![Im1] ## Tucows Inc. ### Condensed Consolidated Balance Sheets **(Dollar amounts in thousands of U.S. dollars)** | | March 31, 2026 | December 31, 2025 | | --- | --- | --- | | | (unaudited) | (audited) | | **Assets** | | | | Current assets: | | | | Cash and cash equivalents | $ 44,306 | $ 46,759 | | Restricted cash | 5,360 | 5,315 | | Accounts receivable | 27,791 | 24,494 | | Deferred costs of fulfillment, current portion | 101,408 | 97,151 | | Prepaid expenses and other | 21,177 | 29,375 | | Total current assets | 200,042 | 203,094 | | Deferred costs of fulfillment, long-term portion | 16,368 | 15,883 | | Secured notes reserve funds | 12,272 | 12,171 | | Property and equipment, net | 275,543 | 281,955 | | Right of use lease asset | 70,578 | 63,315 | | Intangible assets | 19,479 | 19,703 | | Goodwill | 130,410 | 130,410 | | Other assets | 4,550 | 4,378 | | **Total assets** | $ 729,242 | $ 730,909 | | **Liabilities and Stockholders' Equity** | | | | Current liabilities: | | | | Accounts payable and accrued liabilities | 33,083 | 35,272 | | Derivative instrument liability | 251 | 75 | | Operating lease liability, current portion | 6,382 | 5,771 | | Contract liabilities, current portion | 135,786 | 131,581 | | Redeemable preferred units | 142,024 | 136,963 | | Other current liabilities | 19,577 | 20,765 | | Total current liabilities | 337,103 | 330,427 | | Contract liabilities, long-term portion | 22,008 | 21,354 | | Operating lease liability, long-term portion | 64,848 | 57,823 | | Syndicated revolver | 189,645 | 189,531 | | Notes payable | 292,639 | 291,646 | | Other long-term liability | 1,366 | 1,366 | | Deferred tax liability | 2,961 | 2,962 | | **Stockholders' deficit:** | | | | Common stock - no par value, 250,000,000 shares authorized; 11,134,174 shares issued and outstanding as of March 31, 2026 and 11,111,453 shares issued and outstanding as of December 31, 2025 | 38,788 | 38,308 | | Additional paid-in capital | 24,158 | 23,526 | | Accumulated deficit | (244,084) | (225,977) | | Accumulated other comprehensive loss | (190) | (57) | | **Total stockholders' deficit** | (181,328) | (164,200) | | **Total liabilities and stockholders' deficit** | $ 729,242 | $ 730,909 | --- ### Tucows Inc. ### Condensed Consolidated Statements of Operations and Comprehensive Loss **(Dollar amounts in thousands of U.S. dollars)** | | Three months ended March 31, | | | | --- | --- | --- | --- | | | 2026 | 2025 | | | | (unaudited) | | | | **Net revenues** | $ 96,657 | $ 94,609 | | | **Cost of revenues:** | | | | | Direct cost of revenues | 56,884 | 55,161 | | | Network, other costs | 5,868 | 5,175 | | | Network, depreciation and amortization | 9,775 | 10,742 | | | Total cost of revenues | 72,527 | 71,078 | | | **Gross profit** | 24,130 | 23,531 | | | **Expenses:** | | | | | Sales and marketing (*) | $ 12,103 | $ 10,991 | | | Technical operations and development (*) | 4,431 | 4,407 | | | General and administrative (*) | 9,828 | 9,242 | | | Loss on disposition of property and equipment | 876 | - | | | Depreciation and amortization | 1,199 | 924 | | | **Total expenses** | 28,437 | 25,564 | | | **Loss from operations** | (4,307) | (2,033) | | | **Other income (expenses):** | | | | | Interest expense, net | (13,865) | (13,613) | | | Liabilities and Stockholders' Equity | 2,457 | 2,679 | | | **Total other income (expenses)** | (11,408) | (10,934) | | | **Loss before provision for income taxes** | (15,715) | (12,967) | | | Provision (recovery) for income taxes | 2,392 | 2,166 | | | **Net loss for the period** | (18,107) | (15,133) | | | **Other comprehensive income (loss), net of tax** | | | | | Unrealized income (loss) on hedging activities | (213) | 42 | | | Net amount reclassified to earnings | 80 | 558 | | | Other comprehensive income (loss) net of tax expense (recovery) | (133) | 600 | | | **Comprehensive loss, net of tax for the period** | $ (18,240) | $ (14,533) | | | **Basic and diluted loss per common share** | $ (1.63) | $ (1.37) | | | **Shares used in computing basic and