Quarterly Report for Quarter Ending June 30, 2026 (Form 10-Q)

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 forward-looking 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) shifts in our product mix may result in declines in our operating profitability, ii) we may not accurately predict technological trends or the success of new products, iii) possible consolidation among our customers, iv) possible customer payment defaults, v) possible replacement of key personnel, vi) a failure in our operational systems or infrastructure could affect our operations, vii) unfavorable general economic conditions that could negatively affect our operating results, viii) our current debt structure may change due to increases in interest rates or our ability to comply with lender loan covenants, ix) our possible pursuit of acquisitions could be expensive or not successful, x) substantial regulatory change and increased competition, xi) data security breaches and xii) elimination of governmental network support we receive. 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.

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 the latest 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 in conformity with GAAP 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 on the date of the financial statements and during the reporting period. The estimates and judgments used in the accompanying financial statements are based on our management's evaluation of the relevant facts and circumstances as of the date of the financial statements. Actual results may differ from these estimates and assumptions. 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 ending December 31, 2025, 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, 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 the first six months of 2026, we have seen our overall revenues increase primarily due to growth in Internet and other revenues mentioned below. 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 have also experienced increased costs in the first six months of 2026, which have affected our margins. In addition, we had anticipated increased inflation and 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 June 30, 2026, we had $27.6 million of our bank revolver available for use if the need arises. 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. This 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 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.

Operations/Fiber-To-The-Premise (FTTP) Build

●

On December 12, 2023, the Company announced that it confirmed eligibility for CBOL funding through the USAC. This 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 change based on updated USAC funding criteria July 1 of each year.

●

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. The Company continues to build and deploy the Gig-speed service. Nuvera's goal is to bring Gig-speed service to as many communities as possible.

●

In 2026, we plan to upgrade 3,300 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. As of June 30, 2026, we have succeeded in upgrading 1,396 passings with these fiber services. Project-to-date, we have upgraded a total of 52,858 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 June 30, 2026.

●

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 June 30, 2026.

●

On March 5, 2024, the Company was awarded a grant from 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 $1,145,401 for this project as of June 30, 2026.

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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 50.0% to 55% matching funds. Construction and expenditures for these projects began in the spring of 2023 and were completed in 2025. The Company has received $8,594,688 for these projects as of June 30, 2026.

Financial Results

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Net loss for the second quarter of 2026 totaled $160,770, which was a $263,270, or 62.09% increase compared to the second quarter of 2025. This increase was primarily due to an increase in data services and other revenues, and a decrease in depreciation, partially offset by a decrease in governmental support revenues, all of which are described below.

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Consolidated revenue for the second quarter of 2026 totaled $17,663,242, which was a $143,297 or 0.80% decrease compared to the second quarter of 2025. This decrease was primarily due to a decrease in governmental support revenues, legacy service revenues, and video services, partially offset by increases in data services and other revenue, 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 1,514 or 14.10% for the twelve months ending June 30, 2026, 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, Internet protocol TV (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

		Q2 2025								Q3 2025								Q4 2025								Q1 2026								Q2 2026
Premise Passings
Fiber - NuFiber/Gig-Cities			46,212								48,617								51,462								52,494								52,858
Non-Fiber			27,288								26,701								25,466								25,129								25,103
Total Passings			73,500								75,318								76,928								77,623								77,961
% Fiber Coverage			62.9	%							64.5	%							66.9	%							67.6	%							67.8	%
Internet/Broadband Connections/Share
Fiber Gig-Cities
Residential			17,056								17,724								18,603								19,464								19,919
Business			1,551								1,592								1,649								1,706								1,762
Totals			18,607				40.3	%			19,316				39.7	%			20,252				39.4	%			21,170				40.3	%			21,681				41.0	%
Non-Fiber
Residential			10,729								10,229								9,635								8,914								8,453
Business			799								768								738								712								661
Totals			11,528				42.2	%			10,997				41.2	%			10,373				40.7	%			9,626				38.3	%			9,114				36.3	%
Total Broadband Connections			30,135				41.0	%			30,313				40.2	%			30,625				39.8	%			30,796				39.7	%			30,795				39.5	%
% Broadband on Fiber			61.7	%							63.7	%							66.1	%							68.7	%							70.4	%
Broadband Customer Revenue/ARPU
Internet/BB Revenue/ARPU
Fiber Gig-Cities
Residential		$	3,802,467			$	75.22			$	3,948,740			$	75.21			$	4,188,706			$	76.33			$	4,507,266			$	78.04			$	4,652,786			$	78.33
Business		$	724,336			$	158.29			$	746,341			$	157.46			$	765,415			$	156.59			$	792,533			$	156.57			$	813,824			$	155.34	*
Totals		$	4,526,803			$	82.12			$	4,695,081			$	82.02			$	4,954,121			$	82.89			$	5,299,799			$	84.37			$	5,466,610			$	84.57
Non-Fiber
Residential		$	1,932,474			$	59.32			$	1,919,567			$	61.46			$	1,831,582			$	62.20			$	1,685,706			$	61.52			$	1,590,007			$	61.83
Business		$	294,661			$	118.43			$	280,438			$	120.21			$	269,938			$	120.13			$	265,295			$	122.14			$	250,726			$	123.63
Totals		$	2,227,135			$	63.51			$	2,200,005			$	65.55			$	2,101,520			$	65.55			$	1,951,001			$	65.97			$	1,840,733			$	66.35
Total Internet/BB Revenue		$	6,753,938							$	6,895,086							$	7,055,641							$	7,250,800							$	7,307,343
% Revenue from Fiber			67.0	%							68.1	%							70.2	%							73.1	%							74.8	%
Other Internet Revenue		$	1,067,614							$	1,105,096							$	1,110,994							$	1,126,914							$	1,141,475
Total Internet Revenue		$	7,821,552							$	8,000,182							$	8,166,635							$	8,377,714							$	8,448,818
All Other Revenue		$	9,984,987							$	10,043,062							$	9,897,296							$	10,054,966							$	9,214,424
Total Revenue		$	17,806,539							$	18,043,244							$	18,063,931							$	18,432,680							$	17,663,242

