Exhibit 99.3

 

 

 

 

 

 

 

 

 

 

 

 

BOSTON OMAHA CORPORATION AND KEY OUTDOOR, INC

 

 

Unaudited Pro Forma Consolidated Balance Sheet

and

Unaudited Pro Forma Consolidated Statements of Operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

BOSTON OMAHA CORPORATION AND KEY OUTDOOR, INC

 

 

Unaudited Pro Forma Consolidated Balance Sheet

 

June 30, 2018

 

 

ASSETS

 

		Historical (unaudited)
										Pro Forma					Pro Forma
		Boston Omaha				Key Outdoor				Adjustments			Notes		Consolidated
Current Assets:
Cash and cash equivalents		$	88,166,783			$	-			$	(38,233,894	)	(2a)		$	49,932,889
Restricted cash			506,046				-				-					506,046
Accounts receivable, net			1,290,966				493,982				(493,982	)	(2a)			1,290,966
Interest receivable			692,109				-				-					692,109
Short-term investments			4,856,131				-				-					4,856,131
U.S. Treasury securities available for sale			150,346,440				-				-					150,346,440
Prepaid expenses			1,098,959				125,748				108,146		(2a)			1,332,853
Total Current Assets			246,957,434				619,730				(38,619,730	)				208,957,434
Property and Equipment, net			10,280,773				3,431,818				6,133,663		(2a)			19,846,254
Other Assets:
Goodwill			25,006,161				2,713,950				16,785,050		(2a)			44,505,161
Intangible assets, net			7,604,863				27,183				8,948,817		(2a)			16,580,863
Investments			32,177,419				-				-					32,177,419
Investments in unconsolidated affiliates			847,146				-				-					847,146
Funds held as collateral assets			862,046				-				-					862,046
Other			707,560				-				-					707,560
Total Other Assets			67,205,195				2,741,133				25,733,867					95,680,195
Total Assets		$	324,443,402			$	6,792,681			$	(6,752,200	)			$	324,483,883

 

See accompanying notes to unaudited pro forma consolidated financial statements.

  

 

BOSTON OMAHA CORPORATION AND KEY OUTDOOR, INC

 

 

Unaudited Pro Forma Consolidated Balance Sheet

 

June 30, 2018

 

 

LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND STOCKHOLDERS' EQUITY

 

		Historical (unaudited)
										Pro Forma					Pro Forma
		Boston Omaha				Key Outdoor				Adjustments			Notes		Consolidated
Current Liabilities:
Bank overdraft		$	-			$	15,839			$	(15,839	)	(2a)		$	-
Accounts payable and accrued expenses			1,843,475				262,104				(262,104	)	(2a)			1,843,475
Short-term payables for acquisitions			137,000				-				-					137,000
Funds held as collateral			862,046				-				-					862,046
Unearned premiums and deferred revenue			2,127,729				143,706				(143,706	)	(2a)			2,127,729
Related party loans			-				1,570,000				(1,570,000	)	(2a)			-
Current portion of long-term debt			-				749,887				(749,887	)	(2a)			-
Total Current Liabilities			4,970,250				2,741,536				(2,741,536	)				4,970,250
Long-term Liabilities:
Asset retirement obligations			174,669				40,481				-					215,150
Long-term debt, less current portion			-				2,317,700				(2,317,700	)	(2a)			-
Deferred tax liability			57,000				-				-					57,000
Total Liabilities			5,201,919				5,099,717				(5,059,236	)				5,242,400
Redeemable Noncontrolling Interest:			1,190,187				-				-					1,190,187
Stockholders' Equity:
Preferred stock, $.001 par value, 1,000,000 authorized, 0 shares issued and outstanding			-				-				-					-
Class A common stock, $.001 par value, 38,838,884 shares authorized, 20,894,774 shares issued and outstanding, respectively			20,895				-				-					20,895
Class B common stock, $.001 par value, 1,161,116 shares authorized, 1,055,560 shares issued and outstanding			1,056				-				-					1,056
Capital stock, no par value, 10,000 shares authorized, 300 shares issued and outstanding			-				6,000				(6,000	)	(2a)			-
Additional paid-in capital			332,907,911				-				-					332,907,911
(Accumulated deficit) retained earnings			(14,878,566	)			1,686,964				(1,686,964	)	(2a)			(14,878,566	)
Total Stockholders' Equity			318,051,296				1,692,964				(1,692,964	)				318,051,296
Total Liabilities, Redeemable Noncontrolling interest and Stockholders' Equity		$	324,443,402			$	6,792,681			$	(6,752,200	)			$	324,483,883

 

See accompanying notes to unaudited pro forma consolidated financial statements.

 

 

BOSTON OMAHA CORPORATION AND KEY OUTDOOR, INC

 

 

Unaudited Pro Forma Consolidated Statement of Operations

 

For the Six Months Ended June 30, 2018

 

 

		Historical (unaudited)								Pro Forma					Pro Forma
		Boston Omaha				Key Outdoor				Adjustments			Notes		Consolidated
Revenues:
Billboard rentals, net		$	3,249,459			$	2,981,577			$	-				$	6,231,036
Premiums earned			984,349				-				-					984,349
Insurance commissions			1,516,868				-				-					1,516,868
Investment and other income			62,027				-				-					62,027
Total Revenues			5,812,703				2,981,577				-					8,794,280
Costs and Expenses:
Cost of billboard revenues (exclusive of depreciation and amortization)			1,565,621				1,106,679				-					2,672,300
Cost of insurance revenues			477,536				-				-					477,536
Employee costs			3,706,024				773,524				-					4,479,548
Professional fees			1,420,375				35,601				-					1,455,976
General and administrative			1,700,215				448,196				-					2,148,411
Amortization			1,451,240				1,743				1,349,457		(2b)			2,802,440
Depreciation			635,407				292,858				38,625		(2b)			966,890
Loss (gain) on disposition of assets			81,857				(129,835	)			-					(47,978	)
Bad debt expense			14,515				-				-					14,515
Accretion			5,995				-				-					5,995
Total Costs and Expenses			11,058,785				2,528,766				1,388,082					14,975,633
Net Income (Loss) from Operations			(5,246,082	)			452,811				(1,388,082	)				(6,181,353	)
Other Income (Expense):
Interest income			1,091,946				-				-					1,091,946
Equity in income of unconsolidated affiliates			385,091				-				-					385,091
Loss on disposition of assets			(54,733	)			-				-					(54,733	)
Interest expense			(1,804	)			(129,955	)			-					(131,759	)
Net Income (Loss) Before Income Tax			(3,712,279	)			322,856				(1,388,082	)				(4,777,505	)
Income Tax (Provision) Benefit			-				-				-		(3b)			-
Net Income (Loss)			(3,712,279	)			322,856				(1,388,082	)				(4,777,505	)
Noncontrolling Interest in Subsidiary Loss			44,800				-				-					44,800
Net Income (Loss) Attributable to Common Stockholders		$	(3,667,479	)		$	322,856			$	(1,388,082	)			$	(4,732,705	)
Basic and Diluted Net Loss per Share		$	(0.21	)									(3a)		$	(0.27	)
Basic and Diluted Weighted Average Class A and Class B Common Shares Outstanding			17,780,454										(3a)			17,780,454

 

See accompanying notes to unaudited pro forma consolidated financial statements.

 

 

BOSTON OMAHA CORPORATION AND KEY OUTDOOR, INC

 

 

Unaudited Pro Forma Consolidated Statement of Operations

 

For the Year Ended December 31, 2017

 

 

		Historical								Pro Forma					Pro Forma
		Boston Omaha				Key Outdoor				Adjustments			Notes		Consolidated
Revenues:
Billboard rentals, net		$	5,265,746			$	6,050,073			$	-				$	11,315,819
Premiums earned			2,031,597				-				-					2,031,597
Insurance commissions			1,586,200				-				-					1,586,200
Investment and other income			130,802				-				-					130,802
Total Revenues			9,014,345				6,050,073				-					15,064,418
Costs and Expenses:
Cost of billboard revenues (exclusive of depreciation and amortization)			2,690,538				2,240,237				-					4,930,775
Cost of insurance revenues			739,657				-				-					739,657
Employee costs			4,420,231				1,724,812				-					6,145,043
Professional fees			2,183,647				55,772				-					2,239,419
General and administrative			1,889,531				970,543				-					2,860,074
Amortization			2,410,081				11,294				2,691,106		(2b)			5,112,481
Depreciation			943,845				690,969				(28,002	)	(2b)			1,606,812
Loss on disposition of assets			362,575				12,213				-					374,788
Bad debt expense			147,172				3,485				-					150,657
Total Costs and Expenses			15,787,277				5,709,325				2,663,104					24,159,706
Net Income (Loss) from Operations			(6,772,932	)			340,748				(2,663,104	)				(9,095,288	)
Other Income (Expense):
Interest income			95,779				110				-					95,889
Equity in income of unconsolidated affiliates			73,760				-				-					73,760
Unrealized gains (loss) on securities			132,191				-				-					132,191
Interest expense			(8,255	)			(249,597	)			-					(257,852	)
Net Income (Loss) Before Income Tax			(6,479,457	)			91,261				(2,663,104	)				(9,051,300	)
Income Tax (Provision) Benefit			-				-				-		(3b)			-
Net Income (Loss)			(6,479,457	)			91,261				(2,663,104	)				(9,051,300	)
Noncontrolling Interest in Subsidiary Loss			11,547				-				-					11,547
Net Income (Loss) Attributable to Common Stockholders		$	(6,467,910	)		$	91,261			$	(2,663,104	)			$	(9,039,753	)
Basic and Diluted Net Loss per Share		$	(0.60	)									(3a)		$	(0.84	)
Basic and Diluted Weighted Average Class A and Class B Common Shares Outstanding			10,817,198										(3a)			10,817,198

 

See accompanying notes to unaudited pro forma consolidated financial statements.

 

 

BOSTON OMAHA CORPORATION AND KEY OUTDOOR, INC

 

 

Notes to Unaudited Pro Forma Consolidated Financial Statements

 

 

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 June 30, 2018 and Key Outdoor, Inc.’s (“Key”) unaudited balance sheet as of June 30, 2018.

 

The unaudited pro forma consolidated statement of operations for the six months ended June 30, 2018 has been prepared from Boston Omaha’s unaudited interim consolidated statement of operations for the six months ended June 30, 2018 and from Key’s unaudited interim statement of operations for the six months ended June 30, 2018.

 

Boston Omaha’s audited consolidated financial statements and Key’s audited financial statements have been used in the preparation of the unaudited pro forma consolidated statement of operations for the year ended December 31, 2017.

 

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

 

Boston Omaha’s audited consolidated financial statements for the years ended December 31, 2017 and 2016 and the notes relating thereto, as found in its Form 10-K which was filed with the Securities and Exchange Commission on March 30, 2018;

 

Boston Omaha’s unaudited consolidated financial statements for the six months ended June 30, 2018 and the notes relating thereto, as found in its Form 10-Q which was filed with the Securities and Exchange Commission on August 13, 2018;

 

Key’s audited financial statements for the year ended December 31, 2017 and the notes relating thereto included in this Form 8-K/A and;

 

Key’s unaudited financial statements for the six months ended June 30, 2018 and the notes relating thereto included elsewhere in this Form 8-K/A.

 

 

NOTE 2.

BUSINESS ACQUISITION

 

On August 22, 2018, Link Media Midwest, LLC (“Link Midwest”) entered into an Asset Purchase Agreement with Key Outdoor, Inc., Angela K. Dahl, and Robert A, Dahl by which Link Midwest acquired over 700 billboard structures and related assets from Key Outdoor, Inc.. The billboards and related assets are located in Illinois, Iowa, and Missouri.

 

Link Midwest is a wholly-owned subsidiary of Link Media Holdings, LLC, a wholly-owned subsidiary of Boston Omaha Corporation, (the “Company”).

 

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.

 

 

BOSTON OMAHA CORPORATION AND KEY OUTDOOR, INC

 

 

Notes to Unaudited Pro Forma Consolidated Financial Statements

 

 

NOTE 2.

BUSINESS ACQUISITION (Continued)

 

Recognized Amount of Identifiable Assets Acquired and Liabilities Assumed

 

The Company has performed a preliminary valuation analysis of the fair market value of Key’s assets to be acquired and liabilities to be assumed. Using the total consideration for the acquisition, the Company has estimated the allocations to such assets and liabilities. The following table summarizes the allocation of the preliminary purchase price as of the transaction’s closing date, August 22, 2018:

 

Identifiable Assets:
Prepaid expenses		$	233,894
Property and equipment			9,565,481
Subtotal			9,799,375
Intangible Assets:
Goodwill			19,499,000
Intangible assets			8,976,000
Total Identifiable Assets Acquired			38,274,375
Liabilities Assumed:			40,481
Total Liabilities Assumed			40,481
Total Identifiable Net Assets		$	38,233,894

 

 

This preliminary purchase price allocation has been used to prepare pro forma adjustments, (2a), in the pro forma balance sheet and statement of operations. The final purchase price allocation will be determined when the Company has completed the detailed valuations and necessary calculations. The final allocation could differ materially from the preliminary allocation used in the pro forma adjustments. The final allocation may include (1) changes in fair values of property and equipment, (2) changes in allocations to intangible assets such as permits, noncompetition agreements, and customer relationships as well as goodwill and (3) other changes to assets and liabilities.

 

Depreciation and amortization, (2b), have been provided for property and equipment and finite intangible assets based on the preliminary purchase price allocation. Property and equipment have been depreciated on a straight-line basis over their estimated useful lives of five, ten or fifteen years. Intangible assets having a finite life have been amortized on a straight-line basis over their estimated useful lives of three, five or ten years.

 

All significant intercompany balances have been eliminated in consolidation.

 

 

BOSTON OMAHA CORPORATION AND KEY OUTDOOR, INC

 

 

Notes to Unaudited Pro Forma Consolidated Financial Statements

 

 

NOTE 3.

PRO FORMA ADJUSTMENTS

 

Earnings per share

 

(3a) The basic net income (loss) per common share is computed by dividing the net income (loss) by the weighted average number of Class A and Class B common shares outstanding.

 

Income Tax (Provision) Benefit

 

(3b) Federal and state income taxes have not been provided as the Company has experienced net operating losses for federal tax purposes and state income taxes have not been significant.

 

 

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