## Tucows Inc.

**Tucows Inc.**  
**Condensed Consolidated Balance Sheets**  
**(Dollar amounts in thousands of U.S. dollars)**

|  | March 31,2025(unaudited) | December 31,2024(audited) |
| --- | --- | --- |
| Assets |  |  |
| Current assets: |  |  |
| Cash and cash equivalents | $38,076 | $56,903 |
| Restricted cash | 5,116 | 4,628 |
| Accounts receivable | 24,120 | 20,878 |
| Deferred costs of fulfillment, current portion | 105,081 | 101,467 |
| Prepaid expenses and other | 22,105 | 21,506 |
| Total current assets | 194,498 | 205,382 |
| Deferred costs of fulfillment, long-term portion | 15,911 | 15,508 |
| Secured notes reserve funds | 11,824 | 11,707 |
| Property and equipment, net | 322,396 | 331,049 |
| Right of use lease asset | 39,193 | 35,640 |
| Intangible assets, net | 23,550 | 24,755 |
| Goodwill | 130,410 | 130,410 |
| Other assets | 4,125 | 4,345 |
| Total assets | 741,907 | 758,796 |
| Liabilities and Stockholders' Equity |  |  |
| Current liabilities: |  |  |
| Accounts payable and accrued liabilities | $28,880 | $40,236 |
| Derivative instrument liability, current portion | 479 | 1,270 |
| Operating lease liability, current portion | 5,050 | 5,150 |
| Contract Liabilities, current portion | 140,689 | 135,649 |
| Other current liabilities | 17,876 | 17,546 |
| Total current liabilities | 192,974 | 199,851 |
| Deferred revenue, long-term portion | 21,653 | 21,155 |
| Operating lease liability, long-term portion | 29,675 | 25,899 |
| Syndicated revolver | 192,078 | 194,426 |
| Notes payable | 288,639 | 287,646 |
| Redeemable preferred units | 122,184 | 122,156 |
| Deferred tax liability | 2,963 | 2,963 |
| Stockholders' deficit: |  |  |
| Common stock - no par value, 250,000,000 shares authorized; 11,034,947 shares issued and outstanding as of March 31,2025 and 11,014,655 shares issued and outstanding as of December 31,2023 | 37,032 | 36,581 |
| Additional paid-in capital | 20,364 | 19,241 |
| Accumulated deficit | (165,291) | (150,158) |
| Accumulated other comprehensive income (loss) | (364) | (964) |
| Total stockholders' deficit | (108,259) | (95,300) |
| Total liabilities and stockholders' deficit | $741,907 | $758,796 |

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**Tucows Inc.**  
**Condensed Consolidated Statements of Operations and Comprehensive Income**  
**(Dollar amounts in thousands of U.S. dollars)**

|  | Three months ended March 31, |  |  |
| --- | --- | --- | --- |
|  | 2025 | 2024 | (unaudited) |
| Net revenues | $94,609 | $87,457 |  |
| Cost of revenues: |  |  |  |
| Direct cost of revenues | 55,161 | 51,794 |  |
| Network, other costs | 5,175 | 7,117 |  |
| Network, depreciation and amortization | 10,742 | 10,230 |  |
| Total cost of revenues | 71,078 | 69,141 |  |
| Gross profit | 23,531 | 18,316 |  |
| Expenses: |  |  |  |
| Sales and marketing(*) | 10,991 | 18,565 |  |
| Technical operations and development(*) | 4,407 | 5,016 |  |
| General and administrative(*) | 9,242 | 9,818 |  |
| Depreciation and amortization | 924 | 1,436 |  |
| Total expenses | 25,564 | 34,835 |  |
| Loss from operations | (2,033) | (16,519) |  |
| Other income (expenses): |  |  |  |
| Interest expense, net | (13,613) | (11,879) |  |
| Other income (expense), net | 2,679 | 3,688 |  |
| Total other income (expenses) | (10,934) | (8,191) |  |
| Loss before provision for income taxes | (12,967) | (24,710) |  |
| Provision for income taxes | 2,166 | 1,774 |  |
| Net loss for the period | (15,133) | (26,484) |  |
| Other comprehensive income (loss), net of tax |  |  |  |
| Unrealized income (loss) on hedging activities | 42 | (1,126) |  |
| Net amount reclassified to earnings | 558 | (169) |  |
| Other comprehensive income (loss) net of tax recovery | 600 | (1,295) |  |
| Comprehensive loss, net of tax for the period | $(14,533) | $(27,779) |  |
| Basic and diluted loss per common share | $(1.37) | $(2.42) |  |
| (*) Stock-based compensation has been included in expenses as follows: |  |  |  |
| Network expenses | $101 | $120 |  |
| Sales and marketing | $309 | $539 |  |
| Technical operations and development | $215 | $214 |  |
| General and administrative | $880 | $1,000 |  |

