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

BoardGeneral 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

MBC WINS PRESTIGIOUS

INTERNATIONAL CARRIER AWARD

MBC HAD

NETWORK RELIABILITY

99.993%

MBC PARTNERS WITH MICROSOFT TO ADDRESS THE

HOMEWORK GAP IN RURAL VIRGINIA

2 MBC-SPONSORED

FRC ROBOTICS TEAMS REPRESENTED SOUTHERN

VIRGINIA AT THE FIRST WORLD CHAMPIONSHIP IN ST. LOUIS

MBC PARTNERS

ON PROJECT THAT WILL BRING A SUBSEA CABLE

LANDING STATION TO

VIRGINIA BEACH

NEW ROBOTICS TEAMS IN SOUTHERN VIRGINIA SPONSORED BY MBC6

2016 MBC BOARD OF DIRECTORSMARK D. HEATH

President/CEO,Martinsville-Henry

CountyEconomic Development

Corporation

DAVID HUDGINS Director of Member &

External Relations, Old Dominion Electric

Cooperative

WANDA BOSTICK JEFFRESS

Owner/Vice President, S.L. Jeffress Co.

& Jeffress Funeral Home

CHARLEY MAJORSExecutive Chairman,

American National Bank

BOB PICCHIPresident, Blue Ridge

Advisory Services Group

RICHARD SHUMAKER

Account Manager,Cisco Systems, Inc.

GARY WALKEROwner & Operator,

Cornerstone Insurance

Agency

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 and CEO

The past year marked another successful year for Mid-Atlantic Broadband. Our financial performance continues to be strong and improving. This performance allows us to invest in Southern Virginia in a variety of ways. Economic Development is central to our mission and we look for opportunities to help with incentives for broadband access for existing businesses and businesses looking to locate in our network area. Education is another core principle and we have expanded our sponsorship of robotics programs in our schools that encourage competition and cooperation among our students in the areas of

math, science and technology. Also, we continually look to step into situations where government and industry can’t and provide resources to make projects possible.

Our Board of Directors is constantly looking for ways that MBC can be a catalyst for economic development and jobs in Southern Virginia. We must be aggressive. We must look for opportunities where Southern Virginia may have advantages whether it is in location, education, job training or natural resources. We also stand ready to be a willing partner with others as we pursue the goal of changing the economic landscape.

I know that I speak for the entire Board of Directors when I say thank you to the dedicated management and staff of MBC. Generally, these folks live in Southern Virginia, most of them born here. The work that MBC does in the communities it serves is important to all of its employees and MBC is better today because of their efforts.

I would also like to thank the members of the Board of Directors for their work. It is a talented, knowledgeable group that believes in MBC’s mission.

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

MBC had another steady year of operations as we’ve noticed increased revenue growth, new economic development prospects, and innovative projects that we anticipate will help bridge the digital divide.

We have partnered with Microsoft and their Affordable Access Initiatives group to implement one of the largest

deployments of wireless broadband access using TV White Space technology. This technology is used in rural and remote regions around the world to provide affordable connectivity to communities, and we’re proud that southern Virginia will be a showcase for this innovative technology. We continue to see growth in our core business for both dedicated optical transport services as well as enabling large carriers to expand their network reach in Virginia by use of our fiber network.

We continue to reinvest in economic and community development initiatives that drive our mission in southern Virginia. We’re implementing new metrics for assessing the social impact of our investments and align those contributions on areas that positively contribute to growth in our region.

We remain focused on improving the economic environment of Southern Virginia and look forward to more great things in 2017!

The World is Coming to Virginia Beach

In May 2016, Virginia Beach was announced as the location for the first transoceanic fiber cable landing station in the Mid-Atlantic United States. The cable landing station will be located in Corporate Landing Business Park, a large business center in the eastern part of Virginia Beach that has 179 acres available for development. Telefónica was approved by the Virginia Beach Development Authority to purchase 3.5 acres in the park for the construction of a 20,000- to 23,000-square foot data center to support this project. Virginia Beach is partnering with MBC to build a robust fiber and conduit infrastructure to support the cable landing station at Corporate Landing.

The subsea cable that spurred the creation of the cable landing station was MAREA, a partnership among Microsoft, Facebook, and Telefónica that will bring a subsea cable from Europe to Virginia Beach. MAREA was designed by Microsoft and Facebook to be the highest-capacity subsea cable to ever cross the Atlantic.

Currently, there are two cables planned to terminate in the cable landing station in Virginia Beach – MAREA and BRUSA (Brazil to Virginia Beach). Other international subsea cables are also looking at coming to Virginia Beach. The new subsea fiber routes planned to land in Virginia Beach give the Commonwealth of Virginia a substantial competitive advantage on the world stage when it comes to promoting and recruiting businesses to invest in our regions.

Microsoft Announces Fourth Expansion in Mecklenburg CountyAs the demand for cloud services continues to grow, Microsoft continues to expand capacity to meet the needs of their customers. In November 2015, Microsoft announced the fourth expansion of their data center site in Mecklenburg County, Virginia, bringing $402.4 million in investment and 42 new jobs. The investment that Microsoft has made at the Mecklenburg data center since 2010 has brought more than $1.74 billion in investment and over 200 new jobs to the Southern Virginia region. MBC is proud to support this investment in Southern Virginia by providing reliable high-capacity and low-latency diverse connections to meet the requirements of

Microsoft that ensure the satisfaction of their customers.

Source: Virginia Economic Development Partnership www.yesvirginia.org

Company Name Location Business Description New Jobs Investment ($)

Telvista Danville Call center 150 -

Blue Ridge Optics LLC Bedford County Manufactures precision optical components and coatings 15 1,000,000

Dominion Virginia Power Greensville County Natural gas-fired power station 44 1,300,000,000

Performance Livestock and Feed Co. Inc. Henry County Livestock feed production 32 4,203,000

Alcoa Henry County Titanium forging and fabrication facility for the aerospace industry 15 8,596,000

Gregory Lumber, Inc. Pittsylvania County Sawmill 3 3,000,000

Abbott Laboratories Campbell County Nutritional formula product 34 34,000,000

Gerdau Ameristeel* Dinwiddie County Manufacturer of long steel products 0 8,551,000

Roobrik Danville Long term care assistant software 5 200,000

SanAir Technologies Laboratory, Inc. Powhatan County Environmental testing services for national clients 10 -

Slick Rock Lumber Halifax County Sawmill 13 535,000

Textron, Inc. Nottoway County Manufacturing and testing of unmanned aerial vehicles 50 1,000,000

Ply Gem Windows Franklin County Vinyl window manufacturing 76 1,980,000

Drake Extrusions Inc.* Henry County Manufacturer of specialty yarn 30 6,000,000

Netarus Danville Software/hardware for marine construction 5 250,000

Springfield Distillery Halifax County Whiskey distillery 5 160,000

Fleetwood Homes Franklin County Manufacturer of prefabricated homes 41 1,317,500

Nationwide Homes Inc. Martinsville Modular home manufacturing company 59 986,300

StarSprings* Henry County Manufacturer of mattress units 68 3,689,900

Buckingham Branch Railroad Buckingham County Short line railroad 7 2,000,000

Chaos Mountain Brewing Franklin County Expansion of brewery facility 9 597,000

The Results Companies Henry County Call center for Business Process Management company 500 -

Faneuil, Inc. Martinsville Call center services 30 -

Microsoft Corporation Mecklenburg County Data center expansion 42 402,400,000

Hometown Ice, LLC Franklin County Ice manufacturing and distribution 3 1,750,000 Schrader International Campbell County Design, manufacture, and assemble sensors for air fluid control engines and vehicle

industries0 2,100,000

Xpress Natural Gas LLC Appomattox County Natural gas delivery and storage by tank fleet 50 7,800,000

DanChem Technologies Pittsylvania County Chemical product and preparation manufacturing 5 6,537,000

Notes: *Indicates foreign affiliation, 2016 announcements are Total Private Sector Investment & Jobs Created 1301 $1,798,652,700preliminary, All announcements are subject to revision July 2015 - June 2016

More and more school districts are implementing technology in the classrooms. Assignments are given to students, and frequently they are required to research and submit their work online. The reality, however, is that many of the students living in Southern Virginia are being left behind as they are not able to access broadband from their home due to affordability and access issues. MBC’s solution to solve the homework gap in rural Virginia is centered around K‐12 schools and TV White Space technology.

This joint project between Microsoft, the Virginia Tobacco Commission, Adaptrum, B2XOnline, Charlotte and Halifax County Public Schools, and Mid-Atlantic Broadband Communities Corporation (MBC) will be the largest deployment of TVWS in the United States with the goal of ensuring that students can access educational content at home.

By utilizing towers located on school campuses in Charlotte and Halifax Counties, MBC and its partners are able to provide Wi-Fi connection using TV White Space technology to those students living in the vicinity of the tower. With this connection, the student has access to whatever content he or she can access at school. This service provides unlimited use of this educational content at no cost to the family of the student.

MBC Deploys TV White Space Technology to Close Homework Gap

“My son is a high school senior who is currently enrolled in dual enrollment classes through Randolph-Henry High School and the local community college that require online research. With our only other option for internet service being an unreliable satellite connection, this has required driving 15-20 minutes to a library for internet access whenever he needs to complete an assignment that requires online connectivity. The homework gap project is a great opportunity that is being provided by MBC and their partners. Being able to view the same educational content at home that they can view at school at no charge to the family is a wonderful resource for students. When the service was first installed at my home, it would cut on and off and probably worked only 1% of the time. Recently, the service has gotten better, with connection 80-90% of the time. MBC and their partners are working hard to make this a reliable service for students in our county, and we look forward to its benefits, because when it’s working, it’s really great!”

-Gwendolyn Harris, Parent of Randolph-Henry High School Senior

2016 FRC Rookie Teams Central High School Portable Chargers

(Lunenburg County)

Tunstall High School Trojans(Pittsylvania County)

Cumberland High Gold Dukes

Sussex Central High Team T.I.G.E.R.S.

Amelia County High Cyber Raiders

Halifax County High Cometbots

Four MBC-sponsored robotics teams compete in the same match in the picture above.Each year since 2012, MBC has sponsored the FIRST FRC (FIRST Robotics

Competition) robotics teams located in Southern Virginia. Students participating in this program are challenged in multiple fields, including electronics, programming, pneumatics, business/marketing, etc. Each year, a new game is presented to the teams, giving these students the opportunity to expand their minds to create new solutions to the challenge that lies before them. Mid-Atlantic Broadband is an advocate for this vision of workforce development in STEM-related fields, as these skills are highly desirable to companies and strengthen the workforce in Southern Virginia.

FRC teams located in Southern Virginia benefit from the annual $6,000 per team donation given by Mid-Atlantic Broadband. With this donation, the teams are able to purchase the FRC kit that is required each year for competition and are able to register for two district events in the FIRST Chesapeake District, which brings together teams from Virginia, Maryland, and Washington, D.C. This year, in addition to the five veteran teams in the region, six new teams from Southern Virginia debuted in the FRC arena. In addition to the yearly $6,000 donation, new teams were eligible for a challenge grant that matched each new team’s fundraising contributions dollar for dollar up to $4,000 per team.

MBC supported 10 YMCAs, 5 Head Start programs, and 3 Boys and Girls Clubs in

Southern Virginia in 2015-16.

“MBC is a corporation that truly lives up to its mission to serve the Southern Virginia region. Through MBC’s ongoing financial support, we have been able to invest in our youths, their health, and the overall wellness of our community. Each year at our location in Farmville, Virginia alone, over 300 elementary school students participate in an 8-week swim and water safety course free of charge at our pool, 10 individuals are introduced to YMCA’s Diabetes Prevention program, and 30 children attend summer camps offered by the YMCA. MBC’s generous contributions are improving the lives of our citizens by enabling elementary school students to gain confidence and skills in the water and reduce the risk of drowning, helping find solutions to create healthy lifestyle changes for individuals who are prediabetic and at risk of developing diabetes and other complications from this chronic illness, and providing children the opportunity to participate in summer camps aimed and providing much needed physical activities and a

nutritious diet.”

-Ben Sysko, CEO, Southside Virginia Family YMCA -

"Our programs promote the development of young people with an emphasis of developing healthy lifestyles. Through MBC's generous contributions and ongoing support, the Boys & Girls Club has offered programs to our youths including Triple Play-Healthy Habits, designed to encourage healthy food choices and physical activity. Working with a low income population, access to healthy foods and safe options for physical play can be a challenge. Our partnership with MBC make possible these opportunities for all 206 of the youths we serve. This would not be possible without MBC's partnership."

- Buleah Thomas, Interim Executive Director, Boys & Girls Club of Emporia/Greensville

The Altavista Bionic Eagles captured the MBC Challenge Cup title for 2016. This year, two MBC-sponsored teams qualified for FIRST World Championship, leaving both the Bionic Eagles and the Piedmont Governor’s School STAGS in the running for the MBC Challenge Cup title. When presented with the option, the two teams displayed the very essence of FIRST’s value of Coopertition by foregoing the prize trip and splitting the prize money so that both teams could gain the experience and honor of competing at

FIRST’s most prestigious tournament.

The Piedmont Governor’s School STAGS won the

#MBCChallengeCup social media challenge by generating

3,339 mentions for their team on

Facebook and Twitter!

And the MBC Challenge Cup Goes To...

MBC-sponsored FRC teams received

17individual team awards at competitions throughout

the 2016 season.

The Altavista Bionic Eagles

“I came to the IT Academy as an unemployed Veteran. After obtaining three certifications, I left the Academy as an employed Veteran with a well-known, highly regarded IT Enterprise Company in Clarksville, VA. The IT Academy provided me with a stable foundation of knowledge that not only increased my IT skills but also started me on the path to success in the world of IT. I am truly grateful and appreciative of those who supported the vision of the IT Academy and made it come to fruition in

South Boston, VA.”

Since classes began in August 2015,

the IT Academy has had

3 cohorts

46 completers

73 CompTIA

certifications earned(A+, Server+, Network+)

MEETMyra Ragland

IT Academy Completer - 1st Cohort

Photo Credit: Drew Morris

In June 2015, the Southern Virginia Higher Education Center (SVHEC) cut the ribbon on the IT Academy to meet the growing demand for skilled IT workers as the data center industry continues to grow in Southern Virginia. MBC is a proud sponsor of the IT Academy, as economic development and preparing the workforce of Southern Virginia to support the success of current and new businesses in the region are priorities for MBC.

MEETKenton Beard

IT Academy Completer2nd Cohort

“I chose the program because I have wanted a good job in the field of IT and I heard about the program working with ATOS to find employees for Microsoft, and I knew I had to get in. Also I always wanted to take classes in IT since I enjoy working with computers.

I think the most valuable aspect of the class was the relationships I developed with the other students and the teachers. The teachers knew what they were talking about and made sure that we knew what was going on. They were always willing to stop and answer questions and were never too busy to explain in further detail. If it wasn't for them, I know that none of us would have had a chance. The fact that they would set aside nights in their schedules for us to come in outside of class times to study meant a lot. I will always have the others students’ and teachers’ information for when I have Tech questions and that will always be invaluable to me.”

Photo Credit: Drew Morris

Photo Credit: Aaron Chandler

In early 2015, MBC partnered with Mid-Atlantic Research Infrastructure Alliance (MARIA), a non-profit corporation that brings together Virginia’s major research universities to facilitate access to shared technology infrastructure for research. In October 2015, MBC deployed the Infinera packet switching module, which enables a highly-efficient packet-optical transport network architecture. The Infinera PXM is designed to enable network operators to benefit from a portfolio of advanced services-based Carrier Ethernet and MPLS technologies that are intended to result in decreased network costs and statistical multiplexing with packet aggregation and transport port consolidation. Deployed on the Infinera DTN-X platform across MBC’s terabit network, Infinera PXM allows MBC to interconnect 100 gigabit Ethernet (GbE) router ports at various university sites and allows access to the Internet2 network via Ashburn. The Infinera PXM module enables MBC to directly map packet services with carrier grade quality of service (QoS) from the edge of the network to its core transport network.

By adding Infinera PXM on the MBC Intelligent Transport Network, MBC now has the benefit of packet-awareness, which enables a significant reduction in expensive router ports required to offer a portfolio of high-capacity Ethernet services. Infinera’s solutions have consistently enabled the MBC network to respond to customers with speed, scale and reliability. As a result of partnering with Infinera, the MBC network capacity to support large research and economic development projects in Virginia has grown ten-fold. With Infinera PXM, MBC continues to extend these benefits to all customers in the network.

MBC with Infinera won the Global Telecoms Business Fixed Infrastructure

Award for their commitment to the success of this project!

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

Total Assets

2,792,627

750,000 789,1021,173,5341,094,183

50,338,60116,463,761

180,071

73,581,879

5,065,124250,000 977,236 713,616

853,198 46,328,226 19,557,046

176,189

73,920,635 Accounts Payable

Accrued LiabilitiesLong-term Debt ObligationsDeferred RevenueTotal Liabilities

Unrestricted Net AssetsTemporarily Restricted Net AssetsTotal Net Assets

Total Liabilities and Net Assets

1,268,262 345,2391,624,117

8,741,40911,979,027

11,264,251 50,338,60161,602,852

73,581,879

70,472 425,303

- 13,619,720 14,115,495

13,476,915 46,328,225 59,805,140

73,920,635

Consolidated Revenue

Cost of Network Operations/Tower Construction

Operating Margin

Sales and Marketing ExpenseAdministrative ExpenseOther Income (Expense)

Net Earnings from Operating Activities

FY2015FY2016

8,776,720

3,187,633

5,589,087

825,824 2,802,074

(920)

1,960,269

10,596,449

4,142,086

6,454,363

666,934 3,285,718 (289,047)

2,212,664

*The balance sheet and income statement provided are from audited financial statements.

Ass

ets

Liab

ility

& E

qu

ity

Inco

me

Sta

tem

en

t

-

100,000.00

200,000.00

300,000.00

400,000.00

500,000.00

600,000.00

700,000.00

800,000.00

900,000.00

MBC Monthly Revenue FY2015-FY2016

In fiscal year 2016, Mid-Atlantic Broadband spent a total of $10,895,739.

Of those funds spent in Virginia, $1,702,722 (39%) was spent with

companies headquartered in Southern Virginia

$638,984 (15%) was spent with certified Small, Women and

Minority (SWaM) firms registered in Virginia

$4,367,144 (40%) was spent with companies headquartered in the

Commonwealth of Virginia

40% spent in

state

39% spent in region

15% spent with SWAM

Dave Keller

Mark Petty

Chris Fewox

Dave Keller is a telecommunications industry veteran with nearly 30 years in leadership positions at Sprint, where he began his career, AEP Communications, NTELOS, CenturyLink, ValleyNet, and MBC. With a history of developing strategic relationships to provide broadband in underserved markets, Keller has worked in sales, marketing, and operations departments supporting business and residential customers in the Midwest and Mid-Atlantic regions. During his time at American Electric Power, Dave led the effort to build a 2500 route mile fiber network in 3 years. As VP of Sales at NTELOS, Dave developed business plans and built public-private partnerships with several cities in the MBC market area, giving him a strong understanding of how to cultivate successful partnerships. Dave also led the development of sales and marketing capabilities that grew the NTELOS wireline business to become a strong Virginia based company positioned well against other national companies. Dave has served on the board of regional technology councils including Region 2000 and CBIC during his career.

In his role at MBC as VP of Sales and Business Development, Dave works to create growth and creative solutions to meet the needs of the Southern Virginia region by leveraging MBC’s middle mile network to position the region as a player in the new digital economy.

Mark Petty began his career at CenturyLink in Charlottesville, Virginia working as an OSP Engineer for the local phone company after graduating from Virginia Tech with a BS in Electrical Engineering. Three years later he was recruited by Lumos as a Network Planner and later held positions including Senior Network Planner, Manager of Outside Plant Engineering, and Director of OSP Plant Engineering. Mark has had the opportunity to support the deployment of broadband networks for residential, small and large businesses, wireless providers, and government agencies.

Mark has spent most of his career designing and managing fiber networks across an eight state region, including Virginia. Most recently, he led the engineering effort to expand the Lumos network approximately 800 miles in Central and Eastern Virginia. Mark grew up in the rural Southwest Virginia town of Galax where furniture and textiles were the main industries and, thus, understands the importance of broadband connectivity and job creation for communities like these.

Chris Fewox has been working in the telecommunications industry for more than 30 years. He began his career with AT&T Corp. in southwest Texas. He was first introduced to the fiber world in 1989, with responsibilities in Outside Plant Construction, Maintenance, and Engineering with AT&T Communications. There he worked with fiber cable and fiber optic systems, where he participated in fiber network installations in North Carolina and South Carolina. After AT&T, Chris moved into his role as OSP Design Engineer, Senior OSP Design Engineer & Project Manager with RJE Telecom, where he worked with MBC to engineer routes for the BTOP-funded projects. At RJE, Chris also dealt heavily with compliance, where he initiated design revisions for construction conflicts, cost cutting initiatives, and adjustments due to regulatory requirements.

In his role at MBC as Senior Project Engineer, Chris focuses on outside plant design and contractor management for engineering and construction projects.

The MBC website got a new look this year.Check it out at www.mbc-va.com.

2016 Staff Title Changes

Jeremy Satterfield Director of Community Outreach and Innovative Programs

Liz SmithMarketing Manager

Chase WeddleNetwork Planner

TOWERS

MBC Towers constructed five towers in Virginia - three in Charlotte County, one in Montvale, and one in Lynchburg for Region 2000. They completed a job for Harris to build out Region 2000's Emergency Services E911 communication system and have also contracted with Harris to build out three other Regional E911 systems in the state. MBC Towers worked with MBC on designing and building out the system for the TV White Space project that addresses the homework gap in Southern Virginia. Measures were taken to bring their Tower Climbing Certification training in-house, and they are now a certified contractor for AEP, SBA, and Crown Castle. MBC Towers currently has 7 employees.

In the last year,

Headquarters Office

Southern VA Technology Park1100 Confroy Drive, Suite 4

South Boston, VA 24592

+1 434 570 1300 Office

Richmond Office

SunTrust Center919 East Main Street

Suite 1000Richmond, VA 23219

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

Silicon Valley Office

5201 Great America ParkwaySuite 320

Santa Clara, CA 95054