BOSTON OMAHA Corp - FORM 8-K/A - EX-99.3 - EXHIBIT 99.3 - January 26, 2017

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EX-99.2 - EXHIBIT 99.2 - BOSTON OMAHA Corpex992.htm
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8-K/A - 8-K/A - BOSTON OMAHA Corpboston8k01232017.htm
Exhibit 99.3
 

 
 
BOSTON OMAHA CORPORATION

AND UNITED CASUALTY AND SURETY INSURANCE COMPANY


UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
AND
UNAUDITED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS

BOSTON OMAHA CORPORATION
AND UNITED CASUALTY AND SURETY INSURANCE COMPANY
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
                   
September 30, 2016
                   
ASSETS
 
                               
         
Pro Forma
    
Elimination
          
Pro Forma
  
   
Boston Omaha
    
Adjustments
    
Adjustments
    
Notes
    
Consolidated
  
                               
Current Assets:
                              
  Cash
  
$
42,375,758
    
$
(11,321,446
)
  
$
-
      
(2)
 
  
$
31,054,312
  
  Restricted cash
    
227,943
      
-
      
-
      
 
 
    
227,943
  
  Accounts receivable, net
    
469,796
      
674,880
      
-
      
(2)
 
    
1,144,676
  
  Investments, short-term
    
-
      
1,394,842
              
(2)
 
    
1,394,842
  
  Prepaid expense
    
377,091
      
99,153
              
(2)
 
    
476,244
  
  Deferred policy acquisition costs
    
-
      
335,506
      
-
      
(2)
 
    
335,506
  
                                         
    Total Current Assets
    
43,450,588
      
(8,817,065
)
    
-
              
34,633,523
  
                                         
Property and Equipment:
                                        
  Structures and displays
    
9,289,542
      
-
      
-
              
9,289,542
  
  Vehicles, equipment, and furniture
    
112,063
      
145,198
      
-
      
(2)
 
    
257,261
  
  Accumulated depreciation
    
(961,492
)
    
(133,293
)
    
-
      
(2)
 
    
(1,094,785
)
                                         
    Total Property and Equipment, net
    
8,440,113
      
11,905
      
-
              
8,452,018
  
                                         
Other Assets:
                                        
  Goodwill
    
7,917,853
      
7,198,930
      
-
      
(2)
 
    
15,116,783
  
  Intangible assets, net
    
2,887,800
      
450,000
      
-
      
(2)
 
    
3,337,800
  
  Investment in unconsolidated affiliate
    
866,221
      
-
      
-
              
866,221
  
  Investment in subsidiary
    
-
      
5,351,070
      
(5,351,070
)
    
(2)
 
    
-
  
  Funds held as collateral assets
    
-
      
1,682,147
      
-
      
(2)
 
    
1,682,147
  
  Investments, long-term
    
-
      
2,839,725
      
-
      
(2)
 
    
2,839,725
  
  Convertible note receivable
    
100,000
      
-
      
-
              
100,000
  
  Other assets
    
-
      
5,529
      
-
      
(2)
 
    
5,529
  
                                         
    Total Other Assets
    
11,771,874
      
17,527,401
      
(5,351,070
)
            
23,948,205
  
                                         
    Total Assets
  
$
63,662,575
    
$
8,722,241
    
$
(5,351,070
)
          
$
67,033,746
  
                                         
See accompanying notes to unaudited pro forma consolidated financial statements.
  
2
BOSTON OMAHA CORPORATION
AND UNITED CASUALTY AND SURETY INSURANCE COMPANY

UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET    
                   
September 30, 2016         
                   
LIABILITIES AND STOCKHOLDERS' EQUITY      
 
                               
         
Pro Forma
    
Elimination
          
Pro Forma
  
   
Boston Omaha
    
Adjustments
    
Adjustments
    
Notes
    
Consolidated
  
                               
Current Liabilities:
                              
                             
  Accounts payable
 
$
342,505
    
$
130,285
    
$
-
      
(2)
 
  
$
472,790
  
    and accrued expenses                                        
  Unearned premiums
    
-
      
1,343,739
      
-
      
(2)
 
    
1,343,739
  
  Federal income taxes payable
    
-
      
60,000
      
-
      
(2)
 
    
60,000
  
  Funds held as collateral
    
-
      
1,682,147
      
-
      
(2)
 
    
1,682,147
  
  Deferred revenue
    
101,536
      
-
      
-
              
101,536
  
                                         
    Total Current Liabilities
    
444,041
      
3,216,171
      
-
              
3,660,212
  
                                         
  Deferred tax liability, noncurrent
      
155,000
              
(2)
 
    
155,000
  
  Long-term payable for acquisition
    
126,500
      
-
      
-
              
126,500
  
                                         
    Total Liabilities
    
570,541
      
3,371,171
      
-
              
3,941,712
  
                                         
Stockholders' Equity:
                                        
  Preferred stock, $.001 par value,
                                  
    1,000,000 shares authorized,
                                  
    0 shares issued and outstanding
    
-
      
-
      
-
              
-
  
  Common stock, $.001 par value,
                                  
    11,000,000 shares authorized,
                                  
    5,841,815 shares issued
                                        
    and outstanding
    
5,842
      
-
      
-
              
5,842
  
  Class A common stock, $.001 par value,
                                  
    1,161,161 shares authorized,
                                  
    1,055,560 shares issued
                                        
    and outstanding
    
1,056
      
-
      
-
              
1,056
  
  Common stock, $75 par value,
                                  
    20,000 shares authorized,
                                        
    14,484 shares issued
                                        
    and outstanding
    
-
      
1,086,300
      
(1,086,300
)
    
(2)
 
    
-
  
  Additonal paid-in capital
    
66,925,766
      
1,459,445
      
(1,459,445
)
    
(2)
 
    
66,925,766
  
  Accumulated deficit
    
(3,840,630
)
    
2,805,325
      
(2,805,325
)
    
(2)
 
    
(3,840,630
)
                                         
    Total Stockholders' Equity
    
63,092,034
      
5,351,070
      
(5,351,070
)
            
63,092,034
  
                                         
    Total Liabilities and
                                        
      Stockholders' Equity
  
$
63,662,575
    
$
8,722,241
    
$
(5,351,070
)
          
$
67,033,746
  
                                         
 See accompanying notes to unaudited pro forma consolidated financial statements.                     
3
BOSTON OMAHA CORPORATION
AND UNITED CASUALTY AND SURETY INSURANCE COMPANY

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS    
               
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016      
 
                         
         
Pro Forma
          
Pro Forma
  
   
Boston Omaha
    
Adjustments
    
Notes
    
Consolidated
  
Revenues:
                        
  Billboard rentals
  
$
2,273,210
    
$
-
          
$
2,273,210
  
  Premiums earned
    
-
      
1,690,180
      
(2)
 
    
1,690,180
  
  Insurance commissions
    
276,850
      
-
              
276,850
  
  Salvage and subrogation
    
-
      
55,593
      
(2)
 
    
55,593
  
  Net investment income
    
-
      
73,868
      
(2)
 
    
73,868
  
                                 
    Total Revenues
    
2,550,060
      
1,819,641
              
4,369,701
  
                                 
Costs and Expenses:
                                
  Cost of billboard revenues (exclusive of
                                
    depreciaton and amortization)
    
874,174
      
-
              
874,174
  
  Underwriting, acquisition and insurance expenses
    
-
      
1,358,578
      
(2)
 
    
1,358,578
  
  Leased employees
    
1,140,009
      
-
              
1,140,009
  
  Professional fees
    
974,214
      
-
              
974,214
  
  Depreciation
    
654,125
      
10,606
      
(2)
 
    
664,731
  
  Amortization
    
596,601
      
13,500
      
(2)
 
    
610,101
  
  General and administrative
    
517,885
      
-
              
517,885
  
  Losses and loss adjustment expenses
    
-
      
54,993
      
(2)
 
    
54,993
  
  Bad debt expense
    
28,682
      
-
              
28,682
  
                                 
    Total Costs and Expenses
    
4,785,690
      
1,437,677
              
6,223,367
  
                                 
Net (Loss) Income from Operations
    
(2,235,630
)
    
