2023 Q2 TCX results financial statements.pdf

Consolidated Balance Sheets

(Dollar amounts in thousands of U.S. dollars)

June 30, 2023 December 31, 2022
(unaudited) (audited)
Assets
Current assets:
Cash and cash equivalents $147,864 $23,496
Restricted Cash 3,361 -
Accounts receivable, net of allowance for doubtful accounts of $603 as of June 30, 2023 and $693 as of December 31, 2022 23,512 18,404
Contract asset, current portion 4,572 5,159
Inventory 7,800 7,284
Prepaid expenses and deposits 20,448 17,005
Derivative instrument asset, current portion 1,060 1,903
Deferred costs of fulfillment, current portion 98,284 94,198
Income taxes recoverable 1,818 2,471
Total current assets 308,719 169,920
Contract asset, long-term portion 31 2,328
Deferred costs of fulfillment, long-term portion 15,874 16,476
Investments 2,012 2,012
Secured notes reserve funds receivable 8,370 -
Deferred tax asset 5 -
Property and equipment 319,393 281,495
Right of use lease asset 21,615 20,489
Contract costs 2,184 1,827
Intangible assets 34,692 39,790
Goodwill 130,410 130,410
Total assets $843,305 $664,747

| Liabilities and Stockholders' Equity | | | | Current liabilities: | | | | Accounts payable | $11,955 | $17,171 | | Accrued liabilities | 27,405 | 22,653 | | Customer deposits | 19,448 | 15,783 | | Derivative instrument liability, current portion | - | 389 | | Operating lease liability, current portion | 5,087 | 4,642 | | Deferred revenue, current portion | 128,868 | 122,894 | | Accreditation fees payable, current portion | 610 | 809 | | Income taxes payable | 754 | 2,248 | | Other current liabilities | - | 1,600 | | Total current liabilities | 194,127 | 188,189 | | Deferred revenue, long-term portion | 22,102 | 22,237 | | Accreditation fees payable, long-term portion | - | 142 | | Operating lease liability, long-term portion | 13,022 | 12,438 | | Syndicated revolver | 229,295 | 238,930 | | Notes payable | 221,089 | - | | Redeemable preferred shares | 102,970 | 90,434 | | Deferred tax liability | 9,594 | 15,720 | | Stockholders' equity: | | | | Common stock - no par value, 250,000,000 shares authorized; 10,853,297 shares issued and outstanding as of June 30, 2023 and 10,817,110 shares issued and outstanding as of December 31, 2022 | 32,945 | 31,868 | | Additional paid-in capital | 11,509 | 8,106 | | Retained earnings | 5,848 | 55,899 | | Accumulated other comprehensive income | 804 | 784 | | Total stockholders' equity | 51,106 | 96,657 | | Total liabilities and stockholders' equity | $843,305 | $664,747 |

Consolidated Statements of Operations and Comprehensive Loss

(Dollar amounts in thousands of U.S. dollars)

Three months ended June 30, 2023 Six months ended June 30, 2023
(unaudited) (unaudited)
$84,978 $ $83,084 $
Net revenues
Cost of revenues:
Direct cost of revenues 50,743 49,300
Network, other costs 6,993 4,764
Network, depreciation of property and equipment 8,757 6,589
Network, amortization of intangible assets 379 378
Network, impairment of property and equipment 74 -
Total cost of revenues 66,946 61,031
Gross profit 18,032 22,053
Expenses:
Sales and marketing(*) 16,020 13,503
Technical operations and development(*) 4,581 3,465
General and administrative(*) 8,084 6,814
Depreciation of property and equipment 150 146
Loss on disposition of property and equipment - 95
Amortization of intangible assets 2,230 2,465
Loss (gain) on currency forward contracts 68 -
Total expenses 31,133 26,488
Loss from operations (13,101) (4,435)
Other income (expenses):
Interest expense, net (10,501) (2,422)
Loss on debt extinguishment (14,680) -
Income earned on sale of transferred assets, net 4,289 4,520
Other income (expense), net - (50)
Total other income (expenses) (20,892) 2,048
Loss before provision for income taxes (33,993) (2,387)
Provision for income taxes (3,025) 738
Net loss before redeemable non-controlling interest (30,968) (3,125)
Other comprehensive income, net of tax
Unrealized income (loss) on hedging activities 578 195
Net amount reclassified to earnings (390) (74)
Other comprehensive income net of tax expense (recovery) of $60 and $40 for the three months ended June 30, 2023 and June 30, 2022, $7 and $369 for the six months ended June 30, 2023 and June 30, 2022 188 121
Comprehensive loss, for the period (30,780) (3,004)
Basic and diluted earnings per common share (2.86) (0.29)
Shares used in computing basic and diluted earnings per common 10,836,652 10,765,595
(*) Stock-based compensation has been included in expenses as follows:
Network expenses 118 95
Sales and marketing 648 347
Technical operations and development 142 151
General and administrative 1,144 842

Consolidated Statements of Cash Flows

(Dollar amounts in thousands of U.S. dollars)
Three months ended June 30, Six months ended June 30,