* 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 three and six months ended June 30, 2026, and 2025 are included below:

Communications Segment
		Three Months Ended June 30,
		2026				2025				Increase (Decrease)
Operating Revenues
Voice Service		$	928,302			$	1,083,432			$	(155,130	)			-14.32	%
Network Access			544,692				614,636				(69,944	)			-11.38	%
Video Service			2,682,557				2,862,495				(179,938	)			-6.29	%
Data Service			8,448,818				7,821,552				627,266				8.02	%
A-CAM/FUSF			3,756,686				4,313,804				(557,118	)			-12.91	%
Other			1,302,187				1,110,620				191,567				17.25	%
Total Operating Revenues			17,663,242				17,806,539				(143,297	)			-0.80	%
Cost of Services, Excluding Depreciation and Amortization			8,158,690				7,763,416				395,274				5.09	%
Selling, General and Administrative			2,751,961				2,957,486				(205,525	)			-6.95	%
Depreciation and Amortization Expenses			4,141,961				4,855,138				(713,177	)			-14.69	%
Total Operating Expenses			15,052,612				15,576,040				(523,428	)			-3.36	%
Operating Income		$	2,610,630			$	2,230,499			$	380,131				17.04	%
Net Loss		$	(160,770	)		$	(424,040	)		$	263,270				-62.09	%
Capital Expenditures		$	2,712,921			$	4,768,204			$	(2,055,283	)			-43.10	%

Communications Segment
		Six Months Ended June 30,
		2026				2025				Increase (Decrease)
Operating Revenues
Voice Service		$	1,884,225			$	2,204,868			$	(320,643	)			-14.54	%
Network Access			1,239,456				1,340,681				(101,225	)			-7.55	%
Video Service			5,396,558				5,743,175				(346,617	)			-6.04	%
Data Service			16,826,532				15,509,670				1,316,862				8.49	%
A-CAM/FUSF			8,024,915				8,622,462				(597,547	)			-6.93	%
Other			2,724,236				2,266,452				457,784				20.20	%
Total Operating Revenues			36,095,922				35,687,308				408,614				1.14	%
Cost of Services, Excluding Depreciation and Amortization			16,192,083				15,439,113				752,970				4.88	%
Selling, General and Administrative			5,604,240				5,911,810				(307,570	)			-5.20	%
Depreciation and Amortization Expenses			8,305,954				9,690,985				(1,385,031	)			-14.29	%
Total Operating Expenses			30,102,277				31,041,908				(939,631	)			-3.03	%
Operating Income		$	5,993,645			$	4,645,400			$	1,348,245				29.02	%
Net Income		$	1,417,668			$	604,880			$	812,788				134.37	%
Capital Expenditures		$	12,427,392			$	13,408,635			$	(981,243	)			-7.32	%
Key metrics
Access Lines			9,227				10,741				(1,514	)			-14.10	%
Video Customers			6,326				7,057				(731	)			-10.36	%
Data Customers			34,681				34,313				368				1.07	%

Certain historical numbers have been changed to conform to the current year's presentation.

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 $928,302, which was $155,130 or 14.32% lower in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and was $1,884,225 which was $320,643 or 14.54% lower in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These decreases were 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 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 $544,692, which was $69,944 or 11.38% lower in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and was $1,239,456, which was $101,225 or 7.55% lower in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These decreases were 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-four communities with our IPTV services and three communities with our CATV services. Video service revenue was $2,682,557, which was $179,938 or 6.29% lower in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and was $5,396,558, which was $346,617 or 6.04% lower in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These decreases were 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, online file back up and online file storage. Data Service revenue was $8,448,818, which was $627,266 or 8.02% higher in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and was $16,826,532, which was $1,316,862 or 8.49% higher in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These increases were primarily due to increases in fiber customers and customers upgrading their packages and speeds, partially offset by a decrease in non-fiber data 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 - 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 $3,756,686, which was $557,118 or 12.91% lower in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. A-CAM/FUSF support totaled $8,024,915, which was $597,547 or 6.93% lower in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These decreases were primarily due to our lower CBOL funding through USAC. On December 12, 2023, the Company announced that it confirmed eligibility for CBOL funding through 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 receipt confirmed 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 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 from the sales of wireless phones and accessories. Other revenue was $1,302,187, which was $191,567 or 17.25% higher in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and was $2,724,236 which was $457,784 or 20.20% higher in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These increases were primarily due to an increase in the sales and installation of CPE, miscellaneous sales, billed labor, and paper billing fee revenue, partially offset by a decrease in directory publishing, lower long-distance revenues, and lower inside wire maintenance fees.

Cost of Services (excluding Depreciation and Amortization)

Cost of services (excluding depreciation and amortization) was $8,158,690, which was $395,274 or 5.09% higher in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and was $16,192,083, which was $752,970 or 4.88% higher in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These increases were primarily due to costs associated with increased CPE, retail and other miscellaneous sales, and increased costs for maintenance and support agreements on our equipment and software. These increases were partially offset by a decrease in programming costs from our video content providers due to a loss of video customers.

Selling, General and Administrative Expenses

Selling, general and administrative expenses were $2,751,961 which was $205,525 or 6.95% lower in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and were $5,604,240, which was $307,570 or 5.20% lower in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These decreases were primarily due to decreased labor costs and cost containment measures taken by the Company.

Depreciation and Amortization

Depreciation and amortization were $4,141,961, which was $713,177 or 14.69% lower in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and were $8,305,954, which was $1,385,031 or 14.29% lower in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These decreases were primarily due to portions of our legacy copper network becoming fully depreciated in 2025, partially offset by an increase in our FTTP network assets to aid in our transition to our new advanced FTTP network, reflecting our continual investment in technology and infrastructure in order to meet our customer's demands for our products and services.

Operating Income

Operating income was $2,610,630, which was $380,131 or 17.04% higher in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and was $5,993,645, which was $1,348,245 or 29.02% higher in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These increases were primarily due to increased data services, other revenue, and lower depreciation expenses, partially offset by lower governmental support revenues and higher cost of services, all of which are described above.

See Consolidated Statements of Income (for discussion below)

Other Income (Expense) and Interest Expense

Interest expense was $2,957,406, which was $4,597 or 0.16% higher in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and was $5,934,286, which was $8,801 or 0.15% higher in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. These increases were primarily due to higher outstanding debt balances, partially offset by decreased interest rates on our non-swapped debt in connection with our term debt credit facility with CoBank to support our fiber-build initiative.

Interest and dividend income was $42,100, which was $4,325 or 11.45% higher in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and was $162,067, which was $22,984 or 12.42% lower in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. The three-month increase and six-month decrease were primarily due to the amount and timing of dividend income earned from our investments.

Other income for the six months ended June 30, 2026, and 2025, included a patronage credit earned with CoBank, which was a result of our debt agreements with them. The patronage credit allocated and received in 2026 was $1,488,941, compared to $1,656,597 allocated and received in 2025. This decrease was primarily due to a decrease in the special patronage distribution. 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.

Other investment income was $57,471, which was $14,265 or 19.89% lower in the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and was $156,632, which was $31,879 or 16.91% lower in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. Other investment income is primarily from our equity ownerships in several partnerships and limited liability companies. Other investment income was lower in 2026 compared to 2025, primarily due to lower operating performance by our equity investments in 2026.

Income Taxes

Income tax benefit was $62,132, which was $102,772 or 62.32% lower in the three months ended June 30, 2026, compared to the three months ended June 30, 2025. This decrease was primarily due to increased operating income. Income tax expense was $551,312, which was $316,081 or 134.37% higher in the six months ended June 30, 2026, compared to the six months ended June 30, 2025. This increase was primarily due to increased operating income, partially offset by lower CoBank patronage dividends. The effective income tax rate for the six months ending June 30, 2026, and 2025 was approximately 28.0%, respectively. The effective income tax rate differs from the federal statutory income tax rate primarily due to state income taxes and other permanent differences.

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 $241,186,909 as of June 30, 2026, reflecting 40.0% equity and 60.0% debt. This compares to a capital structure of $238,681,735 as of December 31, 2025, reflecting 39.6% equity and 60.4% 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 4.99 times debt to earnings before interest, taxes, depreciation, and amortization (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 our 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 six months ended June 30, 2026, were proceeds from cash generated from operations and cash reserves held at the beginning of the period. As of June 30, 2026, we had a working capital surplus of $11,988,380. In addition, as of June 30, 2026, we had $27.6 million available under our revolving credit facility to fund any short-term working capital needs available to fund our fiber expansion plans. The working capital surplus as of June 30, 2026, was primarily the result of elevated inventory levels to support our fiber-build initiative.

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 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 that may be imposed by our capital structure or sources of financing.

The following table summarizes our cash flow:

		Six Months Ended June 30,
		2026				2025
Net cash provided by (used in):
Operating activities		$	10,328,787			$	8,569,072
Investing activities			(11,773,068	)			(11,383,264	)
Financing activities			1,375,816				1,871,574
Change in cash		$	(68,465	)		$	(942,618	)

Cash Flows from Operating Activities

Cash generated by operations in the first six months of 2026 was $10,328,787, compared to cash generated by operations of $8,569,072 in the first six months of 2025. The increase in cash from operating activities in 2026 was primarily due to the timing of the increase/decrease in assets and liabilities and distributions from our equity investments.

Cash generated by operations continues to be our primary source of funding for existing operations, debt service, and dividend payments, when declared by our BOD, to stockholders. Cash as of June 30, 2026, was $281,392, compared to $349,857 as of December 31, 2025.

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 $11,773,068 during the first six months of 2026 compared to $11,383,264 for the first six months of 2025. Capital expenditures relating to our fiber initiative and on-going operations were $12,427,392 for the six months ended June 30, 2026, compared to $13,408,635 for the six months ended June 30, 2025. Materials and supply expenditures decreased by $696,324 in the first six months of 2026 compared to a decrease of $1,934,631 for the first six months of 2025. The decreases for the six months ended June 30, 2026, and 2025, were 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 remainder of the 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 June 30, 2026, we had $27.6 million available under our existing revolving credit facility to fund capital expenditures and other operating needs.

Cash Flows Provided by Financing Activities

Cash provided by financing activities for the six months ended June 30, 2026, was $1,375,816. This included long-term debt repayments of $906,250, proceeds from issuance of long-term debt of $20,000,000, loan fees of $35,000, changes in our revolving credit facility of $18,720,498, and grants received for plant construction of $1,037,564. Cash provided by financing activities for the six months ended June 30, 2025, was $1,871,574. This included changes in our revolving credit facility of $141,650, and grants received for construction of plant of $1,729,924. The change in cash flows provided by financing activities in 2026 was primarily due to long-term debt payments, 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 $11,988,380 as of June 30, 2026, with current assets of approximately $25.3 million and current liabilities of approximately $13.3 million, compared to a working capital surplus of $8,034,640 as of December 31, 2025. The ratio of current assets to current liabilities was 1.90 and 1.47 as of June 30, 2026, and December 31, 2025. The working capital surplus as of June 30, 2026, was primarily the result of elevated inventories to support our fiber-build initiative.

Our credit facility requires us to comply with specified financial ratios and tests. These financial ratios include the Total Leverage Ratio and debt service coverage ratio. On June 30, 2026, we were in compliance with the Total Leverage Ratio. Our debt service coverage ratio as of June 30, 2026, was 1.99, which was below our minimum debt service coverage ratio of 2.00 per our existing covenants with CoBank. On August 6, 2026, Nuvera received a waiver from CoBank to decrease our minimum debt service coverage ratio to 1.75 to accommodate our decreased debt service coverage ratio as of June 30, 2026.

Our current Total Leverage Ratio as of June 30, 2026, was 4.99. Our maximum Total Leverage Ratio under the loan facility is 6.00:1.00.

Dividends and Restrictions

Nuvera did not declare or pay a dividend in the first two quarters of 2026 or in 2025. The BOD's action reflects the Company's commitment to maximize available capital for the near future as it executes on its Nuvera Gig Cities project. This decision focuses available capital on deploying fiber and capturing the growth opportunity in new and existing markets in southern Minnesota. Nuvera believes this investment in the largest infrastructure project in Company history is strengthening its competitive position as a regional provider.

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 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 Total Leverage Ratio as of June 30, 2026, was 4.99.

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.

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.