10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

_________________

FORM 10-Q

(Mark One)

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

For the quarterly period ended March 31, 2022

☐     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  0-3024

NUVERA COMMUNICATIONS, INC.

(Exact name of Registrant as specified in its charter)

Minnesota (State or other jurisdiction of incorporation or organization) 41-0440990 (I.R.S. Employer Identification No.)

27 North Minnesota Street

New Ulm, Minnesota 56073

(Address of principal executive offices)

Registrant’s telephone number, including area code: (507) 354-4111

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 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 and post 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,” “non-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 

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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 Exchange Act).  Yes £  No ⮽

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

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock - $1.66 par value	NUVR	OTCQB Marketplace

The total number of shares of the registrant’s common stock outstanding as of May 10, 2022: 5,064,760.

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table of contents

PART I – FINANCIAL INFORMATION
Item 1	Financial Statements	4 - 9
	Consolidated Statements of Income (unaudited) for the Three Months Ended  March 31, 2022 and 2021	4
	Consolidated Statements of Comprehensive Income (unaudited) for the Three Months Ended March 31, 2022 and 2021	5
	Consolidated Balance Sheets (unaudited) as of March 31, 2022 and December 31, 2021	6 - 7
	Consolidated Statements of Cash Flows (unaudited) for the Three Months Ended March 31, 2022 and 2021	8
	Consolidated Statements of Stockholders’ Equity (unaudited) for the Three Months Ended March 31, 2022 and 2021	9
	Condensed Notes to Consolidated Financial Statements (unaudited)	10 - 30
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	30 - 43
Item 3	Quantitative and Qualitative Disclosures about Market Risk	43
Item 4	Controls and Procedures	44
PART II – OTHER INFORMATION
Item 1	Legal Proceedings	44
Item 1A	Risk Factors	44 - 53
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	53 - 54
Item 3	Defaults upon Senior Securities	54
Item 4	Mine Safety Disclosures	54
Item 5	Other Information	54
Item 6	Exhibits Listing	55
	Signatures	56
	Exhibits

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PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

NUVERA COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
	Three Months Ended March 31,
	2022		2021
OPERATING REVENUES:
Voice Service	$	1,468,178	$	1,551,278
Network Access		1,291,310		1,582,440
Video Service		3,141,492		3,028,877
Data Service		6,716,852		6,267,971
A-CAM/FUSF		2,894,587		2,968,195
Other Non-Regulated		962,353		1,079,362
Total Operating Revenues		16,474,772		16,478,123
OPERATING EXPENSES:
Plant Operations (Excluding Depreciation    and Amortization)		3,427,246		3,417,738
Cost of Video		2,549,852		2,756,343
Cost of Data		1,028,534		923,514
Cost of Other Nonregulated Services		378,194		409,246
Depreciation and Amortization		3,498,284		3,071,572
Selling, General and Administrative		2,661,463		2,663,890
Total Operating Expenses		13,543,573		13,242,303
OPERATING INCOME		2,931,199		3,235,820
OTHER INCOME (EXPENSE)
Interest Expense		(496,655)		(565,374)
Interest/Dividend Income		177,045		101,402
Interest During Construction		32,204		9,992
Gain on Debt Forgiveness		-		2,912,433
CoBank Patronage Dividends		567,468		625,490
Other Investment Income		124,301		66,048
Total Other Income (Expense)		404,363		3,149,991
INCOME BEFORE INCOME TAXES		3,335,562		6,385,811
INCOME TAXES EXPENSE		933,956		1,205,100
NET INCOME	$	2,401,606	$	5,180,711
NET INCOME PER SHARE
Basic	$	0.47	$	1.00
Diluted	$	0.47	$	0.99
DIVIDENDS PER SHARE	$	0.14	$	0.13
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic		5,111,622		5,202,832
Diluted		5,124,540		5,210,554
The accompanying notes are an integral part of these consolidated financial statements.

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NUVERA COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited)
	Three Months Ended March 31,
	2022		2021
Net Income	$	2,401,606	$	5,180,711
Other Comprehensive Income:
Unrealized Gains on Interest Rate Swaps		1,799,825		945,061
Income Tax Expense Related to Unrealized    Gains on Interest Rate Swaps		(513,670)		(269,720)
Other Comprehensive Income:		1,286,155		675,341
Comprehensive Income	$	3,687,761	$	5,856,052
The accompanying notes are an integral part of these consolidated financial statements.

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NUVERA COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEETS (Unaudited)
ASSETS
	March 31, 2022		December 31, 2021
CURRENT ASSETS:
Cash	$	878,078	$	2,306,149
Receivables, Net of Allowance for     Doubtful Accounts of $80,000 and $80,000		2,535,002		2,426,009
Income Taxes Receivable		471,666		1,405,622
Materials, Supplies, and Inventories		7,327,046		5,357,380
Prepaid Expenses and Other Current Assets		2,095,856		1,886,810
Total Current Assets		13,307,648		13,381,970
INVESTMENTS & OTHER ASSETS:
Goodwill		49,903,029		49,903,029
Intangibles		17,827,483		18,315,567
Other Investments		10,531,863		10,417,563
Right of Use Asset		1,084,600		1,154,293
Financial Derivative Instruments		916,460		-
Other Assets		437,341		422,427
Total Investments and Other Assets		80,700,776		80,212,879
PROPERTY, PLANT & EQUIPMENT:
Communications Plant		192,098,334		189,990,012
Other Property & Equipment		27,760,245		27,439,201
Video Plant		11,321,216		11,306,071
Total Property, Plant and Equipment		231,179,795		228,735,284
Less Accumulated Depreciation		150,596,128		147,585,930
Net Property, Plant & Equipment		80,583,667		81,149,354
TOTAL ASSETS	$	174,592,091	$	174,744,203
The accompanying notes are an integral part of these consolidated financial statements.

6

NUVERA COMMUNICATIONS, INC. CONSOLIDATED BALANCE SHEETS (continued) (Unaudited)
LIABILITIES AND STOCKHOLDERS' EQUITY
	March 31, 2022		December 31, 2021
CURRENT LIABILITIES:
Current Portion of Long-Term Debt, Net of      Unamortized Loan Fees	$	4,509,044	$	4,511,844
Accounts Payable		2,434,553		3,244,472
Other Accrued Taxes		322,739		260,013
Deferred Compensation		63,424		63,829
Accrued Compensation		2,025,687		2,122,436
Other Accrued Liabilities		863,859		634,247
Total Current Liabilities		10,219,306		10,836,841
LONG-TERM DEBT, Net of Unamortized      Loan Fees		44,110,542		43,114,772
NONCURRENT LIABILITIES:
Loan Guarantees		209,367		222,464
Deferred Income Taxes		19,998,170		19,484,500
Unrecognized Tax Benefit		42,775		42,775
Other Accrued Liabilities		1,066,428		1,112,343
Financial Derivative Instruments		-		883,365
Deferred Compensation		398,738		396,548
Total Noncurrent Liabilities		21,715,478		22,141,995
COMMITMENTS AND CONTINGENCIES:		-		-
STOCKHOLDERS' EQUITY:
Preferred Stock - $1.66 Par Value, 10,000,000 Shares    Authorized, No Shares Issued and Outstanding		-		-
Common Stock - $1.66 Par Value, 90,000,000 Shares Authorized,    5,064,760 and 5,210,053 Shares Issued and Outstanding		8,441,267		8,683,422
Accumulated Other Comprehensive Gain (Loss)		654,902		(631,253)
Unearned Compensation		262,735		259,620
Retained Earnings		89,187,861		90,338,806
Total Stockholders' Equity		98,546,765		98,650,595
TOTAL LIABILITIES AND     STOCKHOLDERS' EQUITY	$	174,592,091	$	174,744,203
The accompanying notes are an integral part of these consolidated financial statements.

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NUVERA COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
	Three Months Ended
	March 31, 2022		March 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$	2,401,606	$	5,180,711
Adjustments to Reconcile Net Income to Net Cash    Provided by Operating Activities:
Depreciation and Amortization		3,523,156		3,096,211
PPP Loan Forgiveness		-		(2,912,433)
Undistributed Earnings of Other Equity Investments		(121,963)		(64,423)
Noncash Patronage Refund		(118,223)		(129,177)
Stock Issued in Lieu of Cash Payment		140,518		39,984
Distributions from Equity Investments		100,000		150,000
Stock-based Compensation		3,782		178,081
Changes in Assets and Liabilities:
Receivables		(108,585)		(337,167)
Income Taxes Receivable		933,956		615,587
Inventories for Resale		(12,527)		(173,169)
Prepaid Expenses		(249,030)		(1,494,445)
Other Assets		(15,322)		(65,048)
Accounts Payable		862,316		174,178
Accrued Income Taxes		-		489,513
Other Accrued Taxes		62,726		61,962
Other Accrued Liabilities		156,641		389,210
Deferred Compensation		1,785		(69,775)
Net Cash Provided by Operating Activities		7,560,836		5,129,800
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant, and Equipment, Net		(4,116,747)		(1,740,415)
Materials and Supplies for Construction		(1,957,139)		(311,145)
Other, Net		12,788		(42,000)
Net Cash Used in Investing Activities		(6,061,098)		(2,093,560)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt		(1,152,600)		(1,152,600)
Loan Origination Fees		(28,000)		-
Changes in Revolving Credit Facility		2,148,698		-
Repurchase of Common Stock		(3,187,500)		-
Dividends Paid		(708,407)		(676,090)
Net Cash Used in Financing Activities		(2,927,809)		(1,828,690)
NET CHANGE IN CASH		(1,428,071)		1,207,550
CASH at Beginning of Period		2,306,149		8,617,660
CASH at End of Period	$	878,078	$	9,825,210
Supplemental cash flow information:
Cash paid for interest	$	466,226	$	782,399
Net cash paid for income taxes	$	0	$	100,000
Certain historical numbers have been changed to conform to the current year's presentation.
The accompanying notes are an integral part of these consolidated financial statements.

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NUVERA COMMUNICATIONS, INC. CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited)
	THREE MONTHS ENDED MARCH 31, 2022
				Accumulated Other Comprehensive
	Common Stock					Unearned		Retained		Total
	Shares	Amount		Income (Loss)		Compensation		Earnings		Equity
BALANCE on December 31, 2021	5,210,053	$	8,683,422	$	(631,253)	$	259,620	$	90,338,806	$	98,650,595
Employee Stock Plan	4,676		7,793						92,741		100,534
Restricted Stock Grant							3,782				3,782
Exercise of RSUs	31		52				(667)		615		-
Repurchase of Common Stock	(150,000)		(250,000)						(2,937,500)		(3,187,500)
Net Income									2,401,606		2,401,606
Dividends									(708,407)		(708,407)
Unrealized Gain on Interest Rate Swap					1,286,155						1,286,155
BALANCE on March 31, 2022	5,064,760	$	8,441,267	$	654,902	$	262,735	$	89,187,861	$	98,546,765
	THREE MONTHS ENDED MARCH 31, 2021
				Accumulated Other Comprehensive
	Common Stock					Unearned		Retained		Total
	Shares	Amount		Income (Loss)		Compensation		Earnings		Equity
BALANCE on December 31, 2020	5,200,689		8,667,816	$	(1,944,511)	$	149,100	$	80,748,301	$	87,620,706
Employee Stock Plan	4,594		7,657						101,083		108,740
Restricted Stock Grants							69,341				69,341
Exercise of RSUs	1,836		3,060				(43,458)		40,398		-
Net Income									5,180,711		5,180,711
Dividends									(676,090)		(676,090)
Unrealized Gain on Interest Rate Swap					675,341						675,341
BALANCE on March 31, 2021	5,207,119	$	8,678,533	$	(1,269,170)	$	174,983	$	85,394,403	$	92,978,749

The accompanying notes are an integral part of these consolidated financial statements.

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NUVERA COMMUNICATIONS, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

March 31, 2022 (Unaudited)

Note 1 – Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements of Nuvera Communications, Inc. and its subsidiaries (Nuvera) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information, rules and regulations of the Securities and Exchange Commission (SEC) and, where applicable, conform to the accounting principles as prescribed by federal and state telephone utility regulatory authorities. Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted or condensed pursuant to such rules and regulations. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal and recurring accruals) considered necessary for the fair presentation of the financial statements and present fairly the results of operations, financial position and cash flows for the interim periods presented as required by Regulation S-X, Rule 10-01. These unaudited interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

The preparation of our financial statements requires our management to make estimates and judgements that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities at the date of the financial statements and during the reporting period. Actual results may differ from these estimates. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year as a whole or any other interim period.

Our consolidated financial statements report the financial condition and results of operations for Nuvera and its subsidiaries in one business segment: the Communications Segment. Inter-company transactions have been eliminated from the consolidated financial statements.

Revenue Recognition

See Note 2 – “Revenue Recognition” for a discussion of our revenue recognition policies.

Cost of Services (excluding depreciation and amortization)

Cost of services includes all costs related to delivery of communication services and products. These operating costs include all costs of performing services and providing related products including engineering, network monitoring and transportation costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include direct and indirect selling expenses, customer service, billing and collections, advertising and all other general and administrative costs associated our operations.

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Depreciation and Amortization Expense

We use the group life method (mass asset accounting) to depreciate the assets of our communications companies. Communications plant acquired in a given year is grouped into similar categories and depreciated over the remaining estimated useful life of the group. When an asset is retired, both the asset and the accumulated depreciation associated with that asset are removed from the books. Due to rapid changes in technology, selecting the estimated economic life of communications plant and equipment requires a significant amount of judgment. We periodically review data on expected utilization of new equipment, asset retirement activity and net salvage values to determine adjustments to our depreciation rates. Depreciation expense was $3,010,200 and $2,240,630 for the three months ended March 31, 2022 and 2021. The increase in depreciation expense in the first quarter of 2022 was primarily due to accelerated depreciation on our old copper cable networks as we transition to a new advanced fiber-to-the-premise (FTTP) network. We amortize our definite-lived intangible assets over their estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment.

Income Taxes

The provision for income taxes consists of an amount for taxes currently payable and a provision for tax consequences deferred to future periods. Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Significant components of our deferred taxes arise from differences (i) in the basis of property, plant and equipment due to the use of accelerated depreciation methods for tax purposes, as well as (ii) in partnership investments and intangible assets due to the difference between book and tax basis. Our effective income tax rate is normally higher than the United States tax rate due to state income taxes and permanent differences, however, our effective income tax rate was lower than the United States tax rate in the quarter ended March 31, 2021 due to the Small Business Administration’s (SBA) Payroll Protection Program (PPP) loan forgiveness not being taxable at the federal level at that time. 

We account for income taxes in accordance with GAAP, which requires an asset and liability approach to financial accounting and reporting for income taxes. As required by GAAP, we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

As of March 31, 2022 and December 31, 2021 we had $38,673 of unrecognized tax benefits that if recognized would affect the tax rate. We do not expect the total amount of unrecognized tax benefits to materially change over the next 12 months.      

We are primarily subject to United States, Minnesota, Iowa, Nebraska, North Dakota and Wisconsin income taxes. Tax years subsequent to 2017 remain open to examination by federal and state tax authorities. We are currently undergoing an examination by the State of Minnesota. We do not expect the results of the examination to have a material effect on our ongoing financial statements. Our policy is to recognize interest and penalties related to income tax matters as income tax expense. As of March 31, 2022 and December 31, 2021 we had $4,102 of accrued interest that related to income tax matters.

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Earnings and Dividends Per Share

Basic and diluted net income per share are calculated as follows:

	Three Months Ended   March 31, 2022				Three Months Ended   March 31, 2021
	Basic		Diluted		Basic		Diluted
Net Income	$	2,401,606	$	2,401,606	$	5,180,711	$	5,180,711
Weighted-average common shares outstanding		5,111,622		5,124,540		5,202,832		5,210,554
Net income per share	$	0.47	$	0.47	$	1.00	$	0.99

The weighted-average shares outstanding, basic and diluted, are calculated as follows:

	Three Months Ended   March 31, 2022				Three Months Ended   March 31, 2021
	Basic		Diluted		Basic		Diluted
Weighted-average common shares outstanding		5,111,622		5,111,622		5,202,832		5,202,832
Unvested RSU's		-		12,918		-		7,722
Weighted-average common shares outstanding		5,111,622		5,124,540		5,202,832		5,210,554

Nuvera’s Board of Directors (BOD) reviews quarterly dividend declarations based on our anticipated earnings, capital requirements and our operating and financial conditions.  

Recent Accounting Developments

Effective January 1, 2021 we adopted Accounting Standards Update (ASU) 2020-06, “Accounting for Convertible Instruments in an Entity’s Own Equity.” ASU 2020-06 simplifies guidance on accounting for convertible instruments and contracts in an entity’s own equity including calculating diluted earnings per share. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures.

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Effective January 1, 2021, we adopted ASU 2019-12, “Income Taxes,” ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions and adding certain requirements to the general framework in Accounting Standards Codification (ASC) 740, “Income Taxes.” The new guidance will be applied prospectively. The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.

In November 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-10, “Disclosures by Business Entities about Government Assistance.” ASU 2021-10 requires disclosure by business entities of the types of government assistance received, the method of accounting for such assistance and the effects of the assistance on its financial statements. The new guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, with early adoption permitted. We are currently evaluating the impact this update will have on our related disclosures.

In March 2020, the FASB issued (ASU) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In January 2021, the FASB issued ASU No. 2101-01, “Reference Rate Reform (Topic 848): Scope.” ASU 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU 2020-04 and ASU 2021-01 are both elective and are effective upon issuance through December 31, 2022. We are currently evaluating the impact these updates will have on our consolidated financial statements and related disclosures.   

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosures relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. The Company is required to adopt ASU 2016-13 for fiscal periods beginning after December 15, 2022, including interim periods within that fiscal year. Early adoption as of December 15, 2018 is permitted. We continue to evaluate the impact the adoption of ASU 2016-13 will have on our financial statements, which we expect will not have a significant impact on our consolidated financial statements.

We have reviewed all other significant newly issued accounting pronouncements and determined that they are either not applicable to our business or that no material effect is expected on our financial position and results of operations.

Note 2 – Revenue Recognition

The Company recognizes revenue based on the following single principles-based, five-step model that is applied to all contracts with customers. These steps include (1) identify the contact(s) with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when each performance obligation is satisfied. 

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Our revenue contracts with customers may include a promise or promises to deliver services such as broadband, video or voice services. Promised services are considered distinct as the customer can benefit from the services either on their own or together with other resources that are readily available to the customer and the Company’s promise to transfer service to the customer is separately identifiable from other promises in the contract. The Company accounts for services as separate performance obligations. Each service is considered a single performance obligation as it is providing a series of distinct services that are substantially the same and have the same pattern of transfer.

The transaction price is determined at contract inception and reflects the amount of consideration to which we expect to be entitled in exchange for transferring service to the customer. This amount is generally equal to the market price of the services promised in the contract and may include promotional or bundling discounts. The majority of our prices are based on tariffed rates filed with regulatory bodies or standard company price lists. The transaction price excludes amounts collected on behalf of third parties such as sales taxes and regulatory fees. Conversely, nonrefundable up-front fees, such as service activation and set-up fees, which are immaterial to our overall revenues, are included in the transaction price. In determining the transaction price, we consider our enforceable rights and obligations within the contract. We do not consider the possibility of a contract being cancelled, renewed or modified, which is consistent with ASC 606-10-32-4.

The transaction price is allocated to each performance obligation based on the standalone selling price of the service, net of the related discount, as applicable.

Revenue is recognized when performance obligations are satisfied by transferring service to the customer as described below.

Significant Judgements

The Company often provides multiple services to a customer. Provision of customer premise equipment (CPE) and additional service tiers may have a significant level of integration and interdependency with the subscription voice, video, Internet or connectivity services. Judgement is required to determine whether the provision of CPE, installation services and additional service tiers are considered distinct and accounted for separately, or not distinct and accounted for together with the subscription services.

Allocation of the transaction price to the distinct performance obligations in bundled service subscriptions requires judgement. The transaction price for a bundle of services is frequently less than the sum of standalone selling prices of each individual service. Bundled discounts are allocated proportionally to the selling price of each individual service within the bundle. Standalone selling prices for the Company’s services are directly observable.

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Disaggregation of Revenue

The following table summarizes revenue from contracts with customers for the quarters ended March 31, 2022 and 2021:

	Three Months Ended March 31,
	2022		2021
Voice Service¹	$	1,611,058	$	1,785,080
Network Access¹		1,325,637		1,611,197
Video Service¹		3,141,352		3,027,547
Data Service¹		6,149,460		5,755,470
Directory²		161,092		178,119
Other Contracted Revenue³		671,607		624,494
Other4		305,501		301,088
Revenue from customers		13,365,707		13,282,995
Subsidy and other revenue outside scope of ASC 6065		3,109,065		3,195,128
Total revenue	$	16,474,772	$	16,478,123
¹ Month-to-Month contracts billed and consumed in the same month.
² Directory revenue is contracted annually, however, this revenue is recognized monthly over the contract period as the advertising is used.
³ This includes long-term contracts where the revenue is recognized monthly over the term of the contract.
4This includes CPE and other equipment sales.
5This includes governmental subsidies and lease revenue outside the scope of ASC 606.

For the three months ended March 31, 2022, approximately 79.28% of our total revenue was from month-to-month and other contracted revenue from customers. Approximately 18.87% of our total revenue was from revenue sources outside of the scope of ASC 606. The remaining 1.85% of total revenue was from other sources including CPE and equipment sales and installation.

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For the three months ended March 31, 2021, approximately 78.78% of our total revenue was from month-to-month and other contracted revenue from customers. Approximately 19.39% of our total revenue was from revenue sources outside of the scope of ASC 606. The remaining 1.83% of total revenue was from other sources including CPE and equipment sales and installation.

A significant portion of our revenue is derived from customers who may generally cancel their subscriptions at any time without penalty. As such, the amount of revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from our existing customer base. Revenue from customers with a contractually specified term and non-cancelable service period will be recognized over the term of such contracts, which is generally 3 to 10 years for these types of contracts.

Nature of Services

Revenues are earned from our customers primarily through the connection to our advanced fiber networks, digital and commercial television (TV) programming, Internet services (high-speed broadband), and hosted and managed services. Revenues for these services are billed based on set rates for monthly service or based on the amount of time the customer is utilizing our facilities. The revenue for these services is recognized over time as the service is rendered.

Voice Service – We receive recurring revenue for basic local services that enable end-user customers to make and receive telephone calls within a defined local calling area for a flat monthly fee. In addition to subscribing to basic local telephone services, our customers may choose from multiple voice service plans with a variety of custom calling features such as call waiting, call forwarding, caller identification and voicemail. Our Voice over Internet Protocol (VoIP) digital phone service is also available as an alternative to the traditional telephone line. Customers may generally cancel their subscriptions at any time without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized over a one-month service period as the subscription services are delivered. Other optional services purchased by the customer are generally accounted for as a distinct performance obligation when purchased and revenue is recognized when the service is provided.

Network Access – We provide access services to other communication carriers for the use of our facilities to terminate or originate long distance calls on our network. Additionally, we bill monthly subscriber line charges (SLCs) to substantially all of our customers for access to the public switched network. These monthly SLCs are regulated and approved by the Federal Communications Commission (FCC). In addition, network access revenue is derived from several federally administered pooling arrangements designed to provide support and distribute funding to us.

