2018Annual Report

MID-ATLANTIC BROADBAND COMMUNITIES CORPORATION

ERNEST R. (RANDY) LAILChairman, MBC Board

Business Consultant & Director,Benchmark Bankshares, Inc.

& Benchmark Community Bank

EDWARD “TED” HODGES Vice Chairman, MBC Board

Partner, Clement & Wheatley, PC

EARVING L. BLYTHE Vice President Emeritus for

Information Technology & CIO, Virginia Tech (Retired)

DUANE DAHLQUIST, PEChairman Emeritus, MBC Board

General Manager,Blue Ridge Power Agency

BEN DAVENPORT, JR. Chairman, First

Piedmont Corporation

BRYAN DAVIDCounty Administrator,

Orange County

For an all-digital version of this annual report, with clickable links to websites and more, please visit www.mbc-va.com/about-mbc.

NEW EMPLOYEES JOINED THE MBC TEAM 3

THE FIRST INVEST SOUTHERN VIRGINIA LEAD

RESULTING IN AN ANNOUNCEMENT COMES

TO DANVILLE

MBC HAD

NETWORK RELIABILITY

99.996%

WITH UPGRADES TO THE NETWORK, MBC’S LINE

SYSTEM CAPACITY IS NOW

1.2 TBPS

3 MBC-SPONSORED

FRC ROBOTICS TEAMS REPRESENTED SOUTHERN

VIRGINIA AT THE FIRST WORLD CHAMPIONSHIP IN DETROIT

MBC ESTABLISHED A SCHOLARSHIP FOR STUDENTS

FURTHERING THEIR EDUCATION IN A STEM FIELD IN

MEMORY OF WANDA

JEFFRESS, A LONGTIME MBC BOARD MEMBER

2018 MBC BOARD OF DIRECTORS

2017-18 YEAR IN REVIEW MBC EXPANDED ROBOTICS SUPPORT IN SOUTHERN VIRGINIA BY SPONSORING FIRST FTC TEAMS IN THE REGION

2018 MBC BOARD OF DIRECTORS

MARK D. HEATHPresident/CEO,

Martinsville-Henry CountyEconomic Development

Corporation

DAVID HUDGINS Director of Member &

External Relations, Old Dominion Electric

Cooperative

WANDA BOSTICK JEFFRESSOwner/Vice President,

S.L. Jeffress Co.& Jeffress Funeral Home

(1957-2018)

CHARLEY MAJORSExecutive Chairman,

American National Bank

BOB PICCHIPresident, Blue Ridge

Advisory Services Group

RICHARD SHUMAKERAccount Manager,

Cisco Systems, Inc.

GARY WALKEROwner & Operator,

Cornerstone InsuranceAgency

Ernest R. (Randy) Lail, MBC Board Chairman Tad Deriso, MBC President & CEO

A Message from the MBC Board Chairman

A Message from the MBC President & CEO

As I write this letter, we are all digging out from possibly the largest early December snow storm in history in Southern Virginia. Being able to communicate during a storm like this by writing this letter and sending it electronically would have been almost impossible just a few years ago. This shows the importance of the service that Mid-Atlantic Broadband Communities Corporation (“MBC”) provides to the customers that it serves.

MBC enjoyed another year of strong financial performance with increases in Broadband Services Revenue, Operating Margin and Earnings from Operations. Just as importantly, MBC continues to improve its network such as the ability to provide its customers with 100G service. Additionally, we continue to look for partners who will not only help us expand our service in the communities that we serve but also partners like Microsoft and Facebook who will allow us to expand our reach outside the region bringing the possibility of extending those relationships in and to Southern Virginia. MBC also has partnered with the Virginia Tobacco Commission and is focused on bringing investment and new jobs to Southern Virginia through its economic development efforts.

I say this every year but it is no less important. We are fortunate to have a knowledgeable, dedicated team that knows how to get things done on a daily basis. I saw a statement that MBC over the years has administered over $100 million in grants from various government agencies and the Tobacco Commission. These projects have been completed on time and on budget. I know that I speak for the entire Board of Directors when I say thank you to the management and staff of MBC.

I would also like to thank the members of the Board of Directors for their work. It is a group that not only has experience in the marketplace in which MBC operates but also understands the communities that MBC serves. I know that the job of furthering the MBC mission is important to all of them. Board of Directors will continue to “push the envelope” in search of ways to improve the economic viability of MBC and Southern Virginia.

Thanks to all of these folks, and you, for your support and interest in MBC.

