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
 
2

 
Exhibit No.
Description
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

tm2011564-3_10ka_DIV_07-ex31-1 - none - 1.0566812s
 
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
 

tm2011564-3_10ka_DIV_08-ex31-2 - none - 1.0869558s
 
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
 

v3.20.1
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
v3.20.1
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)
v3.20.1
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%
v3.20.1
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
v3.20.1
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.
v3.20.1
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
 
v3.20.1
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
 
v3.20.1
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
 
v3.20.1
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.
v3.20.1
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
 
v3.20.1
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
%
v3.20.1
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
v3.20.1
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  
v3.20.1
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
 
v3.20.1
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 ($0.01 par value per share)    
Common Class A [Member]      
Document Information [Line Items]      
Entity Common Stock, Shares Outstanding (in shares)   3,412,805  
Common Class B [Member]      
Document Information [Line Items]      
Entity Common Stock, Shares Outstanding (in shares)   0  
v3.20.1
Consolidated Statements of Stockholders' Equity (Deficit) - USD ($)
$ 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
v3.20.1
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.
v3.20.1
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
)%
v3.20.1
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
%
v3.20.1
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
v3.20.1
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
%
v3.20.1
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
v3.20.1
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)
v3.20.1
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
v3.20.1
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.
v3.20.1
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  
v3.20.1
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  
v3.20.1
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
v3.20.1
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