381,964
              
(1,853,666
)
                                 
Other Income (Expense):
                                
  Equity in income (loss) of unconsolidated affiliate
    
(32,958
)
    
-
              
(32,958
)
  Other income
      -      
2,054
      
(2)
 
    
2,054
  
  Interest expense
    
(2,240
)
    
-
              
(2,240
)
                                 
(Loss) Income Before Income Tax
    
(2,270,828
)
    
384,018
              
(1,886,810
)
                               
Income Tax (Provision) Benefit
    
-
      
(96,500
)
    
(3b)
 
    
(96,500
)
                                 
Net (Loss) Income
  
$
(2,270,828
)
  
$
287,518
            
$
(1,983,310
)
                                 
Basic and Diluted Net (Loss) Income per share
  
$
(0.40
)
            
(3a)
 
  
$
(0.35
)
                                 
Basic and Diluted Weighted Average Shares Outstanding
    
5,744,898
              
(3a)
 
    
5,744,898
  
                                 
 See accompanying notes to unaudited pro forma consolidated financial statements.                 
4
BOSTON OMAHA CORPORATION
AND UNITED CASUALTY AND SURETY INSURANCE COMPANY

UNAUDITED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS    
               
FOR THE YEAR ENDED DECEMBER 31, 2015       
 
                         
         
Pro Forma
          
Pro Forma
  
   
Boston Omaha
    
Adjustments
    
Notes
    
Consolidated
  
Revenues:
                        
  Billboard rentals
  
$
713,212
    
$
-
          
$
713,212
  
  Premiums earned
    
-
      
2,585,127
      
(2)
 
    
2,585,127
  
  Salvage and subrogation
    
-
      
19,276
      
(2)
 
    
19,276
  
  Net investment income
    
-
      
96,741
      
(2)
 
    
96,741
  
  Consulting fees, related party
    
9,700
      
-
              
9,700
  
                                 
    Total Revenues
    
722,912
      
2,701,144
              
3,424,056
  
                                 
Costs and Expenses:
                                
  Cost of billboard revenues (exclusive
                                
    of depreciation and amortization)
    
229,507
      
-
              
229,507
  
  Underwriting, acquisition and insurance expenses
    
-
      
2,002,230
      
(2)
 
    
2,002,230
  
  Professional fees
    
737,451
      
-
              
737,451
  
  Depreciation
    
307,367
      
14,141
      
(2)
 
    
321,508
  
  Leased employees
    
241,803
      
-
              
241,803
  
  Losses and loss adjustment expenses
    
-
      
19,283
      
(2)
 
    
19,283
  
  General and administrative
    
153,715
      
-
              
153,715
  
  Amortization
    
150,436
      
18,000
      
(2)
 
    
168,436
  
  Bad debt expense
    
9,511
      
-
              
9,511
  
                                 
    Total Costs and Expenses
    
1,829,790
      
2,053,654
              
3,883,444
  
                                 
Net (Loss) Income from Operations
    
(1,106,878
)
    
647,490
              
(459,388
)
                                 
Other Income (Expense):
                                
  Equity in income (loss) of unconsolidated affiliate
    
3,813
      
-
              
3,813
  
  Gain on sale of investment in unconsolidated affiliate
    
78,150
      
-
              
78,150
  
  Other income
   
-
      
5,378
      
(2)
 
    
5,378
  
  Interest expense
    
(22,508
)
    
-
              
(22,508
)
                                 
(Loss) Income Before Income Tax
    
(1,047,423
)
    
652,868
              
(394,555
)
                                 
Income Tax (Provision) Benefit
    
-
      
(219,200
)
    
(3b)
 
    
(219,200
)
                                 
Net (Loss) Income
  
$
(1,047,423
)
  
$
433,668
            
$
(613,755
)
                                 
Basic and Diluted Net (Loss) Income per share
  
$
(0.71
)
            
(3a)
 
  
$
(0.41
)
                                 
Basic and Diluted Weighted Average Shares Outstanding
    
1,481,310
              
(3a)
 
    
1,481,310
  
                                 
 See accompanying notes to unaudited pro forma consolidated financial statements.                 
 
 

5
BOSTON OMAHA CORPORATION
AND UNITED CASUALTY AND SURETY INSURANCE COMPANY
 
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA INFORMATION
NOTE 1.   BASIS OF PRESENTATION

The unaudited pro forma consolidated balance sheet has been prepared by applying pro forma adjustments to Boston Omaha Corporation's ("Boston Omaha") ("the Company") unaudited consolidated balance sheet as of September 30, 2016.

The unaudited pro forma consolidated statement of operations for the nine months ended September 30, 2016 has been prepared from Boston Omaha's unaudited interim consolidated statement of operations for the nine months ended September 30, 2016 and from United Casualty and Surety Insurance Company's ("UC&S") unaudited interim statement of operations for the nine months ended September 30, 2016.

Boston Omaha's audited consolidated financial statements and UC&S's audited financial statements have been used in the preparation of the unaudited pro forma consolidated statements of operations for the year ended December 31, 2015.

The unaudited pro forma consolidated financial statements should be read in conjunction with the historical financial statements of Boston Omaha and UC&S as follows:

Boston Omaha's audited consolidated financial statements for the years ended December 31, 2015 and 2014 and the notes relating thereto, as found in its Form 10-K which was filed on March 30, 2016.

Boston Omaha's unaudited consolidated financial statements for the nine months ended September 30, 2016 and the notes relating thereto, as found in its Form 10-Q which was filed on November 14, 2016; and

UC&S's audited financial statements for the years ended December 31, 2015 and 2014 and the notes relating thereto included in this Form 8-K/A and

UC&S's unaudited financial statements for the nine months ended September 30, 2016 and the notes relating thereto included elsewhere in this Form 8-K/A.

NOTE 2.   BUSINESS ACQUISITION

On December 7, 2016, General Indemnity Insurance Group ("GIG") a wholly-owned subsidiary of Boston Omaha purchased the stock of UC&S from the stockholders for a purchase price of $13,000,000.
6
BOSTON OMAHA CORPORATION
AND UNITED CASUALTY AND SURETY INSURANCE COMPANY
 
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA INFORMATION

NOTE 2.    BUSINESS ACQUISITION (Continued)

Recognized Amount of Identifiable Assets Acquired and Liabilities Assumed
      
       
Identifiable Assets
      
  Cash and cash equivalents
  
$
1,678,554
  
  Accounts receivable
    
674,880
  
  Investments, short-term
    
1,394,842
  
  Prepaid reinsurance premiums
    
99,153
  
  Deferred policy acquisition costs
    
335,506
  
  Furniture and equipment, net
    
11,905
  
  Funds held as collateral assets
    
1,682,147
  
  Investments, long-term
    
2,839,725
  
  Other assets
    
5,529
  
         
    Subtotal
    
8,722,241
  
         
Intangible Assets:
        
  State licenses
    
450,000
  
  Goodwill
    
7,198,930
  
         
    Total Intangible Assets
    
7,648,930
  
         
    Total Identifiable Assets Acquired
    
16,371,171
  
         
Liabilities Assumed:
        
  Accrued underwriting, losses, and loss adjustment expenses
    
130,285
  
  Unearned premiums
    
1,343,739
  
  Federal income taxes payable
    
60,000
  
  Funds held as collateral
    
1,682,147
  
  Deferred tax liability
    
155,000
  
         
    Total Liabilities Assumed
    
3,371,171
  
         
    Total Identifiable Net Assets
  
$
13,000,000
  
 
Amortization has been provided for the intangible asset having a finite life, expected to be twenty-five years.

All significant intercompany balances have been eliminated in consolidation.

7
BOSTON OMAHA CORPORATION
AND UNITED CASUALTY AND SURETY INSURANCE COMPANY
 
NOTES TO UNAUDITED CONSOLIDATED PRO FORMA INFORMATION

NOTE 3.   PRO FORMA ADJUSTMENTS

Earnings per share

The basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of common shares outstanding.

Income Tax (Provision) Benefit

Federal and state income taxes have been provided at statutory rates.
8
 

BOSTON OMAHA Corp Reports