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Note 6 - Business Acquisitions | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Mergers, Acquisitions and Dispositions Disclosures [Text Block] | NOTE 6. BUSINESS ACQUISITIONS 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. $1,851,186 of the cash proceeds will be held in escrow for a minimum of one year from the closing to provide indemnification for certain representations and warranties made by FibAire in the asset purchase agreement. At any time, FibAire has the option, but not the obligation, to sell AireBeam its entire ownership interest in AireBeam. AireBeam would be obligated to purchase the units and pay for the purchase over a three-year period if FibAire elects to exercise this option. At any time after December 31, 2023, AireBeam has the option, but not the obligation, to purchase FibAire’s ownership interest in AireBeam, 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 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:
|  | December 31, 2020 |
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 |
AireBeam's results of operations are recognized from March 10, 2020, the date of acquisition, through December 31, 2020. For the year ended December 31, 2020, revenues and earnings recognized from the date of acquisition in our consolidated statement of operations were $3,772,109 and $364,125, respectively. Acquisition costs of $287,934 were expensed in professional fees during the year. 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). Broadband Acquisitions FIF Utah On December 29, 2020, FIF Utah, our wholly-owned subsidiary, acquired substantially all of the business assets of Utah Broadband, LLC, which we refer to as “UBB”, a broadband services provider, 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 will be 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. 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 UBB and fair value allocation benchmarks from similar completed transactions. We are currently in the process of assessing UBB’s documentation of contracts related to customer relationships, detailed structure reports, operating leases, and asset retirement obligations; and therefore the initial allocation of the purchase price is subject to refinement. The purchase was recorded at fair value and preliminarily allocated as follows:
|  | December 31, 2020 |
Assets Acquired |  |  |  |
Property, plant and equipment |  | $ | 6,170,000 |
Customer relationships |  |  | 7,400,000 |
Permits |  |  | 330,000 |
Trade names and trademarks |  |  | 1,910,000 |
Goodwill |  |  | 11,030,000 |
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 |
FIF Utah's results of operations are recognized from December 29, 2020, the date of acquisition, through December 31, 2020. For the year ended December 31, 2020, revenues and earnings recognized from the date of acquisition in our consolidated statement of operations were $64,428 and $21,340, respectively. Acquisition costs of $352,998 were expensed in professional fees during the year. 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). 2019 Acquisitions Billboard Acquisitions Image Outdoor Advertising, Inc. On August 30, 2019, our subsidiary, LMSE, acquired from Image Outdoor Advertising, LLC, which we refer to as “Image”, 61 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 for a total purchase price of $7,625,604 and includes $398,750 that was held back by LMSE and will be disbursed, subject to any claims for indemnification, over an 18 month period. The final purchase price allocation related to Image includes property, plant and equipment, intangibles, and goodwill of $1,544,970, $3,152,000 and $3,058,633, respectively, as well as other net liabilities of $129,999. Alpha Displays, Inc. On October 1, 2019, our subsidiary, LMO, acquired certain billboard assets in Missouri from Alpha Displays, Inc. The purchase price for the acquired assets was $1,337,685 and includes $380,546 that was held back by LMO and will be disbursed, subject to any claims for indemnification, over an 18 month period. The assets were acquired for the purpose of expanding our presence in the outdoor advertising market in the Midwestern United States. Pro Forma Information The following is the unaudited pro forma information assuming all business acquisitions occurred on January 1, 2019. 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 or preliminary acquisition costs. Depreciation is computed on the straight-line method over the estimated remaining economic lives of the assets, ranging from two years to twenty 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 Year Ended |
|  | December 31, |
|  | 2020 |  |  | 2019 |
Revenue |  | $ | 55,925,700 |  |  | $ | 55,824,936 |
Net Income Attributable to Common Stockholders |  | $ | 2,933,789 |  |  | $ | 1,775,851 |
Basic and Diluted Net Income per Share |  | $ | 0.11 |  |  | $ | 0.08 |
Basic and Diluted Weighted Average Class A and Class B Common Shares Outstanding |  |  | 25,738,225 |  |  |  | 22,801,394 |
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 for 2019 to include the stock issued in connection with the acquisition of Image.

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- Definition The entire disclosure for business combinations, including leverage buyout transactions (as applicable), and divestitures. This may include a description of a business combination or divestiture (or series of individually immaterial business combinations or divestitures) completed during the period, including background, timing, and assets and liabilities recognized and reclassified or sold. This element does not include fixed asset sales and plant closings. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -SubTopic 20 -URI http://asc.fasb.org/subtopic&trid=2122178 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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