What changed in this filing

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Item 1. Financial Statements

2025-08-07 compared with 2025-05-08 · 410 added, 216 removed, 503 unchanged (55% of the section changed)

3 unchanged sentences

CONDENSED CONSOLIDATED BALANCE SHEETS

AS OF MARCH 31, 2025 AND DECEMBER 31, 2024

AS OF JUNE 30, 2025 AND DECEMBER 31, 2024

(IN THOUSANDS, EXCEPT SHARE DATA)

14 unchanged sentences

Right-of-use leased assets

IPv4 intangible assets

IPv4 intangible asset

Other intangible assets, net

10 unchanged sentences

Total current liabilities

Senior secured 2026 notes, net of unamortized debt costs of $ 306 and $ 375 , respectively, and discounts of $ 408 and $ 499 , respectively

Senior secured 2026 notes, net of unamortized debt costs of $ 375 and discount of $ 499

Senior unsecured 2027 notes, net of unamortized debt costs of $ 1,632 and $ 2,013 , respectively, and discounts of $ 5,724 and $ 7,053 , respectively

Secured IPv4 notes, net of debt costs of $ 6,381 and $ 6,702 , respectively

Secured IPv4 notes, net of unamortized debt costs of $ 9,880 and $ 6,702 , respectively

Senior secured 2032 notes, net of unamortized debt costs of $ 2,143

Operating lease liabilities, net of current maturities

17 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND MARCH 31, 2024

FOR THE THREE MONTHS ENDED JUNE 30, 2025 AND JUNE 30, 2024

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

1 unchanged sentence

Three Months Ended

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

Service revenue

2 unchanged sentences

Selling, general, and administrative (including $ 4,158 and $ 3,215 of equity-based compensation expense, respectively)

Acquisition costs – Sprint Business

Acquisition costs – Sprint

Depreciation and amortization

Total operating expenses

Gain on lease termination

Operating loss

Interest expense, including change in valuation interest rate swap agreement

Reduction to gain on bargain purchase – Sprint Business

Loss on debt extinguishment and redemption – 2026 notes

Gain on bargain purchase – Sprint

Interest income – IP Transit Services Agreement

Interest income – Purchase Agreement

Interest income and other, net

Loss before income taxes

Income tax benefit

Comprehensive loss:

Foreign currency translation adjustment

Comprehensive loss

Net loss per common share:

Basic net loss per common share

Diluted net loss per common share

Dividends declared per common share

Weighted-average common shares - basic

Weighted-average common shares - diluted

The accompanying notes are an integral part of these condensed consolidated statements.

COGENT COMMUNICATIONS HOLDINGS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND JUNE 30, 2024

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)

Six Months Ended

June 30, 2025

June 30, 2024

Service revenue

Operating expenses:

Network operations (including $ 996 and $ 735 of equity-based compensation expense, respectively, exclusive of depreciation and amortization shown separately below)

Selling, general, and administrative (including $ 11,681 and $ 9,781 of equity-based compensation expense, respectively)

Acquisition costs – Sprint

Depreciation and amortization

Total operating expenses

Gain on lease termination

Operating loss

Interest expense, including change in valuation interest rate swap agreement

Loss on debt extinguishment and redemption – 2026 notes

Gain on bargain purchase – Sprint

Interest income – IP Transit Services Agreement

Interest income (loss) – Purchase Agreement

Interest income (loss) and other, net

Interest income and other, net

Loss before income taxes

13 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2025 AND MARCH 31, 2024

FOR THE SIX MONTHS ENDED JUNE 30, 2025 AND JUNE 30, 2024

(IN THOUSANDS)

Three Months Ended

March 31, 2025

March 31, 2024

Six Months Ended

June 30, 2025

June 30, 2024

Cash flows from operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization

2 unchanged sentences

Equity-based compensation expense (net of amounts capitalized)

Reduction to gain on bargain purchase – Sprint Business

Loss on debt extinguishment and redemption – 2026 notes

Gain on bargain purchase – Sprint

Gain on finance lease termination

Deferred income taxes

6 unchanged sentences

Deposits and other assets

Net cash provided by operating activities

Net cash used in operating activities

Cash flows from investing activities:

Cash receipts - IP Transit Services Agreement – T-Mobile

Acquisition of Sprint Business – severance reimbursement

Acquisition of Sprint – severance reimbursement

Purchases of property and equipment

2 unchanged sentences

Dividends paid

Purchases of common stock

Net proceeds from issuance of senior unsecured 2027 notes - net of discount of $ 6.8 million and debt costs of $ 1.4 million

Net proceeds from issuance of secured IPv4 notes – net of debt costs of $ 4.0 million and $ 7.6 million, respectively

Net proceeds from issuance of senior secured 2032 notes - net of debt costs of $ 2.2 million

Debt extinguishment and redemption – 2026 notes

Proceeds from exercises of stock options

Settlement of finance lease – at a discount

Principal payments of finance lease obligations

Net cash used in financing activities

Net cash provided by financing activities

Effect of exchange rates changes on cash

Net (decrease) increase in cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

7 unchanged sentences

Reorganization and merger

On May 15, 2014, pursuant to the Agreement and Plan of Reorganization (the “Merger Agreement”) by and among Cogent Communications Group, Inc.

On May 15, 2014, pursuant to the Agreement and Plan of Reorganization by and among Cogent Communications Group, Inc.

(now Cogent Communications Group, LLC), a Delaware corporation (“Group”), Cogent Communications Holdings, Inc., a Delaware corporation (“Holdings”), and Cogent Communications Merger Sub, Inc., a Delaware corporation, Group adopted a new holding company organizational structure whereby Group is now a wholly owned subsidiary of Holdings.

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and its subsidiaries.

Cogent Communications, LLC (formerly Cogent Communications, Inc.) is wholly owned by Group, Sprint Communications Company LP is indirectly wholly owned by Holdings, and the vast majority of the Company’s assets, contractual arrangements, and operations are executed by Sprint Communications Company LP and Cogent Communications, LLC.

Cogent Communications, LLC (formerly Cogent Communications, Inc.) is wholly owned by Group, Cogent Fiber LLC (formerly Sprint Communications Company LP) is indirectly wholly owned by Holdings, and the vast majority of the Company’s assets are held by, contractual arrangements are executed by, and operations are conducted by, Cogent Fiber LLC and Cogent Communications, LLC.

Description of business

16 unchanged sentences

The Company provides these off-net services primarily to corporate customers using other carriers’ circuits to provide the “last mile” portion of the link from the customers’ premises to the Company’s network.

The Company also provides certain non-core services that resulted from acquisitions, including the acquisition of Sprint Communications (as discussed below).

The Company also provides certain non-core services that resulted from acquisitions, including the acquisition of Sprint Communications, now called Cogent Fiber LLC (as discussed below).

The Company continues to support but does not actively sell these non-core services.

In connection with the Company’s acquisition of Sprint Communications, the Company began to provide optical wavelength services and optical transport services over a network that is generally independent of the Company’s legacy IP network.

The Company is selling these wavelength services to its existing customers, customers of Sprint Communications and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure.

Additionally, the Sprint Business (as defined below) customers include a number of companies larger than the Company’s historical customer base.

In connection with the acquisition of Sprint Communications, the Company expanded selling services to these larger “Enterprise” customers.

In connection with the Company’s acquisition of Cogent Fiber LLC, the Company began to provide optical wavelength services and optical transport services over a network that is generally independent of the Company’s legacy IP network.

The Company is selling these wavelength services to its existing customers, customers of Cogent Fiber LLC and to new customers who require dedicated optical transport connectivity without the capital and ongoing expenses associated with owning and operating network infrastructure.

Additionally, the Cogent Fiber Business (as defined below) customers include a number of companies larger

than the Company’s historical customer base.

In connection with the acquisition of Cogent Fiber LLC, the Company expanded selling services to these larger “Enterprise” customers.

Acquisition of Sprint Communications

2 unchanged sentences

long-haul fiber network (including the non-U.S.

extensions thereof) of Sprint Communications and its subsidiaries (the “Sprint Business”).

Pursuant to the Purchase Agreement, the Company purchased from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) of Wireline Network Holdings LLC, a Delaware limited liability company that, following an internal restructuring and divisive merger, held Sprint Communications’ assets and liabilities relating to the Sprint Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”).

The Purchase Agreement included customary representations, warranties, indemnities and covenants, including regarding the conduct of the Sprint Business prior to the closing of the Transaction (the “Closing”).

extensions thereof) of Sprint Communications (now Cogent Fiber LLC) and its subsidiaries (the “Cogent Fiber Business”).

Pursuant to the Purchase Agreement, the Company purchased from the Seller all of the issued and outstanding membership interests (the “Purchased Interests”) of Wireline Network Holdings LLC, a Delaware limited liability company that, following an internal restructuring and divisive merger, held Sprint Communications’ assets and liabilities relating to the Cogent Fiber Business (such transactions contemplated by the Purchase Agreement, collectively, the “Transaction”).

The Purchase Agreement included customary representations, warranties, indemnities and covenants, including regarding the conduct of the Cogent Fiber Business prior to the closing of the Transaction (the “Closing”).

In addition, the Closing was subject to customary closing conditions, including the receipt of certain required regulatory approvals and consents.

The Company believes it is in a unique position to monetize the Sprint Business and its network and management expects to achieve significant cost reduction synergies and revenue synergies from the Transaction.

The Company believes it is in a unique position to monetize the Cogent Fiber Business and its network and management expects to achieve significant cost reduction synergies and revenue synergies from the Transaction.

Purchase Price

1 unchanged sentence

On the Closing Date, the Buyer consummated the Transaction pursuant to the terms of the Purchase Agreement, providing a purchase price of $ 1 payable to the Seller for the Purchased Interests, subject to customary adjustments, including working capital (the “Working Capital Adjustment”), as set forth in the Purchase Agreement.

As consideration for the Purchased Interests, the Working Capital Adjustment (primarily related to acquired cash and cash equivalents of an estimated $ 43.4 million at the Closing Date in order to fund the international operations of the Sprint Business) resulted in the Buyer making a payment to the Seller of $ 61.1 million on the Closing Date.

As consideration for the Purchased Interests, the Working Capital Adjustment (primarily related to acquired cash and cash equivalents of an estimated $ 43.4 million at the Closing Date in order to fund the international operations of the Cogent Fiber Business) resulted in the Buyer making a payment to the Seller of $ 61.1 million on the Closing Date.

During the third quarter of 2023, an additional Working Capital Adjustment of $ 5.0 million was accrued due to the Seller.

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During the third quarter of 2023, the Short-term Lease Payment was reduced by $ 4.8 million and in the first quarter of 2024, the Short-term Lease Payment was reduced by an additional $ 17.0 million, net of discount of $ 7.2 million.

Including the cumulative impact of these adjustments, the amortization of the discount resulted in interest income (expense) of $ 0.4 million and ($ 0.5 ) million for the three months ended March 31, 2025 and 2024, respectively.

