fiscal 2020. The decrease in premiums earned was primarily due to the suspension of its rental guarantee bond program.

●

Our brokerage operations realized an 52.7% increase in insurance commissions in the third quarter of fiscal 2021 when compared to the third quarter of fiscal 2020. The increase is mainly due to the ACS acquisition completed in April 2021 as well as an increase in bonds sold through other insurance carriers.

●

Commissions paid in the third quarter of fiscal 2021 decreased by $243,200 from the third quarter of fiscal 2020 primarily due to the suspension of UCS's rental guarantee bond program, which generally provided a higher commission structure.

●

Losses and loss adjustment expense as a percentage of insurance revenues decreased from 24.4% in the third quarter of fiscal 2020 to 13.5% in the third quarter of fiscal 2021. Losses and loss adjustment expenses are reserved monthly based on a percentage of earned premium. During fiscal 2020, UCS strengthened its reserving methodology for its rental guarantee bond program in response to market disruptions caused by COVID-19. UCS' exposure to the rental guarantee bond program has been significantly mitigated as a majority of bonds have since expired.

●

Employee costs in the third quarter of fiscal 2021 increased by 21.6% from the third quarter of fiscal 2020. The increase is mainly due to the ACS acquisition completed in April 2021.

●

General and administrative expenses in the third quarter of fiscal 2021 increased by 47.4% from the third quarter of fiscal 2020. The increase is mainly due to IT system implementation related expenses and the ACS acquisition completed in April 2021.

●

During the third quarter of fiscal 2021, our segment loss from insurance operations of $358,963 was increased by other investment losses of $1,687,112 mainly from unrealized losses on our investments in publicly held securities. We expect to continue to invest a portion of our excess capital in accordance with insurance regulatory limitations in both large-cap publicly traded equity securities and bonds. These investments are subject to the risk of loss in value depending upon market conditions and factors outside of our control.

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Results of Broadband Operations

	For the Three Months Ended September 30,
	(unaudited)
	2021				2020
				As a % of				As a % of
				Segment				Segment
				Operating				Operating
	Amount			Revenues	Amount			Revenues
Operating Revenues
Broadband revenues	$	3,773,729		100.0%	$	1,144,343		100.0%
Cost of Revenues
Network operations and data costs		438,640		11.6%		64,913		5.7%
Programming costs		31,283		0.8%		23,336		2.0%
Cell site rent and utilities		152,498		4.1%		12,275		1.1%
Other costs of revenues		119,661		3.2%		28,890		2.5%
Total cost of revenues		742,082		19.7%		129,414		11.3%
Gross margin		3,031,647		80.3%		1,014,929		88.7%
Other Operating Expenses
Employee costs		1,402,777		37.2%		557,096		48.7%
Professional fees		42,541		1.1%		10,343		0.9%
Depreciation		723,052		19.2%		129,262		11.3%
Amortization		230,385		6.1%		80,673		7.1%
General and administrative		574,800		15.2%		197,233		17.2%
Accretion		3,467		0.1%		1,722		0.2%
Loss on disposition of assets		385		0.0%		12,000		1.0%
Total expenses		2,977,407		78.9%		988,329		86.4%
Segment Income from Operations		54,240		1.4%		26,600		2.3%
Interest expense, net		(3,324	)	(0.1%)		(1,596	)	(0.1%)
Noncontrolling interest in subsidiary income		(70,674	)	(1.8%)		(2,500	)	(0.2%)
Net Income (Loss) Attributable to Common Stockholders	$	(19,758	)	(0.5%)	$	22,504		2.0%

Comparison of the Third Quarter of Fiscal 2021 to the Third Quarter of Fiscal 2020. In March 2020, we commenced our broadband services business with the acquisition of substantially all of the assets of FibAire. In December 2020, we acquired substantially all of the business assets of UBB. Therefore, comparisons of our broadband results for the third quarter of fiscal 2021 to the third quarter of fiscal 2020 may not be meaningful.

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Results of Billboard Operations

	For the Nine Months Ended September 30,
	(unaudited)
	2021				2020
				As a % of				As a % of
				Segment				Segment
				Operating				Operating
	Amount			Revenues	Amount			Revenues
Operating Revenues
Billboard rentals, net	$	23,129,582		100.0%	$	20,991,755		100.0%
Cost of Revenues
Ground rents		4,766,504		20.6%		4,592,406		21.9%
Utilities		932,028		4.0%		929,397		4.4%
Commissions paid		2,216,400		9.6%		2,018,314		9.6%
Other costs of revenues		1,012,596		4.4%		932,148		4.5%
Total cost of revenues		8,927,528		38.6%		8,472,265		40.4%
Gross margin		14,202,054		61.4%		12,519,490		59.6%
Other Operating Expenses
Employee costs		4,334,412		18.7%		4,313,414		20.6%
Professional fees		420,046		1.8%		464,565		2.2%
Depreciation		2,666,167		11.5%		2,498,514		11.9%
Amortization		2,557,931		11.1%		2,462,425		11.7%
General and administrative		2,075,259		9.0%		2,321,205		11.0%
Accretion		86,419		0.4%		104,242		0.5%
Loss on disposition of assets		116,247		0.5%		77,685		0.4%
Total expenses		12,256,481		53.0%		12,242,050		58.3%
Segment Income from Operations		1,945,573		8.4%		277,440		1.3%
Interest expense, net		(683,858	)	(3.0%)		(595,088	)	(2.8%)
Net Income (Loss) Attributable to Common Stockholders	$	1,261,715		5.4%	$	(317,648	)	(1.5%)

Comparison of the First Nine Months of Fiscal 2021 to the First Nine Months of Fiscal 2020. In the first nine months of fiscal 2021, there was an 10.2% increase in net billboard revenues from the first nine months of fiscal 2020, reflecting an improvement in rental and occupancy rates across a number of our markets after being negatively impacted by the COVID-19 pandemic in 2020. In addition, the acquisition of billboards from Thomas in the first quarter of fiscal 2021 accounted for approximately 3.3% of our billboard revenues in the first nine months of fiscal 2021. The key factors affecting our billboard operations results during the first nine months of fiscal 2020 were as follows:

●

Ground rent expense decreased as a percentage of total segment operating revenues from 21.9% in the first nine months of fiscal 2020 to 20.6% in the first nine months of fiscal 2021.

