Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2022 | May 10, 2022 | |
Document Information Line Items | ||
Entity Registrant Name | NUVERA COMMUNICATIONS, INC. | |
Trading Symbol | NUVR | |
Document Type | 10-Q | |
Current Fiscal Year End Date | --12-31 | |
Entity Common Stock, Shares Outstanding | 5,064,760 | |
Amendment Flag | false | |
Entity Central Index Key | 0000071557 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Document Period End Date | Mar. 31, 2022 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q1 | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Entity File Number | 0-3024 | |
Entity Incorporation, State or Country Code | MN | |
Entity Tax Identification Number | 41-0440990 | |
Entity Address, Address Line One | 27 North Minnesota Street | |
Entity Address, City or Town | New Ulm | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 56073 | |
City Area Code | 507 | |
Local Phone Number | 354-4111 | |
Entity Interactive Data Current | Yes | |
Title of 12(g) Security | Common Stock - $1.66 par value |
CONSOLIDATED STATEMENTS OF INCO
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
OPERATING REVENUES: | ||
Operating Revenues | $ 16,474,772 | $ 16,478,123 |
OPERATING EXPENSES: | ||
Plant Operations (Excluding Depreciation and Amortization) | 3,427,246 | 3,417,738 |
Cost of Video | 2,549,852 | 2,756,343 |
Cost of Data | 1,028,534 | 923,514 |
Cost of Other Nonregulated Services | 378,194 | 409,246 |
Depreciation and Amortization | 3,498,284 | 3,071,572 |
Selling, General and Administrative | 2,661,463 | 2,663,890 |
Total Operating Expenses | 13,543,573 | 13,242,303 |
OPERATING INCOME | 2,931,199 | 3,235,820 |
OTHER INCOME (EXPENSE) | ||
Interest Expense | (496,655) | (565,374) |
Interest/Dividend Income | 177,045 | 101,402 |
Interest During Construction | 32,204 | 9,992 |
Gain on Debt Forgiveness | 2,912,433 | |
CoBank Patronage Dividends | 567,468 | 625,490 |
Other Investment Income | 124,301 | 66,048 |
Total Other Income (Expense) | 404,363 | 3,149,991 |
INCOME BEFORE INCOME TAXES | 3,335,562 | 6,385,811 |
INCOME TAXES EXPENSE | 933,956 | 1,205,100 |
NET INCOME | $ 2,401,606 | $ 5,180,711 |
NET INCOME PER SHARE | ||
Basic (in Dollars per share) | $ 0.47 | $ 1 |
Diluted (in Dollars per share) | 0.47 | 0.99 |
DIVIDENDS PER SHARE (in Dollars per share) | $ 0.14 | $ 0.13 |
WEIGHTED AVERAGE SHARES OUTSTANDING | ||
Basic (in Shares) | 5,111,622 | 5,202,832 |
Diluted (in Shares) | 5,124,540 | 5,210,554 |
Voice Services [Member] | ||
OPERATING REVENUES: | ||
Operating Revenues | $ 1,468,178 | $ 1,551,278 |
Network Access [Member] | ||
OPERATING REVENUES: | ||
Operating Revenues | 1,291,310 | 1,582,440 |
Video Service [Member] | ||
OPERATING REVENUES: | ||
Operating Revenues | 3,141,492 | 3,028,877 |
Data Service [Member] | ||
OPERATING REVENUES: | ||
Operating Revenues | 6,716,852 | 6,267,971 |
ACAM/FUSF [Member] | ||
OPERATING REVENUES: | ||
Operating Revenues | 2,894,587 | 2,968,195 |
Other Non Regulated [Member] | ||
OPERATING REVENUES: | ||
Operating Revenues | $ 962,353 | $ 1,079,362 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Statement of Comprehensive Income [Abstract] | ||
Net Income | $ 2,401,606 | $ 5,180,711 |
Other Comprehensive Income: | ||
Unrealized Gains on Interest Rate Swaps | 1,799,825 | 945,061 |
Income Tax Expense Related to Unrealized Gains on Interest Rate Swaps | (513,670) | (269,720) |
Other Comprehensive Income: | 1,286,155 | 675,341 |
Comprehensive Income | $ 3,687,761 | $ 5,856,052 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
CURRENT ASSETS: | ||
Cash | $ 878,078 | $ 2,306,149 |
Receivables, Net of Allowance for Doubtful Accounts of $80,000 and $80,000 | 2,535,002 | 2,426,009 |
Income Taxes Receivable | 471,666 | 1,405,622 |
Materials, Supplies, and Inventories | 7,327,046 | 5,357,380 |
Prepaid Expenses and Other Current Assets | 2,095,856 | 1,886,810 |
Total Current Assets | 13,307,648 | 13,381,970 |
INVESTMENTS & OTHER ASSETS: | ||
Goodwill | 49,903,029 | 49,903,029 |
Intangibles | 17,827,483 | 18,315,567 |
Other Investments | 10,531,863 | 10,417,563 |
Right of Use Asset | 1,084,600 | 1,154,293 |
Financial Derivative Instruments | 916,460 | |
Other Assets | 437,341 | 422,427 |
Total Investments and Other Assets | 80,700,776 | 80,212,879 |
PROPERTY, PLANT & EQUIPMENT: | ||
Communications Plant | 192,098,334 | 189,990,012 |
Other Property & Equipment | 27,760,245 | 27,439,201 |
Video Plant | 11,321,216 | 11,306,071 |
Total Property, Plant and Equipment | 231,179,795 | 228,735,284 |
Less Accumulated Depreciation | 150,596,128 | 147,585,930 |
Net Property, Plant & Equipment | 80,583,667 | 81,149,354 |
TOTAL ASSETS | 174,592,091 | 174,744,203 |
CURRENT LIABILITIES: | ||
Current Portion of Long-Term Debt, Net of Unamortized Loan Fees | 4,509,044 | 4,511,844 |
Accounts Payable | 2,434,553 | 3,244,472 |
Other Accrued Taxes | 322,739 | 260,013 |
Deferred Compensation | 63,424 | 63,829 |
Accrued Compensation | 2,025,687 | 2,122,436 |
Other Accrued Liabilities | 863,859 | 634,247 |
Total Current Liabilities | 10,219,306 | 10,836,841 |
LONG-TERM DEBT, Net of Unamortized Loan Fees | 44,110,542 | 43,114,772 |
NONCURRENT LIABILITIES: | ||
Loan Guarantees | 209,367 | 222,464 |
Deferred Income Taxes | 19,998,170 | 19,484,500 |
Unrecognized Tax Benefit | 42,775 | 42,775 |
Other Accrued Liabilities | 1,066,428 | 1,112,343 |
Financial Derivative Instruments | 883,365 | |
Deferred Compensation | 398,738 | 396,548 |
Total Noncurrent Liabilities | 21,715,478 | 22,141,995 |
COMMITMENTS AND CONTINGENCIES: | ||
STOCKHOLDERS' EQUITY: | ||
Preferred Stock - $1.66 Par Value, 10,000,000 Shares Authorized, No Shares Issued and Outstanding | ||
Common Stock - $1.66 Par Value, 90,000,000 Shares Authorized, 5,064,760 and 5,210,053 Shares Issued and Outstanding | 8,441,267 | 8,683,422 |
Accumulated Other Comprehensive Gain (Loss) | 654,902 | (631,253) |
Unearned Compensation | 262,735 | 259,620 |
Retained Earnings | 89,187,861 | 90,338,806 |
Total Stockholders' Equity | 98,546,765 | 98,650,595 |
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ 174,592,091 | $ 174,744,203 |
CONSOLIDATED BALANCE SHEETS (_2
CONSOLIDATED BALANCE SHEETS (Unaudited) (Parentheticals) - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Statement of Financial Position [Abstract] | ||
Allowance for Doubtful Accounts (in Dollars) | $ 80,000 | $ 80,000 |
Preferred stock par value (in Dollars per share) | $ 1.66 | $ 1.66 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | ||
Preferred stock, shares outstanding | ||
Common stock par value (in Dollars per share) | $ 1.66 | $ 1.66 |
Common stock, shares authorized | 90,000,000 | 90,000,000 |
Common stock, shares issued | 5,064,760 | 5,210,053 |
Common stock, shares outstanding | 5,064,760 | 5,210,053 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net Income | $ 2,401,606 | $ 5,180,711 |
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||
Depreciation and Amortization | 3,523,156 | 3,096,211 |
PPP Loan Forgiveness | (2,912,433) | |
Undistributed Earnings of Other Equity Investments | (121,963) | (64,423) |
Noncash Patronage Refund | (118,223) | (129,177) |
Stock Issued in Lieu of Cash Payment | 140,518 | 39,984 |
Distributions from Equity Investments | 100,000 | 150,000 |
Stock-based Compensation | 3,782 | 178,081 |
Changes in Assets and Liabilities: | ||
Receivables | (108,585) | (337,167) |
Income Taxes Receivable | 933,956 | 615,587 |
Inventories for Resale | (12,527) | (173,169) |
Prepaid Expenses | (249,030) | (1,494,445) |
Other Assets | (15,322) | (65,048) |
Accounts Payable | 862,316 | 174,178 |
Accrued Income Taxes | 489,513 | |
Other Accrued Taxes | 62,726 | 61,962 |
Other Accrued Liabilities | 156,641 | 389,210 |
Deferred Compensation | 1,785 | (69,775) |
Net Cash Provided by Operating Activities | 7,560,836 | 5,129,800 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Additions to Property, Plant, and Equipment, Net | (4,116,747) | (1,740,415) |
Materials and Supplies for Construction | (1,957,139) | (311,145) |
Other, Net | 12,788 | (42,000) |
Net Cash Used in Investing Activities | (6,061,098) | (2,093,560) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Principal Payments of Long-Term Debt | (1,152,600) | (1,152,600) |
Loan Origination Fees | (28,000) | |
Changes in Revolving Credit Facility | 2,148,698 | |
Repurchase of Common Stock | (3,187,500) | |
Dividends Paid | (708,407) | (676,090) |
Net Cash Used in Financing Activities | (2,927,809) | (1,828,690) |
NET CHANGE IN CASH | (1,428,071) | 1,207,550 |
CASH at Beginning of Period | 2,306,149 | 8,617,660 |
CASH at End of Period | 878,078 | 9,825,210 |
Supplemental cash flow information: | ||
Cash paid for interest | 466,226 | 782,399 |
Net cash paid for income taxes | $ 0 | $ 100,000 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) | Common Stock [Member] | AOCI Attributable to Parent [Member] | Unearned Compensation [Member] | Retained Earnings [Member] | Total |
BALANCE at Dec. 31, 2020 | $ 8,667,816 | $ (1,944,511) | $ 149,100 | $ 80,748,301 | $ 87,620,706 |
BALANCE (in Shares) at Dec. 31, 2020 | 5,200,689 | ||||
Employee Stock Plan | $ 7,657 | 101,083 | 108,740 | ||
Employee Stock Plan (in Shares) | 4,594 | ||||
Restricted Stock Grant | 69,341 | 69,341 | |||
Exercise of RSUs | $ 3,060 | (43,458) | 40,398 | ||
Exercise of RSUs (in Shares) | 1,836 | ||||
Net Income | 5,180,711 | 5,180,711 | |||
Dividends | (676,090) | (676,090) | |||
Unrealized Gain on Interest Rate Swap | 675,341 | 675,341 | |||
BALANCE at Mar. 31, 2021 | $ 8,678,533 | (1,269,170) | 174,983 | 85,394,403 | 92,978,749 |
BALANCE (in Shares) at Mar. 31, 2021 | 5,207,119 | ||||
BALANCE at Dec. 31, 2021 | $ 8,683,422 | (631,253) | 259,620 | 90,338,806 | 98,650,595 |
BALANCE (in Shares) at Dec. 31, 2021 | 5,210,053 | ||||
Employee Stock Plan | $ 7,793 | 92,741 | 100,534 | ||
Employee Stock Plan (in Shares) | 4,676 | ||||
Restricted Stock Grant | 3,782 | 3,782 | |||
Exercise of RSUs | $ 52 | (667) | 615 | ||
Exercise of RSUs (in Shares) | 31 | ||||
Repurchase of Common Stock | $ (250,000) | (2,937,500) | (3,187,500) | ||
Repurchase of Common Stock (in Shares) | (150,000) | ||||
Net Income | 2,401,606 | 2,401,606 | |||
Dividends | (708,407) | (708,407) | |||
Unrealized Gain on Interest Rate Swap | 1,286,155 | 1,286,155 | |||
BALANCE at Mar. 31, 2022 | $ 8,441,267 | $ 654,902 | $ 262,735 | $ 89,187,861 | $ 98,546,765 |
BALANCE (in Shares) at Mar. 31, 2022 | 5,064,760 |
Basis of Presentation and Conso
Basis of Presentation and Consolidation | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Business Description and Accounting Policies [Text Block] | Note 1 – Basis of Presentation and Consolidation The accompanying unaudited condensed consolidated financial statements of Nuvera Communications, Inc. and its subsidiaries (Nuvera) have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information, rules and regulations of the Securities and Exchange Commission (SEC) and, where applicable, conform to the accounting principles as prescribed by federal and state telephone utility regulatory authorities. Certain information and disclosures normally included in annual financial statements prepared in accordance with GAAP have been omitted or condensed pursuant to such rules and regulations. In the opinion of management, the unaudited condensed consolidated financial statements reflect all adjustments (consisting only of normal and recurring accruals) considered necessary for the fair presentation of the financial statements and present fairly the results of operations, financial position and cash flows for the interim periods presented as required by Regulation S-X, Rule 10-01. These unaudited interim condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements and notes thereto contained in our Annual Report on Form 10-K for the year ended December 31, 2021. The preparation of our financial statements requires our management to make estimates and judgements that affect the reported amounts of assets, liabilities, revenue and expenses, and the related disclosure of contingent assets and liabilities at the date of the financial statements and during the reporting period. Actual results may differ from these estimates. The results of operations for the interim periods presented are not necessarily indicative of the results that may be expected for the fiscal year as a whole or any other interim period. Our consolidated financial statements report the financial condition and results of operations for Nuvera and its subsidiaries in one business segment: the Communications Segment. Inter-company transactions have been eliminated from the consolidated financial statements. Revenue Recognition See Note 2 – “Revenue Recognition” for a discussion of our revenue recognition policies. Cost of Services (excluding depreciation and amortization) Cost of services includes all costs related to delivery of communication services and products. These operating costs include all costs of performing services and providing related products including engineering, network monitoring and transportation costs. Selling, General and Administrative Expenses Selling, general and administrative expenses include direct and indirect selling expenses, customer service, billing and collections, advertising and all other general and administrative costs associated our operations. Depreciation and Amortization Expense We use the group life method (mass asset accounting) to depreciate the assets of our communications companies. Communications plant acquired in a given year is grouped into similar categories and depreciated over the remaining estimated useful life of the group. When an asset is retired, both the asset and the accumulated depreciation associated with that asset are removed from the books. Due to rapid changes in technology, selecting the estimated economic life of communications plant and equipment requires a significant amount of judgment. We periodically review data on expected utilization of new equipment, asset retirement activity and net salvage values to determine adjustments to our depreciation rates. Depreciation expense was $3,010,200 and $2,240,630 for the three months ended March 31, 2022 and 2021. The increase in depreciation expense in the first quarter of 2022 was primarily due to accelerated depreciation on our old copper cable networks as we transition to a new advanced fiber-to-the-premise (FTTP) network. We amortize our definite-lived intangible assets over their estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment. Income Taxes The provision for income taxes consists of an amount for taxes currently payable and a provision for tax consequences deferred to future periods. Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Significant components of our deferred taxes arise from differences (i) in the basis of property, plant and equipment due to the use of accelerated depreciation methods for tax purposes, as well as (ii) in partnership investments and intangible assets due to the difference between book and tax basis. Our effective income tax rate is normally higher than the United States tax rate due to state income taxes and permanent differences, however, our effective income tax rate was lower than the United States tax rate in the quarter ended March 31, 2021 due to the Small Business Administration’s (SBA) Payroll Protection Program (PPP) loan forgiveness not being taxable at the federal level at that time. We account for income taxes in accordance with GAAP, which requires an asset and liability approach to financial accounting and reporting for income taxes. As required by GAAP, we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. As of March 31, 2022 and December 31, 2021 we had $38,673 of unrecognized tax benefits that if recognized would affect the tax rate. We do not expect the total amount of unrecognized tax benefits to materially change over the next 12 months. We are primarily subject to United States, Minnesota, Iowa, Nebraska, North Dakota and Wisconsin income taxes. Tax years subsequent to 2017 remain open to examination by federal and state tax authorities. We are currently undergoing an examination by the State of Minnesota. We do not expect the results of the examination to have a material effect on our ongoing financial statements. Our policy is to recognize interest and penalties related to income tax matters as income tax expense. As of March 31, 2022 and December 31, 2021 we had $4,102 of accrued interest that related to income tax matters. Earnings and Dividends Per Share Basic and diluted net income per share are calculated as follows: Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Basic Diluted Basic Diluted Net Income $ 2,401,606 $ 2,401,606 $ 5,180,711 $ 5,180,711 Weighted-average common 5,111,622 5,124,540 5,202,832 5,210,554 Net income per share $ 0.47 $ 0.47 $ 1.00 $ 0.99 The weighted-average shares outstanding, basic and diluted, are calculated as follows: Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Basic Diluted Basic Diluted Weighted-average common 5,111,622 5,111,622 5,202,832 5,202,832 Unvested RSU's - 12,918 - 7,722 Weighted-average common 5,111,622 5,124,540 5,202,832 5,210,554 Nuvera’s Board of Directors (BOD) reviews quarterly dividend declarations based on our anticipated earnings, capital requirements and our operating and financial conditions. Recent Accounting Developments Effective January 1, 2021 we adopted Accounting Standards Update (ASU) 2020-06, “Accounting for Convertible Instruments in an Entity’s Own Equity.” ASU 2020-06 simplifies guidance on accounting for convertible instruments and contracts in an entity’s own equity including calculating diluted earnings per share. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures. Effective January 1, 2021, we adopted ASU 2019-12, “Income Taxes,” ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions and adding certain requirements to the general framework in Accounting Standards Codification (ASC) 740, “Income Taxes.” The new guidance will be applied prospectively. The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures. In November 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-10, “Disclosures by Business Entities about Government Assistance.” ASU 2021-10 requires disclosure by business entities of the types of government assistance received, the method of accounting for such assistance and the effects of the assistance on its financial statements. The new guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, with early adoption permitted. We are currently evaluating the impact this update will have on our related disclosures. In March 2020, the FASB issued (ASU) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In January 2021, the FASB issued ASU No. 2101-01, “Reference Rate Reform (Topic 848): Scope.” ASU 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU 2020-04 and ASU 2021-01 are both elective and are effective upon issuance through December 31, 2022. We are currently evaluating the impact these updates will have on our consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosures relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. The Company is required to adopt ASU 2016-13 for fiscal periods beginning after December 15, 2022, including interim periods within that fiscal year. Early adoption as of December 15, 2018 is permitted. We continue to evaluate the impact the adoption of ASU 2016-13 will have on our financial statements, which we expect will not have a significant impact on our consolidated financial statements. We have reviewed all other significant newly issued accounting pronouncements and determined that they are either not applicable to our business or that no material effect is expected on our financial position and results of operations. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Revenue from Contract with Customer [Text Block] | Note 2 – Revenue Recognition The Company recognizes revenue based on the following single principles-based, five-step model that is applied to all contracts with customers. These steps include (1) identify the contact(s) with the customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when each performance obligation is satisfied. Our revenue contracts with customers may include a promise or promises to deliver services such as broadband, video or voice services. Promised services are considered distinct as the customer can benefit from the services either on their own or together with other resources that are readily available to the customer and the Company’s promise to transfer service to the customer is separately identifiable from other promises in the contract. The Company accounts for services as separate performance obligations. Each service is considered a single performance obligation as it is providing a series of distinct services that are substantially the same and have the same pattern of transfer. The transaction price is determined at contract inception and reflects the amount of consideration to which we expect to be entitled in exchange for transferring service to the customer. This amount is generally equal to the market price of the services promised in the contract and may include promotional or bundling discounts. The majority of our prices are based on tariffed rates filed with regulatory bodies or standard company price lists. The transaction price excludes amounts collected on behalf of third parties such as sales taxes and regulatory fees. Conversely, nonrefundable up-front fees, such as service activation and set-up fees, which are immaterial to our overall revenues, are included in the transaction price. In determining the transaction price, we consider our enforceable rights and obligations within the contract. We do not consider the possibility of a contract being cancelled, renewed or modified, which is consistent with ASC 606-10-32-4. The transaction price is allocated to each performance obligation based on the standalone selling price of the service, net of the related discount, as applicable. Revenue is recognized when performance obligations are satisfied by transferring service to the customer as described below. Significant Judgements The Company often provides multiple services to a customer. Provision of customer premise equipment (CPE) and additional service tiers may have a significant level of integration and interdependency with the subscription voice, video, Internet or connectivity services. Judgement is required to determine whether the provision of CPE, installation services and additional service tiers are considered distinct and accounted for separately, or not distinct and accounted for together with the subscription services. Allocation of the transaction price to the distinct performance obligations in bundled service subscriptions requires judgement. The transaction price for a bundle of services is frequently less than the sum of standalone selling prices of each individual service. Bundled discounts are allocated proportionally to the selling price of each individual service within the bundle. Standalone selling prices for the Company’s services are directly observable. Disaggregation of Revenue The following table summarizes revenue from contracts with customers for the quarters ended March 31, 2022 and 2021: Three Months Ended March 31, 2022 2021 Voice Service¹ $ 1,611,058 $ 1,785,080 Network Access¹ 1,325,637 1,611,197 Video Service¹ 3,141,352 3,027,547 Data Service¹ 6,149,460 5,755,470 Directory² 161,092 178,119 Other Contracted Revenue³ 671,607 624,494 Other 4 305,501 301,088 Revenue from customers 13,365,707 13,282,995 Subsidy and other revenue 5 3,109,065 3,195,128 Total revenue $ 16,474,772 $ 16,478,123 ¹ Month-to-Month contracts billed and consumed in the same month. ² Directory revenue is contracted annually, however, this revenue is recognized ³ This includes long-term contracts where the revenue is recognized monthly over 4 This includes CPE and other equipment sales. 5 This includes governmental subsidies and lease revenue outside the scope of ASC For the three months ended March 31, 2022, approximately 79.28% of our total revenue was from month-to-month and other contracted revenue from customers. Approximately 18.87% of our total revenue was from revenue sources outside of the scope of ASC 606. The remaining 1.85% of total revenue was from other sources including CPE and equipment sales and installation. For the three months ended March 31, 2021, approximately 78.78% of our total revenue was from month-to-month and other contracted revenue from customers. Approximately 19.39% of our total revenue was from revenue sources outside of the scope of ASC 606. The remaining 1.83% of total revenue was from other sources including CPE and equipment sales and installation. A significant portion of our revenue is derived from customers who may generally cancel their subscriptions at any time without penalty. As such, the amount of revenue related to unsatisfied performance obligations is not necessarily indicative of the future revenue to be recognized from our existing customer base. Revenue from customers with a contractually specified term and non-cancelable service period will be recognized over the term of such contracts, which is generally 3 to 10 years for these types of contracts. Nature of Services Revenues are earned from our customers primarily through the connection to our advanced fiber networks, digital and commercial television (TV) programming, Internet services (high-speed broadband), and hosted and managed services. Revenues for these services are billed based on set rates for monthly service or based on the amount of time the customer is utilizing our facilities. The revenue for these services is recognized over time as the service is rendered. Voice Service – We receive recurring revenue for basic local services that enable end-user customers to make and receive telephone calls within a defined local calling area for a flat monthly fee. In addition to subscribing to basic local telephone services, our customers may choose from multiple voice service plans with a variety of custom calling features such as call waiting, call forwarding, caller identification and voicemail. Our Voice over Internet Protocol (VoIP) digital phone service is also available as an alternative to the traditional telephone line. Customers may generally cancel their subscriptions at any time without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized over a one-month service period as the subscription services are delivered. Other optional services purchased by the customer are generally accounted for as a distinct performance obligation when purchased and revenue is recognized when the service is provided. Network Access – We provide access services to other communication carriers for the use of our facilities to terminate or originate long distance calls on our network. Additionally, we bill monthly subscriber line charges (SLCs) to substantially all of our customers for access to the public switched network. These monthly SLCs are regulated and approved by the Federal Communications Commission (FCC). In addition, network access revenue is derived from several federally administered pooling arrangements designed to provide support and distribute funding to us. Revenues earned from other communication carriers accessing our network are based on the utilization of our network by these carriers as measured by minutes of use on the network or special access to the network by the individual carriers on a monthly basis. Revenues are billed at tariffed access rates for both interstate and intrastate calls and are recognized into revenue monthly based on the period the access was provided. The National Exchange Carriers Association (NECA) pools and redistributes the SLCs to various communication providers through the Connect America Fund (CAF). These revenues are earned and recognized into revenue on a monthly basis. Any adjustments to these amounts received by NECA are adjusted for in revenue upon receipt of the adjustment. Video Service – We provide a variety of enhanced video services on a monthly recurring basis to our customers. We also receive monthly recurring revenue from our subscribers for providing commercial TV programming in competition with local cable TV (CATV), satellite dish TV and off-air TV service providers. We serve twenty-two communities with our IPTV services and five communities with our CATV services. Customers may generally cancel their subscriptions at any time without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized over a one-month service period as the subscription services are delivered. Other optional services purchased by the customer are generally accounted for as a distinct performance obligation when purchased and revenue is recognized when the service is provided. Data Service – We provide high speed Internet to business and residential customers depending on the nature of the network facilities that are available, the level of service selected and the location. Our revenue is earned based on the offering of various flat packages based on the level of service, data speeds and features. We also provide e-mail and managed services, such as web hosting and design, on-line file back up and on-line file storage. Data customers may generally cancel their subscriptions at any time without penalty. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized over a one-month service period as the subscription services are delivered. Other optional services purchased by the customer are generally accounted for as a distinct performance obligation when purchased and revenue is recognized when the service is provided. Directory – Our directory publishing revenue in our telephone directories recurs monthly and is recognized into revenue on a monthly basis. Other Contracted Revenue - Managed services and certain other data customers include advanced fiber-delivered communications and managed information technology solutions to mainly business customers, as well as high-capacity last-mile data connectivity services to wireless and wireline carriers. Services are primarily offered on a subscription basis with a contractually specified and non-cancelable service period. The non-cancelable contract terms for these customers generally range from 3 to 10 years. Each subscription service provided is accounted for as a distinct performance obligation and revenue is recognized ratably over the contract period as the subscription services are delivered. These services are billed as monthly recurring charges to customers. Other – We also generate revenue from the sales, service and installation of CPE and other services. Sales and service of CPE are billed and recognized into revenue once the sale or service is complete or delivered. These sales and services are generally short-term in nature and are completed within one month. Other revenues are immaterial to our total revenues. Subsidy and Other Revenue outside the Scope of ASC 606 – We receive subsidies from governmental entities to operate and expand our advanced fiber networks. In addition, we have revenue from leasing arrangements. Both of these revenue streams are outside of the scope of ASC 606. Interstate access rates are established by a nationwide pooling of companies known as NECA. The FCC established NECA in 1983 to develop and administer interstate access service rates, terms and conditions. Revenues are pooled and redistributed on the basis of a company's actual or average costs. There has been a change in the composition of interstate access charges in recent years, shifting more of the charges to the end user and reducing the amount of access charges paid by the interexchange carriers (IXC’s). We believe this trend will continue. Intrastate access rates are filed with state regulatory commissions in Minnesota and Iowa. The Company currently receives funding based on the Alternative Connect America Cost Model (A-CAM) as described below, with the exception of Scott-Rice Telephone Company (Scott-Rice), which receives funding from the Federal Universal Service Fund (FUSF). Scott-Rice’s settlements from the pools are based on nationwide average schedules, which includes the pooling and redistribution of revenues based on a company’s actual or average costs as described below. A-CAM As described above, with the exception of Scott-Rice, the remainder of our companies receive funding from A-CAM. Per the FCC Public Notice DA 19-115, the Company receives A-CAM support and has corresponding service deployment obligations under that program. The Company annually receives (i) $596,084 for its Iowa operations and (ii) $8,354,481 for its Minnesota operations. The Company will receive the revised A-CAM offer for a period of 10 years, which started in 2019. The Company uses the funding that it receives through the A-CAM program to meet its defined broadband build-out obligations, which the Company is currently completing. Accounts Receivable, Contract Assets and Contract Liabilities The following table provides information about our receivables, contracts assets and contract liabilities from revenue contracts with our customers: Quarter Ended March 31, 2022 2021 Accounts receivable, net $ 1,790,323 $ 1,479,643 Contract assets 701,963 522,826 Contract liabilities 849,479 901,130 Accounts Receivable A receivable is recognized in the period the Company provides goods and services when the Company’s right to consideration is unconditional. Payment terms on invoiced amounts are generally 30-60 days. Contract Assets Contract assets include costs that are incremental to the acquisition of a contract. Incremental costs are those that result directly from obtaining a contract or costs that would not have been incurred if the contract had not been obtained, which primarily relates to sales commissions. We defer and amortize these costs over the expected customer life as the contract obligations are satisfied. We determined that the expected customer life is the expected period of benefit as the commission on the renewal contact is commensurate with the commission on the initial contract. During the quarters ended March 31, 2022 and 2021, the Company recognized expenses of $65,645 and $38,033, respectively, related to deferred contract acquisition costs. Short-term contract assets are included in current assets under prepaid expenses and other current assets. Long-term contract assets are included in investments and other assets under other assets. Contract Liabilities Contract liabilities include deferred revenues related to advanced payments for services and nonrefundable, upfront service activation and set-up fees, which under the new standard are generally deferred. In addition, contract liabilities include customer deposits that are not recognized into revenue, but are instead returned to the customer after a holding period. Short-term contract liabilities include deferred revenues for advanced payments for managed services and other long-term contracts. This includes the current portion of the deferred revenues that will be recognized monthly within one year. Short-term contract liabilities are included in current liabilities under other accrued liabilities. Long-term contract liabilities include deferred revenues for advanced payments for managed services and other long-term contracts. This includes the portion longer than one year and the corresponding deferred revenues are recognized into revenue on a monthly basis based on the term of the contract. Long-term contract liabilities are included in noncurrent liabilities under other accrued liabilities. During the quarters ended March 31, 2022 and 2021, the Company recognized revenues of $182,475 and $174,242, respectively, related to deferred revenues. Performance Obligations ASC 606, Revenue from Contracts with Customers, requires that the Company disclose the aggregate amount of the transaction price that is allocated to remaining performance obligations that are unsatisfied as of December 31, 2021. The guidance provides certain practical expedients that limit this requirement. The service revenue contracts of the Company meet the following practical expedients provided by ASC 606: 1. 2. The Company has elected these practical expedients. Performance obligations related to our service revenue contracts are generally satisfied over time. For services transferred over time, revenue is recognized based on amounts invoiced to the customer as the Company has concluded that the invoice amount directly corresponds with the value of services provided to the customer. Management considers this a faithful depiction of the transfer of control as services are substantially the same and have the same pattern of transfer over the life of the contract. As such, revenue related to unsatisfied performance obligations that will be billed in future periods has not been disclosed. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2022 | |