MBC had another steady year of operations as we’ve noticed increased revenue growth and continued reinvestment in our communities.

Revenues continue to grow year over year, which is an excellent barometer of broadband growth in Southern Virginia. We are connecting more cell tower sites to our fiber optic network which allows wireless and cellular carriers to increase the speeds and coverages they provide to their customers in the region. Macro trends in wireless growth, mobility

and strength of our wireless carriers in the region continue to drive need for robust fiber connectivity to cell sites, and MBC is well positioned to take advantage of those trends in the years to come. Bandwidth needs continue to grow year over year, and this insatiable appetite for more bandwidth at lower costs will continue to compel us to reinvest in our core optical transport network infrastructure. Several years ago, a 1 Gigabit connection was plenty of bandwidth for some of our K-12 facilities, but now we’re seeing multiple gigabit and even 10 Gigabit requirements from our carrier customers to serve those schools. Our recent investments in 100G capabilities are paying dividends with large customers able to grow and scale their network operations, and have redundant and stable connections to major peering points throughout Virginia. We are delivering new and diverse connectivity capabilities into the Cable Landing Station in Virginia Beach, which now connects to the active subsea fiber routes to Europe and South America.

Our economic development outreach investments are paying dividends in private capital investments and job creation with the announcement of several new companies expanding to Southern Virginia. Our Invest Southern Virginia brand is focused on attracting Foreign Direct Investments from Advanced Manufacturing industries as well as aggressively identifying and marketing data center sites with our utility partners in the region. With the seemingly constant political and economic turmoil in the United Kingdom, our Invest Southern Virginia marketing brand continues to make an impact and we’ve had several recent announcements of UK manufacturing companies moving manufacturing and distribution activities to stable and business friendly communities within Southern Virginia.

I’m incredibly proud of our team at MBC, and the commitment they have shown to run an efficient and stable network, provide excellent customer support, manage our accounting and finance operations with excellence, and maintain a strong fiduciary responsibility for our grant funded assets. MBC will continue to work with our corporate and public institutions to showcase Southern Virginia as a great place to live, work and play and we look forward to an even more successful 2019!

Invest Southern Virginia

Invest Southern Virginia (ISV) is an economic development initiative, led and funded by MBC, designed to attract growing technology, data center and advanced manufacturing companies to expand and locate to Southern Virginia. Working in partnership with local and regional business leaders, ISV markets the region to prospective national and international companies seeking a premier east coast location with a specifically trained workforce, pro-business environment and connected infrastructure. In 2018, the ISV team generated multiple leads and facilitated visits to Southern Virginia for prospective companies looking for a U.S. east coast location.

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Harlow Group, a U.K.-based company specializing in precision sheet metalwork, fabrications, and assemblies, announced they would locate their first U.S. sheet metal fabrication plant in Danville, investing $8 million and creating 49 new jobs for the region. Harlow Group was the first ISV

lead to result in an announcement.

Invest Southern Virginia

www.investsouthernvirginia.com

To l e arn mo re ab out avai lable o p p o r tu n it ie s in So uthern Virginia, p l e as e co n tact Lau ren M athena at

l au re n.math e n a@mb c-va.com , or v is it

Data Center Initiative

Recruitment efforts began to attract data center companies to locate in Southern Virginia.

Lauren Mathena joined the MBC team in March 2018 and manages the ISV initiative.

Invest Southern Virginia attended the Data Center Investment Conference & Expo (DICE) in San Jose, CA in 2018. We exhibited alongside Dominion Energy to showcase the robust infrastructure that Southern Virginia offers to data centers.

ISV engaged an engineering firm to conduct a study of available land and buildings to determine the best opportunities for data centers to locate in Southern Virginia. The study will identify the locations best suited for data centers by evaluating site readiness and available infrastructure including fiber, power, and water/sewer, as well as other key attributes.

Identifying Opportunities

Economic Development Announcements in Southern VirginiaCompany Name Location Business Description New Jobs Investment ($)

GS Industries of Bassett, Inc. Henry County Plastic injection molded parts 3 451,700

Stik-Pak Solutions Franklin County Contract packaging manufacturer 50 14,300,000

Central Virginia Manufacturing Bedford County Sheet metal fabricator 9 300,000

Richlands Creamery LLC Dinwiddie County Commercial creamery 17 1,700,000

KMR Aviation Services, Inc. Bedford County Leasing, certifying, selling parts, and providing maintained solutions to the airline industry 12 1,000,000

Panaceutics Pittsylvania County Provides personalized medicine and nutrition solutions 70 5,817,000

Innovairre Communications, LLC Bedford County Manufacturer of direct mail fundraising campaign materials 12 4,850,000

Eastern Panel Manufacturing Pittsylvania County Specializes in supplying office, residential, and contract furniture manufacturing 15 1,000,000

Chaos Mountain Brewing, LLC Franklin County Craft brewery 5 250,000

Graham Packaging Company Campbell County Designs and manufactures plastic containers for liquid products for consumer consumption, such as nutritional supplements 8 6,700,000

Service Center Metals Prince George County Aluminum extruded product for sale to the wholesale market through metal distributors 58 45,243,000

Amthor International Pittsylvania County Customized metal tanker truck fabrication and manufacturer 70 2,500,000

Grand Springs Halifax County Manufactures and packages spring water for consumers. 28 800,000

Innovatio Sealing Technologies Appomattox County Provides highly engineered solutions with customized seals to support your application needs 28 2,120,000

Intertape Polymer Group* Pittsylvania County Packaging products and systems 15 7,000,000

Unison* Pittsylvania County Pipe bending and automation machinery manufacturing 35 5,200,000

Oran Safety Glass* Greensville County Specialty glass manufacturer 55 4,450,000

Notes: *Indicates foreign affiliation Total Private Sector Investment & Jobs Created 490 103,681,700 All announcements are subject to revision July 2017 - June 2018Source: Virginia Economic Development Partnership www.yesvirginia.com

Robotics in Southern VirginiaMBC proudly sponsors all of the FIRST FRC high school robotics teams in Southern Virginia to support STEM-based workforce development in the region. Since 2012, we have invested over $360,000 in this robotics program which provides high school students training in electronics, programming, pneumatics, business and marketing, as well as other skills that they can use in their future careers.

F E A R T H E D E E R ! STAGS Win the 2018 MBC Challenge Cup

The Piedmont Governor’s School STAGS brought the MBC Challenge Cup trophy back to Martinsville for the first time since 2015 by finishing

as the highest ranked MBC-sponsored FRC team at the end of tournament play. As MBC Challenge Cup champions, the STAGS

received $10,000 for their team.

Two Times a Triple Threat3 Teams from Southern Virginia Compete at the

FIRST World Championship for Second Year

MBC-Sponsored FRC 2018 Season Team Results

Awards 7

District Event Finalist (2nd Place) 3

District Event Winner (1st Place) 1

District Championship Berth 5

World Championship Berth 3

For the second season in a row, three FRC teams sponsored by MBC competed in the FIRST World Championship, an event attended by teams from across the globe. The Halifax County High School Cometbots 977, Piedmont Governor’s School STAGS 1262, and Martinsville High School MADawgs 3258 competed. The championship event was held in Detroit, MI.

The chance to compete at the FIRST World Championship event comes with a large price tag. MBC contributed additional funds to these teams to help offset these costs. Microsoft, one of MBC’s corporate partners, stepped in and provided matching funds to help these three teams compete at this international event!

MartinsvilleMADawgs

HalifaxCometbots

PGS STAGS

Robotics Talk

“FIRST robotics is some of the hardest work you’ll ever have, but it’s also some of the best fun you’ll ever have. So you might be stressed, you might be tired, but there’s still a smile on your face. End of the day, it’s the greatest thing ever.”

“Coming from a place like Martinsville, Virginia, where we really don’t get that encouragement of the STEM fields, it’s really cool to see companies like MBC sponsoring our team. It really says a lot about how these companies are doing their best to ensure that the new generation has skills that are going to be applicable to them in their future careers.”

“The kids get exposed to so much here. Not only do they see their like peers who have done the same thing with robots, but, you know, they’re interacting with people from all over the world. As an educator, this is one of the most worthy things that I’ve done with students, because it takes what you’re teaching them in the classroom and it puts

it to work.”

Joseph Barron Halifax Cometbots 977 Student Member

Xavon StanleySTAGS 1262Student Member

Brian Pace STAGS 1262

Mentor

Hear from students and mentors about what having the opportunity to participate in FIRST robotics in Southern Virginia means to them.

Interested in hearing more?

Search for mbcjustpressplay on YouTube and find the video

FIRST Robotics Competition World Championship

More STEM Support in Southern Virginia

In 2018, MBC decided to expand support of robotics in Southern Virginia by supporting the FIRST First Tech Challenge (FTC) teams in the region. FTC is a robotics program for students in grades 7-12 that teaches students how to design, build, program, and operate robots for head-to-head alliance competition.

