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Note 8 - Investments, Including Investments Accounted for Using the Equity Method | 12 Months Ended
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Dec. 31, 2020
Notes to Financial Statements |
Investment [Text Block] |
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 year ended December 31, 2020, gains on redemptions of U.S. Treasury securities held to maturity were $13,159.
|  | December 31, |
|  | 2020 |  |  | 2019 |
Certificates of deposit |  | $ | 1,035,827 |  |  | $ | 987,599 |
Corporate bonds classified as trading |  |  | 1,020,000 |  |  |  | 910,000 |
U.S. Treasury notes and corporate bond held to maturity |  |  | 4,994,848 |  |  |  | 4,649,572 |
Total |  | $ | 7,050,675 |  |  | $ | 6,547,171 |
Marketable Equity Securities During 2019, we began investing in 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 December 31, 2020 and 2019 are as follows:
|  |  |  |  |  | Gross |  |  |  |  |
|  |  |  |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gain (Loss) |  |  | Value |
Marketable equity securities, December 31, 2020 |  | $ | 68,205,548 |  |  | $ | (4,169,066 | ) |  | $ | 64,036,482 |
Marketable equity securities, December 31, 2019 |  | $ | 49,554,926 |  |  | $ | 6,353,001 |  |  | $ | 55,907,927 |
U.S. Treasury 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 and available for sale as of December 31, 2020 and 2019 are as follows:
|  |  |  |  |  | Gross |  |  |  |  |
|  |  |  |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gain |  |  | Value |
U.S. Treasury trading securities, December 31, 2020 |  | $ | 37,766,133 |  |  | $ | 1,812 |  |  | $ | 37,767,945 |
U.S. Treasury securities available for sale, December 31, 2019 |  | $ | 75,488,863 |  |  | $ | (79,664 | ) |  | $ | 75,409,199 |
Long-term Investments Long-term investments consist of certificates of deposit having maturity dates in excess of twelve months, U.S. Treasury securities, and certain equity investments. The certificates of deposit and U.S. Treasury securities have maturity dates ranging from 2021 through 2023. We have the intent and the ability to hold the certificates of deposit and U.S. Treasury securities to maturity. Certificates of deposit and 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:
|  | December 31, |
|  | 2020 |  |  | 2019 |
U.S. Treasury securities, held to maturity |  | $ | 286,015 |  |  | $ | 1,094,983 |
Certificates of deposit |  |  | - |  |  |  | 380,753 |
Preferred stock |  |  | 104,019 |  |  |  | 104,019 |
Non-voting preferred units of Dream Finders Holdings, LLC |  |  | - |  |  |  | 12,000,000 |
Non-voting common units of Dream Finders Holdings, LLC |  |  | - |  |  |  | 10,000,000 |
Yellowstone Acquisition Company warrants |  |  | 4,786,263 |  |  |  | - |
Voting common stock of CB&T Holding Corporation |  |  | 19,058,485 |  |  |  | 19,058,485 |
Total |  | $ | 24,234,782 |  |  | $ | 42,638,240 |
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. 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 the twelve months ended December 31, 2020, DFH redeemed all $12 million of the preferred units purchased in May 2019. 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 December 31, 2020 and 2019 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 30%. Two of the investments in affiliates, Logic Real Estate Companies, LLC and 24th Street Holding Company, LLC, having a combined carrying amount of $6,687,707 as of December 31, 2020, are managed by an entity controlled by a member of our board of directors. 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. The funds will focus on opportunities within secured lending and direct investments in commercial real estate. Yellowstone Special Purpose Acquisition Company On September 25, 2020, we filed a Registration Statement on Form S-1 with the Securities and Exchange Commission for a proposed initial public offering of units of a special purpose acquisition company (“SPAC”) named Yellowstone Acquisition Company, which we refer to as “Yellowstone”. Our subsidiary, BOC Yellowstone LLC, which we refer to as “BOC Yellowstone”, served as the sponsor of Yellowstone. 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. Prior to the filing of the Yellowstone's Registration Statement on Form S-1, BOC Yellowstone purchased 5,750,000 shares of Yellowstone's Class B common stock, par value $0.0001 per share, for an aggregate price of $25,000. Between October 9, 2020, and December 31, 2020, BOC Yellowstone surrendered 2,350,276 shares of Class B common stock to Yellowstone for no consideration, resulting in an aggregate of 3,399,724 shares of Yellowstone's Class B common stock outstanding as of December 31, 2020. The shares of Class B common stock will automatically convert into shares of Yellowstone's Class A common stock on a one-for-one basis at the time of Yellowstone's initial business combination and are subject to certain transfer restrictions. On October 26, 2020, Yellowstone consummated its initial public offering (the “IPO") of 12,500,000 units (the “Units”). Each Unit consisted of one share of Class A common stock of Yellowstone, par value $0.0001 per share, and one-half of one redeemable warrant of Yellowstone, each whole warrant entitling the holder thereof to purchase one whole share of Yellowstone's Class A Common Stock at an exercise price of $11.50 per share. 