Disclosure Text Block [Abstract] | |
Lessee, Operating Leases [Text Block] | Note 3 – Leases Under FASB’s ASU 2016-02, “Leases,” which, together with its related clarifying ASUs, provided revised guidance for lease accounting and related disclosure requirements and established a right-to-use (ROU) model that requires lessees to record a ROU asset and a lease liability on the balance sheet for all leases with terms longer than 12 months. Leases will be classified as either finance or operating, with classification affecting the pattern of expense recognition. The ASU also requires disclosures to allow financial statement users to better understand the amount, timing and uncertainty of cash flows arising from leases. These disclosures include qualitative requirements, providing additional information about the amounts recorded in the financial statements. The following table includes the ROU and operating lease liabilities as of March 31, 2022 and December 31, 2021. Right of Use Asset Balance Balance Operating Lease Right-Of-Use Assets $ 1,084,600 $ 1,154,293 Operating Lease Liability Balance Balance Short-Term Operating Lease Liability $ 287,862 $ 283,167 Long-Term Operating Lease Liability 831,780 905,528 Total $ 1,119,642 $ 1,188,695 Maturity analysis under these lease agreements are as follows: Maturity Analysis Balance 2022 (remaining) $ 261,129 2023 348,708 2024 236,948 2025 120,881 2026 71,023 Thereafter 309,800 Total 1,348,489 Less Imputed Interest (228,847) Present Value of Operating Leases $ 1,119,642 We amortize our leases over the shorter of the term of the lease or the useful life of the asset. Lease expense for the three months ended March 31, 2022 and 2021 was $87,289 and $91,877, respectively. |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value Disclosures [Text Block] | Note 4 – Fair Value Measurements We have adopted the rules prescribed under GAAP for our financial assets and liabilities. GAAP includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources, while unobservable inputs reflect a reporting entity’s pricing based upon its own market assumptions. The fair value hierarchy consists of the following three levels: Level 1: Inputs are quoted prices in active markets for identical assets or liabilities. Level 2: Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs that are derived principally from or corroborated by observable market data. Level 3: Inputs are derived from valuation techniques where one or more significant inputs or value drivers are unobservable. We have used financial derivative instruments to manage our overall cash flow exposure to fluctuations in interest rates. We accounted for derivative instruments in accordance with GAAP that requires derivative instruments to be recorded on the balance sheet at fair value. Changes in fair value of derivative instruments must be recognized in earnings unless specific hedge accounting criteria are met, in which case, the gains and losses are included in other comprehensive income rather than in earnings. We have entered into interest rate swap agreements (IRSAs) with our lender, CoBank, ACB (CoBank) to manage our cash flow exposure to fluctuations in interest rates. These instruments are designated as cash flow hedges and are effective at mitigating the risk of fluctuations on interest rates in the marketplace. Any gains or losses related to changes in the fair value of these derivatives are accounted for as a component of accumulated other comprehensive income (loss) for as long as the hedge remains effective. The fair value of our IRSAs is discussed in Note 7 – “Interest Rate Swaps”. The fair value of our swap agreements was determined based on Level 2 inputs. Other Financial Instruments Other Investments - We conducted an evaluation of our investments in all of our investees in connection with the preparation of our audited financial statements at December 31, 2021. As of March 31, 2022, we believe the carrying value of our investments is not impaired. Debt – We estimate the fair value of our long-term debt based on the discounted future cash flows we expect to pay using current rates of borrowing for similar types of debt. Fair value of the debt approximates carrying value. Other Financial Instruments - Our financial instruments also include cash equivalents, trade accounts receivable and accounts payable where the current carrying amounts approximate fair market value. |
Goodwill and Intangibles
Goodwill and Intangibles | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill and Intangible Assets Disclosure [Text Block] | Note 5 – Goodwill and Intangibles We account for goodwill and other intangible assets under GAAP. Under GAAP, goodwill and intangible assets with indefinite useful lives are not amortized, but are instead tested for impairment (i) on at least an annual basis and (ii) when changes in circumstances indicate that the fair value of goodwill may be below its carrying value. These circumstances include, but are not limited to (i) a significant adverse change in the business climate, (ii) unanticipated competition or (iii) an adverse action or assessment by a regulator. Determining impairment involves estimating the fair value of a reporting unit using a combination of (i) the income or DCF approach and (ii) the market approach that utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds its fair value, the amount of the impairment loss must be measured. The impairment loss is calculated by comparing the implied fair value of the reporting unit’s goodwill to its carrying amount. In calculating the implied fair value of the reporting unit’s goodwill, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied value of goodwill. We recognize impairment loss when the carrying amount of goodwill exceeds its implied fair value. Our goodwill totaled $49,903,029 at March 31, 2022 and December 31, 2021. In 2021 and 2020, we engaged an independent valuation firm to aid in the completion of our annual impairment testing for existing goodwill. For 2021 and 2020, the testing results indicated no impairment charge to goodwill as the determined fair value was sufficient to pass the impairment test. Our intangible assets subject to amortization consist of acquired customer relationships, regulatory rights and trade names. We amortize intangible assets with finite lives over their respective estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment. In addition, we periodically reassess the carrying value, useful lives and classifications of our identifiable intangible assets. The components of our identified intangible assets are as follows: March 31, 2022 December 31, 2021 Useful Lives Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Definite-Lived Intangible Assets Customers Relationships 14-15 yrs $ 42,878,445 $ 29,211,968 $ 42,878,445 $ 28,806,055 Regulatory Rights 15 yrs 4,000,000 3,799,965 4,000,000 3,733,299 Trade Name 3-5 yrs 310,106 226,949 310,106 211,444 Indefinitely-Lived Intangible Assets Video Franchise 3,000,000 - 3,000,000 - Spectrum 877,814 - 877,814 - Total $ 51,066,365 $ 33,238,882 $ 51,066,365 $ 32,750,798 Net Identified Intangible Assets $ 17,827,483 $ 18,315,567 Amortization expense related to the definite-lived intangible assets was $488,074 and $830,942 for the three months ended March 31, 2022 and 2021. Amortization expense for the remaining nine months of 2022 and the five years subsequent to 2022 is estimated to be: ● (April 1 – December 31) $ 1,464,292 ● 2023 $ 1,660,295 ● 2024 $ 1,623,654 ● 2025 $ 1,618,732 ● 2026 $ 1,613,809 ● 2027 $ 906,667 |
Secured Credit Facility
Secured Credit Facility | 3 Months Ended |
Mar. 31, 2022 | |
Secured Credit Facility [Abstract] | |
Secured Credit Facility [Text Block] | Note 6 – Secured Credit Facility We have a master loan agreement with CoBank. Nuvera and its respective subsidiaries also have security agreements under which substantially all the assets of Nuvera and its respective subsidiaries have been pledged to CoBank as collateral. In addition, Nuvera and its respective subsidiaries have guaranteed all the obligations under the credit facility. These mortgage notes are required to be paid in quarterly installments covering principal and interest, beginning in September 2018 and maturing on July 31, 2025. On March 16, 2022, Nuvera and CoBank entered into (i) an Agreement Regarding Amendments to Loan Documents and (ii) an Amended and Restated Revolving Loan Promissory Note. The agreements amended our existing credit facility with CoBank. Under the Agreements, among other thing, (i) the Company’s revolving loan was increased from $10.0 million to $20.0 million, (ii) the maturity date of the revolving loan was set at June 30, 2022, and (iii) the Company operating subsidiaries’ agreed to extend their previous guarantees, security interests and mortgages to cover the increased amount of the revolving note. The Company is currently working on entering into a new credit facility with CoBank to replace this line of credit increase and its other existing credit facility in the second quarter of 2022. The new credit facility will be structured to meet Nuvera’s existing and expected future liquidity and capital resource needs. We generally use variable-rate debt to finance our operations, capital expenditures and acquisitions. These variable-rate debt obligations expose us to variability in interest payments due to changes in interest rates. The terms of our credit facility with CoBank require that we enter into interest rate agreements designed to protect us against fluctuations in interest rates, in an aggregate principal amount and for a duration determined under the credit facility. As described in Note 7 – “Interest Rate Swaps,” on August 1, 2018 we entered into an IRSA with CoBank covering 25 percent of our existing debt balance or $16,137,500 of our aggregate indebtedness to CoBank on August 1, 2018. As of March 31, 2022, our IRSA covered $11,815,250, with a weighted average interest rate of 5.27%. As described in Note 7 – “Interest Rate Swaps,” on August 29, 2019 we entered into a second IRSA with CoBank covering an additional $42,000,000 of our aggregate indebtedness to CoBank on August 29, 2019. As of March 31, 2022, our IRSA covered $33,116,037, with a weighted average interest rate of 3.50%. Our remaining debt of $20.8 million ($16.8 million available under the revolving credit facilities and $4.0 million currently outstanding) remains subject to variable interest rates at an effective weighted average interest rate of 2.70%, as of March 31, 2022. Our loan agreements include restrictions on our ability to pay cash dividends to our stockholders. However, we are allowed to pay dividends (a) (i) in an amount up to $2,700,000 in any year if our “Total Leverage Ratio,” that is, the ratio of our “Indebtedness” to “EBITDA” (earnings before interest, taxes, depreciation and amortization – as defined in the loan documents), is greater than 2.00 to 1.00, and (ii) in any amount if our Total Leverage Ratio is less than 2.00 to 1.00, and (b) in either case, if we are not in default or potential default under the loan agreements. On December 31, 2020, our Total Leverage Ratio fell below 2.00, thus eliminating any restrictions on our ability to pay cash dividends to our stockholders. Our current Total Leverage Ratio as of March 31, 2022, is 1.86. Our credit facility requires us to comply with specified financial ratios and tests. These financial ratios include total leverage ratio, debt service coverage ratio, equity to total assets ratio and annual maximum aggregate capital expenditures. At March 31, 2022, we were in compliance with all the stipulated financial ratios in our loan agreements. There are security and loan agreements underlying our current CoBank credit facility that contain restrictions on our distributions to stockholders and investment in, or loans, to others. Also, our credit facility contains restrictions that, among other things, limits or restricts our ability to enter into guarantees and contingent liabilities, incur additional debt, issue stock, transact asset sales, transfers or dispositions, and engage in mergers and acquisitions, without CoBank approval. On April 16, 2020, Nuvera received a $2,889,000 loan under the SBA’s PPP, which was established as part of the Coronavirus Aid, Relief Economic Security Act, or CARES Act. The PPP Loan was unsecured and was evidenced by a note in the favor of Citizens as the lender On February 3, 2021, the Company was notified by Citizens, the lender on the Company’s PPP Loan that Citizens had received payment in full from the United States federal government for the amount of the Company’s PPP Loan and the Company’s PPP Loan had been fully forgiven. We recognized a gain on the forgiveness of $2,912,433, which included the original amount of the loan plus accrued interest in the quarter ended March 31, 2021. |
Interest Rate Swaps
Interest Rate Swaps | 3 Months Ended |
Mar. 31, 2022 | |
Disclosure Text Block Supplement [Abstract] | |
Financial Instruments Disclosure [Text Block] | Note 7 – Interest Rate Swaps We assess interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely affect expected future cash flows and by evaluating hedging opportunities. We generally use variable-rate debt to finance our operations, capital expenditures and acquisitions. These variable-rate debt obligations expose us to variability in interest payments due to changes in interest rates. The terms of our credit facility with CoBank required that we enter into interest rate agreements designed to protect us against fluctuations in interest rates, in an aggregate principal amount and for a duration determined under the credit facility. To meet this objective, we have entered into an IRSA with CoBank covering 25 percent of our existing outstanding debt balance or $16,137,500 of our aggregate indebtedness to CoBank at August 1, 2018. The swap effectively locked in the interest rate on 25 percent of our variable-rate debt through July 2025. Under this IRSA, we have changed the variable-rate cash flow exposure on the debt obligations to fixed cash flows. Under the terms of the IRSA, we pay a fixed contractual interest rate and (i) make an additional payment if the London Interbank Offering Rate (LIBOR) variable rate payment is below a contractual rate or (ii) receive a payment if the LIBOR variable rate payment is above the contractual rate. On August 29, 2019, we entered into a second IRSA with CoBank covering an additional $42,000,000 of our aggregate indebtedness to CoBank on August 29, 2019. The swap effectively locked in a significant portion of our variable-rate debt through July 2025. Under this IRSA, we have changed the variable rate cash flow exposure on the debt obligations to fixed cash flows. Under the terms of the IRSA, we pay a fixed contractual interest rate and (i) make an additional payment if the LIBOR variable rate payment is below a contractual rate or (ii) receive a payment if the LIBOR variable rate payment is above the contractual rate. Each month, we make interest payments to CoBank under its loan agreements based on the current applicable LIBOR Rate plus the contractual LIBOR margin then in effect with respect to the loan, without reflecting our IRSAs. At the end of each calendar month, CoBank adjusts our aggregate interest payments based on the difference, if any, between the amounts paid by us during the month and the current effective interest rate. Net interest payments are reported in our consolidated income statement as interest expense. Our IRSAs under our credit facilities both qualify as cash flow hedges for accounting purposes under GAAP. We reflect the effect of these hedging transactions in the financial statements. The unrealized gain/loss is reported in other comprehensive income. If we terminate our IRSAs, the cumulative change in fair value at the date of termination would be reclassified from accumulated other comprehensive income, which is classified in stockholders’ equity, into earnings on the consolidated statements of income. The fair value of the Company’s IRSAs were determined based on valuations received from CoBank and were based on the present value of expected future cash flows using discount rates appropriate with the terms of the IRSAs. The fair value indicates an estimated amount we would be required to pay if the contracts were canceled or transferred to other parties. On March 31, 2022, the fair value of these swaps was $916,460, which has been recorded net of deferred tax of $261,558, resulting in the $654,902 in accumulated other comprehensive income. On March 31, 2021, the fair value liability of these swaps was $1,776,057, which has been recorded net of deferred tax benefit of $506,887, resulting in the $1,269,170 in accumulated other comprehensive loss. |
Other Investments
Other Investments | 3 Months Ended |
Mar. 31, 2022 | |
Other Investments [Abstract] | |
Other Investments [Text Block] | Note 8 – Other Investments We are a co-investor with other communication companies in several partnerships and limited liability companies. These joint ventures make it possible to offer services to customers, including digital video services and fiber transport services that we would have difficulty offering on our own. These joint ventures also make it possible to invest in new technologies with a lower level of financial risk. We recognize income and losses from these investments on the equity method of accounting. For a listing of our investments, see Note 11 – “Segment Information.” The FASB requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value with changes in fair value recognized in net income. However, an entity may choose to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. As of March 31, 2022, we had not recorded any gains or losses on our investments. |
Guarantees
Guarantees | 3 Months Ended |
Mar. 31, 2022 | |
Guarantees [Abstract] | |
Guarantees [Text Block] | Note 9 – Guarantees Nuvera has guaranteed a portion of a ten-year loan owed by FiberComm, LC, set to mature on April 30, 2026. As of March 31, 2022, we have recorded a liability of $209,367 in connection with the guarantee on this loan. This guarantee may be exercised if FiberComm, LC does not make its required payments on this note. |
Incentive and Retirement Plans
Incentive and Retirement Plans | 3 Months Ended |
Mar. 31, 2022 | |
Retirement Benefits [Abstract] | |
Retirement Benefits [Text Block] | Note 10 – Incentive and Retirement Plans We have an Employee Incentive Plan for employees other than executive officers and a Management Incentive Plan for executive officers. Both plans were implemented in 2006. The Plan permits the issuance of up to 200,000 shares of our Common Stock in stock awards. Each qualified employee of the Company may elect to receive up to 50% of their incentive compensation in Company Common Stock in lieu of cash. Each of the Company’s Executive Officers are required to receive 50% of their incentive compensation earned in Company Common Stock in lieu of cash. As of March 31, 2022, 155,399 shares remain available to be issued under the Plan. Our BOD adopted the 2017 Omnibus Stock Plan effective May 25, 2017. The shareholders of the Company approved the Plan at the May 25, 2017 Annual Meeting of Shareholders. The Plan enables the Company to grant stock incentive awards to current and new employees, including officers, and to Board members and service providers. The Plan permits stock incentive awards in the form of options (incentive and non-qualified), stock appreciation rights, restricted stock, restricted stock units (RSUs), performance stock, performance units, and other awards in stock or cash. The Plan permits the issuance of up to 625,000 shares of our Common Stock in any of the above stock awards. As of March 31, 2022, 557,563 shares remain available to be issued under the Plan. Starting in 2017 and each subsequent year following 2017, our BOD and Compensation Committee granted awards to the Company’s executive officers under the Plan. We recognize share-based compensation expense for these RSUs over the vesting period of the RSUs which is determined by our BOD. Forfeitures of RSU’s are accounted for as they occur. Each executive officer received or may receive time-based RSUs and performance-based RSUs. The time-based RSUs are computed as a percentage of the executive officer’s base salary based on the closing price of Company common stock on a date set by the BOD, and will vest over a three-year period based on the executive officer being employed by the Company on the vesting date. The performance-based RSUs are also computed as a percentage of the executive officer’s base salary based on the closing price of Company common stock on a date set by the BOD, and will vest over a three-year period based on the Company attaining an average Return on Invested Capital (ROIC) over that three-year period. The ROIC target is set by the BOD. Executive officers may earn more or less performance-based RSU’s based on if the actual ROIC over the time period is more or less than target. Upon vesting of either time-based or performance-based RSUs, the executive officers will be able to receive Common Stock in the Company in exchange for the RSUs. RSUs currently issued and outstanding are as follows: Time-Based RSU's Targeted Performance-Based RSU's Closing Stock Price Vesting Date Balance at December 31, 2020 7,638 9,611 Issued 3,364 5,247 $ 21.90 12/31/2023 Exercised - (1,588) $ 23.67 12/31/2020 Exercised (1,562) - $ 21.75 12/31/2021 Balance at December 31, 2021 9,440 13,270 Forfeited - (2,637) Balance at March 31, 2022 9,440 10,633 In 2022, after considerable study, discussion and interaction with our consultants, the Compensation Committee decided to replace RSUs with non-qualified stock options (Options). The Compensation Committee believes that grants of Options more directly align management long-term equity compensation with increased shareholder value creation at a time when the Company is engaged in significant investment and transformation as part of its long-term strategy. The Compensation Committee also determined to extend the grant of Options to Named Executive Officers, senior employee directors and other employee directors as key members of the Company leadership team and contributors of overall success. |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2022 | |
Segment Reporting [Abstract] | |
Segment Reporting Disclosure [Text Block] | Note 11 – Segment Information We operate in the Communications Segment and have no other significant business segments. The Communications Segment consists of voice, data and video communication services delivered to the customer over our advanced fiber communications network. No single customer accounted for a material portion of our consolidated revenues. The Communications Segment operates the following communications companies and has investment ownership interests as follows: Communications Segment ● Communications Companies: ▪ Nuvera Communications, Inc., the parent company; ▪ Hutchinson Telephone Company (HTC), a wholly-owned subsidiary of Nuvera; ▪ Peoples Telephone Company, a wholly-owned subsidiary of Nuvera; ▪ Scott-Rice Telephone Co., a wholly-owned subsidiary of Nuvera; ▪ Sleepy Eye Telephone Company, a wholly-owned subsidiary of Nuvera; ▪ Western Telephone Company, a wholly-owned subsidiary of Nuvera; and ▪ Hutchinson Telecommunications, Inc., a wholly-owned subsidiary of HTC, located in Litchfield and Glencoe, Minnesota; ● Our investments and interests in the following entities include some management responsibilities: ▪ FiberComm, LC – 20.00% subsidiary equity ownership interest. FiberComm, LC is located in Sioux City, Iowa; ▪ Broadband Visions, LLC (BBV) – 24.30% subsidiary equity ownership interest. BBV provides video headend and Internet services; ▪ Independent Emergency Services, LLC (IES) – 14.29% subsidiary equity ownership interest. IES is a provider of E-911 services to the State of Minnesota as well as a number of counties located in Minnesota; and ▪ Fiber Minnesota, LLC (FM) – 7.54% subsidiary equity ownership interest. FM is a Minnesota state-wide network that provides connectivity for regional businesses. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies Disclosure [Text Block] | Note 12 – Commitments and Contingencies We are involved in certain contractual disputes in the ordinary course of business. We do not believe the ultimate resolution of any of these existing matters will have a material adverse effect on our financial position, results of operations or cash flows. We did not experience any changes to material contractual obligations in the first three months of 2022. Refer to the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 for the discussion relating to commitments and contingencies. |
Broadband Grants
Broadband Grants | 3 Months Ended |
Mar. 31, 2022 | |
Broadband Grants [Abstract] | |
Broadband Grants [Text Block] | Note 13 – Broadband Grants In January 2020, the Company was awarded a broadband grant from the Minnesota Department of Employment and Economic Development (DEED). The grant will provide up to 36.5% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved or underserved communities and businesses in the Company’s service area. The Company is eligible to receive $730,000 of approximately $2,000,000 total project costs. The Company will provide the remaining 63.5% matching funds. Construction and expenditures for these projects began in the spring of 2020 and were completed under budget in the third quarter of 2021. We have received $724,465 for these projects as of March 31, 2022. On January 29, 2021, the Company was awarded five broadband grants from the DEED. The grants will provide up to 35.4% of the total cost of building fiber connections to homes and businesses for improved high-speed Internet in unserved or underserved communities and businesses in the Company’s service area. The Company is eligible to receive $1,918,037 of the approximately $5,419,617 total project costs. The Company will provide the remaining 64.6% matching funds. Construction and expenditures for these projects began in the spring of 2021. We have not received any funds for these projects as of March 31, 2022. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Subsequent Events [Text Block] | Note 14 – Subsequent Events In its definitive proxy statement dated April 4, 2022 for its 2022 annual meeting of shareholders to be held on May 26, 2022, filed with the SEC on April 6, 2022, Nuvera disclosed that on March 31, 2022, the Company’s BOD and Compensation Committee authorized the issuance of Options as Awards to Named Executive Officers, senior employee directors and other employee directors under the 2017 Omnibus Stock Plan, but had not yet finalized the Black-Scholes analysis determining the value of the Options to be granted and therefore the number of Options to granted. On April 11, 2022, the BOD and Compensation Committee completed its analysis. The following language supplements and updates the proxy statement disclosure: The number of Options awarded was computed as a percentage of the employee’s base salary using a Black-Scholes formula using an exercise price equal to the closing price of Company common stock of $21.20 on April 11, 2022. These Options will vest one-third each on April 11, 2023, 2024 and 2025. Options Closing Stock Price Vesting Date Balance at December 31, 2021 - Issued 40,879 $ 21.20 4/11/2023 Issued 40,900 $ 21.20 4/11/2024 Issued 40,890 $ 21.20 4/11/2025 Balance at March 31, 2022 122,669 We have evaluated and disclosed subsequent events through the filing date of this Quarterly Report on Form 10-Q. |
Accounting Policies, by Policy
Accounting Policies, by Policy (Policies) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Revenue [Policy Text Block] | Revenue Recognition See Note 2 – “Revenue Recognition” for a discussion of our revenue recognition policies. |
Cost of Goods and Service [Policy Text Block] | Cost of Services (excluding depreciation and amortization) Cost of services includes all costs related to delivery of communication services and products. These operating costs include all costs of performing services and providing related products including engineering, network monitoring and transportation costs. |
Selling, General and Administrative Expenses, Policy [Policy Text Block] | Selling, General and Administrative Expenses Selling, general and administrative expenses include direct and indirect selling expenses, customer service, billing and collections, advertising and all other general and administrative costs associated our operations. |
Depreciation, Depletion, and Amortization [Policy Text Block] | Depreciation and Amortization Expense We use the group life method (mass asset accounting) to depreciate the assets of our communications companies. Communications plant acquired in a given year is grouped into similar categories and depreciated over the remaining estimated useful life of the group. When an asset is retired, both the asset and the accumulated depreciation associated with that asset are removed from the books. Due to rapid changes in technology, selecting the estimated economic life of communications plant and equipment requires a significant amount of judgment. We periodically review data on expected utilization of new equipment, asset retirement activity and net salvage values to determine adjustments to our depreciation rates. Depreciation expense was $3,010,200 and $2,240,630 for the three months ended March 31, 2022 and 2021. The increase in depreciation expense in the first quarter of 2022 was primarily due to accelerated depreciation on our old copper cable networks as we transition to a new advanced fiber-to-the-premise (FTTP) network. We amortize our definite-lived intangible assets over their estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment. |
Income Tax, Policy [Policy Text Block] | Income Taxes The provision for income taxes consists of an amount for taxes currently payable and a provision for tax consequences deferred to future periods. Deferred income taxes are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities, and their respective tax bases. Significant components of our deferred taxes arise from differences (i) in the basis of property, plant and equipment due to the use of accelerated depreciation methods for tax purposes, as well as (ii) in partnership investments and intangible assets due to the difference between book and tax basis. Our effective income tax rate is normally higher than the United States tax rate due to state income taxes and permanent differences, however, our effective income tax rate was lower than the United States tax rate in the quarter ended March 31, 2021 due to the Small Business Administration’s (SBA) Payroll Protection Program (PPP) loan forgiveness not being taxable at the federal level at that time. We account for income taxes in accordance with GAAP, which requires an asset and liability approach to financial accounting and reporting for income taxes. As required by GAAP, we recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more-likely-than-not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. As of March 31, 2022 and December 31, 2021 we had $38,673 of unrecognized tax benefits that if recognized would affect the tax rate. We do not expect the total amount of unrecognized tax benefits to materially change over the next 12 months. We are primarily subject to United States, Minnesota, Iowa, Nebraska, North Dakota and Wisconsin income taxes. Tax years subsequent to 2017 remain open to examination by federal and state tax authorities. We are currently undergoing an examination by the State of Minnesota. We do not expect the results of the examination to have a material effect on our ongoing financial statements. Our policy is to recognize interest and penalties related to income tax matters as income tax expense. As of March 31, 2022 and December 31, 2021 we had $4,102 of accrued interest that related to income tax matters. |
Earnings Per Share, Policy [Policy Text Block] | Earnings and Dividends Per Share Basic and diluted net income per share are calculated as follows: Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Basic Diluted Basic Diluted Net Income $ 2,401,606 $ 2,401,606 $ 5,180,711 $ 5,180,711 Weighted-average common 5,111,622 5,124,540 5,202,832 5,210,554 Net income per share $ 0.47 $ 0.47 $ 1.00 $ 0.99 The weighted-average shares outstanding, basic and diluted, are calculated as follows: Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Basic Diluted Basic Diluted Weighted-average common 5,111,622 5,111,622 5,202,832 5,202,832 Unvested RSU's - 12,918 - 7,722 Weighted-average common 5,111,622 5,124,540 5,202,832 5,210,554 Nuvera’s Board of Directors (BOD) reviews quarterly dividend declarations based on our anticipated earnings, capital requirements and our operating and financial conditions. |
New Accounting Pronouncements, Policy [Policy Text Block] | Recent Accounting Developments Effective January 1, 2021 we adopted Accounting Standards Update (ASU) 2020-06, “Accounting for Convertible Instruments in an Entity’s Own Equity.” ASU 2020-06 simplifies guidance on accounting for convertible instruments and contracts in an entity’s own equity including calculating diluted earnings per share. The adoption of this guidance did not have an impact on our consolidated financial statements and related disclosures. Effective January 1, 2021, we adopted ASU 2019-12, “Income Taxes,” ASU 2019-12 simplifies the accounting for income taxes by eliminating certain exceptions and adding certain requirements to the general framework in Accounting Standards Codification (ASC) 740, “Income Taxes.” The new guidance will be applied prospectively. The adoption of this guidance did not have a material impact on our consolidated financial statements and related disclosures. In November 2021, the Financial Accounting Standards Board (FASB) issued ASU 2021-10, “Disclosures by Business Entities about Government Assistance.” ASU 2021-10 requires disclosure by business entities of the types of government assistance received, the method of accounting for such assistance and the effects of the assistance on its financial statements. The new guidance is effective for financial statements issued for annual periods beginning after December 15, 2021, with early adoption permitted. We are currently evaluating the impact this update will have on our related disclosures. In March 2020, the FASB issued (ASU) 2020-04, “Facilitation of the Effects of Reference Rate Reform on Financial Reporting.” ASU 2020-04 provides optional expedients and exceptions for applying GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. In January 2021, the FASB issued ASU No. 2101-01, “Reference Rate Reform (Topic 848): Scope.” ASU 2021-01 clarifies that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivatives that are affected by the discounting transition. ASU 2020-04 and ASU 2021-01 are both elective and are effective upon issuance through December 31, 2022. We are currently evaluating the impact these updates will have on our consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments.” ASU 2016-13 requires entities to use a new forward-looking, expected loss model to estimate credit losses. It also requires additional disclosures relating to the credit quality of trade and other receivables, including information relating to management’s estimate of credit allowances. The Company is required to adopt ASU 2016-13 for fiscal periods beginning after December 15, 2022, including interim periods within that fiscal year. Early adoption as of December 15, 2018 is permitted. We continue to evaluate the impact the adoption of ASU 2016-13 will have on our financial statements, which we expect will not have a significant impact on our consolidated financial statements. We have reviewed all other significant newly issued accounting pronouncements and determined that they are either not applicable to our business or that no material effect is expected on our financial position and results of operations. |
Basis of Presentation and Con_2
Basis of Presentation and Consolidation (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Accounting Policies [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted [Table Text Block] | Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Basic Diluted Basic Diluted Net Income $ 2,401,606 $ 2,401,606 $ 5,180,711 $ 5,180,711 Weighted-average common 5,111,622 5,124,540 5,202,832 5,210,554 Net income per share $ 0.47 $ 0.47 $ 1.00 $ 0.99 |
Schedule of Weighted Average Number of Shares [Table Text Block] | Three Months Ended March 31, 2022 Three Months Ended March 31, 2021 Basic Diluted Basic Diluted Weighted-average common 5,111,622 5,111,622 5,202,832 5,202,832 Unvested RSU's - 12,918 - 7,722 Weighted-average common 5,111,622 5,124,540 5,202,832 5,210,554 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue [Table Text Block] | Three Months Ended March 31, 2022 2021 Voice Service¹ $ 1,611,058 $ 1,785,080 Network Access¹ 1,325,637 1,611,197 Video Service¹ 3,141,352 3,027,547 Data Service¹ 6,149,460 5,755,470 Directory² 161,092 178,119 Other Contracted Revenue³ 671,607 624,494 Other 4 305,501 301,088 Revenue from customers 13,365,707 13,282,995 Subsidy and other revenue 5 3,109,065 3,195,128 Total revenue $ 16,474,772 $ 16,478,123 ¹ Month-to-Month contracts billed and consumed in the same month. ² Directory revenue is contracted annually, however, this revenue is recognized ³ This includes long-term contracts where the revenue is recognized monthly over 4 This includes CPE and other equipment sales. 5 This includes governmental subsidies and lease revenue outside the scope of ASC |
Contract with Customer, Contract Asset, Contract Liability, and Receivable [Table Text Block] | Quarter Ended March 31, 2022 2021 Accounts receivable, net $ 1,790,323 $ 1,479,643 Contract assets 701,963 522,826 Contract liabilities 849,479 901,130 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Disclosure Text Block [Abstract] | |
ROU And Operating Lease Liabilities [Table Text Block] | Right of Use Asset Balance Balance Operating Lease Right-Of-Use Assets $ 1,084,600 $ 1,154,293 Operating Lease Liability Balance Balance Short-Term Operating Lease Liability $ 287,862 $ 283,167 Long-Term Operating Lease Liability 831,780 905,528 Total $ 1,119,642 $ 1,188,695 |
Lessee, Operating Lease, Liability, Maturity [Table Text Block] | Maturity Analysis Balance 2022 (remaining) $ 261,129 2023 348,708 2024 236,948 2025 120,881 2026 71,023 Thereafter 309,800 Total 1,348,489 Less Imputed Interest (228,847) Present Value of Operating Leases $ 1,119,642 |
Goodwill and Intangibles (Table
Goodwill and Intangibles (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets [Table Text Block] | March 31, 2022 December 31, 2021 Useful Lives Gross Carrying Amount Accumulated Amortization Gross Carrying Amount Accumulated Amortization Definite-Lived Intangible Assets Customers Relationships 14-15 yrs $ 42,878,445 $ 29,211,968 $ 42,878,445 $ 28,806,055 Regulatory Rights 15 yrs 4,000,000 3,799,965 4,000,000 3,733,299 Trade Name 3-5 yrs 310,106 226,949 310,106 211,444 Indefinitely-Lived Intangible Assets Video Franchise 3,000,000 - 3,000,000 - Spectrum 877,814 - 877,814 - Total $ 51,066,365 $ 33,238,882 $ 51,066,365 $ 32,750,798 Net Identified Intangible Assets $ 17,827,483 $ 18,315,567 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense [Table Text Block] | ● (April 1 – December 31) $ 1,464,292 ● 2023 $ 1,660,295 ● 2024 $ 1,623,654 ● 2025 $ 1,618,732 ● 2026 $ 1,613,809 ● 2027 $ 906,667 |
Incentive and Retirement Plans
Incentive and Retirement Plans (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Retirement Benefits [Abstract] | |
Share-Based Payment Arrangement, Restricted Stock Unit, Activity [Table Text Block] | Time-Based RSU's Targeted Performance-Based RSU's Closing Stock Price Vesting Date Balance at December 31, 2020 7,638 9,611 Issued 3,364 5,247 $ 21.90 12/31/2023 Exercised - (1,588) $ 23.67 12/31/2020 Exercised (1,562) - $ 21.75 12/31/2021 Balance at December 31, 2021 9,440 13,270 Forfeited - (2,637) Balance at March 31, 2022 9,440 10,633 |
Subsequent Events (Tables)
Subsequent Events (Tables) | 3 Months Ended |
Mar. 31, 2022 | |
Subsequent Events [Abstract] | |
Share-Based Payment Arrangement, Option, Activity [Table Text Block] | Options Closing Stock Price Vesting Date Balance at December 31, 2021 - Issued 40,879 $ 21.20 4/11/2023 Issued 40,900 $ 21.20 4/11/2024 Issued 40,890 $ 21.20 4/11/2025 Balance at March 31, 2022 122,669 |
Basis of Presentation and Con_3
Basis of Presentation and Consolidation (Details) | 3 Months Ended | ||
Mar. 31, 2022USD ($) | Mar. 31, 2021USD ($) | Dec. 31, 2021USD ($) | |
Accounting Policies [Abstract] | |||
Number of Reportable Segments | 1 | ||
Depreciation | $ 3,010,200 | $ 2,240,630 | |
Unrecognized Tax Benefits | 38,673 | $ 38,673 | |
Income Tax Examination, Interest Accrued | $ 4,102 | $ 4,102 |
Basis of Presentation and Con_4
Basis of Presentation and Consolidation (Details) - Basic and diluted net income per share - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Basic and diluted net income per share [Abstract] | ||
Net Income, Basic | $ 2,401,606 | $ 5,180,711 |
Net Income, Diluted | $ 2,401,606 | $ 5,180,711 |
Weighted-average common shares outstanding, Basic | 5,111,622 | 5,202,832 |
Weighted-average common shares outstanding, Diluted | 5,124,540 | 5,210,554 |
Net income per share, Basic | $ 0.47 | $ 1 |
Net income per share, Diluted | $ 0.47 | $ 0.99 |
Basis of Presentation and Con_5
Basis of Presentation and Consolidation (Details) - The weighted-average shares outstanding, basic and diluted, are calculated as follows: - shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
The weighted-average shares outstanding, basic and diluted, are calculated as follows: [Abstract] | ||
Weighted-average common shares outstanding, Basic | 5,111,622 | 5,202,832 |
Unvested RSU's | 12,918 | 7,722 |
Weighted-average common shares outstanding, Diluted | 5,124,540 | 5,210,554 |
Revenue Recognition (Details) -
Revenue Recognition (Details) - Disaggregation of Revenue | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Minimum [Member] | ||
Revenue Recognition (Details) - Disaggregation of Revenue [Line Items] | ||
Contract Term | 3 years | |
Maximum [Member] | ||
Revenue Recognition (Details) - Disaggregation of Revenue [Line Items] | ||
Contract Term | 10 years | |
Month To Month And Other Contracted Revenue [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member] | ||
Revenue Recognition (Details) - Disaggregation of Revenue [Line Items] | ||
Concentration Risk, Percentage | 79.28% | 78.78% |
Outside Of The Scope Of ASC 606 [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member] | ||
Revenue Recognition (Details) - Disaggregation of Revenue [Line Items] | ||
Concentration Risk, Percentage | 18.87% | 19.39% |
CPE and Equipment Sales and Installation [Member] | Revenue from Contract with Customer Benchmark [Member] | Customer Concentration Risk [Member] | ||
Revenue Recognition (Details) - Disaggregation of Revenue [Line Items] | ||
Concentration Risk, Percentage | 1.85% | 1.83% |
Revenue Recognition (Details)_2
Revenue Recognition (Details) - Nature of Services | 3 Months Ended |
Mar. 31, 2022 | |
Other Contracted Revenue [Member] | Minimum [Member] | |
Revenue Recognition (Details) - Nature of Services [Line Items] | |
Revenue Recognition Period | 3 years |
Other Contracted Revenue [Member] | Maximum [Member] | |
Revenue Recognition (Details) - Nature of Services [Line Items] | |
Revenue Recognition Period | 10 years |
Product and Service, Other [Member] | |
Revenue Recognition (Details) - Nature of Services [Line Items] | |
Revenue Recognition Period | 1 month |
Revenue Recognition (Details)_3
Revenue Recognition (Details) - A-CAM | 3 Months Ended |
Mar. 31, 2022USD ($) | |
Lowa Operations [Member] | |
Revenue Recognition (Details) - A-CAM [Line Items] | |
Construction Contractor, Receivable, Excluding Contract Retainage | $ 596,084 |
Minnesota Operations [Member] | |
Revenue Recognition (Details) - A-CAM [Line Items] | |
Construction Contractor, Receivable, Excluding Contract Retainage | $ 8,354,481 |
ACAM [Member] | |
Revenue Recognition (Details) - A-CAM [Line Items] | |
Contract Receivable Period | 10 years |
Revenue Recognition (Details)_4
Revenue Recognition (Details) - Accounts Receivable | 3 Months Ended |
Mar. 31, 2022 | |
Minimum [Member] | |
Revenue Recognition (Details) - Accounts Receivable [Line Items] | |
Payment Term | 30 days |
Maximum [Member] | |
Revenue Recognition (Details) - Accounts Receivable [Line Items] | |
Payment Term | 60 days |
Revenue Recognition (Details)_5
Revenue Recognition (Details) - Contract Assets - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Revenue from Contract with Customer [Abstract] | ||
Professional and Contract Services Expense | $ 65,645 | $ 38,033 |
Revenue Recognition (Details)_6
Revenue Recognition (Details) - Contract Liabilities - USD ($) | Mar. 31, 2022 | Mar. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Deferred Revenue, Noncurrent | $ 182,475 | $ 174,242 |
Revenue Recognition (Details)_7
Revenue Recognition (Details) - Revenue from contracts with customers - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||
Revenue from customers | $ 13,365,707 | $ 13,282,995 |
Subsidy and other revenue outside scope of ASC 6065 | 3,109,065 | 3,195,128 |
Total revenue | 16,474,772 | 16,478,123 |
Voice Services [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from customers | 1,611,058 | 1,785,080 |
Total revenue | 1,468,178 | 1,551,278 |
Network Access [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from customers | 1,325,637 | 1,611,197 |
Total revenue | 1,291,310 | 1,582,440 |
Video Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from customers | 3,141,352 | 3,027,547 |
Total revenue | 3,141,492 | 3,028,877 |
Data Service [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from customers | 6,149,460 | 5,755,470 |
Total revenue | 6,716,852 | 6,267,971 |
Directory [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from customers | 161,092 | 178,119 |
Other Contracted Revenue [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from customers | 671,607 | 624,494 |
Product and Service, Other [Member] | ||
Disaggregation of Revenue [Line Items] | ||
Revenue from customers | $ 305,501 | $ 301,088 |
Revenue Recognition (Details)_8
Revenue Recognition (Details) - Receivables, contracts assets and contract liabilities from revenue contracts with our customers - USD ($) | Mar. 31, 2022 | Mar. 31, 2021 |
Receivables, contracts assets and contract liabilities from revenue contracts with our customers [Abstract] | ||
Accounts receivable, net | $ 1,790,323 | $ 1,479,643 |