Revenues earned from other communication carriers accessing our network are based on the utilization of our network by these carriers as measured by minutes of use on the network or special access to the network by the individual carriers on a monthly basis. Revenues are billed at tariffed access rates for both interstate and intrastate calls and are recognized into revenue monthly based on the period the access was provided.

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The National Exchange Carriers Association (NECA) pools and redistributes the SLCs to various communication providers through the Connect America Fund (CAF). These revenues are earned and recognized into revenue on a monthly basis. Any adjustments to these amounts received by NECA are adjusted for in revenue upon receipt of the adjustment.

Video Service – We provide a variety of enhanced video services on a monthly recurring basis to our customers. We also receive monthly recurring revenue from our subscribers for providing commercial TV programming in competition with local cable TV (CATV), satellite dish TV and off-air TV service providers. We serve twenty-two communities with our IPTV services and five communities with our CATV services. Customers may generally cancel their subscriptions at any time without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized over a one-month service period as the subscription services are delivered. Other optional services purchased by the customer are generally accounted for as a distinct performance obligation when purchased and revenue is recognized when the service is provided.

Data Service – We provide high speed Internet to business and residential customers depending on the nature of the network facilities that are available, the level of service selected and the location. Our revenue is earned based on the offering of various flat packages based on the level of service, data speeds and features. We also provide e-mail and managed services, such as web hosting and design, on-line file back up and on-line file storage. Data customers may generally cancel their subscriptions at any time without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized over a one-month service period as the subscription services are delivered. Other optional services purchased by the customer are generally accounted for as a distinct performance obligation when purchased and revenue is recognized when the service is provided.

Directory – Our directory publishing revenue in our telephone directories recurs monthly and is recognized into revenue on a monthly basis. 

Other Contracted Revenue - Managed services and certain other data customers include advanced fiber-delivered communications and managed information technology solutions to mainly business customers, as well as high-capacity last-mile data connectivity services to wireless and wireline carriers. Services are primarily offered on a subscription basis with a contractually specified and non-cancelable service period. The non-cancelable contract terms for these customers generally range from 3 to 10 years. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized ratably over the contract period as the subscription services are delivered. These services are billed as monthly recurring charges to customers. 

Other – We also generate revenue from the sales, service and installation of CPE and other services. Sales and service of CPE are billed and recognized into revenue once the sale or service is complete or delivered. These sales and services are generally short-term in nature and are completed within one month. Other revenues are immaterial to our total revenues.

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Subsidy and Other Revenue outside the Scope of ASC 606 – We receive subsidies from governmental entities to operate and expand our advanced fiber networks. In addition, we have revenue from leasing arrangements. Both of these revenue streams are outside of the scope of ASC 606. 

Interstate access rates are established by a nationwide pooling of companies known as NECA. The FCC established NECA in 1983 to develop and administer interstate access service rates, terms and conditions. Revenues are pooled and redistributed on the basis of a company's actual or average costs. There has been a change in the composition of interstate access charges in recent years, shifting more of the charges to the end user and reducing the amount of access charges paid by the interexchange carriers (IXC’s). We believe this trend will continue.

Intrastate access rates are filed with state regulatory commissions in Minnesota and Iowa.

The Company currently receives funding based on the Alternative Connect America Cost Model (A-CAM) as described below, with the exception of Scott-Rice Telephone Company (Scott-Rice), which receives funding from the Federal Universal Service Fund (FUSF). Scott-Rice’s settlements from the pools are based on nationwide average schedules, which includes the pooling and redistribution of revenues based on a company’s actual or average costs as described below. 

A-CAM

As described above, with the exception of Scott-Rice, the remainder of our companies receive funding from A-CAM.

Per the FCC Public Notice DA 19-115, the Company receives A-CAM support and has corresponding service deployment obligations under that program. The Company annually receives (i) $596,084 for its Iowa operations and (ii) $8,354,481 for its Minnesota operations. The Company will receive the revised A-CAM offer for a period of 10 years, which started in 2019. The Company uses the funding that it receives through the A-CAM program to meet its defined broadband build-out obligations, which the Company is currently completing.

Accounts Receivable, Contract Assets and Contract Liabilities

The following table provides information about our receivables, contracts assets and contract liabilities from revenue contracts with our customers:

	Quarter Ended March 31,
	2022		2021
Accounts receivable, net	$	1,790,323	$	1,479,643
Contract assets		701,963		522,826
Contract liabilities		849,479		901,130

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Accounts Receivable

A receivable is recognized in the period the Company provides goods and services when the Company’s right to consideration is unconditional. Payment terms on invoiced amounts are generally 30-60 days.

Contract Assets

Contract assets include costs that are incremental to the acquisition of a contract. Incremental costs are those that result directly from obtaining a contract or costs that would not have been incurred if the contract had not been obtained, which primarily relates to sales commissions. We defer and amortize these costs over the expected customer life as the contract obligations are satisfied. We determined that the expected customer life is the expected period of benefit as the commission on the renewal contact is commensurate with the commission on the initial contract. During the quarters ended March 31, 2022 and 2021, the Company recognized expenses of $65,645 and $38,033, respectively, related to deferred contract acquisition costs. Short-term contract assets are included in current assets under prepaid expenses and other current assets. Long-term contract assets are included in investments and other assets under other assets.

Contract Liabilities

Contract liabilities include deferred revenues related to advanced payments for services and nonrefundable, upfront service activation and set-up fees, which under the new standard are generally deferred. In addition, contract liabilities include customer deposits that are not recognized into revenue, but are instead returned to the customer after a holding period. Short-term contract liabilities include deferred revenues for advanced payments for managed services and other long-term contracts. This includes the current portion of the deferred revenues that will be recognized monthly within one year. Short-term contract liabilities are included in current liabilities under other accrued liabilities. Long-term contract liabilities include deferred revenues for advanced payments for managed services and other long-term contracts. This includes the portion longer than one year and the corresponding deferred revenues are recognized into revenue on a monthly basis based on the term of the contract. Long-term contract liabilities are included in noncurrent liabilities under other accrued liabilities. During the quarters ended March 31, 2022 and 2021, the Company recognized revenues of $182,475 and $174,242, respectively, related to deferred revenues.

Performance Obligations

ASC 606, Revenue from Contracts with Customers, requires that the Company disclose the aggregate amount of the transaction price that is allocated to remaining performance obligations that are unsatisfied as of December 31, 2021. The guidance provides certain practical expedients that limit this requirement. The service revenue contracts of the Company meet the following practical expedients provided by ASC 606:

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1.  The performance obligation is part of a contract that has an original expected duration of one year or less.

2.  Revenue is recognized from the satisfaction of the performance obligations in the amount billable to the customer in accordance with ASC 606-10-55-18.

The Company has elected these practical expedients. Performance obligations related to our service revenue contracts are generally satisfied over time. For services transferred over time, revenue is recognized based on amounts invoiced to the customer as the Company has concluded that the invoice amount directly corresponds with the value of services provided to the customer. Management considers this a faithful depiction of the transfer of control as services are substantially the same and have the same pattern of transfer over the life of the contract. As such, revenue related to unsatisfied performance obligations that will be billed in future periods has not been disclosed.

Note 3 – Leases

Under FASB’s ASU 2016-02, “Leases,” which, together with its related clarifying ASUs, provided revised guidance for lease accounting and related disclosure requirements and established a right-to-use (ROU) model that requires lessees to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The ASU also requires disclosures to allow financial statement users to better understand the amount, timing and uncertainty of cash flows arising from leases. These disclosures include qualitative requirements, providing additional information about the amounts recorded in the financial statements.     

The following table includes the ROU and operating lease liabilities as of March 31, 2022 and December 31, 2021.

Right of Use Asset	Balance March 31, 2022		Balance December 31, 2021
Operating Lease Right-Of-Use Assets	$	1,084,600	$	1,154,293

Operating Lease Liability	Balance March 31, 2022		Balance December 31, 2021
Short-Term Operating Lease Liability	$	287,862	$	283,167
Long-Term Operating Lease Liability		831,780		905,528
Total	$	1,119,642	$	1,188,695

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Maturity analysis under these lease agreements are as follows:

Maturity Analysis	Balance March 31, 2022
2022 (remaining)	$	261,129
2023		348,708
2024		236,948
2025		120,881
2026		71,023
Thereafter		309,800
Total		1,348,489
Less Imputed Interest		(228,847)
Present Value of Operating Leases	$	1,119,642

We amortize our leases over the shorter of the term of the lease or the useful life of the asset. Lease expense for the three months ended March 31, 2022 and 2021 was $87,289 and $91,877, respectively.

Note 4 – Fair Value Measurements

We have adopted the rules prescribed under GAAP for our financial assets and liabilities. GAAP includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels:

Level 1:	Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2:	Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs that are derived principally from or corroborated by observable market data.
Level 3:	Inputs are derived from valuation techniques where one or more significant inputs or value drivers are unobservable.

We have used financial derivative instruments to manage our overall cash flow exposure to fluctuations in interest rates. We accounted for derivative instruments in accordance with GAAP that requires derivative instruments to be recorded on the balance sheet at fair value. Changes in fair value of derivative instruments must be recognized in earnings unless specific hedge accounting criteria are met, in which case, the gains and losses are included in other comprehensive income rather than in earnings.

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We have entered into interest rate swap agreements (IRSAs) with our lender, CoBank, ACB (CoBank) to manage our cash flow exposure to fluctuations in interest rates. These instruments are designated as cash flow hedges and are effective at mitigating the risk of fluctuations on interest rates in the marketplace. Any gains or losses related to changes in the fair value of these derivatives are accounted for as a component of accumulated other comprehensive income (loss) for as long as the hedge remains effective.

The fair value of our IRSAs is discussed in Note 7 – “Interest Rate Swaps”. The fair value of our swap agreements was determined based on Level 2 inputs.

Other Financial Instruments

Other Investments - We conducted an evaluation of our investments in all of our investees in connection with the preparation of our audited financial statements at December 31, 2021. As of March 31, 2022, we believe the carrying value of our investments is not impaired.

Debt – We estimate the fair value of our long-term debt based on the discounted future cash flows we expect to pay using current rates of borrowing for similar types of debt. Fair value of the debt approximates carrying value.

Other Financial Instruments - Our financial instruments also include cash equivalents, trade accounts receivable and accounts payable where the current carrying amounts approximate fair market value.

Note 5 – Goodwill and Intangibles

We account for goodwill and other intangible assets under GAAP. Under GAAP, goodwill and intangible assets with indefinite useful lives are not amortized, but are instead tested for impairment (i) on at least an annual basis and (ii) when changes in circumstances indicate that the fair value of goodwill may be below its carrying value. These circumstances include, but are not limited to (i) a significant adverse change in the business climate, (ii) unanticipated competition or (iii) an adverse action or assessment by a regulator. Determining impairment involves estimating the fair value of a reporting unit using a combination of (i) the income or DCF approach and (ii) the market approach that utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds its fair value, the amount of the impairment loss must be measured. The impairment loss is calculated by comparing the implied fair value of the reporting unit’s goodwill to its carrying amount. In calculating the implied fair value of the reporting unit’s goodwill, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied value of goodwill. We recognize impairment loss when the carrying amount of goodwill exceeds its implied fair value. Our goodwill totaled $49,903,029 at March 31, 2022 and December 31, 2021. 

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In 2021 and 2020, we engaged an independent valuation firm to aid in the completion of our annual impairment testing for existing goodwill. For 2021 and 2020, the testing results indicated no impairment charge to goodwill as the determined fair value was sufficient to pass the impairment test.   

Our intangible assets subject to amortization consist of acquired customer relationships, regulatory rights and trade names. We amortize intangible assets with finite lives over their respective estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment. In addition, we periodically reassess the carrying value, useful lives and classifications of our identifiable intangible assets.

The components of our identified intangible assets are as follows:

		March 31, 2022					December 31, 2021
	Useful Lives		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Definite-Lived Intangible Assets
Customers Relationships	14-15 yrs		$	42,878,445	$	29,211,968	$	42,878,445	$	28,806,055
Regulatory Rights	15 yrs			4,000,000		3,799,965		4,000,000		3,733,299
Trade Name	3-5 yrs			310,106		226,949		310,106		211,444
Indefinitely-Lived Intangible Assets
Video Franchise				3,000,000		-		3,000,000		-
Spectrum				877,814		-		877,814		-
Total			$	51,066,365	$	33,238,882	$	51,066,365	$	32,750,798
Net Identified Intangible Assets					$	17,827,483			$	18,315,567

Amortization expense related to the definite-lived intangible assets was $488,074 and $830,942 for the three months ended March 31, 2022 and 2021. Amortization expense for the remaining nine months of 2022 and the five years subsequent to 2022 is estimated to be:

●	(April 1 – December 31)	$	1,464,292
●	2023	$	1,660,295
●	2024	$	1,623,654
●	2025	$	1,618,732
●	2026	$	1,613,809
●	2027	$	906,667

Note 6 – Secured Credit Facility

We have a master loan agreement with CoBank. Nuvera and its respective subsidiaries also have security agreements under which substantially all the assets of Nuvera and its respective subsidiaries have been pledged to CoBank as collateral. In addition, Nuvera and its respective subsidiaries have guaranteed all the obligations under the credit facility. These mortgage notes are required to be paid in quarterly installments covering principal and interest, beginning in September 2018 and maturing on July 31, 2025.  

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On March 16, 2022, Nuvera and CoBank entered into (i) an Agreement Regarding Amendments to Loan Documents and (ii) an Amended and Restated Revolving Loan Promissory Note. The agreements amended our existing credit facility with CoBank. Under the Agreements, among other thing, (i) the Company’s revolving loan was increased from $10.0 million to $20.0 million, (ii) the maturity date of the revolving loan was set at June 30, 2022, and (iii) the Company operating subsidiaries’ agreed to extend their previous guarantees, security interests and mortgages to cover the increased amount of the revolving note. The Company is currently working on entering into a new credit facility with CoBank to replace this line of credit increase and its other existing credit facility in the second quarter of 2022. The new credit facility will be structured to meet Nuvera’s existing and expected future liquidity and capital resource needs.

We generally use variable-rate debt to finance our operations, capital expenditures and acquisitions. These variable-rate debt obligations expose us to variability in interest payments due to changes in interest rates. The terms of our credit facility with CoBank require that we enter into interest rate agreements designed to protect us against fluctuations in interest rates, in an aggregate principal amount and for a duration determined under the credit facility.

As described in Note 7 – “Interest Rate Swaps,” on August 1, 2018 we entered into an IRSA with CoBank covering 25 percent of our existing debt balance or $16,137,500 of our aggregate indebtedness to CoBank on August 1, 2018. As of March 31, 2022, our IRSA covered $11,815,250, with a weighted average interest rate of 5.27%.

As described in Note 7 – “Interest Rate Swaps,” on August 29, 2019 we entered into a second IRSA with CoBank covering an additional $42,000,000 of our aggregate indebtedness to CoBank on August 29, 2019. As of March 31, 2022, our IRSA covered $33,116,037, with a weighted average interest rate of 3.50%.

Our remaining debt of $20.8 million ($16.8 million available under the revolving credit facilities and $4.0 million currently outstanding) remains subject to variable interest rates at an effective weighted average interest rate of 2.70%, as of March 31, 2022.

Our loan agreements include restrictions on our ability to pay cash dividends to our stockholders. However, we are allowed to pay dividends (a) (i) in an amount up to $2,700,000 in any year if our “Total Leverage Ratio,” that is, the ratio of our “Indebtedness” to “EBITDA” (earnings before interest, taxes, depreciation and amortization – as defined in the loan documents), is greater than 2.00 to 1.00, and (ii) in any amount if our Total Leverage Ratio is less than 2.00 to 1.00, and (b) in either case, if we are not in default or potential default under the loan agreements. On December 31, 2020, our Total Leverage Ratio fell below 2.00, thus eliminating any restrictions on our ability to pay cash dividends to our stockholders. Our current Total Leverage Ratio as of March 31, 2022, is 1.86. 

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Our credit facility requires us to comply with specified financial ratios and tests. These financial ratios include total leverage ratio, debt service coverage ratio, equity to total assets ratio and annual maximum aggregate capital expenditures. At March 31, 2022, we were in compliance with all the stipulated financial ratios in our loan agreements.

There are security and loan agreements underlying our current CoBank credit facility that contain restrictions on our distributions to stockholders and investment in, or loans, to others. Also, our credit facility contains restrictions that, among other things, limits or restricts our ability to enter into guarantees and contingent liabilities, incur additional debt, issue stock, transact asset sales, transfers or dispositions, and engage in mergers and acquisitions, without CoBank approval.  

On April 16, 2020, Nuvera received a $2,889,000 loan under the SBA’s PPP, which was established as part of the Coronavirus Aid, Relief Economic Security Act, or CARES Act. The PPP Loan was unsecured and was evidenced by a note in the favor of Citizens as the lender. On February 3, 2021, the Company was notified by Citizens, the lender on the Company’s PPP Loan that Citizens had received payment in full from the United States federal government for the amount of the Company’s PPP Loan and the Company’s PPP Loan had been fully forgiven. We recognized a gain on the forgiveness of $2,912,433, which included the original amount of the loan plus accrued interest in the quarter ended March 31, 2021.

Note 7 – Interest Rate Swaps

We assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely affect expected future cash flows and by evaluating hedging opportunities.

We generally use variable-rate debt to finance our operations, capital expenditures and acquisitions. These variable-rate debt obligations expose us to variability in interest payments due to changes in interest rates. The terms of our credit facility with CoBank required that we enter into interest rate agreements designed to protect us against fluctuations in interest rates, in an aggregate principal amount and for a duration determined under the credit facility.

To meet this objective, we have entered into an IRSA with CoBank covering 25 percent of our existing outstanding debt balance or $16,137,500 of our aggregate indebtedness to CoBank at August 1, 2018. The swap effectively locked in the interest rate on 25 percent of our variable-rate debt through July 2025. Under this IRSA, we have changed the variable-rate cash flow exposure on the debt obligations to fixed cash flows. Under the terms of the IRSA, we pay a fixed contractual interest rate and (i) make an additional payment if the London Interbank Offering Rate (LIBOR) variable rate payment is below a contractual rate or (ii) receive a payment if the LIBOR variable rate payment is above the contractual rate.

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On August 29, 2019, we entered into a second IRSA with CoBank covering an additional $42,000,000 of our aggregate indebtedness to CoBank on August 29, 2019. The swap effectively locked in a significant portion of our variable-rate debt through July 2025. Under this IRSA, we have changed the variable rate cash flow exposure on the debt obligations to fixed cash flows. Under the terms of the IRSA, we pay a fixed contractual interest rate and (i) make an additional payment if the LIBOR variable rate payment is below a contractual rate or (ii) receive a payment if the LIBOR variable rate payment is above the contractual rate.

Each month, we make interest payments to CoBank under its loan agreements based on the current applicable LIBOR Rate plus the contractual LIBOR margin then in effect with respect to the loan, without reflecting our IRSAs. At the end of each calendar month, CoBank adjusts our aggregate interest payments based on the difference, if any, between the amounts paid by us during the month and the current effective interest rate. Net interest payments are reported in our consolidated income statement as interest expense.

Our IRSAs under our credit facilities both qualify as cash flow hedges for accounting purposes under GAAP. We reflect the effect of these hedging transactions in the financial statements. The unrealized gain/loss is reported in other comprehensive income. If we terminate our IRSAs, the cumulative change in fair value at the date of termination would be reclassified from accumulated other comprehensive income, which is classified in stockholders’ equity, into earnings on the consolidated statements of income.

The fair value of the Company’s IRSAs were determined based on valuations received from CoBank and were based on the present value of expected future cash flows using discount rates appropriate with the terms of the IRSAs. The fair value indicates an estimated amount we would be required to pay if the contracts were canceled or transferred to other parties. On March 31, 2022, the fair value of these swaps was $916,460, which has been recorded net of deferred tax of $261,558, resulting in the $654,902 in accumulated other comprehensive income. On March 31, 2021, the fair value liability of these swaps was $1,776,057, which has been recorded net of deferred tax benefit of $506,887, resulting in the $1,269,170 in accumulated other comprehensive loss. 

Note 8 – Other Investments  

We are a co-investor with other communication companies in several partnerships and limited liability companies. These joint ventures make it possible to offer services to customers, including digital video services and fiber transport services that we would have difficulty offering on our own. These joint ventures also make it possible to invest in new technologies with a lower level of financial risk. We recognize income and losses from these investments on the equity method of accounting. For a listing of our investments, see Note 11 – “Segment Information.” 

The FASB requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. As of March 31, 2022, we had not recorded any gains or losses on our investments.    

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Note 9 – Guarantees

Nuvera has guaranteed a portion of a ten-year loan owed by FiberComm, LC, set to mature on April 30, 2026. As of March 31, 2022, we have recorded a liability of $209,367 in connection with the guarantee on this loan. This guarantee may be exercised if FiberComm, LC does not make its required payments on this note.

Note 10 – Incentive and Retirement Plans

We have an Employee Incentive Plan for employees other than executive officers and a Management Incentive Plan for executive officers. Both plans were implemented in 2006. The Plan permits the issuance of up to 200,000 shares of our Common Stock in stock awards. Each qualified employee of the Company may elect to receive up to 50% of their incentive compensation in Company Common Stock in lieu of cash. Each of the Company’s Executive Officers are required to receive 50% of their incentive compensation earned in Company Common Stock in lieu of cash. As of March 31, 2022, 155,399 shares remain available to be issued under the Plan.

Our BOD adopted the 2017 Omnibus Stock Plan effective May 25, 2017. The shareholders of the Company approved the Plan at the May 25, 2017 Annual Meeting of Shareholders. The Plan enables the Company to grant stock incentive awards to current and new employees, including officers, and to Board members and service providers. The Plan permits stock incentive awards in the form of options (incentive and non-qualified), stock appreciation rights, restricted stock, restricted stock units (RSUs), performance stock, performance units, and other awards in stock or cash. The Plan permits the issuance of up to 625,000 shares of our Common Stock in any of the above stock awards. As of March 31, 2022, 557,563 shares remain available to be issued under the Plan.

Starting in 2017 and each subsequent year following 2017, our BOD and Compensation Committee granted awards to the Company’s executive officers under the Plan. We recognize share-based compensation expense for these RSUs over the vesting period of the RSUs which is determined by our BOD. Forfeitures of RSU’s are accounted for as they occur. Each executive officer received or may receive time-based RSUs and performance-based RSUs. The time-based RSUs are computed as a percentage of the executive officer’s base salary based on the closing price of Company common stock on a date set by the BOD, and will vest over a three-year period based on the executive officer being employed by the Company on the vesting date. The performance-based RSUs are also computed as a percentage of the executive officer’s base salary based on the closing price of Company common stock on a date set by the BOD, and will vest over a three-year period based on the Company attaining an average Return on Invested Capital (ROIC) over that three-year period. The ROIC target is set by the BOD. Executive officers may earn more or less performance-based RSU’s based on if the actual ROIC over the time period is more or less than target. Upon vesting of either time-based or performance-based RSUs, the executive officers will be able to receive Common Stock in the Company in exchange for the RSUs.

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RSUs currently issued and outstanding are as follows:

	Time-Based RSU's	Targeted Performance-Based RSU's		Closing Stock Price	Vesting Date
Balance at December 31, 2020	7,638	9,611
Issued	3,364	5,247	$	21.90	12/31/2023
Exercised	-	(1,588)	$	23.67	12/31/2020
Exercised	(1,562)	-	$	21.75	12/31/2021
Balance at December 31, 2021	9,440	13,270
Forfeited	-	(2,637)
Balance at March 31, 2022	9,440	10,633

In 2022, after considerable study, discussion and interaction with our consultants, the Compensation Committee decided to replace RSUs with non-qualified stock options (Options). The Compensation Committee believes that grants of Options more directly align management long-term equity compensation with increased shareholder value creation at a time when the Company is engaged in significant investment and transformation as part of its long-term strategy. The Compensation Committee also determined to extend the grant of Options to Named Executive Officers, senior employee directors and other employee directors as key members of the Company leadership team and contributors of overall success.

Note 11 – Segment Information  

We operate in the Communications Segment and have no other significant business segments. The Communications Segment consists of voice, data and video communication services delivered to the customer over our advanced fiber communications network. No single customer accounted for a material portion of our consolidated revenues.

The Communications Segment operates the following communications companies and has investment ownership interests as follows:

Communications Segment

● Communications Companies:

▪ Nuvera Communications, Inc., the parent company;

▪ Hutchinson Telephone Company (HTC), a wholly-owned subsidiary of Nuvera;

▪ Peoples Telephone Company, a wholly-owned subsidiary of Nuvera;

▪ Scott-Rice Telephone Co., a wholly-owned subsidiary of Nuvera;

▪ Sleepy Eye Telephone Company, a wholly-owned subsidiary of Nuvera;

▪ Western Telephone Company, a wholly-owned subsidiary of Nuvera; and

▪ Hutchinson Telecommunications, Inc., a wholly-owned subsidiary of HTC, located in Litchfield and Glencoe, Minnesota;

● Our investments and interests in the following entities include some management responsibilities:

▪ FiberComm, LC – 20.00% subsidiary equity ownership interest. FiberComm, LC is located in Sioux City, Iowa;

▪ Broadband Visions, LLC (BBV) – 24.30% subsidiary equity ownership interest. BBV provides video headend and Internet services;

▪ Independent Emergency Services, LLC (IES) – 14.29% subsidiary equity ownership interest. IES is a provider of E-911 services to the State of Minnesota as well as a number of counties located in Minnesota; and

▪ Fiber Minnesota, LLC (FM) – 7.54% subsidiary equity ownership interest. FM is a Minnesota state-wide network that provides connectivity for regional businesses.

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Note 12 – Commitments and Contingencies

We are involved in certain contractual disputes in the ordinary course of business. We do not believe the ultimate resolution of any of these existing matters will have a material adverse effect on our financial position, results of operations or cash flows. We did not experience any changes to material contractual obligations in the first three months of 2022. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for the discussion relating to commitments and contingencies.

Note 13 – Broadband Grants

In January 2020, the Company was awarded a broadband grant from the Minnesota Department of Employment and Economic Development (DEED). The grant will provide up to 36.5% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved or underserved communities and businesses in the Company’s service area. The Company is eligible to receive $730,000 of approximately $2,000,000 total project costs. The Company will provide the remaining 63.5% matching funds. Construction and expenditures for these projects began in the spring of 2020 and were completed under budget in the third quarter of 2021. We have received $724,465 for these projects as of March 31, 2022.

On January 29, 2021, the Company was awarded five broadband grants from the DEED. The grants will provide up to 35.4% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved or underserved communities and businesses in the Company’s service area. The Company is eligible to receive $1,918,037 of the approximately $5,419,617 total project costs. The Company will provide the remaining 64.6% matching funds. Construction and expenditures for these projects began in the spring of 2021. We have not received any funds for these projects as of March 31, 2022.     

Note 14 – Subsequent Events

In its definitive proxy statement dated April 4, 2022 for its 2022 annual meeting of shareholders to be held on May 26, 2022, filed with the SEC on April 6, 2022, Nuvera disclosed that on March 31, 2022, the Company’s BOD and Compensation Committee authorized the issuance of Options as Awards to Named Executive Officers, senior employee directors and other employee directors under the 2017 Omnibus Stock Plan, but had not yet finalized the Black-Scholes analysis determining the value of the Options to be granted and therefore the number of Options to granted.

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On April 11, 2022, the BOD and Compensation Committee completed its analysis. The following language supplements and updates the proxy statement disclosure:

The number of Options awarded was computed as a percentage of the employee’s base salary using a Black-Scholes formula using an exercise price equal to the closing price of Company common stock of $21.20 on April 11, 2022. These Options will vest one-third each on April 11, 2023, 2024 and 2025.

	Options	Closing Stock Price		Vesting Date
Balance at December 31, 2021	-
Issued	40,879	$	21.20	4/11/2023
Issued	40,900	$	21.20	4/11/2024
Issued	40,890	$	21.20	4/11/2025
Balance at March 31, 2022	122,669

We have evaluated and disclosed subsequent events through the filing date of this Quarterly Report on Form 10-Q.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Forward Looking Statements

From time to time, in reports filed with the SEC, in press releases, and in other communications to shareholders or the investing public, we may make forward-looking statements concerning possible or anticipated future financial performance, business activities or plans. These statements generally are identified by the words “believes,” “expects,” “anticipates,” “estimates,” “projects,” “intends,” “plans,” “may,” “will,” “would,” “seeks,” “targets,” “continues,” “should,” “will be,” “will continue,” or similar expressions. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements of Nuvera and its subsidiaries to be different from those expressed or implied in the forward-looking statements. These risks and uncertainties may include, but are not limited to: i) unfavorable general economic conditions that could negatively affect our operating results; ii) substantial regulatory change and increased competition; iii) our possible pursuit of acquisitions could be expensive or not successful; iv) we may not accurately predict technological trends or the success of new products; v) shifts in our product mix may result in declines in our operating profitability; vi) possible consolidation among our customers; vii) a failure in our operational systems or infrastructure could affect our operations; viii) data security breaches; ix) possible replacement of key personnel; x) elimination of governmental network support we receive; xi) our current debt structure may change due to increases in interest rates or our ability to comply with lender loan covenants and xii) possible customer payment defaults. For these forward-looking statements, we claim the protection of the safe harbor for forward-looking statements contained in the federal securities laws. Shareholders and the investing public should understand that these forward-looking statements are subject to risks and uncertainties which could affect our actual results and cause actual results to differ materially from those indicated in the forward-looking statements.

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In addition, forward-looking statements speak only as of the date they are made, which is the filing date of this Form 10-Q. With the exception of the requirements set forth in the federal securities laws or the rules and regulations of the SEC, we do not undertake any obligation to update or review any forward-looking information, whether as a result of new information, future events or otherwise.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of financial condition and results of operations stated in this Form 10-Q, are based upon Nuvera’s consolidated unaudited financial statements that have been prepared in accordance with GAAP, rules and regulations of the SEC and, where applicable, conform to the accounting principles as prescribed by federal and state telephone utility regulatory authorities. We presently give accounting recognition to the actions of regulators where appropriate. The preparation of our financial statements requires our management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities at the date of the financial statements and during the reporting period. Actual results may differ from these estimates. Our senior management has discussed the development and selection of accounting estimates and the related Management Discussion and Analysis disclosure with our Audit Committee. For a summary of our significant accounting policies, see Note 1 – “Summary of Significant Accounting Policies” to the Consolidated Financial Statements contained in our Annual Report on Form 10-K for the year ended December 31, 2021, which is incorporated herein by reference.

Results of Operations

Overview

Nuvera has an advanced fiber communications network and offers a diverse array of communications products and services. We provide broadband Internet access, video services and managed and hosted solutions services. In addition, we provide local voice service and network access to other communications carriers for connections to our networks as well as long distance service. 

Our operations consist primarily of providing services to customers for a monthly charge. Because many of these services are recurring in nature, backlog orders and seasonality are not significant factors. Our working capital requirements include financing the construction of our advanced fiber networks. We also require capital to maintain our advanced fiber networks and infrastructure; fund the payroll costs of our highly skilled labor force; maintain inventory to service capital projects, our advanced fiber network and our communication equipment customers; pay dividends and provide for the carrying value of trade accounts receivable, some of which may take several months to collect in the normal course of business.

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COVID-19

We continue to closely monitor the impact on our business of the outbreak of the COVID-19 pandemic. We have and are continuing to take precautions to ensure the safety of our employees, customers and business partners, while assuring business continuity and reliable service and support to our customers. Health and safety measures implemented include transitioning to remote work-from-home policies, proof of COVID-19 vaccination and mandatory testing for our employees that are not vaccinated, redesigning and investing in our office spaces to accommodate a more healthy air quality environment, providing our field technicians and customer-facing personnel with personal protective equipment and additional safety training, practicing social distancing and adding calling in advance for work that must be performed inside customer premises. We are proactively monitoring and augmenting our network capacity, to meet the higher demands for data usage during the pandemic as a result of increased usage from work from home and remote learning applications. As a result of the pandemic, the demand for bandwidth upgrades have increased for our consumer, commercial and carrier customers. Our existing network enables us to efficiently respond and adapt to the increase in Internet traffic during this time.

While we have not seen a significant adverse impact to our financial results from COVID-19 to date, the extent of the future impact of the COVID-19 pandemic on our business is uncertain and difficult to predict. Capital markets and the United States economy have also been significantly impacted by the pandemic. Adverse economic and market conditions as a result of COVID-19 could also adversely affect the demand for our products and services and may also impact the ability of our customers to satisfy their obligations to us. If the pandemic continues to cause significant negative impacts to economic conditions, our results of operations, financial condition and liquidity could be materially and adversely affected.

In the first quarter of 2022, we have seen our overall revenues remain steady primarily due to Internet growth mentioned above. However, we continue to see an accelerated loss in our voice service and video service customers as those customers make choices about their entertainment needs and personal finances in light of the COVID-19 pandemic. We have also experienced increased costs in the first quarter of 2022 which have affected our margins. In addition, we are anticipating increased inflation and future supply chain issues in the inventory, equipment and fiber we use in our business and have therefore purchased a large amount of these items in order to mitigate these potential issues and not disrupt our business operations.  

With respect to liquidity, we continue to evaluate costs and spending across our organization. This includes evaluating discretionary spending and non-essential capital investment expenditures. As of March 31, 2022, we have $16.8M on our bank revolver available for use in the event that the need arises. We will continue to actively monitor the situation and may take further actions that alter our operations as may be required by federal, state or local authorities or that we determine are in the best interests of our employees, customers, suppliers and shareholders.

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Executive Summary

Highlights:

●      On December 15, 2021, the Company announced plans to build and deploy Gig fiber Internet across its network creating crucial access to the fastest speeds available for rural communities, small cities and suburban areas across Minnesota. “This is a transformational moment for Nuvera as we make a future-focused investment in the communities we serve by providing the most reliable FTTP access to Gig-speed services,” said Glenn Zerbe, CEO. “Our homes, businesses and communities need reliable and affordable connections to school, workplaces and entertainment, as an important and growing part of everyday life.” “Nuvera’s investment in fiber-to-the-home network infrastructure will allow more underserved communities across Minnesota to leverage the quality of life and economic opportunity that access to a state-of-the-art network provides now and for years to come.” said, State Sen. Nick Frentz, DFL-North Mankato. Nuvera’s Gig-speed end-to-end fiber network is building and rolling out now. Service will be available for thousands of customers in 2022. The company will continue to build and deploy the Gig-speed service over the next few years. “We’re excited to create ‘Nuvera Gig Cities’ in the communities we serve while also expanding access to fiber-based Internet service at a range of speeds,” said Zerbe. “Nuvera’s fiber network gives customers affordable access to a range of speeds from 100 Mbps to 1 Gig at prices that are the same whether you’re in rural Goodhue or suburban Prior Lake.” While Nuvera’s goal is to bring Gig-speed service to as many communities as possible, the initial buildout will focus on the following cities and surrounding communities:

o   New Ulm

o   Hutchinson

o   Glencoe

o   Goodhue

o   Litchfield

o   Redwood Falls

o   Prior Lake

o   Elko New Market

o   Savage

o   Sleepy Eye

o   Springfield

o   Aurelia, IA

Nuvera’s fiber Internet prices range from $50 per month to $125 per month for Gig-speed services. Customers can choose the right speed at an affordable price, including low-income households through Federal programs.

In 2022, we had originally planned to upgrade more than 8,000 locations with fiber services and faster broadband speeds, however, as of March 31, 2022 we now plan to upgrade more than 10,000 locations in 2022. As of March 31, 2022, we have upgraded 866 of the planned 10,000 locations with these fiber services.  

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●   On March 16, 2022, Nuvera and CoBank entered into (i) an Agreement Regarding Amendments to Loan Documents and (ii) an Amended and Restated Revolving Loan Promissory Note. The agreements amended our existing credit facility with CoBank. Under the Agreements, among other thing, (i) the Company’s revolving loan was increased from $10.0 million to $20.0 million, (ii) the maturity date of the revolving loan was set at June 30, 2022, and (iii) the Company operating subsidiaries’ agreed to extend their previous guarantees, security interests and mortgages to cover the increased amount of the revolving note. The Company is currently working on entering into a new credit facility with CoBank to replace this line of credit and its existing credit facility in the second quarter of 2022. The new  credit facility will be structured to meet Nuvera’s existing and expected future liquidity and capital resource needs.

●      On January 29, 2021, the Company was awarded five broadband grants from the DEED. The grants will provide up to 35.4% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved or underserved communities and businesses in the Company’s service area. The Company is eligible to receive $1,918,037 of the approximately $5,419,617 total project costs. The Company will provide the remaining 64.6% matching funds. Construction and expenditures for these projects began in the spring of 2021. We have not received any funds for these projects as of March 31, 2022.    

●      On April 16, 2020, Nuvera received a $2,889,000 loan under the SBA’s PPP. The PPP was designed to provide a direct incentive for small businesses to keep their workers employed during the COVID-19 crisis. The SBA forgave loans if all employees were kept on the payroll for a required period of time under the program starting April 16, 2020, and the loan funds were used for payroll, rent and utilities. Nuvera retained employment of all employees through this period and followed all the SBA rules regarding this loan. The Company applied for debt forgiveness in August 2020. On February 3, 2021, the Company was notified by Citizens, the lender on the Company’s PPP Loan that Citizens has received payment in full from the United States federal government for the amount of the Company’s PPP Loan and the Company’s PPP Loan had been fully forgiven.

●      In January 2020, the Company was awarded a broadband grant from the DEED. The grant will provide up to 36.5% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved or underserved communities and businesses in the Company’s service area. The Company is eligible to receive $730,000 of the approximately $2,000,000 total project costs. The Company will provide the remaining 63.5% matching funds. Construction and expenditures for these projects began in the spring of 2020 and were completed under budget in the third quarter of 2021. We have received $724,465 for these projects as of March 31, 2022.

●       Net income for the first quarter of 2022 totaled $2,401,606, which was a $2,779,105, or 53.64% decrease compared to the first quarter of 2021. This decrease was primarily due to the debt forgiveness from the PPP Loan being recognized in the first quarter of 2021 and a decrease in operating income, all of which are described below.

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●      Consolidated revenue for the first quarter of 2022 totaled $16,474,772, which was a $3,351 or 0.02% decrease compared to the first quarter of 2021. This decrease was primarily due to decreases in network access, voice services, and other revenue, partially offset by increases in data and video revenues, all of which are described below.  

Business Trends

Included below is a synopsis of business trends management believes will continue to affect our business in 2022. 

Voice and switched access revenues are expected to continue to be adversely impacted by future declines in access lines due to competition in the communications industry from CATV providers, VoIP providers, wireless, other competitors, emerging technologies and the ongoing effects of COVID-19. As we experience access line losses, our switched access revenue will continue to decline consistent with industry-wide trends. A combination of changing minutes of use, carriers optimizing their network costs, lower demand for dedicated lines and downward rate pressures may affect our future voice and switched access revenues. Access line losses totaled 2,287 or 11.98% for the twelve months ended March 31, 2022 due to the reasons mentioned above.    

The expansion of our advanced fiber communications network, growth in broadband connection sales along with continued migration to higher connectivity speeds and the sales of Internet value-added services such as on-line data backup, and hosted and managed service solutions are expected to continue to offset the revenue declines from the access line trends discussed above.

To be competitive, we continue to emphasize the bundling of our products and services. Our customers have the option to bundle local phone, high-speed Internet, long distance and video services. These bundles provide our customers with one convenient location to obtain all of their communications and entertainment options, a convenient billing solution and bundle discounts. We believe that product bundles positively impact our customer retention, and the associated discounts provide our customers the best value for their communications and entertainment options. We have an advanced fiber broadband network, which, along with the bundling of our voice, Internet and video services allows us to meet customer demands for products and services. We continue to focus on the research and deployment of advanced technological products that include broadband services, wireless services, private line, VoIP, digital video, IPTV and hosted and managed services.

We continue to evaluate our operating structure to identify opportunities for increased operational efficiencies and effectiveness. This involves evaluating opportunities for task automation, network efficiency and the balancing of our workforce based on the current needs of our customers.

Financial results for the Communications Segment for the three months ended March 31, 2022 and 2021 are included below:

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Communications Segment
	Three Months Ended March 31,
	2022		2021		Increase (Decrease)
Operating Revenues
Voice Service	$	1,468,178	$	1,551,278	$	(83,100)	-5.36%
Network Access		1,291,310		1,582,440		(291,130)	-18.40%
Video Service		3,141,492		3,028,877		112,615	3.72%
Data Service		6,716,852		6,267,971		448,881	7.16%
A-CAM/FUSF		2,894,587		2,968,195		(73,608)	-2.48%
Other		962,353		1,079,362		(117,009)	-10.84%
Total Operating Revenues		16,474,772		16,478,123		(3,351)	-0.02%
Cost of Services, Excluding Depreciation     and Amortization		7,383,826		7,506,841		(123,015)	-1.64%
Selling, General and Administrative		2,661,463		2,663,890		(2,427)	-0.09%
Depreciation and Amortization Expenses		3,498,284		3,071,572		426,712	13.89%
Total Operating Expenses		13,543,573		13,242,303		301,270	2.28%
Operating Income	$	2,931,199	$	3,235,820	$	(304,621)	-9.41%
Net Income	$	2,401,606	$	5,180,711	$	(2,779,105)	-53.64%
Capital Expenditures	$	4,116,747	$	1,740,415	$	2,376,332	136.54%
Key metrics
Access Lines		16,801		19,088		(2,287)	-11.98%
Video Customers		10,100		10,766		(666)	-6.19%
Broadband Customers		32,752		31,883		869	2.73%

Revenue

Voice Service – We receive recurring revenue for basic voice services that enable customers to make and receive telephone calls within a defined local calling area for a flat monthly fee. In addition to subscribing to basic local voice services, our customers may choose from a variety of custom calling features such as call waiting, call forwarding, caller identification and voicemail. Voice service revenue was $1,468,178, which was $83,100 or 5.36% lower in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This decrease was primarily due to a decrease in access lines, which continues to be impacted by the on-going effects of COVID-19, which has accelerated an industry trend of customers moving to other communications options, partially offset by a combination of rate increases introduced into several of our markets in the past few years.     

The number of access lines we serve as a company have been decreasing, which is consistent with a general industry trend, as customers are increasingly utilizing other technologies, such as wireless phones and IP services. To help offset declines in voice service revenue, we implemented an overall strategy that continues to focus on selling a competitive bundle of services. Our focus on marketing competitive service bundles to our customers creates value for the customer and aids in the retention of our voice lines.

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Network Access – We provide access services to other communications carriers for the use of our facilities to terminate or originate traffic on our network. Additionally, we bill SLCs to substantially all of our customers for access to the public switched network. These monthly SLCs are regulated and approved by the FCC. In addition, network access revenue is derived from several federally administered pooling arrangements designed to provide network support and distribute funding to communications companies. Network access revenue was $1,291,310, which was $291,130 or 18.40% lower in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This decrease was primarily due to lower minutes of use on our network and lower special access revenues, which continues to be impacted by the on-going effects of COVID-19, which has accelerated an industry trend of customers moving to other communications options.

In recent years, IXCs and others have become more aggressive in disputing both interstate carrier access charges and the applicability of access charges to their network traffic. We believe that long distance and other communication providers will continue to challenge the applicability of access charges either before the FCC or directly with the local exchange carriers. We cannot predict the likelihood of future claims and cannot estimate the impact.

Video Service – We receive monthly recurring revenue from our subscribers for providing commercial TV programming in competition with local CATV, satellite dish TV and off-air TV service providers. We serve twenty-two communities with our IPTV services and five communities with our CATV services. Video service revenue was $3,141,492, which was $112,615 or 3.72% higher in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This increase was primarily due to a combination of rate increases introduced into several of our markets over the past few years, partially offset by a decrease in video customers, which continues to be impacted by the on-going effects of COVID-19, which has accelerated an industry trend of customers moving to other video options.   

Data Service – We provide high speed Internet to business and residential customers. Our revenue is earned based on the offering of various flat rate packages based on the level of service, data speeds and features. We also provide e-mail and managed services, such as web hosting and design, on-line file back up and on-line file storage. Data service revenue was $6,716,852, which was $448,881 or 7.16% higher in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This increase was primarily due to an increase in data customers, customers upgrading their packages and speeds and the implementation of a monthly equipment charge to our customers. We expect continued growth in this area will be driven by completing our advanced FTTP network, expansion of service areas and marketing managed service solutions to businesses.

A-CAM/FUSF – In 2019, the Company elected to receive funding from A-CAM, with the exception of Scott-Rice, which still receives funding from the FUSF. See Note 2 – “Revenue Recognition” for a discussion regarding A-CAM and FUSF.

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A-CAM/FUSF support totaled $2,894,587, which was $73,608 or 2.48% lower in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This decrease was primarily due to lower FUSF support received for Scott-Rice due to declining access lines.

Other Revenue – Our customers are billed for toll and long-distance services on either a per call or flat-rate basis. This also includes the offering of directory assistance, operator service and long distance private lines. We also generate revenue from directory publishing through an outside vendor, sales and service of CPE, bill processing and other customer services. Our directory publishing revenue in our telephone directories recurs monthly. We also provide retail sales and service of cellular phones and accessories through Telispire, a national wireless provider. We resell these wireless services as Nuvera Wireless, our branded product. We receive both recurring revenue for our wireless services, as well as revenue collected for the sales of wireless phones and accessories. Other revenue was $962,353, which was $117,009 or 10.84% lower in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This decrease was primarily due to a decrease in the sales and installation of CPE, and lower long-distance revenues.

Cost of Services (excluding Depreciation and Amortization)

Cost of services (excluding depreciation and amortization) was $7,383,826, which was $123,015 or 1.64% lower in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This decrease was primarily due to lower programming costs from video content providers and a loss of video customers, partially offset by higher costs associated with increased maintenance and support agreements on our equipment and software, and increased cost to maintain a highly skilled workforce. We have experienced increased inflation in our operations in the first quarter of 2022 and expect future inflationary pressures could affect our costs to operate our business.   