●

Commissions paid as a percentage of total segment operating revenues remained flat at 9.6% in the first nine months of fiscal 2020 and in the first nine months of fiscal 2021.

●

Employee costs as a percentage of total segment operating revenues decreased from 20.6% in the first nine months of fiscal 2020 to 18.7% in the first nine months of fiscal 2021.

●

General and administrative expenses decreased as a percentage of total segment operating revenues from 11.0% in the first nine months of fiscal 2020 to 9.0% in the first nine months of fiscal 2021.

●

Depreciation and amortization expense increased by $167,653 and $95,506, respectively, from the first nine months of fiscal 2020. The increases are primarily due to the Thomas acquisition in the first quarter of fiscal 2021.

●

Net interest expense of $683,858 in the first nine months of fiscal 2021 compared to net interest expense of $595,088 the first nine months of fiscal 2020. Net interest expense was related to Link's $18 million and $5.5 million term loans, which commenced in August 2019 and August 2020, respectively.

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Results of Insurance Operations

	For the Nine Months Ended September 30,
	(unaudited)
	2021				2020
				As a % of				As a % of
				Segment				Segment
				Operating				Operating
	Amount			Revenues	Amount			Revenues
Operating Revenues
Premiums earned	$	5,554,297		74.8%	$	9,538,183		87.2%
Insurance commissions		1,642,962		22.1%		1,065,013		9.7%
Investment and other income		226,986		3.1%		338,953		3.1%
Total operating revenues		7,424,245		100.0%		10,942,149		100.0%
Cost of Revenues
Commissions paid		1,559,222		21.0%		2,884,197		26.4%
Premium taxes, fees, and assessments		200,115		2.7%		244,956		2.2%
Losses and loss adjustment expense		1,272,054		17.1%		2,238,078		20.5%
Total cost of revenues		3,031,391		40.8%		5,367,231		49.1%
Gross margin		4,392,854		59.2%		5,574,918		50.9%
Other Operating Expenses
Employee costs		3,751,084		50.5%		3,286,309		30.0%
Professional fees		250,712		3.4%		428,922		3.9%
Depreciation		21,340		0.3%		17,240		0.2%
Amortization		130,018		1.8%		396,453		3.6%
General and administrative		1,818,267		24.5%		1,431,153		13.1%
Total expenses		5,971,421		80.5%		5,560,077		50.8%
Segment Income (Loss) from Operations		(1,578,567	)	(21.3%)		14,841		0.1%
Interest expense, net		(1,991	)	(0.0%)		(365	)	(0.0%)
Other investment income (loss)		2,219,102		(29.9%)		(2,184,391	)	(19.9%)
Net Income (Loss) Attributable to Common Stockholders	$	638,544		8.6%	$	(2,169,915	)	(19.8%)

Comparison of the First Nine Months of Fiscal 2021 to the First Nine Months of Fiscal 2020. In the first nine months of fiscal 2021, total operating revenues declined by 32.2% as compared to the first nine months of fiscal 2020, mainly due to the suspension of UCS's rental guarantee bond program. The key factors affecting our insurance operations results during the first nine months of fiscal 2021 were as follows:

●

Premiums earned from our UCS insurance subsidiary in the first nine months of fiscal 2021 decreased 41.8% from the first nine months of fiscal 2020. The decrease in premiums earned was primarily due to the suspension of its rental guarantee bond program.

●

Our brokerage operations realized a 54.3% increase in insurance commissions in the first nine months of fiscal 2021 when compared to the first nine months of fiscal 2020. The increase is mainly due to the ACS acquisition completed in April 2021 as well as an increase in bonds sold through other insurance carriers.

●

Commissions paid in the first nine months of fiscal 2021 decreased by $1,324,975 from the first nine months of fiscal 2020 primarily due to the suspension of UCS's rental guarantee bond program, which generally provided a higher commission structure.

●

Losses and loss adjustment expenses as a percentage of insurance revenues decreased from 20.5% in the first nine months of fiscal 2020 to 17.1% in the first nine months of fiscal 2021. Losses and loss adjustment expenses are reserved monthly based on a percentage of earned premium. During fiscal 2020, UCS strengthened its reserving methodology for its rental guarantee bond program in response to market disruptions caused by COVID-19. UCS' exposure to the rental guarantee bond program has been significantly mitigated as a majority of bonds have since expired.

●

Employee costs in the first nine months of fiscal 2021 increased by 14.1% from the first nine months of fiscal 2020. The increase is mainly due to the ACS acquisition completed in April 2021.

●

General and administrative expenses in the first nine months of fiscal 2021 increased by 27.0% from the first nine months of fiscal 2020. The increase is mainly due to IT system implementation related expenses and the ACS acquisition completed in April 2021.

●

During the first nine months of fiscal 2021, our segment loss from insurance operations of $1,578,567 was more than offset by other investment income of $2,219,102 mainly from unrealized gains on our investments in publicly held securities. We expect to continue to invest a portion of our excess capital in accordance with insurance regulatory limitations in both large-cap publicly traded equity securities and bonds. These investments are subject to the risk of loss in value depending upon market conditions and factors outside of our control.

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Results of Broadband Operations

	For the Nine Months Ended September 30,
	(unaudited)
	2021				2020
				As a % of				As a % of
				Segment				Segment
				Operating				Operating
	Amount			Revenues	Amount			Revenues
Operating Revenues
Broadband revenues	$	11,329,220		100.0%	$	2,575,676		100.0%
Cost of Revenues
Network operations and data costs		1,528,584		13.5%		172,704		6.7%
Programming costs		87,081		0.8%		51,871		2.0%
Cell site rent and utilities		432,116		3.8%		42,724		1.7%
Other costs of revenues		304,943		2.7%		111,774		4.3%
Total cost of revenues		2,352,724		20.8%		379,073		14.7%
Gross margin		8,976,496		79.2%		2,196,603		85.3%
Other Operating Expenses
Employee costs		3,911,189		34.5%		1,021,554		39.6%
Professional fees		125,175		1.1%		25,146		1.0%
Depreciation		1,311,516		11.6%		228,622		8.9%
Amortization		820,496		7.2%		153,763		5.9%
General and administrative		1,474,068		13.0%		330,361		12.8%
Accretion		10,298		0.1%		1,722		0.1%
Loss on disposition of assets		3,657		0.0%		12,000		0.5%
Total expenses		7,656,399		67.5%		1,773,168		68.8%
Segment Income from Operations		1,320,097		11.7%		423,435		16.5%
Interest expense, net		(8,293	)	(0.1%)		(1,594	)	(0.1%)
Noncontrolling interest in subsidiary income		(325,135	)	(2.9%)		(42,184	)	(1.7%)
Net Income Attributable to Common Stockholders	$	986,669		8.7%	$	379,657		14.7%

Comparison of the First Nine Months of Fiscal 2021 to the First Nine Months of Fiscal 2020. In March 2020, we commenced our broadband services business with the acquisition of substantially all of the assets of FibAire. In December 2020, we acquired substantially all of the business assets of UBB. Therefore, comparisons of our broadband results for the first nine months of fiscal 2021 to the first nine months of fiscal 2020 may not be meaningful.

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Cash Flows

Cash Flows for the First Nine Months of Fiscal 2021 compared to the First Nine Months of Fiscal 2020

The table below summarizes our cash flows, in dollars, for the first nine months of fiscal 2021 and the first nine months of fiscal 2020:

	Nine Months		Nine Months
	Ended		Ended
	September 30, 2021		September 30, 2020
	(unaudited)		(unaudited)
Net cash provided by operating activities	$	6,620,097	$	3,492,006
Net cash provided by (used in) investing activities		10,564,107		(37,479,511	)
Net cash provided by financing activities		52,177,885		60,267,250
Net increase in cash, cash equivalents, and restricted cash	$	69,362,089	$	26,279,745

Net Cash Provided by Operating Activities. Net cash provided by operating activities was $6,620,097 for the first nine months of fiscal 2021 compared to a $3,492,006 for the first nine months of fiscal 2020. The increase in net cash provided by operating activities was primarily due to the addition of our broadband services business, increased cash flow generation within our billboard business, increased distributions from unconsolidated affiliates, and favorable working capital fluctuations, which was partially offset by the decline in operating results within our insurance business as well as costs associated with Yellowstone.

Net Cash Provided by (Used in) Investing Activities. Net cash provided by investing activities was $10,564,107 for the first nine months of fiscal 2021 as compared with net cash used in investing activities of $37,479,511 for the first nine months of fiscal 2020. The increase in net cash provided by investing activities is primarily attributable to net proceeds of $65,475,346 related to the sale or maturity of marketable securities and U.S. Treasury trading securities held at Boston Omaha and the receipt of $20,000,000 of principal payments on our note receivable from DFH. Partially offsetting the increase in net cash inflows was our $55,000,000 Sky Series B Preferred Units investment.

Net Cash Provided by Financing Activities. Net cash provided by financing activities was $52,177,885 during the first nine months of fiscal 2021 as compared to net cash provided by financing activities of $60,267,250 during the first nine months of fiscal 2020. During the first nine months of fiscal 2021, net cash provided by financing activities mainly consisted of $58,625,000 in gross proceeds raised through our public offering of Class A common stock on April 1, 2021, offset primarily by offering costs of $3,447,996 and net returns of funds held as collateral in the amount of $1,452,590.

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Liquidity and Capital Resources

Currently, we own billboards in Alabama, Florida, Georgia, Illinois, Iowa, Kansas, Missouri, Nebraska, Nevada, Virginia, West Virginia and Wisconsin, surety insurance brokerage firms we acquired in 2016, 2017 and 2021, a surety insurance company we acquired in December 2016, broadband services providers whose assets we acquired in March 2020 and December 2020 and minority investments in several real estate management entities and a bank holding entity whose primary source of revenue is in subprime automobile lending. At September 30, 2021, we had approximately $116 million in unrestricted cash and approximately $51 million in U.S. Treasury trading securities. Our strategy is to continue to acquire other billboard locations, insurance businesses, and broadband service providers as well as acquire other businesses which we believe have the potential to generate positive cash flows and when made at what we believe to be attractive prices relative to other opportunities generally available to us. We currently expect to finance any future acquisitions and investments with cash, debt and seller or third-party financing. In the future, we may satisfy all or a portion of the purchase price for an acquisition with our equity securities. In addition, we have made investments in several companies and expect to continue to make investments in the securities of both publicly traded and privately held companies.

