XML 27 R14.htm IDEA: XBRL DOCUMENT
v3.21.2

Note 8 - Investments, Including Investments Accounted for Using the Equity Method | 9 Months Ended
--- | ---
Sep. 30, 2021
Notes to Financial Statements |
Investment [Text Block] | 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 nine months ended September 30, 2021, losses on redemptions of U.S. Treasury securities held to maturity were $63,994. For the nine months ended September 30, 2020, gains on redemptions of U.S. Treasury securities held to maturity were $7,318.
|  | September 30, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Certificates of deposit |  | $ | 310,044 |  |  | $ | 1,035,827 |
Corporate bonds classified as trading |  |  | - |  |  |  | 1,020,000 |
U.S. Treasury notes and corporate bond held to maturity |  |  | 4,668,600 |  |  |  | 4,994,848 |
Total |  | $ | 4,978,644 |  |  | $ | 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. Our marketable equity securities are held by UCS and Boston Omaha. Marketable equity securities as of September 30, 2021 and December 31, 2020 are as follows:
|  |  |  |  |  | Gross |  |  |  |  |
|  |  |  |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gain (Loss) |  |  | Value |
Marketable equity securities, September 30, 2021 |  | $ | 31,321,031 |  |  | $ | 48,954,072 |  |  | $ | 80,275,103 |
Marketable equity securities, December 31, 2020 |  | $ | 68,205,548 |  |  | $ | (4,169,066 | ) |  | $ | 64,036,482 |
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 September 30, 2021 and December 31, 2020 are as follows:
|  |  |  |  |  | Gross |  |  |  |  |
|  |  |  |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gain (Loss) |  |  | Value |
U.S. Treasury trading securities, September 30, 2021 |  | $ | 50,995,742 |  |  | $ | 1,438 |  |  | $ | 50,997,180 |
U.S. Treasury trading 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 U.S. Treasury securities and certain equity investments. We have the intent and the ability to hold the U.S. Treasury securities to maturity, which ranges from 2022 to 2023. Our 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:
|  | September 30, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
U.S. Treasury securities, held to maturity |  | $ | 154,265 |  |  | $ | 286,015 |
Preferred stock |  |  | 104,019 |  |  |  | 104,019 |
Voting common stock of CBT Holding Corporation |  |  | 19,058,485 |  |  |  | 19,058,485 |
Total |  | $ | 19,316,769 |  |  | $ | 19,448,519 |
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 September 30, 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 49.9%. Two of the investments in affiliates, Logic Real Estate Companies, LLC, which we refer to as “Logic”, and 24th Street Holding Company, LLC, having a combined carrying amount of $781,970 as of September 30, 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. 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. Sky Harbour LLC On September 14, 2021, our subsidiary BOC YAC Funding LLC completed the previously-announced investment of $55 million in Series B Preferred units of Sky Harbour LLC (“SHG”). Upon the successful consummation of the proposed business combination between Yellowstone Acquisition Company and SHG, these units will convert into 5,500,000 shares of the post-combination public company’s Class A common stock, at a price of $10 per share. See further discussion within Note 17. 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:
|  | September 30, |  |  | December 31, |
|  | 2021 |  |  | 2020 |
Beginning of period |  | $ | 20,913,896 |  |  | $ | 771,805 |
Additional investment in unconsolidated affiliates |  |  | 55,000,000 |  |  |  | 16,000,000 |
Distributions received |  |  | (2,100,010 | ) |  |  | (1,433,480 | )
Reclassification of investment in affiliate to marketable securities |  |  | (12,880,146 | ) |  |  | - |
Equity in income of unconsolidated affiliates |  |  | 935,488 |  |  |  | 5,575,571 |
End of period |  | $ | 61,869,228 |  |  | $ | 20,913,896 |
Combined summarized financial data for these affiliates is as follows:
|  | For the Three Months Ended |  |  | For the Nine Months Ended |
|  | September 30, |  |  | September 30, |
|  | 2021 |  |  | 2020 |  |  | 2021 |  |  | 2020 |
Revenue |  | $ | 7,055,929 |  |  | $ | 288,403,203 |  |  | $ | 24,854,881 |  |  | $ | 676,336,442 |
Gross profit |  |  | 2,464,195 |  |  |  | 44,856,872 |  |  |  | 12,467,729 |  |  |  | 99,618,080 |
Income from continuing operations |  |  | (2,293,107 | ) |  |  | 23,983,417 |  |  |  | (4,687,712 | ) |  |  | 41,911,245 |
Net income |  |  | (2,538,089 | ) |  |  | 23,429,704 |  |  |  | (6,167,189 | ) |  |  | 41,162,122 |
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 was 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.

X
- References No definition available. + Details
Name: | us-gaap_DisclosureTextBlockAbstract
Namespace Prefix: | us-gaap_
Data Type: | xbrli:stringItemType
Balance Type: | na
Period Type: | duration

X
- Definition The entire disclosure for investment. + References Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 321 -URI http://asc.fasb.org/topic&trid=75115024 Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 320 -URI http://asc.fasb.org/topic&trid=2196928 Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 325 -URI http://asc.fasb.org/topic&trid=2197064 Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef -Publisher FASB -Name Accounting Standards Codification -Topic 323 -URI http://asc.fasb.org/topic&trid=2196965 + Details
Name: | us-gaap_InvestmentTextBlock
Namespace Prefix: | us-gaap_
Data Type: | dtr-types:textBlockItemType
Balance Type: | na
Period Type: | duration