NOTE

BUSINESS ACQUISITIONS

2019

Acquisitions

August 30, 2019,

our subsidiary, LMSE, acquired from Image Outdoor Advertising, LLC, which we refer to as “Image”,

billboard structures and related assets located in West Virginia. The acquisition was completed for the purpose of expanding our presence in the outdoor advertising market in the Southeastern United States. The purchase price consisted of

$6,915,501

in cash, net of adjustments, and

34,673

shares of our Class A common stock and includes

$398,750

that was held back by LMSE and will be disbursed, subject to any claims for indemnification, over an

month period. 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 Southeastern 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 Image includes property, plant and equipment, intangibles and goodwill of

$1,565,065,

$3,145,000

and

$3,045,538,

respectively, as well as other net liabilities of

$129,999.

2018

Acquisitions

During the year ended

December 31, 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.

Billboard Acquisitions

Tammy Lynn Outdoor, LLC

July 31, 2018,

our subsidiary, LMSE, acquired from Tammy Lynn Outdoor, LLC, which we refer to as “Tammy Lynn,” billboard structures and related assets primarily located in West Virginia with additional acquired assets located in Virginia. The acquisition was completed for the purpose of expanding our presence in the outdoor advertising market in the Southeastern United States. The purchase price consisted of

$14,763,261

in cash, net of adjustments, and

85,170

shares of our Class A common stock. There were

adjustments made to the purchase price allocation recorded as of

December 31, 2018.

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.

For the

three

and

nine

month periods ended

September 30, 2018,

revenues and earnings recognized from the date of acquisition in our consolidated statement of operations were

$340,006

and (

$54,969

), respectively. Acquisition costs of

$113,679

were expensed in professional fees during the same period.

Key Outdoor, Inc.

August 22, 2018,

our subsidiary, LMM acquired from Key Outdoor, Inc., which we refer to as “Key,” over

700

billboard structures and related assets. 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.

A portion of the purchase price equal to

$1,900,000

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

month period. Another

$329,467

was held back as required consent holdback. Both holdbacks, net of

2018

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

December 31, 2018

. Each of Key and Angela K. Dahl and Robert A. Dahl, Key's principals, entered into

five

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

$36,004,427.

During the

nine

months ended

September 30, 2019

, we made payments of

$1,964,990

on the short-term payable for business acquisitions.

During the

third

quarter of

2019,

we completed our review of customer relationships, structures, permits, and lease contracts which allowed us to finalize the preliminary purchase price allocation. Finite-lived intangible assets consist of customer relationships, permits, and

five

year 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.

The final purchase price allocation, including current measurement-period adjustments, was recorded as follows:

				Key
	Sep. 30, 2019			Adjustments			Dec. 31, 2018
Assets Acquired
Property and Equipment:
Structures and displays	$	6,927,808		$	(2,676,030	)	$	9,603,838

Intangible Assets:
Customer relationships		8,627,000			935,000			7,692,000
Permits, licenses, and lease acquisition costs		1,167,000			(17,000	)		1,184,000
Easements		-			-			-
Favorable leases		-			-			-
Noncompetition and non-solicitation agreements		100,000			-			100,000
Goodwill		21,257,030			1,758,030			19,499,000

Total Intangible Assets		31,151,030			2,676,030			28,475,000

Other Assets:
Accounts receivable		-			-			-
Prepaid expenses		233,894			-			233,894

Total Other Assets		233,894			-			233,894

Total Assets Acquired		38,312,732			-			38,312,732

Liabilities Assumed
Accounts payable and accrued expenses		-			-			-
Asset retirement obligations		(78,838	)		-			(78,838	)
Other long-term liabilities		-			-			-

Total Liabilities Assumed		(78,838	)		-			(78,838	)

Total	$	38,233,894		$	-		$	38,233,894

Amortization expense for the

three

and

nine

month periods ended

September 30, 2019,

is increased by

$335,797

to reflect the effect on earnings as a result of the above adjustments to the provisional amounts recognized. Depreciation expense for the same periods is decreased by

$193,269

as a result of the adjustments.

For the

three

and

nine

month periods ended

September 30, 2018,

revenues and earnings recognized from the date of acquisition in our consolidated statement of operations were

$555,992

and (

$6,756

), respectively. Acquisition costs of

$121,469

were expensed in professional fees during the same period.

Waitt Outdoor, LLC

August 31, 2018,

our subsidiary, LMO acquired from Waitt Outdoor, LLC, which we refer to as “Waitt,” over

1,600

billboard structures and related assets. 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

was initially held in escrow, subject to any claims for indemnification, and subsequently released to Waitt during the

third

quarter of

2019.

Waitt, WaittCorp Investments, LLC, and Mr. Michael J. Delich, the principal of Waitt, have also entered into

five

year noncompetition and nonsolicitation agreements in connection with the acquisition.

During the

third

quarter of

2019,

we completed our review of customer relationships, structures, permits, easements and lease contracts which allowed us to finalize the preliminary purchase price allocation. 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. We also acquired several 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 final purchase price allocation, including current measurement-period adjustments, was recorded as follows:

				Waitt
	Sep. 30, 2019			Adjustments			Dec. 31, 2018
Assets Acquired
Property and Equipment:
Structures and displays	$	16,220,375		$	(3,503,529	)	$	19,723,904

Intangible Assets:
Customer relationships		13,984,000			1,288,000			12,696,000
Permits, licenses, and lease acquisition costs		5,288,000			(53,000	)		5,341,000
Easements		454,563			-			454,563
Favorable leases		-			-			-
Noncompetition and non-solicitation agreements		219,000			-			219,000
Goodwill		48,650,475			2,268,529			46,381,946

Total Intangible Assets		68,596,038			3,503,529			65,092,509

Other Assets:
Accounts receivable		1,239,457			-			1,239,457
Prepaid expenses		1,551,084			-			1,551,084

Total Other Assets		2,790,541			-			2,790,541

Total Assets Acquired		87,606,954			-			87,606,954

Liabilities Assumed
Accounts payable and accrued expenses		(761,779	)		-			(761,779	)
Asset retirement obligations		(1,497,913	)		-			(1,497,913	)
Other long-term liabilities		(1,316,000	)		-			(1,316,000	)

Total Liabilities Assumed		(3,575,692	)		-			(3,575,692	)

Total	$	84,031,262		$	-		$	84,031,262

Amortization expense for the

three

and

nine

month periods ended

September 30, 2019,

is increased by

$459,369

to reflect the effect on earnings as a result of the above adjustments to the provisional amounts recognized. Depreciation expense for the same periods is decreased by

$253,033

as a result of the adjustments.

For the

three

and

nine

month periods ended

September 30, 2018,

revenues and earnings recognized from the date of acquisition in our consolidated statement of operations were

$1,117,509

and

$32,312,

respectively. Acquisition costs of

$140,165

were expensed in professional fees during the same period.

Pro Forma Information

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

January 1, 2018.

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

fifty

years.

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2019		2018			2019			2018

Revenue	$	11,037,522	$	8,699,175		$	30,931,950		$	25,705,507

Net Income (Loss) Attributable to Common Stockholders	$	487,184	$	(3,399,022	)	$	(6,148,998	)	$	(10,045,212	)

Basic and Diluted Income (Loss) per Share	$	0.02	$	(0.15	)	$	(0.27	)	$	(0.52	)

Basic and Diluted Weighted Average Class A and Class B Common Shares Outstanding		22,833,411		22,094,087			22,594,263			19,313,588

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