There can be no assurance that we will consummate any subsequent acquisitions. Furthermore, our acquisitions are subject to a number of risks and uncertainties, including as to when, whether and to what extent the anticipated benefits and cost savings of a particular acquisition will be realized. Our failure to successfully identify and complete future acquisitions of assets or businesses could reduce future potential earnings, available cash and slow our anticipated growth. Although we have and continue to enter into non-binding letters of intent to acquire businesses on a regular basis, we do not have current agreements, commitments or understandings for any specific material acquisitions which are probable to be consummated at this time.

To date, we have raised funds through the sale of our Common Stock in public offerings, sales of our Common Stock in “at the market” programs, term loan financing through our Link subsidiary, proceeds from the sale of publicly traded securities held by us, cash flow from operations, and, prior to 2019, through private placements of our Common Stock.

2020 and 2021 Underwritten Public Offerings

On May 28, 2020, we entered into an underwriting agreement (the “2020 Underwriting Agreement”) with Wells Fargo Securities, LLC (“WFS”) and Cowen and Company, LLC, as joint lead book-running managers for a public offering of 3,200,000 shares, which we refer to as the “firm shares,” of our Class A common stock at a public offering price of $16.00 per share. Under the terms of the underwriting agreement, we granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 480,000 shares of Class A common stock at the public offering price less underwriting discounts and commissions, which we refer to as the “option shares.” On June 2, 2020, we completed the public offering selling a total of 3,680,000 shares, including both the firm shares and all of the option shares, resulting in total gross proceeds to us of $58.9 million. The shares were sold in the offering pursuant to the Company’s shelf registration statement on Form S-3 (File No. 333-222853) that was declared effective on February 9, 2018, as supplemented by a prospectus supplement dated May 28, 2020 (the “2018 Shelf Registration Statement”).

On March 31, 2021, we entered into an underwriting agreement (the “2021 Underwriting Agreement”) with WFS for a public offering of 2,300,000 shares, which we refer to as the “firm shares,” of our Class A common stock, of which 2,000,000 shares were sold by Boston Omaha and 300,000 shares were sold by a selling stockholder, at a public offering price of $25.00 per share. Under the terms of the 2021 Underwriting Agreement, we granted the underwriters an option, exercisable for 30 days, to purchase up to an additional 345,000 shares of Class A common stock at the public offering price less underwriting discounts and commissions, which we refer to as the “option shares.” On April 6, 2021, we announced the completion of the public offering consisting of 2,345,000 shares, including both the firm shares and all of the option shares issued as a result of the underwriters’ exercise in full of their over-allotment option, resulting in total gross proceeds to us of $58.6 million. We raised this capital to fund the planned expansion of our fiber-to-the-home broadband business, to seek to grow our Link billboard business through the acquisitions of additional billboard businesses, and for general corporate purposes. The shares were sold in the offering pursuant to the Company’s universal shelf registration statement on Form S-3ASR (File No. 333-254870) that was declared effective on March 30, 2021 (the “2021 Shelf Registration Statement”).

We may, from time to time, in one or more offerings, offer and sell an indeterminate amount of any combination of Class A common stock or preferred stock, various series of debt securities and/or warrants. The shelf registration statement may also be used by one or more selling security holders to be identified in the future of our securities. We or any selling security holders may offer these securities from time to time in amounts, at prices and on terms determined at the time of offering. We may sell these securities to or through one or more underwriters, dealers or agents or directly to purchasers on a delayed or continuous basis. Unless otherwise set forth in an applicable prospectus supplement, we intend to use the net proceeds from the sale of the securities that we offer for general corporate purposes, including, but not limited to, financing our existing businesses and operations, and expanding our businesses and operations through additional hires, strategic alliances and acquisitions.

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At The Market Offering Programs

Starting in March 2018, we utilized our at the market offering that was part of our 2018 Shelf Registration Statement. This 2018 Shelf Registration Statement, which authorized us to sell up to $200 million through the sales of securities to the public, expired in February 2021 and was superseded by the 2021 Shelf Registration Statement. We sold a total of 2,630,787 shares of Class A common stock and raised gross proceeds of $60.1 million under the 2018 Shelf Registration Statement.

On September 29, 2021, we entered into an at the market equity offering program (the “ATM Program”) pursuant to a Sales Agreement (the “Sales Agreement”) by and between us and WFS. This ATM Program is consistent with our historical practice of having available to management the option to issue stock from time to time in order to continue to fund the growth of its fiber to the home rural broadband business, acquire additional billboards, and make other such investments in assets as needed to seek to grow intrinsic value per share. Our general preference is always to have options available to us from a capital allocation perspective which includes, but is not limited to, having a regularly filed ATM program as well as an authorized share repurchase program.

Pursuant to the terms of the Sales Agreement, we may sell, from time to time, shares (collectively, the “Placement Shares”) of our Class A common stock, with an aggregate sales price of up to $100 million through WFS, in transactions that are deemed to be at the market offerings as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”). As of the date of this Report, we have sold 73,397 shares of our Class A common stock resulting in net proceeds of approximately $2.7 million.

Upon delivery of a placement notice (a “Placement Notice”) and upon the terms and subject to the conditions of the Sales Agreement, WFS will use reasonable efforts consistent with its normal trading and sales practices, applicable laws and the rules of the NASDAQ Capital Market (“NASDAQ”) to sell the Placement Shares from time to time based upon our instructions for the sales, including price, time or size limits specified, and otherwise in accordance with, the terms of such Placement Notice. Pursuant to the Sales Agreement, WFS may sell Placement Shares by any method permitted by law deemed to be an at the market offering as defined in Rule 415 of the Securities Act. WFS may not purchase Placement Shares for its own account as principal unless expressly authorized to do so by us.

We intend to use the net proceeds from the sale of Placement Shares, after deducting WFS’ commissions and our offering expenses, for general corporate purposes, which may include financing its existing businesses and operations, and expanding its businesses and operations through additional acquisitions, minority investments and additional hires. To the extent that we raise additional funds by issuing equity or other securities, our shareholders may experience additional dilution. In the event we are required to obtain additional funds, there is no guarantee that we will be able to raise or obtain the additional funds or that the funds will be available on favorable terms to us.

For sales of Placement Shares through WFS, we will pay WFS a commission at a mutually agreed rate of 3% of the gross sales price per Placement Share. In addition, we have agreed to pay certain expenses incurred by WFS in connection with the offering. We have no obligation to sell any shares under the Sales Agreement, and may at any time suspend the offering of Placement Shares under the Sales Agreement.

The Sales Agreement contains customary representations and warranties of the parties and indemnification and contribution provisions under which we and WFS have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. The ATM Program pursuant to the Sales Agreement will automatically terminate upon the issuance and sale of all of the Placement Shares through WFS.

The Placement Shares will be offered and sold pursuant to the 2021 Shelf Registration Statement and a related prospectus supplement dated September 29, 2021 and filed with the SEC on the same date.

The foregoing description of the Sales Agreement is not complete and is qualified in its entirety by reference to the full text of the Sales Agreement, a copy of which is filed as Exhibit 1.1 to the Current Report on Form 8-K as filed with the SEC on September 29, 2021.

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Link Credit Agreement

On August 12, 2019, Link entered into a Credit Agreement (the “Credit Agreement”) with First National Bank of Omaha (the “Lender”) under which Link may borrow up to $40 million (the “Credit Facility”). The Credit Agreement provides for an initial term loan (“Term Loan 1”), an incremental term loan (“Term Loan 2”) and a revolving line of credit. These loans are secured by all assets of Link and its operating subsidiaries, including a pledge of equity interests of each of Link’s subsidiaries. In addition, each of Link’s subsidiaries has joined as a guarantor to the obligations under the Credit Agreement. These loans are not guaranteed by BOC or any of BOC’s non-billboard businesses. Link initially borrowed approximately $18 million under Term Loan 1 and $5.5 million under Term Loan 2. Link may not borrow additional funds under the term loan provisions of the Credit Facility. Long-term debt included within our consolidated balance sheet as of September 30, 2021 consists of Link’s Term Loan 1 and Term Loan 2 borrowings of $22,175,535, of which $1,220,005 is classified as current. There were no amounts outstanding related to the revolving line of credit as of September 30, 2021.

Principal amounts under each of Term Loan 1 and Term Loan 2 are payable in monthly installments according to a 15-year amortization schedule. These principal payments commenced on July 1, 2020 for Term Loan 1 and on October 1, 2020 for Term Loan 2. Both term loans are payable in full on August 12, 2026. During the first three years of the term loans, Link may prepay up to 10% of the loan principal in each year without paying any prepayment penalty. Otherwise, there is a prepayment penalty ranging between 2.0% and 0.5%. After three years, there is no prepayment penalty. Term Loan 1 and Term Loan 2 have fixed interest rates of 4.25% and 3.375%, respectively, per annum. The revolving line of credit loan facility has a $5 million maximum availability. Interest payments are based on the U.S. Prime Rate rate minus an applicable margin ranging between 0.65% and 1.15% dependent on Link’s consolidated leverage ratio. The revolving line of credit is due and payable on August 12, 2023.

During the term of the Credit Facility, Link is required to comply with the following financial covenants: A consolidated leverage ratio for any test period ending on the last day of any fiscal quarter of Link (a) beginning with the fiscal quarter ended December 31, 2020 of not greater than 3.25 to 1.00, and (b) beginning with the fiscal quarter ending December 31, 2021 and thereafter, of not greater than 3.00 to 1.0; minimum consolidated fixed charge coverage ratio of not less than 1.15 to 1.00 measured quarterly, based on rolling four quarters. The Company was in compliance with these covenants as of September 30, 2021.

The Credit Agreement includes representations and warranties, reporting covenants, affirmative covenants, negative covenants, financial covenants and events of default customary for financings of this type. Upon the occurrence of an event of default the Lender may accelerate the loans. Upon the occurrence of certain insolvency and bankruptcy events of default the loans will automatically accelerate. The foregoing summary of the Credit Agreement and the transactions contemplated thereby does not purport to be a complete description and is qualified in its entirety by reference to the terms and conditions of the Credit Agreement and Security Agreement, copies of which are attached as Exhibit 10.1 and Exhibit 10.2, respectively to our Form 8-K as filed with the SEC on August 13, 2019, a First Amendment to Credit Agreement, a copy of which is attached as Exhibit 10.1 to our Form 8-K as filed with the SEC on October 29, 2019, a Second Amendment to Credit Agreement, a copy of which is attached as Exhibit 10.1 to our Form 8-K as filed with the SEC on June 30, 2020, and a Third Amendment to Credit Agreement (the “Third Amendment”) with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on August 24, 2021.

Loan to Dream Finders Homes

On October 2, 2020, we provided a term loan of $20 million to Dream Finders Holdings, LLC to be used in expanding DFH's footprint in the Southeast United States. The effective interest rate on this term loan is approximately 14% and matured on May 1, 2021. This loan was repaid with interest in early 2021.

Investments in Yellowstone Acquisition Company and Sky Harbour LLC

Between August and November 2020, we invested, through BOC Yellowstone, approximately $7.8 million through the purchase of 3,399,724 shares of Class B common stock and private placement warrants to purchase 7,719,779 shares of Class A common stock of Yellowstone. BOC Yellowstone is the sponsor of Yellowstone and under the terms of Yellowstone’s initial public offering completed in October 2020, which we refer to as the “Yellowstone IPO”, owns approximately 20% of Yellowstone’s issued and outstanding common stock. On September 27, 2021, Yellowstone borrowed $1 million from us which amount, at our option is, payable upon the closing of the business consummation, to purchase additional private placement warrants upon the same terms and conditions as the currently outstanding private placement warrants, or a combination of cash and warrants.

On August 1, 2021, Yellowstone entered into a business combination agreement with Sky Harbour LLC (“SHG”), a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars. Upon closing of the business combination, SHG will become a publicly traded company, and it is expected that its common stock will be listed on the NASDAQ exchange. The combined company will have an implied pro forma equity market value of approximately $777 million at closing.

On August 1, 2021, we entered into a $55 million Series B Preferred Unit Purchase Agreement (the “Series B Purchase Agreement”) with SHG. On September 14, 2021, we completed the $55 million transaction, purchasing the Series B Preferred Units. This additional equity investment was made directly into SHG, and upon the successful consummation of the business combination, will convert into 5,500,000 shares of the post-combination public company’s Class A common stock, at a price of $10 per share. In the event the business combination is not consummated, our investment will remain as Series B Preferred Units of SHG. In addition, the parties will seek to raise additional funding to support the business combination through a private placement investment (“PIPE”) to be consummated at the closing of the transaction of $100 million. In addition to the $55 million of financing support, we have also agreed to provide to SHG a backstop valued at up to an additional $45 million through the purchase of additional shares of Yellowstone Class A common stock at a price of $10 per share if needed to meet the minimum investment condition of $150 million. This backstop financing is payable in any combination of cash and public securities at our option.

The transaction is subject to the satisfaction of customary closing conditions, including the approval of the shareholders of Yellowstone. As part of its overall financing strategy, on September 14, 2021, SHG completed a private activity tax-exempt bond financing which raised $166 million in gross proceeds in long term debt. The combined company expects to receive up to $238 million in gross proceeds, assuming no redemptions by Yellowstone’s existing public stockholders. This amount excludes additional funds which may be raised in the PIPE. All SHG equityholders are retaining 100% of their equity in the combined company. The cash proceeds are expected to be used to fund the completion of four new airport hangar campuses in addition to expansion at SHG’s location currently in operation.

The foregoing summary of the Series B Purchase Agreement and the transactions contemplated thereby does not purport to be a complete description and is qualified in its entirety by reference to the terms and conditions of the Series B Purchase Agreement, a copy of which is attached as Exhibit 10.1 to a Form 8-K as filed with the SEC on August 3, 2021. Capitalized terms used herein have the meaning given to such terms in the Series B Purchase Agreement, as applicable.

We believe that our existing cash and short-term investments, funds available through the Credit Agreement Link entered into on August 12, 2019, as amended, any proceeds from the Sale of Placement Shares, and any funds that we may receive from cash flows from operations will be sufficient to meet working capital requirements and anticipated capital expenditures for the next 12 months. At September 30, 2021, we had approximately $116 million in unrestricted cash, $51 million in U.S. treasury trading securities, and $80 million in marketable equity securities.

If future additional significant acquisition opportunities become available in excess of our currently available cash and U.S. Treasury securities, we may need to seek additional capital through long term debt borrowings, the sale of our securities, and/or other financing options and we may not be able to obtain such debt or equity financing on terms favorable to us or at all. In the future, we may use a number of different sources to finance our acquisitions and operations, including current cash on hand, potential future cash flows from operations, seller financing, debt financings including but not limited to long-term debt and line of credit facilities, including additional credit facilities which may or may not be secured by our assets or those of our operating subsidiaries, additional common or preferred equity issuances or any combination of these sources, to the extent available to us, or other sources that may become available from time to time, which could include asset sales and issuance of debt securities. In addition to Link’s current credit facility, any future debt that we incur may be recourse or non-recourse and may be secured or unsecured. Link's existing credit facility imposes restrictions on Link that could increase our vulnerability to general adverse economic and industry conditions by limiting our flexibility in planning for and reacting to changes in our billboard, insurance and broadband businesses. Specifically, these restrictions place limits on Link and its subsidiaries' ability to, among other things, incur additional indebtedness, make additional acquisitions and investments, pay dividends, repurchase stock, create liens, enter into transactions with affiliates, merge or consolidate or transfer or sell our billboard assets. Link’s credit facility requires it to meet a fixed charge coverage ratio and other financial covenants. Link’s ability to comply with these loan covenants may be affected by factors beyond its control and a breach of any loan covenants would likely result in an event of default under the Credit Agreement, which would permit the Lender to declare all amounts incurred thereunder to be immediately due and payable and to terminate their commitment to make future extensions of credit. We also may take advantage of joint venture or other partnering opportunities as such opportunities arise in order to acquire properties that would otherwise be unavailable to us. Any future credit facilities which we or any of our subsidiaries may enter into would likely impose similar restrictions and risks.

We may use the proceeds of any future borrowings to acquire assets or for general corporate purposes. In determining when to use leverage, we will assess the appropriateness of new equity or debt capital based on market conditions, including assumptions regarding future cash flow, the creditworthiness of customers and future rental rates.

We conduct and plan to continue to conduct our activities in such a manner as not to be deemed an investment company under the Investment Company Act. Therefore, no more than 40% of our total assets can be invested in investment securities, as such term is defined in the Investment Company Act. In addition, we do not invest or intend to invest in securities as our primary business. We run the risk of inadvertently being deemed to be an investment company that is required to register under the Investment Company Act of 1940 (the “Investment Company Act”) because a significant portion of our assets consists of investments in companies in which we own less than a majority interest. The risk varies depending on events beyond our control, such as significant appreciation or depreciation in the market value of certain of our publicly traded holdings, adverse developments with respect to our ownership of certain of our subsidiaries, and transactions involving the sale of certain assets. If we are deemed to be an inadvertent investment company, we may seek to rely on a safe-harbor under the Investment Company Act that would provide us a one-year grace period to take steps to avoid being deemed to be an investment company. In order to ensure we avoid being deemed an investment company, we have taken, and may need to continue to take, steps to reduce the percentage of our assets that constitute investments assets under the Investment Company Act. These steps have included, among others, selling marketable securities that we might otherwise hold for the long-term and deploying our cash in non-investment assets. We have recently sold marketable securities, including at times at a loss, and we may be forced to sell our investment assets at unattractive prices or to sell assets that we otherwise believe benefit our business in the future to remain below the requisite threshold. We may also seek to acquire additional non-investment assets to maintain compliance with the Investment Company Act, and we may need to incur debt, issue additional equity or enter into other financing arrangements that are not otherwise attractive to our business. Any of these actions could have a material adverse effect on our results of operations and financial condition. Moreover, we can make no assurance that we would successfully be able to take the necessary steps to avoid being deemed to be an investment company in accordance with the safe-harbor. If we were unsuccessful, then we would have to register as an investment company, and we would be unable to operate our business in its current form. We would be subject to extensive, restrictive, and potentially adverse statutory provisions and regulations relating to, among other things, operating methods, management, capital structure, indebtedness, dividends, and transactions with affiliates. If we were deemed to be an investment company and did not register as an investment company when required to do so, there would be a risk, among other material adverse consequences, that we could become subject to monetary penalties or injunctive relief, or both, that we would be unable to enforce contracts with third parties, and/or that third parties could seek to obtain rescission of transactions with us undertaken during the period in which we were an unregistered investment company.

Our certificate of incorporation and bylaws do not limit the amount of debt that we may incur. Our Board of Directors has not adopted a policy limiting the total amount of debt that we may incur. Our Board of Directors will consider a number of factors in evaluating the amount of debt that we may incur. If we adopt a debt policy, our Board of Directors may from time to time modify such policy in light of then-current economic conditions, relative costs of debt and equity capital, market values of our properties, general conditions in the markets for debt and equity securities, fluctuations in the market price of our Class A common stock if then trading on any exchange, growth and acquisition opportunities and other factors. Our decision to use leverage in the future to finance our assets will be at our discretion and will not be subject to the approval of our stockholders, and we are not restricted by our governing documents or otherwise in the amount of leverage that we may use.

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Off-Balance Sheet Arrangements

Except for our normal operating leases, we do not have any off-balance sheet financing arrangements, transactions or special purpose entities.

Quantitative and Qualitative Disclosures About Market Risk

At September 30, 2021, we held no significant derivative instruments that materially increased our exposure to market risks for interest rates, foreign currency rates, commodity prices or other market price risks. Our operations are currently conducted entirely within the U.S.; therefore, we had no significant exposure to foreign currency exchange rate risk.

Critical Accounting

The preparation of the consolidated financial statements and related notes to the consolidated financial statements requires us to make estimates that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures of contingent assets and liabilities. We base these estimates on historical results and various other assumptions, including the impact of the COVID-19 pandemic, believed to be reasonable, all of which form the basis for making estimates concerning the carrying values of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates. Information with respect to our critical accounting policies that we believe could have the most significant effect on our reported results or require subjective or complex judgments by management is contained in Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and in the Notes to the Consolidated Financial Statements each in our Annual Report on Form 10-K/A for the fiscal year ended December 31, 2020, as filed with the SEC on May 24, 2021. We believe that at September 30, 2021, there has been no material change to this information.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

Not applicable as we are a “smaller reporting company.”

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in company reports filed or submitted under the Exchange Act is accumulated and communicated to management, including our Co-Chief Executive Officers and Chief Financial Officer, to allow timely decisions regarding required disclosure.

As required by Rules 13a-15 and 15d-15 under the Exchange Act, our Co-Chief Executive Officers and Chief Financial Officer carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2021. Based upon their evaluation, our Co-Chief Executive Officers and Chief Financial Officer have concluded that our disclosure controls and procedures were not effective as of September 30, 2021 because of the material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. Specifically, management determined that its disclosure controls and procedures and internal control over financial reporting were not effective as of December 31, 2020 related to its risk assessment of the formation of Yellowstone Acquisition Company. Specifically, the Company did not design and implement effective controls addressing the technical accounting complexities associated with SPAC formations. This material weakness resulted in the restatement of our financial statements for the year ended December 31, 2020. Additionally, this material weakness could result in a misstatement of the recorded warrant liability, Yellowstone's Class A common stock and related accounts and disclosures that would result in a material misstatement of the financial statements that would not be prevented or detected on a timely basis.

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Remediation Plan

Management has been implementing and continues to implement measures designed to remediate the control deficiencies contributing to the material weakness, such that these controls are designed, implemented and operating effectively. The remediation actions include performing an assessment of risks of material misstatement associated with the accounting and financial reporting for the special purpose acquisition company, evaluating the assignment of responsibilities associated with the accounting for the Company's investment in Yellowstone, including considering hiring additional resources and providing additional training to existing resources.

Management believes that these actions, and the improvements achieved as a result, will effectively remediate the material weaknesses. However, the material weaknesses in our internal control over financial reporting will not be considered remediated until the remediated controls operate for a sufficient period of time and management has concluded, through testing, that these controls are operating effectively.

Changes in Internal Control over Financial Reporting

There have not been any changes in our internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act, during the fiscal quarter ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

Our management, including our principal executive officers and principal financial and accounting officer, does not expect that our disclosure controls and procedures or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company have been detected. These inherent limitations include, but are not limited to, the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the control. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Due to the nature of our business, we are, from time to time and in the ordinary course of business, involved in routine litigation or subject to disputes or claims related to our business activities, including, without limitation, workers’ compensation claims and employment-related disputes. In the opinion of our management, none of the pending litigation, disputes or claims against us, if decided adversely, will have a material adverse effect individually or in the aggregate on our financial condition, cash flows or results of operations.

Item 1A. Risk Factors

Not applicable as we are a “smaller reporting company.” For a list of risk factors, please refer to our Annual Report on Form 10-K/A for the year ended December 31, 2020, as filed with the SEC on May 24, 2021.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None.

Item 6. Exhibits.

The exhibits listed in the following Exhibit Index are incorporated herein by reference.

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EXHIBIT INDEX

Exhibit No.

Exhibit Description

3.1 (*)

Second Amended and Restated Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 26, 2017.

3.2 (*)

First Amendment to the Second Amended and Restated Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on May 7, 2018.

3.3 (*)

Certificate of Amendment to the Second Amended and Restated Certificate of Incorporation of the Company, filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on June 2, 2020.

3.4 (*)

Amended and Restated Bylaws of the Company, filed as Exhibit 3.7 to the Company’s Registration Statement on Form S-1/A filed with the Commission on June 5, 2017.

3.5 (*)

Amended and Restated Bylaws of the Company, as amended, filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed with the Commission on April 1, 2020.

10.1 (*)	Credit Agreement, dated August 12, 2019 by and between Link Media Holdings, LLC, and First National Bank of Omaha. (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 13, 2019)

10.2 (*)	Security Agreement, dated August 12, 2019, by and among Link Media Holdings, LLC and the Subsidiary Guarantors in Favor of First National Bank of Omaha (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on August 13, 2019)

10.3 (*)	Subsidiaries Guaranty dated August 12, 2019 by and among the Subsidiary Guarantors in Favor of First National Bank of Omaha (filed as Exhibit 10.3 to the Company’s Current Report on Form 8-K filed with the Commission on August 13, 2019)

10.4 (*)	$5,000,000 Revolving Note dated August 12, 2019 issued by Link Media Holdings, LLC in favor of First National Bank of Omaha (filed as Exhibit 10.4 to the Company’s Current Report on Form 8-K filed with the Commission on August 13, 2019)

10.5 (*)	$24,900,000 Term Loan Note 1 dated August 12, 2019 issued by Link Media Holdings, LLC to First National Bank of Omaha (filed as Exhibit 10.5 to the Company’s Current Report on Form 8-K filed with the Commission on August 13, 2019)

10.6 (*)	Form of Term Loan Note 2 to be issued by Link Media Holdings, LLC to First National Bank of Omaha (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the Commission on August 13, 2019)

10.7 (*)	First Amendment to Credit Agreement dated October 25, 2019 by and between Link Media Holdings, LLC and First National Bank of Omaha, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on October 29, 2019.

10.8 (*)	Sky Harbour LLC Series B Preferred Unit Purchase Agreement (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the Commission on August 3, 2021)

10.9 (*)	Sky Harbour LLC Voting and Support Agreement (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed with the Commission on August 3, 2021)

31.1 (#)	Certification of Co-Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).

31.2 (#)

Certification of Co-Chief Executive Officer required by Rule 13a-14(a) or Rule 15d-14(a).

31.3 (#)

Certification of the Chief Financial Officer required by Rule 13a-14(a) or Rule 15d-14(a).

32.1 (#)(##)

Certification of the Co-Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.

32.2 (#)(##)

Certification of the Co-Chief Executive Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.

32.3 (#)(##)

Certification of the Chief Financial Officer required by Rule 13a-14(b) or Rule 15d-14(b) and 18 U.S.C. 1350.

101.INS (#)

Inline XBRL Instance Document.

101.SCH (#)

Inline XBRL Taxonomy Extension Schema Document.

101.CAL (#)

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF (#)

Inline XBRL Taxonomy Extension Definition.

101.LAB (#)

Inline XBRL Taxonomy Extension Label Linkbase Document.

101.PRE (#)

Inline XBRL Taxonomy Presentation Linkbase Document.

104	Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).

(*)	Incorporated by reference to the filing indicated.

(#)	Filed herewith.

(##)

The certifications attached as Exhibits 32.1, 32.2, and 32.3 that accompany this Report, are not deemed filed with the SEC and are not to be incorporated by reference into any filing of Boston Omaha Corporation under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, whether made before or after the date of this Report irrespective of any general incorporation language contained in such filing.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

BOSTON OMAHA CORPORATION

(Registrant)

By: /s/ Alex B. Rozek

Alex B. Rozek

Co-President (Principal Executive Officer)

November 12, 2021

By: /s/ Adam K. Peterson

Adam K. Peterson

Co-President (Principal Executive Officer)

November 12, 2021

By: /s/ Joshua P. Weisenburger

Joshua P. Weisenburger

Chief Financial Officer
(Principal Financial and Accounting Officer)

November 12, 2021