BOSTON OMAHA Corp - FORM 8-K/A - EX-99.2 - EXHIBIT 99.2

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EX-99.3 - EXHIBIT 99.3 - BOSTON OMAHA Corp	ex993.htm
EX-99.1 - EXHIBIT 99.1 - BOSTON OMAHA Corp	ex991.htm
8-K/A - 8-K/A - BOSTON OMAHA Corp	boston8k01232017.htm

Exhibit 99.2

United Casualty and Surety

Insurance Company

Unaudited Financial Statements for the Nine

Months Ended September 30, 2016 and Year

Ended December 31, 2015

UNITED CASUALTY AND SURETY INSURANCE COMPANY

TABLE OF CONTENTS

		Page

UNAUDITED FINANCIAL STATEMENTS:

	Balance Sheets – September 30, 2016 and December 31, 2015	1

	Statements of Income – Three and Nine Months Ended September 30, 2016 and 2015	2

	Statements of Cash Flows – Nine Months Ended September 30, 2016 and 2015	3

	Notes to Unaudited Financial Statements	4-6

UNITED CASUALTY AND SURETY INSURANCE COMPANY

BALANCE SHEETS
(UNAUDITED)


	September 30,		December 31,
ASSETS	2016		2015

CURRENT ASSETS:
Cash and cash equivalents	$	1,678,554	$	884,609
Investments, short-term		1,394,842		1,766,686
Receivables:
Premiums		590,212		230,312
Anticipated salvage and subrogation		84,668		29,675
Total receivables		674,880		259,987
Prepaid reinsurance premiums		99,153		97,545
Deferred policy acquisition costs		335,506		289,812

Total current assets		4,182,935		3,298,639

Other assets		5,529		4,864
Investments, long-term		2,839,725		3,346,861
Funds held as collateral assets		1,682,147		2,145,513
Property and equipment, net		11,905		22,511

TOTAL ASSETS	$	8,722,241	$	8,818,388

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES:
Accrued underwriting expenses	$	108,285	$	89,817
Dividends payable		-		81,798
Unearned premiums		1,343,739		1,174,208
Accrued losses and loss adjustment expenses		22,000		22,000
Federal income taxes payable		60,000		-
Funds held as collateral		1,682,147		2,145,513

Total current liabilities		3,216,171		3,513,336

LONG-TERM LIABILITIES:
Deferred tax liability		155,000		155,000

TOTAL LIABILITIES		3,371,171		3,668,336

STOCKHOLDERS' EQUITY:
Common stock, $75 par value – 20,000 shares authorized, 14,484 shares
issued and outstanding at September 30, 2016 and December 31, 2015		1,086,300		1,086,300
Additional paid-in capital		1,459,445		1,459,445
Retained earnings		2,805,325		2,604,307

Total Stockholders' Equity		5,351,070		5,150,052

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$	8,722,241	$	8,818,388

See accompanying notes to the unaudited financial statements.

UNITED CASUALTY AND SURETY INSURANCE COMPANY

STATEMENTS OF INCOME
(UNAUDITED)

	For the Three Months Ended					For the Nine Months Ended
	September 30,					September 30,
	2016		2015			2016			2015

OPERATING REVENUES:

Premiums earned	$	559,254	$	663,521		$	1,690,180		$	1,949,418
Salvage and subrogation		26,422		10,024			55,593			14,404
Net investment income		24,863		22,401			73,868			70,280

Total Operating Revenues		610,539		695,946			1,819,641			2,034,102

OPERATING EXPENSES:

Underwriting, acquisition and insurance expenses		466,978		494,294			1,358,578			1,407,610
Losses and loss adjustment expenses		26,422		8,031			54,993			12,411
Other (income) expense		-		(1,601	)		(2,054	)		(4,890	)
Depreciation and amortization expense		3,535		3,535			10,606			10,606

Total Operating Expenses		496,935		504,259			1,422,123			1,425,737

INCOME BEFORE FEDERAL INCOME TAXES		113,604		191,687			397,518			608,365

FEDERAL INCOME TAXES		30,000		30,000			96,500			122,500

NET INCOME	$	83,604	$	161,687		$	301,018		$	485,865

See accompanying notes to the unaudited financial statements.

UNITED CASUALTY AND SURETY INSURANCE COMPANY

STATEMENTS OF CASH FLOWS
(UNAUDITED)

	For the Nine Months Ended
	September 30,
	2016			2015
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$	301,018		$	485,865
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		10,606			10,606
Amortization of bond premiums		3,763			2,025
Change in carrying value of certificates of deposit		(32,889	)		(30,094	)
Changes in operating assets and liabilities:
Increase in receivables		(414,893	)		(224,864	)
Increase in prepaid reinsurance premiums		(1,608	)		(28,652	)
Increase in other assets		(665	)		-
Increase in deferred acquisition costs		(45,694	)		(120,452	)
Increase in accrued underwriting expenses		18,468			59,354
Increase in unearned premiums		169,531			372,043
Increase in federal income taxes payable		60,000			97,500

Net cash provided by operating activities		67,637			623,331

INVESTING ACTIVITIES:
Proceeds from the sale of investments		1,008,106			497,130
Investment purchases		(100,000	)		(490,000	)

Net cash provided by investing activities		908,106			7,130

CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid to stockholders		(181,798	)		(207,539	)

Net cash used in financing activities		(181,798	)		(207,539	)

INCREASE IN CASH AND CASH EQUIVALENTS		793,945			422,922

CASH AND CASH EQUIVALENTS:
Beginning of period		884,609			848,047

End of period	$	1,678,554		$	1,270,969

SUPPLEMENTAL DISCLOSURES:
Interest paid	$	-		$	-
Income taxes paid	$	36,500		$	25,000

See accompanying notes to the unaudited financial statements.

UNITED CASUALTY AND SURETY INSURANCE COMPANY

NOTES TO UNAUDITED FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016 AND YEAR ENDED DECEMBER 31, 2015

1.	ORGANIZATION AND BACKGROUND

The accompanying unaudited interim financial statements have been prepared in connection with United Casualty and Surety Insurance Company's sale of all outstanding common stock to General Indemnity Group, LLC ("GIG"), a wholly-owned subsidiary of Boston Omaha Corporation, and to comply with the rules and regulations of the Securities and Exchange Commission ("SEC") for inclusion by Boston Omaha Corporation in its current report on Form 8-K/A.

United Casualty and Surety Insurance Company ("UCSIC" or the "Company"), originally a Georgia corporation, redomesticated to the Commonwealth of Massachusetts in June 1993. The Company is licensed and authorized to issue Fidelity and Surety bonds in Massachusetts, New York, Connecticut, New Hampshire, Rhode Island, Maine, Pennsylvania, New Jersey, and Florida. The Company also holds a certificate of authority from the United States Department of the Treasury to act as a Surety and Reinsurer on Federal Bonds.

The accompanying unaudited interim financial statements of United Casualty and Surety Insurance Company have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission, and should be read in conjunction with the Company's audited financial statements and notes thereto for the year ended December 31, 2015 included elsewhere in this Form 8-K/A. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the interim financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the year ended December 31, 2015 included elsewhere in this Form 8-K/A have been omitted.

2. INVESTMENTS

The carrying value and estimated fair value of investments are as follows:

	September 30, 2016
	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Loss		Estimated Fair Value

U.S. Treasury securities	$	810,857	$	44	$	-	$	810,901
Certificates of deposit, less than 12 months*		1,394,842		-		-		767,132
Certificates of deposit, greater than 12 months*		2,028,868		-		-		971,491

Total investments, held-to-maturity		4,234,567	$	44	$	-	$	2,549,524
Amount reported as investments, short-term		1,394,842

Investments, long-term	$	2,839,725

* Certificates of deposit are stated at carrying value which estimates fair value.

2. INVESTMENTS (CONTINUED)

	December 31, 2015
	Amortized Cost/ Carrying Value		Gross Unrealized Gains		Gross Unrealized Loss		Estimated Fair Value

U.S. Treasury securities	$	814,620	$	6,295	$	-	$	820,915
Certificates of deposit, less than 12 months*		1,766,686		-		-		1,761,240
Certificates of deposit, greater than 12 months*		2,532,241		-		-		2,532,241

Total investments, held-to-maturity		5,113,547	$	6,295	$	-	$	5,114,396
Amount reported as investments, short-term		1,766,686

Investments, long-term	$	3,346,861

* Certificates of deposit are stated at carrying value which estimates fair value.

3.	DEFERRED POLICY ACQUISITION COSTS

The following table presents the amounts of policy acquisition costs deferred and amortized as of:

	September 30,			December 31,
	2016			2015

Deferred policy acquisition costs, beginning of period	$	289,812		$	261,976
Policy acquisition costs deferred		467,701			665,884
Policy acquisition costs expensed		(422,007	)		(638,048	)

Deferred policy acquisition costs, end of period	$	335,506		$	289,812

The following table presents the components of underwriting, acquisition and insurance expenses:

	For the Three Months				For the Nine Months
	Ended September 30,				Ended September 30,
	2016		2015		2016		2015

Policy acquisition costs expensed	$	145,884	$	184,655	$	422,007	$	511,913
Payroll and payroll taxes		187,561		187,619		572,003		595,456
Other operating expenses		133,533		122,020		364,568		300,241
Underwriting, acquisition and insurance expenses	$	466,978	$	494,294	$	1,358,578	$	1,407,610

4.	PROPERTY AND EQUIPMENT

The following table presents the components of property and equipment as of:

	September 30,			December 31,
	2016			2015

Equipment	$	80,667		$	80,667
Furniture and fixtures		40,266			40,266
Leasehold improvements		24,265			24,265
		145,198			145,198

Accumulated depreciation and amortization		(133,293	)		(122,687	)

Property and equipment, net	$	11,905		$	22,511

5.	STATUTORY FINANCIAL INFORMATION

Insurance companies are required to file financial statements with state insurance regulatory authorities prepared on an accounting basis prescribed or permitted by such authorities (statutory basis). Net earnings and capital and surplus on a statutory basis were as follows:

Statutory Net Earnings				Statutory Capital and Surplus
September 30,		September 30,		September 30,		December 31,
2016		2015		2016		2015

$	265,935	$	376,019	$	5,064,193	$	4,901,365

For the nine months ended September 30, 2016 and 2015, statutory net earnings differ from net earnings on a GAAP basis primarily due to the treatment of deferred acquisition costs, the basis of difference in property and equipment, and changes in non-admitted assets.

6.	SUBSEQUENT EVENTS

On December 5, 2016 the Massachusetts Department of Insurance approved the purchase of all outstanding common stock of United Casualty Surety Insurance Company by General Indemnity Group, LLC ("GIG"), a subsidiary of Boston Omaha Corporation (OTC: BOMN). Subsequently, on December 7, 2016, the acquisition was completed and under the terms of the stock purchase agreement, GIG paid the Company's shareholders $13,000,000.

On December 27, 2016 the Company amended its articles whereby the par value of the common stock was increased to $130 per common share from $75 per common share. This amendment results in a reclassification of additional paid in capital to the common stock account, however does not impact the reported total of stockholders' equity.

* * * * * * * * * * * * *

BOSTON OMAHA Corp - FORM 8-K/A - EX-99.2 - EXHIBIT 99.2 - January 26, 2017

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BOSTON OMAHA Corp Reports