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $2,661,463, which was $2,427 or 0.09% lower in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This decrease was primarily due to cost containment efforts implemented in 2022. We have experienced increased inflation in our operations in the first quarter of 2022 and expect future inflationary pressures could affect our costs to operate our business.

Depreciation and Amortization

Depreciation and amortization were $3,498,284, which was $426,712 or 13.89% higher in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This increase was primarily due to accelerated depreciation on our old copper cable networks as we transition to a new advanced FTTP network and increases in our advanced FTTP network assets, reflecting our continual investment in technology and infrastructure in order to meet our customers’ demands for products and services.

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Operating Income

Operating income was $2,931,199, which was $304,621 or 9.41% lower in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This decrease was primarily due to higher depreciation, which is described above.  

See Consolidated Statements of Income (for discussion below)

Other Income (Expense) and Interest Expense 

Interest expense was $496,655, which was $68,719 or 12.15% lower in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This decrease was primarily due to lower outstanding debt balances in connection with our term debt credit facility with CoBank, offset by an increase in our variable debt with CoBank.

Interest and dividend income was $177,045, which was $75,643 or 74.60% higher in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This increase was primarily due to an increase in dividend income earned on our investments.

On February 3, 2021, the Company was notified by Citizens, the lender on the Company’s PPP Loan, that Citizens has received payment-in-full from the United States federal government for the amount of the Company’s PPP Loan and the Company’s PPP Loan had been fully forgiven resulting in a gain on debt forgiveness of $2,912,433, which was the total of the PPP Loan plus accrued interest on the loan.

Other income for the three months ended March 31, 2022 and 2021, included a patronage credit earned with CoBank, which was a result of our debt agreements with them. The patronage credit allocated and received in 2022 was $567,468, compared to $625,490 allocated and received in 2021. CoBank determines and pays the patronage credit annually, generally in the first quarter of the calendar year, based on its results from the prior year. We record these patronage credits as income when they are received.

Other investment income was $124,301, which is $58,253 or 88.20% higher in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. Other investment income is primarily from our equity ownerships in several partnerships and limited liability companies.

Income Taxes

Income tax expense was $933,956 which was $271,144 or 22.50% lower in the three months ended March 31, 2022 compared to the three months ended March 31, 2021. This decrease was primarily due to the PPP Loan forgiveness being tax exempt at the federal level as of March 31, 2021, and a decrease in operating income. The effective income tax rate for the three months ending March 31, 2022 and 2021 was approximately 28.00% and 18.87%, respectively. The effective income tax rate differs from the federal statutory income tax rate primarily due to state income taxes and other permanent differences.

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Liquidity and Capital Resources

Capital Structure

Nuvera’s total capital structure (long-term and short-term debt obligations, net of unamortized loan fees plus stockholders’ equity) was $147,166,351 as of March 31, 2022, reflecting 67.0% equity and 33.0% debt. This compares to a capital structure of $146,277,211 at December 31, 2021, reflecting 67.4% equity and 32.6% debt. In the communications industry, debt financing is most often based on operating cash flows. Specifically, our current use of our credit facilities is in a ratio of approximately 1.86 times debt to EBITDA (as defined in the loan documents), which is well within acceptable limits for our agreements and our industry. Our management believes adequate operating cash flows and other internal and external resources, such as our cash on hand, and revolving credit facility are available to finance ongoing operating requirements, including capital expenditures, business development, debt service and temporary financing of trade accounts receivable. In addition, in the first quarter of 2022, the Company secured an additional $10 million line of credit from our current lender CoBank and expect a new credit facility will be obtained from CoBank in the second quarter of 2022 to accommodate the Company’s fiber-build plans and fund operations.

Liquidity Outlook

Our short-term and long-term liquidity needs arise primarily from (i) capital expenditures; (ii) working capital requirements needed to support our growth; (iii) debt service; (iv) dividend payments on our stock and (v) potential acquisitions.

Our primary sources of liquidity for the three months ended March 31, 2022 were proceeds from cash generated from operations and cash reserves held at the beginning of the period. As of March 31, 2022 we had a working capital surplus of $3,088,342. In addition, as of March 31, 2022, we had $16.8 million available under our revolving credit facility to fund any short-term working capital needs. The working capital surplus as of March 31, 2022 was primarily the result of increased inventories and decreased accounts payable.

Impact of COVID-19 on Our Cash Flows

The global spread of COVID-19 and the various attempts to contain it may create volatility with our future cash flows. Our future cash flows also could be impacted by our customer’s inability to pay for or keep their existing services, or their inability to acquire our services due to their personal financial hardships created by COVID-19. We may not be able to expand our network, acquire new customers or service existing customers based on our future cash flow position. We continue to monitor our discretionary spending in reaction to the COVID-19 pandemic. We have experienced disruptions in our business as we implemented modifications to preserve adequate liquidity and ensure that our business can continue to operate during this uncertain time. 

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Cash Flows

We expect our liquidity needs to include capital expenditures, payment of interest and principal on our indebtedness, income taxes and dividends. We use our cash inflow to manage the temporary increases in cash demand and utilize our revolving credit facility to manage more significant fluctuations in liquidity caused by growth initiatives.

While it is often difficult for us to predict the impact of general economic conditions, including the impact of COVID-19 on us, we believe that we will be able to meet our current and long-term cash requirements primarily through our operating cash flows and anticipated debt financing and anticipate that we will be able to plan for and match future liquidity needs with future internal and available external resources. 

We periodically seek to add growth initiatives by either expanding our network or our markets through organic or internal investments or through strategic acquisitions. We believe we can adjust the timing or the number of our initiatives according to any limitations which may be imposed by our capital structure or sources of financing.

The following table summarizes our cash flow:

	Three Months Ended March 31,
	2022		2021
Net cash provided by (used in):
Operating activities	$	7,560,836	$	5,129,800
Investing activities		(6,061,098)		(2,093,560)
Financing activities		(2,927,809)		(1,828,690)
Change in cash	$	(1,428,071)	$	1,207,550

Cash Flows from Operating Activities

Cash generated by operations in the first three months of 2022 was $7,560,836, compared to cash generated by operations of $5,129,800 in the first three months of 2021. The increase in cash from operating activities in 2022 was primarily due to the timing of the increase/decrease in assets and liabilities.  

Cash generated by operations continues to be our primary source of funding for existing operations, capital expenditures, debt service and dividend payments to stockholders. Cash as of March 31, 2022 was $878,078, compared to $2,306,149 as of December 31, 2021.

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Cash Flows Used in Investing Activities

We operate in a capital intensive business. We continue to upgrade our advanced fiber networks for changes in technology in order to provide advanced services to our customers.

Cash flows used in investing activities were $6,061,098 during the first three months of 2022 compared to $2,093,560 for the first three months of 2021. Capital expenditures relating to on-going operations were $4,116,747 for the three months ended March 31, 2022, compared to $1,740,415 for the three months ended March 31, 2021. Materials and supply expenditures increased by $1,957,139 in the first three months of 2022 compared to $311,145 for the first three months of 2021. This increase was primarily due to a large purchase of these items to support our fiber-build initiatives and to avoid anticipated supply chain issues and increased inflation we are expecting in 2022. Our investing expenditures are financed with cash flows from our current operations and advances on our line of credit when needed. We believe that our current operations and anticipated new debt financing from CoBank will provide adequate cash flows to fund our plant additions for the remainder of this year; however, funding from our revolving credit facility is available if the timing of our cash flows from operations does not match our cash flow requirements. As of March 31, 2022, we had $16.8 million available under our existing credit facility to fund capital expenditures and other operating needs.

Cash Flows Used in Financing Activities

Cash used in financing activities for the three months ended March 31, 2022 was $2,927,809. This included long-term debt repayments of $1,152,600, loan origination fees of $28,000, changes in our revolving credit facility of $2,148,698, the repurchase of common stock of $3,187,500 and the distribution of $708,407 of dividends to our stockholders. Cash used in financing activities for the three months ended March 31, 2021 was $1,828,690. This included long-term debt repayments of $1,152,600 and the distribution of $676,090 of dividends to our stockholders.

Working Capital

We had a working capital surplus (i.e., current assets minus current liabilities) of $3,088,342 as of March 31, 2022, with current assets of approximately $13.3 million and current liabilities of approximately $10.2 million, compared to a working capital surplus of $2,545,129 as of December 31, 2021. The ratio of current assets to current liabilities was 1.30 and 1.23 as of March 31, 2022 and December 31, 2021. The working capital surplus as of March 31, 2022 was primarily the result of increased inventories and decreased accounts payable. 

At March 31, 2022 and December 31, 2021 we were in compliance with all stipulated financial ratios in our loan agreements.

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Dividends and Restrictions

We declared a quarterly dividend of $0.14 per share for the first quarter of 2022 and $0.13 per share for the first quarter of 2021, respectively, which totaled $708,407 for the first quarter of 2022 and $676,090 for the first quarter of 2021.

We expect to continue to pay quarterly dividends during the remainder of 2022, but only if and to the extent declared by our BOD on a quarterly basis and subject to various restrictions on our ability to do so (described below). Dividends on our common stock are not cumulative.  

There are security and loan agreements underlying our current CoBank credit facility that contain restrictions on our distributions to stockholders and investment in, or loans, to others. See below and Note 6 – “Secured Credit Facility” for additional information.

Our loan agreements include restrictions on our ability to pay cash dividends to our stockholders. However, we are allowed to pay dividends (a) (i) in an amount up to $2,700,000 in any year if our “Total Leverage Ratio,” that is, the ratio of our “Indebtedness” to “EBITDA” – as defined in the loan documents), is greater than 2.00 to 1.00, and (ii) in any amount if our Total Leverage Ratio is less than 2.00 to 1.00, and (b) in either case, if we are not in default or potential default under the loan agreements. On December 31, 2020, our Total Leverage Ratio fell below 2.00, thus eliminating any restrictions on our ability to pay cash dividends to our stockholders. Our current Total Leverage Ratio as of March 31, 2022, was 1.86.  

Our BOD reviews quarterly dividend declarations based on our anticipated earnings, capital requirements and our operating and financial conditions. The cash requirements of our current dividend payment practices are in addition to our other expected cash needs. Should our BOD determine a dividend will be declared, we expect we will have sufficient availability from our current cash flows from operations to fund our existing cash needs and the payment of our dividends. In addition, we expect we will have sufficient availability under our revolving credit facility to fund dividend payments in addition to any fluctuations in working capital and other cash needs.

Long-Term Debt

See Note 6 – “Secured Credit Facility” for information pertaining to our long-term debt.

Recent Accounting Developments  

See Note 1 – “Basis of Presentation and Consolidation” for a discussion of recent accounting developments.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Not required for a smaller reporting company.

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Item 4. Controls and Procedures

Our principal executive officer and principal financial officer evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rule 13a-15(e) or Rule 15d-15(e), as of the end of the period subject to this Report. Based on this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective.

Management’s Report on Internal Control over Financial Reporting

As of the end of the period covered by this Quarterly Report on Form 10-Q (the Evaluation Date), we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, regarding the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) promulgated under the Securities and Exchange Act of 1934, as amended). Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded, as of the end of the period covered by this Quarterly Report, that our disclosure controls and procedures ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act are recorded, processed, summarized and reported within the time periods specified in applicable rules and forms and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, in a manner that allows timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There have been no material changes in the Company’s internal control over financial reporting that occurred during the Company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Other than the litigation incidental to our business, there are no pending material legal proceedings to which we are a party or to which any of our property is subject. 

Item 1A. Risk Factors.

Our operations and financial results are subject to various risks and uncertainties, including but not limited to those described below, that could adversely affect our business, financial condition, results of operations, cash flows and the trading price of our common stock.

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Risks Relating to Our Business

We expect to continue to face significant competition in all parts of our business. The communications industry is highly competitive. We face actual and potential competition from many existing and emerging companies, including other incumbent and competitive communications companies, long-distance carriers and resellers, wireless companies, Internet service providers, satellite companies and cable TV companies, and, in some cases, new forms of providers who are able to offer competitive services through software applications requiring a comparatively small initial investment. Due to consolidations and strategic alliances within the industry, we cannot predict the number of competitors we will face at any given time.

The wireless business has expanded significantly and has caused many subscribers with traditional telephone and land-based Internet access services to give up those services and rely exclusively on wireless services. In addition, consumers’ options for viewing TV shows have expanded as content becomes increasingly available through alternative sources. Some providers, including TV and cable TV content owners, have initiated Over-The-Top (OTT) services that deliver video content to TV, computers and other devices over the Internet. We may not be able to successfully anticipate and respond too many of the various competitive factors affecting the industry, including regulatory changes that may affect our competitors and us differently, new technologies, services and applications that may be introduced, changes in consumer preferences, demographic trends, and discount or bundled pricing strategies by competitors.

Competitors in the markets we serve enjoy certain business advantages, including size, financial resources, a more diverse product mix, brand recognition and connection to virtually all of our customers and potential customers. The largest cable operators also enjoy certain business advantages, including size, financial resources, ownership of or superior access to desirable programming and other content, a more diverse product mix, brand recognition and first-in-field advantages with a customer base that generates positive cash flow for its operations.  Our competitors continue to add features, increase data speeds and adopt aggressive pricing and packaging for services comparable to the services we offer. Their success in selling services that are competitive with ours among our various customer channels could lead to revenue erosion in our business. We face intense competition in our markets for long-distance, Internet access, video service and other ancillary services that are important to our business and to our growth strategy.  If we do not compete effectively we could lose customers, revenue and market share.

We must adapt to rapid technological changes. If we are unable to take advantage of technological developments, or if we adopt and implement them at a slower rate than our competitors, we may experience a decline in the demand for our services. Our industry operates in a technologically complex environment. New technologies are continually developed and existing products and services undergo constant improvement. Emerging technologies offer consumers a variety of choices for their communication and broadband needs. To remain competitive, we will need to adapt to future changes in technology to enhance our existing offerings and to introduce new or improved offerings that anticipate and respond to the varied and continually changing demands of our various customer channels. Our business and results of operations could be adversely affected if we are unable to match the benefits offered by competing technologies on a timely basis and at an acceptable cost, or if we fail to employ technologies desired by our customers before our competitors do so.

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New technologies, particularly alternative methods for the distribution, access and viewing of content, have been, and will likely continue to be, developed that will further increase the number of competitors that we face and drive changes in consumer behavior. Consumers seek more control over when, where and how they consume content and are increasingly interested in communication services outside of the home and in newer services in wireless Internet technology and devices such as tablets, smartphones and mobile wireless routers that connect to such devices. These new technologies, distribution platforms and consumer behaviors may have a negative impact on our business.

In addition, evolving technologies can reduce the costs of entry for others, resulting in greater competition and significant new advantages for competitors. Technological developments could require us to make significant new capital investments in order to remain competitive with other service providers.  If we do not replace or upgrade our network and its technology on a timely basis, we may not be able to compete effectively and could lose customers. We may also be placed at a cost disadvantage in offering our services. Technology changes are also allowing individuals to bypass communications companies and cable operators entirely to make and receive calls, and to provide for the distribution and viewing of video programming without the need to subscribe to traditional voice and video products and services. Increasingly, this can be done over wireless facilities and other emerging mobile technologies in addition to traditional wired networks. Wireless companies are aggressively developing networks using next-generation data technologies, which are capable of delivering high-speed Internet service via wireless technology to a large geographic footprint. As these technologies continue to expand in availability and reliability, they could become an effective alternative to our high-speed Internet services. Although we use fiber optics in parts of our networks and are building a new FTTP network, including in our residential areas, we continue to rely on coaxial cable and copper transport media to serve customers in many areas. The facilities we use to offer our video services, including the interfaces with customers, are undergoing a rapid evolution, and depend in part on the products, expertise and capabilities of third-parties. If we cannot develop new services and products to keep pace with technological advances, or if such services and products are not widely embraced by our customers, our results of operations could be adversely impacted.

Shifts in our product mix may result in a decline in operating profitability. Margins vary among our products and services. Our profitability may be impacted by technological changes, customer demands, regulatory changes, the competitive nature of our business and changes in the product mix of our sales. These shifts may also result in our long-lived assets becoming impaired or our inventory becoming obsolete. We review long-lived assets for potential impairment if certain events or changes in circumstances indicate that impairment may be present.

Public health threats, such as the recent outbreak of COVID-19, could have a material adverse effect on our business, results of operations, cash flows and stock price.  We may face risks associated with public health threats or outbreaks of epidemic, pandemic or communicable diseases, such as the outbreak of the COVID-19 and its variants.  The COVID-19 pandemic has in the short-term and may in the long-term adversely impact the global economy, financial markets and supply chains and has resulted in increased unemployment levels. The outbreak has resulted in federal, state and local governments implementing mitigation measures, including shelter-in-place orders, travel restrictions, limitations on business, school closures, vaccination and testing requirements and other measures. Governments have enacted fiscal and monetary stimulus measures to counteract the impacts of COVID-19.

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As a critical infrastructure provider, we have continued to operate our business and provide services to our customers. Although we are considered an essential business, the outbreak of COVID-19 and any preventive or protective actions implemented by governmental authorities may have a material adverse effect on our operations, customers and suppliers and could do so for an indefinite period of time. Adverse economic and market conditions as a result of COVID-19 could also adversely affect the demand for our products and services and may also impact the ability of our customers to satisfy their obligations to us. In addition, concerns regarding the economic impact of COVID-19 have caused volatility in financial and other capital markets which has and may continue to adversely affect the market price of our common stock and our ability to access capital markets. In response to the COVID-19 pandemic, we have transitioned a substantial number of our employees to telecommuting and remote work arrangements, which may increase the risk of a security breach or cybersecurity attack on our information technology systems that could impact our business.

We cannot reasonably estimate at this time the resulting future financial impact of COVID-19 on our business, but the prolonged effect of it could have a material adverse effect to our results of operations, financial condition and liquidity. The extent to which the COVID-19 pandemic may adversely impact our business, results of operations, financial condition and liquidity will depend on future developments, which are highly uncertain and unpredictable, including the severity and duration of the outbreak, current and new variants of COVID-19, the availability and distribution of effective treatments and vaccines, the effectiveness of actions taken to contain or mitigate its effects and any resulting economic downturn, recession or depression in the markets we serve.

We receive support from various funds established under federal and state laws, and the continued receipt of that support is not assured. A significant portion of our revenues come from network access and subsidies. An order adopted by the FCC in 2011 (2011 Order) significantly impacted the amount of support revenue we receive from the Universal Service Fund (USF), CAF and intercarrier compensation (ICC).  The 2011 Order reformed core parts of the USF, broadly recast the existing ICC scheme, established the CAF to replace support revenues provided by the USF and redirected support from voice services to broadband services.

We receive subsidy payments from various federal and state universal service support programs, including high-cost support, Lifeline and E-Rate programs for schools and libraries. The total cost of the various federal universal service programs has increased significantly in recent years, putting pressure on regulators to reform the programs and to limit both eligibility and support. We cannot predict future changes that may impact the subsidies we receive. However, a reduction in subsidies support may directly affect our profitability and cash flows.

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A disruption in our networks and infrastructure could cause service delays or interruptions, which could cause us to lose customers and incur additional expenses. Our customers depend on reliable service over our network. The primary risks to our network infrastructure include physical damage to lines, security breaches, capacity limitations, power surges or outages, software defects and disruptions beyond our control, such as natural disasters and acts of terrorism. From time to time in the ordinary course of business, we experience short disruptions in our service due to factors such as physical damage, inclement weather and service failures of our third-party service providers. We could experience more significant disruptions in the future. Disruptions may cause service interruptions or reduced capacity for customers, either of which could cause us to lose customers and incur unexpected expenses.

A cyber-attack may lead to unauthorized access to confidential customer, personnel and business information that could adversely affect our business. Attempts by others to gain unauthorized access to organizations' information technology systems are becoming more frequent and sophisticated, and are sometimes successful. These attempts may include covertly introducing malware to companies' computers and networks, impersonating authorized users or "hacking" into systems. We seek to prevent, detect and investigate all security incidents that do occur, however we may be unable to prevent or detect a significant attack in the future. Significant information technology security failures could result in the theft, loss, damage, unauthorized use or publication of our confidential business information, which could harm our competitive position, subject us to additional regulatory scrutiny, expose us to litigation or otherwise adversely affect our business. If a security breach results in misuse of our customers' confidential information, we may incur liability as a result.

Our operations require substantial capital expenditures and our business, financial condition, results of operations and liquidity may be impacted if funds for capital expenditures are not available when needed. We require significant capital expenditures to maintain, upgrade and enhance our network facilities and operations. While we have historically been able to fund capital expenditures from cash generated from operations and borrowings under our revolving credit facility, the other risk factors described in this section could materially reduce cash available from operations or significantly increase our capital expenditure requirements, which may result in our inability to fund the necessary level of capital expenditures to maintain, upgrade or enhance our network. This could adversely affect our business, financial condition, results of operations and liquidity.

We may be unable to obtain necessary hardware, software and operational support from third-party vendors. We depend on third-party vendors to supply us with a significant amount of hardware, software and operational support necessary to provide certain of our services, to maintain, upgrade and enhance our network facilities and operations, and to support our information and billing systems. Some of our third-party vendors are our primary source of supply for certain products and services for which there are few substitutes. The global supply chains have been and may continue to be impacted by the COVID-19 pandemic, which has caused a delay in the development, manufacturing and shipping of products and in some cases an increase in product costs. If any of these vendors should experience financial difficulties, experience supply chain issues, have demand that exceeds their capacity or can no longer meet our specifications or provide products or services we need or at reasonable prices, our ability to provide some services may be hindered, in which case our business, financial condition and results of operations may be adversely affected.

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Our ability to attract and/or retain certain key management and other personnel in the future could have an adverse effect on our business. We rely on the talents and efforts of key management personnel, many of whom have been with our company or in our industry for decades. While we maintain long-term and emergency transition plans for key management personnel and believe we could either identify internal candidates or attract outside candidates to fill any vacancy created by the loss of any key management personnel, the loss of one or more of our key management personnel could have a negative impact on our business.

Acquisitions present many risks and we may be unable to realize the anticipated benefits of acquisitions. From time to time, we make acquisitions and investments or enter into other strategic transactions. In connection with these types of transactions, we may incur unanticipated expenses; fail to realize anticipated benefits; have difficulty integrating the acquired businesses; disrupt relationships with current and new employees, customers and vendors; incur significant indebtedness or have to delay or not proceed with announced transactions. The occurrence of any of the foregoing events could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We may face significant challenges in combining the operations of an acquired business with ours in a timely and efficient manner. The failure to successfully integrate an acquired business and to successfully manage the challenges presented by the integration process may result in our inability to achieve anticipated benefits of the acquisition, including operational and financial synergies. Even if we are successful in integrating acquired businesses, we cannot guarantee that the integration will result in the complete realization of anticipated financial synergies or that they will be realized within the expected time frames.

Risks Relating to Current Economic Conditions

Weak economic conditions may have a negative impact on our business, results of operations and financial condition. Downturns in the economic conditions in the markets and industries we serve could adversely affect demand for our products and services and have a negative impact on our results of operations. Economic weakness or uncertainty may make it difficult for us to obtain new customers and may cause our existing customers to reduce or discontinue their services to which they subscribe. This risk may be worsened by the expanded availability of free or lower cost services, such as streaming or OTT services or substitute services, such as wireless phones and public Wi-Fi networks. Weak economic conditions may also impact the ability of third parties to satisfy their obligations to us.

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Risks Relating to Our Stock

The price of our stock may be volatile and may fluctuate substantially, which could negatively affect holders of our stock. The market price of our stock may fluctuate widely as a result of various factors including, but not limited to, period-to-period fluctuations in our operating results, the limited number of holders of our stock and the resulting limited liquidity in our stock, dilution, developments in the communications industry, the failure of securities analysts to cover our stock, changes in financial estimates by securities analysts, competitive factors, regulatory developments, labor disruptions, general market conditions and market conditions affecting the stock of communications companies. Communications companies have, in the past, experienced extreme volatility in the trading prices and volumes of their securities, which has often been unrelated to operating performance. High levels of market volatility may have a significant adverse effect on the market price of our stock.  In addition, in the past, securities class action litigation has often been instituted against companies following periods of volatility in their stock price. This type of litigation could result in substantial costs and divert management's attention and resources, which could have a material adverse impact on our business, financial condition, results of operations, liquidity and/or the market price of our stock.

Risks Relating to Our Indebtedness and Our Capital Structure

We are expecting to have a substantial amount of debt outstanding due to our FTTP initiatives, which could adversely affect our business and restrict our ability to fund working capital and planned capital expenditures. Our substantial expected level of indebtedness could adversely impact our business, including:

● We may be required to use a substantial portion of our cash flow from operations to make principal and interest payments on our debt, which will reduce funds available for operations, capital expenditures, future business opportunities and strategic initiatives;

● We may have limited flexibility to react to changes in our business and our industry;

● It may be more difficult for us to satisfy our other obligations;

● We may have a limited ability to borrow additional funds or to sell assets to raise funds if needed for working capital, capital expenditures, acquisitions or other purposes;

● We may become more vulnerable to general adverse economic and industry conditions, including changes in interest rates; and

● We may be at a disadvantage compared to our competitors that have less debt.

We cannot guarantee that we will generate sufficient revenues to service our debt and have adequate funds left over to achieve or sustain profitability in our operations, meet our working capital and capital expenditure needs or compete successfully in our markets.

We may not be able to refinance our existing debt if necessary, or we may only be able to do so at a higher interest rate. We may be unable to refinance or renew our credit facilities and our failure to repay all amounts due on the maturity dates would cause a default under the credit agreement. Alternatively, any renewal or refinancing may occur on less favorable terms. If we refinance our credit facilities on terms that are less favorable to us than the terms of our existing debt, our interest expense may increase significantly, which could impact our results of operations and impair our ability to use our funds for other purposes.

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Our variable-rate debt subjects us to interest rate risk, which could impact our cost of borrowing and operating results. Certain of our debt obligations are at variable rates of interest and expose us to interest rate risk. Increases in interest rates could negatively impact our results of operations and operating cash flows. We utilize IRSAs to convert a portion of our variable-rate debt to a fixed-rate basis. However, we do not maintain interest rate hedging agreements for all of our variable-rate debt and our existing hedging agreements may not fully mitigate our interest rate risk, may prove disadvantageous or may create additional risks.

In addition, a portion of our variable-rate debt bears interest based on LIBOR. In 2017, the Financial Conduct Authority, which regulates LIBOR, announced that it intended to stop requiring banks to submit rates for the calculation of LIBOR after 2021. In November 2020, the ICE Benchmark Administration, the administrator of LIBOR, extended the cessation date for submission and publication of rates for all LIBOR tenors until June 30, 2023, except for the one-week and two-month LIBOR tenors, which ceased on December 31, 2021. As of January 1, 2022, regulated United States financial institutions are no longer permitted to enter into new contracts referencing any LIBOR settings. The United States Federal Reserve, in conjunction with the Alternative Reference Rates Committee, has proposed replacing LIBOR with the Secured Overnight Financing Rate (SOFR), a new index based on trading in overnight repurchase agreements. At this time, it is not possible to predict whether SOFR will become the most prevalent alternative reference rate in the market or what impact the transition from LIBOR to alternative reference rates may have on the interest rates for our current and future debt obligations as well as our IRSAs, which may be adversely affected. In addition, any transition process from LIBOR to an alternative rate could cause, among other things, LIBOR to perform differently than in the past, a disruption in the financial markets, or increases in benchmark rates, any of which could adversely affect our results of operations, cash flows and liquidity.

Risks Related to the Regulation of Our Business

We are subject to a complex and uncertain regulatory environment, and we face compliance costs and restrictions greater than those of many of our competitors. Our businesses are subject to regulation by the FCC and other federal, state and local entities. Rapid changes in technology and market conditions have resulted in changes in how the government addresses communications, video programming and Internet services. Many businesses that compete with our communications companies are comparatively less regulated. Some of our competitors are either not subject to utilities regulation or are subject to significantly fewer regulations. In contrast to our subsidiaries regulated as cable operators and satellite video providers, competing on-demand and OTT providers and motion picture and DVD firms have almost no regulation of their video activities. Recently, federal and state authorities have become more active in seeking to address critical issues in each of our product and service markets. The adoption of new laws or regulations, or changes to the existing regulatory framework at the federal, state or local level, could require significant and costly adjustments that could adversely affect our business plans. New regulations could impose additional costs or capital requirements, require new reporting, impair revenue opportunities, potentially impede our ability to provide services in a manner that would be attractive to our customers and potentially create barriers to enter new markets or to acquire new lines of business. We face continued regulatory uncertainty in the immediate future. Not only are these governmental entities continuing to move forward on these matters, their actions remain subject to reconsideration, appeal and legislative modification over an extended period of time, and it is unclear how their actions will ultimately impact our business. We cannot predict future developments or changes to the regulatory environment or the impact such developments or changes may have on us.

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Increased regulation of the Internet could increase our cost of doing business. Current laws and regulations governing access to, or commerce on, the Internet are limited. As the significance of the Internet continues to expand, federal, state and local governments may adopt new rules and regulations applicable to, or apply existing laws and regulations to, the Internet. During 2017, the FCC adopted an order eliminating its previous classification of Internet service as a telecommunications service regulated under Title II of the Telecommunications Act of 1996. This effectively limits the FCC’s authority over Internet Service Providers. The FCC retained rules requiring Internet Service Providers to disclose practices associated with blocking, throttling and paid prioritization of Internet traffic. The FCC order has been challenged in court and the outcome of the challenge cannot be determined at this time.  

The outcome of pending matters before the FCC and the Federal Trade Commission and any potential congressional action cannot be determined at this time but could lead to increased costs for the Company in connection with our provision of Internet services, and could affect our ability to compete in the markets we serve.

We are subject to extensive laws and regulations relating to the protection of the environment, natural resources and worker health and safety. Our operations and properties are subject to federal, state and local laws and regulations relating to the protection of the environment, natural resources and worker health and safety, including laws and regulations governing and creating liability in connection with the management, storage and disposal of hazardous materials, asbestos and petroleum products. We are also subject to laws and regulations governing air emissions from our fleet vehicles. As a result, we face several risks, including:

● Hazardous materials may have been released at properties that we currently own or formerly owned (perhaps through our predecessors). Under certain environmental laws, we could be held liable, without regard to fault, for the costs of investigating and remediating any actual or threatened contamination at these properties and for contamination associated with disposal by us, or by our predecessors, of hazardous materials at third-party disposal sites;

● We could incur substantial costs in the future if we acquire businesses or properties subject to environmental requirements or affected by environmental contamination. In particular, environmental laws regulating wetlands, endangered species and other land use and natural resources may increase the costs associated with future business or expansion or delay, alter or interfere with such plans;

● The presence of contamination can adversely affect the value of our properties and make it difficult to sell any affected property or to use it as collateral; and
 

● We could be held responsible for third-party property damage claims, personal injury claims or natural resource damage claims relating to contamination found at any of our current or past properties.

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The cost of complying with environmental requirements could be significant. Similarly, the adoption of new environmental laws or regulations, or changes in existing laws or regulations or their interpretations, could result in significant compliance costs or unanticipated environmental liabilities.

Our business may be impacted by new or changing tax laws or regulations and actions by federal, state, and/or local agencies, or by how judicial authorities apply tax laws.  Our operations are subject to various federal, state and local tax laws and regulations. In connection with the products and services we sell, we calculate, collect, and remit various federal, state, and local taxes, surcharges and regulatory fees to numerous federal, state and local governmental authorities. In many cases, the application of tax laws is uncertain and subject to differing interpretations, especially when evaluated against new technologies and communications services, such as broadband Internet access and cloud related services. Tax laws are dynamic and subject to change as new laws are passed and new interpretations of the law are issued or applied. Changes in tax laws, or changes in interpretations of existing laws, could materially affect our financial position, results of operations and cash flows. For example, the Tax Cuts and Jobs Act of 2017, a major federal tax reform, that had a significant impact on our tax obligations and effective income tax rate.  

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

Repurchases of Nuvera common stock are made to support the Company’s stock-based employee compensation plans and for other corporate purposes. In May 2019, Nuvera announced the adoption of a $4.0 million stock repurchase program running through the end of 2021. Under the stock repurchase program, repurchases can be made from time to time using a variety of methods, including through open market purchases or in privately negotiated transactions in compliance with the rules of the SEC and other applicable legal requirements.

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The following table summarizes stock repurchases for the year ended December 31, 2021.

				Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Plans or Programs
	Total Number of Shares Purchased as Part of Publicaly Announced Plans or or Programs (1)
		Average Price Paid per Share
Period
July 1 - December 30, 2020	19,487		N/A	$	3,647,263
January 1 - June 30, 2021	3,028	$	23.80	$	3,575,197
July 1 - December 31, 2021	4,000	$	23.85	$	-
Total July 1, 2019 - December 31, 2021	26,515
(1) The total number of shares purchased includes: (i) shares purchased under the Board's authorizations
described above, including market purchases and privately negotiated purchases.

In two transactions that closed on February 25, 2022 and February 28, 2022, Nuvera purchased 75,000 shares each from two shareholders, for a total of 150,000 shares at a price of $21.25 per share for a total purchase price of $3,187,500. The shares were purchased pursuant to a privately negotiated purchase agreement between Nuvera and the shareholders. This stock purchase was authorized by the Nuvera BOD and a waiver was obtained from CoBank to facilitate the sale. See Nuvera’s Form 8-K filed with  the SEC on March 2, 2022 for more information regarding this stock purchase.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures

Not Applicable.

Item 5. Other Information.

None.

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Item 6. Exhibits.

Exhibit

Number           Description

31.1                 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2                 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1                 Certification of Chief Executive Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2                 Certification of Chief Financial Officer pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS          XBRL Instance Document

101.SCH         XBRL Taxonomy Extension Schema Document

101.CAL         XBRL Taxonomy Extension Calculation Linkbase Document

101.DEF         XBRL Taxonomy Extension Definition Linkbase Document

101.LAB         XBRL Taxonomy Extension Label Linkbase Document

101.PRE          XBRL Taxonomy Extension Presentation Linkbase Document

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	NUVERA COMMUNICATIONS, INC.
Dated:  May 10, 2022	By	/s/ Glenn H. Zerbe
	Glenn H. Zerbe, President and Chief Executive Officer
Dated:  May 10, 2022	By	/s/ Curtis O. Kawlewski
	Curtis O. Kawlewski, Chief Financial Officer

56

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER UNDER RULE 13a-14(a) ADOPTED

 PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Glenn H. Zerbe, President and Chief Executive Officer of Nuvera Communications, Inc., certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2022 of Nuvera Communications, 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;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of registrant's Board of Directors (or persons performing the equivalent functions):

a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date:  May 10, 2022	By	/s/ Glenn H. Zerbe
		Glenn H. Zerbe
		President and Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER UNDER RULE 13a-14(a) ADOPTED

PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Curtis O. Kawlewski, Chief Financial Officer of Nuvera Communications, Inc., certify that:

1.     I have reviewed this Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2022 of Nuvera Communications, 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;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.     The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)     Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting.

5.     The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's Board of Directors (or persons performing the equivalent functions):

a)     All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

Date: May 10, 2022	/s/ Curtis O. Kawlewski
	Curtis O. Kawlewski
	Chief Financial Officer

EX-32.1

EXHIBIT 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

UNDER 18 U.S.C. SECTION 1350

PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Nuvera Communications, Inc. on Form 10-Q for the period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Glenn H. Zerbe, President and Chief Executive Officer of the Company, certify, pursuant to and for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Nuvera Communications, Inc.

Date:  May 10, 2022	/s/ Glenn H. Zerbe
	Glenn H. Zerbe
	President and Chief Executive Officer

EX-32.2

EXHIBIT 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

UNDER 18 U.S.C. 1350

PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Nuvera Communications, Inc. on Form 10-Q for the period ended March 31, 2022 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Curtis O. Kawlewski, Chief Financial Officer of the Company, hereby certify, pursuant to and for purposes of 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

1.     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.     The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of Nuvera Communications, Inc.

Date: May 10, 2022	/s/ Curtis O. Kawlewski
	Curtis O. Kawlewski
	Chief Financial Officer

XML

Document And Entity Information - shares	3 Months Ended
	Mar. 31, 2022	May 10, 2022
Document Information Line Items
Entity Registrant Name	NUVERA COMMUNICATIONS, INC.
Trading Symbol	NUVR
Document Type	10-Q
Current Fiscal Year End Date	--12-31
Entity Common Stock, Shares Outstanding		5,064,760
Amendment Flag	false
Entity Central Index Key	0000071557
Entity Current Reporting Status	Yes
Entity Filer Category	Accelerated Filer
Document Period End Date	Mar. 31, 2022
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	Q1
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Document Quarterly Report	true
Document Transition Report	false
Entity File Number	0-3024
Entity Incorporation, State or Country Code	MN
Entity Tax Identification Number	41-0440990
Entity Address, Address Line One	27 North Minnesota Street
Entity Address, City or Town	New Ulm
Entity Address, State or Province	MN
Entity Address, Postal Zip Code	56073
City Area Code	507
Local Phone Number	354-4111
Entity Interactive Data Current	Yes
Title of 12(g) Security	Common Stock - $1.66 par value

XML

CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
OPERATING REVENUES:
Operating Revenues	$ 16,474,772	$ 16,478,123
OPERATING EXPENSES:
Plant Operations (Excluding Depreciation and Amortization)	3,427,246	3,417,738
Cost of Video	2,549,852	2,756,343
Cost of Data	1,028,534	923,514
Cost of Other Nonregulated Services	378,194	409,246
Depreciation and Amortization	3,498,284	3,071,572
Selling, General and Administrative	2,661,463	2,663,890
Total Operating Expenses	13,543,573	13,242,303
OPERATING INCOME	2,931,199	3,235,820
OTHER INCOME (EXPENSE)
Interest Expense	(496,655)	(565,374)
Interest/Dividend Income	177,045	101,402
Interest During Construction	32,204	9,992
Gain on Debt Forgiveness		2,912,433
CoBank Patronage Dividends	567,468	625,490
Other Investment Income	124,301	66,048
Total Other Income (Expense)	404,363	3,149,991
INCOME BEFORE INCOME TAXES	3,335,562	6,385,811
INCOME TAXES EXPENSE	933,956	1,205,100
NET INCOME	$ 2,401,606	$ 5,180,711
NET INCOME PER SHARE
Basic (in Dollars per share)	$ 0.47	$ 1
Diluted (in Dollars per share)	0.47	0.99
DIVIDENDS PER SHARE (in Dollars per share)	$ 0.14	$ 0.13
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic (in Shares)	5,111,622	5,202,832
Diluted (in Shares)	5,124,540	5,210,554
Voice Services [Member]
OPERATING REVENUES:
Operating Revenues	$ 1,468,178	$ 1,551,278
Network Access [Member]
OPERATING REVENUES:
Operating Revenues	1,291,310	1,582,440
Video Service [Member]
OPERATING REVENUES:
Operating Revenues	3,141,492	3,028,877
Data Service [Member]
OPERATING REVENUES:
Operating Revenues	6,716,852	6,267,971
ACAM/FUSF [Member]
OPERATING REVENUES:
Operating Revenues	2,894,587	2,968,195
Other Non Regulated [Member]
OPERATING REVENUES:
Operating Revenues	$ 962,353	$ 1,079,362

XML

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Statement of Comprehensive Income [Abstract]
Net Income	$ 2,401,606	$ 5,180,711
Other Comprehensive Income:
Unrealized Gains on Interest Rate Swaps	1,799,825	945,061
Income Tax Expense Related to Unrealized Gains on Interest Rate Swaps	(513,670)	(269,720)
Other Comprehensive Income:	1,286,155	675,341
Comprehensive Income	$ 3,687,761	$ 5,856,052

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
CURRENT ASSETS:
Cash	$ 878,078	$ 2,306,149
Receivables, Net of Allowance for Doubtful Accounts of $80,000 and $80,000	2,535,002	2,426,009
Income Taxes Receivable	471,666	1,405,622
Materials, Supplies, and Inventories	7,327,046	5,357,380
Prepaid Expenses and Other Current Assets	2,095,856	1,886,810
Total Current Assets	13,307,648	13,381,970
INVESTMENTS & OTHER ASSETS:
Goodwill	49,903,029	49,903,029
Intangibles	17,827,483	18,315,567
Other Investments	10,531,863	10,417,563
Right of Use Asset	1,084,600	1,154,293
Financial Derivative Instruments	916,460
Other Assets	437,341	422,427
Total Investments and Other Assets	80,700,776	80,212,879
PROPERTY, PLANT & EQUIPMENT:
Communications Plant	192,098,334	189,990,012
Other Property & Equipment	27,760,245	27,439,201
Video Plant	11,321,216	11,306,071
Total Property, Plant and Equipment	231,179,795	228,735,284
Less Accumulated Depreciation	150,596,128	147,585,930
Net Property, Plant & Equipment	80,583,667	81,149,354
TOTAL ASSETS	174,592,091	174,744,203
CURRENT LIABILITIES:
Current Portion of Long-Term Debt, Net of Unamortized Loan Fees	4,509,044	4,511,844
Accounts Payable	2,434,553	3,244,472
Other Accrued Taxes	322,739	260,013
Deferred Compensation	63,424	63,829
Accrued Compensation	2,025,687	2,122,436
Other Accrued Liabilities	863,859	634,247
Total Current Liabilities	10,219,306	10,836,841
LONG-TERM DEBT, Net of Unamortized Loan Fees	44,110,542	43,114,772
NONCURRENT LIABILITIES:
Loan Guarantees	209,367	222,464
Deferred Income Taxes	19,998,170	19,484,500
Unrecognized Tax Benefit	42,775	42,775
Other Accrued Liabilities	1,066,428	1,112,343
Financial Derivative Instruments		883,365
Deferred Compensation	398,738	396,548
Total Noncurrent Liabilities	21,715,478	22,141,995
COMMITMENTS AND CONTINGENCIES:
STOCKHOLDERS' EQUITY:
Preferred Stock - $1.66 Par Value, 10,000,000 Shares Authorized, No Shares Issued and Outstanding
Common Stock - $1.66 Par Value, 90,000,000 Shares Authorized, 5,064,760 and 5,210,053 Shares Issued and Outstanding	8,441,267	8,683,422
Accumulated Other Comprehensive Gain (Loss)	654,902	(631,253)
Unearned Compensation	262,735	259,620
Retained Earnings	89,187,861	90,338,806
Total Stockholders' Equity	98,546,765	98,650,595
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 174,592,091	$ 174,744,203

XML

CONSOLIDATED BALANCE SHEETS (Unaudited) (Parentheticals) - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Statement of Financial Position [Abstract]
Allowance for Doubtful Accounts (in Dollars)	$ 80,000	$ 80,000
Preferred stock par value (in Dollars per share)	$ 1.66	$ 1.66
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued
Preferred stock, shares outstanding
Common stock par value (in Dollars per share)	$ 1.66	$ 1.66
Common stock, shares authorized	90,000,000	90,000,000
Common stock, shares issued	5,064,760	5,210,053
Common stock, shares outstanding	5,064,760	5,210,053

XML

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income	$ 2,401,606	$ 5,180,711
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:
Depreciation and Amortization	3,523,156	3,096,211
PPP Loan Forgiveness		(2,912,433)
Undistributed Earnings of Other Equity Investments	(121,963)	(64,423)
Noncash Patronage Refund	(118,223)	(129,177)
Stock Issued in Lieu of Cash Payment	140,518	39,984
Distributions from Equity Investments	100,000	150,000
Stock-based Compensation	3,782	178,081
Changes in Assets and Liabilities:
Receivables	(108,585)	(337,167)
Income Taxes Receivable	933,956	615,587
Inventories for Resale	(12,527)	(173,169)
Prepaid Expenses	(249,030)	(1,494,445)
Other Assets	(15,322)	(65,048)
Accounts Payable	862,316	174,178
Accrued Income Taxes		489,513
Other Accrued Taxes	62,726	61,962
Other Accrued Liabilities	156,641	389,210
Deferred Compensation	1,785	(69,775)
Net Cash Provided by Operating Activities	7,560,836	5,129,800
CASH FLOWS FROM INVESTING ACTIVITIES:
Additions to Property, Plant, and Equipment, Net	(4,116,747)	(1,740,415)
Materials and Supplies for Construction	(1,957,139)	(311,145)
Other, Net	12,788	(42,000)
Net Cash Used in Investing Activities	(6,061,098)	(2,093,560)
CASH FLOWS FROM FINANCING ACTIVITIES:
Principal Payments of Long-Term Debt	(1,152,600)	(1,152,600)
Loan Origination Fees	(28,000)
Changes in Revolving Credit Facility	2,148,698
Repurchase of Common Stock	(3,187,500)
Dividends Paid	(708,407)	(676,090)
Net Cash Used in Financing Activities	(2,927,809)	(1,828,690)
NET CHANGE IN CASH	(1,428,071)	1,207,550
CASH at Beginning of Period	2,306,149	8,617,660
CASH at End of Period	878,078	9,825,210
Supplemental cash flow information:
Cash paid for interest	466,226	782,399
Net cash paid for income taxes	$ 0	$ 100,000

XML

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($)	Common Stock [Member]	AOCI Attributable to Parent [Member]	Unearned Compensation [Member]	Retained Earnings [Member]	Total
BALANCE at Dec. 31, 2020	$ 8,667,816	$ (1,944,511)	$ 149,100	$ 80,748,301	$ 87,620,706
BALANCE (in Shares) at Dec. 31, 2020	5,200,689
Employee Stock Plan	$ 7,657			101,083	108,740
Employee Stock Plan (in Shares)	4,594
Restricted Stock Grant			69,341		69,341
Exercise of RSUs	$ 3,060		(43,458)	40,398
Exercise of RSUs (in Shares)	1,836
Net Income				5,180,711	5,180,711
Dividends				(676,090)	(676,090)
Unrealized Gain on Interest Rate Swap		675,341			675,341
BALANCE at Mar. 31, 2021	$ 8,678,533	(1,269,170)	174,983	85,394,403	92,978,749
BALANCE (in Shares) at Mar. 31, 2021	5,207,119
BALANCE at Dec. 31, 2021	$ 8,683,422	(631,253)	259,620	90,338,806	98,650,595
BALANCE (in Shares) at Dec. 31, 2021	5,210,053
Employee Stock Plan	$ 7,793			92,741	100,534
Employee Stock Plan (in Shares)	4,676
Restricted Stock Grant			3,782		3,782
Exercise of RSUs	$ 52		(667)	615
Exercise of RSUs (in Shares)	31
Repurchase of Common Stock	$ (250,000)			(2,937,500)	(3,187,500)
Repurchase of Common Stock (in Shares)	(150,000)
Net Income				2,401,606	2,401,606
Dividends				(708,407)	(708,407)
Unrealized Gain on Interest Rate Swap		1,286,155			1,286,155
BALANCE at Mar. 31, 2022	$ 8,441,267	$ 654,902	$ 262,735	$ 89,187,861	$ 98,546,765
BALANCE (in Shares) at Mar. 31, 2022	5,064,760

XML

Basis of Presentation and Consolidation

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Business Description and Accounting Policies [Text Block]

Note 1 – Basis of Presentation and Consolidation

The accompanying unaudited condensed consolidated financial statements of Nuvera Communications, Inc. and its subsidiaries (Nuvera) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information, rules and regulations of the Securities and Exchange Commission (SEC) and, where applicable, conform to the accounting principles as prescribed by federal and state telephone utility regulatory authorities. Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted or condensed pursuant to such rules and regulations. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal and recurring accruals) considered necessary for the fair presentation of the financial statements and present fairly the results of operations, financial position and cash flows for the interim periods presented as required by Regulation S-X, Rule 10-01. These unaudited interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2021.