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**Tucows Inc.**  
**Consolidated Statements of Cash Flows**  
**(Dollar amounts in thousands of U.S. dollars)**

|  | Three months ended March 31, |  |
| --- | --- | --- |
|  | 2025 | 2024 |
| Cash provided by: | (unaudited) |  |
| Operating activities: |  |  |
| Net loss for the period | $ (15,133) | $ (26,484) |
| Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| Depreciation and amortization | 11,666 | 11,666 |
| Amortization of debt discount and issuance costs | 1,167 | 1,067 |
| Deferred income taxes (recovery) | (191) | 385 |
| Accretion of redeemable preferred units | - | 3,755 |
| Stock-based compensation | 1,505 | 1,873 |
| Change in non-cash operating working capital: |  |  |
| Accounts receivable | (3,242) | 2,523 |
| Prepaid expenses and deposits | 875 | 1,245 |
| Deferred costs of fulfillment | (4,017) | (5,019) |
| Accounts payable & accrued liabilities | (10,622) | (4,341) |
| Contract liabilities | 5,538 | 7,024 |
| Other operating assets and liabilities | 1,203 | 628 |
| Net cash provided by (used in) operating activities | (11,251) | (5,678) |
| Financing activities: |  |  |
| Repayment of syndicated revolver | (2,500) | (5,500) |
| Net cash provided by (used in) financing activities | (2,500) | (5,500) |
| Investing activities: |  |  |
| Proceeds on disposal of property and equipment | 966 | - |
| Additions to property and equipment | (5,437) | (14,320) |
| Acquisition of Simply Bits | - | - |
| Acquisition of intangible assets | - | (96) |
| Net cash provided by (used in) investing activities | (4,471) | (14,416) |
| (Decrease) increase in cash and cash equivalents | (18,222) | (25,594) |
| Cash and cash equivalents, restricted cash, and restricted cash equivalents beginning of period | 73,238 | 104,978 |
| Cash and cash equivalents, restricted cash, and restricted cash equivalents end of period | $ 55,016 | $ 79,384 |
| Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents within the interim consolidated balance sheets to the amounts shown in the interim consolidated statements of cash flows above: |  |  |
| Cash and cash equivalents | 38,076 | 66,590 |
| Restricted cash included in funds held for trustee | 5,116 | 4,034 |
| Restricted cash included in secured notes reserve funds | 11,824 | 8,760 |
| Total Cash and cash equivalents, restricted cash, and restricted cash equivalents end of period | 55,016 | 79,384 |
| Supplemental cash flow information: |  |  |
| Interest paid | $ 18,332 | $ 9,009 |
| Income taxes paid, net | $ 1,299 | $ 695 |
| Supplementary disclosure of non-cash investing and financing activities: |  |  |
| Property and equipment acquired during the period not yet paid for | $ 1,435 | $ 5,945 |

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## Reconciliation of Loss before Provision for Income Taxes to Adjusted EBITDA (In Thousands of U.S. Dollars)

## Reconciliation of Loss before Provision for Income Taxes to Adjusted EBITDA (In Thousands of U.S. Dollars)

| (in Thousands of U.S. Dollars) | Three months ended March 31, |  |
| --- | --- | --- |
| (unaudited) | 2025(unaudited) | 2024(unaudited) |
| Net Loss for the Period | $ (15,133) | $ (26,484) |
| Less: |  |  |
| Provision for income taxes | 2,166 | 1,774 |
| Depreciation of property and equipment | 10,460 | 9,987 |
| Impairment and loss on disposition of property and equipment | 204 | 53 |
| Amortization of intangible assets | 1,205 | 1,679 |
| Interest expense, net | 13,613 | 11,879 |
| Stock-based compensation | 1,505 | 1,873 |
| Unrealized loss(gain)on foreign exchange revaluation of foreign denominated monetary assets and liabilities | (364) | 389 |
| Acquisition and other costs ¹ | 15 | 3,051 |
| Adjusted EBITDA | $ 13,671 | $ 4,201 |

ⁱ Acquisition and other costs represent transaction-related expenses, transitional expenses, such as redundant post-acquisition expenses, primarily related to our acquisitions. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments.