Annual Report for Fiscal Year Ending 12-31, 2025 (Form 10-K)

Management's Discussion and Analysis of Financial Condition and Results of Operations

The following discussion should be read in conjunction with our historical financial statements and the related notes contained elsewhere in this report.

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, maintain our communication equipment customers; pay dividends, when declared by the BOD, 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.

In 2025, we saw our overall revenues increase primarily due to growth in governmental support revenues and Internet. However, we continue to see accelerated losses in our voice and video service customers as those customers make choices about their entertainment needs and personal finances. We also experienced increased costs in 2025 which have affected our margins. In addition, we had anticipated increased inflation and future supply chain issues in the inventory, equipment, and fiber we use in our business and had therefore purchased a large amount of these items 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 December 31, 2025, we had $8.9 million of our bank revolver available for use if the need arises. In addition, we have a $25.0 million delayed draw term loan available to fund our fiber expansion plans. The Company may seek additional financing to continue to fund its fiber expansion plans and meet current and future liquidity needs.

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.

Executive Summary

Highlights:

Banking/Dividends

●

On July 31, 2025, we entered into a new IRSA with CoBank covering an additional $43,750,000 of our aggregate indebtedness to CoBank. The new swap effectively locked in a portion of our variable-rate debt through July 2026 and replaced our existing three swaps which all expired as of July 31, 2025. Under this new 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 secured overnight financing rate (SOFR) variable rate payment is below a contractual rate or (ii) receive a payment if the SOFR variable rate payment is above the contractual rate.

●

On June 21, 2024, 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 and secured a credit facility in the aggregate principal amount of $180.0 million. Under the Agreements, among other things, (i) the Company received a $125.0 million term loan to replace existing debt, (ii) a $25.0 million delayed draw term loan, (iii) the Company's revolving loan was decreased from $40.0 million to $30.0 million, (iv) the maturity dates of the term loans and revolving loan were set at June 21, 2029, and (v) the Company's operating subsidiaries agreed to extend their previous guarantees, security interests and mortgages to cover the increased amount of the revolving credit facility. The financing was secured to facilitate the Company's advanced fiber-build plans announced on December 15, 2021. Refer to the Company's 8-K filing with the SEC on June 25, 2024, for further details regarding the credit agreements with CoBank.

Operations/FTTP Build

●

On December 12, 2023, the Company announced that it confirmed eligibility for CBOL funding through the USAC. The incremental funding will be used to continue to support the Company's multi-year fiber construction initiative. The Company began receiving a monthly benefit in November of 2023 with the first payment received in December of 2023. The monthly CBOL subsidy formula is reviewed and subject to revision on an annual basis and subject to changed based on updated USAC funding criteria July 1 of each year.

●

On December 15, 2021, the Company announced plans to build and deploy Gig-speed fiber Internet across its network creating crucial access to the fastest speeds available for rural communities, small cities, and suburban areas across Minnesota. The Company will continue to build and deploy the Gig-speed fiber service over the next few years. Nuvera's goal is to bring Gig-speed fiber service to as many communities as possible.

●

In 2025, we planned to upgrade 5,900 passings with fiber services and faster broadband speeds. These passings will include upgrading current customers from our old copper network and new edge out passings. For the year ended December 31, 2025, we have succeeded in upgrading 6,123 passings with these fiber services. Project-to-date, we have upgraded a total of 51,462 overall passings with these fiber services.

Broadband Grants

●

In August 2022, the Company was awarded a grant from the United States federal government. This Low-Density Broadband grant will provide up to 75% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved and underserved communities in the Company's service area. The Company is eligible to receive $3,210,000 of approximately $4,280,000 total project costs. The Company will provide the remaining 25% of the matching funds. The Company has received $0 for this project as of December 31, 2025.

●

On November 21, 2023, the Company was awarded a grant from Goodhue County in Minnesota. This Low-Density Broadband grant will provide $277,733 of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved and underserved communities in and around Goodhue county. The Company has received $0 for this project as of December 31, 2025.

●

On March 5, 2024, the Company was awarded a grant from the Minnesota Department of Employment and Economic Development (DEED). This Low-Density Broadband grant will provide up to 75% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved and underserved communities in the Company's service area. The Company is eligible to receive $1,884,429 of approximately $2,512,572 total project costs. The Company will provide the remaining 25% of the matching funds. The Company has received $107,837 for this project as of December 31, 2025.

●

On December 8, 2022, the Company was awarded four broadband grants from DEED. The grants will provide up to 45.0% to 50.0% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved and underserved communities and businesses in the Company's service area. The Company is eligible to receive $8,594,688 of approximately $18,139,749 total project costs. The Company will provide the remaining 55.0% to 50% matching funds. Construction and expenditures for these projects began in the spring of 2023. The Company has received $8,594,688 for these projects as of December 31, 2025.

●

Net income in 2025 totaled $327,669, which was a $4,755,479, or 107.4% increase compared to 2024. This increase was primarily due to a goodwill impairment in our HTC operating unit in 2024, partially offset by an increase in interest expense associated with a higher level of borrowing under our CoBank credit facility, increased operating expenses and an increase in operating revenues, all of which are described below.

●

Consolidated revenue for 2025 totaled $71,794,483, which was a $2,558,146 increase compared to 2024. This increase was primarily due to increases in governmental support revenues, data services and other revenues, offset by decreases in legacy service revenues and video services, 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 2026.

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, and emerging technologies. 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 1,796 or 15.37% in 2025 compared to 2024 due to the reasons mentioned above.

We expect 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 invest in our fiber broadband network and 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.

The table below presents our revenue by technology and advanced fiber-build progress for the last five quarters:

Nuvera Communications, Inc.

Reporting by Technology

		Q4 2024								Q1 2025								Q2 2025								Q3 2025								Q4 2025
Premise Passings
Fiber - NuFiber/Gig-Cities			45,339								46,022								46,212								48,617								51,462
Non-Fiber			27,062								27,031								27,288								26,701								25,466
Total Passings			72,401								73,053								73,500								75,318								76,928
% Fiber Coverage			62.6	%							63.0	%							62.9	%							64.5	%							66.9	%
Internet/Broadband Connections/Share
Fiber Gig-Cities
Residential			15,078								16,124								17,056								17,724								18,603
Business			1,338								1,437								1,551								1,592								1,649
Totals			16,416				36.2	%			17,561				38.2	%			18,607				40.3	%			19,316				39.7	%			20,252				39.4	%
Non-Fiber
Residential			12,114								11,293								10,729								10,229								9,635
Business			1,025								922								799								768								738
Totals			13,139				48.6	%			12,215				45.2	%			11,528				42.2	%			10,997				41.2	%			10,373				40.7	%
Total Broadband Connections			29,555				40.8	%			29,776				40.8	%			30,135				41.0	%			30,313				40.2	%			30,625				39.8	%
% Broadband on Fiber			55.5	%							59.0	%							61.7	%							63.7	%							66.1	%
Broadband Customer Revenue/ARPU
Internet/BB Revenue/ARPU
Fiber Gig-Cities
Residential		$	3,282,653			$	74.66			$	3,541,243			$	74.89			$	3,802,467			$	75.22			$	3,948,740			$	75.21			$	4,188,706			$	76.33
Business		$	603,643			$	153.05			$	654,977			$	155.50			$	724,336			$	158.29			$	746,341			$	157.46			$	765,415			$	156.59	*
Totals		$	3,886,296			$	81.11			$	4,196,220			$	81.48			$	4,526,803			$	82.12			$	4,695,081			$	82.02			$	4,954,121			$	82.89
Non-Fiber
Residential		$	2,193,437			$	59.29			$	2,048,638			$	59.18			$	1,932,474			$	59.32			$	1,919,567			$	61.46			$	1,831,582			$	62.20
Business		$	399,187			$	126.65			$	351,409			$	122.66			$	294,661			$	118.43			$	280,438			$	120.21			$	269,938			$	120.13
Totals		$	2,592,624			$	64.57			$	2,400,047			$	64.03			$	2,227,135			$	63.51			$	2,200,005			$	65.55			$	2,101,520			$	65.55
Total Internet/BB Revenue		$	6,478,920							$	6,596,267							$	6,753,938							$	6,895,086							$	7,055,641
% Revenue from Fiber			60.0	%							63.6	%							67.0	%							68.1	%							70.2	%
Other Internet Reveneue		$	1,049,548							$	1,091,851							$	1,067,614							$	1,105,096							$	1,110,994
Total Internet Revenue		$	7,528,468							$	7,688,118							$	7,821,552							$	8,000,182							$	8,166,635
All Other Revenue		$	9,968,555							$	10,192,651							$	9,984,987							$	10,043,062							$	9,897,296
Total Revenue		$	17,497,023							$	17,880,769							$	17,806,539							$	18,043,244							$	18,063,931

* Nuvera has experienced a decrease in its Fiber Gig-Cities Business ARPU. This is primarily due to the aggressive conversion of our smaller business customers from non-fiber to fiber.

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 years ended, December 31, 2025, and 2024, are included below:

Communications Segment

		2025				2024				Increase (Decrease)
Operating Revenues
Voice Service		$	4,253,818			$	4,664,083			$	(410,265	)			-8.8	%
Network Access			2,634,733				3,103,915				(469,182	)			-15.1	%
Video Service			11,276,390				11,746,455				(470,065	)			-4.0	%
Data Service			31,676,487				29,758,882				1,917,605				6.4	%
A-CAM/FUSF			17,344,414				15,507,401				1,837,013				11.8	%
Other			4,608,641				4,455,601				153,040				3.4	%
Total Operating Revenues			71,794,483				69,236,337				2,558,146				3.7	%
Cost of Services, Excluding Depreciation and Amortization			31,176,149				31,101,288				74,861				0.2	%
Selling, General and Administrative			11,285,812				10,395,727				890,085				8.6	%
Depreciation and Amortization Expenses			19,453,914				17,849,439				1,604,475				9.0	%
Total Operating Expenses			61,915,875				59,346,454				2,569,421				4.3	%
Operating Income		$	9,878,608			$	9,889,883			$	(11,275	)			-0.1	%
Net Income (Loss)		$	327,669			$	(4,427,810	)		$	4,755,479				-107.4	%
Capital Expenditures		$	33,228,372			$	53,757,778			$	(20,529,406	)			-38.2	%
Key metrics
Access Lines			9,889				11,685				(1,796	)			-15.4	%
Video Customers			6,795				7,436				(641	)			-8.6	%
Data Connections			34,843				33,704				1,139				3.4	%

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 multiple voice service plans with a variety of custom calling features such as call waiting, call forwarding, caller identification and voicemail. Voice service revenue was $4,253,818, which was $410,265 or 8.8% lower in 2025 compared to 2024. This decrease was primarily due to a decrease in access lines, which was the result of an accelerated industry trend of customers moving to other communications options or dropping their access lines altogether, 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.

Network Access - We provide access services to other communications carriers for the use of our facilities to terminate or originate long-distance calls on our fiber network. Additionally, we bill SLCs to substantially all 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 $2,634,733, which was $469,182 or 15.1% lower in 2025 compared to 2024. This decrease was primarily due to lower minutes of use on our network and lower special access revenues, which was the result of an accelerated industry trend of customers moving to other communications options or dropping their access lines altogether.

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 LECs. We cannot predict the likelihood of future claims and cannot estimate the impact.

Video Service - We provide a variety of enhanced video services on a monthly recurring basis to our customers. 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 $11,276,390, which was $470,065 or 4.0% lower in 2025 compared to 2024. This decrease was primarily due to a decrease in video customers, partially offset by a combination of rate increases introduced into several of our markets over the past few years. The decrease in video customers continues to be an accelerated industry trend of customers moving to other video options.

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 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 $31,676,487 which was $1,917,605 or 6.4% higher in 2025 compared to 2024. This increase was primarily due to increases in fiber customers and customers upgrading their packages and speeds, partially offset by a decrease in non-fiber customers. We expect continued growth in this area will be driven by completing our advanced FTTP network, expansion of our service areas and marketing managed service solutions to businesses.

A-CAM/FUSF - The Company currently receives funding based on the A-CAM, except for Scott-Rice, which receives funding from the FUSF. Scott-Rice's settlements from the NECA pools are based on nationwide average schedules, which includes the pooling and redistribution of revenues based on a company's actual or average costs. See Note 2 - "Revenue Recognition" for a discussion regarding A-CAM and FUSF.

A-CAM/FUSF support totaled $17,344,414, which was $1,837,013 or 11.8% higher in 2025 compared to 2024. This increase was primarily due to our CBOL funding through USAC and higher CAF support funding for our operating companies. On December 12, 2023, the Company announced that it confirmed eligibility for CBOL funding through USAC. The incremental funding is being used to continue to support the Company's multi-year fiber construction initiative. The Company began receiving a monthly benefit in November of 2023, with the first payment received in December. The monthly CBOL subsidy formula is reviewed and subject to revision on an annual basis and subject to change based on updated USAC funding criteria July 1 of each year.

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 Telespire, 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 from the sales of wireless phones and accessories. Other revenue was $4,608,641, which was $153,040 or 3.4% higher in 2025 compared to 2024. This increase was primarily due to an increase in our paper billing revenue, partially offset by a decrease in directory publishing, lower long-distance revenues, lower inside wire maintenance fees and a decrease in the sales and installation of CPE.

Cost of Services (Excluding Depreciation and Amortization Expense)

Cost of services (excluding depreciation and amortization expense) was $31,176,149, which was $74,861 or 0.2% higher in 2025 compared to 2024. This increase was primarily due to increased labor costs, and maintenance and support agreements on our equipment and software. This increase is partially offset by lower programming costs from video content providers due to a loss of video customers and a decline in CPE and retail sales.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $11,285,812, which was $890,085 or 8.6% higher in 2025 compared to 2024. This increase was primarily due to increased customer acquisition costs associated with our FTTP network initiative.

Depreciation and Amortization Expense

Depreciation and amortization expense was $19,453,914, which was $1,604,475 or 9.0% higher in 2025 compared to 2024. The increase in depreciation expense was primarily due to an increase in our FTTP network assets to aid in our transition to a new advanced FTTP network, reflecting our continual investment in technology and infrastructure in order to meet our customers' demands for products and services.

Operating Income

Operating income was $9,878,608, which was $11,275 or 0.1% lower in 2025 compared to 2024. This decrease was primarily due to higher depreciation and selling, general and administrative expenses, partially offset by increased governmental support revenues and increased data services revenues, all of which are described above.

See Consolidated Statements of Operations (for discussion below)

Other Income (Expense) and Interest Expense

Other income in 2025 and 2024, included a patronage credit earned with CoBank, which was a result of our debt agreements with them. The patronage credit allocated and received in 2025 was $1,656,597 compared to $1,196,948 allocated and received in 2024. This increase was primarily due to higher outstanding debt balances and increased interest rates on our non-swapped debt in connection with our term debt credit facility and revolving credit facility with CoBank to support our fiber-build initiative. 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 in the period they are allocated and received.

Interest and dividend income increased $54,822 in 2025 compared to 2024. This increase was primarily due to increases in dividend income earned on our investments.

Interest expense increased $889,161 in 2025 compared to 2024. This increase was primarily due to higher outstanding debt balances on our non-swapped debt in connection with our term debt credit facility with CoBank to support our fiber-build initiative.

The gain on sale of investments in 2025 reflects the final true up on the sale of FiberComm by Nuvera and the other owners of FiberComm to ImOn Communications LLC on March 31, 2023. The loss on sale of investments in 2024 reflects the settlement of the FiberComm escrow account and the loss on the sale of our RTFC patronage.

Other investment income increased $188,425 in 2025 compared to 2024. Other investment income is primarily from our equity ownerships in several partnerships and limited liability companies. Other investment income was higher in 2025 compared to 2024, primarily due to an improved operating performance by our equity investments in 2025.

Income Taxes

Income tax expense decreased by $81,809 in 2025 compared to 2024 as we recorded income tax expense of $249,316 in 2025 and an income tax expense of $331,125 in 2024. This decrease was primarily due to increased interest expense, partially offset by CoBank patronage dividends. The effective income tax rate was approximately 43.21% for 2025 and (8.08%) for 2024. The difference between the effective tax rate and the federal statutory tax rate are reconciled in Note 8 - "Income Taxes."

Non-GAAP Measures

In addition to the results reported with GAAP, we also use certain non-GAAP measures such as net earnings before interest expense, income taxes, and depreciation and amortization (EBITDA) and "Adjusted EBITDA" to evaluate operating performance and to facilitate the comparison of our historical results and trends. These financial measures are not a measure of financial performance under GAAP and should not be considered in isolation or as a substitute for net income as a measure of performance and net cash provided by operating activities as a measure of liquidity. They are not, on their own, necessarily indicative of cash available to fund cash needs as determined in accordance with GAAP. The calculation of these non-GAAP measures may not be comparable to similarly titled measures used by other companies. Reconciliations of these non-GAAP measures to the most directly comparable financial measures presented in accordance with GAAP are provided below.

Adjusted EBITDA is comprised of EBITDA, adjusted for certain items as permitted or required under our credit facility as described in the reconciliations below. These measures are a common measure of operating performance in the communications industry and are useful, with other data, as a means to evaluate our ability to fund our estimated uses of cash.

The following table is a reconciliation of net income to EBITDA and Adjusted EBITDA for the years ended December 31, 2025, and 2024.

		2025				2024
Net Income (Loss)		$	327,669			$	(4,427,810	)
Add (subtract):
Interest Expense, net of interest income			12,109,445				11,223,969
Income tax expense			249,316				331,125
Depreciation and amortization			19,453,914				17,849,439
EBITDA			32,140,344				24,976,723
Adjustments to EBITDA:
Other, net ¹			(2,601,926	)			2,917,358
Investment distributions ²			19,557				(27,230	)
Non-cash, stock-based compensation ³			283,007				398,264
Adjusted EBITDA		$	29,840,982			$	28,265,115

¹ Includes the equity earnings from our investments, gain on sale of investment, patronage income, impairment of goodwill, interest during construction and certain other miscellaneous items.

² Includes other cash distributions received from our investments less dividend income.

³ Represents compensation expenses in connection with the issuance of stock awards, which, because of the non-cash nature of these expenses, are excluded from adjusted EBITDA.

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 $238,681,735 as of December 31, 2025, reflecting 39.6% equity and 60.4% debt. This compares to a capital structure of $234,715,909 as of December 31, 2024, reflecting 39.9% equity and 60.1% 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 4.97 times debt to EBITDA (as defined in the loan documents), which is well within acceptable limits for our agreements and our industry. Our maximum Total Leverage Ratio under our loan facility is 6:00:1:00. Our management believes adequate operating cash flows and other internal and external resources, such as our cash on hand and credit facility, are available to finance ongoing operating requirements, including capital expenditures, business development, debt service and temporary financing of trade accounts receivable.

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, if declared, on our stock and (v) potential acquisitions.

Our primary sources of liquidity for the year ended December 31, 2025, were proceeds from cash generated from operations and cash reserves held at the beginning of the period. As of December 31, 2025, we had a working capital surplus of $8,034,640. In addition, as of December 31, 2025, we had $8.9 million available under our revolving credit facility to fund any short-term working capital needs. Also, we have a $25.0 million delayed draw term loan available to fund our fiber expansion plans. The working capital surplus as of December 31, 2025, was primarily the result of elevated inventory levels to support our fiber-build initiative and a rescheduling of our principal payments to CoBank as a part of our debt facility with them.

We have not conducted a public equity offering. We operate with original equity capital, retained earnings and additions to indebtedness in the form of senior debt and bank lines of credit.

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, we believe that we will be able to meet our current and long-term cash requirements primarily through our operating cash flows and 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:

		For Year Ended December 31
		2025				2024				Increase (Decrease)
Net cash provided by (used in):
Operating activities		$	19,170,540			$	18,975,291			$	195,249				1.03	%
Investing activities			(27,026,909	)			(43,994,182	)			16,967,273				38.57	%
Financing activities			6,319,529				25,645,684				(19,326,155	)			-75.36	%
Change in cash		$	(1,536,840	)		$	626,793			$	(2,163,633	)			345.19	%

Cash Flows from Operating Activities

Cash generated by operations for the year ended December 31, 2025, was $19,170,540, compared to cash generated by operations of $18,975,291 in 2024. The increase in cash from operating activities in 2025 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, debt service and dividend payments to stockholders, when declared by our BOD. Cash as of December 31, 2025, was $349,857, compared to $1,886,697 on December 31, 2024.

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 to provide advanced services to our customers.

Cash flows used in investing activities were $27,026,909 for the year ended December 31, 2025, compared to $43,994,182 used in investing activities in 2024. Capital expenditures relating to our fiber initiative and on-going operations were $33,228,372 in 2025 and $53,757,778 in 2024. Materials and supply expenditures decreased by $6,110,723 in 2025 primarily due to the use of materials on hand to support our fiber-build initiatives. Our investing expenditures were financed with cash flows from our current operations, advances on our line of credit and grant proceeds. We believe that our current operations and debt financing from CoBank will provide adequate cash flows to fund our plant additions for the upcoming year; however, funding from our revolving credit facility and delayed draw term loan are available if the timing of our cash flows from operations does not match our cash flow requirements. As of December 31, 2025, we had $8.9 million available under our existing revolving credit facility and $25.0 million on our delayed draw term loan to fund capital expenditures and other operating needs.

Cash Flows Provided by Financing Activities

Cash provided by financing activities for the year ended December 31, 2025, was $6,319,529. This included changes in our revolving credit facility of $2,613,016, loan origination fees of $35,000, and grants received for plant construction of $3,741,513. Cash provided by financing activities for the year ended December 31, 2024, was $25,645,684. This included principal payments of $100,000,000, loan proceeds from our term loan of $125,000,000, loan origination fees of $1,709,522, changes in our revolving credit facility of $(5,665,450) and grants received for construction of plant of $8,020,656. The change in cash flows used in financing activities in 2025 was primarily due to changes in our revolving credit facility with CoBank and grants received for construction to fund our fiber initiative.

Working Capital

We had a working capital surplus (i.e., current assets minus current liabilities) of $8,034,640 as of December 31, 2025, with current assets of approximately $25.0 million and current liabilities of approximately $17.0 million, compared to a working capital surplus of $16,603,132 as of December 31, 2024. The ratio of current assets to current liabilities was 1.47 and 2.11 as of December 31, 2025, and 2024. The working capital surplus as of December 31, 2025, was primarily the result of elevated inventories to support our fiber-build initiative and a rescheduling of our principal payments to CoBank as part of our debt facility with them.

As of December 31, 2025, and December 31, 2024, we were in compliance with all stipulated financial ratios in our loan agreements.

Our current Total Leverage Ratio as of December 31, 2025, was 4.97. Our maximum Total Leverage Ratio under the loan facility is 6:00:1.00.

Long-Term Debt and Revolving Credit Facilities

Our long-term debt obligations as of December 31, 2025, were $146,113,839 (excluding loan origination fees). Our long-term debt obligations as of December 31, 2024, were $143,500,823 (excluding long-term loan origination fees).

On June 21, 2024, 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 and secured a credit facility in the aggregate principal amount of $180.0 million.

Under the Agreements, among other things, (i) the Company received a $125.0 million term loan to replace existing debt, (ii) a $25.0 million delayed draw term loan, (iii) the Company's revolving loan was decreased from $40.0 million to $30.0 million, (iv) the maturity dates of the term loans and revolving loan were set at June 21, 2029, and (v) the Company's operating subsidiaries agreed to extend their previous guarantees, security interests and mortgages to cover the increased amount of the credit facility. The financing was secured to facilitate the Company's advanced fiber-build plans announced on December 15, 2021. Refer to the Company's 8-K filing with the SEC on June 25, 2024, for further details regarding the 2024 credit agreements with CoBank.

Under the credit agreement, the Company and its respective subsidiaries have entered into 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. The credit agreement contains certain customary events of default, which include failure to make payments when due, the material inaccuracy of representations or warranties, failure to observe or perform certain covenants, cross-defaults, bankruptcy and insolvency-related events, certain judgments, certain ERISA-related events, or a change in control (as defined in the credit agreement).

Our Long-Term Debt consists of the following notes:

2024 Credit Agreement

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TERM A-1 LOAN - $125,000,000 term note with interest payable quarterly. The final maturity date of this note is June 21, 2029. Eight quarterly principal payments of $781,250 are due commencing June 30, 2026, through March 31, 2028, and four quarterly principal payments of $1,562,500 commencing on June 30, 2028, through maturity date. A final balloon payment of $112,500,000 is due at maturity of this note on June 21, 2029.

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DELAYED DRAW TERM LOAN - $25,000,000 Delayed Draw Term Loan with interest on any outstanding amounts payable quarterly. The final maturity date of this loan is June 21, 2029. Eight quarterly principal payments of 0.625% of the outstanding loan balance are due commencing June 30, 2026, through March 31, 2028, and four quarterly principal payments of 1.250% of the outstanding loan balance commencing on June 30, 2028, through maturity date. A final balloon payment of the balance of the Delayed Draw Term Loan is due at maturity of this note on June 21, 2029. We currently have drawn $0 on this Delayed Draw Term Loan as of December 31, 2025.

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REVOLVING LOAN - $30,000,000 revolving loan with interest payable quarterly. Final maturity date of this note is June 21, 2029. We currently have drawn $21,113,839 on this revolving note as of December 31, 2025.

The term and revolving loan borrowings initially bear interest at a "Margin for SOFR Rate Loans" of 3.75% above the applicable SOFR rate. The margin for SOFR rate loans for term and revolving loans increases as our "Leverage Ratio" increases and decreases as our "Leverage Ratio" decreases.

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.

Under the 2024 credit facility, Nuvera can enter into IRSAs in connection with amounts borrowed from CoBank. On September 30, 2025, $43,750,000 of our indebtedness was covered under an IRSA with CoBank. See Note 7 - "Interest Rate Swaps," for details regarding our IRSA.

Our remaining outstanding debt of $102.4 million remains subject to variable interest rates at an effective weighted average interest rate of 7.32%, as of December 31, 2025.

As of December 31, 2025, our additional delayed draw term loan of $25.0 million and unused revolving credit facility of $8.9 million are subject to an unused commitment fee of 0.50% annually, until drawn. Once drawn, this debt would be subject to an effective weighted average interest rate based on current rate of interest in effect at the time.

Our loan agreements include restrictions on our ability to pay cash dividends to our stockholders. However, we are allowed to pay dividends in an amount up to $3,000,000 in any year as long as no default or event of default has occurred, and our current Total Leverage Ratio is equal to 4.25:1.00 or less. In addition, we are allowed to pay dividends in an unlimited amount in any year as long as no default or event of default has occurred, and our current Total Leverage Ratio is equal to 3.50:1.00 or less. Our current Total Leverage Ratio as of December 31, 2025, was 4.97. Our maximum Total Leverage Ratio under the loan facility is 6.00:1.00.

Our credit facility requires us to comply with specified financial ratios and tests. These financial ratios include Total Leverage Ratio and debt service coverage ratio. As of December 31, 2025, 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 restrict 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.

See Note 6 - "Long-Term Debt" for information pertaining to our long-term debt and current effective interest rates.

Critical Accounting Policies and Estimates

Management's discussion and analysis of financial condition and results of operations stated in this 2025 Annual Report on Form 10-K are based upon Nuvera's consolidated 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 - "Business Description and Summary of Significant Accounting Policies."

Revenue Recognition

See Note 2 - "Revenue Recognition" for a discussion of our revenue recognition policies.

Allowance for Credit Losses (AFCLs)

Accounts receivables are recorded at amortized cost less an AFCLs that are not expected to be recovered. The gross amount of accounts receivable is recorded net of the corresponding AFCLs in the consolidated balance sheets. We maintain AFCLs resulting from the expected failure or inability of our customers to make their required payments. We recognize the AFCLs based on management's expectation of the asset's collectability. The allowance is based on multiple factors including historical experience with bad debts, the credit quality of the customer base, the aging of such receivable and current macroeconomic conditions, as well as management's expectation of conditions in the future, as applicable. Our AFCLs are recorded on a monthly basis based on the aging of our overall accounts receivable. Our accounts receivable collection policy includes internal collection efforts after an accounts receivable balance is past 30 days due with service being suspended after approximately 40 days and terminated upon 60 days past due.

Our AFCLs were $265,000 and $170,000 as of December 31, 2025, and 2024.

Valuation of Goodwill

We have goodwill on our books related to prior acquisitions of communications company properties. As discussed more fully in Note 5 - "Goodwill and Intangibles," and in accordance with GAAP, goodwill is reviewed for impairment annually or more frequently if an event occurs or circumstances change that would reduce the fair value below its' carrying value. We perform our annual fair value evaluation in the fourth quarter of each year.

The impairment test for goodwill involves measuring a goodwill impairment loss by comparing the implied fair value of a reporting unit's goodwill with the carrying amount of that goodwill. Any excess of the carrying value of the reporting unit goodwill over the implied fair value of the reporting unit goodwill will be recorded as an impairment loss.

In 2025 and 2024, we engaged an independent valuation firm to aid in the completion of an annual impairment test for existing goodwill acquired. For 2025 and 2024, after the testing was completed, we determined that there was no impairment to goodwill for Scott-Rice and SETC as the determined fair value was sufficient to pass the impairment test. For 2025, after the testing, we determined that there was no impairment to goodwill for HTC as the determined fair value was sufficient to pass the impairment test. For 2024, after the testing was completed, we determined that there was an impairment to goodwill for HTC of $4.9 million as the determined fair value was not sufficient to pass the impairment test. We used a combination of Income (Discounted Cash Flow Method or DCF Method) and Market Approaches to estimate the fair value of the goodwill on our books related to prior acquisitions of communications company properties. The assumptions used in the estimates of fair value were based on projections provided by our management and a rate of return based on market information observed in debt and traded equity securities. Their Market Approaches considered market multiples observed in companies comparable to ours, traded on public exchange or over the counter, or transacted in a merger or acquisition transaction.

Assumptions used in our 2025 DCF model include the following:

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A 9.00% weighted average cost of capital based on an industry weighted average cost of capital; and

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A 1.5% terminal revenue growth rate.

The most significant amount of goodwill recorded on our books was due to the acquisitions of HTC, SETC and Scott-Rice. The carrying value of the goodwill was $35,624,660 as of December 31, 2025, and 2024.

In 2025, we tested the HTC, Scott-Rice and SETC goodwill. Based on the DCF model approach that was used, we determined the estimated enterprise fair value of our reporting units exceeded the carrying amount of that reporting units by approximately 7.3%, 29.7% and 28.5% for HTC, Scott-Rice and SETC, respectively, which indicated that we had no impairment as of December 31, 2025. In 2024, we tested the HTC goodwill. Based on the DCF model approach that was used, we determined that the carrying amount of that reporting unit exceeded the enterprise's fair value of that reporting unit and resulted in an impairment of $4.9 million.

Due to changes in financial and credit markets, and overall valuations of communications properties, the Company determined that the carrying value of the HTC reporting unit exceeded its fair value in 2024, which resulted in the impairment listed above. The non-cash impairment charge of $4.9 million did not and is not expected to have any impact on the Company's operations.

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 basis. 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.

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.

In accordance with GAAP, we record net unrecognized tax benefits that, if recognized, would affect the income tax provision when recorded. See Note 8 - "Income Taxes."

As of December 31, 2025, and 2024, we had $0 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 twelve months.

We are primarily subject to United States, Minnesota, Iowa, Nebraska, North Dakota, and Wisconsin income taxes. Tax years subsequent to 2020 remain open to examination by federal and state tax authorities. Our policy is to recognize interest and penalties related to income tax matters as income tax expense. As of December 31, 2025, and 2024 we had $27,790 and $20,904 of interest or penalties accrued that related to income tax matters.

Property, Plant and Equipment

We record impairment losses on long-lived assets used in operations when events and circumstances indicate the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than the carrying amounts of those assets. In assessing the recoverability of long-lived assets, we compare the carrying value to the undiscounted future cash flows the assets are expected to generate. If the total of the undiscounted future cash flows is less than the carrying amount of the assets, we would write down those assets based on the excess of the carrying amount over the fair value of the assets. Fair value is generally determined by calculating the discounted future cash flows expected from those assets. Changes in these estimates could have a material adverse effect on the assessment of long-lived assets, thereby requiring a write-down of the assets. Write-downs of long-lived assets are recorded as impairment charges and are a component of operating expenses. We have reviewed our long-lived assets and concluded that no impairment charge on these long-lived assets is necessary.

We use the group life method (mass asset accounting) to depreciate the assets of our communication 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 the expected utilization of new equipment, asset retirement activity and net salvage values to determine adjustments to our depreciation rates.

Grant money received from governmental entities for reimbursement of capital expenditures is accounted for as a reduction from the cost of the asset. As the grant was to be used in the Company's regulated network, the Company accounts for this funding as aid to construction as outlined in the FCC's Part 32 "Uniform System of Accounts for Telecommunications Companies." The resulting balance sheet presentation reflects the Company's net investment in the assets in our property, plant, and equipment. Depreciation is calculated and recorded based on the reduced cost of the investment, therefore the impact of prior grants received is reflected in earnings as a reduction in depreciation. Grant funds are shown as inflows in the financing activities section of the statement of cash flows.

Equity Method Investment

We are an investor in several partnerships and limited liability corporations. Our percentages of ownership in these joint ventures range from 7.63% to 24.30%. We use the equity method of accounting for these investments, which reflects original cost and the recognition of our share of the net income or losses from the respective operations.

Incentive Compensation

We engaged an outside consultant in 2005 to advise us in our development of an Employee Incentive Plan (EIP) for employees other than executive officers and a Management Incentive Plan (MIP) for our executive officers. Both plans were implemented in 2006. Both plans are cash/stock-based/Option-based incentive plans. Payments on each plan are based on an achievement of objectives of measurable corporate and operational performance with financial targets. The financial targets include the achievement of specified certain operating income before interest, taxes, depreciation, and amortization criteria, while the operational targets are based upon fiber passings, fiber connections, and net Internet customer additions. The EIP permits the issuance of up to 200,000 shares of our Common Stock in stock awards.

We accrue an estimated liability each year for these potential payouts and reverse that accrual if the incentive payout targets are not met and paid out. Incentive payouts, if earned, are typically paid in late March of the year following the target year and after the filing of our Annual Report on Form 10-K.

On March 27, 2025, the Compensation Committee and the Board adopted a new cash-based long-term incentive plan (2025 Plan). The 2025 Plan is a 3-year, cash-based long-term incentive and retention arrangement which measures operating income before interest, taxes, depreciation, and amortization (OIBITDA) and entails continued service with Nuvera throughout a 3-year period. Awards will be made annually (subject to the Compensation Committee's oversight on plan design, which may change from time to time) with 3-year overlapping cycles, and performance measured each individual year. Vesting is based (i) on achievement of predetermined OIBITDA targets set annually and (ii) on continued service with Nuvera through the end of the 3-year performance cycle. Cash payouts will be made at the end of the 3-year cycle. OIBITDA performance targets for each year within the 3-year period will be aligned with approved operating budget for that year.

On February 24, 2017, our BOD adopted the Nuvera Communications, Inc. 2017 Omnibus Stock Plan (2017 OSP) effective May 25, 2017. The shareholders of the Company approved the 2017 OSP at the May 25, 2017, Annual Meeting of Shareholders. The purpose of the 2017 OSP was to enable Nuvera and its subsidiaries to attract and retain talented and experienced people, closely link employee compensation with performance realized by shareholders, and reward long-term results with long-term compensation. The 2017 OSP enables us to grant stock incentive awards to current and new employees, including officers, and to BOD members and service providers. The 2017 OSP 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 2017 OSP permits the issuance of up to 625,000 shares of our Common Stock in any of the above stock awards.

See Note 14 - "Stock Based Compensation" for a detailed discussion of our incentive compensation and RSUs.

Recent Accounting Developments

See Note 1 - "Business Description and Summary of Significant Accounting Policies" for a discussion of recent accounting developments.