NOTE

BUSINESS ACQUISITIONS

201

Acquisitions

During the

nine

months ended

September 30, 2018,

we completed

three

acquisitions of billboards 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. A summary of the revenues and earnings of each since the acquisition dates included in the consolidated statements of operations for the

three

months and

nine

months ended

September 30, 2018

is provided in the tables below.

Billboard Acquisitions

Tammy Lynn Outdoor, LLC

July 31, 2018,

our subsidiary, LMSE, entered into a purchase agreement with Tammy Lynn Outdoor, LLC, which we refer to as “Tammy Lynn,” based in Bluefield, West Virginia. The assets acquired are primarily located in West Virginia with additional acquired assets located in Virginia. The majority of the

$16,688,254

purchase price was paid in cash, however, as part of the consideration for the purchase the seller received

85,170

shares of our Class A common stock. The acquisition was completed for the purpose of expanding our presence in the outdoor advertising market in the Southeastern United States. The preliminary purchase price allocation is based on internal information derived from our previous acquisitions in the Southeastern United States and will be revised when we have completed our evaluation. Due to the timing of the transaction, the initial accounting for the business acquisition is incomplete. Finite-lived intangible assets consist of customer relationships, permits, favorable leases, and a

five

year noncompetition agreement. We amortize the noncompetition agreement according to the terms of the asset purchase agreement. For other finite-lived assets, amortization is computed over the average period of expected benefit determined from internal information.

Key Outdoor, Inc.

August 22, 2018,

our subsidiary, LMM entered into a purchase agreement with Key Outdoor, Inc., which we refer to as “Key,” Angela K. Dahl, and Robert A. Dahl, by which LMM acquired over

700

billboard structures and related assets from Key. The billboards and related assets are located in Illinois, Iowa and Missouri.

The purchase price for the acquired assets was

$38,000,000,

subject to certain post-closing adjustments, which totaled

$233,894,

and was paid in cash. A portion of the purchase price equal to

$1,900,000

was held back by LMM and will be disbursed, subject to any claims for indemnification, over a

month period. Another

$329,467

is being held back as required consent holdback. Both holdbacks are included in the caption “Short-term payables for business acquisitions” on our consolidated balance sheet as of

September 30, 2018.

Each of Key and Angela K. Dahl and Robert A. Dahl, Key’s principals, have also entered into

five

year noncompetition and nonsolicitation agreements in connection with the acquisition. Total cash distributed at closing was

$36,004,427.

The provisional purchase price allocation is based on internal information derived from our previous acquisitions in the Midwestern United States and will be revised when an independent appraisal has been completed. Due to the timing of the transaction, the initial accounting for the business combination is incomplete. Finite-lived intangible assets consist of customer relationships, permits, and noncompetition and nonsolicitation agreements. We amortize the noncompetition and nonsolicitation agreements according to the terms of the asset purchase agreement. For other finite-lived assets, amortization is computed over the average period of expected benefit determined from internal information.

Waitt Outdoor, LLC

August 31, 2018,

our subsidiary, LMO entered into a purchase agreement with Waitt Outdoor, LLC, which we refer to as “Waitt,” by which LMO acquired over

1,600

billboard structures and related assets from Waitt. The billboards and related assets are located in Kansas, Illinois, Iowa, Missouri and Nebraska.

The purchase price for the acquired assets was

$82,000,000,

subject to certain post-closing adjustments, which totaled

$2,031,262,

resulting in a total purchase price of

$84,031,262.

Cash paid at closing was

$84,031,262

of which

$4,102,500

is held in escrow, subject to any claims for indemnification. Waitt, WaittCorp Investments, LLC, and Mr. Michael J. Delich, the principal of Waitt, have also entered into a

five

year noncompetition and nonsolicitation agreement in connection with the acquisition.

easements. The easements are permanent easements which grant us the right to use real property

not

owned by us. Since the easements are perpetual, they are

not

amortized.

