10-K/A

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

Form 10-K/A

(Amendment No. 1)

(Mark One)

☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2019

OR

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from             to            

Commission File Number: 1-32362

OTELCO INC.

(Exact Name of Registrant as Specified in Its Charter)

Delaware	52-2126395
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
505 Third Avenue East, Oneonta, Alabama	35121
(Address of Principal Executive Offices)	(Zip Code)

205-625-3580
(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Class A Common Stock ($0.01 par value per share)	OTEL	The Nasdaq Stock Market LLC

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.  Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of  “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐	Accelerated filer ☐
Non-accelerated filer ☒	Smaller reporting company ☒
​	Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).  Yes ☐ No ☒

As of June 30, 2019, the aggregate market value of the registrant’s Class A Common Stock held by non-affiliates of the registrant was $28.7 million based on the closing sale price of the registrant’s Class A Common Stock as reported on the Nasdaq Stock Market LLC. In determining the market value of the registrant’s Class A Common Stock held by non-affiliates, shares of Class A Common Stock beneficially owned by the registrant’s directors, officers and holders of more than 10% of the registrant’s Class A Common Stock have been excluded. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of March 9, 2020, the registrant had 3,412,805 shares of Class A Common Stock, par value $0.01 per share, and 0 shares of Class B Common Stock, par value $0.01 per share, outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Certain information required in Part III of this report is incorporated by reference from the registrant’s proxy statement for the 2020 annual meeting of shareholders, which will be filed no later than 120 days after the close of the registrant’s fiscal year ended December 31, 2019.

EXPLANATORY NOTE

This Amendment No. 1 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 10-K”) of Otelco Inc. is being filed for the sole purpose of correcting a clerical error in which Exhibit 101 containing the XBRL (eXtensible Business Reporting Language) Interactive Data File for the financial statements and notes included in Part II, Item 8 of the 2019 10-K was inadvertently omitted from the EDGAR filing of the 2019 10-K, as originally filed on March 9, 2020. This Amendment No. 1 contains currently dated Section 302 certifications as Exhibits 31.1 and 31.2. No attempt has been made in this Amendment No. 1 to modify or update the disclosures presented in the 2019 10-K as previously filed. This Amendment No. 1 does not reflect events occurring after the filing of the original 2019 10-K or modify or update those disclosures that may be affected by subsequent events. Accordingly, this Amendment No. 1 should be read in conjunction with the 2019 10-K and the registrant’s other filings with the SEC.

1

PART IV

Item 15.   Exhibits and Financial Statement Schedules

(a)(3) Exhibits

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation of Otelco Inc. (filed as Exhibit 3.1 to the Company’s Registration Statement on Form 8-A (File No. 001-32362) filed on May 24, 2013, and incorporated herein by reference)
3.2	Fourth Amended and Restated By-laws of Otelco Inc., as amended (filed as Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on March 31, 2014, and incorporated herein by reference)
4.1	Form of stock certificate for Class A common stock, $0.01 par value per share (filed as Exhibit 4.1 to the Company’s Registration Statement on Form 8-A (File No. 001-32362) filed on May 24, 2013, and incorporated herein by reference)
4.2	Form of stock certificate for Class B common stock, $0.01 par value per share (filed as Exhibit 4.4 to the Company’s Current Report on Form 8-K filed on May 24, 2013, and incorporated herein by reference)
4.3	Description of the Company’s Securities (filed as Exhibit 4.3 to the Company's Annual Report on Form 10-K filed on March 9, 2020, and incorporated herein by reference).
10.1	Amended and Restated Employment Agreement, dated as of March 11, 2009, between Otelco Inc. and Curtis L. Garner, Jr. (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on March 12, 2009, and incorporated herein by reference)*
10.2	Employment Agreement, dated as of August 24, 2006, between Otelco Inc. and Dennis Andrews (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on August 29, 2006, and incorporated herein by reference)*
10.3	Employment Agreement, dated as of November 15, 2006, between Otelco Inc. and Jerry C. Boles (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on November 15, 2006, and incorporated herein by reference)*
10.4	Amendment, dated as of December 17, 2008, to the Employment Agreement, dated as of August 24, 2006, between Otelco Inc. and Dennis Andrews (filed as Exhibit 10.10 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference)*
10.5	Amendment, dated as of December 17, 2008, to the Employment Agreement, dated as of November 15, 2006, between Otelco Inc. and Jerry C. Boles (filed as Exhibit 10.11 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2008, and incorporated herein by reference)*
10.6	Third Amended and Restated Employment Agreement, dated as of December 10, 2014, between Otelco Inc. and Robert Souza (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 10, 2014, and incorporated herein by reference)*
10.7	Otelco Inc. 2014 Stock Incentive Plan (filed as Appendix A to the Company’s Definitive Proxy Statement on Schedule 14A filed on April 11, 2014, and incorporated herein by reference)*
10.8	Amendment, dated as of March 5, 2010, to the Amended and Restated Employment Agreement, dated as of March 11, 2009, between Otelco Inc. and Curtis L. Garner, Jr. (filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2009, and incorporated herein by reference)*
10.9	Second Amendment, dated as of March 4, 2011, to the Employment Agreement, dated as of August 24, 2006, between Otelco Inc. and Dennis Andrews, as previously amended on December 17, 2008 (filed as Exhibit 10.14 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, and incorporated herein by reference)*

2

Exhibit No.	Description
10.10	Second Amendment, dated as of March 4, 2011, to the Employment Agreement, dated as of November 15, 2006, between Otelco Inc. and Jerry C. Boles, as previously amended on December 17, 2008 (filed as Exhibit 10.15 to the Company’s Annual Report on Form 10-K for the year ended December 31, 2010, and incorporated herein by reference)*
10.11	Credit Agreement, dated as of November 2, 2017, by and among Otelco Inc., as borrower, each subsidiary of Otelco Inc. listed as a guarantor on the signature pages thereto, as guarantors, the lenders from time to time party thereto, as lenders, and CoBank, ACB, as administrative agent, as issuer of letters of credit, and as provider of the swing line commitment (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on November 6, 2017, and incorporated herein by reference)
10.12	Agreement Regarding Amendments to Credit Agreement, dated as of March 2, 2020, by and among Otelco Inc., as borrower, each subsidiary of Otelco Inc. listed as a guarantor on the signature pages thereto, as guarantors, the lenders from time to time party thereto, as lenders, and CoBank, ACB, as a lender and administrative agent (filed as Exhibit 10.1 to the Company’s current Report on Form 8-K filed on March 3, 2020, and incorporated herein by reference)
10.13	Otelco Inc. 2018 Stock Incentive Plan (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on May 10, 2018, and incorporated herein by reference)*
10.14	Employment Agreement, dated as of October 15, 2018, by and between Otelco Inc. and Richard Clark (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on October 16, 2018, and incorporated herein by reference)*
10.15	Confidential Separation Agreement and General Release, dated as of July 1, 2019, effective as of September 30, 2019, by and between Otelco Inc. and Dennis K. Andrews (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 8, 2019, and incorporated herein by reference)*
10.16	First Amended and Restated Employment Agreement, dated as of December 19, 2019 (filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on December 20, 2019, and incorporated herein by reference) *
10.17	Separation and Consulting Agreement, dated as of December 19, 2019, between Otelco Inc. and Robert J. Souza (filed as Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on December 20, 2019, and incorporated herein by reference)*
21.1	List of subsidiaries of Otelco Inc. (filed as Exhibit 21.1 to the Company's Annual Report on Form 10-K filed on March 9, 2020, and incorporated herein by reference).
31.1	Certificate pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Chief Executive Officer
31.2	Certificate pursuant to Rule 13a-14(a) or Rule 15d-14(a) of the Securities Exchange Act of 1934 of the Chief Financial Officer
101	The following information from the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 formatted in Extensible Business Reporting Language (XBRL): (i) Consolidated Balance Sheets; (ii) Consolidated Statements of Operations; (iii) Consolidated Statements of Stockholders’ Equity (Deficit); (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements

*

Management contract or compensatory plan or arrangement

3

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this Annual Report on Form 10-K/A to be signed on its behalf by the undersigned, thereunto duly authorized.

OTELCO INC.
By:	/s/ Richard A. Clark
​	Richard A. Clark President and Chief Executive Officer

Date: March 10, 2020

4

EX-31.1

Exhibit 31.1​

CERTIFICATION BY CHIEF EXECUTIVE OFFICER

I, Richard A. Clark, certify that:

1.

I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of Otelco Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Date: March 10, 2020

/s/ Richard A. Clark

Richard A. Clark
President & Chief Executive Officer

EX-31.2

Exhibit 31.2​

CERTIFICATION BY CHIEF FINANCIAL OFFICER

I, Curtis L. Garner, Jr., certify that:

1.

I have reviewed this Amendment No. 1 to the Annual Report on Form 10-K of Otelco Inc.;

2.

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Date: March 10, 2020

/s/ Curtis L. Garner, Jr.

Curtis L. Garner, Jr.
Chief Financial Officer

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Note 6 - Investments - Schedule of Investments (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Investments	$ 1,477	$ 1,498
CoBank Stock, at Cost [Member]
Investments	1,192	1,192
Rental Property [Member]
Investments	194	219
Other Miscellaneous Investments [Member]
Investments	$ 91	$ 87

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Note 4 - Property and Equipment (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Depreciation, Total	$ 7,344	$ 6,906	$ 7,001
Telephone Plant Adjustment [Member]
Amortization, Total	$ (90)	$ (82)	$ (82)

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Note 12 - Leases - Lease Information (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Operating cash outflow from operating leases	$ (445)
Weighted-average remaining lease term – operating leases (Year)	5 years 146 days
Weighted average discount rate – operating leases	6.50%

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Note 15 - Stock Plans - Summary of Stock Option Activity (Details) - Incentive and Non-Qualified Stock Options [Member]	12 Months Ended
	Dec. 31, 2019 $ / shares shares
Stock options outstanding (in shares) | shares	50,000
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 16.97
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross | shares
Granted, weighted average grant date fair value (in dollars per share) | $ / shares
Stock options vested (in shares) | shares	(10,000)
Vested, weighted average grant date fair value (in dollars per share) | $ / shares	$ 16.97
Stock options forfeited or cancelled (in shares) | shares
Forfeited or cancelled, weighted average grant date fair value (in dollars per share) | $ / shares
Stock options outstanding (in shares) | shares	40,000
Outstanding, weighted average grant date fair value (in dollars per share) | $ / shares	$ 16.97

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Note 17 - Subsequent Events

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Subsequent Events [Text Block]

17. Subsequent Events

On

March 2, 2020,

the Company announced that its New Credit Facility was amended to change the loan covenants, effective as of

December 31, 2019.

Among other things, the amendment to the New Credit Facility amends the financial covenants set forth in the New Credit Facility to: (i) remove the required minimum fixed charge coverage ratio; (ii) add a maximum annual aggregate capital expenditures covenant of

$10.5

million for fiscal year

2020

and

$10.0

million for each year fiscal year thereafter; (iii) modify the required maximum leverage ratio to the following maximum levels for each fiscal quarter end during the following periods (A)

3.50:1.00

for any fiscal quarter ending during the period from

October 1, 2019

through

March 30, 2021, (

B)

3.25:1.00

for any fiscal quarter ending during the period from

April 1, 2021

through

December 31, 2021,

and (C)

3.00:1.00

for any fiscal quarter ending on or after

January 1, 2022;

and (iv) add a new minimum debt service coverage ratio covenant of

not

less than

1.75:1.00,

measured as of the end of each fiscal quarter. The executed amendment was filed on Form

8

-K on

March 3, 2020.

See

Note

7,

Notes Payable,

for additional information about the New Credit Facility.

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Note 5 - Other Accounts Receivable (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Accounts, Notes, Loans and Financing Receivable [Table Text Block]

	December 31,
	201 9		201 8
Carrier access bills receivable	$	235	$	277
National Exchange Carrier Association receivable		1,257		1,295
Receivables from Alabama Service Fund		40		53
Other miscellaneous		373		274
	$	1,905	$	1,899

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Note 13 - Fair Value Measurement

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Fair Value Disclosures [Text Block]

13. Fair Value Measurement

The Company adopted ASC

820,

Fair Value Measurements and Disclosures

(“ASC

820”

), which defines fair value, establishes a framework for measuring fair value and requires disclosures about fair value measurements. The framework that is set forth in this standard is applicable to the fair value measurements where it is permitted or required under other accounting pronouncements.

ASC

820

defines fair value as the exit price, which is the price that would be received to sell an asset or paid to transfer a liability in a transaction between market participants at the measurement date. ASC

820

establishes a

three

-tier value hierarchy that prioritizes inputs to valuation techniques used for fair value measurement.

● Level 1 consists of observable market data in an active market for identical assets or liabilities.

● Level 2 consists of observable market data, other than that included in Level 1, that is either directly or indirectly observable.

● Level 3 consists of unobservable market data. The input may reflect the assumptions of the Company, not a market participant, if there is little available market data and the Company’s own assumptions are considered by management to be the best available information.

Fair Value Notes Payable

The fair value of the Company’s notes payable is determined using various methods, including quoted market prices for notes with similar terms of maturity, which is a Level

2

measurement, and discounted cash flows, which is a Level

3

measurement. The fair values listed below are for complying with ASC

820

and do

not

appear in the consolidated financial statements. The carrying amounts and estimated fair values of notes payable are as follows (in thousands):

New Credit Facility
	Carrying Value		Fair Value
Notes payable December 31, 2018	$	74,562	$	74,702
Notes payable December 31, 2019	$	70,212	$	69,932

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Note 5 - Other Accounts Receivable

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Financing Receivables [Text Block]

5. Other Accounts Receivable

Other accounts receivable consist of the following (in thousands) as of:

	December 31,
	201 9		201 8
Carrier access bills receivable	$	235	$	277
National Exchange Carrier Association receivable		1,257		1,295
Receivables from Alabama Service Fund		40		53
Other miscellaneous		373		274
	$	1,905	$	1,899

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Note 9 - Employee Benefit Program

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Pension and Other Postretirement Benefits Disclosure [Text Block]

9. Employee Benefit Program

Employees of all subsidiaries except BTC participate in a Company-sponsored defined contribution savings plan under Section

401

(k) of the Internal Revenue Code. The terms of the plan provide for an elective contribution from employees

not

to exceed

$

18.5

thousand for

2019,

2018

and

2017.

The Company matched the employee’s contribution up to

4.5

%

of the employee’s annual compensation during

2019,

2018

and

2017.

For the years ended

December 31, 2019,

2018,

and

2017,

the total contributions and expense associated with this plan was

$449

thousand,

$470

thousand and

$486

thousand, respectively. 

The employees of BTC participate in a multiemployer Retirement and Security Program (“RSP”) as a defined benefit plan and a Savings Plan (“SP”) provided through the National Telecommunications Cooperative Association (“NTCA”). The risks associated with participating in a multiemployer plan are different from a single-employer plan. Contributions to the multiemployer plan by the Company

may

be used to provide benefits to employees of other participating employers. If a participating employer stops contributing to the plan, the unfunded obligations of the plan

may

be borne by the remaining participating employers. The NTCA has sponsored the RSP since

1959.

Currently, the Company represents approximately

0.3%

of the employers and less than

0.1%

of the employees covered by the RSP. As of

December 2018,

the RSP’s ongoing funded status decreased to

94%.

Program assets as of

December 31, 2018

were over

$1.9

billion, placing the RSP among the

500

largest pension plans in the United States. Participation in the RSP requires a minimum employee contribution of

1.0%

of their annual compensation. For each of

2019,

2018

and

2017,

the Company contributed

4.5%

of annual compensation for every participating employee. SP is a defined contribution savings plan under Section

401

(k) of the Internal Revenue Code to which the Company made

no

contribution for

2019,

2018

or

2017.

The employee can make voluntary contributions to the SP as desired. For the years ended

December 31, 2019,

2018,

and

2017,

the total expense associated with these plans was

$19

thousand,

$21

thousand and

$16

thousand, respectively.

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Note 16 - Selected Quarterly Financial Data (Unaudited) (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Quarterly Financial Information [Table Text Block]

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Fiscal 2018:
Revenue	$	16,726	$	16,890	$	16,252	$	16,200
Operating income	$	4,061	$	5,172	$	4,536	$	4,024
Net income	$	1,996	$	2,908	$	2,326	$	2,237
Net income per common share-basic	$	0.59	$	0.86	$	0.69	$	0.66
Net income per common share-diluted	$	0.58	$	0.85	$	0.67	$	0.65
Fiscal 2019:
Revenue	$	15,755	$	15,658	$	15,762	$	15,591
Operating income	$	3,763	$	3,708	$	3,841	$	3,532
Net income	$	2,281	$	1,717	$	1,819	$	1,979
Net income per common share-basic	$	0.67	$	0.50	$	0.53	$	0.58
Net income per common share-diluted	$	0.66	$	0.50	$	0.53	$	0.58

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Note 11 - Revenue Streams and Concentrations (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Disaggregation of Revenue [Table Text Block]

	For the Years Ended December 31,
	2019		2018
Local services	$	19,313	$	20,948
Network access		21,210		21,662
Internet		14,646		15,221
Transport services		4,236		4,774
Video and security		2,735		2,824
Managed services		626		639
Total revenues	$	62,766	$	66,068

	For the Years Ended December 31,
	2019		2018
Local services	$	19,313	$	20,948
Network access		4,283		4,643
Internet		14,646		15,221
Transport services		4,085		4,623
Video and security		2,735		2,824
Managed services		626		639
Total revenues generated from customers	$	45,688	$	48,898

	For the Year Ended
	December 31, 2019		% In-Scope			% Total
Month to month (“MTM”) customers	$	27,617		61.3	%		44.0	%
Competitive local exchange carrier (“CLEC”) business customers		13,162		29.2			21.0
Network access		2,513		5.6			4.0
Total revenue streams		43,292		96.1			69.0
Global access*		1,770		3.9			2.8
Total revenue from contracts with customers		45,062		100.0	%		71.8
Managed services**		626		n/a			1.0
Total revenue generated from customers		45,688		n/a			72.8
Indefeasible rights-of-use agreements**		151		n/a			0.2
Network access**		16,927		n/a			27.0
Total revenues	$	62,766					100.0	%

	For the Year Ended
	December 31, 2018		% In-Scope			% Total
MTM customers	$	29,556		61.3	%		44.7	%
CLEC business customers		14,060		29.1			21.3
Network access		2,711		5.6			4.1
Total revenue streams		46,327		96.0			70.1
Global access*		1,932		4.0			2.9
Total revenue from contracts with customers		48,259		100.0	%		73.0
Managed services**		639		n/a			1.0
Total revenue generated from customers		48,898		n/a			74.0
Indefeasible rights-of-use agreements**		151		n/a			0.2
Network access**		17,019		n/a			25.8
Total revenues	$	66,068					100.0	%

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Note 8 - Income Tax - Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Deferred tax liabilities:
Amortization	$ (11,133)	$ (10,947)
Depreciation	(10,934)	(9,978)
Lease asset	(306)
Prepaid expense	(506)	(357)
Other	(8)	(8)
Total deferred tax liabilities	(22,887)	(21,290)
Deferred tax assets:
Deferred compensation	147	142
Advance payments	597	612
Lease liability	306
Bad debt	77	145
Other	239	246
Total deferred tax assets	$ 1,366	$ 1,145

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Note 11 - Revenue Streams and Concentrations (Details Textual) - USD ($) $ in Millions	3 Months Ended	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2019	Sep. 30, 2019
Revenue, Remaining Performance Obligation, Amount	$ 7.2	$ 7.2
Contract with Customer, Liability, Total			$ 3.6
Contract with Customer, Liability, Revenue Recognized	1.4
Short-term Contract with Customer [Member]
Revenue, Remaining Performance Obligation, Amount	1.2	1.2
Long-term Contract with Customer [Member]
Revenue, Remaining Performance Obligation, Amount	$ 6.0	$ 6.0
Long-term Contract with Customer [Member] | Minimum [Member]
Revenue, Expected to Recognize, Term		2 years
Long-term Contract with Customer [Member] | Maximum [Member]
Revenue, Expected to Recognize, Term		5 years

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Note 3 - Goodwill and Intangible Assets

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Goodwill and Intangible Assets Disclosure [Text Block]

3. Goodwill and Intangible Assets

ASC

350

requires that goodwill be tested for impairment annually, unless potential interim indicators exist that could result in impairment. Although the Company has only

one

reporting segment, it has historically considered its

three

regions (Alabama, Missouri, and New England) to be reporting units for purposes of goodwill impairment testing. The Company changed its approach to managing its business from

three

semi-autonomous regions to a functional management approach with leadership for functions spanning the whole Company. In

2018,

the Company implemented a single billing and operations support system covering all customers. Additionally, a chief operating officer position was established and filled during

fourth

quarter

2018

to lead all operations. Therefore, the Company measures goodwill for impairment as a single reporting unit beginning in

2019.

The Company performed its annual goodwill impairment testing as of

October 1, 2019.

The Company used the discounted cash flow (“DCF”) method under the income approach as well as the guideline public company method (“GPCM”) under the market approach to value the reporting units. The Company utilized weightings of

50.0%

for the DCF method and

50.0%

for the GPCM to derive a concluded fair value of total assets. The Company concluded that

no

impairment was present during the impairment review as of

October 1, 2019,

and

2018.

The Company determined that

no

events or circumstances from

October 1, 2019,

through

December 31, 2019,

indicated that a further assessment was necessary.

There was

no

change in the carrying amount of goodwill during

2019

or

2018,

with a balance of

$45.0

million as of both

December 31, 2019,

and

2018.

The Company also found

no

impairment in the other intangible assets and the only change in the carrying amounts for the years ended

December 31, 2019,

and

2018,

is due to the amortization for each current year.

Intangible assets are summarized as follows (in thousands):

	December 31, 201 8
	Carrying Value		Accumulated Amortization			Net Book Value
Customer relationships	$	24,025	$	(23,110	)	$	915
Contract relationships		19,600		(19,600	)		-
Non-competition		107		(107	)		-
Trade name		23		(19	)		4
Total	$	43,755	$	(42,836	)	$	919

	December 31, 201 9
	Carrying Value		Accumulated Amortization			Net Book Value
Customer relationships	$	24,025	$	(23,497	)	$	528
Contract relationships		19,600		(19,600	)		-
Non-competition		107		(107	)		-
Trade name		23		(21	)		2
Total	$	43,755	$	(43,225	)	$	530

These intangible assets had a range of

2

to

15

years of useful lives at inception and utilize both the sum-of-the-years’ digits and straight-line methods of amortization, as appropriate. The following tables present historical and expected amortization expense of the existing intangible assets as of

December 31, 2019,

for each of the following periods (in thousands):

Aggregate amortization expense for the years ended

December 31,

2017	$	458
2018	$	408
2019	$	389

Expected amortization expense for the years ending

December 31,

2020	$	372
2021		158
Total	$	530

XML

Document And Entity Information - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2019	Mar. 09, 2020	Jun. 30, 2019
Document Information [Line Items]
Entity Registrant Name	OTELCO INC.
Entity Central Index Key	0001288359
Trading Symbol	otel
Current Fiscal Year End Date	--12-31
Entity Filer Category	Non-accelerated Filer
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Well-known Seasoned Issuer	No
Entity Emerging Growth Company	false
Entity Small Business	true
Entity Interactive Data Current	Yes
Entity Public Float			$ 28.7
Entity Shell Company	false
Document Type	10-K/A
Document Period End Date	Dec. 31, 2019
Document Fiscal Year Focus	2019
Document Fiscal Period Focus	FY
Amendment Flag	true
Amendment Description	This Amendment No. 1 to the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 (the “2019 10-K”) of Otelco Inc. is being filed for the sole purpose of correcting a clerical error in which Exhibit 101 containing the XBRL (eXtensible Business Reporting Language) Interactive Data File for the financial statements and notes included in Part II, Item 8 of the 2019 10-K was inadvertently omitted from the EDGAR filing of the 2019 10-K, as originally filed on March 9, 2020. This Amendment No. 1 contains currently dated Section 302 certifications as Exhibits 31.1 and 31.2. No attempt has been made in this Amendment No. 1 to modify or update the disclosures presented in the 2019 10-K as previously filed. This Amendment No. 1 does not reflect events occurring after the filing of the original 2019 10-K or modify or update those disclosures that may be affected by subsequent events. Accordingly, this Amendment No. 1 should be read in conjunction with the 2019 10-K and the registrant’s other filings with the SEC.
Title of 12(b) Security	Class A Common Stock ($0.01 par value per share)
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		3,412,805
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding (in shares)		0

XML

Consolidated Statements of Stockholders' Equity (Deficit) - USD ($) $ in Thousands	Common Stock [Member] Common Class A [Member]	Common Stock [Member] Common Class B [Member]	Additional Paid-in Capital [Member]	AOCI Attributable to Parent [Member]	Total
Balance (in shares) at Dec. 31, 2016	3,291,750
Balance at Dec. 31, 2016	$ 33		$ 4,186	$ (14,927)	$ (10,708)
Net income				12,115	12,115
Stock-based compensation expense			308		308
Tax withholdings paid on behalf of employees for restricted stock units			(209)		(209)
Issuance of Common Stock (in shares)	54,939
Issuance of Common Stock	$ 1				1
Issuance of Common Stock, APIC
Balance (in shares) at Dec. 31, 2017	3,346,689
Balance at Dec. 31, 2017	$ 34		4,285	(2,812)	1,507
Net income				9,467	9,467
Stock-based compensation expense			308		308
Tax withholdings paid on behalf of employees for restricted stock units			(380)		(380)
Issuance of Common Stock (in shares)	41,935
Issuance of Common Stock
Balance (in shares) at Dec. 31, 2018	3,388,624
Balance at Dec. 31, 2018	$ 34		4,213	6,655	10,902
Net income				7,796	7,796
Stock-based compensation expense			254		254
Tax withholdings paid on behalf of employees for restricted stock units			(192)		(192)
Issuance of Common Stock (in shares)	24,181
Balance (in shares) at Dec. 31, 2019	3,412,805
Balance at Dec. 31, 2019	$ 34		$ 4,275	$ 14,451	$ 18,760

XML

Note 4 - Property and Equipment

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Property, Plant and Equipment Disclosure [Text Block]

4. Property and Equipment

A summary of property and equipment is shown as follows (in thousands, except estimated life):

	Estimated			December 31,
	Life			201 9			201 8
Land				$	1,164		$	1,164
Building and improvements	20	-	40		13,358			13,197
Telephone equipment	6	-	20		246,692			236,741
Cable television equipment		7			13,258			12,627
Furniture and equipment	8	-	14		3,082			3,066
Vehicles	7	-	9		6,961			6,906
Computer software and equipment	5	-	5		20,132			19,835
Internet equipment		5			11,196			10,521
Total property and equipment					315,843			304,057
Accumulated depreciation and amortization					(258,559	)		(251,984	)
Net property and equipment				$	57,284		$	52,073

Depreciation expense for the years ended

December 31, 2019,

2018

and

2017,

was

$7,344

thousand,

$6,906

thousand and

$7,001

thousand, respectively. Amortization expense for telephone plant adjustment was $(

90

) thousand, $(

82

) thousand and $(

82

) thousand for the years ended

December 31, 2019,

2018

and

2017,

respectively.

XML

Note 8 - Income Tax

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Income Tax Disclosure [Text Block]

8. Income Tax

 Income tax expense for the years ended

December 31, 2019,

2018,

and

2017

is summarized below (in thousands):

	For the Years Ended December 31,
	201 9			201 8		201 7
Federal income taxes
Current	$	443		$	1,036	$	1,201
Deferred		1,717			898		(9,332	)
Total federal tax expense (benefit)		2,160			1,934		(8,131	)
State income taxes
Current		574			503		284
Deferred		(341	)		308		(9	)
Total state tax expense		233			811		275
Total income tax expense (benefit)	$	2,393		$	2,745	$	(7,856	)

Public Law

No:

115

-

97,

also known as the Tax Act, was enacted on

December 22, 2017.

The Tax Act reduced the U.S. federal corporate tax rate from

35%

to a flat rate of

21%.

ASC

740

requires deferred tax assets and liabilities to be remeasured as of the date the Tax Act was enacted based on the rates at which they are expected to reverse in the future, which is generally now

21%.

The Securities and Exchange Commission staff issued SAB

118,

which provides guidance on accounting for the impact of the Tax Act and states a reasonable estimate of the Tax Act’s effects on the Company’s deferred tax balances should be included in the Company’s consolidated financial statements. Based on the Company’s understanding of the Tax Act, it made a reasonable estimate of the Tax Act’s effects on the Company’s deferred tax balances. As of

December 31, 2017,

the provisional amount recorded related to the remeasurement of the Company’s deferred tax liability balance was

$9.3

million and reflected a

one

-time reduction in the Company’s income tax provision. As of

December 31, 2017,

the Company finalized its accounting estimates for income tax effects related to the Tax Act. The Company elected

not

to utilize the measurement window provided under SAB

118.

As of

December 31, 2019,

the Company did

not

record any adjustments to its

2017

income tax effects resulting from the Tax Act.

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities as of

December 31, 2019,

and

2018,

are presented below (in thousands):

	December 31,
	201 9			20 1 8
Deferred tax liabilities:
Amortization	$	(11,133	)	$	(10,947	)
Depreciation		(10,934	)		(9,978	)
Lease asset		(306	)		—
Prepaid expense		(506	)		(357	)
Other		(8	)		(8	)
Total deferred tax liabilities	$	(22,887	)	$	(21,290	)
Deferred tax assets:
Deferred compensation	$	147		$	142
Advance payments		597			612
Lease liability		306			—
Bad debt		77			145
Other		239			246
Total deferred tax assets	$	1,366		$	1,145

As of

December 31, 2019,

the Company had

no

U.S. federal and state net operating loss carryforwards. As of

December 31, 2018,

the Company had U.S. federal and state net operating loss carryforwards of

$0

and

$43

thousand, respectively. The Company had

no

alternative minimum tax credit carryforwards as of

December 31, 2019,

or

December 31, 2018.

The Company establishes valuation allowances when necessary to reduce deferred tax assets to amounts expected to be realized. As of

December 31, 2019,

the Company had

no

valuation allowance recorded. 

The effective income tax rates as of

December 31, 2019,

2018,

and

2017,

were

23.5%,

22.5%

and (

184.5

)%, respectively.

ASC

740

prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. For each year ended

December 31, 2019,

2018,

and

2017,

the Company did

not

identify any material uncertain tax positions. Tax years from

2016

forward remain open for audit.

Total income tax expense was different than that computed by applying U.S. federal income tax rates to income before income taxes for the years ended

December 31, 2019,

2018,

and

2017.

The reasons for the differences are presented below (in thousands, except percentages):

	For the Years Ended December 31,
	20 1 9			201 8			201 7
Federal income tax at statutory rate		21	%		21	%		35	%
Federal income tax provision at statutory rate	$	2,140		$	2,565		$	1,491
State income tax provision, net of federal income tax effects		548			641			177
Federal tax rate change		—			—			(9,336	)
Adjustments for prior years		(222	)		(302	)		(121	)
Other		(73	)		(159	)		(67	)
Provision (benefit) for income taxes	$	2,393		$	2,745		$	(7,856	)
Effective income tax rate		23.5	%		22.5	%		(184.5	)%

XML

Note 12 - Leases

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Lessee, Operating Leases [Text Block]

12. Leases

ASU

2016

-

02

requires lessees to recognize most leases on the balance sheet. As stated above in Note

2,

Summary of Significant Accounting Policies –

Recently Adopted Accounting Pronouncements

, the Company has elected certain practical expedients available at adoption. The Company elected the package of practical expedients upon transition

not

to reassess whether expired or existing contracts contain leases under the new definition of a lease;

not

to reassess the lease classification for expired or existing leases; and

not

to reassess whether previously capitalized initial direct costs would qualify for capitalization under ASU

2016

-

02.

In evaluating certain equipment rental arrangements such as cable, internet and security service contracts, the Company considered the practical expedient that allows lessors to elect, by class of underlying asset, to

not

separate non-lease components from the associated lease components if the non-lease components otherwise would be accounted for in accordance with the new revenue recognition standard. The Company elected this practical expedient as the following

two

criteria are met; the lease component and the associated non-lease components have the same timing and pattern of transfer; and the lease component, if accounted for separately, would be classified as an operating lease. The Company elected to adopt the new standard using the transition method provided by ASU

2018

-

11;

therefore, prior periods will

not

be restated. The Company has determined that the impact of adoption is limited to real property leases and is consistent with industry practices. This ASU was effective

January 1, 2019,

the Company recognized an aggregate of

$1,073,919

in lease liabilities and corresponding ROU assets and

no

impact on the opening retained earnings balances.

In consideration of whether an agreement contains a lease as defined under ASU

2016

-

02,

the Company answered these

three

questions; has an asset been identified, is the asset physically distinct, and does the customer have the right to control the asset. The Company determined based on the

three

-step questions above, the arrangements pertaining to real property building and office facilities in Alabama, Maine and Massachusetts are within the scope of ASU

2016

-

02.

In calculating the lease liability, the Company considered the lease term in which the Company would include any periods covered by an option to extend the lease if the lessee is reasonably certain to exercise that option. The Company evaluated factors that might create an economic incentive to exercise options to extend, including contract, asset, entity and market-based factors. The Company determined that there would be

no

significant relocation and interruption costs associated with moving to alternative space that would disincentivize a move at renewal; therefore, renewals to extend the lease term are

not

included in the ROU asset and lease liabilities.

A lessee

may

recognize the lease payments in profit or loss on a straight-line basis over the lease term and variable lease payments in the period in which the obligation for those payments is incurred. The accounting policy election for short-term leases shall be made by class of underlying asset to which the right of use relates. A short-term lease is defined as a lease that, at the commencement date, has a lease term of

12

months or less and does

not

include an option to purchase the underlying asset that the lessee is reasonably certain to exercise. The Company elected to exclude short-term leases from the recognition requirements.

In discounting the liability, ASU

2016

-

02

indicates that the incremental rate used must be comparable to a rate attributable to a similar amount, for a similar term, and with similar collateral as the assets in the lease. The Company observed that published commercial borrowing rates were generally between

5.0%

to

7.0%

for loans collateralized by the real estate for terms ranging from

5

-

10

years.

Maturities of lease liabilities as of

December 31, 2019

are as follows (in thousands):

	Leased Real Property and
	Office Facilities
2020	$	359
2021		249
2022		231
2023		212
2024		79
Thereafter		228
Total lease payments	$	1,358
Less: Interest		(212	)
Present value of lease liabilities	$	1,146

Supplemental cash flow information related to operating leases was as follows (in thousands, except years and percentages):

	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	(445	)
Weighted-average remaining lease term – operating leases (in years)		5.4
Weighted average discount rate – operating leases		6.5	%

XML

Note 1 - Nature of Business (Details Textual)				3 Months Ended	12 Months Ended
	Nov. 02, 2017 USD ($)	Feb. 17, 2016 USD ($)	Jan. 25, 2016 USD ($)	Jun. 30, 2017 USD ($)	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Number of Reportable Segments					1
Long-term Debt, Total					$ 70,212,000
Consortium of Banks Led By CoBank ABC [Member]
Debt Instrument, Term	5 years
Debt Agreement, Maximum Borrowing Capacity	$ 92,000,000
Debt Issuance Costs, Net, Total	28,000
Write off of Deferred Debt Issuance Cost	3,700,000
Revolving Credit Facility [Member]
Debt Instrument, Term			5 years
Line of Credit Facility, Maximum Borrowing Capacity			$ 5,000,000
Revolving Credit Facility [Member] | Consortium of Banks Led By CoBank ABC [Member]
Line of Credit Facility, Maximum Borrowing Capacity	5,000,000
Term Loan Facility [Member] | Consortium of Banks Led By CoBank ABC [Member]
Long-term Debt, Total	87,000,000
Line of Credit, Accordion Feature	$ 20,000,000
Senior Notes [Member]
Debt Instrument, Term			5 years
Debt Instrument, Face Amount			$ 85,000,000
Proceeds from Issuance of Debt		$ 85,000,000
Payments of Debt Restructuring Costs				$ 77,900
Capital Expenditure Limit						$ 7,500,000	$ 8,500,000
Write off of Deferred Debt Issuance Cost							3,070,000
Subordinated Debt [Member]
Debt Instrument, Term			5 years 182 days
Debt Instrument, Face Amount		15,300,000
Proceeds from Issuance of Debt		$ 15,300,000
Write off of Deferred Debt Issuance Cost							$ 621,000

XML

Note 12 - Leases (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Lessee, Operating Lease, Liability, Maturity [Table Text Block]

	Leased Real Property and
	Office Facilities
2020	$	359
2021		249
2022		231
2023		212
2024		79
Thereafter		228
Total lease payments	$	1,358
Less: Interest		(212	)
Present value of lease liabilities	$	1,146

Lease, Cost [Table Text Block]

	Year Ended
	December 31, 2019
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash outflow from operating leases	$	(445	)
Weighted-average remaining lease term – operating leases (in years)		5.4
Weighted average discount rate – operating leases		6.5	%

XML

Consolidated Statements of Operations - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues	$ 62,766	$ 66,068	$ 68,526
Operating expenses
Cost of services	30,075	30,592	31,395
Selling, general and administrative expenses	10,204	10,451	10,147
Depreciation and amortization	7,643	7,232	7,377
Total operating expenses	47,922	48,275	48,919
Income from operations	14,844	17,793	19,607
Other income (expense)
Interest expense	(5,271)	(5,844)	(13,249)
Loss on debt prepayment penalty			(2,303)
Other income	616	263	204
Total other expense	(4,655)	(5,581)	(15,348)
Income before income tax (expense) benefit	10,189	12,212	4,259
Income tax (expense) benefit	(2,393)	(2,745)	7,856
Net income	$ 7,796	$ 9,467	$ 12,115
Weighted average number of common shares outstanding:
Basic (in shares)	3,412,805	3,388,624	3,346,689
Diluted (in shares)	3,430,453	3,434,862	3,445,632
Basic net income per common share (in dollars per share)	$ 2.28	$ 2.79	$ 3.62
Diluted net income per common share (in dollars per share)	$ 2.27	$ 2.76	$ 3.52

XML

Note 8 - Income Tax - Tax Effects of Temporary Differences (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Federal income taxes
Current	$ 443	$ 1,036	$ 1,201
Deferred	1,717	898	(9,332)
Total federal tax expense (benefit)	2,160	1,934	(8,131)
State income taxes
Current	574	503	284
Deferred	(341)	308	(9)
Total state tax expense	233	811	275
Total income tax expense (benefit)	$ 2,393	$ 2,745	$ (7,856)

XML

Note 10 - Net Income Per Common Share - Reconciliation of Income (Loss) Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Weighted average number of common shares outstanding - basic (in shares)									3,412,805	3,388,624	3,346,689
Effect of dilutive securities (in shares)									17,648	46,238	98,943
Weighted average number of common shares and potential common shares - diluted (in shares)									3,430,453	3,434,862	3,445,632
Net income									$ 7,796	$ 9,467	$ 12,115
Net income per common share - basic (in dollars per share)	$ 0.58	$ 0.53	$ 0.50	$ 0.67	$ 0.66	$ 0.69	$ 0.86	$ 0.59	$ 2.28	$ 2.79	$ 3.62
Net income per common share - diluted (in dollars per share)	$ 0.58	$ 0.53	$ 0.50	$ 0.66	$ 0.65	$ 0.67	$ 0.85	$ 0.58	$ 2.27	$ 2.76	$ 3.52

XML

Note 2 - Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Organization, Consolidation and Presentation of Financial Statements Disclosure [Text Block]

2. Summary of Significant Accounting Policies

Basis of Presentation and Principles of Consolidation

The consolidated financial statements include the accounts of Otelco Inc. and its subsidiaries, all of which are either directly or indirectly wholly owned. These include: Blountsville Telephone LLC (“BTC”); Brindlee Mountain Telephone LLC; CRC Communications LLC; Granby Telephone LLC; Hopper Telecommunications LLC; Mid-Maine Telecom LLC; Mid-Maine TelPlus LLC; Otelco Mid-Missouri LLC and its wholly-owned subsidiary I-Land Internet Services LLC; Otelco Telecommunications LLC; Otelco Telephone LLC; Pine Tree Telephone LLC; Saco River Telephone LLC; Shoreham Telephone LLC (“STC”); and War Telephone LLC.

The accompanying consolidated financial statements include the accounts of Otelco Inc. and all of the aforesaid subsidiaries after elimination of all material intercompany balances and transactions.

Use of Estimates

The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results

may

differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements.

Significant accounting estimates include the recoverability of goodwill, identified intangibles, long-term assets, deferred tax valuation allowances and allowance for bad debt.

Regulatory Accounting

The Company follows the accounting for regulated enterprises, which is now part of Accounting Standards Codification (“ASC”)

980,

Regulated Operations

(“ASC

980”

), as issued by the Financial Accounting Standards Board (the “FASB”). This accounting practice recognizes the economic effects of rate regulation by recording costs and a return on investment as such amounts are recovered through rates authorized by regulatory authorities. Accordingly, ASC

980

requires the Company to depreciate telecommunications property and equipment over the estimated useful lives approved by regulators, which could be different than the estimated useful lives that would otherwise be determined by management. ASC

980

also requires deferral of certain costs and obligations based upon approvals received from regulators to permit recovery of such amounts in future years. Criteria that would give rise to the discontinuance of accounting in accordance with ASC

980

include (

1

) increasing competition restricting the ability of the Company to establish prices that allow it to recover specific costs and (

2

) significant changes in the manner in which rates are set by regulators from cost-based regulation to another form of regulation. The Company periodically reviews the criteria to determine whether the continuing application of ASC

980

is appropriate for its rural local exchange carriers (“RLECs”). As of

December 31, 2019,

and

2018,

84.3%

and

81.4%,

respectively, of the Company’s net property, plant and equipment was accounted for under ASC

980.

The Company is subject to reviews and audits by regulatory agencies. The effect of these reviews and audits, if any, will be recorded in the period in which they

first

become known and determinable.

Intangible Assets and Goodwill

Intangible assets, other than goodwill, consist primarily of the fair values of customer related intangibles, non-compete agreements and long-term customer contracts acquired in connection with business combinations. Goodwill represents the excess of total acquisition cost over the assigned value of net identifiable tangible and intangible assets acquired through various business combinations, less any impairment. Due to the regulatory accounting required by ASC

980,

the Company did

not

record acquired regulated telecommunications property and equipment at fair value as required by ASC

805,

Business Combinations

, through

2004.

In accordance with

47

CFR

32.2000,

the federal regulation governing acquired telecommunications property and equipment, such property and equipment is accounted for at original cost, and depreciation and amortization of property and equipment acquired is credited to accumulated depreciation.

The Company performs a quarterly review of its identified intangible assets to determine if facts and circumstances exist which indicate that the useful life is shorter than originally estimated or that the carrying amount of assets

may

not

be recoverable. If such facts and circumstances do exist, the Company assesses the recoverability of identified intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.

ASC

350,

Intangibles

-

Goodwill and Other

(“ASC

350”

), requires that goodwill be tested for impairment annually, unless potential interim indicators exist that could result in impairment. The Company performs an annual step

1

goodwill impairment test that compares the fair value of the reporting unit to the carrying amount. If the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to that excess.

Revenue Recognition

Local services

. Local services revenue for monthly recurring local services is billed in advance to a portion of the Company’s customers and in arrears to the balance of the customers. The Company records revenue for charges that have

not

yet been invoiced to its customers as unbilled revenue when services are rendered. The Company records revenue billed in advance as advanced billings and defers recognition until such revenue is earned. Long distance service is billed to customers in arrears based on actual usage. The Company records unbilled long distance revenue as unbilled revenue when services are rendered. Unlimited long distance in bundles is billed at a flat rate and recognized over the period of time the service is provided.

Network access

. Network access revenue is derived from several sources. Revenue for interstate access services is received through tariffed access charges filed with the FCC. These access charges are billed by the Company to interstate interexchange carriers and retail voice customers. A portion of the access charge revenue received by the Company is based upon its actual cost of providing interstate access service, plus a return on the investment dedicated to providing that service. The balance of the access charge revenue received by the Company is based upon the nationwide average schedule costs of providing interstate access services. Rates for the Company’s competitive subsidiaries are set by FCC rule to be

no

more than the interconnecting interstate rate of the predominant local carrier. The Company also receives Connect America Fund (“CAF”) revenues from the Universal Service Administrative Company (“USAC”). The CAF revenues are known as Connect America Fund–Intercarrier Compensation (“CAF-ICC”), A-CAM, and Connect America Fund–Broadband Loop Support (“CAF-BLS”). CAF-ICC is based on the Company’s frozen traffic sensitive rate of return, less access charges billed to interexchange carriers and end user retail customers. A-CAM revenues are based on the FCC’s model, which calculates the cost to provide broadband services to rural areas of each state. All of the Company’s RLECs receive A-CAM revenues.

Revenue for intrastate access service is received through tariffed access charges billed by the Company to the originating intrastate carrier using access rates filed with the Alabama Public Service Commission (the “APSC”), the Maine Public Utilities Commission (the “MPUC”), the Massachusetts Department of Telecommunications and Cable (the “MDTC”), the Missouri Public Service Commission (the “MPSC”), the New Hampshire Public Utilities Commission (the “NHPUC”), the Vermont Public Utility Commission (the “VPUC”) and the West Virginia Public Service Commission (the “WVPSC”) and are retained by the Company.  

Revenue for the intrastate/interLATA access service is received through tariffed access charges as filed with the APSC, MDTC, MPSC, MPUC, NHPUC, VPUC and WVPSC. These access charges are billed to the intrastate carriers and are retained by the Company. Revenue for terminating and originating long distance service is received through charges for providing usage of the local exchange network. Toll revenues are recognized when services are rendered.

The FCC’s Intercarrier Compensation order, issued in

October 2011,

has significantly changed the way telecommunication carriers receive compensation for exchanging traffic and state tariffed rates. All terminating intrastate rates that exceeded the interstate rate were reduced to the terminating interstate rate effective

July 2013.

Beginning in

2014,

the interstate and intrastate rates began being reduced over a

six

year period to “bill and keep” in which carriers bill their customers for services and keep those charges but neither pay for nor receive compensation from traffic sent to or received from other carriers. In addition, subsidies to carriers serving high cost areas has been phased out over an extended period. STC was the only RLEC receiving a minimal high cost subsidy as of

December 31, 2019.

Revenues for interstate access services are based on reimbursement of costs and an allowed rate of return. Revenues of this nature are received from USAC. The FCC’s Rate-of-Return Universal Service Fund Reform order, issued in

March 2016,

reduced the authorized rate-of-return by

25

basis points in

2016

and will reduce the authorized rate-of-return by

25

basis points in each subsequent year until

2021.

The FCC’s Intercarrier Compensation order, issued in

October 2011,

capped each year’s revenue requirement (rate of return and reimbursement of costs) at

95.0%

of the previous year’s revenue requirement. Such revenues amounted to

23.3%,

21.3%,

and

20.7%

of the Company’s total revenues for the years ended

December 31, 2019,

2018,

and

2017,

respectively.

Internet, tran

sport service,

cable

and satellite

television

and cloud hosting and managed services

. Internet, transport service, cable and satellite television and cloud hosting and managed services revenues are recognized when services are rendered. Operating revenues from the lease of dark fiber covered by indefeasible rights-of-use agreements are recorded as earned. In some cases, the entire lease payment is received at inception of the lease and recognized ratably over the lease term after recognition of expenses associated with lease inception. The Company has deferred revenue in the consolidated balance sheets as of

December 31, 2019,

and

2018,

of

$2.1

million and

$2.3

million, respectively, related to transport services, which is included as part of advanced billing and payments. The Company has deferred revenue in the consolidated balance sheets as of

December 31, 2019,

and

2018,

of

$229

thousand and

$126

thousand, respectively, related to other services, which is included as part of advanced billing and payments.

Cash and Cash Equivalents

Cash equivalents are stated at cost plus accrued interest, which approximates fair value. Cash equivalents are high-quality, short-term money market instruments and highly liquid debt instruments with an original maturity of

three

months or less when purchased. The cash equivalents are readily convertible to known amounts of cash and are so near maturity that they present insignificant risk of changes in value because of changes in interest rates.

Accounts Receivable

The Company extends credit to its business and residential customers based upon a written credit policy. Service interruption is the primary vehicle for controlling losses. Accounts receivable are recorded at the invoiced amount and do

not

bear interest. The allowance for doubtful accounts is the Company’s best estimate for the amount of probable credit losses in the Company’s existing accounts receivable. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information. Receivable balances are reviewed on an aged basis and account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Materials and Supplies

Materials and supplies are stated at the lower of cost or realizable value. Cost is determined using an average cost basis.

Property and Equipment

Regulated property and equipment is stated at original cost less any impairment. Unregulated property and equipment purchased through acquisitions is stated at its fair value at the date of acquisition less any impairment. Expenditures for improvements that significantly add to productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are expensed when incurred. Depreciation of regulated property and equipment is computed principally using the straight-line method over useful lives determined by the APSC for Alabama locations, while the other regulated locations use similar useful lives as Alabama. Depreciation of unregulated property and equipment primarily employs the straight-line method over industry standard estimated useful lives.

Long-Lived Assets

The Company reviews its long-lived assets for impairment at each balance sheet date and whenever events or changes in circumstances indicate that the carrying amount of an asset should be assessed. To determine if impairment exists, the Company estimates the future undiscounted cash flows expected to result from the use of the asset being reviewed for impairment. If the sum of these expected future cash flows is less than the carrying amount of the asset, the Company recognizes an impairment loss in accordance with guidance included in ASC

360,

Property, Plant, and Equipment

. The amount of the impairment recognized is determined by estimating the fair value of the assets and recording a loss for the excess of the carrying value over the fair value.

Deferred Financing Costs

Deferred financing and loan costs consist of debt issuance costs incurred in obtaining long-term financing, which are amortized using the effective interest method. Amortization of deferred financing and loan costs is classified as “Interest expense”. Deferred financing and loan costs are presented in the balance sheet as a direct deduction from the related debt liability. When amendments to debt agreements are considered to extinguish existing debt per guidance included in ASC

470,

Debt

, the remaining deferred financing costs are expensed at the time of amendment.

Income Taxes

The Company accounts for income taxes using the asset and liability approach in accordance with guidance included in ASC

740,

Income Taxes

(“ASC

740”

). The asset and liability approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities using enacted tax rates. Any changes in enacted tax rates or tax laws are included in the provision for income taxes in the period of enactment. A valuation allowance is provided when it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized.

The provision for income taxes consists of an amount for the taxes currently payable and a provision for the tax consequences deferred to future periods.

Interest and penalties related to income tax matters would be recognized in income tax expense. As of

December 31, 2019,

there was

no

material amount recorded for interest and penalties.

The Company conducts business in multiple jurisdictions and, as a result,

one

or more subsidiaries file income tax returns in the U.S. federal, various state and local jurisdictions. All tax years since

2016

are open for examination by various tax authorities.

Fair Value of Financial Instruments

The carrying values of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaids, accounts payable and accrued liabilities, approximate their fair values as of

December 31, 2019,

and

2018,

due to their short term nature. The fair value of debt instruments at

December 31, 2019,

and

2018,

is disclosed in the notes to the consolidated financial statements.

Income

per Common Share

The Company computes net income per common share in accordance with the provisions included in ASC

260,

Earnings per Share

(“ASC

260”

). Under ASC

260,

basic and diluted income per share is computed by dividing net income available to stockholders by the weighted average number of common shares and common share equivalents outstanding during the period. Basic income per common share excludes the effect of potentially dilutive securities, while diluted income per common share reflects the potential dilution that would occur if securities or other contracts to issue common shares were exercised for, converted into or otherwise resulted in the issuance of common shares.

Recently Adopted Accounting Pronouncements

In

May 2014,

the FASB issued Accounting Standards Update (“ASU”)

2014

-

09,

Revenue from Contracts with Customers (Topic

606

)

(“ASU

2014

-

09”

). This ASU requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also provides a more robust framework for revenue issues and improves comparability of revenue recognition practices across industries. This ASU was the product of a joint project between the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard. ASU

2014

-

09

permits the use of either a retrospective or modified retrospective application. This guidance was to be effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2016,

with early adoption

not

permitted. In

July 2015,

the FASB issued ASU

2015

-

14,

Revenue from Contracts with Customers (Topic

606

): Deferral of the Effective Date.

This ASU confirmed a

one

-year delay in the effective date of ASU

2014

-

09,

making the effective date for the Company the

first

quarter of fiscal

2018

instead of the

first

quarter of fiscal

2017.

In

March 2016,

the FASB issued ASU

2016

-

08,

Revenue from Contracts with Customers (Topic

606

): Principal versus Agent Consideration (Reporting Revenues Gross versus Net)

. This ASU is further guidance to ASU

2014

-

09,

and clarifies principal versus agent considerations. In

April 2016,

the FASB issued ASU

2016

-

10,

Revenue from Contracts with Customers (Topic

606

): Identifying Performance Obligations and Licensing.

This ASU is also further guidance to ASU

2014

-

09,

and clarifies the identification of performance obligations. In

May 2016,

the FASB issued ASU

2016

-

12,

Revenue from Contracts with Customers (Topic

606

): Narrow-Scope Improvements and Practical Expedients.

This ASU is also further guidance to ASU

2014

-

09,

and clarifies assessing the narrow aspects of recognizing revenue. In

December 2016,

the FASB issued ASU

2016

-

20,

Technical Corrections and Improvements to Topic

606,

Revenue from Contracts with Customers.

This ASU is also further guidance to ASU

2014

-

09,

and clarifies technical corrections and improvements for recognizing revenue.

In

January 2017,

the FASB issued ASU

2017

-

03,

Accounting Changes and Error Corrections (Topic

250

) and Investments-Equity Method and Joint Ventures (Topic

323

)

(“ASU

2017

-

03”

). This ASU requires registrants to evaluate the impact ASU

2014

-

09

will have on financial statements and adequately disclose this information to assist the reader in assessing the significance of ASU

2014

-

09

on the financial statements when adopted. The Company commenced its assessment of ASU

2014

-

09

beginning in

June 2016.

This assessment included analyzing ASU

2014

-

09’s

impact on the Company’s various revenue streams, comparing the Company’s historical accounting policies and practices to the requirements of ASU

2014

-

09,

and identifying potential differences from applying the requirements of ASU

2014

-

09

to the Company’s contracts. The Company has used a

five

-step process to identify the contract with the customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when or as the performance obligations are satisfied. The Company has implemented the appropriate changes to its business processes, systems and controls to support revenue recognition and disclosures under ASU

2014

-

09.

The Company adopted ASU

2014

-

09

at the beginning of its

2018

fiscal year using the modified retrospective method applied to those contracts which were

not

completed as of

January 1, 2018.

Prior period amounts have

not

been adjusted and continue to be reported in accordance with historic accounting standards in effect during those periods. The adoption of ASU

2014

-

09

and related amendments did

not

have a material impact on the Company’s consolidated financial statements.

In

January 2016,

the FASB issued ASU

2016

-

01,

Financial Instruments - Overall (Subtopic

825

-

10

)

(“ASU

2016

-

01”

). This ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU

2016

-

01

requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or in the accompanying notes to the financial statements. That presentation provides financial statement users with more decision-useful information about an entity’s involvement in financial instruments. The provisions of this ASU were to be effective for annual periods beginning after

December 15, 2017,

and interim periods within those years, with early adoption permitted. In

February 2018,

the FASB issued ASU

2018

-

03,

Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic

825

-

10

),

which made targeted improvements to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This ASU also confirmed a

six

-month delay in the effective date of ASU

2016

-

01,

making the effective date for the Company the

second

quarter of fiscal

2018

instead of the

first

quarter of fiscal

2018,

with early adoption permitted. The Company adopted ASU

2016

-

01

as of

March 31, 2018,

and that adoption did

not

have a material impact on the Company’s consolidated financial statements.

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases (Topic

842

)

(“ASU

2016

-

02”

)

.

This ASU requires lessees to recognize most leases on the balance sheet. The provisions of this guidance are effective for annual periods beginning after

December 15, 2018,

and interim periods within those years, with early adoption permitted. In

January 2017,

the FASB issued ASU

2017

-

03,

which requires registrants to evaluate the impact ASU

2016

-

02

will have on financial statements and adequately disclose this information to assist the reader in assessing the significance of ASU

2016

-

02

on the financial statements when adopted. In

January 2018,

the FASB issued ASU

2018

-

01,

Leases (Topic

842

): Land Easement Practical Expedient for Transition to Topic

842

. This ASU provides an optional transition practical expedient to

not

evaluate under ASU

2016

-

02

existing or expired land easements that were

not

previously accounted for as leases under ASC Topic

840,

Leases

. An entity that elects this practical expedient should evaluate new or modified land easements under ASU

2016

-

02

beginning at the date that the entity adopts ASU

2016

-

02.

In

July 2018,

the FASB issued ASU

2018

-

10,

Codification Improvements to Topic

842,

Leases,

which provides improvements and clarifications for ASU

2016

-

02.

In

July 2018,

the FASB issued ASU

2018

-

11,

Leases (Topic

842

): Targeted Improvements

(“ASU

2018

-

11”

). This ASU provides an additional transition method by allowing entities to initially apply the new lease standard at the date of adoption with a cumulative effect adjustment to the opening balances of retained earnings in the period of adoption. This ASU also gives lessors the option of electing, as a practical expedient by class of underlying asset,

not

to separate the lease and non-lease components of a contract when those lease contracts meet certain criteria. In

December 2018,

the FASB issued ASU

2018

-

20,

Narrow-Scope Improvements for Lessors.

This ASU clarifies lessor treatment for sales taxes and other similar taxes collected from lessees, certain lessor costs, and recognition of variable payments for contracts with lease and non-lease components. In

March 2019,

the FASB issued ASU

2019

-

01,

Codification Improvements.

This ASU clarifies determining the fair value of the underlying asset by lessors that are

not

manufacturers or dealers, presentation on the statement of cash flows for sales-type and direct financing leases, and transition disclosures related to Topic

250,

Accounting Changes and Error Corrections. The Company has completed its evaluation of the requirements of this guidance and implemented the processes necessary to adopt ASU

2016

-

02,

as amended. The Company has elected certain practical expedients available at adoption. The Company elected the package of practical expedients upon transition

not

to reassess whether expired or existing contracts contain leases under the new definition of a lease;

not

to reassess the lease classification for expired or existing leases; and

not

to reassess whether previously capitalized initial direct costs would qualify for capitalization under ASU

2016

-

02.

In evaluating certain equipment rental arrangements such as cable, internet and security service contracts, the Company considered the practical expedient that allows lessors to elect, by class of underlying asset, to

not

separate non-lease components from the associated lease components if the non-lease components otherwise would be accounted for in accordance with the new revenue recognition standard. The Company elected this practical expedient as the following

two

criteria are met; the lease component and the associated non-lease components have the same timing and pattern of transfer; and the lease component, if accounted for separately, would be classified as an operating lease. The Company elected to adopt the new standard using the transition method provided by ASU

2018

-

11;

therefore, prior periods will

not

be restated. The Company has determined that the impact of adoption is limited to real property leases and is consistent with industry practices. Adoption of the new standard resulted in the Company recognizing an aggregate of

$1,073,919

in lease liabilities and corresponding right of use (“ROU”) assets and

no

impact on the opening retained earnings balances. The adoption of ASU

2016

-

02

had an immaterial impact on the consolidated statements of operations and consolidated statements of cash flows as of

December 31, 2019.

In

August 2016,

the FASB issued ASU

2016

-

15

, Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments

. This ASU addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic

230,

Statement of Cash Flows, and other Topics. This ASU is effective for annual reporting periods, and interim periods therein, beginning after

December 15, 2017,

with early adoption permitted. The Company adopted this ASU and that adoption did

not

have a material impact on the Company’s consolidated financial statements.

In

May 2017,

the FASB issued ASU

2017

-

09,

Compensation-Stock Compensation (Topic

718

)

(“ASU

2017

-

09”

). ASU

2017

-

09

provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC Topic

718,

Stock Compensation

. ASU

2017

-

09

is effective for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. Early adoption is permitted for any interim period for which financial statements have

not

been issued. ASU

2017

-

09

should be applied prospectively to an award modified on or after the adoption date. The Company adopted this ASU and that adoption did

not

have a material impact on the Company’s consolidated financial statements.

In

May 2017,

the FASB issued ASU

2017

-

10,

Service Concession Arrangements (Topic

853

)

(“ASU

2017

-

10”

). The objective of this ASU is to specify that an operating entity should

not

account for a service concession arrangement that meets certain criteria as a lease in accordance with ASC Topic

840,

Leases

. ASU

2017

-

10

further states that the infrastructure used in a service concession arrangement should

not

be recognized as property, plant, and equipment of the operating entity. The provisions of this ASU are effective for annual periods beginning after

December 15, 2017,

and interim periods within those years, with early adoption permitted. The Company adopted this ASU and that adoption did

not

have a material impact on the Company’s consolidated financial statements.

In

March 2018,

the FASB issued ASU

2018

-

05,

Income Taxes (Topic

740

)

. The objective of this ASU is to amend ASC

740,

Income Taxes to reflect Staff Accounting Bulletin

No.

118,

issued by the staff of the Securities and Exchange Commission (“SAB

118”

), which addresses the enactment of the Tax Cuts and Jobs Act (the “Tax Act”). SAB

118

outlines the approach companies

may

take if they determine that the necessary information is

not

available (in reasonable detail) to evaluate, compute, and prepare accounting entries to recognize the effects of the Tax Act by the time the financial statements are required to be filed. Companies

may

use this approach when the timely determination of some or all of the income tax effects from the Tax Act are incomplete by the due date of the financial statements.  A reporting entity must act in good faith and update provisional amounts as soon as more information becomes available, evaluated and prepared, during a measurement period that cannot exceed

one

year from the enactment date. Initial reasonable estimates and subsequent changes to provisional amounts should be reported in income tax expense or benefit from continuing operations in the period in which they are determined.  As of

December 31, 2017,

the provisional amount recorded related to the remeasurement of the Company’s deferred tax liability balance was

$9.3

million and reflected a

one

-time reduction in the Company’s income tax provision. As of

December 31, 2017,

the Company finalized its accounting estimates for income tax effects related to the Tax Act. The Company elected

not

to utilize the measurement window provided under SAB

118.

The Company did

not

record any adjustments to its

2017

income tax effects resulting from the Tax Act.

In

June 2018,

the FASB issued ASU

2018

-

07,

Compensation – Stock Compensation (Topic

718

)

(“ASU

2018

-

07”

). This ASU expands the scope of ASU

2017

-

09,

which currently only includes share-based payments issued to employees, to also include share-based payments issued to nonemployees for goods and services. The amendments in this ASU are effective for public companies for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years.  Early adoption is permitted, but

no

earlier than the Company’s adoption date of ASU

2014

-

09.

The Company adopted this ASU and that adoption did

not

have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements

During

2018,

the FASB issued ASUs

2018

-

01

through

2018

-

20

and, during

2019,

the FASB has issued ASUs

2019

-

01

through

2019

-

12.

Except for the ASUs discussed above and below, these ASUs provide technical corrections or simplifications to existing guidance and to specialized industries or entities and therefore have minimal, if any, impact on the Company.

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles-Goodwill and Other (Topic

350

)

(“ASU

2017

-

04”

). The objective of this ASU is to simplify how an entity is required to test goodwill for impairment by eliminating Step

2

from the goodwill impairment test. ASU

2017

-

04

is effective for fiscal years beginning after

December 15, 2019,

and interim periods within those fiscal years. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017.

The Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

In

August 2018,

the FASB issued ASU

2018

-

13,

Fair Value Measurement (Topic

820

)

(“ASU

2018

-

13”

)

.

This ASU modifies the disclosure requirements on fair value measurements in ASU

2018

-

13,

based on the concepts in the Concepts Statement, including the consideration of costs and benefits. This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. ASU

2018

-

13

is effective for fiscal years beginning after

December 15, 2019,

and interim periods within those fiscal years. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the additional disclosures until their effective date. The Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

In

November 2018,

the FASB issued ASU

2018

-

19,

Codification Improvements to Topic

326,

Financial Instruments – Credit Losses

(“ASU

2018

-

19”

)

.

This ASU improves the disclosure requirements in ASU

2016

-

13,

Financial Instruments - Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments

(“ASU

2016

-

13”

) issued in

June 2016,

to make a cumulative-effect adjustment to opening retained earnings as of the beginning of the

first

reporting period in which the amendments are effective. The effective date and transition requirements for the amendments in this update are the same as the effective dates and transition requirements in ASU

2016

-

13,

as amended by ASU

2018

-

19.

In

April 2019,

the FASB issued ASU

2019

-

04,

Codification Improvements to Topic

326,

Financial Instruments – Credit Losses, Topic

815,

Derivatives and Hedging, and Topic

825,

Financial Instruments.

This ASU improves the disclosure requirements in ASU

2016

-

13

issued in

June 2016,

to allow the measurement of allowance for credit losses on accrued interest receivable balances separately from other components of the amortized cost basis of associated financial assets. In

May 2019,

the FASB issued ASU

2019

-

05,

Financial Instruments – Credit Losses (Topic

326

).

This ASU improves the disclosure requirements in ASU

2016

-

13

issued in

June 2016,

to allow companies to irrevocably elect, upon adoption of ASU

2016

-

13,

the fair value option on financial instruments that (

1

) were previously recorded at amortized cost and (

2

) are within the scope of ASC

326

-

20

if the instruments are eligible for the fair value option under ASC

825

-

10.

The effective date and transition requirements for the amendments in this update are the same as the effective dates and transition requirements in ASU

2016

-

13,

as amended by ASU

2018

-

19.

In

November 2019,

the FASB issued ASU

2019

-

10,

Financial Instruments – Credit Losses (Topic

326

), Derivatives and Hedging (Topic

815

), and Leases (Topic

842

)

(“ASU

2019

-

10”

)

.

This ASU defers certain major updates

not

yet effective due to the challenge’s private companies, smaller public companies, and

not

-for-profit organizations are having with implementation. In

November 2019,

the FASB issued ASU

2019

-

11,

Codification Improvements to Topic

326,

Financial Instruments – Credit Losses.

The amendments in this ASU clarify and address stakeholders’ specific issues about certain aspects in update

2016

-

13.

ASU

2019

-

10

has deferred the effective date for credit losses for smaller reporting companies to years beginning after

December 15, 2022,

including interim periods within those fiscal years. An entity is still permitted to early adopt as of the fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. The Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

In

November 2019,

the FASB issued ASU

2019

-

08,

Compensation – Stock Compensation (Topic

718

) and Revenue from Contracts with Customers (Topic

606

); Codification Improvements – Share-Based Consideration Payable to a Customer

(“ASU

2019

-

08”

). ASU

2019

-

08,

requires that an entity apply the guidance in ASU

2018

-

07

to measure and classify share-based payment awards granted to a customer. The amount recorded as a reduction in the transaction price should be based on the grant-date fair value of the share-based payment award. The amendments in ASU

2019

-

08

are effective for public companies for fiscal years beginning after

December 15, 2019,

and interim periods within those fiscal years.  Early adoption is permitted, but

no

earlier than the Company’s adoption of the amendments in ASU

2018

-

07.

As of

December 31, 2019,

the Company does

not

have any share-based payment awards to customers, therefore the Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

In

December 2019,

the FASB issued ASU

2019

-

12,

Income Taxes (Topic

740

)

(“ASU

2019

-

12”

). This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic

740.

The amendments in ASU

2019

-

12

are effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2020.

Early adoption of the amendments is permitted, including adoption in any interim period for which financial statements have

not

yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

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Note 7 - Notes Payable (Details Textual) - USD ($)			12 Months Ended
	Oct. 22, 2018	Oct. 21, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Jan. 25, 2016
Amortization of Debt Issuance Costs			$ 452,000	$ 476,000	$ 4,823,000
New Credit Facility [Member]
Debt Issuance Costs, Gross			2,100,000
Amortization of Debt Issuance Costs			452,000	476,000	75,000
Line of Credit Facility, Maximum Borrowing Capacity			5,000,000
Long-term Line of Credit, Total			0	0
Line of Credit Facility, Commitment Fee Percentage	0.38%	0.50%
Line of Credit Facility, Commitment Fee Amount			$ 19,000	$ 24,000	4,000
Previous Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity					5,000,000
Long-term Line of Credit, Total					$ 0
Revolving Credit Facility [Member]
Line of Credit Facility, Maximum Borrowing Capacity						$ 5,000,000
Line of Credit Facility, Commitment Fee Percentage					0.75%
Line of Credit Facility, Commitment Fee Amount					$ 32,000
Senior Notes [Member]
Debt Issuance Costs, Gross					4,900,000
Amortization of Debt Issuance Costs					896,000
Write off of Deferred Debt Issuance Cost					3,070,000
Legal Fees					14,000
Subordinated Debt [Member]
Debt Issuance Costs, Gross					892,000
Amortization of Debt Issuance Costs					133,000
Write off of Deferred Debt Issuance Cost					621,000
Legal Fees					$ 14,000

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Note 4 - Property and Equipment - Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018
Property Plant and Equipment, Gross	$ 315,843	$ 304,057
Accumulated depreciation and amortization	(258,559)	(251,984)
Net property and equipment	57,284	52,073
Land [Member]
Property Plant and Equipment, Gross	1,164	1,164
Building Improvements [Member]
Property Plant and Equipment, Gross	$ 13,358	13,197
Estimated Life (Year)	40 years
Building Improvements [Member] | Minimum [Member]
Estimated Life (Year)	20 years
Telephone Equipment [Member]
Property Plant and Equipment, Gross	$ 246,692	236,741
Estimated Life (Year)	20 years
Telephone Equipment [Member] | Minimum [Member]
Estimated Life (Year)	6 years
Cable Television Equipment [Member]
Property Plant and Equipment, Gross	$ 13,258	12,627
Cable Television Equipment [Member] | Maximum [Member]
Estimated Life (Year)	7 years
Furniture and Fixtures [Member]
Property Plant and Equipment, Gross	$ 3,082	3,066
Estimated Life (Year)	14 years
Furniture and Fixtures [Member] | Minimum [Member]
Estimated Life (Year)	8 years
Vehicles [Member]
Property Plant and Equipment, Gross	$ 6,961	6,906
Estimated Life (Year)	9 years
Vehicles [Member] | Minimum [Member]
Estimated Life (Year)	7 years
Computer Equipment [Member]
Property Plant and Equipment, Gross	$ 20,132	19,835
Estimated Life (Year)	7 years
Computer Equipment [Member] | Minimum [Member]
Estimated Life (Year)	5 years
Computer Equipment [Member] | Maximum [Member]
Estimated Life (Year)	5 years
Internet Equipment [Member]
Property Plant and Equipment, Gross	$ 11,196	$ 10,521
Internet Equipment [Member] | Maximum [Member]
Estimated Life (Year)	5 years

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Note 12 - Leases - Undiscounted and Discounted Cash Flows for Leases (Details) $ in Thousands	Dec. 31, 2019 USD ($)
2020	$ 359
2021	249
2022	231
2023	212
2024	79
Thereafter	228
Total lease payments	1,358
Less: Interest	(212)
Present value of lease liabilities	$ 1,146

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Note 15 - Stock Plans - Summary of RSU Activity (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Restricted stock units outstanding (in shares)	66,312	98,943
Outstanding, weighted average grant date fair value (in dollars per share)	$ 9.06	$ 4.51
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period	0	34,755	366,356
Granted, weighted average grant date fair value (in dollars per share)		$ 13.30
Restricted stock units vested (in shares)	(36,847)	(67,386)
Vested, weighted average grant date fair value (in dollars per share)	$ 5.68	$ 4.56
Restricted stock units forfeited or cancelled (in shares)	(11,817)
Forfeited or cancelled, weighted average grant date fair value (in dollars per share)	$ 13.30
Restricted stock units outstanding (in shares)	17,648	66,312	98,943
Outstanding, weighted average grant date fair value (in dollars per share)	$ 13.30	$ 9.06	$ 4.51

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Note 16 - Selected Quarterly Financial Data (Unaudited)

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Quarterly Financial Information [Text Block]

16. Selected Quarterly Financial Data (unaudited and in thousands, except per share amounts)

	First Quarter		Second Quarter		Third Quarter		Fourth Quarter
Fiscal 2018:
Revenue	$	16,726	$	16,890	$	16,252	$	16,200
Operating income	$	4,061	$	5,172	$	4,536	$	4,024
Net income	$	1,996	$	2,908	$	2,326	$	2,237
Net income per common share-basic	$	0.59	$	0.86	$	0.69	$	0.66
Net income per common share-diluted	$	0.58	$	0.85	$	0.67	$	0.65
Fiscal 2019:
Revenue	$	15,755	$	15,658	$	15,762	$	15,591
Operating income	$	3,763	$	3,708	$	3,841	$	3,532
Net income	$	2,281	$	1,717	$	1,819	$	1,979
Net income per common share-basic	$	0.67	$	0.50	$	0.53	$	0.58
Net income per common share-diluted	$	0.66	$	0.50	$	0.53	$	0.58

XML

Note 4 - Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Property, Plant and Equipment [Table Text Block]

	Estimated			December 31,
	Life			201 9			201 8
Land				$	1,164		$	1,164
Building and improvements	20	-	40		13,358			13,197
Telephone equipment	6	-	20		246,692			236,741
Cable television equipment		7			13,258			12,627
Furniture and equipment	8	-	14		3,082			3,066
Vehicles	7	-	9		6,961			6,906
Computer software and equipment	5	-	5		20,132			19,835
Internet equipment		5			11,196			10,521
Total property and equipment					315,843			304,057
Accumulated depreciation and amortization					(258,559	)		(251,984	)
Net property and equipment				$	57,284		$	52,073

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Note 15 - Stock Plans (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Share-based Payment Arrangement, Restricted Stock Unit, Activity [Table Text Block]

	RSUs			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017		98,943		$	4.51
Granted		34,755		$	13.30
Vested		(67,386	)	$	4.56
Forfeited or cancelled		—		$	—
Outstanding at December 31, 2018		66,312		$	9.06

	RSUs			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2018		66,312		$	9.06
Granted		—		$	—
Vested		(36,847	)	$	5.68
Forfeited or cancelled		(11,817	)	$	13.30
Outstanding at December 31, 2019		17,648		$	13.30

Share-based Payment Arrangement, Option, Activity [Table Text Block]

	ISOs and NQ S tock O ptions			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2018		50,000		$	16.97
Granted		—		$	—
Vested		(10,000	)	$	16.97
Forfeited or cancelled		—		$	—
Outstanding at December 31, 2019		40,000		$	16.97

XML

Note 10 - Net Income Per Common Share (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Earnings Per Share, Basic and Diluted [Table Text Block]

	For the Years Ended December 31,
	201 9		201 8		201 7
Weighted average number of common shares outstanding - basic		3,412,805		3,388,624		3,346,689
Effect of dilutive securities		17,648		46,238		98,943
Weighted average number of common shares and potential common shares - diluted		3,430,453		3,434,862		3,445,632
Net income	$	7,796	$	9,467	$	12,115
Net income per common share - basic	$	2.28	$	2.79	$	3.62
Net income per common share - diluted	$	2.27	$	2.76	$	3.52

XML

Note 3 - Goodwill and Intangible Assets (Details Textual) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)	Dec. 31, 2018 USD ($)
Number of Reportable Segments	1
Number of Reporting Units	3
Goodwill Impairment, Weighted Percent Used in Discontinued Cash Flow Method	50.00%
Goodwill Impairment, Weighted Percent Used in Guideline Public Company Method	50.00%
Goodwill, Impairment Loss	$ 0	$ 0
Goodwill, Period Increase (Decrease), Total	0	0
Goodwill, Ending Balance	44,976	44,976
Impairment of Intangible Assets (Excluding Goodwill), Total	$ 0	$ 0
Minimum [Member]
Finite-Lived Intangible Asset, Useful Life	2 years
Maximum [Member]
Finite-Lived Intangible Asset, Useful Life	15 years

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Note 6 - Investments

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Investment Holdings [Text Block]

6. Investments

Investments consist of the following (in thousands) as of:

	December 31,
	201 9		201 8
Investment in CoBank stock	$	1,192	$	1,192
Rental property		194		219
Other miscellaneous		91		87
	$	1,477	$	1,498

The investment in CoBank stock is carried at historical cost due to

no

readily determinable fair value for those instruments being available. Management believes there has been

no

other than temporary impairment in such investment. This investment consists of patronage certificates that represent ownership in the financial institution where the Company previously had and currently has debt. These certificates yield dividends on an annual basis, and the investment is redeemed ratably subsequent to the repayment of the debt. The Company purchased a

two

year interest rate cap associated with the New Credit Facility and it had a value of

$4

thousand as of

December 31, 2018.

The interest rate cap expires

February 26, 2020

and has a value of

zero

as of

December 31, 2019.

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Note 10 - Net Income Per Common Share

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Earnings Per Share [Text Block]

10. Net Income per Common Share

Basic net income per common share is computed by dividing net income by the weighted-average number of common shares outstanding for the period. Diluted net income per common share reflects the potential dilution that would occur should all of the shares of Class A common stock underlying restricted stock units (“RSUs”) be issued.

A reconciliation of the common shares for purposes of the calculation of the Company’s basic and diluted net income per common share is as follows (weighted average number of common shares outstanding in whole numbers and net income in thousands):

	For the Years Ended December 31,
	201 9		201 8		201 7
Weighted average number of common shares outstanding - basic		3,412,805		3,388,624		3,346,689
Effect of dilutive securities		17,648		46,238		98,943
Weighted average number of common shares and potential common shares - diluted		3,430,453		3,434,862		3,445,632
Net income	$	7,796	$	9,467	$	12,115
Net income per common share - basic	$	2.28	$	2.79	$	3.62
Net income per common share - diluted	$	2.27	$	2.76	$	3.52

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Current assets
Cash and cash equivalents	$ 3,113	$ 4,657
Accounts receivable:
Due from subscribers, net of allowance for doubtful accounts of $209 and $577, respectively	3,908	4,183
Other	1,905	1,899
Materials and supplies	3,954	2,802
Prepaid expenses	1,624	1,198
Other assets	251
Total current assets	14,755	14,739
Property and equipment, net	57,284	52,073
Goodwill	44,976	44,976
Intangible assets, net	530	919
Operating lease right-of-use asset	1,146
Investments	1,477	1,498
Interest rate cap		4
Other assets	577	143
Total assets	120,745	114,352
Current liabilities
Accounts payable	1,525	1,331
Accrued expenses	4,861	5,054
Advance billings and payments	1,618	1,614
Customer deposits	44	48
Current operating lease liability	296
Current maturity of long-term notes payable, net of debt issuance costs	3,929	3,904
Total current liabilities	12,273	11,951
Deferred income taxes	21,521	20,145
Advance billings and payments	2,157	2,234
Other liabilities	12	13
Long-term operating lease liability	850
Long-term notes payable, less current maturities and debt issuance costs	65,172	69,107
Total liabilities	101,985	103,450
Stockholders' equity
Additional paid in capital	4,275	4,213
Retained earnings	14,451	6,655
Total stockholders' equity	18,760	10,902
Total liabilities and stockholders' equity	120,745	114,352
Common Class A [Member]
Stockholders' equity
Class A Common Stock, $.01 par value-authorized 10,000,000 shares; issued and outstanding 3,412,805 and 3,388,624 shares, respectively	$ 34	$ 34

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Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Cash flows from operating activities:
Net income	$ 7,796	$ 9,467	$ 12,115
Adjustments to reconcile net income to cash flows provided by operating activities:
Depreciation	7,344	6,906	7,001
Amortization	299	326	376
Amortization of loan costs	452	476	4,823
Non-cash lease amortization	265
Loss on debt prepayment penalty			2,303
Provision (benefit) for deferred income taxes	1,308	1,062	(9,393)
Excess tax benefit from stock-based compensation	68	144	52
Provision for uncollectible accounts receivable	214	553	357
Stock-based compensation	254	308	308
Payment in kind interest - subordinated debt			266
Changes in operating assets and liabilities
Accounts receivable	(196)	(113)	(316)
Materials and supplies	(1,152)	(102)	(516)
Prepaid expenses and other assets	(860)	1,982	(189)
Accounts payable and accrued expenses	1	(37)	215
Advance billings and payments	(73)	(203)	577
Other liabilities	(270)	(9)	(17)
Net cash from operating activities	15,450	20,760	17,962
Cash flows used in investing activities:
Acquisition and construction of property and equipment	(12,440)	(7,983)	(8,510)
Retirement of investment	(4)	(11)	(1)
Net cash used in investing activities	(12,444)	(7,994)	(8,511)
Cash flows used in financing activities:
Loan origination costs	(12)	(64)	(2,144)
Principal repayment of long-term notes payable	(4,350)	(11,350)	(98,927)
Proceeds from loan refinancing			87,000
Debt prepayment penalty fees			(2,303)
Interest rate cap	4	(4)
CoBank equity account retirement		119	164
Tax withholdings paid on behalf of employees for restricted stock units	(192)	(380)	(209)
Net cash used in financing activities	(4,550)	(11,679)	(16,419)
Net (decrease) increase in cash and cash equivalents	(1,544)	1,087	(6,968)
Cash and cash equivalents, beginning of period	4,657	3,570	10,538
Cash and cash equivalents, end of period	3,113	4,657	3,570
Supplemental disclosures of cash flow information:
Interest paid	4,834	5,383	9,287
Income taxes paid (refunded)	1,993	(502)	1,802
Issuance of Class A common stock			$ 1

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Note 11 - Revenue Streams and Concentrations - Revenue Streams (Details) - USD ($) $ in Thousands		3 Months Ended								12 Months Ended
		Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenues		$ 15,591	$ 15,762	$ 15,658	$ 15,755	$ 16,200	$ 16,252	$ 16,890	$ 16,726	$ 62,766	$ 66,068	$ 68,526
Revenue Benchmark [Member]
Revenues, percentage										100.00%	100.00%
Month-to-Month Customers [Member]
Revenues, within scope of ASU 2014-09										$ 27,617	$ 29,556
Revenues, percentage within scope of ASU 2014-09										61.30%	61.30%
Month-to-Month Customers [Member] | Revenue, Product and Service Benchmark [Member]
Revenues, percentage										44.00%
Month-to-Month Customers [Member] | Revenue Benchmark [Member]
Revenues, percentage											44.70%
Competitive Local Exchange Carrier Business Customers [Member]
Revenues, within scope of ASU 2014-09										$ 13,162	$ 14,060
Revenues, percentage within scope of ASU 2014-09										29.20%	29.10%
Competitive Local Exchange Carrier Business Customers [Member] | Revenue, Product and Service Benchmark [Member]
Revenues, percentage										21.00%
Competitive Local Exchange Carrier Business Customers [Member] | Revenue Benchmark [Member]
Revenues, percentage											21.30%
Network Access Customers [member]
Revenues, within scope of ASU 2014-09										$ 2,513	$ 2,711
Revenues, percentage within scope of ASU 2014-09										5.60%	5.60%
Network Access Customers [member] | Revenue, Product and Service Benchmark [Member]
Revenues, percentage										4.00%
Network Access Customers [member] | Revenue Benchmark [Member]
Revenues, percentage											4.10%
Month-to-Month, Competitive Local Exchange Carrier Business, and Network Access Customers [Member]
Revenues, within scope of ASU 2014-09										$ 43,292	$ 46,327
Revenues, percentage within scope of ASU 2014-09										96.10%	96.00%
Month-to-Month, Competitive Local Exchange Carrier Business, and Network Access Customers [Member] | Revenue, Product and Service Benchmark [Member]
Revenues, percentage										69.00%
Month-to-Month, Competitive Local Exchange Carrier Business, and Network Access Customers [Member] | Revenue Benchmark [Member]
Revenues, percentage											70.10%
Global Access Customers [Member]
Revenues, within scope of ASU 2014-09	[1]									$ 1,770	$ 1,932
Revenues, percentage within scope of ASU 2014-09	[1]									3.90%	4.00%
Global Access Customers [Member] | Revenue, Product and Service Benchmark [Member]
Revenues, percentage	[1]									2.80%
Global Access Customers [Member] | Revenue Benchmark [Member]
Revenues, percentage	[1]										2.90%
Month-to-Month, Competitive Local Exchange Carrier Business, Network Access, and Global Access Customers [Member]
Revenues, within scope of ASU 2014-09										$ 45,062	$ 48,259
Revenues, percentage within scope of ASU 2014-09										100.00%	100.00%
Month-to-Month, Competitive Local Exchange Carrier Business, Network Access, and Global Access Customers [Member] | Revenue, Product and Service Benchmark [Member]
Revenues, percentage										71.80%
Month-to-Month, Competitive Local Exchange Carrier Business, Network Access, and Global Access Customers [Member] | Revenue Benchmark [Member]
Revenues, percentage											73.00%
Managed Services [Member]
Revenues	[2]									$ 626	$ 639
Managed Services [Member] | Revenue, Product and Service Benchmark [Member]
Revenues, percentage	[2]									1.00%
Managed Services [Member] | Revenue Benchmark [Member]
Revenues, percentage	[2]										1.00%
Sales Channel, Directly to Consumer [Member]
Revenues										$ 45,688	$ 48,898
Sales Channel, Directly to Consumer [Member] | Revenue, Product and Service Benchmark [Member]
Revenues, percentage										72.80%
Sales Channel, Directly to Consumer [Member] | Revenue Benchmark [Member]
Revenues, percentage											74.00%
Local services [Member]
Revenues										$ 19,313	$ 20,948
Local services [Member] | Sales Channel, Directly to Consumer [Member]
Revenues										19,313	20,948
Network Access [Member]
Revenues										21,210	21,662
Network Access [Member] | Sales Channel, Directly to Consumer [Member]
Revenues										4,283	4,643
Internet [Member]
Revenues										14,646	15,221
Internet [Member] | Sales Channel, Directly to Consumer [Member]
Revenues										14,646	15,221
Transport Services [Member]
Revenues										4,236	4,774
Transport Services [Member] | Sales Channel, Directly to Consumer [Member]
Revenues										4,085	4,623
Video and Security [Member]
Revenues										2,735	2,824
Video and Security [Member] | Sales Channel, Directly to Consumer [Member]
Revenues										2,735	2,824
Management Service [Member]
Revenues										626	639
Management Service [Member] | Sales Channel, Directly to Consumer [Member]
Revenues										626	639
Indefeasible Rights-Of-Use Agreements, Outside of ASU 2014-09 Scope [Member]
Revenues	[2]									$ 151	$ 151
Indefeasible Rights-Of-Use Agreements, Outside of ASU 2014-09 Scope [Member] | Revenue, Product and Service Benchmark [Member]
Revenues, percentage	[2]									0.20%
Indefeasible Rights-Of-Use Agreements, Outside of ASU 2014-09 Scope [Member] | Revenue Benchmark [Member]
Revenues, percentage	[2]										0.20%
Network Access, Outside of ASU 2014-09 Scope [Member]
Revenues	[2]									$ 16,927	$ 17,019
Network Access, Outside of ASU 2014-09 Scope [Member] | Revenue, Product and Service Benchmark [Member]
Revenues, percentage	[2]									27.00%
Network Access, Outside of ASU 2014-09 Scope [Member] | Revenue Benchmark [Member]
Revenues, percentage	[2]										25.80%

[1] Fixed fees charged to MTM customers and CLEC business customers.

[2] Revenue generated from sources not within the scope of ASU 2014-09. See Note 2, Summary of Significant Accounting Policies – Revenue Recognition, for accounting policies associated with these sources of revenue.

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Note 7 - Notes Payable - Maturities of Notes Payable (Details) $ in Thousands	Dec. 31, 2019 USD ($)
2020	$ 4,350
2021	4,350
2022	61,512
2023
Total	$ 70,212

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Note 8 - Income Tax - Effective Income Tax Rate Reconciliation (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Federal income tax at statutory rate	21.00%	21.00%	35.00%
Federal income tax provision at statutory rate	$ 2,140	$ 2,565	$ 1,491
State income tax provision, net of federal income tax effects	548	641	177
Federal tax rate change			(9,336)
Adjustments for prior years	(222)	(302)	(121)
Other	(73)	(159)	(67)
Total income tax expense (benefit)	$ 2,393	$ 2,745	$ (7,856)
Effective income tax rate	23.50%	22.50%	(184.50%)

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Note 13 - Fair Value Measurement - Fair Value of Long-term Debt (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Long-term Debt, Total	$ 70,212
New Credit Facility [Member]
Long-term Debt, Total	69,101	$ 73,011
Reported Value Measurement [Member] | New Credit Facility [Member]
Long-term Debt, Total	70,212	74,562
Estimate of Fair Value Measurement [Member] | New Credit Facility [Member]
Long-term Debt, Total	$ 69,932	$ 74,702

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Note 16 - Selected Quarterly Financial Data (Unaudited) - Selected Quarterly Financial Data (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended								12 Months Ended
	Dec. 31, 2019	Sep. 30, 2019	Jun. 30, 2019	Mar. 31, 2019	Dec. 31, 2018	Sep. 30, 2018	Jun. 30, 2018	Mar. 31, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Revenue	$ 15,591	$ 15,762	$ 15,658	$ 15,755	$ 16,200	$ 16,252	$ 16,890	$ 16,726	$ 62,766	$ 66,068	$ 68,526
Operating income	3,532	3,841	3,708	3,763	4,024	4,536	5,172	4,061	$ 14,844	$ 17,793	$ 19,607
Net income	$ 1,979	$ 1,819	$ 1,717	$ 2,281	$ 2,237	$ 2,326	$ 2,908	$ 1,996
Net income per common share-basic (in dollars per share)	$ 0.58	$ 0.53	$ 0.50	$ 0.67	$ 0.66	$ 0.69	$ 0.86	$ 0.59	$ 2.28	$ 2.79	$ 3.62
Net income per common share-diluted (in dollars per share)	$ 0.58	$ 0.53	$ 0.50	$ 0.66	$ 0.65	$ 0.67	$ 0.85	$ 0.58	$ 2.27	$ 2.76	$ 3.52

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Note 6 - Investments (Details Textual) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2019
Derivative Assets, Noncurrent, Total	$ 4
Interest Rate Cap [Member]
Derivative, Term of Contract	2 years
Derivative Assets, Noncurrent, Total	$ 4	$ 0

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Note 3 - Goodwill and Intangible Assets - Aggregate Amortization Expense (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
2017	$ 389	$ 408	$ 458
2020	372
2021	158
Total	$ 530	$ 919

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Note 7 - Notes Payable - New Credit Facility (Details) (Parentheticals)	Dec. 31, 2019	Dec. 31, 2018
New Credit Facility [Member]
Notes payable, interest rate	5.95%	6.77%

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Note 6 - Investments (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Summary of Investment Holdings, Schedule of Investments [Table Text Block]

	December 31,
	201 9		201 8
Investment in CoBank stock	$	1,192	$	1,192
Rental property		194		219
Other miscellaneous		91		87
	$	1,477	$	1,498

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Note 14 - Commitments and Contingencies

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Commitments and Contingencies Disclosure [Text Block]

14. Commitments and Contingencies

From time to time, the Company

may

be involved in various claims, legal actions and regulatory proceedings incidental to and in the ordinary course of business, including administrative hearings of the APSC, the MPUC, the MDTC, the MPSC, the NHPUC, the VPUC and the WVPSC, relating primarily to rate making and customer service requirements. In addition, the Company

may

be involved in similar proceedings with interconnection carriers and the FCC. Currently,

none

of the Company’s legal proceedings are expected to have a material adverse effect on the Company’s business.

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Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2019

Accounting Policies [Abstract]

Basis of Accounting, Policy [Policy Text Block]

Basis of Presentation and Principles of Consolidation

The consolidated financial statements include the accounts of Otelco Inc. and its subsidiaries, all of which are either directly or indirectly wholly owned. These include: Blountsville Telephone LLC (“BTC”); Brindlee Mountain Telephone LLC; CRC Communications LLC; Granby Telephone LLC; Hopper Telecommunications LLC; Mid-Maine Telecom LLC; Mid-Maine TelPlus LLC; Otelco Mid-Missouri LLC and its wholly-owned subsidiary I-Land Internet Services LLC; Otelco Telecommunications LLC; Otelco Telephone LLC; Pine Tree Telephone LLC; Saco River Telephone LLC; Shoreham Telephone LLC (“STC”); and War Telephone LLC.

The accompanying consolidated financial statements include the accounts of Otelco Inc. and all of the aforesaid subsidiaries after elimination of all material intercompany balances and transactions.

Use of Estimates, Policy [Policy Text Block]

Use of Estimates

The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America, which require management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying consolidated financial statements are based upon management’s evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results

may

differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements.

Significant accounting estimates include the recoverability of goodwill, identified intangibles, long-term assets, deferred tax valuation allowances and allowance for bad debt.

Intercompany Profit to Regulated Affiliates, Policy [Policy Text Block]

Regulatory Accounting

The Company follows the accounting for regulated enterprises, which is now part of Accounting Standards Codification (“ASC”)

980,

Regulated Operations

(“ASC

980”

), as issued by the Financial Accounting Standards Board (the “FASB”). This accounting practice recognizes the economic effects of rate regulation by recording costs and a return on investment as such amounts are recovered through rates authorized by regulatory authorities. Accordingly, ASC

980

requires the Company to depreciate telecommunications property and equipment over the estimated useful lives approved by regulators, which could be different than the estimated useful lives that would otherwise be determined by management. ASC

980

also requires deferral of certain costs and obligations based upon approvals received from regulators to permit recovery of such amounts in future years. Criteria that would give rise to the discontinuance of accounting in accordance with ASC

980

include (

1

) increasing competition restricting the ability of the Company to establish prices that allow it to recover specific costs and (

2

) significant changes in the manner in which rates are set by regulators from cost-based regulation to another form of regulation. The Company periodically reviews the criteria to determine whether the continuing application of ASC

980

is appropriate for its rural local exchange carriers (“RLECs”). As of

December 31, 2019,

and

2018,

84.3%

and

81.4%,

respectively, of the Company’s net property, plant and equipment was accounted for under ASC

980.

The Company is subject to reviews and audits by regulatory agencies. The effect of these reviews and audits, if any, will be recorded in the period in which they

first

become known and determinable.

Goodwill and Intangible Assets, Policy [Policy Text Block]

Intangible Assets and Goodwill

Intangible assets, other than goodwill, consist primarily of the fair values of customer related intangibles, non-compete agreements and long-term customer contracts acquired in connection with business combinations. Goodwill represents the excess of total acquisition cost over the assigned value of net identifiable tangible and intangible assets acquired through various business combinations, less any impairment. Due to the regulatory accounting required by ASC

980,

the Company did

not

record acquired regulated telecommunications property and equipment at fair value as required by ASC

805,

Business Combinations

, through

2004.

In accordance with

47

CFR

32.2000,

the federal regulation governing acquired telecommunications property and equipment, such property and equipment is accounted for at original cost, and depreciation and amortization of property and equipment acquired is credited to accumulated depreciation.

The Company performs a quarterly review of its identified intangible assets to determine if facts and circumstances exist which indicate that the useful life is shorter than originally estimated or that the carrying amount of assets

may

not

be recoverable. If such facts and circumstances do exist, the Company assesses the recoverability of identified intangible assets by comparing the projected undiscounted net cash flows associated with the related asset or group of assets over their remaining lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets.

ASC

350,

Intangibles

-

Goodwill and Other

(“ASC

350”

), requires that goodwill be tested for impairment annually, unless potential interim indicators exist that could result in impairment. The Company performs an annual step

1

goodwill impairment test that compares the fair value of the reporting unit to the carrying amount. If the carrying amount exceeds the fair value, an impairment loss is recognized in an amount equal to that excess.

Revenue [Policy Text Block]

Revenue Recognition

Local services

. Local services revenue for monthly recurring local services is billed in advance to a portion of the Company’s customers and in arrears to the balance of the customers. The Company records revenue for charges that have

not

yet been invoiced to its customers as unbilled revenue when services are rendered. The Company records revenue billed in advance as advanced billings and defers recognition until such revenue is earned. Long distance service is billed to customers in arrears based on actual usage. The Company records unbilled long distance revenue as unbilled revenue when services are rendered. Unlimited long distance in bundles is billed at a flat rate and recognized over the period of time the service is provided.

Network access

. Network access revenue is derived from several sources. Revenue for interstate access services is received through tariffed access charges filed with the FCC. These access charges are billed by the Company to interstate interexchange carriers and retail voice customers. A portion of the access charge revenue received by the Company is based upon its actual cost of providing interstate access service, plus a return on the investment dedicated to providing that service. The balance of the access charge revenue received by the Company is based upon the nationwide average schedule costs of providing interstate access services. Rates for the Company’s competitive subsidiaries are set by FCC rule to be

no

more than the interconnecting interstate rate of the predominant local carrier. The Company also receives Connect America Fund (“CAF”) revenues from the Universal Service Administrative Company (“USAC”). The CAF revenues are known as Connect America Fund–Intercarrier Compensation (“CAF-ICC”), A-CAM, and Connect America Fund–Broadband Loop Support (“CAF-BLS”). CAF-ICC is based on the Company’s frozen traffic sensitive rate of return, less access charges billed to interexchange carriers and end user retail customers. A-CAM revenues are based on the FCC’s model, which calculates the cost to provide broadband services to rural areas of each state. All of the Company’s RLECs receive A-CAM revenues.

Revenue for intrastate access service is received through tariffed access charges billed by the Company to the originating intrastate carrier using access rates filed with the Alabama Public Service Commission (the “APSC”), the Maine Public Utilities Commission (the “MPUC”), the Massachusetts Department of Telecommunications and Cable (the “MDTC”), the Missouri Public Service Commission (the “MPSC”), the New Hampshire Public Utilities Commission (the “NHPUC”), the Vermont Public Utility Commission (the “VPUC”) and the West Virginia Public Service Commission (the “WVPSC”) and are retained by the Company.  

Revenue for the intrastate/interLATA access service is received through tariffed access charges as filed with the APSC, MDTC, MPSC, MPUC, NHPUC, VPUC and WVPSC. These access charges are billed to the intrastate carriers and are retained by the Company. Revenue for terminating and originating long distance service is received through charges for providing usage of the local exchange network. Toll revenues are recognized when services are rendered.

The FCC’s Intercarrier Compensation order, issued in

October 2011,

has significantly changed the way telecommunication carriers receive compensation for exchanging traffic and state tariffed rates. All terminating intrastate rates that exceeded the interstate rate were reduced to the terminating interstate rate effective

July 2013.

Beginning in

2014,

the interstate and intrastate rates began being reduced over a

six

year period to “bill and keep” in which carriers bill their customers for services and keep those charges but neither pay for nor receive compensation from traffic sent to or received from other carriers. In addition, subsidies to carriers serving high cost areas has been phased out over an extended period. STC was the only RLEC receiving a minimal high cost subsidy as of

December 31, 2019.

Revenues for interstate access services are based on reimbursement of costs and an allowed rate of return. Revenues of this nature are received from USAC. The FCC’s Rate-of-Return Universal Service Fund Reform order, issued in

March 2016,

reduced the authorized rate-of-return by

25

basis points in

2016

and will reduce the authorized rate-of-return by

25

basis points in each subsequent year until

2021.

The FCC’s Intercarrier Compensation order, issued in

October 2011,

capped each year’s revenue requirement (rate of return and reimbursement of costs) at

95.0%

of the previous year’s revenue requirement. Such revenues amounted to

23.3%,

21.3%,

and

20.7%

of the Company’s total revenues for the years ended

December 31, 2019,

2018,

and

2017,

respectively.

Internet, tran

sport service,

cable

and satellite

television

and cloud hosting and managed services

. Internet, transport service, cable and satellite television and cloud hosting and managed services revenues are recognized when services are rendered. Operating revenues from the lease of dark fiber covered by indefeasible rights-of-use agreements are recorded as earned. In some cases, the entire lease payment is received at inception of the lease and recognized ratably over the lease term after recognition of expenses associated with lease inception. The Company has deferred revenue in the consolidated balance sheets as of

December 31, 2019,

and

2018,

of

$2.1

million and

$2.3

million, respectively, related to transport services, which is included as part of advanced billing and payments. The Company has deferred revenue in the consolidated balance sheets as of

December 31, 2019,

and

2018,

of

$229

thousand and

$126

thousand, respectively, related to other services, which is included as part of advanced billing and payments.

Cash and Cash Equivalents, Policy [Policy Text Block]

Cash and Cash Equivalents

Cash equivalents are stated at cost plus accrued interest, which approximates fair value. Cash equivalents are high-quality, short-term money market instruments and highly liquid debt instruments with an original maturity of

three

months or less when purchased. The cash equivalents are readily convertible to known amounts of cash and are so near maturity that they present insignificant risk of changes in value because of changes in interest rates.

Receivable [Policy Text Block]

Accounts Receivable

The Company extends credit to its business and residential customers based upon a written credit policy. Service interruption is the primary vehicle for controlling losses. Accounts receivable are recorded at the invoiced amount and do

not

bear interest. The allowance for doubtful accounts is the Company’s best estimate for the amount of probable credit losses in the Company’s existing accounts receivable. The Company establishes an allowance for doubtful accounts based upon factors surrounding the credit risk of specific customers, historical trends, and other information. Receivable balances are reviewed on an aged basis and account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Inventory, Policy [Policy Text Block]

Materials and Supplies

Materials and supplies are stated at the lower of cost or realizable value. Cost is determined using an average cost basis.

Property, Plant and Equipment, Policy [Policy Text Block]

Property and Equipment

Regulated property and equipment is stated at original cost less any impairment. Unregulated property and equipment purchased through acquisitions is stated at its fair value at the date of acquisition less any impairment. Expenditures for improvements that significantly add to productive capacity or extend the useful life of an asset are capitalized. Expenditures for maintenance and repairs are expensed when incurred. Depreciation of regulated property and equipment is computed principally using the straight-line method over useful lives determined by the APSC for Alabama locations, while the other regulated locations use similar useful lives as Alabama. Depreciation of unregulated property and equipment primarily employs the straight-line method over industry standard estimated useful lives.

Impairment or Disposal of Long-Lived Assets, Policy [Policy Text Block]

Long-Lived Assets

The Company reviews its long-lived assets for impairment at each balance sheet date and whenever events or changes in circumstances indicate that the carrying amount of an asset should be assessed. To determine if impairment exists, the Company estimates the future undiscounted cash flows expected to result from the use of the asset being reviewed for impairment. If the sum of these expected future cash flows is less than the carrying amount of the asset, the Company recognizes an impairment loss in accordance with guidance included in ASC

360,

Property, Plant, and Equipment

. The amount of the impairment recognized is determined by estimating the fair value of the assets and recording a loss for the excess of the carrying value over the fair value.

Deferred Charges, Policy [Policy Text Block]

Deferred Financing Costs

Deferred financing and loan costs consist of debt issuance costs incurred in obtaining long-term financing, which are amortized using the effective interest method. Amortization of deferred financing and loan costs is classified as “Interest expense”. Deferred financing and loan costs are presented in the balance sheet as a direct deduction from the related debt liability. When amendments to debt agreements are considered to extinguish existing debt per guidance included in ASC

470,

Debt

, the remaining deferred financing costs are expensed at the time of amendment.

Income Tax, Policy [Policy Text Block]

Income Taxes

The Company accounts for income taxes using the asset and liability approach in accordance with guidance included in ASC

740,

Income Taxes

(“ASC

740”

). The asset and liability approach requires the recognition of deferred tax liabilities and assets for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities using enacted tax rates. Any changes in enacted tax rates or tax laws are included in the provision for income taxes in the period of enactment. A valuation allowance is provided when it is more likely than

not

that some portion or all of the deferred tax assets will

not

be realized.

The provision for income taxes consists of an amount for the taxes currently payable and a provision for the tax consequences deferred to future periods.

Interest and penalties related to income tax matters would be recognized in income tax expense. As of

December 31, 2019,

there was

no

material amount recorded for interest and penalties.

The Company conducts business in multiple jurisdictions and, as a result,

one

or more subsidiaries file income tax returns in the U.S. federal, various state and local jurisdictions. All tax years since

2016

are open for examination by various tax authorities.

Fair Value of Financial Instruments, Policy [Policy Text Block]

Fair Value of Financial Instruments

The carrying values of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaids, accounts payable and accrued liabilities, approximate their fair values as of

December 31, 2019,

and

2018,

due to their short term nature. The fair value of debt instruments at

December 31, 2019,

and

2018,

is disclosed in the notes to the consolidated financial statements.

Earnings Per Share, Policy [Policy Text Block]

Income

per Common Share

The Company computes net income per common share in accordance with the provisions included in ASC

260,

Earnings per Share

(“ASC

260”

). Under ASC

260,

basic and diluted income per share is computed by dividing net income available to stockholders by the weighted average number of common shares and common share equivalents outstanding during the period. Basic income per common share excludes the effect of potentially dilutive securities, while diluted income per common share reflects the potential dilution that would occur if securities or other contracts to issue common shares were exercised for, converted into or otherwise resulted in the issuance of common shares.

New Accounting Pronouncements, Policy [Policy Text Block]

Recently Adopted Accounting Pronouncements

In

May 2014,

the FASB issued Accounting Standards Update (“ASU”)

2014

-

09,

Revenue from Contracts with Customers (Topic

606

)

(“ASU

2014

-

09”

). This ASU requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This ASU also provides a more robust framework for revenue issues and improves comparability of revenue recognition practices across industries. This ASU was the product of a joint project between the FASB and the International Accounting Standards Board to clarify the principles for recognizing revenue and to develop a common revenue standard. ASU

2014

-

09

permits the use of either a retrospective or modified retrospective application. This guidance was to be effective for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2016,

with early adoption

not

permitted. In

July 2015,

the FASB issued ASU

2015

-

14,

Revenue from Contracts with Customers (Topic

606

): Deferral of the Effective Date.

This ASU confirmed a

one

-year delay in the effective date of ASU

2014

-

09,

making the effective date for the Company the

first

quarter of fiscal

2018

instead of the

first

quarter of fiscal

2017.

In

March 2016,

the FASB issued ASU

2016

-

08,

Revenue from Contracts with Customers (Topic

606

): Principal versus Agent Consideration (Reporting Revenues Gross versus Net)

. This ASU is further guidance to ASU

2014

-

09,

and clarifies principal versus agent considerations. In

April 2016,

the FASB issued ASU

2016

-

10,

Revenue from Contracts with Customers (Topic

606

): Identifying Performance Obligations and Licensing.

This ASU is also further guidance to ASU

2014

-

09,

and clarifies the identification of performance obligations. In

May 2016,

the FASB issued ASU

2016

-

12,

Revenue from Contracts with Customers (Topic

606

): Narrow-Scope Improvements and Practical Expedients.

This ASU is also further guidance to ASU

2014

-

09,

and clarifies assessing the narrow aspects of recognizing revenue. In

December 2016,

the FASB issued ASU

2016

-

20,

Technical Corrections and Improvements to Topic

606,

Revenue from Contracts with Customers.

This ASU is also further guidance to ASU

2014

-

09,

and clarifies technical corrections and improvements for recognizing revenue.

In

January 2017,

the FASB issued ASU

2017

-

03,

Accounting Changes and Error Corrections (Topic

250

) and Investments-Equity Method and Joint Ventures (Topic

323

)

(“ASU

2017

-

03”

). This ASU requires registrants to evaluate the impact ASU

2014

-

09

will have on financial statements and adequately disclose this information to assist the reader in assessing the significance of ASU

2014

-

09

on the financial statements when adopted. The Company commenced its assessment of ASU

2014

-

09

beginning in

June 2016.

This assessment included analyzing ASU

2014

-

09’s

impact on the Company’s various revenue streams, comparing the Company’s historical accounting policies and practices to the requirements of ASU

2014

-

09,

and identifying potential differences from applying the requirements of ASU

2014

-

09

to the Company’s contracts. The Company has used a

five

-step process to identify the contract with the customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when or as the performance obligations are satisfied. The Company has implemented the appropriate changes to its business processes, systems and controls to support revenue recognition and disclosures under ASU

2014

-

09.

The Company adopted ASU

2014

-

09

at the beginning of its

2018

fiscal year using the modified retrospective method applied to those contracts which were

not

completed as of

January 1, 2018.

Prior period amounts have

not

been adjusted and continue to be reported in accordance with historic accounting standards in effect during those periods. The adoption of ASU

2014

-

09

and related amendments did

not

have a material impact on the Company’s consolidated financial statements.

In

January 2016,

the FASB issued ASU

2016

-

01,

Financial Instruments - Overall (Subtopic

825

-

10

)

(“ASU

2016

-

01”

). This ASU addresses certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. ASU

2016

-

01

requires separate presentation of financial assets and financial liabilities by measurement category and form of financial asset (that is, securities or loans and receivables) on the balance sheet or in the accompanying notes to the financial statements. That presentation provides financial statement users with more decision-useful information about an entity’s involvement in financial instruments. The provisions of this ASU were to be effective for annual periods beginning after

December 15, 2017,

and interim periods within those years, with early adoption permitted. In

February 2018,

the FASB issued ASU

2018

-

03,

Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic

825

-

10

),

which made targeted improvements to address certain aspects of recognition, measurement, presentation, and disclosure of financial instruments. This ASU also confirmed a

six

-month delay in the effective date of ASU

2016

-

01,

making the effective date for the Company the

second

quarter of fiscal

2018

instead of the

first

quarter of fiscal

2018,

with early adoption permitted. The Company adopted ASU

2016

-

01

as of

March 31, 2018,

and that adoption did

not

have a material impact on the Company’s consolidated financial statements.

In

February 2016,

the FASB issued ASU

2016

-

02,

Leases (Topic

842

)

(“ASU

2016

-

02”

)

.

This ASU requires lessees to recognize most leases on the balance sheet. The provisions of this guidance are effective for annual periods beginning after

December 15, 2018,

and interim periods within those years, with early adoption permitted. In

January 2017,

the FASB issued ASU

2017

-

03,

which requires registrants to evaluate the impact ASU

2016

-

02

will have on financial statements and adequately disclose this information to assist the reader in assessing the significance of ASU

2016

-

02

on the financial statements when adopted. In

January 2018,

the FASB issued ASU

2018

-

01,

Leases (Topic

842

): Land Easement Practical Expedient for Transition to Topic

842

. This ASU provides an optional transition practical expedient to

not

evaluate under ASU

2016

-

02

existing or expired land easements that were

not

previously accounted for as leases under ASC Topic

840,

Leases

. An entity that elects this practical expedient should evaluate new or modified land easements under ASU

2016

-

02

beginning at the date that the entity adopts ASU

2016

-

02.

In

July 2018,

the FASB issued ASU

2018

-

10,

Codification Improvements to Topic

842,

Leases,

which provides improvements and clarifications for ASU

2016

-

02.

In

July 2018,

the FASB issued ASU

2018

-

11,

Leases (Topic

842

): Targeted Improvements

(“ASU

2018

-

11”

). This ASU provides an additional transition method by allowing entities to initially apply the new lease standard at the date of adoption with a cumulative effect adjustment to the opening balances of retained earnings in the period of adoption. This ASU also gives lessors the option of electing, as a practical expedient by class of underlying asset,

not

to separate the lease and non-lease components of a contract when those lease contracts meet certain criteria. In

December 2018,

the FASB issued ASU

2018

-

20,

Narrow-Scope Improvements for Lessors.

This ASU clarifies lessor treatment for sales taxes and other similar taxes collected from lessees, certain lessor costs, and recognition of variable payments for contracts with lease and non-lease components. In

March 2019,

the FASB issued ASU

2019

-

01,

Codification Improvements.

This ASU clarifies determining the fair value of the underlying asset by lessors that are

not

manufacturers or dealers, presentation on the statement of cash flows for sales-type and direct financing leases, and transition disclosures related to Topic

250,

Accounting Changes and Error Corrections. The Company has completed its evaluation of the requirements of this guidance and implemented the processes necessary to adopt ASU

2016

-

02,

as amended. The Company has elected certain practical expedients available at adoption. The Company elected the package of practical expedients upon transition

not

to reassess whether expired or existing contracts contain leases under the new definition of a lease;

not

to reassess the lease classification for expired or existing leases; and

not

to reassess whether previously capitalized initial direct costs would qualify for capitalization under ASU

2016

-

02.

In evaluating certain equipment rental arrangements such as cable, internet and security service contracts, the Company considered the practical expedient that allows lessors to elect, by class of underlying asset, to

not

separate non-lease components from the associated lease components if the non-lease components otherwise would be accounted for in accordance with the new revenue recognition standard. The Company elected this practical expedient as the following

two

criteria are met; the lease component and the associated non-lease components have the same timing and pattern of transfer; and the lease component, if accounted for separately, would be classified as an operating lease. The Company elected to adopt the new standard using the transition method provided by ASU

2018

-

11;

therefore, prior periods will

not

be restated. The Company has determined that the impact of adoption is limited to real property leases and is consistent with industry practices. Adoption of the new standard resulted in the Company recognizing an aggregate of

$1,073,919

in lease liabilities and corresponding right of use (“ROU”) assets and

no

impact on the opening retained earnings balances. The adoption of ASU

2016

-

02

had an immaterial impact on the consolidated statements of operations and consolidated statements of cash flows as of

December 31, 2019.

In

August 2016,

the FASB issued ASU

2016

-

15

, Statement of Cash Flows (Topic

230

): Classification of Certain Cash Receipts and Cash Payments

. This ASU addresses how certain cash receipts and cash payments are presented and classified in the statement of cash flows under Topic

230,

Statement of Cash Flows, and other Topics. This ASU is effective for annual reporting periods, and interim periods therein, beginning after

December 15, 2017,

with early adoption permitted. The Company adopted this ASU and that adoption did

not

have a material impact on the Company’s consolidated financial statements.

In

May 2017,

the FASB issued ASU

2017

-

09,

Compensation-Stock Compensation (Topic

718

)

(“ASU

2017

-

09”

). ASU

2017

-

09

provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting in ASC Topic

718,

Stock Compensation

. ASU

2017

-

09

is effective for fiscal years beginning after

December 15, 2017,

and interim periods within those fiscal years. Early adoption is permitted for any interim period for which financial statements have

not

been issued. ASU

2017

-

09

should be applied prospectively to an award modified on or after the adoption date. The Company adopted this ASU and that adoption did

not

have a material impact on the Company’s consolidated financial statements.

In

May 2017,

the FASB issued ASU

2017

-

10,

Service Concession Arrangements (Topic

853

)

(“ASU

2017

-

10”

). The objective of this ASU is to specify that an operating entity should

not

account for a service concession arrangement that meets certain criteria as a lease in accordance with ASC Topic

840,

Leases

. ASU

2017

-

10

further states that the infrastructure used in a service concession arrangement should

not

be recognized as property, plant, and equipment of the operating entity. The provisions of this ASU are effective for annual periods beginning after

December 15, 2017,

and interim periods within those years, with early adoption permitted. The Company adopted this ASU and that adoption did

not

have a material impact on the Company’s consolidated financial statements.

In

March 2018,

the FASB issued ASU

2018

-

05,

Income Taxes (Topic

740

)

. The objective of this ASU is to amend ASC

740,

Income Taxes to reflect Staff Accounting Bulletin

No.

118,

issued by the staff of the Securities and Exchange Commission (“SAB

118”

), which addresses the enactment of the Tax Cuts and Jobs Act (the “Tax Act”). SAB

118

outlines the approach companies

may

take if they determine that the necessary information is

not

available (in reasonable detail) to evaluate, compute, and prepare accounting entries to recognize the effects of the Tax Act by the time the financial statements are required to be filed. Companies

may

use this approach when the timely determination of some or all of the income tax effects from the Tax Act are incomplete by the due date of the financial statements.  A reporting entity must act in good faith and update provisional amounts as soon as more information becomes available, evaluated and prepared, during a measurement period that cannot exceed

one

year from the enactment date. Initial reasonable estimates and subsequent changes to provisional amounts should be reported in income tax expense or benefit from continuing operations in the period in which they are determined.  As of

December 31, 2017,

the provisional amount recorded related to the remeasurement of the Company’s deferred tax liability balance was

$9.3

million and reflected a

one

-time reduction in the Company’s income tax provision. As of

December 31, 2017,

the Company finalized its accounting estimates for income tax effects related to the Tax Act. The Company elected

not

to utilize the measurement window provided under SAB

118.

The Company did

not

record any adjustments to its

2017

income tax effects resulting from the Tax Act.

In

June 2018,

the FASB issued ASU

2018

-

07,

Compensation – Stock Compensation (Topic

718

)

(“ASU

2018

-

07”

). This ASU expands the scope of ASU

2017

-

09,

which currently only includes share-based payments issued to employees, to also include share-based payments issued to nonemployees for goods and services. The amendments in this ASU are effective for public companies for fiscal years beginning after

December 15, 2018,

and interim periods within those fiscal years.  Early adoption is permitted, but

no

earlier than the Company’s adoption date of ASU

2014

-

09.

The Company adopted this ASU and that adoption did

not

have a material impact on the Company’s consolidated financial statements.

Recent Accounting Pronouncements

During

2018,

the FASB issued ASUs

2018

-

01

through

2018

-

20

and, during

2019,

the FASB has issued ASUs

2019

-

01

through

2019

-

12.

Except for the ASUs discussed above and below, these ASUs provide technical corrections or simplifications to existing guidance and to specialized industries or entities and therefore have minimal, if any, impact on the Company.

In

January 2017,

the FASB issued ASU

2017

-

04,

Intangibles-Goodwill and Other (Topic

350

)

(“ASU

2017

-

04”

). The objective of this ASU is to simplify how an entity is required to test goodwill for impairment by eliminating Step

2

from the goodwill impairment test. ASU

2017

-

04

is effective for fiscal years beginning after

December 15, 2019,

and interim periods within those fiscal years. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after

January 1, 2017.

The Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

In

August 2018,

the FASB issued ASU

2018

-

13,

Fair Value Measurement (Topic

820

)

(“ASU

2018

-

13”

)

.

This ASU modifies the disclosure requirements on fair value measurements in ASU

2018

-

13,

based on the concepts in the Concepts Statement, including the consideration of costs and benefits. This ASU eliminates, adds and modifies certain disclosure requirements for fair value measurements as part of its disclosure framework project. ASU

2018

-

13

is effective for fiscal years beginning after

December 15, 2019,

and interim periods within those fiscal years. An entity is permitted to early adopt any removed or modified disclosures upon issuance of this ASU and delay adoption of the additional disclosures until their effective date. The Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

In

November 2018,

the FASB issued ASU

2018

-

19,

Codification Improvements to Topic

326,

Financial Instruments – Credit Losses

(“ASU

2018

-

19”

)

.

This ASU improves the disclosure requirements in ASU

2016

-

13,

Financial Instruments - Credit Losses (Topic

326

): Measurement of Credit Losses on Financial Instruments

(“ASU

2016

-

13”

) issued in

June 2016,

to make a cumulative-effect adjustment to opening retained earnings as of the beginning of the

first

reporting period in which the amendments are effective. The effective date and transition requirements for the amendments in this update are the same as the effective dates and transition requirements in ASU

2016

-

13,

as amended by ASU

2018

-

19.

In

April 2019,

the FASB issued ASU

2019

-

04,

Codification Improvements to Topic

326,

Financial Instruments – Credit Losses, Topic

815,

Derivatives and Hedging, and Topic

825,

Financial Instruments.

This ASU improves the disclosure requirements in ASU

2016

-

13

issued in

June 2016,

to allow the measurement of allowance for credit losses on accrued interest receivable balances separately from other components of the amortized cost basis of associated financial assets. In

May 2019,

the FASB issued ASU

2019

-

05,

Financial Instruments – Credit Losses (Topic

326

).

This ASU improves the disclosure requirements in ASU

2016

-

13

issued in

June 2016,

to allow companies to irrevocably elect, upon adoption of ASU

2016

-

13,

the fair value option on financial instruments that (

1

) were previously recorded at amortized cost and (

2

) are within the scope of ASC

326

-

20

if the instruments are eligible for the fair value option under ASC

825

-

10.

The effective date and transition requirements for the amendments in this update are the same as the effective dates and transition requirements in ASU

2016

-

13,

as amended by ASU

2018

-

19.

In

November 2019,

the FASB issued ASU

2019

-

10,

Financial Instruments – Credit Losses (Topic

326

), Derivatives and Hedging (Topic

815

), and Leases (Topic

842

)

(“ASU

2019

-

10”

)

.

This ASU defers certain major updates

not

yet effective due to the challenge’s private companies, smaller public companies, and

not

-for-profit organizations are having with implementation. In

November 2019,

the FASB issued ASU

2019

-

11,

Codification Improvements to Topic

326,

Financial Instruments – Credit Losses.

The amendments in this ASU clarify and address stakeholders’ specific issues about certain aspects in update

2016

-

13.

ASU

2019

-

10

has deferred the effective date for credit losses for smaller reporting companies to years beginning after

December 15, 2022,

including interim periods within those fiscal years. An entity is still permitted to early adopt as of the fiscal years beginning after

December 15, 2018,

including interim periods within those fiscal years. The Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

In

November 2019,

the FASB issued ASU

2019

-

08,

Compensation – Stock Compensation (Topic

718

) and Revenue from Contracts with Customers (Topic

606

); Codification Improvements – Share-Based Consideration Payable to a Customer

(“ASU

2019

-

08”

). ASU

2019

-

08,

requires that an entity apply the guidance in ASU

2018

-

07

to measure and classify share-based payment awards granted to a customer. The amount recorded as a reduction in the transaction price should be based on the grant-date fair value of the share-based payment award. The amendments in ASU

2019

-

08

are effective for public companies for fiscal years beginning after

December 15, 2019,

and interim periods within those fiscal years.  Early adoption is permitted, but

no

earlier than the Company’s adoption of the amendments in ASU

2018

-

07.

As of

December 31, 2019,

the Company does

not

have any share-based payment awards to customers, therefore the Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

In

December 2019,

the FASB issued ASU

2019

-

12,

Income Taxes (Topic

740

)

(“ASU

2019

-

12”

). This ASU simplifies the accounting for income taxes by removing certain exceptions to the general principles in Topic

740.

The amendments in ASU

2019

-

12

are effective for public companies for fiscal years, and interim periods within those fiscal years, beginning after

December 15, 2020.

Early adoption of the amendments is permitted, including adoption in any interim period for which financial statements have

not

yet been issued. An entity that elects to early adopt the amendments in an interim period should reflect any adjustments as of the beginning of the annual period that includes that interim period. Additionally, an entity that elects early adoption must adopt all the amendments in the same period. The Company does

not

expect this ASU to have a material impact on its consolidated financial statements.

XML

Note 15 - Stock Plans (Details Textual) - USD ($) $ in Thousands		12 Months Ended
	Oct. 15, 2018	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total		$ 329	$ 416
Share-based Payment Arrangement, Expense, Tax Benefit		$ 68	$ 144
Incentive and Non-Qualified Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage	20.00%
Restricted Stock Units (RSUs) [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Grants in Period		0	34,755	366,356
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Vested or Cancelled				267,413
Share-based Payment Arrangement, Amount Capitalized	$ 0		$ 0
Share-based Payment Arrangement, Expense		$ 167	290
Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Amount, Total		48	216
Restricted Stock Units (RSUs) [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				1 year
Restricted Stock Units (RSUs) [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period				3 years
Incentive Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	29,460
Non-Qualified Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross	20,540
Incentive and Non-Qualified Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Period	5 years
Share-based Payment Arrangement, Expense		$ 87	$ 18
Share-based Compensation Arrangement by Share-based Payment Award, Options, Grants in Period, Gross

XML

Note 17 - Subsequent Events (Details Textual) - Subsequent Event [Member] - New Credit Facility [Member] $ in Millions	Mar. 02, 2020 USD ($)
Debt Instrument, Covenant, Maximum Annual Aggregate Capital Expenditures	$ 10.5
Debt Instrument, Covenant, Maximum Annual Aggregate Capital Expenditures, 2021 and Thereafter	$ 10.0
Maximum Leverage Ratio for October 1, 2019 Through March 30, 2021	3.5
Maximum Leverage Ratio for April 1 , 2021 Through December 31, 2021	3.25
Maximum Leverage Ratio On or After January 1, 2022	3
Minimum Debt Service Coverage Ratio	1.75

XML

Note 7 - Notes Payable - New Credit Facility (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Notes payable, net of debt issuance cost, current	$ 3,929	$ 3,904
Notes payable, net of debt issuance cost, noncurrent	65,172	69,107
Long-term Debt, Total	70,212
New Credit Facility [Member]
Long term debt, current	4,350
Long term debt, noncurrent	65,862
Long term debt, carrying amount	70,212	74,562
Debt issuance cost, current	(421)
Debt issuance cost, long-term	(690)
Debt issuance cost	(1,111)	(1,551)
Notes payable, net of debt issuance cost, current	3,929
Notes payable, net of debt issuance cost, noncurrent	65,172
Long-term Debt, Total	$ 69,101	$ 73,011

XML

Note 5 - Other Accounts Receivable - Schedule of Other Accounts Receivable (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Other Receivables	$ 1,905	$ 1,899
Carrier Access Bills Receivable [Member]
Other Receivables	235	277
NECA Receivable [Member]
Other Receivables	1,257	1,295
Receivables from Alabama Service Fund [Member]
Other Receivables	40	53
Other Miscellaneous [Member]
Other Receivables	$ 373	$ 274

XML

Note 3 - Goodwill and Intangible Assets - Intangible Asset Summaries (Details) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Carrying Value	$ 43,755	$ 43,755
Accumulated Amortization	(43,225)	(42,836)
Net Book Value	530	919
Customer Relationships [Member]
Carrying Value	24,025	24,025
Accumulated Amortization	(23,497)	(23,110)
Net Book Value	528	915
Customer Contracts [Member]
Carrying Value	19,600	19,600
Accumulated Amortization	(19,600)	(19,600)
Net Book Value
Noncompete Agreements [Member]
Carrying Value	107	107
Accumulated Amortization	(107)	(107)
Net Book Value
Trade Names [Member]
Carrying Value	23	23
Accumulated Amortization	(21)	(19)
Net Book Value	$ 2	$ 4

XML

Note 15 - Stock Plans

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Shareholders' Equity and Share-based Payments [Text Block]

15. Stock Plans

The Company has previously granted RSUs underlying

366,356

shares of Class A common stock as of

December 31, 2017.

These RSUs (or a portion thereof) vest with respect to each recipient over a

one

to

three

year period from the date of grant, provided the recipient remains in the employment or service of the Company as of the vesting date and, in selected instances, certain performance criteria are attained. Additionally, these RSUs (or a portion thereof) could vest earlier in the event of a change in control of the Company, or upon involuntary termination without cause. Of the

366,356

previously granted RSUs, RSUs underlying

267,413

shares of Class A common stock have vested or were cancelled as of

December 31, 2017.

During the

twelve

months ended

December 31, 2018,

34,755

RSUs were granted by the Company. There were

no

RSUs granted by the Company during

2019.

The previous RSU grants were made primarily to executive-level personnel at the Company and, as a result,

no

compensation costs have been capitalized.

The following table summarizes RSU activity for the year ended

December 31, 2018:

	RSUs			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2017		98,943		$	4.51
Granted		34,755		$	13.30
Vested		(67,386	)	$	4.56
Forfeited or cancelled		—		$	—
Outstanding at December 31, 2018		66,312		$	9.06

The following table summarizes RSU activity for the year ended

December 31, 2019:

	RSUs			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2018		66,312		$	9.06
Granted		—		$	—
Vested		(36,847	)	$	5.68
Forfeited or cancelled		(11,817	)	$	13.30
Outstanding at December 31, 2019		17,648		$	13.30

Stock-based compensation expense related to RSUs was

$167

thousand and

$290

thousand for the years ended

December 31, 2019,

and

2018,

respectively. Stock-based compensation related to RSUs is recognized over the

39

-month vesting schedule. Accounting standards require that the Company estimate forfeitures for RSUs and reduce compensation expense accordingly. The Company has reduced its expense by the assumed forfeiture rate and will evaluate actual experience against the assumed forfeiture rate going forward. The forfeiture rate has been developed using historical performance metrics which could impact the size of the final issuance of Class A common stock. The Company has

no

history before

2014

with RSU forfeiture.

As of

December 31, 2019,

and

2018,

the unrecognized total compensation cost related to unvested RSUs was

$48

thousand and

$216

thousand, respectively. That cost is expected to be recognized by the end of

2021.

The tax benefit recognized with respect to RSUs during the years ended

December 31, 2019,

and

2018,

was

$68

thousand and

$144

thousand, respectively.

On

October 15, 2018,

the Company granted

29,460

incentive stock options (“ISOs”) and

20,540

non-qualified (“NQ”) stock options to purchase shares of Class A common stock. These options vest with respect to the recipient thereof over a

five

year period with

20%

becoming exercisable on each anniversary of the vesting commencement date of

October 15, 2019,

provided the recipient remains in the employment or service of the Company as of the vesting date. Additionally, these options (or a portion thereof) could vest earlier in the event of a change in control of the Company. These option grants were made to

one

executive-level employee of the Company and, as a result,

no

compensation costs have been capitalized.

The following table summarizes ISO and NQ stock option activity as of

December 31, 2019:

	ISOs and NQ S tock O ptions			Weighted Average Grant Date Fair Value
Outstanding at December 31, 2018		50,000		$	16.97
Granted		—		$	—
Vested		(10,000	)	$	16.97
Forfeited or cancelled		—		$	—
Outstanding at December 31, 2019		40,000		$	16.97

Stock-based compensation expense related to ISOs and NQ stock options was

$87

thousand and

$18

thousand for the years ended

December 31, 2019,

and

2018,

respectively.

As of

December 31, 2019,

and

2018,

the unrecognized total compensation cost related to unvested ISOs and NQ stock options was

$329

thousand and

$416

thousand, respectively. That cost is expected to be recognized by the end of

2023.

XML

Note 3 - Goodwill and Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Finite-Lived Intangible Assets [Table Text Block]

	December 31, 201 8
	Carrying Value		Accumulated Amortization			Net Book Value
Customer relationships	$	24,025	$	(23,110	)	$	915
Contract relationships		19,600		(19,600	)		-
Non-competition		107		(107	)		-
Trade name		23		(19	)		4
Total	$	43,755	$	(42,836	)	$	919

	December 31, 201 9
	Carrying Value		Accumulated Amortization			Net Book Value
Customer relationships	$	24,025	$	(23,497	)	$	528
Contract relationships		19,600		(19,600	)		-
Non-competition		107		(107	)		-
Trade name		23		(21	)		2
Total	$	43,755	$	(43,225	)	$	530

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block]

2017	$	458
2018	$	408
2019	$	389

2020	$	372
2021		158
Total	$	530

XML

Note 7 - Notes Payable (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Maturities of Long-term Debt [Table Text Block]

2020	$	4,350
2021		4,350
2022		61,512
2023		—
Total	$	70,212

New Credit Facility [Member]

Notes Tables

Schedule of Long-term Debt Instruments [Table Text Block]

							December 31,			December 31,
	Current			Long-term			201 9			201 8
New Credit Facility with CoBank, ACB; variable interest rate of 5.95% and 6.77% at December 31, 2019 and 2018, respectively. Interest is quarterly and paid in arrears on the last business day of each quarter. The New Credit Facility is secured by the total assets of the subsidiary guarantors. The unpaid balance is due November 3, 2022.	$	4,350		$	65,862		$	70,212		$	74,562
Debt issuance cost		(421	)		(690	)		(1,111	)		(1,551	)
Notes payable, net of debt issuance cost	$	3,929		$	65,172		$	69,101		$	73,011

XML

Note 2 - Summary of Significant Accounting Policies (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017	Sep. 30, 2019	Jan. 01, 2019
Percentage of Net Property, Plant, and Equipment Accounted for Under ASC980	84.30%	81.40%
Revenue Requirement, Cap Interest Rate, Percent of Prior Year	95.00%
Contract with Customer, Liability, Total				$ 3,600,000
Unrecognized Tax Benefits, Income Tax Penalties and Interest Expense, Total	$ 0
Operating Lease, Right-of-Use Asset	1,146,000
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability			$ 9,300,000
Operating Lease, Liability, Total	1,146,000
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset					$ 1,073,919
Operating Lease, Liability, Total					$ 1,073,919
Transport Services [Member]
Deferred Revenue, Total	2,100,000	2,300,000
Service, Other [Member]
Contract with Customer, Liability, Total	$ 229,000	$ 126,000
Revenue Benchmark [Member]
Concentration Risk, Percentage	100.00%	100.00%
Revenue Benchmark [Member] | Customer Concentration Risk [Member] | Interstate Access Services [Member]
Concentration Risk, Percentage	23.30%	21.30%	20.70%

XML

Note 13 - Fair Value Measurement (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Fair Value, by Balance Sheet Grouping [Table Text Block]

New Credit Facility
	Carrying Value		Fair Value
Notes payable December 31, 2018	$	74,562	$	74,702
Notes payable December 31, 2019	$	70,212	$	69,932

XML

Note 8 - Income Tax (Tables)

12 Months Ended

Dec. 31, 2019

Notes Tables

Schedule of Components of Income Tax Expense (Benefit) [Table Text Block]

	For the Years Ended December 31,
	201 9			201 8		201 7
Federal income taxes
Current	$	443		$	1,036	$	1,201
Deferred		1,717			898		(9,332	)
Total federal tax expense (benefit)		2,160			1,934		(8,131	)
State income taxes
Current		574			503		284
Deferred		(341	)		308		(9	)
Total state tax expense		233			811		275
Total income tax expense (benefit)	$	2,393		$	2,745	$	(7,856	)

Schedule of Deferred Tax Assets and Liabilities [Table Text Block]

	December 31,
	201 9			20 1 8
Deferred tax liabilities:
Amortization	$	(11,133	)	$	(10,947	)
Depreciation		(10,934	)		(9,978	)
Lease asset		(306	)		—
Prepaid expense		(506	)		(357	)
Other		(8	)		(8	)
Total deferred tax liabilities	$	(22,887	)	$	(21,290	)
Deferred tax assets:
Deferred compensation	$	147		$	142
Advance payments		597			612
Lease liability		306			—
Bad debt		77			145
Other		239			246
Total deferred tax assets	$	1,366		$	1,145

Schedule of Effective Income Tax Rate Reconciliation [Table Text Block]

	For the Years Ended December 31,
	20 1 9			201 8			201 7
Federal income tax at statutory rate		21	%		21	%		35	%
Federal income tax provision at statutory rate	$	2,140		$	2,565		$	1,491
State income tax provision, net of federal income tax effects		548			641			177
Federal tax rate change		—			—			(9,336	)
Adjustments for prior years		(222	)		(302	)		(121	)
Other		(73	)		(159	)		(67	)
Provision (benefit) for income taxes	$	2,393		$	2,745		$	(7,856	)
Effective income tax rate		23.5	%		22.5	%		(184.5	)%

XML

Note 7 - Notes Payable

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Debt Disclosure [Text Block]

7. Notes Payable

Notes payable consists of the following (in thousands, except percentages) as of:

							December 31,			December 31,
	Current			Long-term			201 9			201 8
New Credit Facility with CoBank, ACB; variable interest rate of 5.95% and 6.77% at December 31, 2019 and 2018, respectively. Interest is quarterly and paid in arrears on the last business day of each quarter. The New Credit Facility is secured by the total assets of the subsidiary guarantors. The unpaid balance is due November 3, 2022.	$	4,350		$	65,862		$	70,212		$	74,562
Debt issuance cost		(421	)		(690	)		(1,111	)		(1,551	)
Notes payable, net of debt issuance cost	$	3,929		$	65,172		$	69,101		$	73,011

The Senior Loan Agreement was fully repaid on

November 2, 2017.

Associated with the Senior Loan Agreement, the Company had

$4.9

million in deferred financing cost. Amortization expense for the deferred financing cost associated with the Senior Loan Agreement was

$896

thousand for the year ended

December 31, 2017,

which is included in interest expense. The Company wrote off

$3,070

thousand of prior deferred financing cost and incurred

$14

thousand in external legal fees during the year ended

December 31, 2017,

as a result of the extinguishment of the Senior Loan Agreement, which is included in interest expense.

The Subordinated Loan Agreement was fully repaid on

November 2, 2017.

Associated with the Subordinated Loan Agreement, the Company had

$892

thousand in deferred financing cost. Amortization expense for the deferred financing cost associated with the Subordinated Loan Agreement was

$133

thousand for the year ended

December 31, 2017,

which is included in interest expense. The Company wrote off

$621

thousand of prior deferred financing cost and incurred

$14

thousand in external legal fees during the year ended

December 31, 2017,

as a result of the extinguishment of the Subordinated Loan Agreement, which is included in interest expense.

Associated with the New Credit Facility, the Company has

$2.1

million in deferred financing cost. Amortization expense for the deferred financing cost associated with the New Credit Facility was

$452

thousand,

$476

thousand and

$75

thousand for the years ended

December 31, 2019,

2018

and

2017,

respectively, which is included in interest expense.

The Company had a revolving credit facility of

$5.0

million associated with the Senior Loan Agreement. There was

no

balance outstanding during

2017.

The Senior Loan Agreement was terminated on

November 2, 2017.

The Company paid a monthly fee of

0.75%

per annum on the unused portion of the revolver loan under the Senior Loan Agreement, payable in arrears. The fee expense was

$32

thousand for the year ended

December 31, 2017.

The revolving credit facility associated with the Company’s New Credit Facility has a maximum borrowing capacity of

$5.0

million. The revolving credit facility is available until

November 3, 2022.

There was

no

balance outstanding as of

December 31, 2019

or

2018.

The Company pays a commitment fee, payable quarterly in arrears, on the unused portion of the revolver loan under the New Credit Facility. The rate declined from

0.50%

per annum to

0.38%

per annum on

October 22, 2018.

The commitment fee expense was

$19

thousand,

$24

thousand and

$4

thousand for the years ended

December 31, 2019,

2018

and

2017,

respectively.

Maturities of notes payable for the next

four

years, assuming

no

annual excess cash flow payments, are as follows (in thousands):

2020	$	4,350
2021		4,350
2022		61,512
2023		—
Total	$	70,212

The Company’s notes payable agreements are subject to certain financial covenants and restrictions on indebtedness, financial guarantees, business combinations and other related items. As of

December 31, 2019,

the Company was in compliance with all such covenants and restrictions.

XML

Note 11 - Revenue Streams and Concentrations

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Revenue from Contract with Customer [Text Block]

11. Revenue Streams and Concentrations

Revenue Streams

The Company identifies its revenue streams with similar characteristics as follows (in thousands):

	For the Years Ended December 31,
	2019		2018
Local services	$	19,313	$	20,948
Network access		21,210		21,662
Internet		14,646		15,221
Transport services		4,236		4,774
Video and security		2,735		2,824
Managed services		626		639
Total revenues	$	62,766	$	66,068

ASU

2014

-

09

requires that an entity recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. As stated above in Note

2,

Summary of Significant Accounting Policies

–

Recently Adopted Accounting Pronouncements

, the Company has used a

five

-step process to identify the contract with the customer, identify the performance obligations, determine the transaction price, allocate the transaction price to the performance obligations and recognize revenue when or as the performance obligations are satisfied. The majority of the Company’s revenue is recognized over time as the service is transferred to the customer. For certain other services, such as unlimited long distance, revenue is recognized over the period of time the service is provided.

The following table identifies revenue generated from customers (in thousands):

	For the Years Ended December 31,
	2019		2018
Local services	$	19,313	$	20,948
Network access		4,283		4,643
Internet		14,646		15,221
Transport services		4,085		4,623
Video and security		2,735		2,824
Managed services		626		639
Total revenues generated from customers	$	45,688	$	48,898

The following table summarizes the revenue generated from contracts with customers among each revenue stream for the years ended

December 31, (

in thousands, except percentages):

	For the Year Ended
	December 31, 2019		% In-Scope			% Total
Month to month (“MTM”) customers	$	27,617		61.3	%		44.0	%
Competitive local exchange carrier (“CLEC”) business customers		13,162		29.2			21.0
Network access		2,513		5.6			4.0
Total revenue streams		43,292		96.1			69.0
Global access*		1,770		3.9			2.8
Total revenue from contracts with customers		45,062		100.0	%		71.8
Managed services**		626		n/a			1.0
Total revenue generated from customers		45,688		n/a			72.8
Indefeasible rights-of-use agreements**		151		n/a			0.2
Network access**		16,927		n/a			27.0
Total revenues	$	62,766					100.0	%

*Fixed fees charged to MTM customers and CLEC business customers.

** Revenue generated from sources

not

within the scope of ASU

2014

-

09.

See Note

2,

Summary of Significant Accounting Policies – Revenue Recognition,

for accounting policies associated with these sources of revenue.

	For the Year Ended
	December 31, 2018		% In-Scope			% Total
MTM customers	$	29,556		61.3	%		44.7	%
CLEC business customers		14,060		29.1			21.3
Network access		2,711		5.6			4.1
Total revenue streams		46,327		96.0			70.1
Global access*		1,932		4.0			2.9
Total revenue from contracts with customers		48,259		100.0	%		73.0
Managed services**		639		n/a			1.0
Total revenue generated from customers		48,898		n/a			74.0
Indefeasible rights-of-use agreements**		151		n/a			0.2
Network access**		17,019		n/a			25.8
Total revenues	$	66,068					100.0	%

*Fixed fees charged to MTM customers and CLEC business customers.

** Revenue generated from sources

not

within the scope of ASU

2014

-

09.

See Note

2,

Summary of Significant Accounting Policies – Revenue Recognition,

for accounting policies associated with these sources of revenue.

Payment terms vary by customer. The Company typically invoices customers in the month following when the service was provided. The term between invoicing and when payment is due is less than a year and is

not

considered significant. Certain customers are invoiced in advance of the service being provided. Revenue is deferred until the point in time control of the service is transferred to the customer, or over the term the service is provided.

Revenue is recognized net of taxes collected on behalf of

third

parties.

As of

December 31, 2019,

the Company had approximately

$7.2

million of unsatisfied performance obligations. As of

December 31, 2019,

the Company expected to recognize approximately

$1.2

million of revenue within the next year and

$6.0

million in the next

two

to

five

years related to such unsatisfied performance obligations. The Company does

not

disclose the value of unsatisfied performance obligations for contracts with an original expected life of

one

year or less or for contracts for which the Company has a right to invoice for services performed.

The deferred revenue balance as of

September 30, 2019,

was

$3.6

million. Approximately

$1.4

million of revenue from that balance was recognized as revenue during the

three

months ended

December 31, 2019,

offset by payments received as of

December 31, 2019,

in advance of control of the service being transferred to the customer.

XML

Note 8 - Income Tax (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Income Tax Expense (Benefit), Continuing Operations, Adjustment of Deferred Tax (Asset) Liability			$ 9,300,000
Deferred Tax Assets, Valuation Allowance, Total	$ 0
Effective Income Tax Rate Reconciliation, Percent, Total	23.50%	22.50%	(184.50%)
Alternative Minimum Tax [Member]
Tax Credit Carryforward, Amount	$ 0	$ 0
Domestic Tax Authority [Member]
Operating Loss Carryforwards, Total	0	0
State and Local Jurisdiction [Member]
Operating Loss Carryforwards, Total	$ 0	$ 43,000

XML

Note 9 - Employee Benefit Program (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Dec. 31, 2018	Dec. 31, 2017
Defined Contribution Plan, Maximum Annual Contributions Per Employee, Amount	$ 18,500	$ 18,500	$ 18,500
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay	4.50%	4.50%	4.50%
Defined Contribution Plan, Cost	$ 449,000	$ 470,000	$ 486,000
BTC [Member]
Defined Contribution Plan, Employer Matching Contribution, Percent of Employees' Gross Pay			4.50%
Defined Contribution Plan, Cost	19,000	$ 21,000	$ 16,000
Defined Contribution Plan, Minimum Annual Contributions Per Employee, Percent		1.00%
Multiemployer Plan, Contributions by Employer	$ 0	$ 0	$ 0
RSP [Member]
Multiemployer Plans, Collective-Bargaining Arrangement, Percentage of Employer's Participants		0.30%
Multiemployer Plans, Collective-Bargaining Arrangement, Percentage of Participants		0.10%
Defined Benefit Plan, Funded Percentage		94.00%
Multiemployer Plans, Plan Assets		$ 1,900,000,000

XML

Consolidated Balance Sheets (Parentheticals) - USD ($) $ in Thousands	Dec. 31, 2019	Dec. 31, 2018
Allowance for doubtful accounts	$ 209	$ 577
Common Class A [Member]
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01
Common stock, authorized (in shares)	10,000,000	10,000,000
Common stock, issued (in shares)	3,412,805	3,388,624
Common stock, outstanding (in shares)	3,412,805	3,388,624

XML

Note 1 - Nature of Business

12 Months Ended

Dec. 31, 2019

Notes to Financial Statements

Nature of Operations [Text Block]

1. Nature of Business

Otelco Inc. (together with its consolidated subsidiaries, the “Company”) provides a broad range of telecommunication services on a retail and wholesale basis. These services include local and long distance calling; network access to and from the Company’s customers; data transport; digital high-speed internet access; cable and Internet Protocol television; other telephone related services; and cloud hosting and managed services. The principal markets for these services are business and residential customers residing in and adjacent to the exchanges the Company serves in Alabama, Maine, Massachusetts, Missouri, Vermont, and West Virginia and business customers throughout Maine and New Hampshire. The Company offers various communications services that are sold to economically similar customers in a comparable manner of distribution. The Company also offers cloud hosting and managed services for small and mid-sized companies who rely on mission-critical software applications. The majority of customers buy multiple services, often bundled together at a single price. The Company views, manages and evaluates the results of its operations from the various communications services as

one

company and therefore has identified

one

reporting segment as it relates to providing segment information.

Refinancings

The Company had a senior loan agreement (the “Senior Loan Agreement”), providing for a

five

year term loan facility in the aggregate principal amount of

$85.0

million and a

five

year

$5.0

million revolving credit facility, and a subordinated loan agreement (the “Subordinated Loan Agreement”), providing for a

five

and a half year term loan facility in the aggregate principal amount of

$15.3

million. The Company borrowed

$85.0

million under the term loan facility of the Senior Loan Agreement and

$15.3

million under the Subordinated Loan Agreement. During

second

quarter

2017,

the Company paid an amendment fee of

$77.9

thousand to its senior lender under the Senior Loan Agreement to raise the capital expenditure limits under the Senior Loan Agreement to

$8.5

million and

$7.5

million for

2017

and

2018,

respectively. The increased capital expenditures were necessary to fulfill build out requirements associated with the Federal Communications Commission’s (the “FCC’s”) Alternative Connect America Model (“A-CAM”) program.

On

November 2, 2017,

the Company refinanced the Senior Loan Agreement and the Subordinated Loan Agreement with a new

$92

million,

five

-year credit facility from a consortium of banks led by CoBank, ACB (the “New Credit Facility”). The New Credit Facility includes an

$87.0

million term loan and a

$5.0

million revolving loan, which is undrawn. The New Credit Facility also includes a

$20.0

million accordion feature that could be used to increase the term-loan portion of the New Credit Facility. Proceeds from the New Credit Facility and cash on hand were used to pay all amounts due in respect of principal, interest, prepayment premiums and fees under the Senior Loan Agreement and the Subordinated Loan Agreement, as well as fees associated with the transaction. The Company recorded costs of

$28

thousand and write-off of loan costs of

$3.7

million in connection with this refinancing.

XML

Note 12 - Leases (Details Textual) - USD ($)	12 Months Ended
	Dec. 31, 2019	Jan. 01, 2019	Dec. 31, 2018
Operating Lease, Right-of-Use Asset	$ 1,146,000
Operating Lease, Liability, Total	$ 1,146,000
Minimum [Member]
Commercial Borrowing Rate	5.00%
Loan Collateralized by Real Estate, Term	5 years
Maximum [Member]
Commercial Borrowing Rate	7.00%
Loan Collateralized by Real Estate, Term	10 years
Accounting Standards Update 2016-02 [Member]
Operating Lease, Right-of-Use Asset		$ 1,073,919
Operating Lease, Liability, Total		$ 1,073,919