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Table of Contents

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 March 31, 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: 28,520,555 shares of Class A common stock and 1,055,560 shares of Class B common stock as of May 24, 2021.

1

Table of Contents

BOSTON OMAHA CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD END ED March 31, 2021

TABLE OF CONTENTS

| Page
Part I – Financial Information | 4
Item 1. Consolidated Financial Statements (Unaudited). | 4
Consolidated Balance Sheets – March 31, 2021 and December 31, 2020 | 4
Consolidated Statements of Operations – Three Months Ended March 31, 2021 and March 31, 2020 | 6
Consolidated Statements of Changes in Stockholders’ Equity – March 31, 2021 and March 31, 2020 | 7
Consolidated Statements of Cash Flows – Three Months Ended March 31, 2021 and March 31, 2020 | 9
Notes to Consolidated Financial Statements | 12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 33
Item 3. Quantitative and Qualitative Disclosures About Market Risk. | 47
Item 4. Controls and Procedures. | 47
Part II – Other Information | 49
Item 1. Legal Proceedings. | 49
Item 1A. Risk Factors. | 49
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. | 49
Item 3. Defaults Upon Senior Securities. | 49
Item 4. Mine Safety Disclosures. | 49
Item 5. Other Information. | 49
Item 6. Exhibits. | 49
Exhibit Index | 50
Signatures | 51

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.

2

Table of Contents

BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Financial Statements

Unaudited

For the Three Months Ended March 31, 2021 and 2020

3

Table of Contents

BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Balance Sheets
Unaudited

ASSETS |
|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Current Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 84,312,352 |  |  | $ | 44,665,972 |
Restricted cash |  |  | 308,458 |  |  |  | 280,269 |
Investments held in trust - special purpose acquisition company |  |  | 138,730,613 |  |  |  | 138,716,226 |
Accounts receivable, net |  |  | 3,599,835 |  |  |  | 4,041,563 |
Interest receivable |  |  | 9,238 |  |  |  | 286,768 |
Short-term investments |  |  | 5,359,719 |  |  |  | 7,050,675 |
Note receivable from affiliate |  |  | - |  |  |  | 20,000,000 |
Marketable equity securities |  |  | 143,990,739 |  |  |  | 64,036,482 |
U. S. Treasury securities |  |  | 54,499,260 |  |  |  | 37,767,945 |
Funds held as collateral assets |  |  | 9,903,614 |  |  |  | 10,006,075 |
Prepaid expenses |  |  | 2,338,669 |  |  |  | 2,197,342 |
Total Current Assets |  |  | 443,052,497 |  |  |  | 329,049,317 |
Property and Equipment, net |  |  | 51,311,183 |  |  |  | 48,508,272 |
Other Assets: |  |  |  |  |  |  |  |
Goodwill |  |  | 127,064,878 |  |  |  | 124,446,446 |
Intangible assets, net |  |  | 44,759,735 |  |  |  | 44,373,909 |
Investments |  |  | 19,445,630 |  |  |  | 19,448,519 |
Investments in unconsolidated affiliates |  |  | 6,575,423 |  |  |  | 20,913,896 |
Deferred policy acquisition costs |  |  | 664,982 |  |  |  | 690,555 |
Right of use assets |  |  | 56,676,028 |  |  |  | 52,849,492 |
Other |  |  | 553,888 |  |  |  | 427,020 |
Total Other Assets |  |  | 255,740,564 |  |  |  | 263,149,837 |
Total Assets |  | $ | 750,104,244 |  |  | $ | 640,707,426 |

See accompanying notes to the unaudited consolidated financial statements.

4

Table of Contents

BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Balance Sheets (Continued)
Unaudited

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND STOCKHOLDERS' EQUITY |
|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Current Liabilities: |  |  |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 7,057,708 |  |  | $ | 6,825,081 |
Short-term payables for business acquisitions |  |  | 364,416 |  |  |  | 771,916 |
Lease liabilities |  |  | 4,024,439 |  |  |  | 4,354,664 |
Funds held as collateral |  |  | 9,903,614 |  |  |  | 10,006,075 |
Unearned premiums |  |  | 3,784,864 |  |  |  | 3,955,363 |
Current maturities of long-term debt |  |  | 1,195,128 |  |  |  | 1,282,504 |
Deferred underwriting fee payable |  |  | 4,759,615 |  |  |  | 4,759,615 |
Deferred revenue |  |  | 2,140,859 |  |  |  | 1,915,031 |
Total Current Liabilities |  |  | 33,230,643 |  |  |  | 33,870,249 |
Long-term Liabilities: |  |  |  |  |  |  |  |
Asset retirement obligations |  |  | 2,095,703 |  |  |  | 2,282,273 |
Lease liabilities |  |  | 51,659,325 |  |  |  | 47,581,933 |
Long-term debt, less current maturities |  |  | 21,568,147 |  |  |  | 21,775,146 |
Other long-term liabilities |  |  | 116,105 |  |  |  | 116,104 |
Warrants liability |  |  | 6,255,493 |  |  |  | 8,431,315 |
Deferred tax liability |  |  | 20,574,225 |  |  |  | 57,000 |
Total Liabilities |  |  | 135,499,641 |  |  |  | 114,114,020 |
Redeemable Noncontrolling Interest |  |  | 149,259,571 |  |  |  | 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, 26,175,555 shares issued and outstanding |  |  | 26,176 |  |  |  | 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 |  |  | 423,545,789 |  |  |  | 424,204,641 |
Retained earnings (accumulated deficit) |  |  | 41,772,011 |  |  |  | (42,665,616 | )
Total Stockholders' Equity |  |  | 465,345,032 |  |  |  | 381,566,257 |
Total Liabilities, Redeemable Noncontrolling Interest, and Stockholders' Equity |  | $ | 750,104,244 |  |  | $ | 640,707,426 |

See accompanying notes to the unaudited consolidated financial statements.

5

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BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Statements of Operations
Unaudited

|  | For the Three Months Ended |
|  | March 31, |
|  | 2021 |  |  | 2020 |
Revenues: |  |  |  |  |  |  |  |
Billboard rentals, net |  | $ | 7,153,685 |  |  | $ | 7,215,766 |
Broadband services |  |  | 3,795,037 |  |  |  | 267,251 |
Premiums earned |  |  | 1,786,564 |  |  |  | 3,454,058 |
Insurance commissions |  |  | 400,177 |  |  |  | 332,791 |
Investment and other income |  |  | 69,556 |  |  |  | 140,314 |
Total Revenues |  |  | 13,205,019 |  |  |  | 11,410,180 |
Costs and Expenses: |  |  |  |  |  |  |  |
Cost of billboard revenues (exclusive of depreciation and amortization) |  |  | 2,861,747 |  |  |  | 2,950,554 |
Cost of broadband revenues (exclusive of depreciation and amortization) |  |  | 756,213 |  |  |  | 75,423 |
Cost of insurance revenues (exclusive of depreciation and amortization) |  |  | 1,129,210 |  |  |  | 1,503,862 |
Employee costs |  |  | 4,242,147 |  |  |  | 3,133,145 |
Professional fees |  |  | 1,093,983 |  |  |  | 1,287,155 |
General and administrative |  |  | 2,167,680 |  |  |  | 1,718,304 |
Amortization |  |  | 1,165,172 |  |  |  | 951,821 |
Depreciation |  |  | 1,146,804 |  |  |  | 831,510 |
Loss on disposition of assets |  |  | 35,567 |  |  |  | 18,919 |
Bad debt expense |  |  | 60,183 |  |  |  | 84,697 |
Accretion |  |  | 32,091 |  |  |  | 34,762 |
Total Costs and Expenses |  |  | 14,690,797 |  |  |  | 12,590,152 |
Net Loss from Operations |  |  | (1,485,778 | ) |  |  | (1,179,972 | )
Other Income (Expense): |  |  |  |  |  |  |  |
Interest income |  |  | 601,652 |  |  |  | 509,479 |
Dividend income |  |  | 132,495 |  |  |  | 390,791 |
Equity in income of unconsolidated affiliates |  |  | 140,297 |  |  |  | 465,665 |
Unrealized gain (loss) on securities |  |  | 104,467,952 |  |  |  | (24,745,513 | )
Gain on disposition of investments |  |  | 2,840,170 |  |  |  | 26,268 |
Remeasurement of warrant liability |  |  | 2,175,824 |  |  |  | - |
Interest expense |  |  | (235,326 | ) |  |  | (194,415 | )
Net Income (Loss) Before Income Taxes |  |  | 108,637,286 |  |  |  | (24,727,697 | )
Income tax (provision) benefit |  |  | (20,517,226 | ) |  |  | - |
Net Income (Loss) |  |  | 88,120,060 |  |  |  | (24,727,697 | )
Noncontrolling interest in subsidiary income |  |  | (3,682,433 | ) |  |  | (6,541 | )
Net Income (Loss) Attributable to Common Stockholders |  | $ | 84,437,627 |  |  | $ | (24,734,238 | )
Basic and Diluted Net Income (Loss) per Share |  | $ | 3.09 |  |  | $ | (1.05 | )
Basic and Diluted Weighted Average Class A and Class B Common Shares Outstanding |  |  | 27,299,946 |  |  |  | 23,510,660 |

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
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 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 |

See accompanying notes to the unaudited consolidated financial statements.

7

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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 |  |  | 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 |

See accompanying notes to the unaudited consolidated financial statements.

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BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Statements of Cash Flows
Unaudited

|  | For the Three Months Ended |
|  | March 31, |
|  | 2021 |  |  | 2020 |
Cash Flows from Operating Activities: |  |  |  |  |  |  |  |
Net Income (Loss) |  | $ | 88,120,060 |  |  | $ | (24,727,697 | )
Adjustments to reconcile net income (loss) to cash provided by (used in) operating activities: |  |  |  |  |  |  |  |
Amortization of right of use assets |  |  | 1,115,663 |  |  |  | 1,002,379 |
Depreciation, amortization, and accretion |  |  | 2,344,067 |  |  |  | 1,818,093 |
Deferred income taxes |  |  | 20,517,226 |  |  |  | - |
Loss on disposition of assets |  |  | 35,567 |  |  |  | 18,919 |
Bad debt expense |  |  | 60,183 |  |  |  | 84,697 |
Equity in earnings of unconsolidated affiliates |  |  | (140,297 | ) |  |  | (465,665 | )
Change in warrant liability |  |  | (2,175,824 | ) |  |  | - |
Unrealized (gain) loss on securities |  |  | (104,467,952 | ) |  |  | 24,745,513 |
Gain on disposition of investments |  |  | (2,840,170 | ) |  |  | (26,268 | )
Changes in operating assets and liabilities: |  |  |  |  |  |  |  |
Accounts receivable |  |  | 392,013 |  |  |  | (726,680 | )
Interest receivable |  |  | 277,530 |  |  |  | 163,775 |
Prepaid expenses |  |  | (49,284 | ) |  |  | 246,685 |
Distributions from unconsolidated affiliates |  |  | 1,598,623 |  |  |  | 98,100 |
Deferred policy acquisition costs |  |  | 25,573 |  |  |  | 77,606 |
Other assets |  |  | (3,007 | ) |  |  | 99,729 |
Accounts payable and accrued expenses |  |  | 232,627 |  |  |  | (1,301,124 | )
Lease liabilities |  |  | (1,067,943 | ) |  |  | (1,037,464 | )
Unearned premiums |  |  | (170,499 | ) |  |  | (532,148 | )
Deferred revenue |  |  | 225,828 |  |  |  | 350,666 |
Net Cash Provided by (Used in) Operating Activities |  |  | 4,029,984 |  |  |  | (110,884 | )
Cash Flows from Investing Activities: |  |  |  |  |  |  |  |
Payments on short-term payables for business acquisitions |  |  | (407,500 | ) |  |  | (500 | )
Business acquisitions, net of cash acquired |  |  | (6,102,508 | ) |  |  | (14,310,533 | )
Proceeds from redemption of preferred units |  |  | - |  |  |  | 6,000,000 |
Principal payments received on note receivable from affiliate |  |  | 20,000,000 |  |  |  | - |
Investment in unconsolidated affiliate |  |  | - |  |  |  | (1,500,000 | )
Purchase of non-controlling interest in subsidiary |  |  | - |  |  |  | (1,406,409 | )
Purchases of equipment and related assets |  |  | (2,624,259 | ) |  |  | (599,059 | )
Proceeds from sales of investments |  |  | 543,408,036 |  |  |  | 265,921,609 |
Purchase of investments |  |  | (518,225,946 | ) |  |  | (218,274,275 | )
Net Cash Provided by Investing Activities |  |  | 36,047,823 |  |  |  | 35,830,833 |

See accompanying notes to the unaudited consolidated financial statements.

9

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BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)
Unaudited

|  | For the Three Months Ended |
|  | March 31, |
|  | 2021 |  |  | 2020 |
Cash Flows from Financing Activities: |  |  |  |  |  |  |  |
Principal payments of long-term debt |  | $ | (294,375 | ) |  | $ | - |
Return of funds held as collateral |  |  | (102,461 | ) |  |  | - |
Offering costs |  |  | (108,863 | ) |  |  | (2,252 | )
Net Cash Used in Financing Activities |  |  | (505,699 | ) |  |  | (2,252 | )
Net Increase in Cash, Cash Equivalents, and Restricted Cash |  |  | 39,572,108 |  |  |  | 35,717,697 |
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period |  |  | 54,952,316 |  |  |  | 16,372,032 |
Cash, Cash Equivalents, and Restricted Cash, End of Period |  | $ | 94,524,424 |  |  | $ | 52,089,729 |
Interest Paid in Cash |  | $ | 232,212 |  |  | $ | 194,415 |
Income Taxes Paid in Cash |  | $ | - |  |  | $ | - |

See accompanying notes to the unaudited consolidated financial statements.

10

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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 Three Months Ended |
|  | March 31, |
|  | 2021 |  |  | 2020 |
Increase in redeemable noncontrolling interest of broadband subsidiary |  | $ | 549,989 |  |  | $ | 1,397,790 |
(Decrease) in redeemable noncontrolling interest of insurance subsidiary |  |  | - |  |  |  | (323,649 | )

See accompanying notes to the unaudited consolidated financial statements.

11

Table of Contents

BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 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 July through November 2017 we completed the acquisition of two surety brokerage businesses and acquired a majority stake in a third surety brokerage business, thus expanding our operations in insurance. During the first quarter of 2020, we purchased the non-controlling interest in our third surety brokerage business from the non-controlling owner.

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, filed with the Securities and Exchange Commission, which we refer to as the “SEC,” on March 29, 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.

Our consolidated subsidiaries 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”

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”

Yellowstone Acquisition Company, which we refer to as "Yellowstone"

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2021 and 2020

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

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 $152,255 and $100,114 for the three months ended March 31, 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.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 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 18, 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 affected by charges against additional paid in capital and accumulated deficit. Yellowstone's Common 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).

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2021 and 2020

NOTE 3. RESTRICTED CASH

Restricted cash consists of the following:

|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Insurance premium escrow |  | $ | 308,458 |  |  | $ | 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.

|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Cash and cash equivalents |  | $ | 84,312,352 |  |  | $ | 44,665,972 |
Funds held as collateral |  |  | 9,903,614 |  |  |  | 10,006,075 |
Restricted cash |  |  | 308,458 |  |  |  | 280,269 |
Total Cash, Cash Equivalents, and Restricted Cash as Presented in the Consolidated Statement of Cash Flows |  | $ | 94,524,424 |  |  | $ | 54,952,316 |

NOTE 4. ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Trade accounts |  | $ | 2,992,647 |  |  | $ | 3,537,864 |
Premiums |  |  | 854,971 |  |  |  | 832,221 |
Allowance for doubtful accounts |  |  | (247,783 | ) |  |  | (328,522 | )
Total Accounts Receivable, net |  | $ | 3,599,835 |  |  | $ | 4,041,563 |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2021 and 2020

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Structures and displays |  | $ | 44,440,750 |  |  | $ | 42,858,525 |
Fiber, towers, and broadband equipment |  |  | 13,222,378 |  |  |  | 11,358,650 |
Vehicles and equipment |  |  | 2,887,970 |  |  |  | 2,522,810 |
Office furniture and equipment |  |  | 2,265,098 |  |  |  | 2,150,729 |
Accumulated depreciation |  |  | (11,505,013 | ) |  |  | (10,382,442 | )
Total Property and Equipment, net |  | $ | 51,311,183 |  |  | $ | 48,508,272 |

Depreciation expense for the three months ended March 31, 2021 and 2020 was $1,146,804 and $831,510, respectively. For the three months ended March 31, 2021 and 2020, we realized losses on the disposition of assets in the amount of $35,567 and $18,919 , respectively.

NOTE 6. BUSINESS ACQUISITIONS

2021 Acquisitions

During the first quarter of 2021, we completed one acquisition of billboard assets accounted for as a business combination under the provisions of ASC 805. A summary of the acquisition is provided below.

Billboard Acquisition

On January 26, 2021, our subsidiary, LMH, acquired from Thomas Outdoors, LLC, 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.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 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. $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 10% interest outstanding owned by FibAire is included within "Redeemable Noncontrolling interest" in our consolidated Balance Sheets.

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 for the three month period ended March 31, 2020 are recognized from March 10, 2020, the date of acquisition, through March 31, 2020. During this period, revenues and earnings were $267,251 and $65,410, respectively. Acquisition costs of $287,934 were expensed in professional fees during the same period. 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).

17

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. The 20% interest outstanding owned by UBB is included within "Redeemable Noncontrolling interest" in our consolidated Balance Sheets.

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 also assessing the fair value of the 20% interest issued to UBB; 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 |

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).

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 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 |
|  | March 31, |
|  | 2021 |  |  | 2020 |
Revenue |  | $ | 13,285,225 |  |  | $ | 14,992,668 |
Net Income (Loss) Attributable to Common Stockholders |  | $ | 84,462,282 |  |  | $ | (23,861,040 | )
Basic and Diluted Earnings (Loss) per Share |  | $ | 3.09 |  |  | $ | (1.01 | )
Basic and Diluted Weighted Average Class A and Class B Common Shares Outstanding |  |  | 27,299,946 |  |  |  | 23,510,660 |

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

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2021 and 2020

NOTE 7. INTANGIBLE ASSETS

Intangible assets consist of the following:

|  | March 31, 2021 |  |  | December 31, 2020 |
|  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |
|  | Cost |  |  | Amortization |  |  | Balance |  |  | Cost |  |  | Amortization |  |  | Balance |
Customer relationships |  | $ | 48,087,482 |  |  | $ | (21,353,075 | ) |  | $ | 26,734,407 |  |  | $ | 46,740,483 |  |  | $ | (20,558,751 | ) |  | $ | 26,181,732 |
Permits, licenses, and lease acquisition costs |  |  | 11,257,673 |  |  |  | (2,665,384 | ) |  |  | 8,592,289 |  |  |  | 11,053,673 |  |  |  | (2,412,313 | ) |  |  | 8,641,360 |
Site location |  |  | 849,347 |  |  |  | (207,426 | ) |  |  | 641,921 |  |  |  | 849,347 |  |  |  | (193,462 | ) |  |  | 655,885 |
Noncompetition agreements |  |  | 626,000 |  |  |  | (414,405 | ) |  |  | 211,595 |  |  |  | 626,000 |  |  |  | (386,934 | ) |  |  | 239,066 |
Trade names and trademarks |  |  | 3,602,202 |  |  |  | (421,107 | ) |  |  | 3,181,095 |  |  |  | 3,602,202 |  |  |  | (369,175 | ) |  |  | 3,233,027 |
Technology |  |  | 1,128,000 |  |  |  | (236,661 | ) |  |  | 891,339 |  |  |  | 1,128,000 |  |  |  | (212,250 | ) |  |  | 915,750 |
Nonsolicitation agreement |  |  | 28,000 |  |  |  | (28,000 | ) |  |  | - |  |  |  | 28,000 |  |  |  | (28,000 | ) |  |  | - |
Easements |  |  | 4,507,089 |  |  |  | - |  |  |  | 4,507,089 |  |  |  | 4,507,089 |  |  |  | - |  |  |  | 4,507,089 |
Total |  | $ | 70,085,793 |  |  | $ | (25,326,058 | ) |  | $ | 44,759,735 |  |  | $ | 68,534,794 |  |  | $ | (24,160,885 | ) |  | $ | 44,373,909 |

Future Amortization

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

|  | March 31, |  |  |  |  |  |  |  |  |
|  | 2021 |  |  | 2022 |  |  | 2023 |  |  | 2024 |  |  | 2025 |  |  | Thereafter |  |  | Total |
Customer relationships |  | $ | 3,267,666 |  |  | $ | 3,267,666 |  |  | $ | 3,267,666 |  |  | $ | 3,267,666 |  |  | $ | 3,267,666 |  |  | $ | 10,396,077 |  |  | $ | 26,734,407 |
Permits, licenses, and lease acquisition costs |  |  | 1,033,348 |  |  |  | 1,033,348 |  |  |  | 1,033,348 |  |  |  | 1,033,348 |  |  |  | 1,013,202 |  |  |  | 3,445,695 |  |  |  | 8,592,289 |
Site location |  |  | 56,623 |  |  |  | 56,623 |  |  |  | 56,623 |  |  |  | 56,623 |  |  |  | 56,623 |  |  |  | 358,806 |  |  |  | 641,921 |
Noncompetition agreements |  |  | 97,450 |  |  |  | 83,462 |  |  |  | 29,843 |  |  |  | 840 |  |  |  | - |  |  |  | - |  |  |  | 211,595 |
Trade names and trademarks |  |  | 208,900 |  |  |  | 208,900 |  |  |  | 208,900 |  |  |  | 208,900 |  |  |  | 208,900 |  |  |  | 2,136,595 |  |  |  | 3,181,095 |
Technology |  |  | 99,000 |  |  |  | 99,000 |  |  |  | 99,000 |  |  |  | 99,000 |  |  |  | 99,000 |  |  |  | 396,339 |  |  |  | 891,339 |
Total |  | $ | 4,762,987 |  |  | $ | 4,748,999 |  |  | $ | 4,695,380 |  |  | $ | 4,666,377 |  |  | $ | 4,645,391 |  |  | $ | 16,733,512 |  |  | $ | 40,252,646 |

Amortization expense for the three months ended March 31, 2021 and 2020 was $1,165,172 and $951,821, respectively.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2021 and 2020

NOTE 7. INTANGIBLE ASSETS (Continued)

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

Customer relationships |  |  | 98 |
Permits, licenses, and lease acquisition costs |  |  | 100 |
Site location |  |  | 136 |
Noncompetition agreements |  |  | 23 |
Trade names and trademarks |  |  | 183 |
Technology |  |  | 108 |

NOTE 8. I NVESTMENTS, 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 three months ended March 31, 2021, losses on redemptions of U.S. Treasury securities held to maturity were $23,904.

|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Certificates of deposit |  | $ | 417,625 |  |  | $ | 1,035,827 |
Corporate bonds available for sale |  |  | - |  |  |  | 1,020,000 |
U.S. Treasury notes and corporate bond |  |  | 4,942,094 |  |  |  | 4,994,848 |
Total |  | $ | 5,359,719 |  |  | $ | 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, with the exception of our DFH shares (see Note 9 below). Our marketable equity securities are held by UCS and Boston Omaha. Marketable equity securities as of March 31, 2021 and December 31, 2020 are as follows:

|  |  |  |  |  | Gross |  |  |  |  |
|  |  |  |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gain (Loss) |  |  | Value |
Marketable equity securities, March 31, 2021 |  | $ | 43,684,885 |  |  | $ | 100,305,854 |  |  | $ | 143,990,739 |
Marketable equity securities, December 31, 2020 |  | $ | 68,205,548 |  |  | $ | (4,169,066 | ) |  | $ | 64,036,482 |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 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 March 31, 2021 and December 31, 2020 are as follows:

|  |  |  |  |  | Gross |  |  |  |  |
|  |  |  |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gain (Loss) |  |  | Value |
U.S. Treasury securities, March 31, 2021 |  | $ | 54,494,536 |  |  | $ | 4,724 |  |  | $ | 54,499,260 |
U.S. Treasury 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 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 2022 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:

|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
U.S. Treasury securities, held to maturity |  | $ | 283,126 |  |  | $ | 286,015 |
Preferred stock |  |  | 104,019 |  |  |  | 104,019 |
Voting common stock of CBT Holding Corporation |  |  | 19,058,485 |  |  |  | 19,058,485 |
Total |  | $ | 19,445,630 |  |  | $ | 19,448,519 |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 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 March 31, 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 30%. Two of the investments in affiliates, Logic Real Estate Companies, LLC and 24th Street Holding Company, LLC, having a combined carrying amount of $560,579 on March 31, 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. At March 31, 2021, our total investment in DFH, based on its closing price on such date, was valued at over $115 million, before applying any required fair value adjustments or discounts related to the lack of marketability associated with our lock-up period.

23

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

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.

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:

|  | March 31, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Beginning of period |  | $ | 20,913,896 |  |  | $ | 771,805 |
Additional investment in unconsolidated affiliates |  |  | - |  |  |  | 16,000,000 |
Distributions received |  |  | (1,598,623 | ) |  |  | (1,433,480 | )
Reclassificaton of investment in affiliate to marketable securities |  |  | (12,880,147 | ) |  |  | - |
Equity in income of unconsolidated affiliates |  |  | 140,297 |  |  |  | 5,575,571 |
End of period |  | $ | 6,575,423 |  |  | $ | 20,913,896 |

Combined summarized financial data for these affiliates is as follows:

|  | March 31, |
|  | 2021 |  |  | 2020 |
Revenue |  | $ | 9,416,765 |  |  | $ | 191,751,459 |
Gross profit |  |  | 6,637,948 |  |  |  | 25,787,988 |
Income from continuing operations |  |  | 20,713 |  |  |  | 7,382,036 |
Net (loss) income |  | $ | (453,471 | ) |  | $ | 6,517,748 |

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% 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.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 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 March 31, 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 March 31, 2021, the estimated fair value of our long-term debt was $23,512,618 which exceeds the carrying amount of $22,763,275.

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 March 31, 2021 resulted in a gain of $2,175,824 which is included within "Remeasurement of warrant liability" within our Consolidated Statements of Operations. The Warrants were classified as Level 1 as of March 31, 2021 and December 31, 2020.

DFH Class A Common Stock

The fair value calculation related to our shares of DFH’s Class A common stock is dependent upon Level 3 adjustments applied to the observable trading price of the shares for a lack of marketability related to our lock-up period pursuant to Rule 144A of the Securities Act of 1933. As a result of the adjustment, a discount of $5,633,703 is included within "Unrealized gain (loss) on securities" within our consolidated statement of operations. The lock-up period specific to Rule 144A will expire during the second quarter of 2021.

Investments Held in Trust - Special Purpose Acquisition Company

Assets held in the Trust Account related to Yellowstone are comprised of $138,730,613 of marketable U.S. treasury securities, all of which are classified as Level 1 within the fair value hierarchy.

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. Other than as described above related to our shares of DFH's Class A common stock, substantially all of the fair value is determined using observed prices of publicly traded securities, level 1 in the fair value hierarchy.

|  | Total Carrying |  |  | Quoted Prices |  |  |  |  |  |  | Total Changes |
|  | Amount in |  |  | in Active |  |  |  |  |  |  | in Fair Values |
|  | Consolidated |  |  | Markets for |  |  |  |  |  |  | Included in |
|  | Balance Sheet |  |  | Identical |  |  | Realized Gains |  |  | Current Period |
|  | March 31, 2021 |  |  | Assets |  |  | and (Losses) |  |  | Earnings (Loss) |
Marketable equity securities and U.S. Treasury trading securities |  | $ | 198,489,999 |  |  | $ | 204,123,702 |  |  | $ | 2,864,074 |  |  | $ | 104,467,952 |

NOTE 1 0. 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 |  |  | 92,574 |
Liabilities settled |  |  | (311,235 | )
Accretion expense |  |  | 32,091 |
Balance, March 31, 2021 |  | $ | 2,095,703 |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2021 and 2020

NOTE 1 1. CAPITAL STOCK

In February 2018, we filed a shelf registration statement with the SEC allowing us to sell up to $200,000,000 of our securities. This registration statement was declared effective by the SEC on February 9, 2018. This shelf registration expired in February 2021. We subsequently entered into a Sales Agreement with Cowen and Company, LLC, which we refer to as “Cowen,” relating to the sale of shares of our Class A common stock to be offered. In accordance with the terms of the Sales Agreement, we may offer and sell from time to time up to $50,000,000 of shares of our Class A common stock through Cowen acting as our agent. Cowen is not required to sell any specific amount of securities, but will act as our sales agent using commercially reasonable efforts consistent with its normal trading and sales practices, on mutually agreed terms between Cowen and us. The compensation to Cowen for sales of Class A common stock sold pursuant to the Sales Agreement will be an amount equal to 3% of the gross proceeds of any shares of Class A common stock sold under the Sales Agreement. From March 2018 through August 20, 2019, we sold through Cowen an aggregate of 2,141,452 shares of our Class A common stock under this “at the market” offering, resulting in gross proceeds to us of $49,999,625. For the period from January 1, through August 20, 2019, we sold through Cowen 942,223 shares of our Class A common stock under this at-the-market offering, resulting in gross proceeds to us of $22,753,943 and net proceeds of $22,059,015 after offering costs of $694,928.

On August 13, 2019, we entered into a second Sales Agreement with Cowen, relating to the sale of additional shares of our Class A common stock to be offered. In accordance with the terms of the second Sales Agreement, we may offer and sell from time to time up to $75,000,000 of shares of our Class A common stock through Cowen acting as our agent. Cowen is not required to sell any specific amount of securities, but will act as our sales agent using commercially reasonable efforts consistent with its normal trading and sales practices, on mutually agreed terms between Cowen and us. The compensation to Cowen for sales of Class A common stock sold pursuant to the Sales Agreement will be an amount equal to 3% of the gross proceeds of any shares of Class A common stock sold under the Sales Agreement. From August 21, 2019 through December 31, 2019, we sold through Cowen 448,880 shares of our Class A common stock under the second “at the market” offering, resulting in gross proceeds to us of $9,450,789 and net proceeds of $9,122,227, after offering costs of $328,562. During the first quarter of fiscal 2020, we did not sell any shares of our Class A common stock under the new "at the market" offering. Subsequent to March 31, 2020, we have sold under the new "at the market" offering 40,455 shares of our Class A common stock for gross proceeds of $669,751.

On March 18, 2020, our Board of Directors authorized and approved a share repurchase program for us to repurchase up to $20,000,000 worth of shares of our Class A common stock, which we refer to as the “Repurchase Program.” Under the Repurchase Program, we may repurchase shares, from time to time, in solicited or unsolicited transactions in the open market, privately-negotiated transactions, or transactions pursuant to a Rule 10b5-1 plan. The Repurchase Program does not obligate us to purchase any particular number of shares and will run through the earlier of June 30, 2021, or our decision that the Repurchase Program is no longer consistent with our short-term and long-term objectives. We have not repurchased any shares during fiscal year 2020.

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 do not have current agreements, commitments or understandings for any specific material acquisitions at this 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.

Our Board of Directors also authorized us to enter into written trading plans under Rule 10b5- 1 of the Securities Exchange Act of 1934, which we refer to as the “Exchange Act.” Adopting a trading plan that satisfies the conditions of Rule 10b5- 1 allows a company to repurchase its shares at times when it might otherwise be prevented from doing so due to self-imposed trading blackout periods or pursuant to insider trading laws. Under any Rule 10b5- 1 trading plan, our third-party broker, subject to Securities and Exchange Commission regulations regarding certain price, market, volume and timing constraints, would have authority to purchase our Class A common stock in accordance with the terms of the plan. We may from time to time, enter into Rule 10b5- 1 trading plans to facilitate the repurchase of our Class A common shares pursuant to our Repurchase Program.

At March 31, 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 three months ended March 31, 2021 is presented in the following table.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2021 and 2020

NOTE 1 1. CAPITAL STOCK (Continued)

|  | 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 March 31, 2021 |  |  | 105,556 |  |  | $ | 9.95 |  |  |  | 4.25 |  |  | $ | 2,069,953 |

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 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.

As of March 31, 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 30-day LIBOR rate plus an applicable margin ranging between 2.00 and 2.50% dependent on Link’s consolidated leverage ratio. The revolving line of credit is due and payable on August 11, 2021.

Long-term debt included within our consolidated balance sheet as of March 31, 2021 consists of Term Loan 1 and Term Loan 2 borrowings of $22,763,275, of which $1,195,128 is classified as current. There were no amounts outstanding related to the revolving line of credit as of March 31, 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 March 31, 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.

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.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2021 and 2020

NOTE 13. LEASES (Continued)

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 months ended March 31, 2021 and 2020 is as follows:

|  | Three Months |  |  | Three Months |  |
|  | Ended |  |  | Ended |  |
|  | March 31, 2021 |  |  | March 31, 2020 |  | Statement of Operations Classification
Lease cost |  | $ | 1,747,633 |  |  | $ | 1,611,303 |  | Cost of billboard revenues and general and administrative
Variable and short-term lease cost |  |  | 97,046 |  |  |  | 157,246 |  | Cost of billboard revenues and general and administrative
Total Lease Cost |  | $ | 1,844,679 |  |  | $ | 1,768,549 |  |

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

|  | Three Months |
|  | Ended |
|  | March 31, 2021 |
Cash payments for operating leases |  | $ | 1,699,913 |
New operating lease assets obtained in exchange for operating lease liabilities |  | $ | 7,553,810 |

Operating Lease Assets and Liabilities

|  | March 31, 2021 |  |  | December 31, 2020 |  | Balance Sheet Classification
Lease assets |  | $ | 56,676,028 |  |  | $ | 52,849,492 |  | Other Assets: Right of use assets
Current lease liabilities |  | $ | 4,024,439 |  |  | $ | 4,354,664 |  | Current Liabilities: Lease liabilities
Noncurrent lease liabilities |  |  | 51,659,325 |  |  |  | 47,581,933 |  | Long-term Liabilities: Lease liabilities
Total Lease Liabilities |  | $ | 55,683,764 |  |  | $ | 51,936,597 |  |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2021 and 2020

NOTE 13. LEASES (Continued)

Maturity of Operating Lease Liabilities

|  | March 31, 2021 |
2021 |  | $ | 6,491,462 |
2022 |  |  | 6,154,292 |
2023 |  |  | 5,840,813 |
2024 |  |  | 5,408,772 |
2025 |  |  | 5,263,616 |
Thereafter |  |  | 55,168,967 |
Total lease payments |  |  | 84,327,922 |
Less imputed interest |  |  | (28,644,158 | )
Present Value of Lease Liabilities |  | $ | 55,683,764 |

As of March 31, 2021, our operating leases have a weighted-average remaining lease term of 17.39 years and a weighted-average discount rate of 4.74%.

NOTE 14. I N DUSTRY 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 and UCS. SSS clients are multi-state and UCS, SCS 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 and UCS and to make additional business acquisitions in the insurance industry.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2021 and 2020

NOTE 14. INDUSTRY SEGMENTS (Continued)

Link Media Holdings, LLC

LMH conducts our billboard rental operations. LMH advertisers 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 and Utah.

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |
Three Months Ended March 31, 2021 |  | GIG |  |  | LMH |  |  | FIF |  |  | Unallocated |  |  | Consolidated |
Revenue |  | $ | 2,256,297 |  |  | $ | 7,153,685 |  |  | $ | 3,795,037 |  |  | $ | - |  |  | $ | 13,205,019 |
Segment gross profit |  |  | 1,127,087 |  |  |  | 4,291,938 |  |  |  | 3,038,824 |  |  |  | - |  |  |  | 8,457,849 |
Segment income (loss) from operations |  |  | (787,487 | ) |  |  | 106,049 |  |  |  | 777,426 |  |  |  | (1,581,766 | ) |  |  | (1,485,778 | )
Capital expenditures |  |  | - |  |  |  | 6,563,517 |  |  |  | 2,040,190 |  |  |  | 123,059 |  |  |  | 8,726,766 |
Depreciation and amortization |  |  | 40,378 |  |  |  | 1,697,028 |  |  |  | 559,755 |  |  |  | 14,815 |  |  |  | 2,311,976 |

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |
Three Months Ended March 31, 2020 |  | GIG |  |  | LMH |  |  | FIF |  |  | Unallocated |  |  | Consolidated |
Revenue |  | $ | 3,927,163 |  |  | $ | 7,215,766 |  |  | $ | - |  |  | $ | 267,251 |  |  | $ | 11,410,180 |
Segment gross profit |  |  | 2,423,301 |  |  |  | 4,265,212 |  |  |  | - |  |  |  | 191,828 |  |  |  | 6,880,341 |
Segment loss from operations |  |  | 300,386 |  |  |  | 72,118 |  |  |  | - |  |  |  | (1,552,476 | ) |  |  | (1,179,972 | )
Capital expenditures |  |  | - |  |  |  | 599,059 |  |  |  |  |  |  |  | 12,341,242 |  |  |  | 12,940,301 |
Depreciation and amortization |  |  | 141,946 |  |  |  | 1,641,385 |  |  |  | - |  |  |  | - |  |  |  | 1,783,331 |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2021 and 2020

NOTE 14. INDUSTRY SEGMENTS (Continued)

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |
As of March 31, 2021 |  | GIG |  |  | LMH |  |  | FIF |  |  | Unallocated |  |  | Consolidated |
Accounts receivable, net |  | $ | 924,966 |  |  | $ | 2,483,411 |  |  | $ | 184,558 |  |  | $ | 6,900 |  |  | $ | 3,599,835 |
Goodwill |  |  | 8,719,294 |  |  |  | 100,191,426 |  |  |  | 18,154,158 |  |  |  | - |  |  |  | 127,064,878 |
Total assets |  |  | 56,258,429 |  |  |  | 225,518,495 |  |  |  | 67,724,449 |  |  |  | 400,602,871 |  |  |  | 750,104,244 |

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | 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 three months ended March 31:

|  | 2021 |  |  | 2020 |
Losses and LAE at January 1 |  | $ | 2,492,334 |  |  | $ | 1,203,493 |
Provision for losses and LAE claims arising in: |  |  |  |  |  |  |  |
Current year |  |  | 249,778 |  |  |  | 575,685 |
Prior year |  |  | 340,087 |  |  |  | 40,806 |
Total incurred |  |  | 589,865 |  |  |  | 616,491 |
Losses and LAE payments for claims arising in: |  |  |  |  |  |  |  |
Current year |  |  | 228,305 |  |  |  | 74,192 |
Prior years |  |  | 310,553 |  |  |  | 379,891 |
Total payments |  |  | 538,858 |  |  |  | 454,083 |
Losses and LAE at March 31 |  | $ | 2,543,341 |  |  | $ | 1,365,901 |

For the three months ended March 31, 2021, $310,553 was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There has been a $191,000 favorable prior year development during the three months ended March 31, 2021. Reserves remaining as of March 31, 2021 for prior years are $340,087 as a result of re-estimation of unpaid losses and loss adjustment expenses. For the three months ended March 31, 2020, $379,891 was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There was a $157,000 favorable prior year development during the three months ended March 31, 2020.

Reserves remaining as of March 31, 2020 for prior years were $40,806 as a result of re-estimation of unpaid losses and loss adjustment expenses. In both periods, the favorable 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. Reinsurance recoverables of ($12,074) and $120,000 are included within Loss and Loss Adjustment Reserves as of March 31, 2021 and 2020, respectively.

NOTE 16. CUSTODIAL RISK

As of March 31, 2021, we had approximately $89,411,470 in excess of federally insured limits on deposit with financial institutions.

31

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.

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 now eliminate 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

On April 1, 2021, our subsidiary, GIG, acquired 100% of the membership units of an insurance brokerage company for a purchase price $2,225,000. The membership units were acquired for the purpose of expanding our presence in the surety and fidelity insurance business in the United States.

On April 6, 2021, we closed on the previously announced underwritten public offering of our Class A common stock, par value $0.001 per share (“Class A common stock”), at a price to the public of $25.00 per share, for a total of 2,645,000 shares, of which 2,345,000 shares were sold by us, including 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 approximately $58.6 million, before deducting the underwriting discount and offering expenses. We did not receive any of the proceeds from the sale of shares by the selling stockholder.

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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. 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 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 March 31, 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. We hope to continue to expand in Arizona, Utah, and other locales.

Investments:

| ● | 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.

| ● | 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. The DFH shares purchased in 2017 are restricted securities and are subject to a lock-up for a period through July 19, 2021 and subject to trading limitations under Rule 144 as we are currently deemed an affiliate of DFH as we own more than 10% of its Class A common stock. 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.

| ● | 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. 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.

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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 the future 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 CB&T and DFH 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 commencing in the first quarter of fiscal 2020 have impacted different parts of our business in different ways.

| ● | Our billboard business incurred some overall smaller reductions in revenue but is returning to more normal levels, with revenues for the first quarter of fiscal 2021 at or near the same levels in most of the markets we serve. 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 quarter of fiscal 2021 were down 0.9% from the same period in 2020.

| ● | 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 quarter of fiscal 2021 decreased by 48.3%, or approximately $1.7 million, from the first quarter 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. Our losses and loss reserves increased by approximately $0.2 million in the first quarter of 2021 from the first quarter of fiscal 2020.

| ● | Our broadband business was generally unaffected by COVID-19 and we continued to expand that business in 2020 and 2021 through an acquisition in Utah in late 2020 and expansion in capital spending to expand our footprint and serve additional customers in both Arizona and Utah.

| ● | 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 quarter of fiscal 2021.

| ● | Our business operations were generally unaffected by COVID-19.

| ● | Despite the pandemic, we generated positive cash flow from operating activities in the first quarter of fiscal 2021 of approximately $4.0 million compared to negative cash flow from operations of approximately $0.1 million in the first quarter of fiscal 2020.

| ● | 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.

| ● | As of March 31, 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 three months ended March 31, 2021.

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 March 31, 2021 Compared to Three Months Ended March 31, 2020

The following is a comparison of our results of operations for the three months ended March 31, 2021, which we refer to as the “first quarter of fiscal 2021,” compared to the three months ended March 31, 2020, which we refer to as the “first quarter of fiscal 2020.”

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

|  | For the Three Months Ended March 31, |
|  | (unaudited) |
|  | 2021 |  |  | 2020 |  |  | 2021 vs 2020 |
|  |  |  |  |  | As a % of |  |  |  |  |  |  | As a % of |  |  |  |  |
|  |  |  |  |  | Total |  |  |  |  |  |  | Total |  |  |  |  |
|  | Amount |  |  | Revenues |  |  | Amount |  |  | Revenues |  |  | $ Variance |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Billboard rentals, net |  | $ | 7,153,685 |  |  |  | 54.2 | % |  | $ | 7,215,766 |  |  |  | 63.2 | % |  | $ | (62,081 | )
Broadband services |  |  | 3,795,037 |  |  |  | 28.8 | % |  | $ | 267,251 |  |  |  | 2.4 | % |  |  | 3,527,786 |
Premiums earned |  |  | 1,786,564 |  |  |  | 13.5 | % |  |  | 3,454,058 |  |  |  | 30.3 | % |  |  | (1,667,494 | )
Insurance commissions |  |  | 400,177 |  |  |  | 3.0 | % |  |  | 332,791 |  |  |  | 2.9 | % |  |  | 67,386 |
Investment and other income |  |  | 69,556 |  |  |  | 0.5 | % |  |  | 140,314 |  |  |  | 1.2 | % |  |  | (70,758 | )
Total Revenues |  | $ | 13,205,019 |  |  |  | 100.0 | % |  | $ | 11,410,180 |  |  |  | 100.0 | % |  | $ | 1,794,839 |

We realized total revenues of $13,205,019 during the first quarter of fiscal 2021, an increase of 15.7% over revenues of $11,410,180 during the first quarter of fiscal 2020. The increase in total revenues was largely driven by our acquisition of FibAire in March 2020 and was partially offset by lower revenue within our UCS insurance subsidiary, mainly due to the suspension of its rental guarantee bond program. Due to the current 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 quarter of fiscal 2021 decreased 0.9% from the first quarter of fiscal 2020, reflecting a reduction in rental and occupancy rates across a number of our markets due to the ongoing COVID-19 pandemic. The decline due to COVID-19 was partially offset by the acquisition of billboards from Thomas in the first quarter of fiscal 2021, which accounted for approximately 2.6% of our billboard revenues in the first quarter of fiscal 2021.

| ● | Revenue from broadband services was $3,795,037 in the first quarter of fiscal 2021 up from $267,251 in the first quarter of fiscal 2020, mainly reflecting the FibAire acquisition completed in March 2020.

| ● | Premiums earned from our UCS insurance subsidiary decreased 48.3% in the first quarter of fiscal 2021, when compared to the first 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.

| ● | Revenues from insurance commissions generated by our surety brokerage operations increased by 20.2%, mainly reflecting an increase in bonds sold through other insurance carriers.

| ● | Investment and other income at UCS decreased 50.4% in the first quarter of fiscal 2021 from $140,314 in the first quarter of fiscal 2020 due to the decline in interest rates as well as a decline in dividends received over the past year.

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

|  | For the Three Months Ended March 31, |
|  | (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 |  | $ | 2,861,747 |  |  |  | 21.7 | % |  | $ | 2,950,554 |  |  |  | 25.8 | % |  | $ | (88,807 | )
Cost of broadband revenues |  |  | 756,213 |  |  |  | 5.7 | % |  |  | 75,423 |  |  |  | 0.7 | % |  |  | 680,790 |
Cost of insurance revenues |  |  | 1,129,210 |  |  |  | 8.6 | % |  |  | 1,503,862 |  |  |  | 13.2 | % |  |  | (374,652 | )
Employee costs |  |  | 4,242,147 |  |  |  | 32.1 | % |  |  | 3,133,145 |  |  |  | 27.4 | % |  |  | 1,109,002 |
Professional fees |  |  | 1,093,983 |  |  |  | 8.3 | % |  |  | 1,287,155 |  |  |  | 11.3 | % |  |  | (193,172 | )
General and administrative |  |  | 2,167,680 |  |  |  | 16.4 | % |  |  | 1,718,304 |  |  |  | 15.1 | % |  |  | 449,376 |
Amortization |  |  | 1,165,172 |  |  |  | 8.8 | % |  |  | 951,821 |  |  |  | 8.3 | % |  |  | 213,351 |
Depreciation |  |  | 1,146,804 |  |  |  | 8.7 | % |  |  | 831,510 |  |  |  | 7.3 | % |  |  | 315,294 |
Accretion |  |  | 32,091 |  |  |  | 0.2 | % |  |  | 34,762 |  |  |  | 0.3 | % |  |  | (2,671 | )
Loss (gain) on disposition of assets |  |  | 35,567 |  |  |  | 0.3 | % |  |  | 18,919 |  |  |  | 0.2 | % |  |  | 16,648 |
Bad debt expense |  |  | 60,183 |  |  |  | 0.5 | % |  |  | 84,697 |  |  |  | 0.7 | % |  |  | (24,514 | )
Total Costs and Expenses |  | $ | 14,690,797 |  |  |  | 111.3 | % |  | $ | 12,590,152 |  |  |  | 110.3 | % |  | $ | 2,100,645 |

During the first quarter of fiscal 2021, we had total costs and expenses of $14,690,797, as compared to total costs and expenses of $12,590,152 in the first quarter of fiscal 2020. Total costs and expenses as a percentage of total revenues increased from 110.3% in the first quarter of fiscal 2020 to 111.3% in the first quarter of fiscal 2021. In the first quarter of fiscal 2021, cost of billboard revenues, cost of insurance revenues and professional fees decreased as a percentage of total revenues as compared to the first quarter of fiscal 2020. Employee costs, depreciation, amortization, and general and administrative expenses increased as a percentage of total revenues mainly due to the addition of our broadband services business in March 2020 and the decline in premiums earned at UCS. Loss on disposition of assets, accretion and bad debt expense, primarily associated with our billboard business, remained relatively constant as a percentage of total revenues.

| ● | During the first quarter of fiscal 2021, cost of billboard revenues decreased by $88,807, or 3.0%, when compared to the first quarter of fiscal 2020. The decrease is mainly related to lower ground rent expense, commissions paid and other cost of revenues during the first quarter of fiscal 2021.

| ● | During the first quarter of fiscal 2021, cost of insurance revenues decreased by $374,652, or 24.9%, when compared to the first quarter of fiscal 2020. The decrease was driven by lower commissions paid due to decreased revenues within UCS both from third-party agents and the sale of certain rental guarantee bonds which generally provide a higher commission structure and was partially offset by an increase in loss reserves at UCS related to its rental guarantee bond program due to the uncertainty caused by COVID-19 which has led to higher losses and loss adjustment expense.

| ● | Employee costs increased $1,109,002 from the first quarter of fiscal 2020. The increase was mainly driven by the addition of our broadband services business in March 2020 and was partially offset by lower employee costs within our billboard and insurance businesses.

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| ● | Professional fees in the first quarter of fiscal 2021 were $1,093,983, or 8.3% of total revenues, as compared to $1,287,155, or 11.3% of total revenues, in the first quarter of fiscal 2020. Professional fees mainly include costs associated with preparing our Annual Report, audit fees, legal fees, acquisition related expenses as well as fees associated with Yellowstone.

| ● | General and administrative expenses increased from $1,718,304 in the first quarter of fiscal 2020 to $2,167,680 in the first quarter of fiscal 2021, an increase of 26.2%. The increase was mainly driven by the addition of our broadband services business in March 2020 and the consolidation of Yellowstone and was partially offset by lower general and administrative expenses within our billboard business.

| ● | Non-cash expenses in the first quarter of fiscal 2021 included $1,165,172 in amortization expense, $1,146,804 in depreciation expense, and $32,091 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 in March 2020.

Net Loss from Operations. Net loss from operations for the first quarter of fiscal 2021 was $1,485,778, or 11.3% of total revenues, as compared to a net loss from operations of $1,179,972, or 10.3% of total revenues, in the first quarter of fiscal 2020. The increase in net loss from operations in dollars was primarily due to decreased revenue within our insurance operations, which was partially offset by the addition of our broadband services operations. Our net loss from operations included $2,344,067 from non-cash amortization, depreciation and accretion expenses in the first quarter of fiscal 2021, as compared to $1,818,093 in the first quarter of fiscal 2020

Other Income (Expense). During the first quarter of fiscal 2021, we had net other income of $110,123,064. Net other income included $104,467,952 from unrealized gains mainly on our investment in DFH after its initial public offering on January 25, 2021, $2,840,170 in realized gains mainly from the sale of large publicly traded equity securities held at Boston Omaha, $2,175,824 related to the remeasurement of Yellowstone's public warrants, interest income of $601,652 primarily derived from our short term loan to DFH, $140,297 in equity in income of unconsolidated affiliates, and $132,495 in dividend income mainly from public equity securities held by Boston Omaha. These items were partially offset by interest expense of $235,326 mainly incurred under Link's term loan. During the first quarter of fiscal 2020, we had net other expense of $23,547,725, which included $24,745,513 from unrealized losses mainly on large publicly traded equity securities held by Boston Omaha and UCS, interest income of $509,479, $465,665 in equity in income of unconsolidated affiliates, $390,791 in dividend income, $26,268 in realized gains on disposition of investments and interest expense of $194,415 incurred under Link's term loan.

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. As stated above, we experienced unrealized gains of $104,467,952 in the value of our public equity securities during the first quarter of fiscal 2021. This contrasts with unrealized losses in the value of our securities of $24,745,513 during the first quarter of fiscal 2020. 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 (L oss) Attributable to Common Stockholders. We had net income attributable to common stockholders in the amount of $84,437,627 in the first quarter of fiscal 2021, or income per share of $3.09, based on 27,299,946 weighted average shares outstanding. This is compared to a net loss attributable to common stockholders of $24,734,238 in the first quarter of fiscal 2020, or a loss per share of $1.05, based on 23,510,660 weighted average shares outstanding.

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Results of Operations by Segment

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

Results of Billboard Operations

|  | For the Three Months Ended March 31, |
|  | (unaudited) |
|  | 2021 |  |  | 2020 |
|  |  |  |  |  | As a % of |  |  |  |  |  |  | As a % of |
|  |  |  |  |  | Segment |  |  |  |  |  |  | Segment |
|  |  |  |  |  | Operating |  |  |  |  |  |  | Operating |
|  | Amount |  |  | Revenues |  |  | Amount |  |  | Revenues |
Operating Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Billboard rentals, net |  | $ | 7,153,685 |  |  |  | 100.0 | % |  | $ | 7,215,766 |  |  |  | 100.0 | %
Cost of Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ground rents |  |  | 1,557,858 |  |  |  | 21.8 | % |  |  | 1,581,546 |  |  |  | 21.9 | %
Utilities |  |  | 313,140 |  |  |  | 4.4 | % |  |  | 326,762 |  |  |  | 4.5 | %
Commissions paid |  |  | 698,799 |  |  |  | 9.8 | % |  |  | 702,756 |  |  |  | 9.8 | %
Other costs of revenues |  |  | 291,950 |  |  |  | 4.0 | % |  |  | 339,490 |  |  |  | 4.7 | %
Total cost of revenues |  |  | 2,861,747 |  |  |  | 40.0 | % |  |  | 2,950,554 |  |  |  | 40.9 | %
Gross margin |  |  | 4,291,938 |  |  |  | 60.0 | % |  |  | 4,265,212 |  |  |  | 59.1 | %
Other Operating Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee costs |  |  | 1,478,572 |  |  |  | 20.6 | % |  |  | 1,517,401 |  |  |  | 21.0 | %
Professional fees |  |  | 211,547 |  |  |  | 3.0 | % |  |  | 152,890 |  |  |  | 2.1 | %
General and administrative |  |  | 694,503 |  |  |  | 9.7 | % |  |  | 743,316 |  |  |  | 10.3 | %
Amortization |  |  | 837,101 |  |  |  | 11.7 | % |  |  | 815,426 |  |  |  | 11.3 | %
Depreciation |  |  | 859,927 |  |  |  | 12.0 | % |  |  | 825,959 |  |  |  | 11.4 | %
Accretion |  |  | 28,694 |  |  |  | 0.4 | % |  |  | 34,762 |  |  |  | 0.5 | %
Loss on disposition of assets |  |  | 32,295 |  |  |  | 0.5 | % |  |  | 18,919 |  |  |  | 0.3 | %
Bad debt expense |  |  | 43,250 |  |  |  | 0.6 | % |  |  | 84,421 |  |  |  | 1.2 | %
Total expenses |  |  | 4,185,889 |  |  |  | 58.5 | % |  |  | 4,193,094 |  |  |  | 58.1 | %
Segment Income from Operations |  |  | 106,049 |  |  |  | 1.5 | % |  |  | 72,118 |  |  |  | 1.0 | %
Interest expense, net |  |  | (229,280 | ) |  |  | (3.2 | %) |  |  | (192,790 | ) |  |  | (2.7 | %)
Net Loss Attributable to Common Stockholders |  | $ | (123,231 | ) |  |  | (1.7 | %) |  | $ | (120,672 | ) |  |  | (1.7 | %)

Comparison of the First Quarter of Fiscal 2021 to the First Quarter of Fiscal 2020. In the first quarter of fiscal 2021, net billboard revenues decreased by 0.9% from the first quarter of fiscal 2020, reflecting a reduction in rental and occupancy rates across a number of our markets due to the ongoing COVID-19 pandemic. The decline due to COVID-19 was partially offset by the acquisition of billboards from Thomas in the first quarter of fiscal 2021, which accounted for approximately 2.6% of our billboard revenues in the first quarter of fiscal 2021. The key factors affecting our billboard operations results during the first quarter of fiscal 2021 were as follows:

﻿

| ● | Ground rent expense decreased as a percentage of total segment operating revenues from 21.9% in the first quarter of fiscal 2020 to 21.8% in the first quarter of fiscal 2021.

| ● | Commissions paid as a percentage of total segment operating revenues were relatively flat at 9.8% of total segment operating revenues in the first quarter of fiscal 2021 and the first quarter of fiscal 2020.

| ● | Employee costs in the first quarter of fiscal 2021 decreased 2.6% when compared to the first quarter of fiscal 2020.

| ● | General and administrative expenses in the first quarter of fiscal 2021 decreased 6.6% when compared to the first quarter of fiscal 2020. The decrease was primarily driven by a reduction in travel related expenses as well as other cost savings initiatives due to COVID-19.

| ● | Amortization expense increased by $21,675 from the first quarter of fiscal 2020. The increase is primarily due to the Thomas acquisition in the first quarter of fiscal 2021.

| ● | Net interest expense of $229,280 in the first quarter of fiscal 2021 compared to net interest expense of $192,790 in the first quarter of fiscal 2020. The increase in 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 March 31, |
|  | (unaudited) |
|  | 2021 |  |  | 2020 |
|  |  |  |  |  | As a % of |  |  |  |  |  |  | As a % of |
|  |  |  |  |  | Segment |  |  |  |  |  |  | Segment |
|  |  |  |  |  | Operating |  |  |  |  |  |  | Operating |
|  | Amount |  |  | Revenues |  |  | Amount |  |  | Revenues |
Operating Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Premiums earned |  | $ | 1,786,564 |  |  |  | 79.2 | % |  | $ | 3,454,058 |  |  |  | 87.9 | %
Insurance commissions |  |  | 400,177 |  |  |  | 17.7 | % |  |  | 332,791 |  |  |  | 8.5 | %
Investment and other income |  |  | 69,556 |  |  |  | 3.1 | % |  |  | 140,314 |  |  |  | 3.6 | %
Total operating revenues |  |  | 2,256,297 |  |  |  | 100.0 | % |  |  | 3,927,163 |  |  |  | 100.0 | %
Cost of Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commissions paid |  |  | 464,654 |  |  |  | 20.6 | % |  |  | 1,043,799 |  |  |  | 26.6 | %
Premium taxes, fees, and assessments |  |  | 74,673 |  |  |  | 3.3 | % |  |  | 65,697 |  |  |  | 1.7 | %
Losses and loss adjustment expense |  |  | 589,883 |  |  |  | 26.1 | % |  |  | 394,366 |  |  |  | 10.0 | %
Total cost of revenues |  |  | 1,129,210 |  |  |  | 50.0 | % |  |  | 1,503,862 |  |  |  | 38.3 | %
Gross margin |  |  | 1,127,087 |  |  |  | 50.0 | % |  |  | 2,423,301 |  |  |  | 61.7 | %
Other Operating Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee costs |  |  | 1,185,051 |  |  |  | 52.5 | % |  |  | 1,239,517 |  |  |  | 31.6 | %
Professional fees |  |  | 112,585 |  |  |  | 5.0 | % |  |  | 169,062 |  |  |  | 4.3 | %
General and administrative |  |  | 575,616 |  |  |  | 25.5 | % |  |  | 572,114 |  |  |  | 14.6 | %
Amortization |  |  | 34,645 |  |  |  | 1.6 | % |  |  | 136,395 |  |  |  | 3.5 | %
Depreciation |  |  | 5,733 |  |  |  | 0.3 | % |  |  | 5,551 |  |  |  | 0.1 | %
Bad debt expense |  |  | 944 |  |  |  | 0.0 | % |  |  | 276 |  |  |  | 0.0 | %
Total expenses |  |  | 1,914,574 |  |  |  | 84.9 | % |  |  | 2,122,915 |  |  |  | 54.1 | %
Segment Income (Loss) from Operations |  |  | (787,487 | ) |  |  | (34.9 | %) |  |  | 300,386 |  |  |  | 7.6 | %
Interest expense, net |  |  | (1,998 | ) |  |  | (0.1 | %) |  |  | (376 | ) |  |  | (0.0 | %)
Unrealized gain (loss) on securities |  |  | 3,179,251 |  |  |  | 140.9 | % |  |  | (5,264,407 | ) |  |  | (134.1 | %)
Gain (loss) on sale of investments |  |  | (23,904 | ) |  |  | (1.0 | %) |  |  | 2,284 |  |  |  | 0.1 | %
Net Income (Loss) Attributable to Common Stockholders |  | $ | 2,365,862 |  |  |  | 104.9 | % |  | $ | (4,962,113 | ) |  |  | (126.4 | %)

Comparison of the First Quarter of Fiscal 2021 to the First Quarter of Fiscal 2020. In the first quarter of fiscal 2021, total operating revenues declined by 42.5% as compared to the first 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 first quarter of fiscal 2021 were as follows:

| ● | Premiums earned from our UCS insurance subsidiary in the first quarter of fiscal 2021 decreased 48.3% from the first 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 a 20.2% increase in insurance commissions from other insurance carriers in the first quarter of fiscal 2021 when compared to the first quarter of fiscal 2020.

| ● | Commissions paid in the first quarter of fiscal 2021 decreased by $579,145 from the first quarter of fiscal 2020 primarily due to the suspension of UCS's rental guarantee bond program, which generally provided a higher commission structure.

| ● | Our losses and loss adjustment expense as a percentage of insurance revenues increased from 10.0% in the first quarter of fiscal 2020 to 26.1% in the first quarter of fiscal 2021. Starting in the second quarter of fiscal 2020, UCS increased its loss reserves related to its rental guarantee bond program due to the uncertainty caused by COVID-19.

| ● | Employee costs in the first quarter of fiscal 2021 decreased 4.4% when compared to the first quarter of fiscal 2020.

| ● | Amortization expense in the first quarter of fiscal 2021 decreased by $101,750 when compared to the first quarter of fiscal 2020.

| ● | During the first quarter of fiscal 2021, our segment loss from insurance operations of $787,487 was reduced by unrealized gains of $3,179,251 from 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 March 31, |
|  | 2021 |  |  | 2020 |
|  | Amount |  |  | As a % of Segment Operating Revenues |  |  | Amount |  |  | As a % of Segment Operating Revenues |
Operating Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Broadband revenues |  | $ | 3,795,037 |  |  |  | 100.0 | % |  | $ | 267,251 |  |  |  | 100.0 | %
Cost of Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Network operations and data costs |  |  | 503,334 |  |  |  | 13.2 | % |  |  | 40,400 |  |  |  | 15.1 | %
Programming costs |  |  | 26,087 |  |  |  | 0.7 | % |  |  | 8,247 |  |  |  | 3.1 | %
Cell site rent and utilities |  |  | 138,918 |  |  |  | 3.7 | % |  |  | 1,653 |  |  |  | 0.6 | %
Other costs of revenues |  |  | 87,874 |  |  |  | 2.3 | % |  |  | 25,123 |  |  |  | 9.4 | %
Total cost of revenues |  |  | 756,213 |  |  |  | 19.9 | % |  |  | 75,423 |  |  |  | 28.2 | %
Gross margin |  |  | 3,038,824 |  |  |  | 80.1 | % |  |  | 191,828 |  |  |  | 71.8 | %
Other Operating Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee costs |  |  | 1,218,732 |  |  |  | 32.1 | % |  |  | 93,331 |  |  |  | 34.9 | %
Professional fees |  |  | 58,520 |  |  |  | 1.6 | % |  |  | 1,000 |  |  |  | 0.4 | %
General and administrative |  |  | 401,733 |  |  |  | 10.6 | % |  |  | 32,087 |  |  |  | 12.0 | %
Amortization |  |  | 293,426 |  |  |  | 7.7 | % |  |  | - |  |  |  | - |
Depreciation |  |  | 266,329 |  |  |  | 7.0 | % |  |  | - |  |  |  | - |
Accretion |  |  | 3,397 |  |  |  | 0.1 | % |  |  | - |  |  |  | - |
Loss on disposition of assets |  |  | 3,272 |  |  |  | 0.1 | % |  |  | - |  |  |  | - |
Bad debt expense |  |  | 15,989 |  |  |  | 0.4 | % |  |  | - |  |  |  | - |
Total expenses |  |  | 2,261,398 |  |  |  | 59.6 | % |  |  | 126,418 |  |  |  | 47.3 | %
Segment Income from Operations |  |  | 777,426 |  |  |  | 20.5 | % |  |  | 65,410 |  |  |  | 24.5 | %
Interest expense, net |  |  | (2,103 | ) |  |  | (0.1% | ) |  |  | - |  |  |  | - |
Noncontrolling interest in subsidiary income |  |  | (138,263 | ) |  |  | (3.6% | ) |  |  | (6,541 | ) |  |  | (2.5% | )
Net Income Attributable to Common Stockholders |  | $ | 637,060 |  |  |  | 16.8 | % |  | $ | 58,869 |  |  |  | 22.0 | %

Comparison of First Quarter of Fiscal 2021 to the First 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 first quarter of fiscal 2021 to the first quarter of fiscal 2020 may not be meaningful.

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Cash Flows

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

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

|  | Three Months |  |  | Three Months |
|  | Ended |  |  | Ended |
|  | March 31, 2021 |  |  | March 31, 2020 |
|  | (unaudited) |  |  | (unaudited) |
Net cash provided by (used in) operating activities |  | $ | 4,029,984 |  |  | $ | (110,884 | )
Net cash provided by investing activities |  |  | 36,047,823 |  |  |  | 35,830,833 |
Net cash used in operating activities |  |  | (505,699 | ) |  |  | (2,252 | )
Net increase in cash, cash equivalents, and restricted cash |  | $ | 39,572,108 |  |  | $ | 35,717,697 |

Net Cash Provided by (Used in) Operating Activities. Net cash provided by operating activities was $4,029,984 for the first three months of fiscal 2021 compared to a net cash outflow of $110,884 for the first three months of fiscal 2020. The net cash provided by operating activities for the first three months of fiscal 2021 was primarily attributable to $1,598,623 in distributions from unconsolidated affiliates, consistent cash flow generation within our billboard business, and the addition of our broadband services business, which was partially offset by the decline in operating results within our insurance business.

Net Cash Provided by Investing Activities. Net cash provided by investing activities was $36,047,823 for the first three months of fiscal 2021 as compared with net cash provided by investing activities of $36,047,823 for the first three months of fiscal 2020. The investing cash inflow during the first three months of fiscal 2021 was primarily attributable to the sale of some of our public equity security holdings and DFH's repayment of its $20,000,000 term loan. In addition, during the first three months of fiscal 2021, we acquired from Thomas 238 billboard structures and related assets located in Kansas for a purchase price of $6,108,508 paid in cash.

Net Cash Used in Financing Activities. Net cash used in financing activities was $505,699 during the first three months of fiscal 2021 as compared to net cash provided used in financing activities of $2,252 during the first three months of fiscal 2020. During the first three months of fiscal 2021, net cash used in financing activities consisted of $294,375 in principal payments on Link's term loans, offering costs of $108,863, and $102,461 in returns of funds held as collateral.

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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 March 31, 2021, we had approximately $84 million in unrestricted cash and approximately $54 million in U.S. Treasury trading securities. Our strategy is to continue to acquire other billboard locations and insurance businesses 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 continually 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.

In February 2018, we announced the entry into a stock purchase agreement relating to the issuance and sale of up to $150,000,000 of our unregistered Class A common stock, which we refer to as the “2018 private placement.” 3,300,000 shares were issued in the initial closing, which occurred on March 6, 2018, resulting in gross proceeds to us of $76,890,000. The remaining 3,137,768 shares were issued during the third quarter of fiscal 2018 in a subsequent closing on May 15, 2018, resulting in gross proceeds to us of approximately $73,110,000. Under the 2018 private placement, all shares were sold at $23.30, a slight premium to the $23.29 closing price of the Class A common stock on the NASDAQ Capital Market, as reported by NASDAQ on the date of the Class A Common Stock Purchase Agreement.

Since March 2018, we utilized our “at the market” offering that is part of our shelf Registration Statement on Form S-3 (File No. 333-222853) that was filed with the Securities and Exchange Commission, which we refer to as the “SEC,” and declared effective in February 2018. This shelf Registration Statement, which authorized us to sell up to $200,000,000 through the sales of securities to the public, expired in February 2021. We sold a total of 2,630,787 shares of Class A common stock and raised gross proceeds of $60,120,165 under this shelf Registration Statement. We expect to file shortly a new shelf registration statement and, as a result, expect to raise additional capital through the sale of our securities, which would dilute the percentage ownership held by current investors.

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 $40,000,000 (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. As of March 31, 2021, Link had borrowed $18,060,000 through Term Loan 1 and $5,500,000 through Term Loan 2 under the Credit Facility. We may not borrow additional funds 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 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 $5,000,000 maximum availability. Interest payments are based on the 30-day LIBOR rate plus an applicable margin ranging between 2.00 and 2.50% dependent on Link’s consolidated leverage ratio. The revolving line of credit is due and payable on August 11, 2021. Long-term debt included within our consolidated balance sheet as of March 31, 2021 consists of Term Loan 1 and Term Loan 2 borrowings of $22,763,275, of which $1,195,128 is classified as current. There were no amounts outstanding related to the revolving line of credit as of March 31, 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 rolling four quarters. The Company was in compliance with these covenants as of March 31, 2021.

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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 incorporated by reference in this report and 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, and 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.

On March 18, 2020, we announced the authorization of a share repurchase program which allows us to repurchase our Class A common stock. We have not yet repurchased any shares under this program and we cannot predict when or if we will repurchase any shares of Class A common stock as any such share repurchases will depend on a number of factors, including constraints specified in any Rule 10b5-1 trading plans, price, general business and market conditions, and alternative investment opportunities.

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 $58,880,000. 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 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 October 2, 2020, we provided a 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 this term loan is approximately 14% and matured on May 1, 2021. This loan was repaid with interest in early 2021.

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 March 31, 2021, we entered into an underwriting agreement, which we refer to as the “underwriting agreement,” with Wells Fargo Securities, LLC 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 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 for a total 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 $58,625,000. 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 shelf registration statement on Form S-3ASR (File No. 333-254870) that was declared effective on March 30, 2021.

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We believe that our existing cash and short-term investments, funds available through the Credit Agreement Link entered into on August 12, 2019, 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. We have also taken steps to suspend the future issuance of certain rental surety bonds issued by UCS and have taken other steps to reduce certain costs of our operations. At March 31, 2021, we had approximately $84 million in unrestricted cash, $54 million in U.S. treasury securities, and $144 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 our current credit facility, any other 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 and insurance industries. 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. Our credit facility requires us to meet a fixed charge coverage ratio and other financial covenants. Our ability to comply with these loan covenants may be affected by factors beyond our control and a breach of any loan covenants would likely result in an event of default under the credit facility, 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 March 31, 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 for the fiscal year ended December 31, 2020, as filed with the SEC on March 29, 2021. We believe that at March 31, 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 March 31, 2021. Based upon their evaluation, our Co-Chief Executive Officers and Chief Financial Officer has concluded that our disclosure controls and procedures were not effective as of March 31, 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.

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.

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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 March 31, 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 for the year ended December 31, 2020, as filed with the SEC on March 29, 2021.

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

On March 18, 2020, we announced the authorization of a share repurchase program which allows us to repurchase up to $20 million of our Class A common stock. We have not yet repurchased any shares under this program and we cannot predict when or if we will repurchase any shares of Class A common stock as the determination whether to effect any share repurchases will depend on a number of factors, including constraints specified in any Rule 10b5-1 trading plans, price, general business and market conditions, and alternative investment opportunities.

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, 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 (*) | Term Loan 2 Note dated August 31, 2020 issued by Link Media Holdings, LLC to 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 September 4, 2020.
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.
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 (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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)

May 24, 2021

By: /s/ Adam K. Peterson

Adam K. Peterson

Co-President (Principal Executive Officer)

May 24, 2021

By: /s/ Joshua P. Weisenburger

Joshua P. Weisenburger

Chief Financial Officer
(Principal Financial and Accounting Officer)

May 24, 2021

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