Including the cumulative impact of these adjustments, the amortization of the discount resulted in interest income (expense) of $ 0.4 million and $ 0.4 million for the three months ended June 30, 2025 and 2024, respectively, and interest income (expense) of $ 0.9 million and ($ 0.1 ) million for the six months ended June 30, 2025 and 2024, respectively.

Severance reimbursements

The Purchase Agreement also provided for reimbursement from the Seller to the Buyer for qualifying severance expenses incurred.

Total qualifying severance expenses were $ 28.6 million of which $ 4.3 million were recorded in the three months ended March 31, 2024.

Total qualifying severance expenses were $ 28.6 million of which $ 8.0 million and $ 12.3 million were recorded in the three and six months ended June 30, 2024, respectively.

These severance payments ended in the second quarter of 2024.

3 unchanged sentences

Under the IP Transit Services Agreement.

TMUSA paid the Company $ 25.0 million and $ 87.5 million during the three months ended March 31, 2025 and 2024, respectively.

TMUSA paid the Company $ 25.0 million and $ 66.7 million during the three months ended June 30, 2025 and 2024, respectively and paid the Company $ 50.0 million and $ 154.2 million during the six months ended June 30, 2025 and 2024, respectively.

The Company accounted for the Transaction as a business combination under ASC Topic 805 Business Combinations (“ASC 805”).

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The determination of the discount rate requires some judgment.

The amortization of the discount resulted in interest income of $ 4.7 million and $ 7.3 million during the three months ended March 31, 2025 and 2024, respectively.

The amortization of the discount resulted in interest income of $ 4.3 million and $ 5.9 million during the three months ended June 30, 2025 and 2024, respectively, and $ 9.0 million and $ 13.3 million during the six months ended June 30, 2025 and 2024, respectively.

Transition Services Agreement

On the Closing Date, the Buyer entered into a transition services agreement (the “TSA”) with the Seller, pursuant to which the Seller provides to the Buyer, and the Buyer provides to the Seller on an interim basis following the Closing Date, certain specified services (the “Transition Services”) to ensure an orderly transition following the separation of the Sprint Business from Sprint Communications.

The services provided by the Seller to the Buyer include, among others, information technology support, back office and finance, real estate and facilities, vendor and supply chain management, including the payment and processing of vendor invoices for the Company and human resources services.

3 unchanged sentences

Any third-party costs incurred in providing the Transition Services are passed on to the party receiving such services at cost for the two-year period.

Amounts paid for the Sprint Business by T-Mobile are reimbursed at cost.

Amounts paid for the Cogent Fiber Business by T-Mobile are reimbursed at cost.

Either party to the TSA may terminate the agreement with respect to any individual service in full for convenience upon 30 days ’ prior written notice for certain services and reduced for other services after a 90 -day period.

2 unchanged sentences

Amounts billed under the TSA are due 30 days from receipt of the related invoice.

Amounts billed to the Company under the TSA are primarily for reimbursement at cost of payments to vendors of the Sprint Business until these vendors are fully transitioned to the Company.

The amounts due from the Seller were primarily reimbursements for severance costs related to Sprint Business employees and services provided by the Company for the Seller.

During the three months ended March 31, 2025 and 2024, the Company was billed $ 0.4 million and $ 16.6 million as due to the Seller under the TSA, respectively.

During the three months ended March 31, 2025 and 2024, the Company paid $ 0.7 million and $ 78.5 million to the Seller under the TSA, respectively.

During the three months ended March 31, 2025 and 2024, the Company billed the Seller $ 15,126 and $ 0.5 million as due from the Seller under the TSA, respectively.

During the three months ended March 31, 2025 and 2024, the Seller paid the Company $ 0.1 million and $ 0.5 million under the TSA, respectively.

As of March 31, 2025, the Company owed $ 0.2 million to the Seller, and the Seller fully paid the amounts billed under the TSA.

Amounts billed to the Company under the TSA are primarily for reimbursement at cost of payments to vendors of the Cogent Fiber Business until these vendors are fully transitioned to the Company.

The amounts due from the Seller were primarily reimbursements for severance costs related to Cogent Fiber Business employees and services provided by the Company for the Seller.

During the three and six months ended June 30, 2025, the Company was billed $ 10,000 and $ 0.4 million as due to the Seller under the TSA, respectively.

During the three and six months ended June 30, 2024, the Company was billed $ 6.7 million and $ 23.3 million as due to the Seller under the TSA, respectively.

During the three and six months ended June 30, 2025, the Company paid the Seller $ 0.2 million and $ 0.9 million, respectively, under the TSA.

During the three and six months ended June 30, 2024, the Company paid the Seller $ 9.8 million and $ 88.2 million, respectively, under the TSA.

During the three and six months ended June 30, 2025, the Company billed the Seller $ 0.1 million and $ 0.1 million, respectively, under the TSA.

During the three and six months ended June 30, 2024, the Company billed the Seller $ 0.4 million and $ 0.9 million, respectively, under the TSA.

During the six months ended June 30, 2025, the Seller paid the Company $ 0.1 million under the TSA.

There were no payments received during the three months ended June 30, 2025 under the TSA.

During the three and six months ended June 30, 2024, the Seller paid the Company $ 0.5 million and $ 0.9 million, respectively, under the TSA.

As of June 30, 2025, the Company owed $ 9,000 to the Seller, and the Seller owed $ 0.1 million to the Company under the TSA.

As of December 31, 2024, the Company owed $ 0.5 million to the Seller, and the Seller owed $ 0.1 million to the Company under the TSA.

1 unchanged sentence

In addition, on the Closing Date, the Buyer and TMUSA entered into a commercial agreement (the “Commercial Agreement”) for colocation and connectivity services, pursuant to which the Company will provide such services to TMUSA for a per service monthly fee plus certain third-party costs incurred in providing the services.

Under the Commercial Agreement, the Company recorded revenue of $ 0.7 million and $ 3.2 million during the three months ended March 31, 2025 and 2024, respectively.

As of March 31, 2025, and December 31, 2024, TMUSA owed $ 0.1 million and $ 2.6 million, respectively, to the Company under the Commercial Agreement.

During the three and six months ended June 30, 2025, the Company billed and recorded revenue due from the Seller of $ 1.1 million and $ 1.8 million, respectively under the Commercial Agreement.

During the three and six months ended June 30, 2024, the Company billed and recorded revenue due from the Seller of $ 5.9 million and $ 9.1 million, respectively under the Commercial Agreement.

As of June 30, 2025, and December 31, 2024, TMUSA owed $ 0.9 million and $ 2.6 million, respectively, to the Company under the Commercial Agreement.

These amounts are recorded in accounts receivable.

1 unchanged sentence

In connection with the Transaction and negotiation of the Purchase Agreement, the Company incurred a total of $ 13.6 million of professional fees and other acquisition-related costs (not including severance costs) since the acquisition date.

Acquisition-related costs (not including severance costs) were $ 9.0 million for the three months ended March 31, 2024.

There were no acquisition-related costs incurred in the three months ended March 31, 2025.

Acquisition-related costs (not including severance costs) were $ 12.4 million and $ 21.4 million for the three and six months ended June 30, 2024, respectively.

There were no acquisition-related costs incurred in the three or six months ended June 30, 2025.

Consideration

13 unchanged sentences

During the three months ended March 31, 2024, the Working Capital Adjustment, net of discount, was adjusted by $ 17.0 million to reflect the conclusion of the determination of amounts due from the Seller from the Short-term Lease Payment.

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(c) The IP Transit Services Agreement payments totaling $ 700.0 million were recorded at their present value resulting in a discount of $ 79.6 million.

10 unchanged sentences

Deferred income taxes were recorded based upon the difference between the book and tax basis of the acquired assets and assumed liabilities at the Company’s marginal effective income tax rate on the Closing Date.

During the three months ended March 31, 2024, the Company recorded a measurement period adjustment resulting in a reduction to the gain on bargain purchase of $ 5.5 million which includes;

During the three months ended March 31, 2024, the Company recorded a measurement period adjustment resulting in a reduction to the gain on bargain purchase of $ 5.5 million which included;

● A reduction to the Short-term Lease Receivable of $ 24.2 million ( $ 17.0 million net of discount);

16 unchanged sentences

Right-of-use leased assets

IPv4 intangible assets

IPv4 intangible asset

Other intangible assets

25 unchanged sentences

Market participants could have differing views on these assumptions, which could result in a materially different fair value of the optical fiber.

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Acquired Leases

2 unchanged sentences

The Company followed its historical policies with respect to evaluating the renewal periods of the acquired leases and estimating the incremental borrowing rate.

During the third quarter of 2023, the Company recorded a measurement period adjustment to reclassify $ 24.9 million from right - of - use leased assets (net of related unfavorable lease liability amount) to finance lease assets (presented within property and equipment) and a measurement period adjustment to reclassify $ 160.9 million from operating lease liabilities to a finance lease liability.

During the third quarter of 2023, the Company recorded a measurement period adjustment to reclassify $ 24.9 million from right-of-use leased assets

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(net of related unfavorable lease liability amount) to finance lease assets (presented within property and equipment) and a measurement period adjustment to reclassify $ 160.9 million from operating lease liabilities to a finance lease liability.

The Company also evaluated the leases for unfavorable terms and recorded an adjustment for unfavorable market terms of $ 157.2 million that was valued using the income approach.

2 unchanged sentences

Intangible assets acquired include $ 458.0 million of Internet Protocol version 4 (“ IPv4”) addresses and $ 16.0 million of acquired customer relationships.

During the fourth quarter of 2023, the Company recorded a reduction to acquired customer relationships, totaling $ 41.0 million from revisions to certain assumptions.

The acquired customer relationships have an estimated useful life of nine years , and the estimated fair value was determined using a market-based income approach.

Amortization expense was $ 0.4 million and $ 0.4 million for the three months ended March 31, 2025 and 2024, respectively.

Amortization expense was $ 0.4 million and $ 0.8 million for the three and six months ended June 30, 2025, respectively and was $ 0.4 million and $ 0.9 million for the three and six months ended June 30, 2024, respectively.

Future amortization expense of the customer relationships is $ 1.8 million per year for seven years .

4 unchanged sentences

Upon consideration of relevant factors, the Company concluded that it was not more-likely-than-not that impairment was present, and therefore, a quantitative impairment assessment was not required.

There was no impairment recorded during the period from May 1, 2023 through March 31, 2025.

There has not been an impairment recorded for the Company’s IPv4 address asset.

Acquired Asset Retirement Obligations

2 unchanged sentences

Reassessment of Bargain Purchase Gain

Because the fair value of the identifiable assets acquired and liabilities assumed exceeded the fair value of the consideration transferred, the Company recorded a material bargain purchase gain.

Because the fair value of the identifiable assets acquired and liabilities assumed exceeded the fair value of the consideration transferred, the Company recorded a material bargain purchase gain of $ 1.4 billion.

Consequently, the Company reassessed the recognition and measurement of identifiable assets acquired and liabilities assumed in accordance with ASC 805-30-25-4 and concluded that all acquired assets and assumed liabilities were recognized and that the valuation procedures and resulting measures were appropriate.

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Basis of presentation

8 unchanged sentences

All inter-company accounts and activity have been eliminated.

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Use of estimates

2 unchanged sentences

Financial instruments

At March 31, 2025 and December 31, 2024, the carrying amount of cash and cash equivalents, restricted cash, accounts receivable, prepaid and other current assets, accounts payable, and accrued expenses approximated fair value because of the short-term nature of these instruments.

At June 30, 2025 and December 31, 2024, the carrying amount of cash and cash equivalents, restricted cash, accounts receivable, prepaid and other current assets, accounts payable, and accrued expenses approximated fair value because of the short-term nature of these instruments.

The Company measures its cash equivalents and restricted cash at amortized cost, which approximates fair value based upon quoted market prices (Level 1).

Based upon recent trading prices (Level 2—market approach) at March 31, 2025;

Based upon recent trading prices (Level 2—market approach) at June 30, 2025,

● The fair value of the Company’s $ 450.0 million aggregate principal amount of 7.00 % Senior Unsecured Notes due 2027 (the “2027 Notes”) was $ 450.0 million;

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● The fair value of the Company’s $ 600.0 million aggregate principal amount of 6.50 % Senior Secured Notes due 2032 (the “2032 Notes”) was $ 591.0 million;

● The fair value of the Company’s $ 206.0 million aggregate principal amount of secured IPv4 notes (the “IPv4 Notes”) was $ 211.3 million;

● The fair value of the Company’s interest rate swap agreement was $ 22.5 million.

● The fair value of the Company’s $ 206.0 million aggregate principal amount of 7.924 % Existing IPv4 Notes (as defined below) was $ 211.3 million;

● The fair value of the Company’s $ 174.4 million aggregate principal amount of 6.646 % IPv4 New Notes (as defined below) was $ 175.4 million;

● The fair value of the Company’s Swap Agreement (as defined below) was $ 13.6 million.

Restricted cash and interest rate swap agreement

Restricted cash includes amounts held in segregated bank accounts by the Company’s clearing broker as margin in support of the Company’s Swap Agreement as discussed in Note 3 and was $ 22.5 million as of March 31, 2025.

Additional restricted cash related to the IPv4 Notes, as discussed in Note 3, was $ 7.7 million as of March 31, 2025.

Additional cash may be further restricted to maintain the Company’s Swap Agreement as interest rates fluctuate and margin requirements change and under the provisions of the Company’s IPv4 Note indenture.

Additional restricted cash related to the IPv4 Notes, as discussed in Note 3, was $ 79.5 million as of June 30, 2025 and $ 7.1 million at December 31, 2024.

The Company does not use derivative financial instruments for trading purposes.

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Gross receipts taxes, universal service fund and other surcharges

2 unchanged sentences

The Company records certain excise taxes and surcharges on a gross basis and includes them in its revenue and network operations expense.

Excise taxes and surcharges billed to customers and recorded on a gross basis (as service revenue and network operations expense) were $ 20.2 million and $ 20.5 million for the three months ended March 31, 2025 and 2024, respectively.

Excise taxes and surcharges billed to customers and recorded on a gross basis (as service revenue and network operations expense) were $ 20.0 million and $ 40.2 million for the three and six months ended June 30, 2025, respectively and were $ 19.2 million and $ 39.7 million for the three and six months ended June 30, 2024, respectively.

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Basic and diluted net loss per common share

3 unchanged sentences

The following details the determination of diluted weighted-average shares:

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Weighted average common shares - basic

3 unchanged sentences

The following details unvested shares of restricted common stock as well as the anti-dilutive effects of stock options and restricted stock awards outstanding:

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Unvested shares of restricted common stock

1 unchanged sentence

Anti-dilutive shares of restricted common stock

Stockholders’ Equity

The following details the changes in stockholders’ equity for the three months and six ended June 30, 2025 and 2024, respectively (in thousands except share data):

Comprehensive

Stockholders’

Balance at March 31, 2025

Forfeitures of shares granted to employees

Equity-based compensation

Foreign currency translation

Issuances of common stock

Exercises of options

Common stock purchases & retirement

Dividends paid

Balance at June 30, 2025

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Stockholders’ (Deficit) Equity

The following details the changes in stockholders’ (deficit) equity for the three months ended March 31, 2025 and 2024, respectively (in thousands except share data):

Comprehensive

Stockholders’

Income (Loss)

Equity (Deficit)

Balance at March 31, 2024

Forfeitures of shares granted to employees

Equity-based compensation

Foreign currency translation

Issuances of common stock

Exercises of options

Common stock purchases & retirement

Dividends paid

Balance at June 30, 2024

Comprehensive

Stockholders’

Balance at December 31, 2024

4 unchanged sentences

Exercises of options

Common stock purchases & retirement

Dividends paid

Balance at March 31, 2024

Balance at June 30, 2025

Comprehensive

6 unchanged sentences

Exercises of options

Common stock purchases & retirement

Dividends paid

Balance at March 31, 2025

Balance at June 30, 2024

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Revenue recognition

8 unchanged sentences

(in thousands)

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Service revenue recognized from deferred revenue balance at beginning of period

4 unchanged sentences

Cash consideration received on transfers of dark fiber, including upfront installation fees, is recognized on a straight-line basis to service revenue over the term of the agreement.

Lease income is included in service revenue in the condensed consolidated statements of comprehensive (loss) income.

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Lease income is included in service revenue in the condensed consolidated statements of comprehensive loss.

In February 2016, the FASB issued ASU No.

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(Amounts in thousands)

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Finance lease cost

3 unchanged sentences

Total lease costs

March 31, 2025

March 31, 2024

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June 30, 2025

June 30, 2024

Other lease information (amounts in thousands)

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Right-of-use assets represent the Company’s right-to-use an underlying asset for the lease term and lease liabilities represent its obligation to make lease payments under the lease.

As of March 31, 2025, the Company had committed to additional IRU agreements totaling $ 170.4 million in future payments to be paid over periods of up to 20 years .

As of June 30, 2025, the Company had committed to additional IRU agreements totaling $ 142.2 million in future payments to be paid over periods of up to 20 years .

These obligations begin when the related fiber is accepted, which is generally expected to occur in the next 12 months.

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The future minimum payments under operating lease and finance lease agreements are as follows (in thousands):

For the Twelve Months Ending March 31

The future minimum payments under the Company’s operating lease and finance lease agreements are as follows (in thousands):

For the Twelve Months Ending June 30,

Total minimum lease obligations

3 unchanged sentences

Lease obligations, net of current maturities

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Allowance for credit losses

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Allowance for credit losses (deducted from accounts receivable) (in thousands)

Three months ended March 31, 2025

Three months ended March 31, 2024

Three months ended June 30, 2025

Three months ended June 30, 2024

Six months ended June 30, 2025

Six months ended June 30, 2024

(in thousands)

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Net bad debt expense

Bad debt recoveries

Accounting Standards Not Yet Adopted

In December 2023, the FASB issued Accounting Standards Update (“ASU 2023-09”) 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures , which requires a public business entity to disclose, on an annual basis, a tabular rate reconciliation disaggregated into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold as defined within the standard.

In addition, all entities will be required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received.

The amendments in ASU 2023-09 are effective for public business entities for annual periods beginning after December 15, 2024, and early adoption is permitted.

The Company will not early adopt ASU 2023-09 and does not expect a material impact on its consolidated financial statements from the adoption of ASU 2023-09.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses , (“ASU 2024-03”), which requires a public business entity to disclose additional information about specific expense categories in the notes to financial statements on an annual and interim basis.

The amendments are effective for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with early adoption permitted.

A public entity should apply the amendments either prospectively to financial statements issued for reporting periods after the effective date of the ASU or retrospectively to any or all prior periods presented in the financial statements.

The Company will not early adopt ASU 2024-03 and is in the process of evaluating the impact on its consolidated financial statements from the adoption of ASU 2024-03.

Property and equipment:

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(in thousands)

March 31, 2025

March 31, 2024

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

Depreciation and amortization expense

1 unchanged sentence

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IRU Finance Lease Termination – Discount and Gain on Lease Termination

In June 2024, the Company elected to exercise a contractual option to prepay in full at a 12.0 % discounted rate an IRU finance lease agreement (the “IRU Lease”) acquired in the Transaction for $ 114.6 million.

At the payment date, the present value of the IRU finance lease liability was $ 117.9 million and the remaining 31 monthly principal payments of $ 4.2 million each totaled $ 130.2 million.

The prepayment resulted in a gain on lease termination of $ 3.3 million related to the difference between the book value of $ 117.9 million and the cash payment of $ 114.6 million.

The Company is continuing to use the related IRU asset.

Long-term debt:

As of March 31, 2025, the Company had outstanding $ 300.0 million aggregate principal amount of 2027 Mirror Notes, $ 450.0 million aggregate principal amount of 2027 Notes, $ 500.0 million aggregate principal amount of 2026 Notes and $ 206.0 million aggregate principal amount of IPv4 Notes.

As discussed in Note 10, on April 11, 2025 the Company issued an additional $ 174.4 million of IPv4 notes (the “New IPv4 Notes”).

The IPv4 Notes were issued in May 2024 and bear interest at a rate of 7.924 %, with an anticipated term ending in May 2029 (such anticipated repayment date, the “ARD”).

As of June 30, 2025, the Company had outstanding the following long-term debt obligations;

● $ 600.0 million aggregate principal amount of 2032 Notes,

● $ 300.0 million aggregate principal amount of 2027 Mirror Notes,

● $ 450.0 million aggregate principal amount of 2027 Notes,

● $ 206.0 million aggregate principal amount of secured IPv4 notes issued in May 2024 (the “Existing IPv4 Notes”) and

● $ 174.4 million aggregate principal amount of secured IPv4 notes issued in April 2025 (the “New IPv4 Notes” and, together with the Existing IPv4 Notes, the “IPv4 Notes”).

o The 2032 Notes were issued in June 2025, are due on July 1, 2032, and bear interest at a rate of 6.50 % per year.

Interest on the 2032 Notes is paid semi-annually on January 1 and July 1 of each year beginning on January 1, 2026.

◾ The 2032 Notes were issued in connection with the redemption of the Company’s $ 500.0 million 3.50 % Senior Secured Notes due to mature in May 2026 (the “Existing Secured 2026 Notes”), that were due on May 1, 2026, and bore interest at a rate of 3.50 % per year.

o The Existing 2024 IPv4 Notes were issued for an aggregate principal amount of $ 206.0 million and bear interest at a rate of 7.924 % , with an anticipated term ending in May 2029 (such anticipated repayment date, the “ARD”).

o The New IPv4 Notes were issued for an aggregate principal amount of $ 174.4 million and bear interest at a rate of 6.646 % , with an ARD of April 2030.

Interest on the IPv4 Notes is paid monthly.

The 2027 Mirror Notes were issued in June 2024, are due on June 15, 2027, and bear interest at a rate of 7.00 % per year.

The 2027 Notes were issued in June 2022, are due on June 15, 2027, and bear interest at a rate of 7.00 % per year.

o The 2027 Mirror Notes were issued in June 2024, are due on June 15, 2027, and bear interest at a rate of 7.00 % per year.

o The 2027 Notes were issued in June 2022, are due on June 15, 2027, and bear interest at a rate of 7.00 % per year.

Interest on the 2027 Mirror Notes and 2027 Notes is paid semi-annually on June 15 and December 15 of each year.

The 2026 Notes were issued in May 2021, are due on May 1, 2026, and bear interest at a rate of 3.50 % per year.

Interest on the 2026 Notes is paid semi-annually on May 1 and November 1 of each year.

Issuance of $ 300.0 Million Principal Amount of 2027 Mirror Notes

On June 11, 2024, Group and Cogent Finance, Inc.

(the “Co-Issuer” and, together with Group, the “Issuers”), two wholly owned subsidiaries of the Company, completed an offering of $ 300.0 million aggregate principal amount of 7.00 % senior unsecured notes due 2027 (the “2027 Mirror Notes”) for issuance in a private placement not registered under the U.S.

Issuance of $ 600.0 million principal amount of 2032 Notes and redemption of the Existing Secured 2026 Notes

On June 17, 2025 (the “2032 Notes Closing Date”), Group and Cogent Finance, Inc.

(the “Co-Issuer” and, together with Group, the “Issuers”), two wholly owned subsidiaries of the Company, completed an offering of $ 600.0 million aggregate principal amount of 2032 Notes for issuance in a private placement not registered under the U.S.

Securities Act of 1933, as amended (the “Securities Act”).

The 2032 Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers in an unregistered offering pursuant to Rule 144A under the Securities Act and to certain non-U.S.

persons in transactions outside the United States in compliance with Regulation S under the Securities Act.

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The net proceeds from the offering were $ 597.8 million after deducting offering expenses.

On June 4, 2025, the Issuers issued a notice of conditional full redemption to holders of all of the then-outstanding Existing Secured 2026 Notes, specifying the 2032 Notes Closing Date as the redemption date.

On the 2032 Notes Closing Date, Group used $ 507.3 million of the net proceeds from the offering to redeem in full, and satisfy and discharge the Issuers’ obligations under, the Existing Secured 2026 Notes.

The obligations under the Existing Secured 2026 Notes included the $ 500.0 million principal amount, a $ 5.0 million make-whole payment and $ 2.2 million of accrued interest.

As a result of the redemption of the Existing Secured 2026 Notes, the Company incurred a loss on debt extinguishment and redemption of $ 5.6 million.

Group expects to use the remainder of the net proceeds for general corporate purposes and/or to make special or recurring dividends to the Company.

The 2032 Notes were issued pursuant to, and are governed by, an indenture, dated June 17, 2025 (the “2032 Notes Indenture”), among the Issuers, the Company, the other guarantors named therein and Wilmington Trust, National Association, as trustee and collateral agent.

The 2032 Notes are jointly and severally guaranteed (the “2032 Notes Subsidiary Guarantees”) on a senior secured basis by each of Group’s existing and future material domestic subsidiaries (other than the Co-Issuer), subject to certain exceptions (collectively, the “2032 Notes Subsidiary Guarantors”).

In addition, the 2032 Notes are guaranteed (together with the 2032 Notes Subsidiary Guarantees, the “Guarantees”) on a senior unsecured basis by the Company (together with the 2032 Notes Subsidiary Guarantors, the “Guarantors”).

However, the Company is not subject to the covenants under the 2032 Notes Indenture.

Under certain circumstances, the 2032 Notes Guarantors may be released from these 2032 Notes Guarantees without the consent of the holders of the 2032 Notes.

The 2032 Notes and the 2032 Notes Subsidiary Guarantees are the Issuers’ and the 2032 Notes Subsidiary Guarantors’ senior secured obligations, secured by a first-priority lien on substantially all of the Issuers’ and the 2032 Notes Subsidiary Guarantors’ assets, subject to certain exceptions, exclusions, limitations and permitted liens.

The 2032 Notes and the 2032 Notes Subsidiary Guarantees are effectively senior to any of the Issuers’ and the Subsidiary Guarantors’ existing and future senior unsecured indebtedness, including the 2027 Notes and 2027 Mirror Notes (together the “Existing Unsecured 2027 Notes”), and future indebtedness secured by liens on the collateral securing the 2032 Notes that are junior to the liens on the collateral securing the 2032 Notes, in each case, to the extent of the value of the collateral securing the 2032 Notes.

Without giving effect to collateral arrangements, the 2032 Notes and the 2032 Notes Subsidiary Guarantees rank pari passu in right of payment with all of the Issuers’ and the 2032 Notes Subsidiary Guarantors’ existing and future senior indebtedness that is not subordinated in right of payment to the 2032 Notes or the 2032 Notes Subsidiary Guarantees, including the Existing Unsecured 2027 Notes, and are effectively subordinated to any of the Issuers’ and the 2032 Notes Subsidiary Guarantors’ indebtedness that is secured by assets that do not constitute collateral or that is secured by liens on the collateral securing the 2032 Notes that are senior to the liens securing the 2032 Notes, in each case, to the extent of the value of the collateral securing such indebtedness.

In addition, the 2032 Notes and the 2032 Notes Subsidiary Guarantees rank contractually senior in right of payment to all of the Issuers’ and the 2032 Notes Subsidiary Guarantors’ subordinated indebtedness and are structurally subordinated to any existing and future indebtedness and other liabilities of Group’s non-guarantor subsidiaries (other than the Co-Issuer).

The Company’s guarantee is its senior unsecured obligation and is effectively subordinated to the Company’s secured indebtedness to the extent of the value of the collateral securing such indebtedness.

Without giving effect to collateral arrangements, the Company’s guarantee ranks pari passu in right of payment with all of the Company’s existing and future senior indebtedness, including its guarantee of the Existing Unsecured 2027 Notes, and contractually senior in right of payment to all of the Company’s future subordinated indebtedness.

The Company’s guarantee is structurally subordinated to any existing and future indebtedness and other liabilities of the Company’s subsidiaries that are neither the Issuers nor a 2032 Notes Subsidiary Guarantor, including the secured IPv4 Notes.

The 2032 Notes bear interest at a rate of 6.50 % per annum.

Interest began to accrue on the 2032 Notes on June 17, 2025 and will be paid semi-annually in arrears on January 1 and July 1 of each year, commencing January 1, 2026, to the persons who are registered holders of the 2032 Notes at the close of business on the December 15 or June 15 immediately preceding the applicable interest payment date.

Unless earlier redeemed or repurchased, the 2032 Notes will mature on July 1, 2032.

The Issuers may redeem some or all of the 2032 Notes at any time prior to July 1, 2028 at a price equal to 100 % of the principal amount of the 2032 Notes, plus a “make-whole” premium as set forth in the 2032 Notes Indenture, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

The Issuers may also redeem up to 40 % of the principal amount of the 2032 Notes using proceeds of certain equity offerings completed prior to July 1, 2028 at a redemption price equal to 106.500 %, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption, subject to certain exceptions.

Thereafter, the Issuers may redeem the 2032 Notes, in whole or in part, at a redemption price ranging from 103.250 % of the aggregate principal amount of the 2032 Notes redeemed to par (depending on the year), in each case, as set forth in the 2032 Notes Indenture, plus accrued and unpaid interest, if any, to, but excluding, the date of redemption.

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If Group undergoes specific kinds of changes in control accompanied by certain ratings events, the Issuers will be required to offer to repurchase the 2032 Notes from holders at a price equal to 101.0 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the date of repurchase.

Additionally, if Group or any of its restricted subsidiaries sells assets and does not apply the proceeds from such sale in a certain manner or certain other events have not occurred, under certain circumstances, the Issuers will be required to use the net proceeds to make an offer to purchase the 2032 Notes at an offer price in cash equal to 100.0 % of the principal amount of the 2032 Notes, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date.

In connection with any offer to purchase all or any of the 2032 Notes (including a change of control offer, asset sale offer or any tender offer), if holders of not less than 90.0 % of the aggregate principal amount of the outstanding 2032 Notes validly tender their 2032 Notes, the Issuers or a third party are entitled to redeem any remaining 2032 Notes at the price paid to each holder.

The 2032 Notes Indenture includes covenants that restrict Group and its restricted subsidiaries’ (including the Co-Issuer’s) ability to, among other things:

● incur indebtedness;

● issue certain preferred stock or similar equity securities;

● pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

● make certain investments and other restricted payments, such as prepayment, redemption or repurchase of certain subordinated indebtedness;

● create liens;

● consolidate, merge, sell or otherwise dispose of all or substantially all of the properties and assets of Cogent Group and its restricted subsidiaries taken as a whole;

● incur restrictions on the ability of a restricted subsidiary to pay dividends or make other payments;

● enter into transactions with affiliates.

However, the covenants provide for certain exceptions to these restrictions, and neither the Company nor any subsidiary of the Company that is not Group or a subsidiary of Group is subject to the covenants under the 2032 Notes Indenture.

Certain covenants will cease to apply to the 2032 Notes if, and for so long as, the 2032 Notes have investment grade ratings from any two of Moody’s Investors Service, Inc., Fitch Ratings, Inc.

and S&P Global Ratings and so long as no default or event of default under the 2032 Notes Indenture has occurred and is continuing.

Upon suspension of the covenants, the 2032 Notes Guarantees and the related liens on the collateral, as applicable, will be released until such time as the covenants are no longer suspended.

The principal amount of the 2032 Notes would become immediately due and payable upon the occurrence of certain bankruptcy or insolvency events involving Group, the Co-Issuer or certain of Group’s subsidiaries, and may be declared immediately due and payable by the trustee or the holders of at least 25.0 % of the aggregate principal amount of the then-outstanding 2032 Notes upon the occurrence of certain events of default under the Indenture.

Events of default include the following with respect to the Issuers and Group’s significant subsidiaries:

(i) failure to pay principal, premium or interest at required times;

(ii) failure to comply with any other agreements in the Indenture;

(iii) default on certain material indebtedness that is caused by a failure to make a payment within any applicable grace period when due at maturity or results in the acceleration of such indebtedness prior to its express maturity;

(iv) failure to pay certain material judgments;

(v) a Guarantee being held unenforceable or invalid or ceasing for any reason to be in full force and effect or a Guarantor denying or disaffirming its obligations under its Guarantee;

(vi) certain events of bankruptcy or insolvency;

and (vii) certain defaults with respect to the security documentation related to the 2032 Notes and the collateral securing the 2032 Notes and the Guarantees of the Subsidiary Guarantors.