diluted loss per common share** | 11,124,592 | 11,032,086 | | | (*) Stock-based compensation has been included in expenses as follows: | | | | | Network expenses | $ 65 | 101 | | | Sales and marketing | $ 243 | 309 | | | Technical operations and development | $ 106 | 215 | | | General and administrative | $ 680 | 880 | | --- ### Tucows Inc. ### Condensed Consolidated Statements of Cash Flows **(Dollar amounts in thousands of U.S. dollars)** | | Three months ended March 31, | | | | --- | --- | --- | --- | | | 2026 | 2025 | | | | (unaudited) | | | | **Cash provided by:** | | | | | Operating activities: | | | | | **Net loss for the period** | $ | (18,107) | $ (15,133) | | Adjustments to reconcile net income to net cash provided by operating activities: | | | | | - Depreciation and amortization | | 10,974 | 11,666 | | - Amortization of debt discount and issuance costs | | 1,153 | 1,167 | | - Loss on disposal of assets | | 876 | - | | - Impairment of property and equipment | | 280 | 204 | | - Deferred income taxes (recovery) | | 43 | (191) | | - Accretion of redeemable preferred units | | 4,989 | - | | - Stock-based compensation expense | | 1,094 | 1,505 | | Change in non-cash operating working capital | | | | | - Accounts receivable | | (3,297) | (3,242) | | - Prepaid expenses and deposits | | 6,763 | 875 | | - Deferred costs of fulfillment | | (4,742) | (4,017) | | - Accounts payable & accrued liabilities | | (1,600) | (10,622) | | - Contract liabilities | | 4,859 | 5,538 | | - Other operating assets and liabilities | | 239 | 999 | | **Net cash provided by (used in) operating activities** | | 3,524 | (11,251) | | **Financing activities:** | | | | | - Repayment of syndicated revolver | | - | (2,500) | | **Investing activities:** | | | | | - Proceeds on disposal of property and equipment | | 578 | 966 | | - Additions to property and equipment | | (5,528) | (5,437) | | - Acquisition of intangible assets | | (881) | - | | **Net cash provided by (used in) investing activities** | | (5,831) | (4,471) | | **(Decrease) increase in cash and cash equivalents** | | (2,307) | (18,222) | | **Cash and cash equivalents, restricted cash, and restricted cash equivalents beginning of period** | | 64,245 | 73,238 | | **Cash and cash equivalents, restricted cash, and restricted cash equivalents end of period** | $ | 61,938 | $ 55,016 | | **Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents:** | | | | | - Cash and cash equivalents | | 44,306 | 38,076 | | - Restricted cash included in funds held for trustee | | 5,360 | 5,116 | | - Restricted cash included in secured notes reserve funds receivable | | 12,272 | 11,824 | | **Total Cash and cash equivalents, restricted cash, and restricted cash equivalents end of period** | | 61,938 | 55,016 | | **Supplemental cash flow information:** | | | | | - Interest paid | $ | 8,380 | 18,332 | | - Income taxes paid, net | $ | 4,008 | 1,299 | | **Supplementary disclosure of non-cash investing and financing activities:** | | | | | Property and equipment acquired during the period not yet paid for | $ | 941 | 1,435 | --- | | Tucows Inc. Reconciliation of Loss before Provision for Income Taxes to Adjusted EBITDA | | --- | --- | | | Three months ended March 31, (unaudited) | | **Net Loss for the period** | $ (18,107) | | **Less:** | | | Provision (recovery) for income taxes | 2,392 | | Depreciation of property and equipment | 9,871 | | Impairment of property and equipment | 280 | | Loss (gain) on disposition of property and equipment | 876 | | Amortization of intangible assets | 1,103 | | Interest expense (net) | 13,865 | | Stock-based compensation | 1,094 | | Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities | 194 | | Acquisition and other costs¹ | 99 | | **Adjusted EBITDA** | $ 11,667 | 1Acquisition and other costs represent transaction-related expenses and transitional expenses. Expenses include severance or transitional costs associated with department, operational or overall company restructuring efforts, including geographic alignments.