Contract assets | 701,963 | 522,826 |
Contract liabilities | $ 849,479 | $ 901,130 |
Leases (Details)
Leases (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Disclosure Text Block [Abstract] | ||
Operating Lease, Expense | $ 87,289 | $ 91,877 |
Leases (Details) - ROU and oper
Leases (Details) - ROU and operating lease liabilities - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Other Noncurrent Assets [Member] | ||
Leases (Details) - ROU and operating lease liabilities [Line Items] | ||
Operating Lease Right-Of-Use Assets | $ 1,084,600 | $ 1,154,293 |
Other Current Liabilities [Member] | ||
Leases (Details) - ROU and operating lease liabilities [Line Items] | ||
Short-Term Operating Lease Liability | 287,862 | 283,167 |
Other Noncurrent Liabilities [Member] | ||
Leases (Details) - ROU and operating lease liabilities [Line Items] | ||
Long-Term Operating Lease Liability | 831,780 | 905,528 |
Other Liabilities [Member] | ||
Leases (Details) - ROU and operating lease liabilities [Line Items] | ||
Total | $ 1,119,642 | $ 1,188,695 |
Leases (Details) - Maturity ana
Leases (Details) - Maturity analysis under these lease agreements - USD ($) | Mar. 31, 2022 | Dec. 31, 2021 |
Leases (Details) - Maturity analysis under these lease agreements [Line Items] | ||
2022 (remaining) | $ 261,129 | |
2023 | 348,708 | |
2024 | 236,948 | |
2025 | 120,881 | |
2026 | 71,023 | |
Thereafter | 309,800 | |
Total | 1,348,489 | |
Less Imputed Interest | (228,847) | |
Other Liabilities [Member] | ||
Leases (Details) - Maturity analysis under these lease agreements [Line Items] | ||
Present Value of Operating Leases | $ 1,119,642 | $ 1,188,695 |
Goodwill and Intangibles (Detai
Goodwill and Intangibles (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2022 | Mar. 31, 2021 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Goodwill | $ 49,903,029 | $ 49,903,029 | |
Amortization of Intangible Assets | $ 488,074 | $ 830,942 |
Goodwill and Intangibles (Det_2
Goodwill and Intangibles (Details) - Components of our identified intangible assets - USD ($) | 3 Months Ended | |
Mar. 31, 2022 | Dec. 31, 2021 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 51,066,365 | $ 51,066,365 |
Accumulated Amortization | 33,238,882 | 32,750,798 |
Net Identified Intangible Assets | 17,827,483 | 18,315,567 |
Customer Relationships [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 42,878,445 | 42,878,445 |
Accumulated Amortization | $ 29,211,968 | 28,806,055 |
Customer Relationships [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 14 years | |
Customer Relationships [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 15 years | |
Regulatory Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 15 years | |
Gross Carrying Amount | $ 4,000,000 | 4,000,000 |
Accumulated Amortization | 3,799,965 | 3,733,299 |
Trade Names [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 310,106 | 310,106 |
Accumulated Amortization | $ 226,949 | 211,444 |
Trade Names [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 3 years | |
Trade Names [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Useful Lives | 5 years | |
Franchise Rights [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 3,000,000 | 3,000,000 |
Accumulated Amortization | ||
Spectrum [Member] | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 877,814 | 877,814 |
Accumulated Amortization |
Goodwill and Intangibles (Det_3
Goodwill and Intangibles (Details) - Summary of Future Amortization Expense | Mar. 31, 2022USD ($) |
Summary of Future Amortization Expense [Abstract] | |
● (April 1 – December 31) | $ 1,464,292 |
● 2023 | 1,660,295 |
● 2024 | 1,623,654 |
● 2025 | 1,618,732 |
● 2026 | 1,613,809 |
● 2027 | $ 906,667 |
Secured Credit Facility (Detail
Secured Credit Facility (Details) - USD ($) | Apr. 16, 2020 | Mar. 31, 2022 | Mar. 31, 2021 | Mar. 16, 2022 | Aug. 29, 2019 | Aug. 01, 2018 |
Secured Credit Facility (Details) [Line Items] | ||||||
Gain on PPP Loan Forgiveness | $ 2,912,433 | |||||
Small Business Administrations Payroll Protection Protection Program [Member] | ||||||
Secured Credit Facility (Details) [Line Items] | ||||||
Proceeds from Issuance of Long-Term Debt | $ 2,889,000 | |||||
Gain on PPP Loan Forgiveness | $ 2,912,433 | |||||
Interest Rate Swap [Member] | First IRSA With Co Bank [Member] | ||||||
Secured Credit Facility (Details) [Line Items] | ||||||
Derivative, Notional Amount | $ 11,815,250 | $ 16,137,500 | ||||
Debt, Weighted Average Interest Rate | 5.27% | |||||
Interest Rate Swap [Member] | Second IRSA CoBank [Member] | ||||||
Secured Credit Facility (Details) [Line Items] | ||||||
Derivative, Notional Amount | $ 33,116,037 | $ 42,000,000 | ||||
Debt, Weighted Average Interest Rate | 3.50% | |||||
Line of Credit [Member] | ||||||
Secured Credit Facility (Details) [Line Items] | ||||||
Long-Term Debt, Gross | $ 20,800,000 | |||||
Long-Term Debt | $ 4,000,000 | |||||
Debt Instrument, Interest Rate, Effective Percentage | 2.70% | |||||
Revolving Credit Facility [Member] | ||||||
Secured Credit Facility (Details) [Line Items] | ||||||
Long-Term Line of Credit | $ 16,800,000 | |||||
Secured Debt [Member] | ||||||
Secured Credit Facility (Details) [Line Items] | ||||||
Debt Instrument, Covenant Description | Our loan agreements include restrictions on our ability to pay cash dividends to our stockholders. However, we are allowed to pay dividends (a) (i) in an amount up to $2,700,000 in any year if our “Total Leverage Ratio,” that is, the ratio of our “Indebtedness” to “EBITDA” (earnings before interest, taxes, depreciation and amortization – as defined in the loan documents), is greater than 2.00 to 1.00, and (ii) in any amount if our Total Leverage Ratio is less than 2.00 to 1.00, and (b) in either case, if we are not in default or potential default under the loan agreements | |||||
Debt Instrument Threshold Amount Dividends | $ 2,700,000 | |||||
Ratio of Indebtedness to Net Capital | 1.86 | |||||
Revolving Credit Facility [Member] | ||||||
Secured Credit Facility (Details) [Line Items] | ||||||
Line of Credit Facility, Maximum Borrowing Capacity | $ 20,000,000 | $ 10,000,000 |
Interest Rate Swaps (Details)
Interest Rate Swaps (Details) - Interest Rate Swap [Member] - USD ($) | 3 Months Ended | |||
Mar. 31, 2022 | Mar. 31, 2021 | Aug. 29, 2019 | Aug. 01, 2018 | |
Interest Rate Swaps (Details) [Line Items] | ||||
Derivative Liability, Noncurrent | $ 916,460 | $ 1,776,057 | ||
Deferred Income Tax Expense (Benefit) | 261,558 | 506,887 | ||
Accumulated Other Comprehensive Income (Loss), Net of Tax | $ 654,902 | $ 1,269,170 | ||
First IRSA With Co Bank [Member] | ||||
Interest Rate Swaps (Details) [Line Items] | ||||
Derivative, Notional Amount | $ 16,137,500 | |||
Derivative, Variable Interest Rate | 25.00% | |||
Second IRSA CoBank [Member] | ||||
Interest Rate Swaps (Details) [Line Items] | ||||
Derivative, Notional Amount | $ 42,000,000 |
Guarantees (Details)
Guarantees (Details) | Mar. 31, 2022USD ($) |
Guarantees [Abstract] | |
Guaranty Liabilities | $ 209,367 |
Incentive and Retirement Plan_2
Incentive and Retirement Plans (Details) | 3 Months Ended |
Mar. 31, 2022shares | |
Employee Incentive Plan [Member] | |
Incentive and Retirement Plans (Details) [Line Items] | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized | 200,000 |
Employee Incentive Plan Percentage Of Compensation In Lieu Of Cash | 50.00% |
Management Incentive Plan Percentage Of Compensation In Lieu Of Cash | 50.00% |
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant | 155,399 |
Omnibus Stock Plan [Member] | |
Incentive and Retirement Plans (Details) [Line Items] | |
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Authorized | 625,000 |
Share-Based Compensation Arrangement by Share-Based Payment Award, Number of Shares Available for Grant | 557,563 |
Incentive and Retirement Plan_3
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items] | ||
Issued (in Dollars per share) | $ 21.9 | |
Issued | Dec. 31, 2023 | |
Share-Based Payment Arrangement, Tranche One [Member] | ||
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items] | ||
Issued | 40,879 | |
Issued (in Dollars per share) | $ 21.2 | |
Exercised (in Dollars per share) | $ 23.67 | |
Exercised | Dec. 31, 2020 | |
Share-Based Payment Arrangement, Tranche Two [Member] | ||
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items] | ||
Issued | 40,900 | |
Issued (in Dollars per share) | $ 21.2 | |
Exercised (in Dollars per share) | $ 21.75 | |
Exercised | Dec. 31, 2021 | |
Time Based RSUs [Member] | ||
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items] | ||
Balance | 9,440 | 7,638 |
Balance | 9,440 | |
Issued | 3,364 | |
Time Based RSUs [Member] | Share-Based Payment Arrangement, Tranche Two [Member] | ||
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items] | ||
Exercised | (1,562) | |
Targeted Performance Based RSUs [Member] | ||
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items] | ||
Balance | 13,270 | 9,611 |
Forfeited | (2,637) | |
Balance | 10,633 | |
Issued | 5,247 | |
Targeted Performance Based RSUs [Member] | Share-Based Payment Arrangement, Tranche One [Member] | ||
Incentive and Retirement Plans (Details) - RSUs currently issued and outstanding [Line Items] | ||
Exercised | (1,588) |
Segment Information (Details)
Segment Information (Details) | Mar. 31, 2022 |
Fiber Comm LC [Member] | |
Segment Information (Details) [Line Items] | |
Equity Method Investment, Ownership Percentage | 20.00% |
Broadband Visions LLC [Member] | |
Segment Information (Details) [Line Items] | |
Equity Method Investment, Ownership Percentage | 24.30% |
Independent Emergency Services LLC [Member] | |
Segment Information (Details) [Line Items] | |
Equity Method Investment, Ownership Percentage | 14.29% |
Fiber Minnesota LLC [Member] | |
Segment Information (Details) [Line Items] | |
Equity Method Investment, Ownership Percentage | 7.54% |
Broadband Grants (Details)
Broadband Grants (Details) | 3 Months Ended |
Mar. 31, 2022USD ($) | |
January 2020 Grant [Member] | |
Broadband Grants (Details) [Line Items] | |
Grants Percentage | 36.50% |
Grants Receivable | $ 730,000 |
Project Cost | $ 2,000,000 |
Matching Fund Percentage Provided By Grantee | 63.50% |
Proceeds from Grantors | $ 724,465 |
January 2021 Grant [Member] | |
Broadband Grants (Details) [Line Items] | |
Grants Percentage | 35.40% |
Grants Receivable | $ 1,918,037 |
Project Cost | $ 5,419,617 |
Matching Fund Percentage Provided By Grantee | 64.60% |
Subsequent Events (Details)
Subsequent Events (Details) | Apr. 11, 2022$ / shares |
Share-Based Payment Arrangement, Option [Member] | Subsequent Event [Member] | |
Subsequent Events (Details) [Line Items] | |
Share-Based Compensation Arrangements by Share-Based Payment Award, Options, Exercises in Period, Weighted Average Exercise Price | $ 21.2 |
Subsequent Events (Details) - N
Subsequent Events (Details) - Number of Options awarded - $ / shares | 3 Months Ended | |
Mar. 31, 2022 | Mar. 31, 2021 | |
Subsequent Events (Details) - Number of Options awarded [Line Items] | ||
Balance | ||
Balance | 122,669 | |
Options, Issued Closing Stock Price (in Dollars per share) | $ 21.9 | |
Share-Based Payment Arrangement, Tranche One [Member] | ||
Subsequent Events (Details) - Number of Options awarded [Line Items] | ||
Options Issued | 40,879 | |
Options, Issued Closing Stock Price (in Dollars per share) | $ 21.2 | |
Options Issued Vesting Date | Apr. 11, 2023 | |
Share-Based Payment Arrangement, Tranche Two [Member] | ||
Subsequent Events (Details) - Number of Options awarded [Line Items] | ||
Options Issued | 40,900 | |
Options, Issued Closing Stock Price (in Dollars per share) | $ 21.2 | |
Options Issued Vesting Date | Apr. 11, 2024 | |
Share-Based Payment Arrangement, Tranche Three [Member] | ||
Subsequent Events (Details) - Number of Options awarded [Line Items] | ||
Options Issued | 40,890 | |
Options, Issued Closing Stock Price (in Dollars per share) | $ 21.2 | |
Options Issued Vesting Date | Apr. 11, 2025 |