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. Also on October 26, 2020, simultaneously with the closing of the IPO, BOC Yellowstone purchased 7,500,000 warrants (the “Private Placement Warrants”) at a purchase price of $1.00 per Private Placement Warrant, for a total purchase price of $7,500,000. In the event that Yellowstone does not consummate a business combination within 15 months of its initial public offering, our shares of Yellowstone's Class B common stock and Private Placement Warrants will be used to redeem the shares of Class A common stock sold to the public (see Note 9 for discussion of Private Placement Warrant valuation). 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. In connection with the underwriter's exercise of the over-allotment option on December 1, 2020, BOC Yellowstone purchased private placement warrants at a price of $1.00 per whole warrant to purchase an additional 219,779 shares of Class A common stock at a price of $11.50 per share. As a result of Yellowstone's IPO, we ceased having a controlling financial interest in Yellowstone as of October 26, 2020. Additionally, as our retained investment in Yellowstone qualifies for equity-method accounting, we were required to remeasure our retained interest at fair value and include any resulting adjustments as part of a gain or loss recognized on deconsolidation. The fair value calculation related to our retained interest in Yellowstone is dependent upon company-specific adjustments applied to both the observable trading price of Yellowstone's Class A common stock and the transaction price of the November 16, 2020 sale to the lead investor in Yellowstone's IPO for a lack of marketability and the related risk of forfeiture should Yellowstone not consummate a business combination. As a result of the remeasurement of our retained interest in Yellowstone, a gain of $5,074,587 is included within "Unrealized gain (loss) on securities" within our consolidated statement of operations. 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:
|  | December 31, |
|  | 2020 |  |  | 2019 |
Beginning of year |  | $ | 771,805 |  |  | $ | 568,713 |
Additional investments in unconsolidated affiliates |  |  | 16,025,000 |  |  |  | 264,834 |
Distributions received |  |  | (1,433,480 | ) |  |  | (541,108 | )
Unrealized gain on initial investment in affiliate |  |  | 5,074,587 |  |  |  | - |
Sale of interest in affiliate |  |  | (309,375 | ) |  |  | - |
Equity in income of unconsolidated affiliates |  |  | 5,187,159 |  |  |  | 479,366 |
End of year |  | $ | 25,315,696 |  |  | $ | 771,805 |
Combined summarized financial data for these affiliates is as follows:
|  | December 31, |
|  | 2020 |  |  | 2019 |
Revenue |  | $ | 1,147,735,494 |  |  | $ | 19,374,109 |
Gross profit |  |  | 176,953,564 |  |  |  | 6,731,623 |
Income from continuing operations |  |  | 82,604,418 |  |  |  | 1,806,620 |
Net income |  |  | 86,473,464 |  |  |  | 1,859,438 |
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 is approximately 14% and the loan matures on May 1, 2021. Interest on unpaid principal accrues each calendar month and is due and payable monthly in arrears, on the first day of the next calendar month. Monthly interest payments began on November 1, 2020 and will continue on the first day of each month until May 1, 2021, when the note matures. Beginning February 1, 2021, and on the first day of each month thereafter, payments of $5,000,000 are due such that all outstanding principal and interest is paid by the maturity date. Other than during the existence of an event of default, all monthly payments are applied first to the payment of unpaid and accrued interest, and finally to the payment of outstanding principal due. Dream Finders Holdings, LLC has the right to prepay all or any portion of the note, but would be required to pay an amount equal to the excess of the interest which would have been due and payable if the note had not been prepaid prior to the maturity date. Any prepayments require no less than ten days notice and must identify the aggregate principal amount of the note to be prepaid on such date as well as the related interest to be paid on the prepayment date.

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