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Issuance of $ 174.4 million principal amount of New IPv4 Notes

On April 11, 2025 (the “New IPv4 Notes Closing Date”), Cogent IPv4 LLC (the “IPv4 Issuer”), a special-purpose, bankruptcy remote, indirect wholly owned subsidiary of the Company, issued $ 174.4 million aggregate principal amount of 6.646 % secured IPv4 address revenue notes, Series 2025-1 Class A-2 (collectively, the “New IPv4 Notes”), with an anticipated repayment date in April 2030, in an offering exempt from registration under the Securities Act.

The net proceeds of the New IPv4 Notes, after offering expenses, were $ 170.5 million.

At the New IPv4 Notes Closing Date, $ 72.6 million of the net proceeds were restricted, and $ 97.9 million of the net proceeds were unrestricted.

The restricted net proceeds will become available based upon improvements in the monthly leverage ratio and debt service coverage ratio (both as defined in the IPv4 Base Indenture (as defined below).

The New IPv4 Notes were issued pursuant to the IPv4 Base Indenture, dated as of May 2, 2024, as supplemented by the Series 2025-1 Supplement thereto, dated as of the New IPv4 Notes Closing Date (the “Series 2025-1 Supplement”), by and between the IPv4 Issuer and the IPv4 Trustee (as defined below).

The IPv4 Base Indenture allows the IPv4 Issuer to issue additional series of notes subject to certain conditions set forth therein, and the IPv4 Base Indenture, together with the Series 2024-1 Supplement thereto (as defined below) and the Series 2025-1 Supplement, and any other series supplements to the IPv4 Base Indenture, is referred to as the “IPv4 Notes Indenture.” Under the IPv4 Notes Indenture, interest is paid on a monthly basis.

From and after the monthly payment date in April of 2030, principal payments will also be required to be made on the New IPv4 Notes on a monthly basis.

No principal payments will be due on the New IPv4 Notes prior to the monthly payment date in April of 2030, unless certain rapid amortization, mandatory prepayment or acceleration events occur.

The legal final maturity date of the New IPv4 Notes is in April of 2055 .

If the IPv4 Issuer has not repaid or refinanced any New IPv4 Notes prior to the monthly payment date in April of 2030, additional interest will accrue thereon in an amount equal to the greater of (i) 5.0 % per annum and (ii) the excess amount, if any, by which the sum of the following exceeds the interest rate for such New IPv4 Notes:

(A) the yield to maturity (adjusted to a “mortgage-equivalent basis” pursuant to the standards and practices of the Securities Industry and Financial Markets Association) on the monthly payment date in April of 2030 of the United States Treasury Security having a remaining term closest to 10 years;

plus (B) 5.0 %;

plus (C) the post-anticipated repayment date note spread of 3.00 % applicable to such New IPv4 Notes.

In connection with the issuance of the New IPv4 Notes, the IPv4 Issuer obtained consents from noteholders representing more than 50 % of the Voting Rights (as defined in the IPv4 Base Indenture) of the Existing IPv4 Notes to adopt amendments to the IPv4 Base Indenture to, among other things, permit the IPv4 Issuer to (i) issue additional Class A Notes (as defined in the IPv4 Base Indenture) (provided that the Class A Leverage Ratio (as defined in the IPv4 Base Indenture) is less than or equal to 7.25 to 1.00 ) (as opposed to 6.10 to 1.00 under the Base Indenture as previously in effect), (ii) dispose of IPv4 addresses owned by the IPv4 Issuer (provided that the pro forma Leverage Ratio (as defined in the IPv4 Base Indenture) is less than or equal to 7.25 to 1.00 ) (as opposed to the greater of (x) 7.10 to 1.00 and (y) the Leverage Ratio as of the date of the most recent issuance of Additional Notes (as defined in the IPv4 Base Indenture) (after giving effect to the issuance of such Additional Notes) under the IPv4 Base Indenture as previously in effect) and (iii) substitute new IPv4 addresses (including Non-Contributed IP Addresses (as defined in the IPv4 Base Indenture)) to be owned by the IPv4 Issuer for the Contributed IP Addresses then owned by the IPv4 Issuer (provided that the pro forma Leverage Ratio is not greater than 7.25 to 1.00 ) (as opposed to 6.10 to 1.00 under the IPv4 Base Indenture as previously in effect), in each case, among other applicable requirements (collectively, the “Amendments”).

Accordingly, on the New IPv4 Notes Closing Date, prior to the issuance of the New IPv4 Notes, the IPv4 Issuer entered into a second amendment to the IPv4 Base Indenture (the “Second Amendment”) with the IPv4 Trustee giving effect to the Amendments.

Issuance of $ 206.0 million principal amount of Existing IPv4 Notes

On May 2, 2024, the IPv4 Issuer issued $ 206.0 million aggregate principal amount of 7.924 % IPv4 Notes (the “Existing IPv4 Notes”), with an anticipated repayment date in May 2029 in an offering exempt from registration under the Securities Act.

The net proceeds from the offering, after debt offering costs, were $ 198.4 million.

The Existing IPv4 Notes were issued pursuant to an indenture, dated as of May 2, 2024 (the “IPv4 Base Indenture”), as supplemented by the Series 2024-1 Supplement thereto, dated as of May 2, 2024 (the “Series 2024-1 Supplement”), in each case entered into by and between the IPv4 Issuer and Wilmington Trust, National Association, as the trustee for the IPv4 Notes (the “IPv4 Trustee”).

The IPv4 Base Indenture allows the IPv4 Issuer to issue additional series of notes subject to certain conditions set forth therein.

The Existing IPv4 Notes were issued as part of a securitization transaction, pursuant to which certain IPv4 addresses, customer IPv4 address leases, customer accounts receivable and other IPv4 address assets (collectively, “IPv4 Address Assets”) were

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contributed to the IPv4 Issuer and are included as collateral for the Existing IPv4 Notes.

While the Existing IPv4 Notes are outstanding, scheduled payments of interest are required to be made on a monthly basis.

From and after the monthly payment date in May of 2029, principal payments will also be required to be made on the Existing IPv4 Notes on a monthly basis.

No principal payments will be due on the Existing IPv4 Notes prior to the monthly payment date in May of 2029, unless certain rapid amortization, mandatory prepayment or acceleration events occur.

The legal final maturity date of the Existing IPv4 Notes is in May of 2054 .

If the IPv4 Issuer has not repaid or refinanced the Existing IPv4 Notes prior to the monthly payment date in May of 2029, additional interest will accrue thereon in an amount equal to the greater of (i) 5.0 % per annum and (ii) the excess amount, if any, by which the sum of the following exceeds the interest rate for such Existing IPv4 Note:

(A) the yield to maturity (adjusted to a “mortgage-equivalent basis” pursuant to the standards and practices of the Securities Industry and Financial Markets Association) on the monthly payment date in May of 2029 of the United States Treasury Security having a remaining term closest to 10 years;

plus (B) 5.0 %;

plus (C) the post-anticipated repayment date note spread of 3.400 % applicable to such Existing IPv4 Note.

IPv4 Notes collateral, guaranty, covenants and restrictions

The IPv4 Notes are obligations only of the IPv4 Issuer pursuant to the indenture (the “IPv4 Notes Indenture”), and are secured by a security interest in substantially all of the IPv4 Address Assets pursuant to the IPv4 Notes Indenture.

The IPv4 Notes are guaranteed by Cogent IPv4 Holdco LLC, a special-purpose entity and an indirect wholly owned subsidiary of the Company, as the guarantor (in such capacity, the “IPv4 Guarantor”), pursuant to a guaranty, dated as of May 2, 2024 (the “Guaranty”) by the IPv4 Guarantor in favor of the IPv4 Trustee pursuant to which the IPv4 Guarantor has granted a security interest in the equity interests of the IPv4 Issuer as collateral security for its obligations under the Guaranty.

Except as described below, neither the Company nor any subsidiary of the Company, other than the IPv4 Issuer and the IPv4 Guarantor, will guarantee or in any way be liable for the obligations of the IPv4 Issuer under the IPv4 Notes Indenture or the IPv4 Notes.

The IPv4 Notes are subject to a series of covenants and restrictions customary for transactions of this type.

These covenants and restrictions include (i) that the IPv4 Issuer maintains a liquidity reserve account to be used to make required payments in respect of the IPv4 Notes with such funds considered restricted cash, (ii) provisions relating to optional and mandatory prepayments, including specified make-whole payments in the case of certain optional prepayments of the IPv4 Notes prior to the monthly payment date in May of 2028, (iii) certain indemnification payments in the event, among other things, that the transfers of the assets pledged as collateral for the IPv4 Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters.

As provided in the IPv4 Base Indenture, the IPv4 Notes are also subject to rapid amortization in the event of a failure to maintain a stated debt service coverage ratio as defined in the IPv4 Notes Indenture.

A rapid amortization may be cured if the debt service coverage ratio exceeds a certain threshold for a certain period of time, upon which cure, regular amortization, if any, will resume.

In addition, if certain utilization thresholds are not met (i.e., the proportion of IP addresses which are leased to the total number of IP addresses owned by the IPv4 Issuer falls below certain thresholds), the IPv4 Issuer will be required to apply collections to the repayment of the IPv4 Notes and in certain circumstances, the noteholders will have the ability to direct a sale of the IP Address Assets, in whole or in part, pursuant to the terms set forth in the IPv4 Notes Indenture.

The IPv4 Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the IPv4 Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective and certain judgments.

IPv4 Notes manager

Cogent Communications, LLC (in such capacity, the “Manager”) performs certain monthly services related to the IPv4 Address Assets and the $ 380.4 million of IPv4 Notes including billing customers, collecting amounts paid by customers, forwarding payments to the IPv4 Trustee related to the IPv4 Address Assets and other administrative services.

Amounts received by the IPv4 Issuer in respect of collections on the IPv4 Address Assets are reconciled on a monthly basis, and the IPv4 Issuer pays the monthly interest on the IPv4 Notes and other expenses from the accumulated customer payments on the IPv4 Address Assets.

Amounts received by the IPv4 Issuer as collections on IPv4 Address Assets before the monthly reconciliation is completed are held in a segregated account by the IPv4 Trustee as collateral for the IPv4 Notes.

After the IPv4 Trustee pays the monthly interest and other IPv4 Address Assets related costs, including monthly fees paid to the Manager for its services, the residual cash is paid to the Company and is unrestricted.

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Issuance of $ 300.0 million principal amount of 2027 Mirror Notes

On June 11, 2024, the Issuers completed an offering of $ 300.0 million aggregate principal amount of the 2027 Mirror Notes for issuance in a private placement not registered under the Securities Act.

The 2027 Mirror Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers in an unregistered offering pursuant to Rule 144A under the Securities Act and to certain non-U.S.

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The net proceeds from the offering were approximately $ 291.9 million after deducting the discount and offering expenses.

Group used $ 114.6 million of the net proceeds from the offering to exercise a contractual option to prepay in full an IRU lease, at a discount.

Group used $ 114.6 million of the net proceeds from the offering to exercise a contractual option to prepay in full the IRU Lease, at a discount.

Group expects to use the remainder of the net proceeds for general corporate purposes and/or to make special or recurring dividends to the Company.

The 2027 Mirror Notes were issued pursuant to, and are governed by, an indenture, dated June 11, 2024 (the “2027 Mirror Notes Indenture”), among the Issuers, the Company, the other guarantors named therein and Wilmington Trust, National Association, as trustee (the “2027 Notes Trustee”).

The 2027 Mirror Notes are jointly and severally guaranteed (the “Guarantees”) on a senior unsecured basis by each of Group’s existing and future material domestic subsidiaries (other than the Co-Issuer), subject to certain exceptions (collectively, the “Subsidiary Guarantors”), and by the Company (together with the Subsidiary Guarantors, the “Guarantors”).

The 2027 Mirror Notes are jointly and severally guaranteed (the “2027 Mirror Notes Guarantees”) on a senior unsecured basis by each of Group’s existing and future material domestic subsidiaries (other than the Co-Issuer), subject to certain exceptions (collectively, the “2027 Mirror Notes Subsidiary Guarantors”), and by the Company (together with the 2027 Mirror Notes Subsidiary Guarantors, the “2027 Mirror Notes Guarantors”).

However, the Company is not subject to the covenants under the 2027 Mirror Notes Indenture.

Under certain circumstances, the Guarantors may be released from these Guarantees without the consent of the holders of the 2027 Mirror Notes.

The 2027 Mirror Notes and the Guarantees are the Issuers’ and the Guarantors’ senior unsecured obligations.

The 2027 Mirror Notes and the Guarantees are effectively subordinated to all of the Issuers’ and the Guarantors’ existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, and are structurally subordinated to all indebtedness and other liabilities of subsidiaries that are not Subsidiary Guarantors.

Without giving effect to collateral arrangements, the 2027 Mirror Notes and the Guarantees rank pari passu in right of payment with all of the Issuers’ and the Guarantors’ existing and future senior indebtedness, including the Issuers’ 2026 Notes and the 2027 Notes.

The 2027 Mirror Notes and the Guarantees rank contractually senior in right of payment to all of the Issuers’ and the Guarantors’ subordinated indebtedness and are structurally subordinated to any existing and future indebtedness and other liabilities of the Issuers’ non-guarantor subsidiaries.

Under certain circumstances, the 2027 Mirror Notes Guarantors may be released from these 2027 Mirror Notes Guarantees without the consent of the holders of the 2027 Mirror Notes.

The 2027 Mirror Notes and the 2027 Mirror Notes Guarantees are the Issuers’ and the 2027 Mirror Notes Guarantors’ senior unsecured obligations.

The 2027 Mirror Notes and the 2027 Mirror Notes Guarantees are effectively subordinated to all of the Issuers’ and the 2027 Mirror Notes Guarantors’ existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, and are structurally subordinated to all indebtedness and other liabilities of subsidiaries that are not 2027 Mirror Notes Subsidiary Guarantors.

Without giving effect to collateral arrangements, the 2027 Mirror Notes and the 2027 Mirror Notes Guarantees rank pari passu in right of payment with all of the Issuers’ and the 2027 Mirror Notes Guarantors’ existing and future senior indebtedness, including the 2027 Notes.

The 2027 Mirror Notes and the 2027 Mirror Notes Guarantees rank contractually senior in right of payment to all of the Issuers’ and the 2027 Mirror Notes Guarantors’ subordinated indebtedness and are structurally subordinated to any existing and future indebtedness and other liabilities of the Issuers’ non-guarantor subsidiaries.

The 2027 Mirror Notes bear interest at a rate of 7.00 % per annum.

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Unless earlier redeemed or repurchased, the 2027 Mirror Notes will mature on June 15, 2027 .

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After June 15, 2024, the Issuers may redeem the 2027 Mirror Notes, in whole or in part, at a redemption price ranging from 103.5 % of the aggregate principal amount of the 2027 Mirror Notes redeemed to par (depending on the year), in each case, as set forth in the 2027 Mirror Notes Indenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption.

If Group undergoes specific kinds of change in control accompanied by certain ratings events, the Issuers will be required to offer to repurchase the 2027 Mirror Notes from holders at a price equal to 101 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

If Group undergoes specific kinds of changes in control accompanied by certain ratings events, the Issuers will be required to offer to repurchase the 2027 Mirror Notes from holders at a price equal to 101.0 % of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.

Additionally, if Group or any of its restricted subsidiaries sells assets and does not apply the proceeds from such sale in a certain manner or certain other events have not occurred, under certain circumstances, the Issuers will be required to use the net proceeds to make an offer to purchase the 2027 Mirror Notes at an offer price in cash equal to 100.0 % of the principal amount of the 2027 Mirror Notes, plus accrued and unpaid interest, if any, to, but not including, the repurchase date.

In connection with any offer to purchase all or any of the 2027 Mirror Notes (including a change of control offer, asset sale offer or any tender offer), if holders of no less than 90 % of the aggregate principal amount of the outstanding 2027 Mirror Notes validly tender their 2027 Mirror Notes, the Issuers or a third party are entitled to redeem any remaining 2027 Mirror Notes at the price paid to each holder.

In connection with any offer to purchase all or any of the 2027 Mirror Notes (including a change of control offer, asset sale, offer or any tender offer), if holders of not less than 90 % of the aggregate principal amount of the outstanding 2027 Mirror Notes validly tender their 2027 Mirror Notes, the Issuers or a third party are entitled to redeem any remaining 2027 Mirror Notes at the price paid to each holder.

The 2027 Mirror Notes Indenture includes covenants that restrict Group and its restricted subsidiaries’ (including the Co-Issuer’s) ability to, among other things:

2 unchanged sentences

pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock;

make certain investments and other restricted payments, such as prepayment, redemption or repurchase of certain indebtedness;

make certain investments and other restricted payments,

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such as prepayment, redemption or repurchase of certain indebtedness;

create liens;

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incur restrictions on the ability of a subsidiary to pay dividends or make other payments;

or to enter into transactions with affiliates.

and enter into transactions with affiliates.

The covenants provide for certain exceptions to these restrictions, and the Company is not subject to the covenants under the 2027 Mirror Notes Indenture.

1 unchanged sentence

and S&P Global Ratings and so long as no default or event of default under the 2027 Mirror Notes Indenture has occurred and is continuing.

Upon suspension of the covenants, the Guarantees will be released until such time as the covenants are no longer suspended.

The principal amount of the 2027 Mirror Notes would become immediately due and payable upon the occurrence of certain bankruptcy or insolvency events involving Group, the Co-Issuer or certain of Group’s subsidiaries, and may be declared immediately due and payable by the 2027 Notes Trustee or the holders of at least 25 % of the aggregate principal amount of the then-outstanding 2027 Mirror Notes upon the occurrence of certain events of default under the 2027 Mirror Notes Indenture.

Upon suspension of the covenants, the 2027 Mirror Notes Guarantees will be released until such time as the covenants are no longer suspended.

The principal amount of the 2027 Mirror Notes would become immediately due and payable upon the occurrence of certain bankruptcy or insolvency events involving Group, the Co-Issuer or certain of Group’s subsidiaries, and may be declared immediately due and payable by the 2027 Mirror Notes Trustee or the holders of at least 25.0 % of the aggregate principal amount of the then-outstanding 2027 Mirror Notes upon the occurrence of certain events of default under the 2027 Mirror Notes Indenture.

Events of default include the following with respect to the Issuers and Group’s significant subsidiaries:

3 unchanged sentences

(iv) failure to pay certain material judgments;

(v) a Guarantee being held unenforceable or invalid or ceasing for any reason to be in full force and effect or a Guarantor denying or disaffirming its obligations under its Guarantee;

(v) a 2027 Mirror Notes Guarantee being held unenforceable or invalid or ceasing for any reason to be in full force and effect or a 2027 Mirror Notes Guarantor denying or disaffirming its obligations under its 2027 Mirror Notes Guarantee;

and (vi) certain events of bankruptcy or insolvency.

Issuance of $ 206.0 Million Principal Amount of IPv4 Notes

On May 2, 2024, Cogent IPv4 LLC (the “IPv4 Issuer”), a special-purpose, bankruptcy remote, indirect wholly owned subsidiary of the Company, issued $ 206.0 million aggregate principal amount of 7.924 % IPv4 Notes (the “IPv4 Notes”), with an anticipated term ending in May 2029 (such anticipated repayment date, the “ARD”), in an offering exempt from registration under the Securities Act.

The net proceeds from the offering, after debt offering costs, were $ 198.4 million and are expected to be used for general corporate purposes.

The IPv4 Notes were issued pursuant to an indenture, dated as of May 2, 2024 (the “IPv4 Base Indenture”), as supplemented by the Series 2024-1 Supplement thereto, dated as of May 2, 2024 (the “Series 2024-1 Supplement”), in each case entered into by and between the IPv4 Issuer and Wilmington Trust, National Association, as the trustee for the IPv4 Notes (the “IPv4 Trustee”).

The IPv4 Base Indenture allows the IPv4 Issuer to issue additional series of notes subject to certain conditions set forth therein, and the IPv4 Base Indenture, together with the Series 2024-1 Supplement, and any other series supplements to the IPv4 Base Indenture, is referred to herein as the “IPv4 Indenture.”

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The IPv4 Notes were issued as part of a securitization transaction, pursuant to which certain IPv4 addresses, customer IPv4 address leases, customer accounts receivable and other IPv4 address assets (collectively, “IPv4 Address Assets”) were contributed to the IPv4 Issuer and are included as collateral for the IPv4 Notes.

While the IPv4 Notes are outstanding, scheduled payments of interest are required to be made on a monthly basis.

From and after the ARD, principal payments will also be required to be made on the IPv4 Notes on a monthly basis.

No principal payments will be due on the IPv4 Notes prior to the ARD, unless certain rapid amortization or acceleration triggers are activated.

Cogent Communications LLC (in such capacity, the “Manager”) performs certain monthly services related to the IPv4 Address Assets and IPv4 Notes including billing customers, collecting amounts paid by customers, forwarding payments to the IPv4 Trustee related to the IPv4 Address Assets and other administrative services.

Amounts paid by the Manager to the IPv4 Trustee are reconciled on a monthly basis and the IPv4 Trustee pays the monthly interest on the IPv4 Notes and other expenses from the accumulated customer payments on the IPv4 Address Assets.

Amounts held by the IPv4 Trustee before the monthly reconciliation is completed are considered restricted cash.

The legal final maturity date of the IPv4 Notes is in May of 2054 .

If the IPv4 Issuer has not repaid or refinanced the IPv4 Notes prior to the monthly payment date in May of 2029, additional interest will accrue thereon in an amount equal to the greater of (i) 5.0 % per annum and (ii) the excess amount, if any, by which the sum of the following exceeds the interest rate for such IPv4 Note:

(A) the yield to maturity (adjusted to a “mortgage-equivalent basis” pursuant to the standards and practices of the Securities Industry and Financial Markets Association) on the ARD for such IPv4 Note of the United States Treasury Security having a remaining term closest to 10 years;

plus (B) 5.0 %;

plus (C) the post-ARD note spread of 3.400 % applicable to such IPv4 Note.

The IPv4 Notes are obligations only of the IPv4 Issuer pursuant to the indenture (the “IPv4 Indenture”), and are secured by a security interest in substantially all of the IPv4 Address Assets pursuant to the IPv4 Indenture.

The IPv4 Notes are subject to a series of covenants and restrictions customary for transactions of this type.

These covenants and restrictions include (i) that the IPv4 Issuer maintains a liquidity reserve account to be used to make required payments in respect of the IPv4 Notes with such funds considered restricted cash, (ii) provisions relating to optional and mandatory prepayments, including specified make-whole payments in the case of certain optional prepayments of the IPv4 Notes prior to the monthly payment date in May of 2029, (iii) certain indemnification payments in the event, among other things, that the transfers of the assets pledged as collateral for the IPv4 Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters.

A rapid amortization may be cured if the debt service coverage ratio exceeds a certain threshold for a certain period of time, upon which cure, regular amortization, if any, will resume.

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Limitations under the Indentures

The indentures governing the 2027 Notes, the 2027 Mirror Notes and the 2026 Notes (the “Indentures”), among other things, limit the ability of Group and its restricted subsidiaries to incur indebtedness;

to pay dividends or make other distributions;

to make certain investments and other restricted payments;

to create liens;

to consolidate, merge, sell or otherwise dispose of all or substantially all of its assets;

to incur restrictions on the ability of a subsidiary to pay dividends or make other payments;

and to enter into certain transactions with its affiliates.

The indentures governing the 2032 Notes, the 2027 Notes, and the 2027 Mirror Notes (collectively, the “Indentures”), among other things, limit the ability of Group and its restricted subsidiaries to incur indebtedness;

issue certain preferred stock or similar equity securities;

pay dividends or make other distributions;

make certain investments and other restricted payments;

create liens;

consolidate, merge, sell or otherwise dispose of all or substantially all of its properties and assets;

incur restrictions on the ability of a subsidiary to pay dividends or make other payments;

and enter into certain transactions with its affiliates.

There are certain exceptions to the limitations on the ability to incur indebtedness under the Indentures, including IRU agreements incurred in the normal course of business and any additional indebtedness if Group’s consolidated leverage ratio, as defined in the Indentures, is less than 6.0 to 1.0 or Group’s fixed charge coverage ratio, as defined in the Indentures, is 2.0 to 1.0 or greater.

Group and its subsidiaries can also incur unlimited liens (which can be used, together with capacity under the debt covenant, to incur additional secured indebtedness) if Group’s consolidated secured leverage ratio, as defined in the Indentures, is less than 4.0 to 1.0 .

Under the Indentures, Group and its restricted subsidiaries can pay dividends, make other distributions, make certain investments and make other restricted payments under certain circumstances, including if, after giving pro forma effect to such restricted payment, Group could still incur $ 1 of “Ratio Debt,” as defined (i.e., either its consolidated leverage ratio is less than 6.0 to 1.0 or its fixed charge coverage ratio is 2.0 to 1.0 or greater).

As of March 31, 2025, Group’s consolidated leverage ratio was below 6.0 , Group’s consolidated secured leverage ratio was below 4.0 and Group’s fixed charge coverage ratio was above 2.0 .

As of March 31, 2025, a total of $ 187.2 million was unrestricted and permitted for restricted payments, including dividends and stock purchases.

Under the Indentures, Group and its restricted subsidiaries can pay dividends, make other distributions, make certain investments and make other restricted payments under certain circumstances, including, with respect to its restricted payments, if, after giving pro forma effect to such restricted payment, Group could still incur $ 1 of “Ratio Debt,” as defined (i.e., either its consolidated leverage ratio is less than 6.0 to 1.0 or its fixed charge coverage ratio is 2.0 to 1.0 or greater).

As of June 30, 2025, and under the more restrictive leverage ratio definitions under the 2027 Notes Indenture and the 2027 Mirror Notes Indenture (the “2027 Notes Indentures”),

● Group’s consolidated leverage ratio was above 6.0 to 1.00 ,

● Group’s consolidated secured leverage ratio was above 4.0 , and

● Group’s fixed charge coverage ratio was above 2.0 .

As of June 30, 2025, and under the leverage ratio definitions under the 2032 Notes Indenture, (The definition of consolidated cash flow under Group’s 2032 Notes Indenture includes cash payments from TMUSA under the IP Transit Services Agreement for the reference period, as defined.)

● Group’s consolidated leverage ratio was below 6.0 to 1.00 ,

● Group’s consolidated secured leverage ratio was below 4.0 , and

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● Group’s fixed charge coverage ratio was above 2.0 .

As of June 30, 2025, a total of $ 295.6 million was unrestricted and permitted for restricted payments, including dividends and stock purchases.

Interest rate swap agreement

As of March 31, 2025, the Company was party to an interest rate swap agreement (the “Swap Agreement”) that has the economic effect of modifying the fixed interest rate obligation associated with its 2026 Notes to a variable interest rate obligation based on the Secured Overnight Financing Rate (“SOFR”) so that the interest payable on the 2026 Notes effectively became variable based on overnight SOFR.

The critical terms of the Swap Agreement match the terms of the 2026 Notes, including the notional amount and the optional redemption date on February 1, 2026.

As of June 30, 2025, the Company was party to an interest rate swap agreement (the “Swap Agreement”).

The Swap Agreement is an independent agreement from the Company’s now extinguished Existing Secured 2026 Notes and remains outstanding until its maturity in February 2026.

The Swap Agreement has the economic effect of modifying the fixed interest rate 3.50 % obligation that was associated with the Company’s former Existing Secured 2026 Notes to a variable interest rate obligation based on the Secured Overnight Financing Rate (“SOFR”) so that the interest payable on the former Existing Secured 2026 Notes effectively became variable based on overnight SOFR.

The critical terms of the Swap Agreement match the terms of the extinguished Existing Secured 2026 Notes, including the notional amount and the optional redemption date on February 1, 2026.

The Company did not elect hedge accounting for the Swap Agreement.

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By entering into the Swap Agreement, the Company has assumed the risk associated with variable interest rates.

Changes in interest rates affect the valuation of the Swap Agreement that the Company recognizes in its condensed consolidated statements of comprehensive income.

Changes in interest rates affect the valuation of the Swap Agreement that the Company recognizes in its condensed consolidated statements of comprehensive loss.

The values that the Company reports for the Swap Agreement as of each reporting date are recognized as “interest expense including change in valuation – interest rate swap agreement” with the corresponding amounts included in assets or liabilities in the Company’s condensed consolidated balance sheets.

As of March 31, 2025, the fair value of the Swap Agreement was a net liability of $ 22.5 million, of which $ 18.6 million is presented with accrued and other current liabilities and $ 3.9 million is presented with other long-term liabilities.

As of December 31, 2024, the fair value of the Swap Agreement was a net liability of $ 22.3 million, of which $ 18.3 million is presented with accrued and other current liabilities and $ 4.0 million is presented with other long-term liabilities.

Unrealized gains (losses) related to the Swap Agreement are included in interest expense.

As of March 31, 2025, the Company has made a $ 23.6 million deposit with the counterparty to the Swap Agreement.

As of June 30, 2025, the fair value of the Swap Agreement was a net liability of $ 13.6 million which is presented with accrued and other current liabilities.

As of December 31, 2024, the fair value of the Swap Agreement was a net liability of $ 22.3 million, of which $ 18.3 million was presented with accrued and other current liabilities and $ 4.0 million was presented with other long-term liabilities.

As of June 30, 2025, the Company has made a $ 13.8 million deposit with the counterparty to the Swap Agreement.

If the fair value of the Swap Agreement exceeds a net liability of $ 13.8 million, the Company will be required to deposit additional funds with the counterparty equal to the net liability fair value.

As of March 31, 2025, $ 22.5 million of the deposit was restricted and $ 1.1 million was unrestricted.

As of June 30, 2025, $ 13.6 million of the deposit was restricted and $ 0.2 million was unrestricted.

Under the Swap Agreement, the Company pays the counterparty a semi-annual payment based upon overnight SOFR plus a contractual interest rate spread, and the counterparty pays the Company a semi-annual fixed 3.50 % interest payment.

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Under the settlement for November 2024, the Company paid $ 12.1 million to the counterparty for a net cash interest cost of $ 12.1 million for the period from May 1, 2024 to October 31, 2024.

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Under the settlement for May 2025, the Company paid $ 9.7 million to the counterparty for a net cash interest cost of $ 9.7 million for the period from November 1, 2024 to April 30, 2025.

Commitments and contingencies :

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The Company reviews its accruals at least quarterly and adjusts them to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter.

The Company has taken certain positions related to its obligations for leased circuits for which it is reasonably possible to result in a loss of up to $ 4.4 million in excess of the amount accrued at March 31, 2025.

In the ordinary course of business, the Company is involved in other legal activities and claims.

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Actual results may differ from these estimates under different assumptions or conditions and such differences could be material.

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Income taxes:

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Three Months Ended

March 31, 2025

March 31, 2024

Common stock buyback program and stock options and award plan:

Six Months Ended

June 30, 2025

June 30, 2024

June 30, 2025

June 30, 2024

On July 4, 2025, H.

1 (the “2025 Tax Act”) was enacted into law.

The legislation includes several significant provisions affecting the taxation of domestic and international business operations, including:

● Permanent extension of 100% bonus depreciation for qualified property placed in service after January 19, 2025.

● Changes to the interest expense limitation under Section 163(j), which includes depreciation and amortization in the calculation of adjusted taxable income thus increasing this base, and effective for tax years beginning after December 31, 2024.

This change results in a higher limitation threshold and potentially reduces disallowed interest expense in future periods.

● Modifications to the GILTI regime, now referred to as Net CFC Tested Income (“NCTI”), including the elimination of the deemed 10% on QBAI and reduction in the Section 250 deduction.

● Replacement of FDII with a new Foreign Derived Domestic Eligible Income (“FDDEI”) regime, modifying the deduction rate and simplifying the overall calculation.

Under ASC 740, the income tax effects of the 2025 Tax Act will be recognized in the period of enactment.

The Company expects the 2025 Tax Act to affect the valuation of certain of its deferred income taxes – a total net deferred income tax liability of $ 362.5 million at June 30, 2025.

The Company is in the process quantifying this impact that will be recorded in the third quarter of 2025.

Common stock buyback program:

The Company’s Board of Directors has approved purchases of shares of the Company’s common stock under a buyback program (the “Buyback Program”) through December 31, 2025.

As of March 31, 2025, there was $ 22.4 million remaining for purchases under the Buyback Program.

There were no purchases of common stock in the three months ended March 31, 2025 or in the three months ended March 31, 2024.

In April 2025, the Company purchased 94,856 shares of its common stock for $ 5.0 million at an average price of $ 53.07 per share under the Buyback Program.

In June 2024, the Company purchased 153,322 shares of its common stock for $ 8.0 million at an average share price of $ 51.97 .

In the second quarter of 2025, the Company purchased 229,507 shares of its common stock for $ 11.5 million at an average price of $ 50.18 per share under its Buyback Program.

In July 2025, the Company purchased an additional 63,487 shares of its common stock for $ 3.1 million at an average price of $ 48.13 per share under its Buyback Program.

On August 6, 2025, the Company’s Board approved a $ 100.0 million increase to its Buyback Program to continue through December 31, 2026.

As of July 31, 2025, there was $ 107.9 million available under the Buyback Program.

Dividends on common stock:

On May 7, 2025 , the Company’s Board of Directors approved the payment of a quarterly dividend of $ 1.01 per share of common stock.

This estimated $ 48.2 million dividend payment is expected to be made on June 6, 2025 .

On August 6, 2025 , the Company’s Board of Directors approved the payment of a quarterly dividend of $ 1.015 per share of common stock.

This estimated $ 48.4 million dividend payment is expected to be made on September 5, 2025 .

The payment of any future dividends and any other returns of capital, including stock buybacks will be at the discretion of the Company’s Board of Directors and may be reduced, eliminated or increased and will be dependent upon the Company’s financial position, results of operations, available cash, cash flow, capital requirements, limitations under the Company’s debt indentures and other factors deemed relevant by the Company’s Board of Directors.

The Company is a Delaware corporation and under the General Corporation Law of the State of Delaware, distributions may be restricted including a restriction that distributions, including stock purchases and dividends, do not result in an impairment of a corporation’s capital, as defined under Delaware law.

The Indentures limit the Company’s ability to return cash to its stockholders.

The Company is a Delaware corporation and under the General Corporation Law of the State of Delaware, distributions may be restricted including a restriction that distributions, including stock

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purchases and dividends, do not result in an impairment of a corporation’s capital, as defined under Delaware law.

The Indentures limit the Company’s ability to return cash to its stockholders.

Related party transactions:

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The Amendment provides for $ 162,118 of additional fixed annual rent during the term of the Network Operations Lease, plus a proportionate share of real estate taxes and operating expenses and separately metered utilities expense.

The Company paid $ 0.8 million and $ 0.8 million in the three months ended March 31, 2025 and 2024, respectively, for rent and related costs (including taxes and utilities) for these leases.

The Company paid $ 0.8 million and $ 0.9 million in the three months ended June 30, 2025 and 2024, respectively, and $ 1.6 million and $ 1.6 million in the six months ended June 30, 2025 and 2024, respectively, for rent and related costs (including taxes and utilities) for these leases.

Geographic and segment information:

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The Company has one operating segment.

The consolidated operating segment financial information regularly reviewed by the CODM, inclusive of assets, revenue, expenses, profit or loss, and noncash items are included in the Condensed Consolidated Statements of Comprehensive Income (Loss), Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Cash Flows.

The consolidated operating segment financial information regularly reviewed by the CODM, inclusive of assets, revenue, expenses, profit or loss, and noncash items are included in the Condensed Consolidated Statements of Comprehensive Loss, Condensed Consolidated Balance Sheets, and Condensed Consolidated Statements of Cash Flows.

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1 unchanged sentence

Below are the Company’s service revenues and long-lived assets by geographic region - including property plant and equipment and excluding intangible assets (in thousands):

Three Months Ended March 31, 2025

Three Months Ended June 30, 2025

North America

South America

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

North America

South America

Six Months Ended June 30, 2025

North America

South America

Six Months Ended June 30, 2024

North America

South America

Long-lived assets, net

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The majority of North American revenue consists of services delivered within the United States.

Subsequent Events

Issuance of $ 174.4 million new IPv4 notes

On April 11, 2025 (the “Closing Date”), the IPv4 Issuer, completed the issuance of $ 174.4 million aggregate principal amount of 6.646 % secured IPv4 address revenue notes, Series 2025-1 Class A-2 (collectively, the “New IPv4 Notes”), with an anticipated term ending in April 2030 (such anticipated repayment date, the “ARD”), in an offering exempt from registration under the Securities Act of 1933, as amended.

The net proceeds, of the New IPv4 Notes, after offering expenses were $ 170.5 million.

At the Closing Date $ 72.6 million of the $ 170.5 million net proceeds were restricted and $ 97.9 million of the net proceeds were unrestricted.

The restricted net proceeds will become available based upon improvements in the monthly leverage ratio and debt service coverage ratio (both as defined in the Base Indenture) under the aggregate $ 380.4 million of IPv4 notes ($ 206.0 million issued in May 2024 and $ 174.4 million issued in April 2025).

The New IPv4 Notes were issued pursuant to the Base Indenture, as supplemented by the Series 2025-1 Supplement thereto, dated as of the Closing Date (the “Series 2025-1 Supplement”), by and between the IPv4 Issuer and the Trustee, and as acknowledged by the Guarantor.

The Base Indenture allows the Issuer to issue additional series of notes subject to certain conditions set forth therein, and the Base Indenture, together with the Series 2024-1 Supplement thereto, dated as of May 2, 2024, and the Series 2025-1 Supplement, and any other series supplements to the Base Indenture, is referred to as the “Indenture.”

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While the New IPv4 Notes are outstanding, interest is paid on a monthly basis.

From and after the ARD, principal payments will also be required to be made on the New IPv4 Notes on a monthly basis.

No principal payments will be due on the New IPv4 Notes prior to the ARD, unless certain rapid amortization or acceleration triggers are activated.

The legal final maturity date of the New IPv4 Notes is in April of 2055 .

If the IPv4 Issuer has not repaid or refinanced any New IPv4 Note prior to the monthly payment date in April of 2030, additional interest will accrue thereon in an amount equal to the greater of (i) 5.0 % per annum and (ii) the excess amount, if any, by which the sum of the following exceeds the interest rate for such New IPv4 Note:

(A) the yield to maturity (adjusted to a “mortgage-equivalent basis” pursuant to the standards and practices of the Securities Industry and Financial Markets Association) on the ARD for such New IPv4 Note of the United States Treasury Security having a remaining term closest to 10 years;

plus (B) 5.0 %;

plus (C) the post-ARD note spread of 3.00 % applicable to such New IPv4 Note.

Collateral and guarantee

The New IPv4 Notes are obligations of the IPv4 Issuer pursuant to the Indenture, and are secured by a security interest in substantially all of the IPv4 Address Assets, pursuant to the Indenture.

The New IPv4 Notes are guaranteed by the IPv4 Guarantor, pursuant to a guaranty, dated as of May 2, 2024 (the “Guaranty”) by the Guarantor in favor of the Trustee, pursuant to which the Guarantor has granted a security interest in the equity interests of the IPv4 Issuer as collateral security for its obligations under the Guaranty.

Except as described below, neither the Company nor any subsidiary of the Company, other than the IPv4 Issuer and the Guarantor, will guarantee or in any way be liable for the obligations of the IPv4 Issuer under the Indenture or the New IPv4 Notes.

Covenants and restrictions

The New IPv4 Notes are subject to a series of covenants and restrictions customary for transactions of this type.

These covenants and restrictions include (i) that the IPv4 Issuer maintains a liquidity reserve account to be used to make required payments in respect of the New IPv4 Notes, (ii) provisions relating to optional and mandatory prepayments, including specified make-whole payments in the case of certain optional prepayments of the New IPv4 Notes prior to the monthly payment date in May of 2028, (iii) certain indemnification payments in the event, among other things, that the transfers of the assets pledged as collateral for the New IPv4 Notes are in stated ways defective or ineffective and (iv) covenants relating to recordkeeping, access to information and similar matters.

As provided in the Base Indenture, the New IPv4 Notes are also subject to rapid amortization in the event of a failure to maintain a stated debt service coverage ratio.

A rapid amortization may be cured if the debt service coverage ratio exceeds a certain threshold for a certain period of time, upon which cure, regular amortization, if any, will resume.

In addition, if certain utilization thresholds are not met (i.e., the proportion of IPv4 addresses that are leased to the total number of IPv4 addresses owned by the IPv4 Issuer falls below certain thresholds), the IPv4 Issuer will be required to apply collections to the repayment of the New IPv4 Notes and, in certain circumstances, the noteholders will have the ability to direct a sale of the IPv4 Address Assets, in whole or in part, pursuant to the terms set forth in the Indenture.

The New IPv4 Notes are also subject to certain customary events of default, including events relating to non-payment of required interest, principal or other amounts due on or with respect to the New IPv4 Notes, failure to comply with covenants within certain time frames, certain bankruptcy events, breaches of specified representations and warranties, failure of security interests to be effective and certain judgments.

Supplement to Base Indenture

In connection with the issuance of the New IPv4 Notes, the IPv4 Issuer obtained consents from noteholders representing more than 50 % of the Voting Rights (as defined in the Base Indenture) of the secured IPv4 address revenue term notes, Series 2024-1 Class A-2, to adopt amendments to the Base Indenture to, among other things, permit the IPv4 Issuer to (i) issue additional Class A Notes (as defined in the Base Indenture) (provided that the Class A Leverage Ratio (as defined in the Base Indenture) is less than or equal to 7.25 to 1.00 ) (as opposed to 6.10 to 1.00 under the Base Indenture as previously in effect), (ii) dispose of IPv4 addresses owned by the IPv4 Issuer (provided that the pro forma Leverage Ratio (as defined in the Base Indenture) is less than or equal to 7.25 to 1.00 ) (as opposed to the greater of (x) 7.10 to 1.00 and (y) the Leverage Ratio as of the date of the most recent issuance of Additional Notes (as defined in the Base Indenture) (after giving effect to the issuance of such Additional Notes) under the Base Indenture as previously in effect) and (iii) substitute new IPv4 addresses (including Non-Contributed IP Addresses (as defined in the Base Indenture)) to be owned by the IPv4 Issuer for the Contributed IP Addresses then owned by the IPv4 Issuer (provided that the pro forma Leverage Ratio is not greater than 7.25 to 1.00 ) (as opposed to 6.10 to 1.00 under the Base Indenture as previously in effect), in each case, among other applicable requirements (collectively, the “Amendments”).

Accordingly, on the Closing Date, prior to the issuance of the New IPv4 Notes, the IPv4 Issuer entered into a second amendment to the Base Indenture (the “Second Amendment”) with the Trustee giving effect to the Amendments.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements