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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, 2023

☐ | 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 | BOC | The New York Stock Exchange

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: 30,249,443 shares of Class A common stock and 1,055,560 shares of Class B common stock as of May 11, 2023.

1

Table of Contents

BOSTON OMAHA CORPORATION

QUARTERLY REPORT ON FORM 10-Q

FOR THE PERIOD END ED March 31, 2023

TABLE OF CONTENTS

| Page
Part I – Financial Information | 4
Item 1. Consolidated Financial Statements (Unaudited). | 4
Consolidated Balance Sheets – March 31, 2023 and December 31, 2022 | 4
Consolidated Statements of Operations – Three Months Ended March 31, 2023 and March 31, 2022 | 6
Consolidated Statements of Changes in Stockholders’ Equity – March 31, 2023 and March 31, 2022 | 7
Consolidated Statements of Cash Flows – Three Months Ended March 31, 2023 and March 31, 2022 | 9
Notes to Consolidated Financial Statements | 12
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 35
Item 3. Quantitative and Qualitative Disclosures About Market Risk. | 50
Item 4. Controls and Procedures. | 50
Part II – Other Information | 51
Item 1. Legal Proceedings. | 51
Item 1A. Risk Factors. | 51
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds. | 51
Item 3. Defaults Upon Senior Securities. | 51
Item 4. Mine Safety Disclosures. | 51
Item 5. Other Information. | 51
Item 6. Exhibits. | 51
Exhibit Index | 52
Signatures | 54

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, 2023 and 2022

3

Table of Contents

BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Balance Sheets
Unaudited

ASSETS
|  | March 31, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
Current Assets: |  |  |  |  |  |  |  |
Cash and cash equivalents |  | $ | 15,902,452 |  |  | $ | 25,493,141 |
Cash held by BOAM funds and other |  |  | 11,414,125 |  |  |  | 8,146,792 |
Accounts receivable, net |  |  | 6,385,096 |  |  |  | 5,831,366 |
Interest receivable |  |  | 185,499 |  |  |  | 196,066 |
Short-term investments |  |  | 11,735,816 |  |  |  | 6,288,828 |
Marketable equity securities |  |  | 8,454,006 |  |  |  | 8,768,938 |
U. S. Treasury securities |  |  | 57,687,945 |  |  |  | 33,520,401 |
Funds held as collateral assets |  |  | 21,207,071 |  |  |  | 21,026,579 |
Prepaid expenses |  |  | 5,452,660 |  |  |  | 4,689,132 |
Total Current Assets |  |  | 138,424,670 |  |  |  | 113,961,243 |
Property and Equipment, net |  |  | 120,876,888 |  |  |  | 115,589,940 |
Other Assets: |  |  |  |  |  |  |  |
Goodwill |  |  | 179,463,522 |  |  |  | 179,463,522 |
Intangible assets, net |  |  | 66,552,490 |  |  |  | 68,342,042 |
Investments |  |  | 26,136,636 |  |  |  | 26,136,636 |
Investments in unconsolidated affiliates |  |  | 109,153,271 |  |  |  | 114,133,349 |
Deferred policy acquisition costs |  |  | 1,327,897 |  |  |  | 1,255,320 |
Right of use assets |  |  | 64,304,426 |  |  |  | 64,719,405 |
Other |  |  | 116,402 |  |  |  | 116,402 |
Total Other Assets |  |  | 447,054,644 |  |  |  | 454,166,676 |
Total Assets |  | $ | 706,356,202 |  |  | $ | 683,717,859 |

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, |
|  | 2023 |  |  | 2022 |
Current Liabilities: |  |  |  |  |  |  |  |
Accounts payable and accrued expenses |  | $ | 10,677,418 |  |  | $ | 10,963,784 |
Short-term payables for business acquisitions |  |  | 1,062,171 |  |  |  | 4,219,358 |
Lease liabilities |  |  | 5,228,891 |  |  |  | 5,203,981 |
Funds held as collateral |  |  | 21,207,071 |  |  |  | 21,026,579 |
Unearned premiums |  |  | 7,731,279 |  |  |  | 7,158,726 |
Current maturities of long-term debt |  |  | 1,557,625 |  |  |  | 1,545,090 |
Deferred revenue |  |  | 2,871,311 |  |  |  | 2,531,222 |
Other current liabilities |  |  | 81,727 |  |  |  | 330,000 |
Total Current Liabilities |  |  | 50,417,493 |  |  |  | 52,978,740 |
Long-term Liabilities: |  |  |  |  |  |  |  |
Asset retirement obligations |  |  | 3,623,403 |  |  |  | 3,569,580 |
Lease liabilities |  |  | 58,743,145 |  |  |  | 59,281,733 |
Long-term debt, less current maturities |  |  | 26,557,275 |  |  |  | 26,954,180 |
Other long-term liabilities |  |  | 314,214 |  |  |  | 335,828 |
Deferred tax liability |  |  | 12,533,206 |  |  |  | 13,948,419 |
Total Liabilities |  |  | 152,188,736 |  |  |  | 157,068,480 |
Redeemable Noncontrolling Interest |  |  | 15,656,900 |  |  |  | 15,713,021 |
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, 29,764,994 and 28,650,688 shares issued and outstanding, respectively |  |  | 29,765 |  |  |  | 28,651 |
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 |  |  | 511,574,762 |  |  |  | 483,917,938 |
Retained earnings |  |  | 16,258,491 |  |  |  | 19,579,645 |
Total Boston Omaha Stockholders' Equity |  |  | 527,864,074 |  |  |  | 503,527,290 |
Noncontrolling interests |  |  | 10,646,492 |  |  |  | 7,409,068 |
Total Equity |  |  | 538,510,566 |  |  |  | 510,936,358 |
Total Liabilities, Redeemable Noncontrolling Interest, and Stockholders' Equity |  | $ | 706,356,202 |  |  | $ | 683,717,859 |

See accompanying notes to the unaudited consolidated financial statements.

5

Table of Contents

BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Statements of Operations
Unaudited

|  | For the Three Months Ended |
|  | March 31, |
|  | 2023 |  |  | 2022 |
Revenues: |  |  |  |  |  |  |  |
Billboard rentals, net |  | $ | 10,302,223 |  |  | $ | 9,138,149 |
Broadband services |  |  | 8,539,906 |  |  |  | 4,076,946 |
Premiums earned |  |  | 3,107,273 |  |  |  | 2,288,449 |
Insurance commissions |  |  | 476,126 |  |  |  | 697,200 |
Investment and other income |  |  | 390,257 |  |  |  | 92,203 |
Total Revenues |  |  | 22,815,785 |  |  |  | 16,292,947 |
Costs and Expenses: |  |  |  |  |  |  |  |
Cost of billboard revenues (exclusive of depreciation and amortization) |  |  | 3,807,664 |  |  |  | 3,527,372 |
Cost of broadband revenues (exclusive of depreciation and amortization) |  |  | 2,574,351 |  |  |  | 910,775 |
Cost of insurance revenues (exclusive of depreciation and amortization) |  |  | 1,563,032 |  |  |  | 1,180,891 |
Employee costs |  |  | 8,197,537 |  |  |  | 5,424,220 |
Professional fees |  |  | 1,169,589 |  |  |  | 2,190,597 |
General and administrative |  |  | 3,962,632 |  |  |  | 2,579,835 |
Amortization |  |  | 1,802,027 |  |  |  | 1,193,193 |
Depreciation |  |  | 2,707,317 |  |  |  | 1,740,071 |
Gain on disposition of assets |  |  | (45,395 | ) |  |  | (54,203 | )
Accretion |  |  | 53,823 |  |  |  | 49,932 |
Total Costs and Expenses |  |  | 25,792,577 |  |  |  | 18,742,683 |
Net Loss from Operations |  |  | (2,976,792 | ) |  |  | (2,449,736 | )
Other Income (Expense): |  |  |  |  |  |  |  |
Interest and dividend income |  |  | 281,866 |  |  |  | 45,324 |
Equity in loss of unconsolidated affiliates |  |  | (4,980,078 | ) |  |  | (3,675,303 | )
Other investment income |  |  | 2,872,219 |  |  |  | 2,615,323 |
Gain recognized on deconsolidation of special purpose acquisition company |  |  | - |  |  |  | 24,977,740 |
Remeasurement of warrant liability |  |  | - |  |  |  | 1,837,211 |
Interest expense |  |  | (288,682 | ) |  |  | (301,649 | )
Net (Loss) Income Before Income Taxes |  |  | (5,091,467 | ) |  |  | 23,048,910 |
Income tax benefit (provision) |  |  | 1,651,615 |  |  |  | (6,680,139 | )
Net (Loss) Income |  |  | (3,439,852 | ) |  |  | 16,368,771 |
Noncontrolling interest in subsidiary loss (income) |  |  | 118,698 |  |  |  | (66,178 | )
Net (Loss) Income Attributable to Common Stockholders |  | $ | (3,321,154 | ) |  | $ | 16,302,593 |
Basic Net (Loss) Income per Share |  | $ | (0.11 | ) |  | $ | 0.55 |
Diluted Net (Loss) Income per Share |  | $ | (0.11 | ) |  | $ | 0.55 |
Basic Weighted Average Class A and Class B Common Shares Outstanding |  |  | 30,524,067 |  |  |  | 29,698,361 |
Diluted Weighted Average Class A and Class B Common Shares Outstanding |  |  | 30,587,745 |  |  |  | 29,765,082 |

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 |  |  | Noncontrolling Interest |  |  | Retained Earnings |  |  | Total |
Beginning Balance, December 31, 2021 |  |  | 28,642,801 |  |  |  | 1,055,560 |  |  | $ | 28,643 |  |  | $ | 1,056 |  |  | $ | 483,855,423 |  |  | $ | - |  |  | $ | 12,440,097 |  |  | $ | 496,325,219 |
Offering costs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (2,551 | ) |  |  | - |  |  |  | - |  |  |  | (2,551 | )
Increase in redeemable noncontrolling interest |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 307,182 |  |  |  | - |  |  |  | - |  |  |  | 307,182 |
Net income attributable to common stockholders, March 31, 2022 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 16,302,593 |  |  |  | 16,302,593 |
Ending Balance, March 31, 2022 |  |  | 28,642,801 |  |  |  | 1,055,560 |  |  | $ | 28,643 |  |  | $ | 1,056 |  |  | $ | 484,160,054 |  |  | $ | - |  |  | $ | 28,742,690 |  |  | $ | 512,932,443 |

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 (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 |  |  | Noncontrolling Interest |  |  | Retained Earnings |  |  | Total |
Beginning Balance, December 31, 2022 |  |  | 28,650,688 |  |  |  | 1,055,560 |  |  | $ | 28,651 |  |  | $ | 1,056 |  |  | $ | 483,917,938 |  |  | $ | 7,409,068 |  |  | $ | 19,579,645 |  |  | $ | 510,936,358 |
Stock issued for cash |  |  | 1,097,824 |  |  |  | - |  |  |  | 1,098 |  |  |  | - |  |  |  | 28,104,363 |  |  |  | - |  |  |  | - |  |  |  | 28,105,461 |
Stock issued as compensation |  |  | 16,482 |  |  |  | - |  |  |  | 16 |  |  |  | - |  |  |  | 420,352 |  |  |  | - |  |  |  | - |  |  |  | 420,368 |
Offering costs |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (867,891 | ) |  |  | - |  |  |  | - |  |  |  | (867,891 | )
Contributions from noncontrolling interests, Build for Rent subsidiary |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 3,300,000 |  |  |  | - |  |  |  | 3,300,000 |
Net income attributable to minority interests |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (62,576 | ) |  |  | - |  |  |  | (62,576 | )
Net loss attributable to common stockholders, March 31, 2023 |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (3,321,154 | ) |  |  | (3,321,154 | )
Ending Balance, March 31, 2023 |  |  | 29,764,994 |  |  |  | 1,055,560 |  |  | $ | 29,765 |  |  | $ | 1,056 |  |  | $ | 511,574,762 |  |  | $ | 10,646,492 |  |  | $ | 16,258,491 |  |  | $ | 538,510,566 |

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, |
|  | 2023 |  |  | 2022 |
Cash Flows from Operating Activities: |  |  |  |  |  |  |  |
Net (Loss) Income |  | $ | (3,439,852 | ) |  | $ | 16,368,771 |
Adjustments to reconcile net (loss) income to cash provided by operating activities: |  |  |  |  |  |  |  |
Amortization of right of use assets |  |  | 1,424,202 |  |  |  | 1,258,464 |
Depreciation, amortization, and accretion |  |  | 4,563,167 |  |  |  | 2,983,196 |
Deferred income taxes |  |  | (1,665,662 | ) |  |  | 6,680,139 |
Gain on disposition of assets |  |  | (45,395 | ) |  |  | (54,203 | )
Bad debt expense |  |  | 54,870 |  |  |  | 9,886 |
Gain on deconsolidation - special purpose acquisition company |  |  | - |  |  |  | (24,977,740 | )
Equity in loss of unconsolidated affiliates |  |  | 4,980,078 |  |  |  | 3,675,303 |
Remeasurement of warrant liability |  |  | - |  |  |  | (1,837,211 | )
Other investment income |  |  | (2,872,219 | ) |  |  | (2,615,323 | )
Changes in operating assets and liabilities exclusive of the effects of business combinations: |  |  |  |  |  |  |  |
Accounts receivable |  |  | (608,600 | ) |  |  | (696,784 | )
Interest receivable |  |  | 10,567 |  |  |  | (34,329 | )
Prepaid expenses |  |  | (763,528 | ) |  |  | (494,414 | )
Distributions from unconsolidated affiliates |  |  | - |  |  |  | 154,143 |
Deferred policy acquisition costs |  |  | (72,578 | ) |  |  | (6,394 | )
Other assets |  |  | - |  |  |  | (8,000 | )
Accounts payable and accrued expenses |  |  | (35,917 | ) |  |  | (15,323,889 | )
Lease liabilities |  |  | (1,493,962 | ) |  |  | (1,254,890 | )
Unearned premiums |  |  | 572,553 |  |  |  | 265,313 |
Deferred revenue |  |  | 340,089 |  |  |  | 230,407 |
Compensation paid in stock |  |  | 420,368 |  |  |  | - |
Net Cash Provided by (Used in) Operating Activities |  |  | 1,368,181 |  |  |  | (15,677,555 | )
Cash Flows from Investing Activities: |  |  |  |  |  |  |  |
Payments on short-term payables for business acquisitions |  |  | (3,157,187 | ) |  |  | (451,550 | )
Payment of contingent consideration |  |  | (248,272 | ) |  |  | - |
Proceeds from sale of investments - special purpose acquisition company |  |  | - |  |  |  | 130,190,277 |
Investment in unconsolidated affiliate |  |  | - |  |  |  | (45,000,000 | )
Capital expenditures |  |  | (8,011,459 | ) |  |  | (5,993,790 | )
Proceeds from sales of investments |  |  | 26,243,485 |  |  |  | 109,742,332 |
Purchases of investments |  |  | (52,671,304 | ) |  |  | (30,496,420 | )
Net Cash (Used in) Provided by Investing Activities |  |  | (37,844,737 | ) |  |  | 157,990,849 |

See accompanying notes to the unaudited consolidated financial statements.

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BOSTON OMAHA CORPORATION

and SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)
Unaudited

|  | For the Three Months Ended |
|  | March 31, |
|  | 2023 |  |  | 2022 |
Cash Flows from Financing Activities: |  |  |  |  |  |  |  |
Proceeds from the issuance of stock |  | $ | 28,105,461 |  |  | $ | - |
Contributions from noncontrolling interest |  |  | 3,300,000 |  |  |  | - |
Redemption of non-controlling interest - special purpose acquisition company |  |  | - |  |  |  | (123,068,515 | )
Payment of deferred underwriting fee - special purpose acquisition company |  |  | - |  |  |  | (4,759,615 | )
Collateral receipt |  |  | 180,492 |  |  |  | 6,532,719 |
Principal payments of long-term debt |  |  | (384,370 | ) |  |  | (386,086 | )
Offering costs |  |  | (867,891 | ) |  |  | (2,551 | )
Net Cash Provided by (Used in) Financing Activities |  |  | 30,333,692 |  |  |  | (121,684,048 | )
Net (Decrease) Increase in Cash, Cash Equivalents, and Restricted Cash |  |  | (6,142,864 | ) |  |  | 20,629,246 |
Cash, Cash Equivalents, and Restricted Cash, Beginning of Period |  |  | 54,666,512 |  |  |  | 81,694,400 |
Cash, Cash Equivalents, and Restricted Cash, End of Period |  | $ | 48,523,648 |  |  | $ | 102,323,646 |
Interest Paid in Cash |  | $ | 283,815 |  |  | $ | 282,099 |
Income Taxes Paid in Cash |  | $ | - |  |  | $ | - |

See accompanying notes to the unaudited consolidated financial statements.

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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, |
|  | 2023 |  |  | 2022 |
Decrease in redeemable noncontrolling interest of broadband subsidiary |  | $ | - |  |  | $ | (307,182 | )

See accompanying notes to the unaudited consolidated financial statements.

11

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

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, Arkansas, Florida, Georgia, Illinois, Iowa, Kansas, Missouri, Nebraska, Nevada, Oklahoma, South Dakota, Tennessee, 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, real estate services, private aviation infrastructure, asset management, 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, Boston Omaha Broadband, LLC.

We completed an acquisition of an outdoor advertising business and entered the outdoor advertising industry on June 19, 2015. From 2015 through 2022, we have completed more than twenty 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 2017 through 2022, we completed four additional acquisitions of surety brokerage businesses.

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. On April 1, 2022, we completed the acquisition of our third broadband internet provider located in Utah.

On September 25, 2020, we filed a Registration Statement on Form S-1 with the Securities and Exchange Commission for a proposed initial public offering of units of a special purpose acquisition company, which we refer to as the “SPAC,” named Yellowstone Acquisition Company, which we refer to as “Yellowstone.” Yellowstone completed its initial public offering on October 26, 2020 and on January 25, 2022 completed a business combination with Sky Harbour Group and Yellowstone changed its name to Sky Harbour Group Corporation (see Note 8 for further discussion).

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

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 a variable interest entity, Yellowstone, 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. All significant intercompany profits, losses, transactions and balances have been eliminated in consolidation.

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.

Our consolidated subsidiaries at March 31, 2023 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”

Link Billboards Oklahoma, LLC which we refer to as "LBO"

General Indemnity Group, LLC which we refer to as “GIG”

American Contracting Services, Inc. which we refer to as "ACS"

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”

Fund One Boston Omaha Build for Rent LP, which we refer to as "BFR"

BOAM BFR, LLC which we refer to as "BOAM BFR"

BOC Business Services, LLC which we refer to as "BBS"

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

BOC Yellowstone, LLC which we refer to as "BOC Yellowstone"

BOC Yellowstone II, LLC which we refer to as “BOC Yellowstone II”

Boston Omaha Broadband, LLC which we refer to as "BOB"

FIF AireBeam, LLC which we refer to as “AireBeam”

Fiber Fast Homes, LLC which we refer to as "FFH"

FIF Utah, LLC which we refer to as “FIF Utah”

FIF St George, LLC which we refer to as "FIF St George"

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue s

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. Production services revenue recognized for the three months ended March 31, 2023 and 2022 was $568,091 and $532,931, respectively.

Practical expedients and exemptions: The Company is utilizing the following practical expedients and exemptions from ASC 606. We generally expense sales commissions when incurred because the amortization period is one year or less. These costs are recorded within costs of billboard revenues exclusive of depreciation and amortization. We do not disclose the value of unsatisfied performance obligations as the majority of our contracts with customers have an original expected length of less than one year. For contracts with customers which exceed one year, the future amount to be invoiced to the customer corresponds directly with the value to be received by the customer.

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 $338,262 and $187,143 for the three months ended March 31, 2023 and 2022, 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.

Credit Losses

We estimate credit losses on financial instruments based on amounts expected to be collected. The allowance for doubtful accounts is estimated based on historical collections, accounts receivable aging, economic indicators, and expected future trends.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Cash and Cash Equivalents

For purposes of the statement of cash flows, we consider all highly liquid investments, with the exception of U.S. Treasury securities, purchased with an original maturity of three months or less to be cash equivalents.

Cash Held by BOAM Funds and Other

Cash Held by BOAM Funds and Other represents cash and cash equivalents held by consolidated BOAM Funds and other consolidated entities. Such amounts are not available to fund the general liquidity needs of Boston Omaha.

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. See further discussion within Note 15.

Investments in Unconsolidated Entities

We account for investments in less than 50% owned and more than 20% owned entities using the equity method of accounting. In accordance with ASC 323-30, we account for investments in limited partnerships and limited liability companies using the equity method of accounting when our investment is more than minimal (greater than 3% to 5%). Our share of income (loss) of such entities is recorded as a single amount as equity in income (loss) of unconsolidated affiliates. Dividends, if any, are recorded as a reduction of the investment.

We monitor our equity method investments for factors indicating other-than-temporary impairment. We consider several factors when evaluating our investments, including, but not limited to, (i) the period of time for which the fair value has been less than the carrying value, (ii) operating and financial performance of the investee, (iii) the investee’s future business plans and projections, (iv) discussions with their management, and (v) our ability and intent to hold the investment until it recovers in value.

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.

The realization of deferred tax assets, including net operating loss carryforwards, is dependent on the generation of future taxable income sufficient to realize the tax deductions, carryforwards and credits. Valuation allowances on deferred tax assets are recognized if it is determined that it is more likely than not that the asset will not be realized. For the year ended December 31, 2022, we recorded a valuation allowance against certain state deferred tax assets that we have determined are not more-likely-than-not realizable.

Pursuant to Section 382 of the Internal Revenue Code of 1986, as amended, annual use of our net operating losses may be limited if it is determined that an ownership shift has occurred. An ownership shift is generally defined as a cumulative change in equity ownership by ‘‘5% shareholders’’ that exceeds 50 percentage points over a rolling three-year period. At this time, a Section 382 study has not been performed to determine if such an ownership shift has occurred.

Recently Issued Accounting Pronouncements

Management reviewed currently issued pronouncements during the year, and believes that any other recently issued, but not yet effective, accounting standards, if currently adopted, would not have a material effect on the accompanying consolidated financial statements.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 3. CASH, CASH EQUIVALENTS, AND RESTRICTED CASH

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, |
|  | 2023 |  |  | 2022 |
Cash and cash equivalents |  | $ | 15,902,452 |  |  | $ | 25,493,141 |
Funds held as collateral |  |  | 21,207,071 |  |  |  | 21,026,579 |
Cash held by BOAM funds and other |  |  | 11,414,125 |  |  |  | 8,146,792 |
Total Cash, Cash Equivalents, and Restricted Cash as Presented in the Consolidated Statements of Cash Flows |  | $ | 48,523,648 |  |  | $ | 54,666,512 |

NOTE 4. ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

|  | March 31, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
Trade accounts |  | $ | 4,697,380 |  |  | $ | 4,798,827 |
Premiums |  |  | 1,758,343 |  |  |  | 1,143,918 |
Allowance for doubtful accounts |  |  | (70,627 | ) |  |  | (111,379 | )
Total Accounts Receivable, net |  | $ | 6,385,096 |  |  | $ | 5,831,366 |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 5. PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

|  | March 31, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
Structures and displays |  | $ | 64,133,486 |  |  | $ | 63,585,845 |
Fiber, towers, and broadband equipment |  |  | 56,780,230 |  |  |  | 50,216,957 |
Land |  |  | 14,380,549 |  |  |  | 14,318,292 |
Vehicles and equipment |  |  | 7,567,297 |  |  |  | 6,778,473 |
Office furniture and equipment |  |  | 4,900,829 |  |  |  | 4,884,941 |
Accumulated depreciation |  |  | (26,885,503 | ) |  |  | (24,194,568 | )
Total Property and Equipment, net |  | $ | 120,876,888 |  |  | $ | 115,589,940 |

Depreciation expense for the three months ended March 31, 2023 and 2022 was $2,707,317 and $1,740,071, respectively.

NOTE 6. BUSINESS ACQUISITIONS

2023 Acquisitions

We did not complete any acquisitions during the first quarter of 2023.

2022 Acquisitions

During the year ended December 31, 2022, we completed the acquisition of a broadband service provider and its related assets as well as an outdoor advertising business and its related assets. These acquisitions were accounted for as business combinations under the provisions of ASC 805. A summary of the acquisitions is provided below.

InfoWest & Go Fiber

On April 1, 2022, FIF St George, LLC, our wholly-owned subsidiary, acquired substantially all of the business assets of InfoWest, Inc. (“InfoWest”) and Go Fiber LLC (“Go Fiber”), who are fiber and fixed wireless internet service providers located in St. George, Utah. The InfoWest and Go Fiber businesses together provide high-speed internet services to over 20,000 customers throughout Southern and Central Utah, Northern Arizona and Moapa Valley, Nevada.

Under the terms of the Agreement, FIF St George, LLC assumed only certain liabilities of InfoWest and Go Fiber. The total purchase price of $48,573,149 was paid 80% in cash, and the remaining 20% of the purchase price was paid by issuing to InfoWest and Go Fiber 20% of the outstanding equity of FIF St George, LLC. A portion of the cash purchase price is held in escrow to provide a source of indemnification for any breaches of the representations and warranties, covenants and other obligations of InfoWest and Go Fiber under the Agreement. At any time, InfoWest and Go Fiber have the option, but not the obligation, to sell FIF St George, LLC its entire ownership interest in FIF St George, LLC. FIF St George, LLC would be obligated to purchase the units and pay for the purchase over a three-year period if InfoWest and Go Fiber elect to exercise this option. Subject to the occurrence of certain future events, FIF St George, LLC has the option, but not the obligation, to purchase InfoWest and Go Fiber’s ownership interest in FIF St George, LLC, 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 owned by InfoWest and Go Fiber is included within "Redeemable Noncontrolling interest" in our consolidated Balance Sheets.

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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:

|  | InfoWest & Go Fiber |
Assets Acquired |  |  |  |
Property, plant and equipment |  | $ | 5,983,410 |
Trade names and trademarks |  |  | 7,300,000 |
Customer relationships |  |  | 16,900,000 |
Goodwill |  |  | 18,071,004 |
Right of use assets |  |  | 3,155,434 |
Other |  |  | 358,614 |
Total Assets Acquired |  |  | 51,768,462 |
Liabilities Assumed |  |  |  |
Lease liabilities |  |  | 3,149,194 |
Other |  |  | 46,119 |
Total Liabilities Assumed |  |  | 3,195,313 |
Total |  | $ | 48,573,149 |

The intangible assets include customer relationships and trade names and trademarks which have useful lives of ten years and twenty years, respectively.

Elevation

On November 21, 2022, our subsidiary, LMO, purchased the outdoor advertising assets of Elevation Outdoor Advertising, which we refer to as “Elevation,” based in Knoxville, TN for a purchase price of $14,239,257. Elevation was founded in 2002 and operates over 265 billboard faces, including 8 digital displays, in Knoxville and East Tennessee. Due to the timing of the transaction, the initial accounting for the business combination is incomplete. We are still in the process of obtaining and assessing documentation of the contracts for customer relationships and detailed reports for structures and permits. The provisional purchase price allocation is based on internal information derived from our previous acquisitions in the Midwestern United States.

|  | Elevation |
Assets Acquired |  |  |  |
Property, plant and equipment |  | $ | 3,717,734 |
Customer relationships |  |  | 2,484,000 |
Goodwill |  |  | 8,017,554 |
Right of use assets |  |  | 2,098,194 |
Other |  |  | 310,794 |
Total Assets Acquired |  |  | 16,628,276 |
Liabilities Assumed |  |  |  |
Accounts payable and other |  |  | 290,825 |
Lease liabilities |  |  | 2,098,194 |
Total Liabilities Assumed |  |  | 2,389,019 |
Total |  | $ | 14,239,257 |

The intangible assets include customer relationships and permits which have useful lives of fifteen and ten years, respectively.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 6. BUSINESS ACQUISITIONS (Continued)

Pro Forma Information

The following is the unaudited pro forma information assuming all business acquisitions occurred on January 1, 2022. 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, |
|  | 2023 |  |  | 2022 |
Revenue |  | $ | 22,815,785 |  |  | $ | 21,045,883 |
Net (Loss) Income Attributable to Common Stockholders |  | $ | (3,321,154 | ) |  | $ | 17,483,060 |
Basic Net (Loss) Income per Share |  | $ | (0.11 | ) |  | $ | 0.59 |
Diluted Net (Loss) Income per Share |  | $ | (0.11 | ) |  | $ | 0.59 |
Basic Weighted Average Class A and Class B Common Shares Outstanding |  |  | 30,524,067 |  |  |  | 29,698,361 |
Diluted Weighted Average Class A and Class B Common Shares Outstanding |  |  | 30,587,745 |  |  |  | 29,765,082 |

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, 2023 and 2022

NOTE 7. INTANGIBLE ASSETS

Intangible assets consist of the following:

|  | March 31, 2023 |  |  | December 31, 2022 |
|  |  |  |  |  | Accumulated |  |  |  |  |  |  |  |  |  |  | Accumulated |  |  |  |  |
|  | Cost |  |  | Amortization |  |  | Balance |  |  | Cost |  |  | Amortization |  |  | Balance |
Customer relationships |  | $ | 69,052,231 |  |  | $ | (29,429,770 | ) |  | $ | 39,622,461 |  |  | $ | 69,052,231 |  |  | $ | (28,141,423 | ) |  | $ | 40,910,808 |
Permits, licenses, and lease acquisition costs |  |  | 11,725,808 |  |  |  | (4,745,823 | ) |  |  | 6,979,985 |  |  |  | 11,724,308 |  |  |  | (4,479,482 | ) |  |  | 7,244,826 |
Site location |  |  | 849,347 |  |  |  | (320,671 | ) |  |  | 528,676 |  |  |  | 849,347 |  |  |  | (306,708 | ) |  |  | 542,639 |
Noncompetition agreements |  |  | 626,000 |  |  |  | (595,340 | ) |  |  | 30,660 |  |  |  | 626,000 |  |  |  | (578,500 | ) |  |  | 47,500 |
Technology |  |  | 1,128,000 |  |  |  | (434,661 | ) |  |  | 693,339 |  |  |  | 1,128,000 |  |  |  | (410,250 | ) |  |  | 717,750 |
Trade names and trademarks |  |  | 11,152,200 |  |  |  | (1,235,512 | ) |  |  | 9,916,688 |  |  |  | 11,152,200 |  |  |  | (1,089,892 | ) |  |  | 10,062,308 |
Nonsolicitation agreement |  |  | 28,000 |  |  |  | (28,000 | ) |  |  | - |  |  |  | 28,000 |  |  |  | (28,000 | ) |  |  | - |
Capitalized contract costs |  |  | 1,927,000 |  |  |  | (197,544 | ) |  |  | 1,729,456 |  |  |  | 1,869,350 |  |  |  | (151,034 | ) |  |  | 1,718,316 |
Indefinite lived intangibles |  |  | 7,051,225 |  |  |  | - |  |  |  | 7,051,225 |  |  |  | 7,097,895 |  |  |  | - |  |  |  | 7,097,895 |
Total |  | $ | 103,539,811 |  |  | $ | (36,987,321 | ) |  | $ | 66,552,490 |  |  | $ | 103,527,331 |  |  | $ | (35,185,289 | ) |  | $ | 68,342,042 |

Future Amortization

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

|  | March 31, |  |  |  |  |  |  |  |  |
|  | 2024 |  |  | 2025 |  |  | 2026 |  |  | 2027 |  |  | 2028 |  |  | Thereafter |  |  | Total |
Customer relationships |  | $ | 5,222,726 |  |  | $ | 5,222,724 |  |  | $ | 5,222,724 |  |  | $ | 5,219,475 |  |  | $ | 5,185,761 |  |  | $ | 13,549,051 |  |  | $ | 39,622,461 |
Permits, licenses, and lease acquisition costs |  |  | 1,080,161 |  |  |  | 1,080,161 |  |  |  | 1,060,015 |  |  |  | 1,033,406 |  |  |  | 1,001,436 |  |  |  | 1,724,806 |  |  |  | 6,979,985 |
Site location |  |  | 56,623 |  |  |  | 56,623 |  |  |  | 56,623 |  |  |  | 56,623 |  |  |  | 56,623 |  |  |  | 245,561 |  |  |  | 528,676 |
Noncompetition agreements |  |  | 29,820 |  |  |  | 840 |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 30,660 |
Technology |  |  | 99,000 |  |  |  | 99,000 |  |  |  | 99,000 |  |  |  | 99,000 |  |  |  | 99,000 |  |  |  | 198,339 |  |  |  | 693,339 |
Trade names and trademarks |  |  | 590,565 |  |  |  | 590,567 |  |  |  | 590,567 |  |  |  | 574,564 |  |  |  | 525,667 |  |  |  | 7,044,758 |  |  |  | 9,916,688 |
Capitalized contract costs |  |  | 192,700 |  |  |  | 192,700 |  |  |  | 192,700 |  |  |  | 192,700 |  |  |  | 192,700 |  |  |  | 765,956 |  |  |  | 1,729,456 |
Total |  | $ | 7,271,595 |  |  | $ | 7,242,615 |  |  | $ | 7,221,629 |  |  | $ | 7,175,768 |  |  | $ | 7,061,187 |  |  | $ | 23,528,471 |  |  | $ | 59,501,265 |

Amortization expense for the three months ended March 31, 2023 and 2022 was $1,802,027 and $1,193,193, respectively.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 7. INTANGIBLE ASSETS (Continued)

As of March 31, 2023, the weighted average amortization period, in months, for intangible assets is as follows:

Customer relationships |  |  | 91 |
Permits, licenses, and lease acquisition costs |  |  | 78 |
Site location |  |  | 112 |
Noncompetition agreements |  |  | 5 |
Technology |  |  | 84 |
Trade names and trademarks |  |  | 201 |
Capitalized contract costs |  |  | 107 |

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 common stock warrants. The U.S. Treasury securities are held by UCS, classified as held to maturity, mature in less than twelve months, and are reported at amortized cost which approximates fair value. Our common stock warrants of Sky Harbour Group Corporation are measured at fair value, with any unrealized holding gains and losses during the period included in earnings.

|  | March 31, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
U.S. Treasury notes held to maturity |  | $ | 7,953,124 |  |  | $ | 4,757,224 |
Common stock warrants of Sky Harbour Group Corporation |  |  | 3,782,692 |  |  |  | 1,531,604 |
Total |  | $ | 11,735,816 |  |  | $ | 6,288,828 |

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 March 31, 2023 and December 31, 2022 are as follows:

|  |  |  |  |  | Gross |  |  |  |  |
|  |  |  |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gain (Loss) |  |  | Value |
Marketable equity securities, March 31, 2023 |  | $ | 8,967,897 |  |  | $ | (513,891 | ) |  | $ | 8,454,006 |
Marketable equity securities, December 31, 2022 |  | $ | 9,665,100 |  |  | $ | (896,162 | ) |  | $ | 8,768,938 |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

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, 2023 and December 31, 2022 are as follows:

|  |  |  |  |  | Gross |  |  |  |  |
|  |  |  |  |  | Unrealized |  |  | Fair |
|  | Cost |  |  | Gain (Loss) |  |  | Value |
U.S. Treasury trading securities, March 31, 2023 |  | $ | 57,750,386 |  |  | $ | (62,441 | ) |  | $ | 57,687,945 |
U.S. Treasury trading securities, December 31, 2022 |  | $ | 33,888,165 |  |  | $ | (367,764 | ) |  | $ | 33,520,401 |

Long-term Investments

Long-term investments consist of U.S. Treasury securities held to maturity and certain equity investments. We have the intent and the ability to hold the U.S. Treasury securities to maturity, occurring in fiscal 2024. Our U.S. Treasury securities are stated at amortized cost which approximates fair value and are held by UCS.

Equity Investments

During May 2018, we invested $19,058,485 in voting common stock of CB&T Holding Corporation, which we refer to as “CB&T,” the privately held parent company of Crescent Bank & Trust. Our investment represents 15.60% of CB&T’s outstanding common stock. CB&T 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.

|  | March 31, |  |  | December 31, |
|  | 2023 |  |  | 2022 |
U.S. Treasury securities held to maturity |  | $ | 6,729,457 |  |  | $ | 6,729,457 |
Preferred stock |  |  | 348,694 |  |  |  | 348,694 |
Voting common stock of CB&T Holding Corporation |  |  | 19,058,485 |  |  |  | 19,058,485 |
Total |  | $ | 26,136,636 |  |  | $ | 26,136,636 |

We reviewed our investments as of March 31, 2023 and concluded that no impairment to the carrying value was required.

22

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

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

Investment in Unconsolidated Affiliates

We have various investments in equity method affiliates, whose businesses are in real estate, real estate services, private aviation infrastructure, and asset management. Our interest in these affiliates ranges from approximately 16% to 23%. 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 $618,587 as of March 31, 2023, are managed by an entity controlled by a member of our board of directors.

24th Street Fund I & 24th Street Fund II

During 2020, we invested a total of $6,000,000 in two funds, 24th Street Fund I, LLC, and 24th Street Fund II, LLC, that are managed by 24th Street Asset Management LLC, a subsidiary of 24th Street Holding Company, LLC, which we currently own approximately 49.9% of both directly and indirectly through our ownership in Logic. The funds focus on opportunities within secured lending and direct investments in commercial real estate.

Sky Harbour Group Corporation

In October 2020, our subsidiary BOC Yellowstone LLC, served as sponsor for the underwritten initial public offering of a special purpose acquisition company named Yellowstone Acquisition Company. 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, owned approximately 20% of Yellowstone's issued and outstanding common stock. The purpose of the offering was 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. The Units were sold at a price of $10.00 per unit, generating gross proceeds to Yellowstone of $125,000,000, and traded 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 August 1, 2021, Yellowstone entered into a business combination agreement with Sky Harbour LLC (“SHG”), a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars. On September 14, 2021, our subsidiary BOC YAC Funding LLC completed the previously-announced investment of $55 million in Series B Preferred Units of SHG. In addition to our $55 million investment, we also agreed to provide SHG an additional $45 million through the purchase of additional shares of Yellowstone Class A common stock at a price of $10 per share through a private placement investment (“PIPE”).

On January 25, 2022, Yellowstone completed the previously announced proposed business combination with SHG following stockholder approval. As a result, SHG became a consolidated subsidiary of Yellowstone and Yellowstone was renamed Sky Harbour Group Corporation, which we refer to as "Sky Harbour". In connection with the business combination, our Series B Preferred Units of SHG converted into 5,500,000 shares of Sky Harbour Group Class A common stock at a price of $10 per share. Also, in connection with the business combination, we entered into a subscription agreement with Sky Harbour, pursuant to which Sky Harbour sold to us 4,500,000 shares of Class A common stock at a price of $10 per share, for total cash consideration of $45 million.

During the first quarter of fiscal 2022, we recognized a non-cash gain of $24,977,740 related to our deconsolidation of Yellowstone, which is included within other income on our Consolidated Statement of Operations. Of the total gain recognized on deconsolidation, approximately $10,000,000 relates to the remeasurement of our retained investment in Sky Harbour via the Sponsor shares, Series B Preferred Units, and PIPE investment, each of which converted into shares of Sky Harbour's Class A common stock on the transaction date, and approximately $15,000,000 relates to the deconsolidation of Yellowstone's assets and liabilities as of the transaction date. The fair value of our retained investment at the deconsolidation date was measured based upon the observable trading price of Sky Harbour's Class A common stock. Subsequent to the business combination, we account for our 22.95% equity investment in Sky Harbour, comprised of 13,118,474 shares of Class A common stock, under the equity method.

All the shares of Sky Harbour Class A common stock and Sky Harbour Warrants to purchase Class A common stock that we hold have been registered under the Securities Act. However, our ability to resell any significant portion of these shares is limited by both the large number of shares and warrants we hold relative to the average trading volume of these securities as well as blackout periods which may prevent us from selling shares as one of our Co-Chief Executive Officers serves on Sky's Board of Directors. The terms of the Sky Harbour business combination prohibited us from selling any of our securities in Sky Harbour prior to January 25, 2023 and has since expired. If our investment in Sky Harbour's Class A common stock was accounted for at fair value based on its quoted market price as of March 31, 2023, it would be valued at approximately $94,300,000.

We have evaluated our investment in Sky Harbour as of March 31, 2023, and determined that there was not an other-than-temporary impairment. Our conclusion was based on several contributing factors, including: (i) our assessment that the underlying business and financial condition of Sky Harbour is favorable; (ii) the period of time for which the fair value has been less than the carrying value, (iii) the recovery of Sky Harbour's stock price since the beginning of 2023, and (iv) our ability and intent to hold the investment. We will continue to review our investment in Sky Harbour for an other-than-temporary impairment on a quarterly basis or upon the occurrence of certain events. If Sky Harbour's stock price drops below our carrying value of $7.73 per share for a sustained period of time, it will likely result in an impairment of our investment. There may also be a future impairment of our investment if our expectations about Sky Harbour's prospective results of operations and cash flows decline, which could be influenced by a variety of factors including adverse market conditions.

23

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

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

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, |
|  | 2023 |  |  | 2022 |
Beginning of year |  | $ | 114,133,349 |  |  | $ | 61,660,905 |
Additional investments in unconsolidated affiliates |  |  | - |  |  |  | 45,094,500 |
Distributions received |  |  | - |  |  |  | (642,511 | )
Reclassification of marketable securities to investment in affiliate |  |  | - |  |  |  | 23,483 |
Transfer of interest |  |  | - |  |  |  | (625,498 | )
Gain on retained interest of deconsolidated affiliate |  |  | - |  |  |  | 10,010,090 |
Equity in loss of unconsolidated affiliates |  |  | (4,980,078 | ) |  |  | (1,387,620 | )
End of period |  | $ | 109,153,271 |  |  | $ | 114,133,349 |

Combined summarized financial data for these affiliates is as follows:

|  | For the Three Months Ended |
|  | March 31, |
|  | 2023 |  |  | 2022 |
Revenue |  | $ | 3,648,762 |  |  | $ | 6,612,827 |
Gross profit |  |  | 3,017,056 |  |  |  | 3,261,322 |
Loss from continuing operations |  |  | (4,865,810 | ) |  |  | (5,134,293 | )
Net loss |  |  | (5,985,768 | ) |  |  | (18,695,284 | )

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

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, 2023 and December 31, 2022, our financial instruments included cash, cash equivalents, receivables, marketable securities, investments, accounts payable, and long-term debt. The carrying value of cash, cash equivalents, 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, 2023, the estimated fair value of our long-term debt was $25,982,426 which is less than the carrying amount of $28,114,900.

Warrants

We previously determined that the Public Warrants issued in connection with Yellowstone's initial public offering in October 2020 were subject to treatment as a liability. Prior to the deconsolidation of Yellowstone which occurred on January 25, 2022, we marked the Public Warrants 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 January 1, 2022 to January 25, 2022 resulted in a gain of $1,837,211, which is included within "Remeasurement of warrant liability" within our Consolidated Statements of Operations.

Following the business combination between Yellowstone Acquisition Company and SHG which occurred on January 25, 2022, we no longer eliminate our investment in the Private Placement Warrants. Our Private Placement warrants related to Sky Harbour are considered level 2 and measured at fair value using observable inputs for similar assets in an active market. Our re-measurement of the Private Placement Warrants from January 1, 2023 to March 31, 2023, and January 25, 2022 to March 31, 2022, resulted in a gain of $2,251,088 and $7,410,988, respectively, which are included within Other investment income within our Consolidated Statements of Operations.

Marketable Equity Securities

On an investment life-to-date basis, we have realized net gains on the sale of equity securities within the marketable equity portfolio held at Boston Omaha of approximately $84,000,000. These amounts exclude any realized gains on equity securities held within the marketable equity portfolio managed by UCS.

Sky Harbour Group Corporation Class A common stock

We account for our 22.95% equity interest in Sky Harbour, comprised of 13,118,474 shares of Class A common stock, under the equity method. If our investment in Sky Harbour's Class A common stock was accounted for at fair value based on its quoted market price as of March 31, 2023, it would be valued at approximately $94,300,000.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 9. FAIR VALUE (Continued)

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. Substantially all of the fair value is determined using observed prices of publicly traded securities, level 1 in the fair value hierarchy.

|  | Total Carrying Amount in Consolidated Balance Sheet March 31, 2023 |  |  | Quoted Prices in Active Markets for Identical Assets |  |  | Realized Gains and (Losses) |  |  | Total Changes in Fair Values Included in Current Period Earnings (Loss) |
Marketable equity securities and U.S. Treasury trading securities |  | $ | 66,141,951 |  |  | $ | 66,141,951 |  |  | $ | 188,525 |  |  | $ | 2,683,694 |

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, 2022 |  | $ | 3,569,580 |
Additions |  |  | - |
Liabilities settled |  |  | - |
Accretion expense |  |  | 53,823 |
Balance, March 31, 2023 |  | $ | 3,623,403 |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 1 1. CAPITAL STOCK

On April 25, 2022, we filed a new shelf registration statement on Form S-3 (File No. 333-264470) that was declared effective on May 11, 2022, relating to the offering of Class A common stock, preferred stock, par value $0.001 per share, which we refer to as “preferred stock,” debt securities and warrants of the Company for up to $500,000,000. Additionally, in the 2022 Shelf Registration Statement, we have registered for resale up to 8,297,093 shares of Class A common stock acquired in 2018 or earlier in private placements in accordance with the terms of a 2018 registration rights agreement. We will not receive any proceeds from the sale of Class A common stock by the selling shareholders. Currently, the selling stockholders are the Massachusetts Institute of Technology, or “MIT,” as well as 238 Plan Associates LLC, an MIT pension and benefit fund and a limited partnership holding our Class A common stock for the economic benefit of MIT. 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. 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.

On December 8, 2022, we entered into an "at the market" equity offering program (the “ATM Program”) pursuant to a Sales Agreement (the “Sales Agreement”) by and between us and WFS. This ATM Program is consistent with our historical practice of having available to management the option to issue stock from time to time in order to continue to fund the growth of our fiber-to-the-home broadband business, acquire additional billboards, and make other such investments in assets as needed to seek to grow intrinsic value per share. Our general preference is always to have options available to us from a capital allocation perspective which includes, but is not limited to, having a regularly filed ATM program. Pursuant to the terms of the Sales Agreement, we may sell, from time to time, shares of our Class A common stock, with an aggregate sales price of up to $100,000,000 through WFS, in transactions that are deemed to be “at the market” offerings as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”).

Upon delivery of a placement notice (a “Placement Notice”) and upon the terms and subject to the conditions of the Sales Agreement, WFS will use reasonable efforts consistent with its normal trading and sales practices, applicable laws and the rules of the New York Stock Exchange (“NYSE”) to sell the shares of Class A common stock from time to time based upon our instructions for the sales, including price, time, or size limits specified, and otherwise in accordance with, the terms of such Placement Notice. Pursuant to the Sales Agreement, WFS may sell shares of Class A commons stock by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act, including without limitation sales made through the NYSE or on any other existing trading market for the Class A common stock. Notwithstanding the foregoing, WFS may not purchase shares of Class A common stock for its own account as principal unless expressly authorized to do so by the Company.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 1 1. CAPITAL STOCK (Continued)

We intend to use the net proceeds from the ATM Program, after deducting WFS' commissions and our offering expenses, for general corporate purposes, which may include financing our existing businesses and operations, and expanding our businesses and operations through additional acquisitions and minority investments, and additional hires. Such expansion may include future billboard acquisitions, broadband acquisitions, acquisitions of surety insurance companies and other growth of the Company's insurance activities, additional investments in real estate management, homebuilding and other real estate service businesses, additional investments in subprime automobile lending, and acquisitions of other businesses. We have not determined the amount of net proceeds to be used for any specific purpose, and management will retain broad discretion over the allocation of net proceeds. While the Company has no current agreements, commitments or understandings for any specific acquisitions at this time, it may use a portion of the net proceeds for these purposes.

From December 31, 2022 through March 31, 2023, we sold 1,097,824 shares of our Class A common stock under the ATM Program for gross proceeds of $28,105,461. For sales of Class A common stock by WFS, we paid WFS a commission at a rate of 3% of the gross sales price per share. In addition, we have agreed to pay certain expenses incurred by WFS in connection with the offering. We have no obligation to sell any shares under the Sales Agreement and may at any time suspend the offering of the ATM Program under the Sales Agreement. The Sales Agreement contains customary representations and warranties of the parties and indemnification and contribution provisions under which we and WFS have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. The ATM Program pursuant to the Sales Agreement will automatically terminate upon the issuance and sale of all the shares through WFS in an aggregate amount of $100,000,000. We also have the right to terminate the ATM Program with WFS upon notice to WFS.

At March 31, 2023, 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 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, 2023 is presented in the following table.

|  | 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, 2022 |  |  | 105,556 |  |  | $ | 9.95 |  |  |  | 2.50 |  |  | $ | 1,746,952 |
Issued |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |
Exercised |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |
Expired |  |  | - |  |  |  |  |  |  |  |  |  |  |  |  |
Outstanding as of March 31, 2023 |  |  | 105,556 |  |  | $ | 9.95 |  |  |  | 2.25 |  |  | $ | 1,448,228 |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

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 $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. Link initially borrowed approximately $18,000,000 under Term Loan 1 and $5,500,000 under Term Loan 2. 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.

On December 6, 2021, Link entered into a Fourth Amendment to the Credit Agreement with the Lender which modified the original Credit Agreement by merging all outstanding principal amounts under both Term Loan 1 and Term Loan 2 into one term loan (the "Term Loan") having a fixed interest rate of 4.00% per annum, and increasing the total Term Loan borrowing limit to $30,000,000.

On May 31, 2022, Link entered into a Fifth Amendment to the Credit Agreement with the Lender which modified the Credit Agreement by extending the period of time under which Link may issue to BOC a cash dividend from January 31, 2022 to June 30, 2022 in the amount up to $8,125,000 in the aggregate.

As of March 31, 2023, Link has borrowed $30,000,000 through the Term Loan under the Credit Facility. Principal amounts under the Term Loan are payable in monthly installments according to a 15-year amortization schedule. Principal payments commenced on July 1, 2020 for amounts previously borrowed under Term Loan 1 and October 1, 2020 for amounts previously borrowed under Term Loan 2. The Term Loan is payable in full on December 6, 2028.

The revolving line of credit loan facility has a $5,000,000 maximum availability. Interest payments are based on the 30-day U.S. Prime Rate minus an applicable margin ranging between 0.65% and 1.15% dependent on Link’s consolidated leverage ratio. The revolving line of credit is due and payable on August 12, 2023.

Long-term debt included within our consolidated balance sheet as of March 31, 2023 consists of Term Loan borrowings of $28,114,900, of which $1,557,625 is classified as current. There were no amounts outstanding related to the revolving line of credit as of March 31, 2023.

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, 2021 of not greater than 3.50 to 1.00, (b) beginning with the fiscal quarter ended December 31, 2022 of not greater than 3.25 to 1.00, and (c) beginning with the fiscal quarter ending December 31, 2023 and thereafter, of not greater than 3.00 to 1.0, and a minimum consolidated fixed charge coverage ratio of not less than 1.15 to 1.00 measured quarterly, based on a rolling four quarters. The Company was in compliance with these covenants as of March 31, 2023.

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.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 13. LEASES

We enter into operating lease contracts primarily for land and office space. Agreements 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.

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 is as follows:

|  | For the Three Months Ended |  |
|  | March 31, |  |
|  | 2023 |  |  | 2022 |  | Statement of Operations Classification
Lease cost |  | $ | 2,176,629 |  |  | $ | 1,937,096 |  | Cost of billboard and broadband revenues and general and administrative
Variable and short-term lease cost |  |  | 577,375 |  |  |  | 331,028 |  | Cost of billboard and broadband revenues and general and administrative
Total Lease Cost |  | $ | 2,754,004 |  |  | $ | 2,268,124 |  |

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

|  | For the Three Months Ended |
|  | March 31, |
|  | 2023 |  |  | 2022 |
Cash payments for operating leases |  | $ | 2,246,389 |  |  | $ | 1,933,522 |
New operating lease assets obtained in exchange for operating lease liabilities |  | $ | 791,724 |  |  | $ | 622,600 |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 13. LEASES (Continued)

Operating Lease Assets and Liabilities

|  | March 31, 2023 |  |  | December 31, 2022 |  | Balance Sheet Classification
Lease assets |  | $ | 64,304,426 |  |  | $ | 64,719,405 |  | Other Assets: Right of use assets
Current lease liabilities |  | $ | 5,228,891 |  |  | $ | 5,203,981 |  | Current Liabilities: Lease liabilities
Noncurrent lease liabilities |  |  | 58,743,145 |  |  |  | 59,281,733 |  | Long-term Liabilities: Lease liabilities
Total Lease Liabilities |  | $ | 63,972,036 |  |  | $ | 64,485,714 |  |

Maturity of Operating Lease Liabilities

|  | March 31, 2023 |
2024 |  | $ | 8,110,303 |
2025 |  |  | 7,512,665 |
2026 |  |  | 7,235,167 |
2027 |  |  | 6,754,259 |
2028 |  |  | 6,447,483 |
Thereafter |  |  | 59,690,379 |
Total lease payments |  |  | 95,750,256 |
Less imputed interest |  |  | (31,778,220 | )
Present Value of Lease Liabilities |  | $ | 63,972,036 |

As of March 31, 2023, our operating leases have a weighted-average remaining lease term of 16.9 years and a weighted-average discount rate of 4.80%.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

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, ACS and UCS. SSS clients are multi-state and UCS, SCS, ACS 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, ACS and UCS and to make additional business acquisitions in the insurance industry.

Link Media Holdings, LLC

LMH conducts our billboard rental operations. LMH billboards are located in Alabama, Arkansas, Florida, Georgia, Illinois, Iowa, Kansas, Missouri, Nebraska, Nevada, Oklahoma, South Dakota, Tennessee, Virginia, West Virginia and Wisconsin.

Boston Omaha Broadband, LLC

BOB conducts our broadband operations. BOB provides high-speed broadband services to its customers located in Arizona, Florida, Nevada, and Utah.

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |
Three Months Ended March 31, 2023 |  | GIG |  |  | LMH |  |  | BOB |  |  | Unallocated |  |  | Consolidated |
Revenue |  | $ | 3,973,656 |  |  | $ | 10,302,223 |  |  | $ | 8,539,906 |  |  | $ | - |  |  | $ | 22,815,785 |
Segment gross profit |  |  | 2,410,624 |  |  |  | 6,494,559 |  |  |  | 5,965,555 |  |  |  | - |  |  |  | 14,870,738 |
Segment income (loss) from operations |  |  | 229,721 |  |  |  | 1,332,110 |  |  |  | (1,699,366 | ) |  |  | (2,839,257 | ) |  |  | (2,976,792 | )
Capital expenditures |  |  | 6,125 |  |  |  | 559,995 |  |  |  | 7,383,081 |  |  |  | 62,258 |  |  |  | 8,011,459 |
Depreciation and amortization |  |  | 75,597 |  |  |  | 2,213,430 |  |  |  | 2,193,130 |  |  |  | 27,187 |  |  |  | 4,509,344 |

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |
Three Months Ended March 31, 2022 |  | GIG |  |  | LMH |  |  | BOB |  |  | Unallocated |  |  | Consolidated |
Revenue |  | $ | 3,077,852 |  |  | $ | 9,138,149 |  |  | $ | 4,076,946 |  |  | $ | - |  |  | $ | 16,292,947 |
Segment gross profit |  |  | 1,896,961 |  |  |  | 5,610,777 |  |  |  | 3,166,171 |  |  |  | - |  |  |  | 10,673,909 |
Segment income (loss) from operations |  |  | (194,182 | ) |  |  | 1,009,980 |  |  |  | (423,701 | ) |  |  | (2,841,833 | ) |  |  | (2,449,736 | )
Capital expenditures |  |  | 105,147 |  |  |  | 799,241 |  |  |  | 5,080,919 |  |  |  | 160,983 |  |  |  | 6,146,290 |
Depreciation and amortization |  |  | 54,865 |  |  |  | 1,993,795 |  |  |  | 857,567 |  |  |  | 27,037 |  |  |  | 2,933,264 |

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 14. INDUSTRY SEGMENTS (Continued)

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |
As of March 31, 2023 |  | GIG |  |  | LMH |  |  | BOB |  |  | Unallocated |  |  | Consolidated |
Accounts receivable, net |  | $ | 2,665,536 |  |  | $ | 3,415,239 |  |  | $ | 304,321 |  |  | $ | - |  |  | $ | 6,385,096 |
Goodwill |  |  | 11,325,138 |  |  |  | 130,428,222 |  |  |  | 37,710,162 |  |  |  | - |  |  |  | 179,463,522 |
Total assets |  |  | 69,701,282 |  |  |  | 273,927,950 |  |  |  | 143,355,300 |  |  |  | 219,371,670 |  |  |  | 706,356,202 |

|  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  | Total |
As of December 31, 2022 |  | GIG |  |  | LMH |  |  | BOB |  |  | Unallocated |  |  | Consolidated |
Accounts receivable, net |  | $ | 1,707,716 |  |  | $ | 3,696,906 |  |  | $ | 426,256 |  |  | $ | 488 |  |  | $ | 5,831,366 |
Goodwill |  |  | 11,325,138 |  |  |  | 130,428,222 |  |  |  | 37,710,162 |  |  |  | - |  |  |  | 179,463,522 |
Total assets |  |  | 68,712,781 |  |  |  | 277,153,407 |  |  |  | 138,800,411 |  |  |  | 199,051,260 |  |  |  | 683,717,859 |

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, 2023 and 2022:

|  | 2023 |  |  | 2022 |
Losses and LAE at January 1 |  | $ | 1,690,579 |  |  | $ | 1,381,526 |
Provision for losses and LAE claims arising in: |  |  |  |  |  |  |  |
Current year |  |  | 576,510 |  |  |  | 201,795 |
Prior year |  |  | 355,001 |  |  |  | 535,001 |
Total incurred |  |  | 931,511 |  |  |  | 736,796 |
Losses and LAE payments for claims arising in: |  |  |  |  |  |  |  |
Current year |  |  | 27,496 |  |  |  | 33,550 |
Prior years |  |  | 196,420 |  |  |  | 193,766 |
Total payments |  |  | 223,916 |  |  |  | 227,316 |
Less reinsurance recoverable |  |  | 415,000 |  |  |  | 315,000 |
Losses and LAE at March 31, |  | $ | 1,983,174 |  |  | $ | 1,576,006 |

For the three months ended March 31, 2023, $196,420 was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There has been a $20,420 unfavorable prior year development during the three months ended March 31, 2023. Reserves remaining as of March 31, 2023 for prior years are $355,001 as a result of re-estimation of unpaid losses and loss adjustment expenses.

For the three months ended March 31, 2022, $193,766 was paid for incurred claims and claim adjustment expenses attributable to insured events of prior years. There was a $24,526 unfavorable prior year development during the three months ended March 31, 2022. Reserves remaining as of March 31, 2022 for prior years were $535,001 as a result of re-estimation of unpaid losses and loss adjustment expenses.

In both periods, unfavorable prior year 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 were $415,000 and $315,000 at March 31, 2023 and March 31, 2022, respectively.

NOTE 16. CUSTODIAL RISK

As of March 31, 2023, we had approximately $22,863,132 in excess of federally insured limits on deposit with financial institutions.

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BOSTON OMAHA CORPORATION
and SUBSIDIARIES

Notes to Unaudited Consolidated Financial Statements

For the Three Months Ended March 31, 2023 and 2022

NOTE 17. SUBSEQUENT EVENTS

Subsequent to March 31, 2023, we sold 433,396 shares of our Class A common stock through our ATM Program with Wells Fargo Securities, resulting in net proceeds of approximately $9.1 million.

On April 6, 2023, Link entered into a Sixth Amendment to Credit Agreement (the “Sixth Amendment”) with First National Bank of Omaha. The Sixth Amendment modifies the Credit Agreement to provide additional flexibility for Link in making "Investment Capital Expenditures" (all Capital Expenditures other than Maintenance Capital Expenditures) by no longer deducting expenditures which qualify as Investment Capital Expenditures from EBITDA in calculating the Consolidated Fixed Charge Coverage Ratio. As a result, only "Maintenance Capital Expenditures" (for or relating to the replacement, refurbishing, improvement, or repair of existing assets) shall be deducted from EBITDA in testing the Consolidated Fixed Charge Coverage Ratio. The amount of unfunded Investment Capital Expenditures (Investment Capital Expenditures other than expenditures funded by BOC) allowable during any test period shall not exceed the Investment Capital Expenditure Available Amount during such test period.

On May 1, 2023, our subsidiary, Boston Omaha Asset Management, LLC, acquired 100% of the membership interests in 24th Street Asset Management LLC ("24th Street"), a Delaware limited liability company, from the members of 24th Street other than BOAM, (the "Sellers") for cash and BOC Class A common stock valued at $5,016,494 in the aggregate. Prior to the transaction, BOAM indirectly owned 48% of the membership interests of 24th Street. The consideration consists of $2,759,072 in cash at closing, an additional $1,254,102 in cash subject to holdback, and 45,644 shares of BOC Class A common stock (based on the average closing price of BOC Class A common stock for the 30 business day period ending two days before the closing date). The shares issued in the transaction are unregistered and have no registration rights. The purchase agreement also provides for certain payments based on performance to receive the holdback amount and certain other potential earnout payments.

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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, PARTICULARLY THOSE ANTICIPATING FUTURE FINANCIAL PERFORMANCE, BUSINESS PROSPECTS, GROWTH, OPERATING STRATEGIES AND SIMILAR MATTERS, INCLUDING WITHOUT LIMITATION, STATEMENTS CONCERNING OPERATIONS, RESULTS OF OPERATIONS, LIQUIDITY, INVESTMENTS, OUR NEED FOR, AND ABILITY TO OBTAIN, ADDITIONAL FUNDING FOR ACQUISITIONS AND POTENTIAL BUSINESS EXPANSION, GENERAL ECONOMIC TRENDS, INFLATIONARY PRESSURES, FINANCIAL CONDITION AND THE IMPACT OF THE COVID-19 PANDEMIC ON OUR BUSINESS. 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 OTHER 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, 2022 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE "SEC") ON MARCH 24, 2023. 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 2023 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, broadband services, surety insurance and related brokerage businesses and an asset management business. In addition, we hold minority investments in commercial real estate management and brokerage services, a bank focused on servicing the automotive loan market, and a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars.

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 Southeastern 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 several 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, 2023, we operate approximately 4,000 billboards with approximately 7,600 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 September 2015, we established an insurance subsidiary, GIG, designed to own and operate insurance businesses generally handling high volume, lower policy limit commercial lines of property and casualty 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 several years, we have also acquired additional surety insurance brokerage businesses located in various regions of the United States. We may in the future expand the reach of our insurance activities to other forms of insurance which may have similar characteristics to surety, such as high volume and low average policy premium insurance businesses which historically have similar economics.

Broadband Services: In March 2020, we commenced our broadband services business with the acquisition of substantially all of the business assets of FibAire, a rural broadband internet provider that serves over 8,000 customers in communities in southern Arizona with a high-speed fixed wireless internet service and is building an all fiber-to-the-home network in select Arizona markets. In December 2020, we acquired substantially all of the business assets of UBB, a broadband internet provider that provides high-speed internet to over 10,000 customers throughout Utah. In September 2021, we announced the launch of Fiber Fast Homes, LLC, which partners with builders, developers, and build for rent communities to build fiber-to-the-home infrastructure and provide fiber internet service to residents. In April 2022, we acquired substantially all of the business assets of InfoWest and Go Fiber, which are fiber and fixed wireless internet service providers with over 20,000 customers throughout Southern and Central Utah, Northern Arizona, and Moapa Valley, Nevada. We hope to continue to expand in Arizona, Florida, Nevada, 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. As of March 31, 2023, we owned 30% of Logic Real Estate Companies, LLC and approximately 49.9% of 24th Street Holding Company, LLC, both directly and also indirectly through our ownership in Logic Real Estate Companies, LLC. 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 Company, LLC, and focus on opportunities within secured lending and direct investments in commercial real estate. On May 1, 2023, our subsidiary Boston Omaha Asset Management, LLC acquired the remaining ownership interest in 24th Street Holding Company LLC and 24th Street Asset Management, LLC.

| ● | In December 2017, we invested $10 million in common units of Dream Finders Holdings LLC, 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. On January 25, 2021, Dream Finders Homes, Inc., a wholly owned subsidiary of DFH, completed its initial public offering and Dream Finders Homes, Inc. became a holding company and sole manager of DFH. Upon completion of the initial public offering, 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. Since DFH’s initial public offering through December 31, 2022 we sold all 4,801,099 shares of DFH Class A common stock for gross proceeds of approximately $81 million.

| ● | 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. Our investment now represents 15.6% of CB&T's outstanding common stock. 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 Acquisition Company. 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. In August 2021, Yellowstone entered into a business combination agreement with Sky Harbour LLC, a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars. The business combination was completed on January 25, 2022 and Yellowstone changed its name to Sky Harbour Group Corporation. Sky Harbour’s Class A common stock trades on the NYSE American under the symbol “SKYH” and its warrants to purchase Class A common stock trade under the symbol “SKYH.WS.”.

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| ● | In September 2021, through one of our subsidiaries, we invested $55 million directly into SHG and received Series B preferred units. Upon the successful consummation of the Sky Harbour business combination, this investment converted into 5,500,000 shares of Sky Harbour's Class A common stock based upon an assumed value of $10.00 per share. In December 2021, we agreed to provide Sky Harbour an additional $45 million through the purchase of 4,500,000 shares of Class A common stock upon the closing of the Sky Harbour business combination, which was consummated in January 2022.

| ● | We recently established a subsidiary within BOAM to operate a proposed build for rent business in which we would develop and own single family detached and/or townhomes for long term rental. We have bought parcels of land in Nevada which we hope to develop or repurpose for other uses. We have provided approximately $15 million of capital to finance the initial stages of these projects and are currently in the process of seeking to raise third party capital to be invested alongside our capital. Once completed and stabilized, we expect that these properties will be financed with long-term fixed-rate debt capital supported by our and other potential third-party equity investments. In addition to developing and managing these properties, we will seek to provide broadband services to these homes, providing us a second or third source of potential revenue from these developments. We are also exploring raising capital through BOAM to help expand our broadband operations both for these build for rent developments and other potential broadband acquisition and expansion opportunities. We may invest cash or contribute certain business assets to any such partnership in exchange for a partnership interest.

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 expect to expand our broadband services in Arizona, Florida, Nevada, Utah and 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 Sky Harbour has provided each company the opportunity 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 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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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 broadband business, direct costs of services includes network operations and data costs, programming costs, cell site rent and utilities, and other broadband level expenses. In our surety business, direct cost of services includes commissions, premium taxes, fees and assessments, and losses and loss adjustment expenses.

Results of Operations

Three Months Ended March 31, 2023 Compared to Three Months Ended March 31, 2022

The following is a comparison of our results of operations for the three months ended March 31, 2023, which we refer to as the “first quarter of fiscal 2023,” compared to the three months ended March 31, 2022, which we refer to as the “first quarter of fiscal 2022.”

Revenues. For the first quarter of fiscal 2023 and the first quarter of fiscal 2022, our revenues in dollars and as a percentage of total revenues were as follows:

|  | For the Three Months Ended March 31, |
|  | (unaudited) |
|  | 2023 |  |  | 2022 |  |  | 2023 vs 2022 |
|  |  |  |  |  | As a % of |  |  |  |  |  |  | As a % of |  |  |  |  |
|  |  |  |  |  | Total |  |  |  |  |  |  | Total |  |  |  |  |
|  | Amount |  |  | Revenues |  |  | Amount |  |  | Revenues |  |  | $ Variance |
Revenues: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Billboard rentals, net |  | $ | 10,302,223 |  |  | 45.2% |  |  | $ | 9,138,149 |  |  |  | 56.1% |  |  | $ | 1,164,074 |
Broadband services |  |  | 8,539,906 |  |  | 37.4% |  |  |  | 4,076,946 |  |  |  | 25.0% |  |  |  | 4,462,960 |
Premiums earned |  |  | 3,107,273 |  |  | 13.6% |  |  |  | 2,288,449 |  |  |  | 14.0% |  |  |  | 818,824 |
Insurance commissions |  |  | 476,126 |  |  | 2.1% |  |  |  | 697,200 |  |  |  | 4.3% |  |  |  | (221,074 | )
Investment and other income |  |  | 390,257 |  |  | 1.7% |  |  |  | 92,203 |  |  |  | 0.6% |  |  |  | 298,054 |
Total Revenues |  | $ | 22,815,785 |  |  | 100.0% |  |  | $ | 16,292,947 |  |  |  | 100.0% |  |  | $ | 6,522,838 |

We realized total revenues of $22,815,785 during the first quarter of fiscal 2023, an increase of 40.0% over revenues of $16,292,947 during the first quarter of fiscal 2022. Revenues increased within each of our businesses in the first quarter of fiscal 2023 when compared to the first quarter of fiscal 2022. The key factors impacting revenue across each of our businesses during the first quarter of fiscal 2023 were as follows:

| ● | Net billboard rentals in the first quarter of fiscal 2023 increased 12.7% from the first quarter of fiscal 2022, reflecting an improvement in rental and occupancy rates across a number of our markets as well as the acquisition of billboards from Elevation during the fourth quarter of fiscal 2022.

| ● | Revenue from broadband services in the first quarter of fiscal 2023 increased 109.5% from the first quarter of fiscal 2022, mainly reflecting the revenues generated from the InfoWest and Go Fiber acquisitions completed in April 2022.

| ● | Premiums earned from our UCS insurance subsidiary increased 35.8% in the first quarter of fiscal 2023 when compared to the first quarter of fiscal 2022. The increase in premiums earned was primarily due to increases in production throughout fiscal 2022 and the first three months of fiscal 2023. 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.

| ● | Revenue from insurance commissions generated by our surety brokerage operations decreased by 31.7% in the first quarter of fiscal 2023 when compared to the first quarter of fiscal 2022, mainly due to reduced production through outside insurance carriers.

| ● | Investment and other income at UCS increased from $92,203 in the first quarter of fiscal 2022 to $390,257 in the first quarter of fiscal 2023, mainly due to the increase in interest rates over the past 12 months.

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Expenses. For the first quarter of fiscal 2023 and the first quarter of fiscal 2022, our expenses, in dollars, and as a percentage of total revenues, were as follows:

|  | For the Three Months Ended March 31, |
|  | (unaudited) |
|  | 2023 |  |  | 2022 |  |  | 2023 vs 2022 |
|  |  |  |  |  | As a % of |  |  |  |  |  |  | As a % of |  |  |  |  |
|  |  |  |  |  | Total |  |  |  |  |  |  | Total |  |  |  |  |
|  | Amount |  |  | Revenues |  |  | Amount |  |  | Revenues |  |  | $ Variance |
Costs and Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Cost of billboard revenues |  | $ | 3,807,664 |  |  |  | 16.7 | % |  | $ | 3,527,372 |  |  |  | 21.7 | % |  | $ | 280,292 |
Cost of broadband revenues |  |  | 2,574,351 |  |  |  | 11.3 | % |  |  | 910,775 |  |  |  | 5.6 | % |  |  | 1,663,576 |
Cost of insurance revenues |  |  | 1,563,032 |  |  |  | 6.8 | % |  |  | 1,180,891 |  |  |  | 7.2 | % |  |  | 382,141 |
Employee costs |  |  | 8,197,537 |  |  |  | 35.9 | % |  |  | 5,424,220 |  |  |  | 33.3 | % |  |  | 2,773,317 |
Professional fees |  |  | 1,169,589 |  |  |  | 5.1 | % |  |  | 2,190,597 |  |  |  | 13.4 | % |  |  | (1,021,008 | )
Depreciation |  |  | 2,707,317 |  |  |  | 11.9 | % |  |  | 1,740,071 |  |  |  | 10.7 | % |  |  | 967,246 |
Amortization |  |  | 1,802,027 |  |  |  | 7.9 | % |  |  | 1,193,193 |  |  |  | 7.3 | % |  |  | 608,834 |
General and administrative |  |  | 3,962,632 |  |  |  | 17.4 | % |  |  | 2,579,835 |  |  |  | 15.8 | % |  |  | 1,382,797 |
Gain on disposition of assets |  |  | (45,395 | ) |  |  | (0.2 | %) |  |  | (54,203 | ) |  |  | (0.3 | %) |  |  | 8,808 |
Accretion |  |  | 53,823 |  |  |  | 0.2 | % |  |  | 49,932 |  |  |  | 0.3 | % |  |  | 3,891 |
Total Costs and Expenses |  | $ | 25,792,577 |  |  |  | 113.0 | % |  | $ | 18,742,683 |  |  |  | 115.0 | % |  | $ | 7,049,894 |

During the first quarter of fiscal 2023, we had total costs and expenses of $25,792,577, as compared to total costs and expenses of $18,742,683 in the first quarter of fiscal 2022. Total costs and expenses as a percentage of total revenues decreased from 115.0% in the first quarter of fiscal 2022 to 113.0% in the first quarter of fiscal 2023. The key factors impacting costs and expenses across each of our businesses during the first quarter of fiscal 2023 were as follows:

| ● | Cost of billboard revenues decreased as a percentage of billboard revenues from 38.6% in the first quarter of fiscal 2022 to 37.0% in the first quarter of fiscal 2023. The decrease was mainly due to lower ground rent expense as a percentage of billboard revenues.

| ● | Cost of broadband revenues increased as a percentage of broadband revenues from 22.3% in the first quarter of fiscal 2022 to 30.1% in the first quarter of fiscal 2023. The increase is mainly driven by the InfoWest and Go Fiber acquisitions completed in April 2022.

| ● | Cost of insurance revenues increased as a percentage of insurance revenues from 38.4% in the first quarter of fiscal 2022 to 39.3% in the first quarter of fiscal 2023. The increase was mainly due to higher premium taxes, fees, and assessments at UCS.

| ● | Employee costs increased from $5,424,220 in the first quarter of fiscal 2022 to $8,197,537 in the first quarter of fiscal 2023, an increase of 51.1%. The increase was mainly driven by the InfoWest and Go Fiber acquisitions, hiring within our FFH business and hiring within our asset management business.

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| ● | Professional fees in the first quarter of fiscal 2023 were $1,169,589, or 5.1% of total revenues, as compared to $2,190,597, or 13.4% of total revenues, in the first quarter of fiscal 2022. The decrease was mainly related to the professional fees associated with Yellowstone completing its business combination with SHG during the first quarter of fiscal 2022.

| ● | General and administrative expenses increased from $2,579,835 in the first quarter of fiscal 2022 to $3,962,632 in the first quarter of fiscal 2023, an increase of 53.6%. The increase was mainly driven by the InfoWest and Go Fiber acquisitions and our FFH business.

| ● | Non-cash expenses in the first quarter of fiscal 2023 included $2,707,317 in depreciation expense, $1,802,027 in amortization expense, and $53,823 in accretion expense related to asset retirement obligations for certain billboard assets. The increase in depreciation and amortization expense is mainly due to the InfoWest and Go Fiber acquisitions.

Net Loss from Operations. Net loss from operations for the first quarter of fiscal 2023 was $2,976,792, or 13.0% of total revenues, as compared to a net loss from operations of $2,449,736, or 15.0% of total revenues, in the first quarter of fiscal 2022. The increase in net loss from operations in dollars was primarily due to costs associated with our FFH business, costs associated with our asset management business, as well as an increase in depreciation and amortization expense related to our InfoWest and Go Fiber acquisitions, which were partially offset by improved operations within our billboard business and insurance business and lower professional fees at Boston Omaha. Our net loss from operations included $4,563,167 from non-cash depreciation, amortization and accretion expenses in the first quarter of fiscal 2023, as compared to $2,983,196 in the first quarter of fiscal 2022.

Other Expense. During the first quarter of fiscal 2023, we had net other expense of $2,114,675. Net other expense included our loss from affiliate operations of $4,980,078 mainly related to our investment in Sky Harbour which we account for under the equity method and interest expense of $288,682 mainly incurred under Link's term loan. These items were partially offset by $2,872,219 in other investment income related to public securities held by Boston Omaha and UCS and interest and dividend income of $281,866. During the first quarter of fiscal 2022, we had net other income of $25,498,646, which included a gain of $24,977,740 related to the deconsolidation of Yellowstone, $2,615,323 in other investment income related to public securities mainly held by Boston Omaha, $1,837,211 related to the remeasurement of Yellowstone's public warrants from January 1, 2022 to January 25, 2022, and interest and dividend income of $45,324. These items were partially offset by a loss of $3,675,303 mainly related to our equity method position in Sky Harbour and interest expense of $301,649 mainly incurred under Link's term loan.

Generally accepted accounting principles ("GAAP") requires us to include the unrealized changes in market prices of investments in public equity securities in our reported earnings. Due to the size of our percentage ownership interest in Sky Harbour's Class A common stock, our investment is recorded under the equity method using the fair market value of Sky Harbour's Class A common stock as of the date of the business combination and we do not include any unrealized gains or losses related to the change in Sky Harbour's stock price in our reported earnings. In the future, if our ownership interest in Sky Harbour's Class A common stock drops below 20%, we will no longer be able to record our investment under the equity method and will be required to include any unrealized gains or losses related to the change in Sky Harbour's stock price in our reported earnings. 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.

Additionally, we have evaluated our investment in Sky Harbour as of March 31, 2023, and determined that there was not an other-than-temporary impairment. Our conclusion was based on several contributing factors, including: (i) our assessment that the underlying business and financial condition of Sky Harbour is favorable; (ii) the period of time for which the fair value has been less than the carrying value, (iii) the recovery of Sky Harbour's stock price during the first quarter of fiscal 2023, and (iv) our ability and intent to hold the investment. We will continue to review our investment in Sky Harbour for an other-than-temporary impairment on a quarterly basis or upon the occurrence of certain events. If Sky Harbour's stock price drops below our carrying value of $7.73 per share for a sustained period of time, it will likely result in an impairment of our investment. There may also be a future impairment of our investment if our expectations about Sky Harbour's prospective results of operations and cash flows decline, which could be influenced by a variety of factors including adverse market conditions.

Net (Loss) Income Attributable to Common Stockholders. We had a net loss attributable to common stockholders in the amount of $3,321,154 in the first quarter of fiscal 2023, or a loss per share of $0.11, b ased o n 30,587,745 d iluted weighted average shares outstanding. This is compared to net income attributable to common stockholders of $16,302,593 in the first quarter of fiscal 2022, or income per share of $0.55, based on 29,765,082 diluted weighted average shares outstanding.

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Results of Operations by Segment

The following tables report results for the following three segments in which we operate, billboards, insurance and broadband, for the first quarter of fiscal 2023 and the first quarter of fiscal 2022:

Results of Billboard Operations

|  | For the Three Months Ended March 31, |
|  | (unaudited) |
|  | 2023 |  |  | 2022 |
|  |  |  |  |  | As a % of |  |  |  |  |  |  | As a % of |
|  |  |  |  |  | Segment |  |  |  |  |  |  | Segment |
|  |  |  |  |  | Operating |  |  |  |  |  |  | Operating |
|  | Amount |  |  | Revenues |  |  | Amount |  |  | Revenues |
Operating Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |
Billboard rentals, net |  | $ | 10,302,223 |  |  | 100.0% |  |  | $ | 9,138,149 |  |  | 100.0% |
Cost of Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ground rents |  |  | 2,004,154 |  |  | 19.5% |  |  |  | 1,963,020 |  |  | 21.5% |
Utilities |  |  | 440,394 |  |  | 4.3% |  |  |  | 404,136 |  |  | 4.4% |
Commissions paid |  |  | 857,405 |  |  | 8.3% |  |  |  | 730,115 |  |  | 8.0% |
Other costs of revenues |  |  | 505,711 |  |  | 4.9% |  |  |  | 430,101 |  |  | 4.7% |
Total cost of revenues |  |  | 3,807,664 |  |  | 37.0% |  |  |  | 3,527,372 |  |  | 38.6% |
Gross margin |  |  | 6,494,559 |  |  | 63.0% |  |  |  | 5,610,777 |  |  | 61.4% |
Other Operating Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee costs |  |  | 1,839,490 |  |  | 17.9% |  |  |  | 1,743,223 |  |  | 19.1% |
Professional fees |  |  | 170,139 |  |  | 1.7% |  |  |  | 116,508 |  |  | 1.3% |
Depreciation |  |  | 1,240,858 |  |  | 12.0% |  |  |  | 1,101,356 |  |  | 12.0% |
Amortization |  |  | 972,572 |  |  | 9.4% |  |  |  | 892,439 |  |  | 9.8% |
General and administrative |  |  | 924,572 |  |  | 9.0% |  |  |  | 805,135 |  |  | 8.8% |
Accretion |  |  | 53,823 |  |  | 0.5% |  |  |  | 46,535 |  |  | 0.5% |
Gain on disposition of assets |  |  | (39,005 | ) |  | (0.4%) |  |  |  | (104,399 | ) |  | (1.1%) |
Total expenses |  |  | 5,162,449 |  |  | 50.1% |  |  |  | 4,600,797 |  |  | 50.4% |
Segment Income from Operations |  |  | 1,332,110 |  |  | 12.9% |  |  |  | 1,009,980 |  |  | 11.0% |
Interest expense, net |  |  | (274,087 | ) |  | (2.6%) |  |  |  | (286,858 | ) |  | (3.1%) |
Other investment income |  |  | 9,754 |  |  | 0.1% |  |  |  | - |  |  | - |
Net Income Attributable to Common Stockholders |  | $ | 1,067,777 |  |  | 10.4% |  |  | $ | 723,122 |  |  | 7.9% |

Comparison of the First Quarter of Fiscal 2023 to the First Quarter of Fiscal 2022. In the first quarter of fiscal 2023, there was a 12.7% increase in net billboard revenues from the first quarter of fiscal 2022, reflecting an improvement in rental and occupancy rates across a number of our markets as well as the acquisition of billboards from Elevation during the fourth quarter of fiscal 2022. The key factors affecting our billboard operations results during the first quarter of fiscal 2023 were as follows:

﻿

| ● | Ground rent expense decreased as a percentage of total segment operating revenues from 21.5% in the first quarter of fiscal 2022 to 19.5% in the first quarter of fiscal 2023.

| ● | Commissions paid as a percentage of total segment operating revenues increased slightly from 8.0% in the first quarter of fiscal 2022 to 8.3% in the first quarter of fiscal 2023.

| ● | Employee costs as a percentage of total segment operating revenues decreased from 19.1% in the first quarter of fiscal 2022 to 17.9% in the first quarter of fiscal 2023. The decrease is due to organic revenue growth as well as the impact from the Elevation acquisition.

| ● | General and administrative expenses increased slightly as a percentage of total segment operating revenues from 8.8% in the first quarter of fiscal 2022 to 9.0% in the first quarter of fiscal 2023.

| ● | Depreciation and amortization expense increased by $139,502 and $80,133, respectively, from the first quarter of fiscal 2022. The increases are primarily due to the Elevation acquisition.

| ● | Net interest expense of $274,087 in the first quarter of fiscal 2023 compared to net interest expense of $286,858 in the first quarter of fiscal 2022.

﻿

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Results of Broadband Operations

|  | For the Three Months Ended March 31, |
|  | (unaudited) |
|  | 2023 |  |  | 2022 |
|  |  |  |  |  | As a % of |  |  |  |  |  |  | As a % of |
|  |  |  |  |  | Segment |  |  |  |  |  |  | Segment |
|  |  |  |  |  | Operating |  |  |  |  |  |  | Operating |
|  | Amount |  |  | Revenues |  |  | Amount |  |  | Revenues |
Operating Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |
Broadband revenues |  | $ | 8,539,906 |  |  | 100.0% |  |  | $ | 4,076,946 |  |  | 100.0% |
Cost of Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |
Network operations and data costs |  |  | 1,236,136 |  |  | 14.5% |  |  |  | 505,068 |  |  | 12.4% |
Programming costs |  |  | 24,636 |  |  | 0.3% |  |  |  | 16,091 |  |  | 0.4% |
Cell site rent and utilities |  |  | 381,564 |  |  | 4.4% |  |  |  | 176,049 |  |  | 4.3% |
Other costs of revenues |  |  | 932,015 |  |  | 10.9% |  |  |  | 213,567 |  |  | 5.2% |
Total cost of revenues |  |  | 2,574,351 |  |  | 30.1% |  |  |  | 910,775 |  |  | 22.3% |
Gross margin |  |  | 5,965,555 |  |  | 69.9% |  |  |  | 3,166,171 |  |  | 77.7% |
Other Operating Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee costs |  |  | 3,520,582 |  |  | 41.3% |  |  |  | 1,817,299 |  |  | 44.6% |
Professional fees |  |  | 128,654 |  |  | 1.5% |  |  |  | 206,359 |  |  | 5.1% |
Depreciation |  |  | 1,403,736 |  |  | 16.4% |  |  |  | 603,875 |  |  | 14.8% |
Amortization |  |  | 789,394 |  |  | 9.3% |  |  |  | 253,692 |  |  | 6.2% |
General and administrative |  |  | 1,828,945 |  |  | 21.4% |  |  |  | 655,054 |  |  | 16.1% |
Accretion |  |  | - |  |  | - |  |  |  | 3,397 |  |  | 0.1% |
(Gain) loss on disposition of assets |  |  | (6,390 | ) |  | (0.1%) |  |  |  | 50,196 |  |  | 1.2% |
Total expenses |  |  | 7,664,921 |  |  | 89.8% |  |  |  | 3,589,872 |  |  | 88.1% |
Segment Loss from Operations |  |  | (1,699,366 | ) |  | (19.9%) |  |  |  | (423,701 | ) |  | (10.4%) |
Interest expense, net |  |  | (3,994 | ) |  | (0.0%) |  |  |  | (4,171 | ) |  | (0.1%) |
Noncontrolling interest in subsidiary loss (income) |  |  | 56,121 |  |  | 0.6% |  |  |  | (66,178 | ) |  | (1.6%) |
Net Loss Attributable to Common Stockholders |  | $ | (1,647,239 | ) |  | (19.3%) |  |  | $ | (494,050 | ) |  | (12.1%) |

Comparison of the First Quarter of Fiscal 2023 to the First Quarter of Fiscal 2022. In the first quarter of fiscal 2023, total operating revenues increased by 109.5% when compared to the first quarter of fiscal 2022 mainly reflecting the revenues generated from the InfoWest and Go Fiber acquisitions during the second quarter of fiscal 2022. The key factors affecting our broadband operations results during the first quarter of fiscal 2023 were as follows:

| ● | Total cost of revenues increased as a percentage of total segment operating revenues from 22.3% in the first quarter of fiscal 2022 to 30.1% in the first quarter of fiscal 2023. The increase is mainly driven by the InfoWest and Go Fiber acquisitions.

| ● | Employee costs in the first quarter of fiscal 2023 increased by 93.7% from the first quarter of fiscal 2022. The increase is mainly due to the professional fees associated with the completion of the InfoWest and Go Fiber acquisitions and hiring within our FFH business.

| ● | Professional fees as a percentage of total segment operating revenues decreased from 5.1% in the first quarter of fiscal 2022 to 1.5% in the first quarter of fiscal 2023. The decrease is mainly due to the InfoWest and Go Fiber acquisitions, which were finalized on April 1, 2022.

| ● | General and administrative expenses as a percentage of total segment operating revenues increased from 16.1% in the first quarter of fiscal 2022 to 21.4% in the first quarter of fiscal 2023. The increase as a percent of revenues is mainly due to the InfoWest and Go Fiber acquisitions and our FFH business.

| ● | Depreciation and amortization expense increased by $799,861 and $535,702, respectively, from the first quarter of fiscal 2022. The increase in depreciation and amortization expense is mainly due to the InfoWest and Go Fiber acquisitions.

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Results of Insurance Operations

|  | For the Three Months Ended March 31, |
|  | (unaudited) |
|  | 2023 |  |  | 2022 |
|  |  |  |  |  | As a % of |  |  |  |  |  |  | As a % of |
|  |  |  |  |  | Segment |  |  |  |  |  |  | Segment |
|  |  |  |  |  | Operating |  |  |  |  |  |  | Operating |
|  | Amount |  |  | Revenues |  |  | Amount |  |  | Revenues |
Operating Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |
Premiums earned |  | $ | 3,107,273 |  |  | 78.2% |  |  | $ | 2,288,449 |  |  | 74.3% |
Insurance commissions |  |  | 476,126 |  |  | 12.0% |  |  |  | 697,200 |  |  | 22.7% |
Investment and other income |  |  | 390,257 |  |  | 9.8% |  |  |  | 92,203 |  |  | 3.0% |
Total operating revenues |  |  | 3,973,656 |  |  | 100.0% |  |  |  | 3,077,852 |  |  | 100.0% |
Cost of Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |
Commissions paid |  |  | 856,431 |  |  | 21.5% |  |  |  | 680,398 |  |  | 22.1% |
Premium taxes, fees, and assessments |  |  | 133,230 |  |  | 3.4% |  |  |  | 48,063 |  |  | 1.6% |
Losses and loss adjustment expense |  |  | 573,371 |  |  | 14.4% |  |  |  | 452,430 |  |  | 14.7% |
Total cost of revenues |  |  | 1,563,032 |  |  | 39.3% |  |  |  | 1,180,891 |  |  | 38.4% |
Gross margin |  |  | 2,410,624 |  |  | 60.7% |  |  |  | 1,896,961 |  |  | 61.6% |
Other Operating Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |
Employee costs |  |  | 1,644,672 |  |  | 41.4% |  |  |  | 1,393,501 |  |  | 45.3% |
Professional fees |  |  | 46,450 |  |  | 1.2% |  |  |  | 72,671 |  |  | 2.4% |
Depreciation |  |  | 35,536 |  |  | 0.9% |  |  |  | 7,803 |  |  | 0.3% |
Amortization |  |  | 40,061 |  |  | 1.0% |  |  |  | 47,062 |  |  | 1.5% |
General and administrative |  |  | 414,184 |  |  | 10.4% |  |  |  | 570,106 |  |  | 18.4% |
Total expenses |  |  | 2,180,903 |  |  | 54.9% |  |  |  | 2,091,143 |  |  | 67.9% |
Segment Income (Loss) from Operations |  |  | 229,721 |  |  | 5.8% |  |  |  | (194,182 | ) |  | (6.3%) |
Interest expense, net |  |  | (369 | ) |  | (0.0%) |  |  |  | - |  |  | - |
Other investment income (loss) |  |  | 299,174 |  |  | 7.5% |  |  |  | (1,099,544 | ) |  | (35.7%) |
Net Income (Loss) Attributable to Common Stockholders |  | $ | 528,526 |  |  | 13.3% |  |  | $ | (1,293,726 | ) |  | (42.0%) |

Comparison of the First Quarter of Fiscal 2023 to the First Quarter of Fiscal 2022. In the first quarter of fiscal 2023, total operating revenues increased by 29.1% when compared to the first quarter of fiscal 2022, mainly due to increased earned premium at our UCS insurance subsidiary. The key factors affecting our insurance operations results during the first quarter of fiscal 2023 were as follows:

| ● | Premiums earned from our UCS insurance subsidiary increased 35.8% in the first quarter of fiscal 2023 when compared to the first quarter of fiscal 2022. The increase in premiums earned was primarily due to increases in production throughout fiscal 2022 and the first three months of fiscal 2023. 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.

| ● | Insurance commissions generated by our surety brokerage operations decreased by 31.7% in the first quarter of fiscal 2023 when compared to the first quarter of fiscal 2022, mainly due to reduced production through outside insurance carriers.

| ● | Investment and other income at UCS increased from $92,203 in the first quarter of fiscal 2022 to $390,257 in the first quarter of fiscal 2023, mainly due to the increase in interest rates over the past 12 months.

| ● | Commissions paid as a percentage of total segment operating revenues decreased from 22.1% in the first quarter of fiscal 2022 to 21.5% in the first quarter of fiscal 2023.

| ● | Losses and loss adjustment expenses as a percentage of total segment operating revenues decreased slightly from 14.7% in the first quarter of fiscal 2022 to 14.4% in the first quarter of fiscal 2023. Losses and loss adjustment expenses are reserved monthly based on a percentage of earned premium.

| ● | Employee costs in the first quarter of fiscal 2023 increased by 18.0% from the first quarter of fiscal 2022. The increase is mainly due to incentive plan payments as well as the hiring of production-based roles within our surety brokerage operations.

| ● | General and administrative expenses in the first quarter of fiscal 2023 decreased by 27.3% from the first quarter of fiscal 2022. The decrease is driven by a $248,272 reduction of the contingent consideration related to the ACS acquisition.

| ● | During the first quarter of fiscal 2023, our segment income from insurance operations of $229,721 was increased by other investment income of $299,174 mainly from unrealized gains on 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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Cash Flows

Cash Flows for the First Nine Months of Fiscal 2022 compared to the First Nine Months of Fiscal 2021

The table below summarizes our cash flows, in dollars, for the first nine months of fiscal 2022 and the first nine months of fiscal 2021:

|  | Three Months |  |  | Three Months |
|  | Ended |  |  | Ended |
|  | March 31, 2023 |  |  | March 31, 2022 |
|  | (unaudited) |  |  | (unaudited) |
Net cash provided by (used in) operating activities |  | $ | 1,368,181 |  |  | $ | (15,677,555 | )
Net cash (used in) provided by investing activities |  |  | (37,844,737 | ) |  |  | 157,990,849 |
Net cash provided by (used in) financing activities |  |  | 30,333,692 |  |  |  | (121,684,048 | )
Net (decrease) increase in cash, cash equivalents, and restricted cash |  | $ | (6,142,864 | ) |  | $ | 20,629,246 |

Net Cash Provided by (Used in) Operating Activities. Net cash provided by operating activities was $1,368,181 for the first three months of fiscal 2023 compared to net cash used in operating activities of $15,677,555 for the first three months of fiscal 2022. The increase in net cash provided by operating activities was mainly driven by improved cash flow generation within our billboard and insurance businesses, positive operating cash flow impact from the InfoWest and Go Fiber acquisitions, and the 2021 bonus payments under our Management Incentive Bonus Plan, which totaled $15,000,000 and were paid in January 2022. These items were partially offset by operating costs within our FFH business and our asset management business.

Net Cash (Used in) Provided by Investing Activities. Net cash used in investing activities was $37,844,737 for the first three months of fiscal 2023 as compared with net cash provided by investing activities of $157,990,849 for the first three months of fiscal 2022. The decrease in net cash provided by investing activities is primarily attributable to $26,427,819 in net purchases of mainly U.S. Treasury securities, $8,011,459 in capital expenditures, and $3,157,187 in payments on short-term payables for business acquisitions.

Net Cash Provided by (Used in) Financing Activities. Net cash provided by financing activities was $30,333,692 during the first three months of fiscal 2023 as compared to net cash used financing activities of $121,684,048 during the first three months of fiscal 2022. During the first three months of fiscal 2023, net cash provided by financing activities mainly consisted of $28,105,461 in gross proceeds raised through the sale of Class A common stock using our "at the market" program and $3,300,000 in contributions received from noncontrolling interests, partially offset by offering costs of $867,891 and $384,370 in principal payments on Link's term loan.

Liquidity and Capital Resources

Currently, we own billboards in Alabama, Arkansas, Florida, Georgia, Illinois, Iowa, Kansas, Missouri, Nebraska, Nevada, Oklahoma, South Dakota, Tennessee, Virginia, West Virginia and Wisconsin, a surety insurance company we acquired in December 2016, surety insurance brokerage firms we acquired in 2016, 2017 and 2021, broadband services providers whose assets we acquired in March 2020, December 2020 and April 2022, minority investments in commercial real estate management and brokerage services, a bank focused on servicing the automotive loan market and a developer of private aviation infrastructure focused on building, leasing and managing business aviation hangars. At March 31, 2023, we had approximately $16 million in unrestricted cash and approximately $58 million in short-term treasury securities. Our strategy is to continue to acquire other billboard locations, insurance businesses, and broadband service providers as well as acquire other businesses and open new businesses which we believe have the potential to generate positive cash flows 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 entered and continue to 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.

To date, we have raised funds through the sale of our Common Stock in public offerings, sales of our Common Stock in “at the market” programs, term loan financing through our Link subsidiary, proceeds from the sale of publicly traded securities held by us, cash flow from operations, and, prior to 2019, through private placements of our Common Stock. As described below, we may raise additional funds through our shelf registration statement allowing us to raise up to $500 million through the sale of securities to fund future acquisitions and investments.

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2022 Shelf Registration Statement

In April 2022, we filed a shelf registration statement on Form S-3 (File No. 333-264470) that was declared effective on May 11, 2022, which we refer to as the “2022 Shelf Registration Statement,” relating to the registration of Class A common stock, preferred stock, par value $0.001 per share, which we refer to as “preferred stock,” debt securities and warrants of the Company for up to $500 million. 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.

Additionally, in the 2022 Shelf Registration Statement, we registered for resale up to 8,297,093 shares of Class A common stock acquired in 2018 or earlier in private placements in accordance with the terms of a 2018 registration rights agreement. We will not receive any proceeds from the sale of Class A common stock by the selling shareholders. The selling stockholders listed in the shelf registration statement are the Massachusetts Institute of Technology, or “MIT,” as well as 238 Plan Associates LLC (an MIT pension and benefit fund), and a limited partnership holding our Class A common stock for the economic benefit of MIT. No officer or director has any beneficial interest in any shares eligible for resale by the selling shareholders.

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At The Market Offering Programs

Starting in March 2018, we utilized our "at the market" offering that was part of our 2018 Shelf Registration Statement. This 2018 Shelf Registration Statement, which authorized us to sell up to $200 million through the sales of securities to the public, expired in February 2021 and was superseded by the 2021 Shelf Registration Statement. We sold a total of 2,630,787 shares of Class A common stock resulting in gross proceeds of $60.1 million under the 2018 Shelf Registration Statement.

On September 29, 2021, we entered into an "at the market" equity offering program pursuant to a Sales Agreement (the "2021 Sales Agreement") by and between us and WFS. Pursuant to the terms of the 2021 Sales Agreement, we could sell, from time to time, shares of our Class A common stock, with an aggregate sales price of up to $100 million through WFS, in transactions that are deemed to be "at the market" offerings as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”). The 2021 Shelf Registration Statement expired on March 28, 2022 upon the filing of our 2021 Annual Report on Form 10-K as we no longer qualified as a well-known seasoned issuer. We sold a total of 122,246 shares of our Class A common stock resulting in gross proceeds of approximately $4.2 million under the 2021 Shelf Registration Statement.

On December 8, 2022, we entered into an "at the market" equity offering program (the “ATM Program”) pursuant to a Sales Agreement (the “2022 Sales Agreement”) with Wells Fargo Securities, LLC (“WFS”). This ATM Program is consistent with our historical practice of having available to management the option to issue stock from time to time in order to continue to fund the growth of its fiber-to-the-home broadband business, acquire additional billboards, and make other such investments in assets as needed to seek to grow intrinsic value per share. Our general preference is always to have options available to it from a capital allocation perspective which includes, but is not limited to, having a regularly filed ATM program.

Pursuant to the terms of the 2022 Sales Agreement, we may sell, from time to time, shares of our Class A common stock, par value $0.001 per share (the “Class A common stock”), with an aggregate sales price of up to $100 million through WFS, in transactions that are deemed to be “at the market” offerings as defined in Rule 415 of the Securities Act of 1933, as amended (the “Securities Act”). Since the signing of the 2022 Sales Agreement, we sold 7,887 shares of Class A common stock in December 2022 for gross proceeds of approximately $205 thousand and 1,098,699 shares of our Class A common stock during the first quarter of fiscal 2023 for gross sale proceeds of approximately $28.1 million. Subsequent to March 31, 2023, we sold 433,396 shares of our Class A common stock for gross proceeds of approximately $9.4 million.

Upon delivery of a placement notice (a “Placement Notice”) and upon the terms and subject to the conditions of the Sales Agreement, WFS will use reasonable efforts consistent with its normal trading and sales practices, applicable laws and the rules of the NYSE to sell the shares available under the ATM Program from time to time based upon our instructions for the sales, including price, time or size limits specified, and otherwise in accordance with, the terms of such Placement Notice. Pursuant to the 2022 Sales Agreement, WFS may sell shares of our Class A common stock under the ATM Program by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 of the Securities Act, including without limitation sales made through the NYSE or on any other existing trading market for the Class A common stock. Notwithstanding the foregoing, WFS may not purchase shares under the ATM Program for its own account as principal unless expressly authorized to do so by us.

We intend to use the net proceeds from the offering, after deducting WFS’ commissions and our offering expenses, for general corporate purposes, which may include financing our existing businesses and operations, and expanding our businesses and operations through additional acquisitions and minority investments and additional hires. Such expansion may include future billboard acquisitions, broadband acquisitions, acquisitions of surety insurance companies and other growth of our insurance activities, additional investments in real estate management, homebuilding and other real estate service businesses, additional investments in subprime automobile lending, and acquisitions of other businesses. We have not determined the amount of net proceeds to be used for any specific purpose, and we will retain broad discretion over the allocation of net proceeds. While we have no current agreements, commitments or understandings for any specific acquisitions at this time, we may use a portion of the net proceeds for these purposes.

For sales of shares of Class A common stock under the ATM Program through WFS, we will pay WFS a commission at a mutually agreed rate of 3% of the gross sales price per share of Class A common stock sold under the ATM Program. We have no obligation to sell any shares under the 2022 Sales Agreement and may at any time suspend the ATM Program under the 2022 Sales Agreement. The 2022 Sales Agreement contains customary representations and warranties of the parties and indemnification and contribution provisions under which we and WFS have agreed to indemnify each other against certain liabilities, including liabilities under the Securities Act. The ATM Program pursuant to the 2022 Sales Agreement will automatically terminate upon the issuance and sale of all of the shares available for sale under the ATM Program through WFS.

The foregoing description of the 2022 Sales Agreement is not complete and is qualified in its entirety by reference to the full text of such agreement, a copy of which is filed as Exhibit 1.1 to the Current Report on Form 8-K dated December 8, 2022 and is incorporated herein by reference.

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Link Credit Agreement

On August 12, 2019, Link entered into a Credit Agreement (the “Credit Agreement”) with First National Bank of Omaha (the “Lender”) under which Link could borrow up to $40 million (the “Credit Facility”). The Credit Agreement provided for an initial term loan (“Term Loan 1”), an incremental term loan (“Term Loan 2”) and a revolving line of credit. Link initially borrowed approximately $18 million under Term Loan 1 and $5.5 million under Term Loan 2. On December 6, 2021, Link entered into a Fourth Amendment to Credit Agreement (the "Fourth Amendment"), which modified the Credit Agreement by increasing the borrowing limit to $30 million and combining the outstanding balances under Term Loan 1 and Term Loan 2 as well as any incremental borrowings into a term loan ("Term Loan"). The Term Loan is 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. The loan is not guaranteed by Boston Omaha or any of our non-billboard businesses. Long-term debt included within our consolidated balance sheet as of March 31, 2023 consists of Link’s Term Loan borrowings of $28,114,900, of which $1,557,625 is classified as current. There were no amounts outstanding related to the revolving line of credit as of March 31, 2023.

Principal amounts under the Term Loan are payable in monthly installments according to a 15-year amortization schedule with principal payments commencing on January 1, 2022. The Term Loan is payable in full on December 6, 2028. During the first three years of the Term Loan, Link may prepay up to 10% of the loan principal in each year without incurring any prepayment penalty. Otherwise, there is a prepayment penalty ranging between 3.0% and 0.5%. After three years, there is no prepayment penalty. The Term Loan has a fixed interest rate of 4.00% per annum. The revolving line of credit loan facility has a $5,000,000 maximum availability. Interest payments are based on the U.S. Prime Rate minus an applicable margin ranging between 0.65% and 1.15% dependent on Link’s consolidated leverage ratio. The revolving line of credit is due and payable on August 12, 2023.

Under the Term Loan, 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, 2021 of not greater than 3.50 to 1.00, (b) beginning with the fiscal quarter ended December 31, 2022 of not greater than 3.25 to 1.00 and (c) beginning with the fiscal quarter ending December 31, 2023 and thereafter of not greater than 3.00 to 1.00, and a 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, 2023.

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 loan. Upon the occurrence of certain insolvency and bankruptcy events of default the loan 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 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 with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on October 29, 2019, a Second Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on June 30, 2020, a Third Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on August 24, 2021, a Fourth Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on December 9, 2021, a Fifth Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on June 3, 2022, and a Sixth Amendment to Credit Agreement with the Lender as filed as Exhibit 10.1 on Form 8-K as filed with the SEC on April 11, 2023.

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Investments in Yellowstone Acquisition Company and Sky Harbour

In 2020, we acted as the sponsor for the initial public offering of Yellowstone and purchased 3,399,724 shares of Yellowstone Class B common stock and 7,719,799 private placement warrants at a combined cost of approximately $7.8 million. On August 1, 2021, we entered into an equity purchase agreement with Sky Harbour LLC by which Sky Harbour LLC unitholders would acquire a majority interest in the combined businesses following the completion of a business combination. As part of the equity purchase agreement, and immediately prior to the completion by Sky Harbour LLC of a private activity bond financing raising $160 million in proceeds in September 2021, we purchased Class B Preferred Units in Sky Harbour LLC for a purchase price of $55 million, which Class B Preferred Units converted to 5,500,000 shares of Sky Harbour Class A common stock upon the closing of the Sky Harbour business combination on January 25, 2022. Also, upon the closing of the business combination, we purchased an additional 4,500,000 shares of Sky Harbour Class A common stock for a purchase price of $45 million.

| ● | Upon the closing of the Sky Harbour business combination, our Class B common stock converted to Class A common stock of Sky Harbour and our private placement warrants are now exercisable to purchase 7,719,779 shares of Class A common stock of Sky Harbour.

| ● | Each Sky Harbour Warrant is exercisable for one share of Class A common stock at a price of $11.50 per share, subject to adjustment, with each Sky Harbour Warrant being exercisable through January 25, 2026. Unlike Sky Harbour’s publicly traded warrants, these warrants are not redeemable by Sky Harbour as long as we or permitted transferees hold these warrants. The Sky Harbour Warrants are also exercisable on a cashless basis.

| ● | Our Sky Harbour Class A common stock and the Sky Harbour Warrants and the shares underlying the warrants were subject to a lockup which expired on January 24, 2023.

| ● | Subsequent to the closing of the Sky Harbour business combination, we distributed 75,000 shares of Sky Harbour Class A common stock to the outside directors of Yellowstone and 206,250 shares of Sky Harbour Class A common stock to an investor in the Yellowstone IPO. As of March 31, 2023, we hold 13,118,474 shares of Sky Harbour Class A common stock and 7,719,779 Sky Harbour Warrants.

| ● | All the shares of Sky Harbour Class A common stock and Sky Harbour Warrants to purchase Class A common stock that we hold have been registered under the Securities Act. However, our ability to resell any significant portion of these shares is limited by both the large number of shares and warrants we hold relative to the average trading volume of these securities as well as blackout periods which may prevent us from selling shares as one of our Co-Chief Executive Officers serves on Sky's Board of Directors. The terms of the Sky Harbour business combination prohibited us from selling any of our securities in Sky Harbour prior to January 25, 2023 and has since expired.

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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, as amended, 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. At March 31, 2023, we had approximately $16 million in unrestricted cash and $58 million in short-term treasury securities.

If future additional significant acquisition opportunities, expansion opportunities within our billboard and broadband services businesses, and possible further development under our build for rent business become available in excess of our currently available cash, U.S. Treasury securities, and marketable equity 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 Link’s current credit facility, any 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, insurance, and broadband businesses. 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. Link’s credit facility requires it to meet a fixed charge coverage ratio and other financial covenants. Link’s ability to comply with these loan covenants may be affected by factors beyond its control and a breach of any loan covenants would likely result in an event of default under the Credit Agreement, 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 deemed to be 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, 2023, 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 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, 2022, as filed with the SEC on March 24, 2023. Other than as discussed below, we believe that at March 31, 2023, there has been no material change to this information.

Investments in Unconsolidated Entities

| ● | We account for investments in less than 50% owned and more than 20% owned entities using the equity method of accounting. In accordance with ASC 323-30, we account for investments in limited partnerships and limited liability companies using the equity method of accounting when its investment is more than minimal (greater than 3% to 5%). Our share of income (loss) of such entities is recorded as a single amount as equity in income (loss) of unconsolidated affiliates. Dividends, if any, are recorded as a reduction of the investment.

| ● | We monitor our equity method investments for factors indicating other-than-temporary impairment. We consider several factors when evaluating our investments, including, but not limited to, (i) the period of time for which the fair value has been less than the carrying value, (ii) operating and financial performance of the investee, (iii) the investee’s future business plans and projections, (iv) discussions with their management, and (v) our ability and intent to hold the investment until it recovers in value.

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

Our management, with the participation of our principal executive officers and principal financial and accounting officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on this evaluation, our principal executive officers and principal financial and accounting officer each concluded that, as of March 31, 2023, our disclosure controls and procedures are effective and designed to ensure that the information required to be disclosed in our reports filed or submitted under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the requisite time periods.

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, 2023 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, 2022, as filed with the SEC on March 24, 2023.

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

On January 3, 2023, the Company issued to its Chief Financial Officer, its Chief Accounting Officer and its four outside independent directors an aggregate of 19,319 shares of restricted Class A common stock subject to certain vesting conditions, for an aggregate value of $493,021 as of the date of issuance. On February 16, 2023, the Company issued to the President of its Link Media Holdings, LLC subsidiary 1,577 shares of restricted Class A common stock valued at $39,993 as of the date of issuance. The shares were issued for services rendered to the Company under an exemption available pursuant to Section 4(2) of the Securities Act of 1933, as amended. No cash consideration was paid for the shares.

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, filed as Exhibit 3.7 to the Company’s Registration Statement on Form S-1/A filed with the Commission on June 5, 2017.

3.5 (*) | 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 (*) | Form of Term Loan Note 2 to be issued by Link Media Holdings, LLC to First National Bank of Omaha (filed as Exhibit 10.6 to the Company’s Current Report on Form 8-K filed with the Commission on August 13, 2019)

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.

10.8 (*) | Second Amendment to Credit Agreement dated June 25, 2020 filed as Exhibit 10.1 to the Company’s Current report on Form 8-K as filed with the Commission on June 30, 2020.

10.9 (*) | Third Amendment to Credit Agreement filed as Exhibit10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on August 24, 2021.

10.10 (*) | Fourth Amendment to Credit Agreement filed as Exhibit10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on December 9, 2021.

10.11* | Amended and Restated Term Loan Note filed as Exhibit10.2 to the Company’s Current Report on Form 8-K as filed with the Commission on December 9, 2021.

10.12 (*) | Fifth Amendment to Credit Agreement filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on June 3, 2022.

10.13 (*) | Sixth Amendment to Credit Agreement filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K as filed with the Commission on April 11, 2023.

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).

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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.

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 12, 2023

By: /s/ Adam K. Peterson

Adam K. Peterson

Co-President (Principal Executive Officer)

May 12, 2023

By: /s/ Joshua P. Weisenburger

Joshua P. Weisenburger

Chief Financial Officer (Principal Financial Officer)

May 12, 2023

By: /s/ Joseph M. Meisinger

Joseph M. Meisinger

Chief Accounting Officer

May 12, 2023

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