The preparation of our financial statements requires our management to make estimates and judgements that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities at the date of the financial statements and during the reporting period. Actual results may differ from these estimates. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year as a whole or any other interim period.

Our consolidated financial statements report the financial condition and results of operations for Nuvera and its subsidiaries in one business segment: the Communications Segment. Inter-company transactions have been eliminated from the consolidated financial statements.

Revenue Recognition

See Note 2 – “Revenue Recognition” for a discussion of our revenue recognition policies.

Cost of Services (excluding depreciation and amortization)

Cost of services includes all costs related to delivery of communication services and products. These operating costs include all costs of performing services and providing related products including engineering, network monitoring and transportation costs.

Selling, General and Administrative Expenses

Selling, general and administrative expenses include direct and indirect selling expenses, customer service, billing and collections, advertising and all other general and administrative costs associated our operations.

Depreciation and Amortization Expense

We use the group life method (mass asset accounting) to depreciate the assets of our communications companies. Communications plant acquired in a given year is grouped into similar categories and depreciated over the remaining estimated useful life of the group. When an asset is retired, both the asset and the accumulated depreciation associated with that asset are removed from the books. Due to rapid changes in technology, selecting the estimated economic life of communications plant and equipment requires a significant amount of judgment. We periodically review data on expected utilization of new equipment, asset retirement activity and net salvage values to determine adjustments to our depreciation rates. Depreciation expense was $3,010,200 and $2,240,630 for the three months ended March 31, 2022 and 2021. The increase in depreciation expense in the first quarter of 2022 was primarily due to accelerated depreciation on our old copper cable networks as we transition to a new advanced fiber-to-the-premise (FTTP) network. We amortize our definite-lived intangible assets over their estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment.

Income Taxes

The provision for income taxes consists of an amount for taxes currently payable and a provision for tax consequences deferred to future periods. Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Significant components of our deferred taxes arise from differences (i) in the basis of property, plant and equipment due to the use of accelerated depreciation methods for tax purposes, as well as (ii) in partnership investments and intangible assets due to the difference between book and tax basis. Our effective income tax rate is normally higher than the United States tax rate due to state income taxes and permanent differences, however, our effective income tax rate was lower than the United States tax rate in the quarter ended March 31, 2021 due to the Small Business Administration’s (SBA) Payroll Protection Program (PPP) loan forgiveness not being taxable at the federal level at that time. 

We account for income taxes in accordance with GAAP, which requires an asset and liability approach to financial accounting and reporting for income taxes. As required by GAAP, we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

As of March 31, 2022 and December 31, 2021 we had $38,673 of unrecognized tax benefits that if recognized would affect the tax rate. We do not expect the total amount of unrecognized tax benefits to materially change over the next 12 months.      

We are primarily subject to United States, Minnesota, Iowa, Nebraska, North Dakota and Wisconsin income taxes. Tax years subsequent to 2017 remain open to examination by federal and state tax authorities. We are currently undergoing an examination by the State of Minnesota. We do not expect the results of the examination to have a material effect on our ongoing financial statements. Our policy is to recognize interest and penalties related to income tax matters as income tax expense. As of March 31, 2022 and December 31, 2021 we had $4,102 of accrued interest that related to income tax matters.

Earnings and Dividends Per Share

Basic and diluted net income per share are calculated as follows:

	Three Months Ended   March 31, 2022				Three Months Ended   March 31, 2021
	Basic		Diluted		Basic		Diluted
Net Income	$	2,401,606	$	2,401,606	$	5,180,711	$	5,180,711
Weighted-average common shares outstanding		5,111,622		5,124,540		5,202,832		5,210,554
Net income per share	$	0.47	$	0.47	$	1.00	$	0.99

The weighted-average shares outstanding, basic and diluted, are calculated as follows:

	Three Months Ended   March 31, 2022				Three Months Ended   March 31, 2021
	Basic		Diluted		Basic		Diluted
Weighted-average common shares outstanding		5,111,622		5,111,622		5,202,832		5,202,832
Unvested RSU's		-		12,918		-		7,722
Weighted-average common shares outstanding		5,111,622		5,124,540		5,202,832		5,210,554

Nuvera’s Board of Directors (BOD) reviews quarterly dividend declarations based on our anticipated earnings, capital requirements and our operating and financial conditions.  

Recent Accounting Developments

Effective January 1, 2021 we adopted Accounting Standards Update (ASU) 2020-06, “Accounting for Convertible Instruments in an Entity’s Own Equity.” ASU 2020-06 simplifies guidance on accounting for convertible instruments and contracts in an entity’s own equity including calculating diluted earnings per share. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures.

Effective January 1, 2021, we adopted ASU 2019-12, “Income Taxes,” ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions and adding certain requirements to the general framework in Accounting Standards Codification (ASC) 740, “Income Taxes.” The new guidance will be applied prospectively. The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.

In November 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-10, “Disclosures by Business Entities about Government Assistance.” ASU 2021-10 requires disclosure by business entities of the types of government assistance received, the method of accounting for such assistance and the effects of the assistance on its financial statements. The new guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, with early adoption permitted. We are currently evaluating the impact this update will have on our related disclosures.

In March 2020, the FASB issued (ASU) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In January 2021, the FASB issued ASU No. 2101-01, “Reference Rate Reform (Topic 848): Scope.” ASU 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU 2020-04 and ASU 2021-01 are both elective and are effective upon issuance through December 31, 2022. We are currently evaluating the impact these updates will have on our consolidated financial statements and related disclosures.   

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosures relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. The Company is required to adopt ASU 2016-13 for fiscal periods beginning after December 15, 2022, including interim periods within that fiscal year. Early adoption as of December 15, 2018 is permitted. We continue to evaluate the impact the adoption of ASU 2016-13 will have on our financial statements, which we expect will not have a significant impact on our consolidated financial statements.

We have reviewed all other significant newly issued accounting pronouncements and determined that they are either not applicable to our business or that no material effect is expected on our financial position and results of operations.

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Revenue Recognition

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Revenue from Contract with Customer [Text Block]

Note 2 – Revenue Recognition

The Company recognizes revenue based on the following single principles-based, five-step model that is applied to all contracts with customers. These steps include (1) identify the contact(s) with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when each performance obligation is satisfied. 

Our revenue contracts with customers may include a promise or promises to deliver services such as broadband, video or voice services. Promised services are considered distinct as the customer can benefit from the services either on their own or together with other resources that are readily available to the customer and the Company’s promise to transfer service to the customer is separately identifiable from other promises in the contract. The Company accounts for services as separate performance obligations. Each service is considered a single performance obligation as it is providing a series of distinct services that are substantially the same and have the same pattern of transfer.

The transaction price is determined at contract inception and reflects the amount of consideration to which we expect to be entitled in exchange for transferring service to the customer. This amount is generally equal to the market price of the services promised in the contract and may include promotional or bundling discounts. The majority of our prices are based on tariffed rates filed with regulatory bodies or standard company price lists. The transaction price excludes amounts collected on behalf of third parties such as sales taxes and regulatory fees. Conversely, nonrefundable up-front fees, such as service activation and set-up fees, which are immaterial to our overall revenues, are included in the transaction price. In determining the transaction price, we consider our enforceable rights and obligations within the contract. We do not consider the possibility of a contract being cancelled, renewed or modified, which is consistent with ASC 606-10-32-4.

The transaction price is allocated to each performance obligation based on the standalone selling price of the service, net of the related discount, as applicable.

Revenue is recognized when performance obligations are satisfied by transferring service to the customer as described below.

Significant Judgements

The Company often provides multiple services to a customer. Provision of customer premise equipment (CPE) and additional service tiers may have a significant level of integration and interdependency with the subscription voice, video, Internet or connectivity services. Judgement is required to determine whether the provision of CPE, installation services and additional service tiers are considered distinct and accounted for separately, or not distinct and accounted for together with the subscription services.

Allocation of the transaction price to the distinct performance obligations in bundled service subscriptions requires judgement. The transaction price for a bundle of services is frequently less than the sum of standalone selling prices of each individual service. Bundled discounts are allocated proportionally to the selling price of each individual service within the bundle. Standalone selling prices for the Company’s services are directly observable.

Disaggregation of Revenue

The following table summarizes revenue from contracts with customers for the quarters ended March 31, 2022 and 2021:

	Three Months Ended March 31,
	2022		2021
Voice Service¹	$	1,611,058	$	1,785,080
Network Access¹		1,325,637		1,611,197
Video Service¹		3,141,352		3,027,547
Data Service¹		6,149,460		5,755,470
Directory²		161,092		178,119
Other Contracted Revenue³		671,607		624,494
Other4		305,501		301,088
Revenue from customers		13,365,707		13,282,995
Subsidy and other revenue outside scope of ASC 6065		3,109,065		3,195,128
Total revenue	$	16,474,772	$	16,478,123
¹ Month-to-Month contracts billed and consumed in the same month.
² Directory revenue is contracted annually, however, this revenue is recognized monthly over the contract period as the advertising is used.
³ This includes long-term contracts where the revenue is recognized monthly over the term of the contract.
4This includes CPE and other equipment sales.
5This includes governmental subsidies and lease revenue outside the scope of ASC 606.

For the three months ended March 31, 2022, approximately 79.28% of our total revenue was from month-to-month and other contracted revenue from customers. Approximately 18.87% of our total revenue was from revenue sources outside of the scope of ASC 606. The remaining 1.85% of total revenue was from other sources including CPE and equipment sales and installation.

For the three months ended March 31, 2021, approximately 78.78% of our total revenue was from month-to-month and other contracted revenue from customers. Approximately 19.39% of our total revenue was from revenue sources outside of the scope of ASC 606. The remaining 1.83% of total revenue was from other sources including CPE and equipment sales and installation.

A significant portion of our revenue is derived from customers who may generally cancel their subscriptions at any time without penalty. As such, the amount of revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from our existing customer base. Revenue from customers with a contractually specified term and non-cancelable service period will be recognized over the term of such contracts, which is generally 3 to 10 years for these types of contracts.

Nature of Services

Revenues are earned from our customers primarily through the connection to our advanced fiber networks, digital and commercial television (TV) programming, Internet services (high-speed broadband), and hosted and managed services. Revenues for these services are billed based on set rates for monthly service or based on the amount of time the customer is utilizing our facilities. The revenue for these services is recognized over time as the service is rendered.

Voice Service – We receive recurring revenue for basic local services that enable end-user customers to make and receive telephone calls within a defined local calling area for a flat monthly fee. In addition to subscribing to basic local telephone services, our customers may choose from multiple voice service plans with a variety of custom calling features such as call waiting, call forwarding, caller identification and voicemail. Our Voice over Internet Protocol (VoIP) digital phone service is also available as an alternative to the traditional telephone line. Customers may generally cancel their subscriptions at any time without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized over a one-month service period as the subscription services are delivered. Other optional services purchased by the customer are generally accounted for as a distinct performance obligation when purchased and revenue is recognized when the service is provided.

Network Access – We provide access services to other communication carriers for the use of our facilities to terminate or originate long distance calls on our network. Additionally, we bill monthly subscriber line charges (SLCs) to substantially all of our customers for access to the public switched network. These monthly SLCs are regulated and approved by the Federal Communications Commission (FCC). In addition, network access revenue is derived from several federally administered pooling arrangements designed to provide support and distribute funding to us.

Revenues earned from other communication carriers accessing our network are based on the utilization of our network by these carriers as measured by minutes of use on the network or special access to the network by the individual carriers on a monthly basis. Revenues are billed at tariffed access rates for both interstate and intrastate calls and are recognized into revenue monthly based on the period the access was provided.

The National Exchange Carriers Association (NECA) pools and redistributes the SLCs to various communication providers through the Connect America Fund (CAF). These revenues are earned and recognized into revenue on a monthly basis. Any adjustments to these amounts received by NECA are adjusted for in revenue upon receipt of the adjustment.

Video Service – We provide a variety of enhanced video services on a monthly recurring basis to our customers. We also receive monthly recurring revenue from our subscribers for providing commercial TV programming in competition with local cable TV (CATV), satellite dish TV and off-air TV service providers. We serve twenty-two communities with our IPTV services and five communities with our CATV services. Customers may generally cancel their subscriptions at any time without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized over a one-month service period as the subscription services are delivered. Other optional services purchased by the customer are generally accounted for as a distinct performance obligation when purchased and revenue is recognized when the service is provided.

Data Service – We provide high speed Internet to business and residential customers depending on the nature of the network facilities that are available, the level of service selected and the location. Our revenue is earned based on the offering of various flat packages based on the level of service, data speeds and features. We also provide e-mail and managed services, such as web hosting and design, on-line file back up and on-line file storage. Data customers may generally cancel their subscriptions at any time without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized over a one-month service period as the subscription services are delivered. Other optional services purchased by the customer are generally accounted for as a distinct performance obligation when purchased and revenue is recognized when the service is provided.

Directory – Our directory publishing revenue in our telephone directories recurs monthly and is recognized into revenue on a monthly basis. 

Other Contracted Revenue - Managed services and certain other data customers include advanced fiber-delivered communications and managed information technology solutions to mainly business customers, as well as high-capacity last-mile data connectivity services to wireless and wireline carriers. Services are primarily offered on a subscription basis with a contractually specified and non-cancelable service period. The non-cancelable contract terms for these customers generally range from 3 to 10 years. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized ratably over the contract period as the subscription services are delivered. These services are billed as monthly recurring charges to customers. 

Other – We also generate revenue from the sales, service and installation of CPE and other services. Sales and service of CPE are billed and recognized into revenue once the sale or service is complete or delivered. These sales and services are generally short-term in nature and are completed within one month. Other revenues are immaterial to our total revenues.

Subsidy and Other Revenue outside the Scope of ASC 606 – We receive subsidies from governmental entities to operate and expand our advanced fiber networks. In addition, we have revenue from leasing arrangements. Both of these revenue streams are outside of the scope of ASC 606. 

Interstate access rates are established by a nationwide pooling of companies known as NECA. The FCC established NECA in 1983 to develop and administer interstate access service rates, terms and conditions. Revenues are pooled and redistributed on the basis of a company's actual or average costs. There has been a change in the composition of interstate access charges in recent years, shifting more of the charges to the end user and reducing the amount of access charges paid by the interexchange carriers (IXC’s). We believe this trend will continue.

Intrastate access rates are filed with state regulatory commissions in Minnesota and Iowa.

The Company currently receives funding based on the Alternative Connect America Cost Model (A-CAM) as described below, with the exception of Scott-Rice Telephone Company (Scott-Rice), which receives funding from the Federal Universal Service Fund (FUSF). Scott-Rice’s settlements from the pools are based on nationwide average schedules, which includes the pooling and redistribution of revenues based on a company’s actual or average costs as described below. 

A-CAM

As described above, with the exception of Scott-Rice, the remainder of our companies receive funding from A-CAM.

Per the FCC Public Notice DA 19-115, the Company receives A-CAM support and has corresponding service deployment obligations under that program. The Company annually receives (i) $596,084 for its Iowa operations and (ii) $8,354,481 for its Minnesota operations. The Company will receive the revised A-CAM offer for a period of 10 years, which started in 2019. The Company uses the funding that it receives through the A-CAM program to meet its defined broadband build-out obligations, which the Company is currently completing.

Accounts Receivable, Contract Assets and Contract Liabilities

The following table provides information about our receivables, contracts assets and contract liabilities from revenue contracts with our customers:

	Quarter Ended March 31,
	2022		2021
Accounts receivable, net	$	1,790,323	$	1,479,643
Contract assets		701,963		522,826
Contract liabilities		849,479		901,130

Accounts Receivable

A receivable is recognized in the period the Company provides goods and services when the Company’s right to consideration is unconditional. Payment terms on invoiced amounts are generally 30-60 days.

Contract Assets

Contract assets include costs that are incremental to the acquisition of a contract. Incremental costs are those that result directly from obtaining a contract or costs that would not have been incurred if the contract had not been obtained, which primarily relates to sales commissions. We defer and amortize these costs over the expected customer life as the contract obligations are satisfied. We determined that the expected customer life is the expected period of benefit as the commission on the renewal contact is commensurate with the commission on the initial contract. During the quarters ended March 31, 2022 and 2021, the Company recognized expenses of $65,645 and $38,033, respectively, related to deferred contract acquisition costs. Short-term contract assets are included in current assets under prepaid expenses and other current assets. Long-term contract assets are included in investments and other assets under other assets.

Contract Liabilities

Contract liabilities include deferred revenues related to advanced payments for services and nonrefundable, upfront service activation and set-up fees, which under the new standard are generally deferred. In addition, contract liabilities include customer deposits that are not recognized into revenue, but are instead returned to the customer after a holding period. Short-term contract liabilities include deferred revenues for advanced payments for managed services and other long-term contracts. This includes the current portion of the deferred revenues that will be recognized monthly within one year. Short-term contract liabilities are included in current liabilities under other accrued liabilities. Long-term contract liabilities include deferred revenues for advanced payments for managed services and other long-term contracts. This includes the portion longer than one year and the corresponding deferred revenues are recognized into revenue on a monthly basis based on the term of the contract. Long-term contract liabilities are included in noncurrent liabilities under other accrued liabilities. During the quarters ended March 31, 2022 and 2021, the Company recognized revenues of $182,475 and $174,242, respectively, related to deferred revenues.

Performance Obligations

ASC 606, Revenue from Contracts with Customers, requires that the Company disclose the aggregate amount of the transaction price that is allocated to remaining performance obligations that are unsatisfied as of December 31, 2021. The guidance provides certain practical expedients that limit this requirement. The service revenue contracts of the Company meet the following practical expedients provided by ASC 606:

1.  The performance obligation is part of a contract that has an original expected duration of one year or less.

2.  Revenue is recognized from the satisfaction of the performance obligations in the amount billable to the customer in accordance with ASC 606-10-55-18.

The Company has elected these practical expedients. Performance obligations related to our service revenue contracts are generally satisfied over time. For services transferred over time, revenue is recognized based on amounts invoiced to the customer as the Company has concluded that the invoice amount directly corresponds with the value of services provided to the customer. Management considers this a faithful depiction of the transfer of control as services are substantially the same and have the same pattern of transfer over the life of the contract. As such, revenue related to unsatisfied performance obligations that will be billed in future periods has not been disclosed.

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Leases

3 Months Ended

Mar. 31, 2022

Disclosure Text Block [Abstract]

Lessee, Operating Leases [Text Block]

Note 3 – Leases

Under FASB’s ASU 2016-02, “Leases,” which, together with its related clarifying ASUs, provided revised guidance for lease accounting and related disclosure requirements and established a right-to-use (ROU) model that requires lessees to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The ASU also requires disclosures to allow financial statement users to better understand the amount, timing and uncertainty of cash flows arising from leases. These disclosures include qualitative requirements, providing additional information about the amounts recorded in the financial statements.     

The following table includes the ROU and operating lease liabilities as of March 31, 2022 and December 31, 2021.

Right of Use Asset	Balance March 31, 2022		Balance December 31, 2021
Operating Lease Right-Of-Use Assets	$	1,084,600	$	1,154,293

Operating Lease Liability	Balance March 31, 2022		Balance December 31, 2021
Short-Term Operating Lease Liability	$	287,862	$	283,167
Long-Term Operating Lease Liability		831,780		905,528
Total	$	1,119,642	$	1,188,695

Maturity analysis under these lease agreements are as follows:

Maturity Analysis	Balance March 31, 2022
2022 (remaining)	$	261,129
2023		348,708
2024		236,948
2025		120,881
2026		71,023
Thereafter		309,800
Total		1,348,489
Less Imputed Interest		(228,847)
Present Value of Operating Leases	$	1,119,642

We amortize our leases over the shorter of the term of the lease or the useful life of the asset. Lease expense for the three months ended March 31, 2022 and 2021 was $87,289 and $91,877, respectively.

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Fair Value Measurements

3 Months Ended

Mar. 31, 2022

Fair Value Disclosures [Abstract]

Fair Value Disclosures [Text Block]

Note 4 – Fair Value Measurements

We have adopted the rules prescribed under GAAP for our financial assets and liabilities. GAAP includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels:

Level 1:	Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2:	Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs that are derived principally from or corroborated by observable market data.
Level 3:	Inputs are derived from valuation techniques where one or more significant inputs or value drivers are unobservable.

We have used financial derivative instruments to manage our overall cash flow exposure to fluctuations in interest rates. We accounted for derivative instruments in accordance with GAAP that requires derivative instruments to be recorded on the balance sheet at fair value. Changes in fair value of derivative instruments must be recognized in earnings unless specific hedge accounting criteria are met, in which case, the gains and losses are included in other comprehensive income rather than in earnings.

We have entered into interest rate swap agreements (IRSAs) with our lender, CoBank, ACB (CoBank) to manage our cash flow exposure to fluctuations in interest rates. These instruments are designated as cash flow hedges and are effective at mitigating the risk of fluctuations on interest rates in the marketplace. Any gains or losses related to changes in the fair value of these derivatives are accounted for as a component of accumulated other comprehensive income (loss) for as long as the hedge remains effective.

The fair value of our IRSAs is discussed in Note 7 – “Interest Rate Swaps”. The fair value of our swap agreements was determined based on Level 2 inputs.

Other Financial Instruments

Other Investments - We conducted an evaluation of our investments in all of our investees in connection with the preparation of our audited financial statements at December 31, 2021. As of March 31, 2022, we believe the carrying value of our investments is not impaired.

Debt – We estimate the fair value of our long-term debt based on the discounted future cash flows we expect to pay using current rates of borrowing for similar types of debt. Fair value of the debt approximates carrying value.

Other Financial Instruments - Our financial instruments also include cash equivalents, trade accounts receivable and accounts payable where the current carrying amounts approximate fair market value.

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Goodwill and Intangibles

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets Disclosure [Text Block]

Note 5 – Goodwill and Intangibles

We account for goodwill and other intangible assets under GAAP. Under GAAP, goodwill and intangible assets with indefinite useful lives are not amortized, but are instead tested for impairment (i) on at least an annual basis and (ii) when changes in circumstances indicate that the fair value of goodwill may be below its carrying value. These circumstances include, but are not limited to (i) a significant adverse change in the business climate, (ii) unanticipated competition or (iii) an adverse action or assessment by a regulator. Determining impairment involves estimating the fair value of a reporting unit using a combination of (i) the income or DCF approach and (ii) the market approach that utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds its fair value, the amount of the impairment loss must be measured. The impairment loss is calculated by comparing the implied fair value of the reporting unit’s goodwill to its carrying amount. In calculating the implied fair value of the reporting unit’s goodwill, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied value of goodwill. We recognize impairment loss when the carrying amount of goodwill exceeds its implied fair value. Our goodwill totaled $49,903,029 at March 31, 2022 and December 31, 2021. 

In 2021 and 2020, we engaged an independent valuation firm to aid in the completion of our annual impairment testing for existing goodwill. For 2021 and 2020, the testing results indicated no impairment charge to goodwill as the determined fair value was sufficient to pass the impairment test.   

Our intangible assets subject to amortization consist of acquired customer relationships, regulatory rights and trade names. We amortize intangible assets with finite lives over their respective estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment. In addition, we periodically reassess the carrying value, useful lives and classifications of our identifiable intangible assets.

The components of our identified intangible assets are as follows:

		March 31, 2022					December 31, 2021
	Useful Lives		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Definite-Lived Intangible Assets
Customers Relationships	14-15 yrs		$	42,878,445	$	29,211,968	$	42,878,445	$	28,806,055
Regulatory Rights	15 yrs			4,000,000		3,799,965		4,000,000		3,733,299
Trade Name	3-5 yrs			310,106		226,949		310,106		211,444
Indefinitely-Lived Intangible Assets
Video Franchise				3,000,000		-		3,000,000		-
Spectrum				877,814		-		877,814		-
Total			$	51,066,365	$	33,238,882	$	51,066,365	$	32,750,798
Net Identified Intangible Assets					$	17,827,483			$	18,315,567

Amortization expense related to the definite-lived intangible assets was $488,074 and $830,942 for the three months ended March 31, 2022 and 2021. Amortization expense for the remaining nine months of 2022 and the five years subsequent to 2022 is estimated to be:

●	(April 1 – December 31)	$	1,464,292
●	2023	$	1,660,295
●	2024	$	1,623,654
●	2025	$	1,618,732
●	2026	$	1,613,809
●	2027	$	906,667

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Secured Credit Facility

3 Months Ended

Mar. 31, 2022

Secured Credit Facility [Abstract]

Secured Credit Facility [Text Block]

Note 6 – Secured Credit Facility

We have a master loan agreement with CoBank. Nuvera and its respective subsidiaries also have security agreements under which substantially all the assets of Nuvera and its respective subsidiaries have been pledged to CoBank as collateral. In addition, Nuvera and its respective subsidiaries have guaranteed all the obligations under the credit facility. These mortgage notes are required to be paid in quarterly installments covering principal and interest, beginning in September 2018 and maturing on July 31, 2025.  

On March 16, 2022, Nuvera and CoBank entered into (i) an Agreement Regarding Amendments to Loan Documents and (ii) an Amended and Restated Revolving Loan Promissory Note. The agreements amended our existing credit facility with CoBank. Under the Agreements, among other thing, (i) the Company’s revolving loan was increased from $10.0 million to $20.0 million, (ii) the maturity date of the revolving loan was set at June 30, 2022, and (iii) the Company operating subsidiaries’ agreed to extend their previous guarantees, security interests and mortgages to cover the increased amount of the revolving note. The Company is currently working on entering into a new credit facility with CoBank to replace this line of credit increase and its other existing credit facility in the second quarter of 2022. The new credit facility will be structured to meet Nuvera’s existing and expected future liquidity and capital resource needs.

We generally use variable-rate debt to finance our operations, capital expenditures and acquisitions. These variable-rate debt obligations expose us to variability in interest payments due to changes in interest rates. The terms of our credit facility with CoBank require that we enter into interest rate agreements designed to protect us against fluctuations in interest rates, in an aggregate principal amount and for a duration determined under the credit facility.

As described in Note 7 – “Interest Rate Swaps,” on August 1, 2018 we entered into an IRSA with CoBank covering 25 percent of our existing debt balance or $16,137,500 of our aggregate indebtedness to CoBank on August 1, 2018. As of March 31, 2022, our IRSA covered $11,815,250, with a weighted average interest rate of 5.27%.

As described in Note 7 – “Interest Rate Swaps,” on August 29, 2019 we entered into a second IRSA with CoBank covering an additional $42,000,000 of our aggregate indebtedness to CoBank on August 29, 2019. As of March 31, 2022, our IRSA covered $33,116,037, with a weighted average interest rate of 3.50%.

Our remaining debt of $20.8 million ($16.8 million available under the revolving credit facilities and $4.0 million currently outstanding) remains subject to variable interest rates at an effective weighted average interest rate of 2.70%, as of March 31, 2022.

Our loan agreements include restrictions on our ability to pay cash dividends to our stockholders. However, we are allowed to pay dividends (a) (i) in an amount up to $2,700,000 in any year if our “Total Leverage Ratio,” that is, the ratio of our “Indebtedness” to “EBITDA” (earnings before interest, taxes, depreciation and amortization – as defined in the loan documents), is greater than 2.00 to 1.00, and (ii) in any amount if our Total Leverage Ratio is less than 2.00 to 1.00, and (b) in either case, if we are not in default or potential default under the loan agreements. On December 31, 2020, our Total Leverage Ratio fell below 2.00, thus eliminating any restrictions on our ability to pay cash dividends to our stockholders. Our current Total Leverage Ratio as of March 31, 2022, is 1.86. 

Our credit facility requires us to comply with specified financial ratios and tests. These financial ratios include total leverage ratio, debt service coverage ratio, equity to total assets ratio and annual maximum aggregate capital expenditures. At March 31, 2022, we were in compliance with all the stipulated financial ratios in our loan agreements.

There are security and loan agreements underlying our current CoBank credit facility that contain restrictions on our distributions to stockholders and investment in, or loans, to others. Also, our credit facility contains restrictions that, among other things, limits or restricts our ability to enter into guarantees and contingent liabilities, incur additional debt, issue stock, transact asset sales, transfers or dispositions, and engage in mergers and acquisitions, without CoBank approval.  

On April 16, 2020, Nuvera received a $2,889,000 loan under the SBA’s PPP, which was established as part of the Coronavirus Aid, Relief Economic Security Act, or CARES Act. The PPP Loan was unsecured and was evidenced by a note in the favor of Citizens as the lender. On February 3, 2021, the Company was notified by Citizens, the lender on the Company’s PPP Loan that Citizens had received payment in full from the United States federal government for the amount of the Company’s PPP Loan and the Company’s PPP Loan had been fully forgiven. We recognized a gain on the forgiveness of $2,912,433, which included the original amount of the loan plus accrued interest in the quarter ended March 31, 2021.

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Interest Rate Swaps

3 Months Ended

Mar. 31, 2022

Disclosure Text Block Supplement [Abstract]

Financial Instruments Disclosure [Text Block]

Note 7 – Interest Rate Swaps

We assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely affect expected future cash flows and by evaluating hedging opportunities.

We generally use variable-rate debt to finance our operations, capital expenditures and acquisitions. These variable-rate debt obligations expose us to variability in interest payments due to changes in interest rates. The terms of our credit facility with CoBank required that we enter into interest rate agreements designed to protect us against fluctuations in interest rates, in an aggregate principal amount and for a duration determined under the credit facility.

To meet this objective, we have entered into an IRSA with CoBank covering 25 percent of our existing outstanding debt balance or $16,137,500 of our aggregate indebtedness to CoBank at August 1, 2018. The swap effectively locked in the interest rate on 25 percent of our variable-rate debt through July 2025. Under this IRSA, we have changed the variable-rate cash flow exposure on the debt obligations to fixed cash flows. Under the terms of the IRSA, we pay a fixed contractual interest rate and (i) make an additional payment if the London Interbank Offering Rate (LIBOR) variable rate payment is below a contractual rate or (ii) receive a payment if the LIBOR variable rate payment is above the contractual rate.

On August 29, 2019, we entered into a second IRSA with CoBank covering an additional $42,000,000 of our aggregate indebtedness to CoBank on August 29, 2019. The swap effectively locked in a significant portion of our variable-rate debt through July 2025. Under this IRSA, we have changed the variable rate cash flow exposure on the debt obligations to fixed cash flows. Under the terms of the IRSA, we pay a fixed contractual interest rate and (i) make an additional payment if the LIBOR variable rate payment is below a contractual rate or (ii) receive a payment if the LIBOR variable rate payment is above the contractual rate.

Each month, we make interest payments to CoBank under its loan agreements based on the current applicable LIBOR Rate plus the contractual LIBOR margin then in effect with respect to the loan, without reflecting our IRSAs. At the end of each calendar month, CoBank adjusts our aggregate interest payments based on the difference, if any, between the amounts paid by us during the month and the current effective interest rate. Net interest payments are reported in our consolidated income statement as interest expense.

Our IRSAs under our credit facilities both qualify as cash flow hedges for accounting purposes under GAAP. We reflect the effect of these hedging transactions in the financial statements. The unrealized gain/loss is reported in other comprehensive income. If we terminate our IRSAs, the cumulative change in fair value at the date of termination would be reclassified from accumulated other comprehensive income, which is classified in stockholders’ equity, into earnings on the consolidated statements of income.

The fair value of the Company’s IRSAs were determined based on valuations received from CoBank and were based on the present value of expected future cash flows using discount rates appropriate with the terms of the IRSAs. The fair value indicates an estimated amount we would be required to pay if the contracts were canceled or transferred to other parties. On March 31, 2022, the fair value of these swaps was $916,460, which has been recorded net of deferred tax of $261,558, resulting in the $654,902 in accumulated other comprehensive income. On March 31, 2021, the fair value liability of these swaps was $1,776,057, which has been recorded net of deferred tax benefit of $506,887, resulting in the $1,269,170 in accumulated other comprehensive loss. 

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Other Investments

3 Months Ended

Mar. 31, 2022

Other Investments [Abstract]

Other Investments [Text Block]

Note 8 – Other Investments  

We are a co-investor with other communication companies in several partnerships and limited liability companies. These joint ventures make it possible to offer services to customers, including digital video services and fiber transport services that we would have difficulty offering on our own. These joint ventures also make it possible to invest in new technologies with a lower level of financial risk. We recognize income and losses from these investments on the equity method of accounting. For a listing of our investments, see Note 11 – “Segment Information.” 

The FASB requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. As of March 31, 2022, we had not recorded any gains or losses on our investments.    

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Guarantees

3 Months Ended

Mar. 31, 2022

Guarantees [Abstract]

Guarantees [Text Block]

Note 9 – Guarantees

Nuvera has guaranteed a portion of a ten-year loan owed by FiberComm, LC, set to mature on April 30, 2026. As of March 31, 2022, we have recorded a liability of $209,367 in connection with the guarantee on this loan. This guarantee may be exercised if FiberComm, LC does not make its required payments on this note.

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Incentive and Retirement Plans

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

Retirement Benefits [Text Block]

Note 10 – Incentive and Retirement Plans

We have an Employee Incentive Plan for employees other than executive officers and a Management Incentive Plan for executive officers. Both plans were implemented in 2006. The Plan permits the issuance of up to 200,000 shares of our Common Stock in stock awards. Each qualified employee of the Company may elect to receive up to 50% of their incentive compensation in Company Common Stock in lieu of cash. Each of the Company’s Executive Officers are required to receive 50% of their incentive compensation earned in Company Common Stock in lieu of cash. As of March 31, 2022, 155,399 shares remain available to be issued under the Plan.

Our BOD adopted the 2017 Omnibus Stock Plan effective May 25, 2017. The shareholders of the Company approved the Plan at the May 25, 2017 Annual Meeting of Shareholders. The Plan enables the Company to grant stock incentive awards to current and new employees, including officers, and to Board members and service providers. The Plan permits stock incentive awards in the form of options (incentive and non-qualified), stock appreciation rights, restricted stock, restricted stock units (RSUs), performance stock, performance units, and other awards in stock or cash. The Plan permits the issuance of up to 625,000 shares of our Common Stock in any of the above stock awards. As of March 31, 2022, 557,563 shares remain available to be issued under the Plan.

Starting in 2017 and each subsequent year following 2017, our BOD and Compensation Committee granted awards to the Company’s executive officers under the Plan. We recognize share-based compensation expense for these RSUs over the vesting period of the RSUs which is determined by our BOD. Forfeitures of RSU’s are accounted for as they occur. Each executive officer received or may receive time-based RSUs and performance-based RSUs. The time-based RSUs are computed as a percentage of the executive officer’s base salary based on the closing price of Company common stock on a date set by the BOD, and will vest over a three-year period based on the executive officer being employed by the Company on the vesting date. The performance-based RSUs are also computed as a percentage of the executive officer’s base salary based on the closing price of Company common stock on a date set by the BOD, and will vest over a three-year period based on the Company attaining an average Return on Invested Capital (ROIC) over that three-year period. The ROIC target is set by the BOD. Executive officers may earn more or less performance-based RSU’s based on if the actual ROIC over the time period is more or less than target. Upon vesting of either time-based or performance-based RSUs, the executive officers will be able to receive Common Stock in the Company in exchange for the RSUs.

RSUs currently issued and outstanding are as follows:

	Time-Based RSU's	Targeted Performance-Based RSU's		Closing Stock Price	Vesting Date
Balance at December 31, 2020	7,638	9,611
Issued	3,364	5,247	$	21.90	12/31/2023
Exercised	-	(1,588)	$	23.67	12/31/2020
Exercised	(1,562)	-	$	21.75	12/31/2021
Balance at December 31, 2021	9,440	13,270
Forfeited	-	(2,637)
Balance at March 31, 2022	9,440	10,633

In 2022, after considerable study, discussion and interaction with our consultants, the Compensation Committee decided to replace RSUs with non-qualified stock options (Options). The Compensation Committee believes that grants of Options more directly align management long-term equity compensation with increased shareholder value creation at a time when the Company is engaged in significant investment and transformation as part of its long-term strategy. The Compensation Committee also determined to extend the grant of Options to Named Executive Officers, senior employee directors and other employee directors as key members of the Company leadership team and contributors of overall success.

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Segment Information

3 Months Ended

Mar. 31, 2022

Segment Reporting [Abstract]

Segment Reporting Disclosure [Text Block]

Note 11 – Segment Information  

We operate in the Communications Segment and have no other significant business segments. The Communications Segment consists of voice, data and video communication services delivered to the customer over our advanced fiber communications network. No single customer accounted for a material portion of our consolidated revenues.

The Communications Segment operates the following communications companies and has investment ownership interests as follows:

Communications Segment

● Communications Companies:

▪ Nuvera Communications, Inc., the parent company;

▪ Hutchinson Telephone Company (HTC), a wholly-owned subsidiary of Nuvera;

▪ Peoples Telephone Company, a wholly-owned subsidiary of Nuvera;

▪ Scott-Rice Telephone Co., a wholly-owned subsidiary of Nuvera;

▪ Sleepy Eye Telephone Company, a wholly-owned subsidiary of Nuvera;

▪ Western Telephone Company, a wholly-owned subsidiary of Nuvera; and

▪ Hutchinson Telecommunications, Inc., a wholly-owned subsidiary of HTC, located in Litchfield and Glencoe, Minnesota;

● Our investments and interests in the following entities include some management responsibilities:

▪ FiberComm, LC – 20.00% subsidiary equity ownership interest. FiberComm, LC is located in Sioux City, Iowa;

▪ Broadband Visions, LLC (BBV) – 24.30% subsidiary equity ownership interest. BBV provides video headend and Internet services;

▪ Independent Emergency Services, LLC (IES) – 14.29% subsidiary equity ownership interest. IES is a provider of E-911 services to the State of Minnesota as well as a number of counties located in Minnesota; and

▪ Fiber Minnesota, LLC (FM) – 7.54% subsidiary equity ownership interest. FM is a Minnesota state-wide network that provides connectivity for regional businesses.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2022

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies Disclosure [Text Block]

Note 12 – Commitments and Contingencies

We are involved in certain contractual disputes in the ordinary course of business. We do not believe the ultimate resolution of any of these existing matters will have a material adverse effect on our financial position, results of operations or cash flows. We did not experience any changes to material contractual obligations in the first three months of 2022. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for the discussion relating to commitments and contingencies.

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Broadband Grants

3 Months Ended

Mar. 31, 2022

Broadband Grants [Abstract]

Broadband Grants [Text Block]

Note 13 – Broadband Grants

In January 2020, the Company was awarded a broadband grant from the Minnesota Department of Employment and Economic Development (DEED). The grant will provide up to 36.5% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved or underserved communities and businesses in the Company’s service area. The Company is eligible to receive $730,000 of approximately $2,000,000 total project costs. The Company will provide the remaining 63.5% matching funds. Construction and expenditures for these projects began in the spring of 2020 and were completed under budget in the third quarter of 2021. We have received $724,465 for these projects as of March 31, 2022.

On January 29, 2021, the Company was awarded five broadband grants from the DEED. The grants will provide up to 35.4% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved or underserved communities and businesses in the Company’s service area. The Company is eligible to receive $1,918,037 of the approximately $5,419,617 total project costs. The Company will provide the remaining 64.6% matching funds. Construction and expenditures for these projects began in the spring of 2021. We have not received any funds for these projects as of March 31, 2022.     

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Subsequent Events

3 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

Subsequent Events [Text Block]

Note 14 – Subsequent Events

In its definitive proxy statement dated April 4, 2022 for its 2022 annual meeting of shareholders to be held on May 26, 2022, filed with the SEC on April 6, 2022, Nuvera disclosed that on March 31, 2022, the Company’s BOD and Compensation Committee authorized the issuance of Options as Awards to Named Executive Officers, senior employee directors and other employee directors under the 2017 Omnibus Stock Plan, but had not yet finalized the Black-Scholes analysis determining the value of the Options to be granted and therefore the number of Options to granted.

On April 11, 2022, the BOD and Compensation Committee completed its analysis. The following language supplements and updates the proxy statement disclosure:

The number of Options awarded was computed as a percentage of the employee’s base salary using a Black-Scholes formula using an exercise price equal to the closing price of Company common stock of $21.20 on April 11, 2022. These Options will vest one-third each on April 11, 2023, 2024 and 2025.

	Options	Closing Stock Price		Vesting Date
Balance at December 31, 2021	-
Issued	40,879	$	21.20	4/11/2023
Issued	40,900	$	21.20	4/11/2024
Issued	40,890	$	21.20	4/11/2025
Balance at March 31, 2022	122,669

We have evaluated and disclosed subsequent events through the filing date of this Quarterly Report on Form 10-Q.

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Accounting Policies, by Policy (Policies)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

Revenue [Policy Text Block]

Revenue Recognition

See Note 2 – “Revenue Recognition” for a discussion of our revenue recognition policies.

Cost of Goods and Service [Policy Text Block]

Cost of Services (excluding depreciation and amortization)

Cost of services includes all costs related to delivery of communication services and products. These operating costs include all costs of performing services and providing related products including engineering, network monitoring and transportation costs.

Selling, General and Administrative Expenses, Policy [Policy Text Block]

Selling, General and Administrative Expenses

Selling, general and administrative expenses include direct and indirect selling expenses, customer service, billing and collections, advertising and all other general and administrative costs associated our operations.

Depreciation, Depletion, and Amortization [Policy Text Block]

Depreciation and Amortization Expense

We use the group life method (mass asset accounting) to depreciate the assets of our communications companies. Communications plant acquired in a given year is grouped into similar categories and depreciated over the remaining estimated useful life of the group. When an asset is retired, both the asset and the accumulated depreciation associated with that asset are removed from the books. Due to rapid changes in technology, selecting the estimated economic life of communications plant and equipment requires a significant amount of judgment. We periodically review data on expected utilization of new equipment, asset retirement activity and net salvage values to determine adjustments to our depreciation rates. Depreciation expense was $3,010,200 and $2,240,630 for the three months ended March 31, 2022 and 2021. The increase in depreciation expense in the first quarter of 2022 was primarily due to accelerated depreciation on our old copper cable networks as we transition to a new advanced fiber-to-the-premise (FTTP) network. We amortize our definite-lived intangible assets over their estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment.

Income Tax, Policy [Policy Text Block]

Income Taxes

The provision for income taxes consists of an amount for taxes currently payable and a provision for tax consequences deferred to future periods. Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Significant components of our deferred taxes arise from differences (i) in the basis of property, plant and equipment due to the use of accelerated depreciation methods for tax purposes, as well as (ii) in partnership investments and intangible assets due to the difference between book and tax basis. Our effective income tax rate is normally higher than the United States tax rate due to state income taxes and permanent differences, however, our effective income tax rate was lower than the United States tax rate in the quarter ended March 31, 2021 due to the Small Business Administration’s (SBA) Payroll Protection Program (PPP) loan forgiveness not being taxable at the federal level at that time. 

We account for income taxes in accordance with GAAP, which requires an asset and liability approach to financial accounting and reporting for income taxes. As required by GAAP, we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority.

As of March 31, 2022 and December 31, 2021 we had $38,673 of unrecognized tax benefits that if recognized would affect the tax rate. We do not expect the total amount of unrecognized tax benefits to materially change over the next 12 months.      

We are primarily subject to United States, Minnesota, Iowa, Nebraska, North Dakota and Wisconsin income taxes. Tax years subsequent to 2017 remain open to examination by federal and state tax authorities. We are currently undergoing an examination by the State of Minnesota. We do not expect the results of the examination to have a material effect on our ongoing financial statements. Our policy is to recognize interest and penalties related to income tax matters as income tax expense. As of March 31, 2022 and December 31, 2021 we had $4,102 of accrued interest that related to income tax matters.

Earnings Per Share, Policy [Policy Text Block]

Earnings and Dividends Per Share

Basic and diluted net income per share are calculated as follows:

	Three Months Ended   March 31, 2022				Three Months Ended   March 31, 2021
	Basic		Diluted		Basic		Diluted
Net Income	$	2,401,606	$	2,401,606	$	5,180,711	$	5,180,711
Weighted-average common shares outstanding		5,111,622		5,124,540		5,202,832		5,210,554
Net income per share	$	0.47	$	0.47	$	1.00	$	0.99

The weighted-average shares outstanding, basic and diluted, are calculated as follows:

	Three Months Ended   March 31, 2022				Three Months Ended   March 31, 2021
	Basic		Diluted		Basic		Diluted
Weighted-average common shares outstanding		5,111,622		5,111,622		5,202,832		5,202,832
Unvested RSU's		-		12,918		-		7,722
Weighted-average common shares outstanding		5,111,622		5,124,540		5,202,832		5,210,554

Nuvera’s Board of Directors (BOD) reviews quarterly dividend declarations based on our anticipated earnings, capital requirements and our operating and financial conditions.  

New Accounting Pronouncements, Policy [Policy Text Block]

Recent Accounting Developments

Effective January 1, 2021 we adopted Accounting Standards Update (ASU) 2020-06, “Accounting for Convertible Instruments in an Entity’s Own Equity.” ASU 2020-06 simplifies guidance on accounting for convertible instruments and contracts in an entity’s own equity including calculating diluted earnings per share. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures.

Effective January 1, 2021, we adopted ASU 2019-12, “Income Taxes,” ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions and adding certain requirements to the general framework in Accounting Standards Codification (ASC) 740, “Income Taxes.” The new guidance will be applied prospectively. The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures.

In November 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-10, “Disclosures by Business Entities about Government Assistance.” ASU 2021-10 requires disclosure by business entities of the types of government assistance received, the method of accounting for such assistance and the effects of the assistance on its financial statements. The new guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, with early adoption permitted. We are currently evaluating the impact this update will have on our related disclosures.

In March 2020, the FASB issued (ASU) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In January 2021, the FASB issued ASU No. 2101-01, “Reference Rate Reform (Topic 848): Scope.” ASU 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU 2020-04 and ASU 2021-01 are both elective and are effective upon issuance through December 31, 2022. We are currently evaluating the impact these updates will have on our consolidated financial statements and related disclosures.   

In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosures relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. The Company is required to adopt ASU 2016-13 for fiscal periods beginning after December 15, 2022, including interim periods within that fiscal year. Early adoption as of December 15, 2018 is permitted. We continue to evaluate the impact the adoption of ASU 2016-13 will have on our financial statements, which we expect will not have a significant impact on our consolidated financial statements.

We have reviewed all other significant newly issued accounting pronouncements and determined that they are either not applicable to our business or that no material effect is expected on our financial position and results of operations.

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Basis of Presentation and Consolidation (Tables)

3 Months Ended

Mar. 31, 2022

Accounting Policies [Abstract]

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

	Three Months Ended   March 31, 2022				Three Months Ended   March 31, 2021
	Basic		Diluted		Basic		Diluted
Net Income	$	2,401,606	$	2,401,606	$	5,180,711	$	5,180,711
Weighted-average common shares outstanding		5,111,622		5,124,540		5,202,832		5,210,554
Net income per share	$	0.47	$	0.47	$	1.00	$	0.99

Schedule of Weighted Average Number of Shares [Table Text Block]

	Three Months Ended   March 31, 2022				Three Months Ended   March 31, 2021
	Basic		Diluted		Basic		Diluted
Weighted-average common shares outstanding		5,111,622		5,111,622		5,202,832		5,202,832
Unvested RSU's		-		12,918		-		7,722
Weighted-average common shares outstanding		5,111,622		5,124,540		5,202,832		5,210,554

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Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2022

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue [Table Text Block]

	Three Months Ended March 31,
	2022		2021
Voice Service¹	$	1,611,058	$	1,785,080
Network Access¹		1,325,637		1,611,197
Video Service¹		3,141,352		3,027,547
Data Service¹		6,149,460		5,755,470
Directory²		161,092		178,119
Other Contracted Revenue³		671,607		624,494
Other4		305,501		301,088
Revenue from customers		13,365,707		13,282,995
Subsidy and other revenue outside scope of ASC 6065		3,109,065		3,195,128
Total revenue	$	16,474,772	$	16,478,123
¹ Month-to-Month contracts billed and consumed in the same month.
² Directory revenue is contracted annually, however, this revenue is recognized monthly over the contract period as the advertising is used.
³ This includes long-term contracts where the revenue is recognized monthly over the term of the contract.
4This includes CPE and other equipment sales.
5This includes governmental subsidies and lease revenue outside the scope of ASC 606.

Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block]

	Quarter Ended March 31,
	2022		2021
Accounts receivable, net	$	1,790,323	$	1,479,643
Contract assets		701,963		522,826
Contract liabilities		849,479		901,130

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Leases (Tables)

3 Months Ended

Mar. 31, 2022

Disclosure Text Block [Abstract]

ROU And Operating Lease Liabilities [Table Text Block]

Right of Use Asset	Balance March 31, 2022		Balance December 31, 2021
Operating Lease Right-Of-Use Assets	$	1,084,600	$	1,154,293

Operating Lease Liability	Balance March 31, 2022		Balance December 31, 2021
Short-Term Operating Lease Liability	$	287,862	$	283,167
Long-Term Operating Lease Liability		831,780		905,528
Total	$	1,119,642	$	1,188,695

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

Maturity Analysis	Balance March 31, 2022
2022 (remaining)	$	261,129
2023		348,708
2024		236,948
2025		120,881
2026		71,023
Thereafter		309,800
Total		1,348,489
Less Imputed Interest		(228,847)
Present Value of Operating Leases	$	1,119,642

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Goodwill and Intangibles (Tables)

3 Months Ended

Mar. 31, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

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

		March 31, 2022					December 31, 2021
	Useful Lives		Gross Carrying Amount		Accumulated Amortization		Gross Carrying Amount		Accumulated Amortization
Definite-Lived Intangible Assets
Customers Relationships	14-15 yrs		$	42,878,445	$	29,211,968	$	42,878,445	$	28,806,055
Regulatory Rights	15 yrs			4,000,000		3,799,965		4,000,000		3,733,299
Trade Name	3-5 yrs			310,106		226,949		310,106		211,444
Indefinitely-Lived Intangible Assets
Video Franchise				3,000,000		-		3,000,000		-
Spectrum				877,814		-		877,814		-
Total			$	51,066,365	$	33,238,882	$	51,066,365	$	32,750,798
Net Identified Intangible Assets					$	17,827,483			$	18,315,567

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

●	(April 1 – December 31)	$	1,464,292
●	2023	$	1,660,295
●	2024	$	1,623,654
●	2025	$	1,618,732
●	2026	$	1,613,809
●	2027	$	906,667

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Incentive and Retirement Plans (Tables)

3 Months Ended

Mar. 31, 2022

Retirement Benefits [Abstract]

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

	Time-Based RSU's	Targeted Performance-Based RSU's		Closing Stock Price	Vesting Date
Balance at December 31, 2020	7,638	9,611
Issued	3,364	5,247	$	21.90	12/31/2023
Exercised	-	(1,588)	$	23.67	12/31/2020
Exercised	(1,562)	-	$	21.75	12/31/2021
Balance at December 31, 2021	9,440	13,270
Forfeited	-	(2,637)
Balance at March 31, 2022	9,440	10,633

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Subsequent Events (Tables)

3 Months Ended

Mar. 31, 2022

Subsequent Events [Abstract]

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

	Options	Closing Stock Price		Vesting Date
Balance at December 31, 2021	-
Issued	40,879	$	21.20	4/11/2023
Issued	40,900	$	21.20	4/11/2024
Issued	40,890	$	21.20	4/11/2025
Balance at March 31, 2022	122,669

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Basis of Presentation and Consolidation (Details)	3 Months Ended
	Mar. 31, 2022 USD ($)	Mar. 31, 2021 USD ($)	Dec. 31, 2021 USD ($)
Accounting Policies [Abstract]
Number of Reportable Segments	1
Depreciation	$ 3,010,200	$ 2,240,630
Unrecognized Tax Benefits	38,673		$ 38,673
Income Tax Examination, Interest Accrued	$ 4,102		$ 4,102

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Basis of Presentation and Consolidation (Details) - Basic and diluted net income per share - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Basic and diluted net income per share [Abstract]
Net Income, Basic	$ 2,401,606	$ 5,180,711
Net Income, Diluted	$ 2,401,606	$ 5,180,711
Weighted-average common shares outstanding, Basic	5,111,622	5,202,832
Weighted-average common shares outstanding, Diluted	5,124,540	5,210,554
Net income per share, Basic	$ 0.47	$ 1
Net income per share, Diluted	$ 0.47	$ 0.99

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Basis of Presentation and Consolidation (Details) - The weighted-average shares outstanding, basic and diluted, are calculated as follows: - shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
The weighted-average shares outstanding, basic and diluted, are calculated as follows: [Abstract]
Weighted-average common shares outstanding, Basic	5,111,622	5,202,832
Unvested RSU's	12,918	7,722
Weighted-average common shares outstanding, Diluted	5,124,540	5,210,554

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Revenue Recognition (Details) - Disaggregation of Revenue	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Minimum [Member]
Revenue Recognition (Details) - Disaggregation of Revenue [Line Items]
Contract Term	3 years
Maximum [Member]
Revenue Recognition (Details) - Disaggregation of Revenue [Line Items]
Contract Term	10 years
Month To Month And Other Contracted Revenue [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member]
Revenue Recognition (Details) - Disaggregation of Revenue [Line Items]
Concentration Risk, Percentage	79.28%	78.78%
Outside Of The Scope Of ASC 606 [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member]
Revenue Recognition (Details) - Disaggregation of Revenue [Line Items]
Concentration Risk, Percentage	18.87%	19.39%
CPE and Equipment Sales and Installation [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member]
Revenue Recognition (Details) - Disaggregation of Revenue [Line Items]
Concentration Risk, Percentage	1.85%	1.83%

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Revenue Recognition (Details) - Nature of Services	3 Months Ended
	Mar. 31, 2022
Other Contracted Revenue [Member] | Minimum [Member]
Revenue Recognition (Details) - Nature of Services [Line Items]
Revenue Recognition Period	3 years
Other Contracted Revenue [Member] | Maximum [Member]
Revenue Recognition (Details) - Nature of Services [Line Items]
Revenue Recognition Period	10 years
Product and Service, Other [Member]
Revenue Recognition (Details) - Nature of Services [Line Items]
Revenue Recognition Period	1 month

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Revenue Recognition (Details) - A-CAM	3 Months Ended
	Mar. 31, 2022 USD ($)
Lowa Operations [Member]
Revenue Recognition (Details) - A-CAM [Line Items]
Construction Contractor, Receivable, Excluding Contract Retainage	$ 596,084
Minnesota Operations [Member]
Revenue Recognition (Details) - A-CAM [Line Items]
Construction Contractor, Receivable, Excluding Contract Retainage	$ 8,354,481
ACAM [Member]
Revenue Recognition (Details) - A-CAM [Line Items]
Contract Receivable Period	10 years

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Revenue Recognition (Details) - Accounts Receivable	3 Months Ended
	Mar. 31, 2022
Minimum [Member]
Revenue Recognition (Details) - Accounts Receivable [Line Items]
Payment Term	30 days
Maximum [Member]
Revenue Recognition (Details) - Accounts Receivable [Line Items]
Payment Term	60 days

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Revenue Recognition (Details) - Contract Assets - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Revenue from Contract with Customer [Abstract]
Professional and Contract Services Expense	$ 65,645	$ 38,033

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Revenue Recognition (Details) - Contract Liabilities - USD ($)	Mar. 31, 2022	Mar. 31, 2021
Revenue from Contract with Customer [Abstract]
Deferred Revenue, Noncurrent	$ 182,475	$ 174,242

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Revenue Recognition (Details) - Revenue from contracts with customers - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disaggregation of Revenue [Line Items]
Revenue from customers	$ 13,365,707	$ 13,282,995
Subsidy and other revenue outside scope of ASC 6065	3,109,065	3,195,128
Total revenue	16,474,772	16,478,123
Voice Services [Member]
Disaggregation of Revenue [Line Items]
Revenue from customers	1,611,058	1,785,080
Total revenue	1,468,178	1,551,278
Network Access [Member]
Disaggregation of Revenue [Line Items]
Revenue from customers	1,325,637	1,611,197
Total revenue	1,291,310	1,582,440
Video Service [Member]
Disaggregation of Revenue [Line Items]
Revenue from customers	3,141,352	3,027,547
Total revenue	3,141,492	3,028,877
Data Service [Member]
Disaggregation of Revenue [Line Items]
Revenue from customers	6,149,460	5,755,470
Total revenue	6,716,852	6,267,971
Directory [Member]
Disaggregation of Revenue [Line Items]
Revenue from customers	161,092	178,119
Other Contracted Revenue [Member]
Disaggregation of Revenue [Line Items]
Revenue from customers	671,607	624,494
Product and Service, Other [Member]
Disaggregation of Revenue [Line Items]
Revenue from customers	$ 305,501	$ 301,088

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Revenue Recognition (Details) - Receivables, contracts assets and contract liabilities from revenue contracts with our customers - USD ($)	Mar. 31, 2022	Mar. 31, 2021
Receivables, contracts assets and contract liabilities from revenue contracts with our customers [Abstract]
Accounts receivable, net	$ 1,790,323	$ 1,479,643
Contract assets	701,963	522,826
Contract liabilities	$ 849,479	$ 901,130

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Leases (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Disclosure Text Block [Abstract]
Operating Lease, Expense	$ 87,289	$ 91,877

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Leases (Details) - ROU and operating lease liabilities - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Other Noncurrent Assets [Member]
Leases (Details) - ROU and operating lease liabilities [Line Items]
Operating Lease Right-Of-Use Assets	$ 1,084,600	$ 1,154,293
Other Current Liabilities [Member]
Leases (Details) - ROU and operating lease liabilities [Line Items]
Short-Term Operating Lease Liability	287,862	283,167
Other Noncurrent Liabilities [Member]
Leases (Details) - ROU and operating lease liabilities [Line Items]
Long-Term Operating Lease Liability	831,780	905,528
Other Liabilities [Member]
Leases (Details) - ROU and operating lease liabilities [Line Items]
Total	$ 1,119,642	$ 1,188,695

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Leases (Details) - Maturity analysis under these lease agreements - USD ($)	Mar. 31, 2022	Dec. 31, 2021
Leases (Details) - Maturity analysis under these lease agreements [Line Items]
2022 (remaining)	$ 261,129
2023	348,708
2024	236,948
2025	120,881
2026	71,023
Thereafter	309,800
Total	1,348,489
Less Imputed Interest	(228,847)
Other Liabilities [Member]
Leases (Details) - Maturity analysis under these lease agreements [Line Items]
Present Value of Operating Leases	$ 1,119,642	$ 1,188,695

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Goodwill and Intangibles (Details) - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Dec. 31, 2021
Goodwill and Intangible Assets Disclosure [Abstract]
Goodwill	$ 49,903,029		$ 49,903,029
Amortization of Intangible Assets	$ 488,074	$ 830,942

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Goodwill and Intangibles (Details) - Components of our identified intangible assets - USD ($)	3 Months Ended
	Mar. 31, 2022	Dec. 31, 2021
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 51,066,365	$ 51,066,365
Accumulated Amortization	33,238,882	32,750,798
Net Identified Intangible Assets	17,827,483	18,315,567
Customer Relationships [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	42,878,445	42,878,445
Accumulated Amortization	$ 29,211,968	28,806,055
Customer Relationships [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Lives	14 years
Customer Relationships [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Lives	15 years
Regulatory Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Lives	15 years
Gross Carrying Amount	$ 4,000,000	4,000,000
Accumulated Amortization	3,799,965	3,733,299
Trade Names [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	310,106	310,106
Accumulated Amortization	$ 226,949	211,444
Trade Names [Member] | Minimum [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Lives	3 years
Trade Names [Member] | Maximum [Member]
Finite-Lived Intangible Assets [Line Items]
Useful Lives	5 years
Franchise Rights [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	$ 3,000,000	3,000,000
Accumulated Amortization
Spectrum [Member]
Finite-Lived Intangible Assets [Line Items]
Gross Carrying Amount	877,814	877,814
Accumulated Amortization

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Goodwill and Intangibles (Details) - Summary of Future Amortization Expense	Mar. 31, 2022 USD ($)
Summary of Future Amortization Expense [Abstract]
● (April 1 – December 31)	$ 1,464,292
● 2023	1,660,295
● 2024	1,623,654
● 2025	1,618,732
● 2026	1,613,809
● 2027	$ 906,667

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Secured Credit Facility (Details) - USD ($)		3 Months Ended
	Apr. 16, 2020	Mar. 31, 2022	Mar. 31, 2021	Mar. 16, 2022	Aug. 29, 2019	Aug. 01, 2018
Secured Credit Facility (Details) [Line Items]
Gain on PPP Loan Forgiveness			$ 2,912,433
Small Business Administrations Payroll Protection Protection Program [Member]
Secured Credit Facility (Details) [Line Items]
Proceeds from Issuance of Long-Term Debt	$ 2,889,000
Gain on PPP Loan Forgiveness			$ 2,912,433
Interest Rate Swap [Member] | First IRSA With Co Bank [Member]
Secured Credit Facility (Details) [Line Items]
Derivative, Notional Amount		$ 11,815,250				$ 16,137,500
Debt, Weighted Average Interest Rate		5.27%
Interest Rate Swap [Member] | Second IRSA CoBank [Member]
Secured Credit Facility (Details) [Line Items]
Derivative, Notional Amount		$ 33,116,037			$ 42,000,000
Debt, Weighted Average Interest Rate		3.50%
Line of Credit [Member]
Secured Credit Facility (Details) [Line Items]
Long-Term Debt, Gross		$ 20,800,000
Long-Term Debt		$ 4,000,000
Debt Instrument, Interest Rate, Effective Percentage		2.70%
Revolving Credit Facility [Member]
Secured Credit Facility (Details) [Line Items]
Long-Term Line of Credit		$ 16,800,000
Secured Debt [Member]
Secured Credit Facility (Details) [Line Items]
Debt Instrument, Covenant Description		Our loan agreements include restrictions on our ability to pay cash dividends to our stockholders. However, we are allowed to pay dividends (a) (i) in an amount up to $2,700,000 in any year if our “Total Leverage Ratio,” that is, the ratio of our “Indebtedness” to “EBITDA” (earnings before interest, taxes, depreciation and amortization – as defined in the loan documents), is greater than 2.00 to 1.00, and (ii) in any amount if our Total Leverage Ratio is less than 2.00 to 1.00, and (b) in either case, if we are not in default or potential default under the loan agreements
Debt Instrument Threshold Amount Dividends		$ 2,700,000
Ratio of Indebtedness to Net Capital		1.86
Revolving Credit Facility [Member]
Secured Credit Facility (Details) [Line Items]
Line of Credit Facility, Maximum Borrowing Capacity		$ 20,000,000		$ 10,000,000

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Interest Rate Swaps (Details) - Interest Rate Swap [Member] - USD ($)	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021	Aug. 29, 2019	Aug. 01, 2018
Interest Rate Swaps (Details) [Line Items]
Derivative Liability, Noncurrent	$ 916,460	$ 1,776,057
Deferred Income Tax Expense (Benefit)	261,558	506,887
Accumulated Other Comprehensive Income (Loss), Net of Tax	$ 654,902	$ 1,269,170
First IRSA With Co Bank [Member]
Interest Rate Swaps (Details) [Line Items]
Derivative, Notional Amount				$ 16,137,500
Derivative, Variable Interest Rate				25.00%
Second IRSA CoBank [Member]
Interest Rate Swaps (Details) [Line Items]
Derivative, Notional Amount			$ 42,000,000

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Guarantees (Details)	Mar. 31, 2022 USD ($)
Guarantees [Abstract]
Guaranty Liabilities	$ 209,367

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Incentive and Retirement Plans (Details)	3 Months Ended
	Mar. 31, 2022 shares
Employee Incentive Plan [Member]
Incentive and Retirement Plans (Details) [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized	200,000
Employee Incentive Plan Percentage Of Compensation In Lieu Of Cash	50.00%
Management Incentive Plan Percentage Of Compensation In Lieu Of Cash	50.00%
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant	155,399
Omnibus Stock Plan [Member]
Incentive and Retirement Plans (Details) [Line Items]
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized	625,000
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant	557,563

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Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items]
Issued (in Dollars per share)		$ 21.9
Issued		Dec. 31, 2023
Share-Based Payment Arrangement, Tranche One [Member]
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items]
Issued	40,879
Issued (in Dollars per share)	$ 21.2
Exercised (in Dollars per share)		$ 23.67
Exercised		Dec. 31, 2020
Share-Based Payment Arrangement, Tranche Two [Member]
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items]
Issued	40,900
Issued (in Dollars per share)	$ 21.2
Exercised (in Dollars per share)		$ 21.75
Exercised		Dec. 31, 2021
Time Based RSUs [Member]
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items]
Balance	9,440	7,638
Balance	9,440
Issued		3,364
Time Based RSUs [Member] | Share-Based Payment Arrangement, Tranche Two [Member]
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items]
Exercised		(1,562)
Targeted Performance Based RSUs [Member]
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items]
Balance	13,270	9,611
Forfeited	(2,637)
Balance	10,633
Issued		5,247
Targeted Performance Based RSUs [Member] | Share-Based Payment Arrangement, Tranche One [Member]
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items]
Exercised		(1,588)

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Segment Information (Details)	Mar. 31, 2022
Fiber Comm LC [Member]
Segment Information (Details) [Line Items]
Equity Method Investment, Ownership Percentage	20.00%
Broadband Visions LLC [Member]
Segment Information (Details) [Line Items]
Equity Method Investment, Ownership Percentage	24.30%
Independent Emergency Services LLC [Member]
Segment Information (Details) [Line Items]
Equity Method Investment, Ownership Percentage	14.29%
Fiber Minnesota LLC [Member]
Segment Information (Details) [Line Items]
Equity Method Investment, Ownership Percentage	7.54%

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Broadband Grants (Details)	3 Months Ended
	Mar. 31, 2022 USD ($)
January 2020 Grant [Member]
Broadband Grants (Details) [Line Items]
Grants Percentage	36.50%
Grants Receivable	$ 730,000
Project Cost	$ 2,000,000
Matching Fund Percentage Provided By Grantee	63.50%
Proceeds from Grantors	$ 724,465
January 2021 Grant [Member]
Broadband Grants (Details) [Line Items]
Grants Percentage	35.40%
Grants Receivable	$ 1,918,037
Project Cost	$ 5,419,617
Matching Fund Percentage Provided By Grantee	64.60%

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Subsequent Events (Details)	Apr. 11, 2022 $ / shares
Share-Based Payment Arrangement, Option [Member] | Subsequent Event [Member]
Subsequent Events (Details) [Line Items]
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price	$ 21.2

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Subsequent Events (Details) - Number of Options awarded - $ / shares	3 Months Ended
	Mar. 31, 2022	Mar. 31, 2021
Subsequent Events (Details) - Number of Options awarded [Line Items]
Balance
Balance	122,669
Options, Issued Closing Stock Price (in Dollars per share)		$ 21.9
Share-Based Payment Arrangement, Tranche One [Member]
Subsequent Events (Details) - Number of Options awarded [Line Items]
Options Issued	40,879
Options, Issued Closing Stock Price (in Dollars per share)	$ 21.2
Options Issued Vesting Date	Apr. 11, 2023
Share-Based Payment Arrangement, Tranche Two [Member]
Subsequent Events (Details) - Number of Options awarded [Line Items]
Options Issued	40,900
Options, Issued Closing Stock Price (in Dollars per share)	$ 21.2
Options Issued Vesting Date	Apr. 11, 2024
Share-Based Payment Arrangement, Tranche Three [Member]
Subsequent Events (Details) - Number of Options awarded [Line Items]
Options Issued	40,890
Options, Issued Closing Stock Price (in Dollars per share)	$ 21.2
Options Issued Vesting Date	Apr. 11, 2025