Note 6 - Business Acquisitions

12 Months Ended

Dec. 31, 2023

Mergers, Acquisitions and Dispositions Disclosures [Text Block]

NOTE 6. BUSINESS ACQUISITIONS

2023 Acquisitions

During the year ended December 31, 2023, we completed the acquisition of two broadband service providers and their related assets and an asset management business. These acquisitions were accounted for as business combinations under the provisions of ASC 805. A summary of the acquisitions is provided below.

24th Street Asset Management

On May 1, 2023, Boston Omaha Asset Management, LLC, our wholly-owned subsidiary, acquired 100% of the membership interests in 24th Street Asset Management LLC, from the members of 24th Street 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 consisted of $2,759,072 in cash paid at closing, an additional $1,254,102 in cash subject to holdback, and 45,644 shares of BOC Class A common stock. Our preliminary purchase price allocation related to 24th Street Asset Management includes carried interest and goodwill of $9,110,478 and $536,626, respectively.

Broadband Acquisitions

On June 16, 2023, our subsidiary, FIF St. George, acquired from Pro Communication and Construction Services, LLC, which we refer to as “ProComm,” broadband construction equipment and related assets for a purchase price of $2,881,000 paid in cash. The acquisition was completed for the purpose of expanding our broadband presence in the Western United States. Due to the timing of the transaction, the initial accounting for the business combination is incomplete. The provisional purchase price allocation is based on internal information derived from our previous acquisitions in the Western United States. We are still in the process of obtaining and assessing documentation of the contracts for customer relationships and detailed reports for equipment and permits. Our preliminary purchase price allocation related to ProComm includes property, plant and equipment, intangibles, and goodwill of $844,500, $1,046,000 and $990,500, respectively. The intangible assets primarily include customer relationships which have a useful life of fifteen years.

On October 24, 2023, our subsidiary, FIF St. George, acquired from Cable Systems, LLC, which we refer to as “Cable Systems”, substantially all of the business assets and related assets for a purchase price of $4,375,000. The consideration consisted of $3,937,500 in cash paid at closing, and an additional $437,500 in cash subject to holdback. The acquisition was completed for the purpose of expanding our broadband presence in the Western United States. Due to the timing of the transaction, the initial accounting for the business combination is incomplete. The provisional purchase price allocation is based on internal information derived from our previous acquisitions in the Western United States. We are still in the process of obtaining and assessing documentation of the contracts for customer relationships and detailed reports for equipment. Our preliminary purchase price allocation related to Cable Systems includes property, plant and equipment, intangibles, and goodwill of $1,664,240, $1,797,000 and $913,760, respectively. The intangible assets include customer relationships which have a useful life of fifteen years.

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 businesses 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, 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 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. 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 its entire ownership interest in FIF St George. FIF St George 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 has the option, but not the obligation, to purchase InfoWest and Go Fiber’s ownership interest in FIF St George, 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.

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.

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:

	*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 years and ten years, respectively.

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 or preliminary acquisition costs. Depreciation is computed on the straight-line method over the estimated remaining economic lives of the assets, ranging from five years to forty years. Amortization is computed on the straight-line method over the estimated useful lives of the assets ranging from five to fifty years.

	*For the Year Ended*
	*December 31,*

	*2023*			*2022*

Revenue	$	97,693,127		$	89,587,574

Net Income Attributable to Common Stockholders	$	(6,371,174	)	$	18,833,218

Basic Net Income per Share	$	(0.20	)	$	0.63

Basic Weighted Average Class A and Class B Common Shares Outstanding		31,092,850			29,698,732

Diluted Net Income per Share	$	(0.20	)	$	0.63

Diluted Weighted Average Class A and Class B Common Shares Outstanding		31,092,850			29,766,247

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