The following tables present information for the

2018

business acquisitions for the

nine

months ended

September 30, 2018,

including amortization of finite intangible assets, revenues and earnings included in consolidated net loss for the

three

months and

nine

months ended

September 30, 2018,

and the costs of acquisition included in professional fees on our consolidated statement of operations for the

three

and

nine

months ended

September 30, 2018.

	Billboards
	Tammy Lynn		Key Outdoor			Waitt Outdoor			Total
Assets Acquired
Property and Equipment:
Structures, displays, and equipment	$	2,147,305	$	9,565,481		$	20,101,630		$	31,814,416

Intangible Assets:
Customer relationships		4,432,000		7,692,000			12,696,000			24,820,000
Permits, licenses, and lease acquisition costs		893,000		1,184,000			5,341,000			7,418,000
Easements		-		-			454,563			454,563
Favorable leases		1,425,000		-			-			1,425,000
Noncompetition and nonsolicitation agreements		10,000		100,000			219,000			329,000
Goodwill		7,592,688		19,499,000			46,381,946			73,473,634

Total Intangible Assets		14,352,688		28,475,000			65,092,509			107,920,197

Other Assets:
Accounts receivable		188,261		-			1,239,457			1,427,718
Prepaid expenses		-		233,894			1,551,084			1,784,978

Total Other Assets		188,261		233,894			2,790,541			3,212,696

Total Assets Acquired		16,688,254		38,274,375			87,984,680			142,947,309

Liabilities Assumed
Accounts payable and accrued expenses		-		-			(761,779	)		(761,779	)
Asset retirement obligations		-		(40,481	)		(1,875,639	)		(1,916,120	)
Other long-term liabilities		-		-			(1,316,000	)		(1,316,000	)

Total Liabilities Assumed		-		(40,481	)		(3,953,418	)		(3,993,899	)

Total	$	16,688,254	$	38,233,894		$	84,031,262		$	138,953,410

	Billboards
	Tammy Lynn			Key Outdoor			Waitt Outdoor		Total
Amortization of intangible assets acquired for the three months ended September 30, 2018	$	285,189		$	225,200		$	400,825	$	911,214

Revenues since the acquisition date included in the consolidated statement of operations for the three months ended September 30, 2018	$	340,006		$	555,992		$	1,117,509	$	2,013,507

Earnings since the acquisition date included in the consolidated statement of operations for the three months ended September 30, 2018	$	(54,969	)	$	(6,756	)	$	32,312	$	(29,413	)

Costs of acquisition included in professional fees in the consolidated statement of operations for the three months ended September 30, 2018	$	113,679		$	121,469		$	140,165	$	375,313

Amortization of intangible assets acquired for the nine months ended September 30, 2018	$	285,189		$	225,200		$	400,825	$	911,214

Revenues since the acquisition date included in the consolidated statement of operations for the nine months ended September 30, 2018	$	340,006		$	555,992		$	1,117,509	$	2,013,507

Earnings since the acquisition date included in the consolidated statement of operations for the nine months ended September 30, 2018	$	(54,969	)	$	(6,756	)	$	32,312	$	(29,413	)

Costs of acquisition included in professional fees in the consolidated statement of operations for the nine months ended September 30, 2018	$	113,679		$	121,469		$	140,165	$	375,313

During the

nine

months ended

September 30, 2018,

we had net cash outflows of

$135,023,950

related to business acquisitions. During the

nine

months ended

September 30, 2017,

we had net cash outflows of

$10,586,890

related to business acquisitions.

2017

Acquisitions

During the year ended

December 31, 2017,

we completed

six

business acquisitions of billboards and related assets and

three

insurance company acquisitions. These acquisitions were accounted for as business combinations under the provisions of ASC

805.

A summary of the acquisitions is provided below. A summary of the revenues and earnings of each since the acquisition dates included in the consolidated statements of operations for the

three

months and

nine

months ended

September 30, 2017

is provided in the tables below.

Billboard Acquisitions

Clear Channel Outdoor, Inc.

January 9, 2017,

our subsidiary, LMG, entered into a purchase agreement with Clear Channel Outdoor, Inc., which we refer to as “CCO,” for the purchase of over

thirty

billboard structures and related assets. The assets acquired are located in Georgia. The cash purchase price for the acquired business was

$2,983,444,

of which

$2,950,000

had been deposited into the seller’s escrow account in

November 2016

and was subsequently applied to the purchase price. The assets were acquired for the purpose of expanding our presence in the outdoor advertising market. The purchase price allocation is based on an appraisal by an independent

third

party valuation firm. Finite-lived intangible assets consist of customer relationships and permits. Amortization is computed over the average period of expected benefit, determined from internal information.

Hartlind Outdoor, LLC

January 31, 2017,

our subsidiary, LMW, entered into a purchase agreement with Hartlind Outdoor, LLC, which we refer to as “Hartlind,” for the purchase of over

ninety

billboard structures and related assets. The assets acquired are located in Wisconsin. The cash purchase price for the acquired business was

$2,817,000.

The assets were acquired for the purpose of expanding our presence in the outdoor advertising market. The purchase price allocation is based on an appraisal by an independent

third

party valuation firm. Finite-lived intangible assets consist of customer relationships, permits, and a noncompetition agreement. We amortize the noncompetition agreement according to the terms of the asset purchase agreement. Amortization of the other finite-lived intangible assets is computed over the average period of expected benefit, determined from internal information. We also acquired

six

easements. The easements are permanent easements which grant us the right to use real property

not

owned by us. Since these rights are perpetual, they are

not

amortized.

Southeastern United States

Subsequent to the CCO business acquisition, we made additional business acquisitions in the Southeastern United States as presented below.

Corey Companies, Inc.

June 8, 2017,

our subsidiaries, LMG and LMA, entered into a purchase agreement with Corey Companies, Inc., which we refer to as “Corey,” for the purchase of approximately

thirty

billboard structures, a

fifty

percent interest in

three

billboard structures, and related assets. The assets acquired are located in Georgia and Alabama. The cash purchase price for the acquired business was

$2,991,314.

The assets were acquired for the purpose of expanding our presence in the outdoor advertising market in the Southeastern United States. The purchase price allocation for the structures, faces and permits is based on internal information derived from our previous acquisitions in Alabama and Georgia. The purchase price allocation for customer relationships is based on an appraisal by an independent

third

party valuation firm. The independent appraisal resulted in a decrease in customer relationships of

$314,000

and an increase in goodwill of

$314,000.

The related decrease in amortization expense for the

nine

months ended

September 30, 2018

was

$64,965.

Finite lived intangible assets consist of customer relationships and permits. Amortization of the finite-lived intangible assets is computed over the average period of expected benefit, determined from internal information.

Vision Outdoor Media, LLC

June 16, 2017,

our subsidiary, LMG, entered into a purchase agreement with Vision Outdoor Media, LLC, which we refer to as “Vision,” for the purchase of

three

billboard structures and related assets. The assets acquired are located in Georgia. The assets were acquired for the purpose of expanding our presence in the outdoor advertising market in the Southeastern United States. The cash purchase price for the acquired business was

$3,199,036.

The purchase price allocation is based on internal information derived from our previous acquisitions in Alabama and Georgia. Finite-lived intangible assets consist of customer relationships and permits. Amortization of the finite-lived intangible assets is computed over the average period of expected benefit, determined from internal information.

View Media, LLC

July 11, 2017,

our subsidiary, LMG, entered into a purchase agreement for the purchase of

one

billboard structure and related assets. The assets acquired are located in Georgia. The cash purchase price of the acquisition was

$623,596.

The assets were acquired for the purpose of expanding our presence in the outdoor advertising market in the Southeastern United States. The purchase price allocation is based on internal information derived from our previous acquisitions in Alabama and Georgia. Finite-lived intangible assets consist of customer relationships and permits. Amortization of the finite-lived intangible assets is computed over the average period of expected benefit, determined from internal information.

In addition, we also made a small acquisition for a cash purchase price of

$900,000.

Insurance Acquisitions

Surety Support Services, Inc.

July 11, 2017,

our subsidiary, GIG, entered into a purchase agreement for the purchase of

100%

of the stock of an insurance brokerage company, Surety Support Services, Inc., which we refer to as “SSS.” The purchase price of the stock was

$450,000,

of which

$22,500

was paid at closing, with

$427,500

due in

2018,

and is included in the caption “Short-term payables for business acquisitions” on our consolidated balance sheet as of

December 31, 2017.

During the

nine

months ended

September 30, 2018,

we made payments of

$427,500

on the short-term payable for business acquisition.

The stock was acquired for the purpose of expanding our presence in the insurance market in the United States. The purchase price allocation is based on internal information derived from our previous insurance brokerage company acquisitions.

Finite-lived intangible assets consist of customer relationships and a noncompetition agreement. We amortize the noncompetition agreement according to the terms of the asset purchase agreement. For other finite-lived assets, amortization is computed over the average period of expected benefit determined from internal information.

South Coast Surety Insurance Services, LLC

October 31, 2017,

our subsidiary, GIG, entered into a purchase agreement for the purchase of

70%

of the membership units of an insurance brokerage company, South Coast Surety Insurance Services, LLC, which we refer to as ”SCS.” The cash purchase price of the units was

$2,908,581,

and was paid at closing. The units were acquired for the purpose of expanding our presence in the insurance market in the United States. The provisional purchase price allocation is based on internal information and will be revised when an independent appraisal has been completed. Due to the timing and complexity of the transaction, the initial accounting for the business combination is incomplete. We are still in the process of obtaining and assessing documentation of the contracts and relationships as well as assessing the initial valuation of the noncontrolling interest.

The seller has agreed to remain as a principal of SCS. The purchase agreement contains an option for the seller to sell us the remaining units (a “put” option). The purchase agreement also contains an option for us to purchase the remaining units (a “call” option) upon the death, incapacitation, or termination of the seller’s employment. Upon exercise of the options by the seller or by us, the purchase price of the remaining units is to be calculated by a formula contained in the purchase agreement. Both the put and the call options are embedded in the purchase agreement, and are

not

legally detachable or separately exercisable. At any time following the closing date of our purchase, the seller has the option (the put option), but

not

the obligation to sell us all of the remaining

30%

of the membership units. Should the seller exercise his option, we are obligated to purchase all of the remaining units, which we refer to as “redeemable NCI.” Since the put option is currently redeemable, in accordance with the guidance of ASC

No.

480

(Subtopic-

S99

Distinguishing Liabilities from Equity Overall,

the redeemable NCI is presented on our consolidated balance sheet between liabilities and equity. Additionally, we are required to re-measure the value of the redeemable NCI as of the date of each balance sheet presented. We have calculated the value of the redeemable NCI based upon the redemption formula contained in the purchase agreement, and have determined that

adjustment is necessary as of

September 30, 2018

and

December 31, 2017,

respectively.

Finite-lived intangible assets consist of customer relationships, trade names and trademarks, and a noncompetition agreement. We amortize the noncompetition agreement according to the terms of the asset purchase agreement. For other finite-lived assets, amortization is computed over the average period of expected benefit determined from internal information.

Freestate Bonds, Inc.

November 30, 2017,

our subsidiary, Warnock entered into a purchase agreement for the purchase of

100%

of the stock of an insurance brokerage company, Freestate Bonds, Inc., which we refer to as “Freestate.” The purchase price of the stock was

$293,000,

of which

$223,500

was paid at closing, with

$69,500

due on

November 30, 2018,

and is included in the caption “Short-term payables for business acquisitions” on our consolidated balance sheets as of

September 30, 2018

and

December 31, 2017.

May 2018,

Freestate was reorganized into Warnock and Freestate was subsequently dissolved.

The following tables present information for the

2017

business acquisitions for the

nine

months ended

September 30, 2017,

including amortization of finite intangible assets, revenues and earnings included in consolidated net loss for the

three

months and

nine

months ended

September 30, 2017,

and the costs of acquisition included in professional fees on our consolidated statement of operations for the

three

and

nine

months ended

September 30, 2017.

	Billboards
	CCO			Hartlind		Southeastern US			Subtotal
Amortization of intangible assets acquired for the three months ended September 30, 2017	$	70,846		$	45,770	$	129,649		$	246,265

Revenues since the acquisition date included in the consolidated statement of operations for the three months ended September 30, 2017	$	264,001		$	85,178	$	238,746		$	587,925

Earnings since the acquisition date included in the consolidated statement of operations for the three months ended September 30, 2017	$	24,293		$	21,281	$	(30,404	)	$	15,170

Costs of acquisition included in professional fees in the consolidated statement of operations for the three months ended September 30, 2017	$	-		$	-	$	27,587		$	27,587

Amortization of intangible assets acquired for the nine months ended September 30, 2017	$	212,539		$	122,054	$	167,830		$	502,423

Revenues since the acquisition date included in the consolidated statement of operations for the nine months ended September 30, 2017	$	623,077		$	237,954	$	244,066		$	1,105,097

Earnings since the acquisition date included in the consolidated statement of operations for the nine months ended September 30, 2017	$	(17,462	)	$	77,010	$	(84,447	)	$	(24,899	)

Costs of acquisition included in professional fees in the consolidated statement of operations for the nine months ended September 30, 2017	$	14,468		$	8,645	$	49,150		$	72,263

	Insurance
	SSS			SCS		Freestate		Subtotal			Total

Amortization of intangible assets acquired for the three months ended September 30, 2017	$	13,749		$	-	$	-	$	13,749		$	260,014

Revenues since the acquisition date included in the consolidated statement of operations for the three months ended September 30, 2017	$	78,065		$	-	$	-	$	78,065		$	665,990

Earnings since the acquisition date included in the consolidated statement of operations for the three months ended September 30, 2017	$	(44,913	)	$	-	$	-	$	(44,913	)	$	(29,743	)

Costs of acquisition included in professional fees in the consolidated statement of operations for the three months ended September 30, 2017	$	28,293		$	-	$	-	$	28,293		$	55,880

Amortization of intangible assets acquired for the nine months ended September 30, 2017	$	13,749		$	-	$	-	$	13,749		$	516,172

Revenues since the acquisition date included in the consolidated statement of operations for the nine months ended September 30, 2017	$	78,065		$	-	$	-	$	78,065		$	1,183,162

Earnings since the acquisition date included in the consolidated statement of operations for the nine months ended September 30, 2017	$	(44,913	)	$	-	$	-	$	(44,913	)	$	(69,812	)

Costs of acquisition included in professional fees in the consolidated statement of operations for the nine months ended September 30, 2017	$	28,293		$	-	$	-	$	28,293		$	100,556

ro Forma Information

The following is the unaudited pro forma information assuming all business acquisitions occurred on

January 1, 2017.

For all of the business acquisitions, depreciation and amortization have been included in the calculation of the below pro forma information 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

fifty

years.

	Three Months Ended						Nine Months Ended
	September 30,						September 30,
	2018			2017			2018			2017

Revenue	$	8,363,233		$	8,359,105		$	24,697,680		$	24,379,048

Net Loss	$	(3,180,120	)	$	(2,720,307	)	$	(9,388,507	)	$	(8,027,154	)

Basic and Diluted Loss per Share	$	(0.14	)	$	(0.19	)	$	(0.49	)	$	(0.83	)

Basic and Diluted Weighted Average Class A and Class B Common Shares Outstanding		22,059,414			14,379,041			19,278,915			9,707,540

The information included in the pro forma amounts is derived from historical information obtained from the sellers of the businesses. With respect to CCO, Corey, Vision, and View, the above pro forma does

not

contain allocation of management overhead and other shared expenses for lines of business under common ownership, that were

not

acquired. The pro forma amounts above for basic and diluted weighted average shares outstanding have been adjusted to include the stock issued in connection with the acquisition of Tammy Lynn.