Cash provided by: Three months ended June 30, Six months ended June 30,
2023 2022 2023 2022
Cash provided by: (unaudited) (unaudited)
Operating activities:
Net loss for the period $(30,968) $(3,125) $(50,051) $(6,145)
Items not involving cash:
Depreciation of property and equipment 8,907 6,735 17,495 12,778
Impairment of property and equipment 74 - 2,016 27
Amortization of debt discount and issuance costs 893 147 1,131 267
Amortization of intangible assets 2,609 2,843 5,481 5,686
Net amortization contract costs (208) (245) (357) (472)
Accretion of contingent consideration - 50 - 148
Deferred income taxes (recovery) (3,413) (1,053) (6,123) (1,739)
Excess tax benefits on share-based compensation expense - (4) (1) (55)
Net Right of use operations assets/Operating lease liability (15) (115) (97) (56)
Loss on disposal of domain names - - - 2
Accretion of redeemable preferred shares 3,338 - 6,375 -
Loss on debt extinguishment 14,680 - 14,680 -
Loss (gain) on change in the fair value of forward contracts 879 - 1,624 -
Amortization of discontinued cash flow hedge from Accumulated other (572) - (1,144) -
Stock-based compensation 2,052 1,436 4,298 2,828
Change in non-cash operating working capital:
Accounts receivable 661 2,865 (5,108) 1,053
Contract asset 693 (5,671) 2,884 (8,176)
Inventory (1,261) (1,238) (516) (1,519)
Prepaid expenses and deposits (2,117) 3,910 (3,443) 1,675
Deferred costs of fulfillment 472 819 (3,484) (1,130)
Income taxes recoverable (1,374) 1,086 (856) 1,568
Accounts payable (4,943) 3,891 (5,099) 6,158
Accrued liabilities 5,220 1,334 4,294 2,444
Customer deposits 3,322 950 3,665 327
Deferred revenue (464) (1,984) 5,839 2,384
Accreditation Fees Payable (52) (55) (341) (69)
Net cash provided by/(used in) operating activities (1,587) 12,576 (6,838) 17,984
Financing activities:
Proceeds received on exercise of stock options - 56 - 570
Proceeds from issuance of notes payable 227,258 - 227,258 -
Redeemable preferred shares redemption (45,718) - (45,718) -
Proceeds from redeemable preferred shares 5,000 - 35,000 -
Deferred notes payable financing costs (6,745) - (6,745) -
Deferred preferred financing costs - - 145 -
Contingent payments for acquisitions - (1,125) (1,600) (3,125)
Proceeds received on syndicated revolver - 19,200 - 35,700
Repayment of syndicated revolver (7,000) - (9,800) -
Payment of syndicated revolver costs (11) (88) (316) (265)
Net cash provided by financing activities 172,784 18,043 198,224 32,880
Investing activities:
Additions to property and equipment (23,158) (30,288) (54,904) (53,342)
Acquisition of intangible assets (217) (22) (383) (117)
Net cash used in investing activities (23,375) (30,310) (55,287) (53,459)
(Decrease) increase in cash and cash equivalents 147,822 309 136,099 (2,595)
Cash and cash equivalents, restricted cash, and restricted cash equivalents beginning of period 11,773 6,201 23,496 9,105
Cash and cash equivalents, restricted cash, and restricted cash equivalents end of period $159,595 $6,510 $159,595 $6,510
Reconciliation of cash, cash equivalents, restricted cash, and restricted cash and cash equivalents 147,864 6,510 147,864 6,510
Cash and cash equivalents 3,361 - 3,361 -
Restricted cash included in secured notes reserve funds receivable 8,370 - 8,370 -
Total Cash and cash equivalents, restricted cash, and restricted cash 159,595 6,510 159,595 6,510
Supplemental cash flow information:
Interest paid $6,442 $2,351 $10,327 $4,033
Income taxes paid, net $1,474 $1,391 $1,995 $2,287
Supplementary disclosure of non-cash investing and financing activities:
Property and equity acquired during the period not yet paid for $2,638 $12,102 $2,638 $12,102

(In Thousands of U.S. Dollars) (unaudited)

(unaudited) Three months ended June 30 Six months ended June 30
(unaudited) 2023(unaudited) 2022(unaudited) 2023(unaudited) 2022(unaudited)
Net loss for the Period $(30,968) $(3,125) $(50,051) $(6,145)
Less:
Provision for income taxes (3,025) 738 (4,735) 1,817
Depreciation of property and equipment 8,907 6,735 17,495 12,778
Impairment and loss on disposition of property and equipment 74 95 2,016 507
Amortization of intangible assets 2,609 2,843 5,481 5,686
Interest expense, net 10,501 2,422 18,381 4,217
Loss on debt extinguishment 14,680 - 14,680 -
Accretion of contingent liability - 50 - 148
Stock-based compensation 2,052 1,436 4,298 2,828
Unrealized loss(gain)on foreign exchange revaluation of foreign denominated monetary assets and liabilities (126) 46 (84) 100
Acquisition and other costs 1 691 460 944 1,076
Adjusted EBITDA $5,395 $11,700 $8,425 $23,012

Bits in November 2021. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments.