Attached files
| file | filename |
|---|---|
| EX-99.3 - EXHIBIT 99.3 - BOSTON OMAHA Corp | ex_125472.htm |
| EX-99.1 - EXHIBIT 99.1 - BOSTON OMAHA Corp | ex_125470.htm |
| EX-23.1 - EXHIBIT 23.1 - BOSTON OMAHA Corp | ex_125558.htm |
| 8-K/A - FORM 8-K/A - BOSTON OMAHA Corp | bomn20181014_8ka.htm |
Exhibit 99.2
KEY OUTDOOR, INC.
Unaudited Financial Statements
For the Six Months Ended June 30, 2018 and 2017
KEY OUTDOOR, INC.
Balance Sheets
Unaudited
|
June 30, |
December 31, |
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|
2018 |
2017 |
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| ASSETS | ||||||||
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Current Assets: |
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Accounts receivable |
$ | 493,982 | $ | 577,677 | ||||
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Prepaid expenses |
125,748 | 109,556 | ||||||
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Total Current Assets |
619,730 | 687,233 | ||||||
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Property and Equipment, net |
3,431,818 | 3,720,411 | ||||||
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Other Assets: |
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Goodwill |
2,713,950 | 2,713,950 | ||||||
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Intangible assets, net |
27,183 | 28,926 | ||||||
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Total Other Assets |
2,741,133 | 2,742,876 | ||||||
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Total Assets |
$ | 6,792,681 | $ | 7,150,520 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY |
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Current Liabilities: |
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Bank overdraft |
$ | 15,839 | $ | 58,955 | ||||
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Accounts payable and accrued expenses |
262,104 | 389,631 | ||||||
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Unearned revenue |
143,706 | 59,961 | ||||||
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Related party loans |
1,570,000 | 1,570,000 | ||||||
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Current portion of long-term debt |
749,887 | 741,257 | ||||||
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Total Current Liabilities |
2,741,536 | 2,819,804 | ||||||
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Long-term Liabilities: |
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Asset retirement obligations |
40,481 | 40,481 | ||||||
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Long-term debt, less current portion |
2,317,700 | 2,685,758 | ||||||
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Total Liabilities |
5,099,717 | 5,546,043 | ||||||
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Stockholders' Equity |
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Capital stock, no par value, 10,000 shares authorized, 300 shares issued and outstanding |
6,000 | 6,000 | ||||||
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Retained earnings |
1,686,964 | 1,598,477 | ||||||
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Total Stockholders' Equity |
1,692,964 | 1,604,477 | ||||||
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Total Liabilities and Stockholders' Equity |
$ | 6,792,681 | $ | 7,150,520 | ||||
See accompanying notes to the unaudited financial statements.
KEY OUTDOOR, INC.
Statements of Operations
Unaudited
|
For the Six Months Ended |
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June 30, |
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2018 |
2017 |
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Revenues: |
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Billboard revenues, net |
$ | 2,981,577 | $ | 2,942,748 | ||||
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Total Revenues |
2,981,577 | 2,942,748 | ||||||
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Costs and Expenses: |
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Cost of billboard revenues (exclusive of depreciation and amortization) |
1,106,679 | 1,182,753 | ||||||
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Employee costs |
773,524 | 889,473 | ||||||
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Professional fees |
35,601 | 31,182 | ||||||
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General and administrative |
448,196 | 489,030 | ||||||
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Amortization |
1,743 | 1,591 | ||||||
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Depreciation |
292,858 | 318,795 | ||||||
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Gain on disposition of assets |
(129,835 | ) | - | |||||
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Total Costs and Expenses |
2,528,766 | 2,912,824 | ||||||
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Net Income from Operations |
452,811 | 29,924 | ||||||
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Other Income (Expense): |
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Interest expense |
(129,955 | ) | (135,052 | ) | ||||
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Net Income (Loss) |
$ | 322,856 | $ | (105,128 | ) | |||
See accompanying notes to the unaudited financial statements.
KEY OUTDOOR, INC.
Statements of Cash Flows
Unaudited
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For the Six Months Ended |
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June 30, |
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2018 |
2017 |
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Cash Flows from Operating Activities: |
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Net income (loss) |
$ | 322,856 | $ | (105,128 | ) | |||
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Adjustments to reconcile net income (loss) to net cash provided by operating activities: |
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Depreciation and amortization |
294,601 | 320,386 | ||||||
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Gain on disposition of assets |
(129,835 | ) | - | |||||
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Changes in operating assets and liabilities: |
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Accounts receivable |
83,695 | (59,233 | ) | |||||
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Prepaid expenses |
(16,192 | ) | (12,355 | ) | ||||
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Accounts payable and accrued expenses |
(127,527 | ) | 71,460 | |||||
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Unearned revenue |
83,745 | 20,588 | ||||||
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Net Cash Provided by Operating Activities |
511,343 | 235,718 | ||||||
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Cash Flows from Investing Activities: |
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Proceeds from disposition of assets |
131,400 | - | ||||||
|
Purchases of property and equipment |
(5,830 | ) | (44,076 | ) | ||||
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Net Cash Provided by (Used in) Investing Activities |
125,570 | (44,076 | ) | |||||
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Cash Flows from Financing Activities: |
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Bank overdraft |
(43,116 | ) | 48,800 | |||||
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Payments on long-term debt |
(359,428 | ) | (284,365 | ) | ||||
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Related party loans |
- | 50,000 | ||||||
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Stockholders' distributions |
(234,369 | ) | (6,077 | ) | ||||
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Net Cash Used in Financing Activities |
(636,913 | ) | (191,642 | ) | ||||
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Net Change in Cash and Cash Equivalents |
- | - | ||||||
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Cash and Cash Equivalents, Beginning of Period |
- | - | ||||||
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Cash and Cash Equivalents, End of Period |
$ | - | $ | - | ||||
|
Interest Paid in Cash |
$ | 129,955 | $ | 135,052 | ||||
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Income Taxes Paid in Cash |
$ | - | $ | - | ||||
See accompanying notes to the unaudited financial statements.
KEY OUTDOOR, INC.
Notes to Unaudited Financial Statements
For the Six Months Ended June 30, 2018 and 2017
|
NOTE 1. |
BASIS OF PRESENTATION |
The accompanying unaudited financial statements have been prepared in connection with Key Outdoor, Inc.’s business combination with Link Media Midwest, LLC ("Link Midwest"), 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.
Key Outdoor, Inc. ("the Company") was organized in 1977 and its operations include the ownership and leasing of approximately 700 billboard structures located in Illinois, Iowa and Missouri.
The accompanying unaudited interim financial statements of Key Outdoor, Inc. 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, 2017 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, 2017 included elsewhere in this Form 8-K/A have been omitted.
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NOTE 2. |
PROPERTY AND EQUIPMENT |
Property and equipment consist of the following:
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June 30, |
December 31, |
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2018 |
2017 |
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Structures and displays |
$ | 15,050,361 | $ | 15,050,162 | ||||
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Vehicles and equipment |
1,210,223 | 1,448,724 | ||||||
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Land |
255,145 | 255,145 | ||||||
| Property and equipment, gross | 16,515,729 | 16,754,031 | ||||||
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Less: accumulated depreciation |
(13,083,911 | ) | (13,033,620 | ) | ||||
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Property and equipment, net |
$ | 3,431,818 | $ | 3,720,411 | ||||
Depreciation expense for the six months ended June 30, 2018 and 2017, was $292,858 and $318,795, respectively. During the six months ended June 30, 2018, the Company realized gains on the disposition of assets in the amount of $129,835.
KEY OUTDOOR, INC.
Notes to Unaudited Financial Statements
For the Six Months Ended June 30, 2018 and 2017
|
NOTE 3. |
INTANGIBLE ASSETS |
Intangible assets consist of the following:
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June 30, |
December 31, |
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2018 |
2017 |
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Non-compete agreements |
$ | 755,000 | $ | 755,000 | ||||
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Customer relationships |
502,000 | 502,000 | ||||||
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Other |
13,305 | 13,305 | ||||||
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Permits |
358,400 | 358,400 | ||||||
| Intangible assets, gross | 1,628,705 | 1,628,705 | ||||||
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Less: accumulated amortization |
(1,601,522 | ) | (1,599,779 | ) | ||||
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Intangible assets, net |
$ | 27,183 | $ | 28,926 | ||||
Amortization expense for the six months ended June 30, 2018 and 2017 was $1,743 and $1,591, respectively.
The future amortization associated with the intangible assets is as follows:
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For the Twelve Months Ended |
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June 30, |
Permits |
Total |
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2019 |
$ | 2,497 | $ | 2,497 | ||||
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2020 |
3,405 | 3,405 | ||||||
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2021 |
3,240 | 3,240 | ||||||
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2022 |
3,240 | 3,240 | ||||||
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2023 |
3,240 | 3,240 | ||||||
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Thereafter |
11,561 | 11,561 | ||||||
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Total |
$ | 27,183 | $ | 27,183 | ||||
The remaining amortization period of the permits is 98 months as of June 30, 2018 with no residual value.
KEY OUTDOOR, INC.
Notes to Unaudited Financial Statements
For the Six Months Ended June 30, 2018 and 2017
|
NOTE 4. |
FUTURE MINIMUM LEASE PAYMENTS |
The Company has entered into various non-cancelable operating leases having remaining terms ranging from month-to-month to 984 months. In many instances, these leases can be cancelled with little or no penalty. Ground rents for the six months ended June 30, 2018 were $674,894, of which $112,000 was incurred, and due to related parties and is included in accounts payable and accrued expenses in the accompanying balance sheet as of June 30, 2018. Ground rents for the six months ended June 30, 2017 were $634,772, of which $37,334 was incurred due to related parties.
The Company leases office space with related parties under operating leases expiring through April 2019. Rent expense included in general and administrative expense for the six months ended June 30, 2018 and 2017, were $102,900 and $102,900, respectively.
Future minimum rents are as follows for the year ended June 30:
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Unaffiliated |
Related |
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Lessors |
Parties |
Total |
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2019 |
$ | 717,260 | $ | 247,531 | $ | 964,791 | ||||||
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2020 |
627,562 | 180,305 | 807,867 | |||||||||
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2021 |
541,031 | 180,305 | 721,336 | |||||||||
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2022 |
465,525 | 180,305 | 645,830 | |||||||||
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2023 |
403,158 | 180,305 | 583,463 | |||||||||
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Thereafter |
848,307 | 2,657,236 | 3,505,543 | |||||||||
| Total | $ | 3,602,843 | $ | 3,625,987 | $ | 7,228,830 | ||||||
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NOTE 5. |
RELATED PARTY LOANS |
As of June 30, 2018, the Company owes the stockholders $1,570,000, bearing interest at 5.5%, and due on demand. Interest expense on the loans approximated $35,000 for the six months ended June 30, 2018.
|
NOTE 6. |
SUBSEQUENT EVENTS |
On August 22, 2018, Link Media Midwest, LLC (“Link Midwest”) entered into an Asset Purchase Agreement with the Company, Angela K. Dahl, and Robert A. Dahl, by which Link Midwest acquired over 700 billboard structures and related assets from the Company. The billboards and related assets are located in Illinois, Iowa and Missouri.
The purchase price for the acquired assets was $38,000,000, subject to certain post-closing adjustments, which totaled $233,894, and was paid in cash. A portion of the purchase price equal to $1,900,000 will be held back by Link Midwest and disbursed, subject to any claims for indemnification, over an 18 month period. Another $329,467 is being held back as required consent holdback. Each of Key Outdoor, Inc. and Angela K. Dahl and Robert A. Dahl, Key Outdoor Inc.’s principals, have also entered into five year non-competition and non-solicitation agreements in connection with the acquisition. Total cash distributed at closing was $36,004,427, which included $1,000,778 paid to satisfy in full the related party loans balance as of August 22, 2018 and $2,899,865 paid to satisfy in full all debt to financial institutions as of August 22, 2018.
Distributions to stockholders totaled $0 from July 1, 2018 through October 16, 2018.
7