MBC supported post-secondary STEM education in Southern Virginia by once again providing scholarships to students at three community colleges located in Southern Virginia. Central Virginia Community College, Danville Community College, and Southside Virginia Community College each received $5,000 to distribute as they thought would best benefit students studying in STEM-H fields at their college.

To qualify for the scholarship, the student(s) must have been studying in a STEM-H field, must have maintained a high school GPA of 3.2 or higher, and must have graduated from one of the thirty-three high schools located in the Southside Tobacco Region within the MBC footprint.

Full Circle STEM in Southern Virginia

“As alumni of the First Robotics Competition (FRC) team 1262, the Stags, Mid-Atlantic Broadband has helped us along the way my entire high school career as we traveled around the globe to various places such as Maryland, Detroit, and St. Louis. Thanks to your support, FRC has influenced me to the field of Mechanical Engineering, which I am studying this semester.”

- Jordan Ashworth MBC Scholarship Awardee

Former Stags Team Member and Current DCC Student

PHCC E-Patriots Gaming TeamIn 2018, Patrick Henry Community College (PHCC) started the “E-Patriots”. The E-Patriots team is a e-sports gaming team that operates as an athletic team and aims to recruit students who will pursue IT academic and career paths.

This year, PHCC opted to use the money previously earmarked for the MBC scholarships to start up this IT opportunity!

STEM-H Scholarships for Community College Students

FIRST FTC Robotics

This season, MBC sponsored six FTC teams in Southern Virginia. Each team received $1,500 and rookie teams had the opportunity to match their fundraising efforts up to an additional $500.

Last Mile Broadband Expansion in Southern Virginia

Bedford CountyComcast Broadband Project in

Southern Bedford County

Appomattox CountyCentral Virginia Electric Cooperative

Members’ Fiber Broadband Project

Appomattox CountyShentel Broadband Expansion

Amelia CountyRegional Broadband Initiative

Dinwiddie CountyRegional Broadband Initiative

Pittsylvania CountyPittsylvania County Broadband

Initiative Halifax CountyHalifax County Broadband

Initiative

Sussex CountySussex County High Speed

Broadband Initiative

Mecklenburg CountyEMPower Project

In March 2018, the Virginia Tobacco Commission awarded nine grants totaling over $11 million to fund last mile broadband projects for Southwest and Southern Virginia. The grants, which were awarded to partnering localities and qualified experienced broadband providers, assisted with up to 50% of the construction costs and will provide broadband services to over 31,500 homes and businesses in unserved areas of the region. Eight of these projects (shown on the map below) are located in Southern Virginia, within the MBC network footprint. MBC is providing middle mile connectivity for several of these projects.

Network Upgrades

MBC Fiber

Map Key

Flex-ILS Drop Locations (18)

Amp Locations (11)

Existing XTC Locations (3)

New XTC Locations (3)

MBC High Capacity Transport Network

MBC Upgrades to Next Generation High Capacity Transport Network

In 2018, MBC made a major capital investment to expand coverage of its Next Generation High Capacity Transport Network. With the growth of high capacity transport requirements in our region and the insatiable bandwidth demands from our customers, MBC invested in the latest optical network technology from Infinera (Flex-ILS system). This upgrade allowed MBC to expand the line system capacity from 400 Gigabits per Second to 1.2 Terabits per second, a 300% increase in capacity. The total capacity can grow to 9.6 Terabits per second on a single pair of fiber, which provides MBC a great deal of flexibility to grow high speed connections to Northern Virginia, the Subsea Cable systems in Virginia Beach, and throughout the Southern Virginia region.

Upgrading the MBC network allows MBC

to establish and retain relationships

with technology companies that

need high capacity optical transport in

the Southern Virginia region.

Cash and Cash EquivalentsShort Term InvestmentsAccounts ReceivableInventoryPrepaid ExpensesNet Fixed Assets, Temporarily RestrictedNet Fixed Assets, OperatingOther Assets

Total Assets

12,605,827-

2,562,427726,640 754,697

38,208,23626,617,167

12,929

81,487,923 Accounts Payable

Accrued LiabilitiesLong-term Debt ObligationsDeferred RevenueTotal Liabilities

Net Assets without Grantor RestrictionsNet Assets with Grantor RestrictionsTotal Net Assets

Total Liabilities and Net Assets

1,289,299551,776

2,600,000 20,397,901 24,838,976

18,440,71138,208,236 56,648,947

81,487,923

Consolidated Revenue

Cost of Network Operations/Tower Construction

Operating Margin

Sales and Marketing ExpenseAdministrative ExpenseOther Income (Expense)

Net Earnings from Operating Activities

FY2018

13,824,675

6,541,562

7,283,113

694,644 3,858,866

(96,057)

2,633,546

*These numbers are derived from audited financial statements.

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11,502,819250,000

1,786,897 577,708

494,936 42,261,511 21,438,639

202,779

78,515,289 373,630

1,484,304 -

18,588,679 20,446,613

15,807,165 42,261,511

58,068,676

78,515,289

FY2017

14,323,566

7,320,407

7,003,159

830,182

3,808,817 (33,910)

2,330,250

2017-18 Financials

2017-18 Financials

In fiscal year 2018, Mid-Atlantic Broadband spent a total of $14,823,046.

20% spent in state

58% spent in region

20% spent with SWaM

$2,913,169 (20%) was spent with companies headquartered in the Commonwealth of

Virginia.

Of the funds spent in Virginia, $1,699,402 (58%) was spent with companies headquarted in

Southern Virginia.

$589,493 (20%) was spent with certified Small, Women, and Minority (SWaM) firms

registered in Virginia.

$0$100,000

$200,000$300,000$400,000$500,000$600,000$700,000$800,000$900,000

$1,000,000$1,100,000

$1,200,000$1,300,000

MBC Monthly Revenue FY2017-FY2018

2018 Staff Additions

A Southern Virginia native and G.W. High School graduate, Lauren had the opportunity to return to her hometown of Danville seven years ago. Since then, she has been working

devoutly to enhance her community.

Lauren plays a key role in furthering MBC’s economic development and community outreach by coordinating foreign direct investment and domestic business recruitment resources (Invest Southern Virginia) and working directly with regional and local stakeholders to support MBC’s

mission.

Lauren holds a BSEd from the University of Virginia and an MHA from Virginia

Commonwealth University.

Ben Burchett comes to MBC with over twenty years of IT experience. He began his career in IT while serving his country in the United States Marine Corps, where he focused on trouble shooting and repairing, to the component level, circuit boards as well as repairing fiber optic transport cables. He comes to MBC from the data center located in Clarksville, VA where his primary focus was on planning the installations of customer equipment for the entire data center. Ben is originally from Cincinnati,

OH and is a fanatic of THE Ohio State.

Madeline Harrover was raised in Fauquier County, Virginia and is a 2012 graduate of Kettle Run High School. She graduated from Radford University in December of 2016 with a Bachelor of Science in Geospatial Sciences. After graduating, she started her career as a cartography technician for Garmin International in Olathe, Kansas until October 2018. Beginning October 2018, she became employed by MBC as a GIS Analyst. She is responsible for digitizing construction prints, assisting with the management of the ArcGIS Online accounts, maintaining MBC’s fiber network geodatabase, and supporting the Network Operations and Accounting teams in asset inventory

throughout the MBC network.

Ben BurchettEquipment Engineer

Lauren Mathena Director of Economic Development

and Community Engagement

Madeline HarroverGIS Analyst

MBC Day of Service

Reinvesting in the communities we serve has been a goal of MBC since day one. In December 2017, the employees of MBC came together for a day of service to build a playset, a privacy fence, and do landscaping for a local community group.

Wanda Jeffress, a long-standing member of the MBC board of directors, passed away this year on March 19th. To honor her legacy, MBC established the MBC Wanda Bostick Jeffress Memorial STEM Scholarship, $5,000 to be awarded to one or more graduating seniors of Halifax County High School. For a student to be eligible for this award, he or she must be pursuing higher education in a STEM field, which may include science, technology, engineering, math, or healthcare. The student also must display academic achievement, a strong commitment to STEM, and financial need.

In 2018, the scholarship was awarded to two deserving students, Kyra Scott and Gordon Taylor. Each student was awarded $2,500 to help them achieve their career goals. Kyra Scott is attending North Carolina A&T in Greensboro, NC to study computer engineering to become a hardware engineer, computer programmer, or software developer. Gordon Taylor is attending the University of Virginia in Charlottesville, VA to work toward his degree in computer engineering. His career goal is to become a software developer.

Wanda Jeffress Memorial Scholarship

Gordon TaylorUVA

Kyra ScottNC A&T

Headquarters Office

Southern Virginia Technology Park

1100 Confroy Drive, Suite 4South Boston, VA 24592

Richmond Office

SunTrust Center919 East Main Street

Suite 1000Richmond, VA 23219

Read, watch, and see more about MBC at www.mbc-va.com.

Office Locations