## 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 | 100,033 | | Network, other costs | | 6,993 | | 4,764 | 13,316 | | Network, depreciation of property and equipment | | 8,757 | | 6,589 | 17,193 | | Network, amortization of intangible assets | | 379 | | 378 | 757 | | Network, impairment of property and equipment | | 74 | | - | 2,016 | | **Total cost of revenues** | | 66,946 | | 61,031 | 133,315 | | **Gross profit** | | 18,032 | | 22,053 | 32,093 | | **Expenses:** | | | | | | Sales and marketing(*) | | 16,020 | | 13,503 | 31,757 | | Technical operations and development(*) | | 4,581 | | 3,465 | 9,396 | | General and administrative(*) | | 8,084 | | 6,814 | 16,275 | | Depreciation of property and equipment | | 150 | | 146 | 302 | | Loss on disposition of property and equipment | | - | | 95 | - | | Amortization of intangible assets | | 2,230 | | 2,465 | 4,724 | | Loss (gain) on currency forward contracts | | 68 | | - | 23 | | **Total expenses** | | 31,133 | | 26,488 | 62,477 | | **Loss from operations** | | (13,101) | | (4,435) | (30,384) | | **Other income (expenses):** | | | | | | Interest expense, net | | (10,501) | | (2,422) | (18,381) | | Loss on debt extinguishment | | (14,680) | | - | (14,680) | | Income earned on sale of transferred assets, net | | 4,289 | | 4,520 | 8,659 | | Other income (expense), net | | - | | (50) | - | | **Total other income (expenses)** | | (20,892) | | 2,048 | (24,402) | | **Loss before provision for income taxes** | | (33,993) | | (2,387) | (54,786) | | Provision for income taxes | | (3,025) | | 738 | (4,735) | | **Net loss before redeemable non-controlling interest** | | (30,968) | | (3,125) | (50,051) | | **Other comprehensive income, net of tax** | | | | | | Unrealized income (loss) on hedging activities | | 578 | | 195 | 646 | | Net amount reclassified to earnings | | (390) | | (74) | (626) | | 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 | 20 | | **Comprehensive loss, for the period** | | (30,780) | | (3,004) | (50,031) | | Basic and diluted earnings per common share | | (2.86) | | (0.29) | (4.63) | | Shares used in computing basic and diluted earnings per common | | 10,836,652 | | 10,765,595 | 10,821,608 | | (*) Stock-based compensation has been included in expenses as follows: | | | | | | Network expenses | | 118 | | 95 | 286 | | Sales and marketing | | 648 | | 347 | 1,255 | | Technical operations and development | | 142 | | 151 | 446 | | General and administrative | | 1,144 | | 842 | 2,312 | --- ## 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.