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Item 9A. Controls and Procedures

2025-03-13 compared with 2024-04-01 · 713 added, 749 removed, 2292 unchanged (39% of the section changed)

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Evaluation of Disclosure Controls and Procedures

As required by Rule 13a-15(b) of the Exchange Act, management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this report, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e).

As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), management, with the participation of our Chief Executive Officer and Chief Financial Officer, evaluated, as of the end of the period covered by this report, the effectiveness of our disclosure controls and procedures as defined in Exchange Act Rule 13a-15(e).

Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives.

Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that due to the material weakness in our internal control over financial reporting that is described below in Management's Annual Report on Internal Control over Financial Reporting, our disclosure controls and procedures were not effective as of December 31, 2023.

Based on the evaluation of our disclosure controls and procedures as of the end of the period covered by this annual report, our chief executive officer and chief financial officer concluded that, as of December 31, 2024 , our disclosure controls and procedures were effective.

Management’s Annual Report on Internal Control over Financial Reporting

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In making this assessment, our management used the criteria established in Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

Based on the results of our evaluation, management has determined that due to the material weakness described below, our internal control over financial reporting was not effective as of December 31, 2023.

Material Weakness in Internal Control Over Financial Reporting

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S.

In connection with our audit of consolidated financial statements for the year ended December 31, 2023, we identified certain control deficiencies in the design and operation of our internal control over financial reporting that constituted a material weakness in two components of internal control as defined by COSO 2013 (Control Activities, and Information and Communication).

As a result of the identified material weaknesses, management, including the CEO and CFO, concluded that internal control over financial reporting was not effective as of December 31, 2023.

Deloitte LLP, the independent registered public accounting firm that audited our financial statements included in this annual report, has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2023.

Their attestation report is included in this annual report.

We did not design and maintain effective controls over certain information technology (“IT”) general controls for information systems that are relevant to the preparation of our financial statements.

Specifically, we did not design and maintain (i) program change management controls for certain financial systems to ensure that IT program and data changes affecting certain IT systems and underlying accounting records are identified, tested, authorized and implemented appropriately and (ii) user access controls that adequately restrict user access to certain financial systems, programs and data to appropriate company personnel.

These IT deficiencies did not result in a material misstatement to the Annual Financial Statements for the period ended December 31, 2023, however, the deficiencies, when aggregated, could impact the effectiveness of IT-dependent controls (such as automated controls that address the risk of material misstatement to one or more assertions, and underlying data that support the effectiveness of system-generated reports used in related process-level manual controls that rely on information generated from the affected information technology systems) that could result in misstatements potentially impacting all financial statement accounts and disclosures that would not be prevented or detected.

Accordingly, management has determined these deficiencies in the aggregate constitute a material weakness.

Deloitte LLP, our independent registered public accounting firm, has audited our consolidated financial statements and expressed an unqualified opinion thereon.

Deloitte has issued an attestation report on the effectiveness of our internal control over financial reporting as of December 31, 2023.

These reports set forth at the beginning of Part II, Item 8 if this Annual Report on Form 10-K.

Remediation Plan for Material Weakness in Internal Control Over Financial Reporting

To remediate the material weakness described above, the Company's remediation efforts included evaluating access controls to key financial systems and implementing enhanced procedures for regular access reviews.

Under the oversight of the Audit Committee, management will continue to remediate and maintain effective IT controls over impacted financial systems.

These steps will include training for IT control owners, enhanced change management procedures, and improved documentation that will clearly identify management’s expectations of the control activities.

The material weakness will not be considered remediated until the applicable remedial controls operate for a sufficient period.

The Company has made progress in the remediation efforts but cannot estimate when these efforts will be completed.

Based on the results of our evaluation, management has determined that our internal control over financial reporting was effective as of December 31, 2024 .

Remediation of Material Weaknesses in Internal Control Over Financial Reporting

The material weaknesses that were previously disclosed as of December 31, 2023 were remediated as of December 31, 2024.

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Controls and Procedures - Remediation Plan for Material Weaknesses in Internal Control over Financial Reporting” contained in the Company's report on Form 10K for the fiscal year ended December 31, 2023 and “Item 4.

Controls and Procedures” contained in the Company’s subsequent quarterly reports on Form 10-Q during 2023, for disclosure of information about the material weaknesses that were reported as a result of the Company’s annual assessment as of December 31, 2022 and the remediation plan for that material weaknesses.

As disclosed in the quarterly reports on Form 10-Q for the first three quarters of 2023, the Company has monitored the controls necessary to remediate the material weaknesses, and as of December 31, 2023, such controls were successfully tested and the material weaknesses were remediated.

Controls and Procedures” contained in the Company's subsequent quarterly reports on Form 10-Q during 2024, for disclosure of information about the material weaknesses that were reported as a result of the Company's annual assessment as of December 31, 2023 and the remediation plan for those material weaknesses.

As disclosed in the quarterly reports on Form 10-Q for the first three quarters of 2024, the Company has monitored the controls necessary to remediate the material weaknesses.

Affected controls have been addressed and additional compensating controls added, as appropriate, to address the material weaknesses.

As of December 31, 2024, such controls were successfully tested and the material weaknesses were remediated.

The Company continues to refine its control environment on an ongoing basis.

Changes in Internal Control over Financial Reporting

Other than the material weaknesses noted above, there were no changes made in our internal controls over financial reporting occurred during Fiscal 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

No change in our internal control over financial reporting occurred during the fiscal year ended December 31, 2024 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting, other than continued monitoring of the controls implemented to remediate the material weaknesses disclosed in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

OTHER INFORMATION

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From 1966 to 1986, he practiced law at the law firm of Goodman and Carr LLP, where he was named partner in 1970.

Karp was until 2011 a Director of Brookfield Real Estate Services Inc., where he also served on the Audit Committee and as the Chair of the Corporate Governance Committee.

Karp was a Director of Brookfield Real Estate Services Inc.

until 2011, where he also served on the Audit Committee and as the Chair of the Corporate Governance Committee.

From 2004 to 2014, Mr.

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Executive Officers

The required information regarding our executive officers is set forth in Part I, Item 1 hereof under the caption “Information about our Executive Officers and Key Employees ” and is incorporated herein by reference.

The required information regarding our executive officers is set forth in Part I, “Item 1.

Business – Information about our Executive Officers and Key Employees” of this Annual Report and is incorporated herein by reference.

Governance Principles

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Each of these documents can be obtained without charge from our Internet web site at tucows.com.

Amendments and waivers of our ethics policy for our senior officers will either be posted on our website or filed with the SEC on a Current Report on Form 8-K.

Amendments and waivers of our ethics policy for our senior officers will either be posted on www.tucows.com or filed with the SEC on a Current Report on Form 8-K.

Chase serves as Chair of the Board.

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Schwartz qualifies as an “audit committee financial expert” as defined under Item 407(d)(5) of Regulation S-K.

The Securities and Exchange Commission has indicated that the designation of a person as an audit committee financial expert does not make such person an “expert” for any purpose, impose any duties, obligations or liabilities on such person that are greater than those imposed generally on members of the audit committee and the board of directors who do not carry this designation, or affect the duties, obligations or liability of any other member of the audit committee or board of directors.

The Board has adopted a written charter for the Audit Committee, which the Audit Committee has reviewed and determined to be in compliance with the rules prescribed by the listing standards of the NASDAQ Capital Market and which is available at tucows.com.

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Sohn, and Mr.

Schwartz served on the committee until September, 2023.

Each member of our Corporate Governance, Nominating and Compensation Committee is an independent director as defined in the listing standards of the NASDAQ Capital Market and also satisfies the applicable compensation committee member independence standards as prescribed by the listing standards of the NASDAQ Capital Market and Rule 10C-1 under the Exchange Act.

The Corporate Governance, Nominating and Compensation Committee held five meetings during Fiscal 2023 .

The Corporate Governance, Nominating and Compensation Committee held four meetings during Fiscal 2024 .

Each member of the Corporate Governance, Nominating and Compensation Committee attended at least 75% of the total number of meetings of the committee during Fiscal 2024 .

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Noss, our Chief Executive Officer, provides consolidated information outlining management’s recommendation regarding executive officer compensation based on title to the Corporate Governance, Nominating and Compensation Committee.

The Corporate Governance, Nominating and Compensation Committee then reviews and discusses the information provided with our CEO and Chief People Officer and then determines the total compensation for each named executive office, as it deems appropriate.

Board Leadership Structure and Responsibilities

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In addition, it allows for appropriate oversight of the Company by our Board, fosters appropriate accountability of management and provides a clear delineation of responsibilities for each position.

Board Diversity

We believe it is important that our Board is composed of individuals reflecting the diversity represented by our employees, our customers, and our communities.

With the addition of Marlene Carl in 2021 and Gigi Sohn in 2023, we have expanded the diversity of our Board.

Below, we provide an enhanced disclosure regarding the diversity of our Board as required by the listing standards of the NASDAQ Capital Market.

Board Diversity Matrix (As of April 1, 2024)

Total Number of Directors

Gender Identify

Demographic Background

African American or Black

Alaskan Native or Native American

Hispanic or Latinx

Native Hawaiian or Pacific Islander

Two or More Races or Ethnicities

Did Not Disclose Demographic Background

Board Diversity Matrix (As of March 15, 2023)

Total Number of Directors

Gender Identify

Demographic Background

African American or Black

Alaskan Native or Native American

Hispanic or Latinx

Native Hawaiian or Pacific Islander

Two or More Races or Ethnicities

Did Not Disclose Demographic Background

Role of the Board in Risk Oversight

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and each member of the Audit Committee and Corporate Governance, Nomination and Compensation Committee will additionally receive $12,000.

We also purchase directors and officer's liability insurance for the benefit of our directors and officers as a group in the amount of $30 million.

We also reimburse our directors for their reasonable out-of-pocket expenses incurred in attending meetings of our Board or its committees.

In March 2024, the Board initiated a review of strategic transactions to enhance shareholder value.

In connection with this process, the Board established a Special Committee composed of independent, non-employee directors:

Chase (Chair), Ms.

Gissin, and Mr.

In May 2024, Ms.

Matheson stepped down from the Special Committee and were replaced by Mr.

Schwartz, and Ms.

Members of the Special Committee received an annual retainer of $12,000, with the Chair receiving an additional annual retainer of $7,500.

Retainers were paid in monthly installments for each month of service.

The Special Committee was dissolved on October 1, 2024.

Matheson received no compensation for their membership on the Special Committee.

The Company also purchases directors and officer's liability insurance for the benefit of its directors and officers as a group in the amount of $30 million.

The Company also reimburses its directors for their reasonable out-of-pocket expenses incurred in attending meetings of the Board or its committees.

The table below shows all compensation paid to each of our non-employee directors during 2024.

Each of the directors listed below served for the entire year except for Lee Matheson and Gigi Sohn, who joined in September 2023.

Each of the directors listed below served for the entire year .

Fees earned or paid in cash ($)

Option awards ($) (1)(2)

Brad Burnham (3)

Jeffrey Schwartz

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Under the 2006 Plan, these options vest one year after the grant date and have a five-year term.

On September 7, 2023, each of our re-elected non-employee directors at the time were awarded automatic formula option grants with an exercise price of $19.78 and a grant date fair value of $7.26;

directors newly elected to the Board at the Company's annual meeting, Ms.

Matheson, were awarded automatic formula option grants of 4,375 shares with an exercise price of $19.78 and a grant date fair value of $7.26 in connection with becoming a director.

On November 2, 2023, Ms.

Carl was awarded an automatic formula option grant of 3,750 with an exercise price of $16.47 and a grant date fair value of $6.06 in connection to Ms.

Carl's appointment to the Audit Committee.

On November 17, 2023, Ms.

Sohn was awarded an automatic formula option grant of 2,500 options with an exercise price of $21.07 and a grant date fair value of $7.73 in connection with Ms.

Sohn's appointment to the Corporate Governance, Nomination and Compensation Committee.

On November 17, 2023, Ms.

Matheson was awarded an automatic formula option grant of 2,500 options with an exercise price of $21.07 and a grant date fair value of $7.73 in connection with Mr.

Matheson's appointment to the Corporate Governance, Nomination and Compensation Committee.

On June 20, 2024 each of our re-elected non-employee directors at the time were awarded automatic formula option grants with an exercise price of $19.93 and a grant date fair value of $8.34 .

The aggregate number of option awards outstanding at December 31, 2024 is as follows for each of the following non-employee directors:

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and 26,250 for Ms.

Burnhan did not stand for re-election during the Company's 2023 meeting of the shareholders.

DELINQUENT SECTION 16(a) REPORTS

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We believe that, under the SEC’s rules and based solely upon our review of the copies of the Forms 3, 4 and 5 furnished to us, or written representations from certain reporting persons, any such reports have been filed in a timely manner with the following exceptions:

The Form 4's filed September 18, 2023 for the grants of options to each of Mr.

Matheson and Ms.

Sohn with a transaction date of September 7, 2023;

and the Form 4's filed on July 5, 2023 for the grants of options for executives (Messrs.

Nos, Singh, Woroch, Fausett, and Koenig) with a transaction date of June 29, 2023;

and the Form 4 filed on February 28, 2024 for the grant of options to Mr.

Matheson with a transaction date of November 16, 2023.

The Form 4 filed September 12, 2024 reporting one transaction for the grant of options to Mr.

Bret Fausett.

Stock ownership of management

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Under Section 16(a) of the Exchange Act, directors, officers and certain beneficial owners of the Company’s equity securities are required to file reports of their transactions in the Company’s equity securities with the SEC on specified due dates.

Insider Trading Policy

Tucows adopted an insider trading policy governing the purchase, sale, and other dispositions of Tucows securities that applies to all personnel of Tucows and its subsidiaries, including directors, officers and employees and other covered persons.

Tucows believes that its insider trading policy is reasonably designed to promote compliance with insider trading laws, rules and regulations, as well as applicable listing standards.

A copy of Tucows insider trading policy is filed as Exhibit 19.1 to this report.

EXECUTIVE COMPENSATION

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For Fiscal 2024, our NEO's included Messrs.

Noss, Singh, Reilly, Woroch and Fausett.

Noss, Ivanov , Singh, Reilly, Woroch and Fausett.

This Compensation Discussion and Analysis (“CD&A”) provides comprehensive information about our executive compensation program for our Fiscal 2024 NEOs, who are listed below, and provides context for the decisions underlying the compensation reported in the executive compensation tables in this Annual Report.

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President and CEO, Tucows Inc.

Davinder Singh

Chief Financial Officer (“CFO”)

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Chief Legal Officer & Vice-President, Regulatory Affairs

Davinder Singh*

Former Chief Financial Officer

Ivanov became Chief Financial Officer on August 5, 2024.

Singh served as Chief Financial Officer until his resignation effective August 2, 2024.

Our philosophy is to provide a mix of compensation that motivates our executives to achieve our short and long- term performance goals in a market-competitive and fiscally responsible way, which in turn will create value for our shareholders.

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The next stockholder advisory (non-binding) vote on executive compensation will be held at our 2026 Annual Meeting.

Stock Grant Practices

The Company maintains a structured process for granting stock options to ensure consistency, transparency, and adherence to corporate governance practices.

Stock option awards to executive officers and employees are granted by and at meetings of the Nominating, Governance, and Compensation Committee on a predetermined schedule.

The Nominating, Governance, and Compensation Committee does not consider material nonpublic information when determining the timing or terms of stock option awards.

Historically, annual equity awards for executive officers have been granted on or around the date of the Company’s annual meeting of shareholders.

In addition to the annual grant cycle, stock awards may be issued at other times throughout the year for new hires, employee promotions, and other special circumstances.

The Nominating, Governance, and Compensation Committee has delegated the authority to approve off-cycle grants to employees, other than executive officers, to the People Team, subject to the guidelines established by the Nominating, Governance, and Compensation Committee.

Stock option grants to non-employee directors are based on a predetermined formula and are automatically granted on the date of the annual meeting of shareholders to each non-employee director serving immediately following such meeting.

Additional information regarding non-employee director compensation can be found in the “Item 10.

Director, Executive Officers and Corporate Governance –Director Compensation” of this Annual Report.

During fiscal year 2024, the Company did not grant equity awards to its named executive officers within the four business days preceding or the one business day following the filing of a periodic report on Form 10-Q or Form 10-K or the filing or furnishing of a Form 8-K that disclosed material nonpublic information.

The Company does not time the disclosure of material nonpublic information for the purpose of influencing the value of stock option grants or executive compensation.

Determining Total Compensation

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In setting target payout levels under our management incentive compensation plan, our Corporate Governance, Nominating and Compensation Committee considers historical payouts, the total cost to the company should performance objectives be achieved and our retention needs.

In Fiscal 2023, due to the Corporate Governance, Nominating and Compensation Committee's reassessment and the realignment of Tucows' operating segments in 2022, annual cash incentive bonuses were structured based on balanced scorecards for each business segment, including specific performance measures.

Notably, bonuses were distributed semi-annually;

of the first installment, 50% was paid in Company common stock, effectively meaning a quarter of the annual bonus was issued in stock.

This procedure was unique to Fiscal 2023 and does not indicate a permanent policy shift.

The Corporate Governance, Nominating and Compensation Committee determines the initial level of funding for the annual incentive bonus pools during the annual budgeting process and approves provisional quarterly payments, computed on a pro-rata basis, based on quarterly minimum year-to-date targets for our senior officers, including NEOs, taking into account the Company’s actual performance on a year-to-date basis.

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Basis for Target incentive Bonus for 2025

Target incentive Bonus Opportunity(1)

Target incentive

Bonus Opportunity(1)

Basis for Target incentive Bonus for 2024

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50% Ting targets, 20% Wavelo targets and 30% Tucows Domains targets

Davinder Singh

Ivan Ivanov (2)

50% Ting targets, 25% Wavelo targets and 25% Tucows Domains targets

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50% Ting targets, 25% Wavelo targets and 25% Tucows Domains targets

Davinder Singh (2)

50% Ting targets, 25% Wavelo targets and 25% Tucows Domains targets

All dollar amounts below are shown U.S.

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dollar, which represents the year-end exchange rate as at December 31, 2024

Our Corporate Governance, Nominating and Compensation Committee met in March 2024 and determined the achievement of the financial objectives applicable under the management incentive compensation plan for 2023 had been partially achieved.

Ivanov became Chief Financial Officer on August 5, 2024.

Singh served as Chief Financial Officer until his resignation effective August 2, 2024.

Our Corporate Governance, Nominating and Compensation Committee met in May 2024 and determined the achievement of the financial objectives applicable under the management incentive compensation plan for 2024 had been partially achieved.

In connection with the Corporate Governance, Nominating and Compensation Committee’s annual review process, the Committee also approved a new set of performance goals under our management incentive compensation plan for Fiscal 2024 and decided not to increase the incentive bonus target opportunity for our NEOs.

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For subsequent equity grants to our NEOs, our Corporate Governance, Nominating and Compensation Committee receives input from our CEO and the People Team leadership.

The Company granted Ting Subsidiary Options to certain NEOs on January 16, 2023.

The Ting Equity Compensation Plan (ECP) includes private subsidiary stock which have been established for the benefit of the employees, officers, directors and certain consultants of Ting.

The Ting stock options were introduced in order to provide variable compensation that helps retain executives and ensures that our executives' interests are aligned with those stakeholders of the business to grow the long-term value.

The maximum number of Ting common units that have been set aside for issuance under the plan is 10 million units, currently there are 100 million common units outstanding.

Generally, options issued under the ECP vest over a four-year period and have a term not exceeding seven years.

Compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of share-based instrument at the time of the grant and are recognized as expense over the vesting period of the share-based instrument.

No Company Option grants have yet been awarded for Fiscal 2024.

In connection with its annual review process, the Corporate Governance, Nominating and Compensation Committee approved, effective June 29, 2023, the following Company Option awards to our NEOs.

In connection with its annual review process, the Corporate Governance, Nominating and Compensation Committee approved, effective June 17, 2024, the following Company Option awards to our NEOs with the exception of Mr Ivanov, whose company options were awarded on July 15, 2024.

These options vest in equal installments on each of the first four anniversaries of the grant date, generally subject to the NEO’s continued employment with us.

The first 5,000 of Mr.

Ivanov’s options vested on January 15, 2025;

the remaining 15,000 shares will vest in a series of 42 successive equal monthly installments upon Mr.

Ivanov’s completion of each additional month of service over the 42-month period thereafter.

Ivanov was also granted 150,000 subsidiary options in Wavelo on July 15, 2024.

Please see “Note 15– Stock Option Plans” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report for a detailed description of these plans.

The following table sets forth the number of Company Options granted in Fiscal 2024 and their corresponding aggregate grant date fair value as of December 31, 2024 .

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Aggregate Grant Date Fair Value (US Dollars)

Davinder Singh

Ivan Ivanov (1)

Justin Reilly

Davinder Singh (1)

Ivanov became Chief Financial Officer on August 5, 2024.

Singh served as Chief Financial Officer until his resignation effective August 2, 2024.

The following table sets forth the number of Subsidiary Options granted in Fiscal 2024 and their corresponding aggregate grant date fair value as of December 31, 2024

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Aggregate Grant Date Fair Value (US Dollars)

Ivan Ivanov (1)

Justin Reilly

Davinder Singh (1)

Ivanov became Chief Financial Officer on August 5, 2024.

Singh served as Chief Financial Officer until his resignation effective August 2, 2024.

During Fiscal 2024 options exercised and vested for our named executive officers were as follows:

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Subsidiary options exercised during Fiscal 2024

Subsidiary options vested during Fiscal 2023

Davinder Singh

Subsidiary options vested during Fiscal 2024 Wavelo

Subsidiary options vested during Fiscal 2024 Ting

Ivan Ivanov (1)

Justin Reilly

Davinder Singh (1)

Ivanov became Chief Financial Officer on August 5, 2024.

Singh served as Chief Financial Officer until his resignation effective August 2, 2024.

Severance and Change of Control Benefits

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Name and Principal Position

Bonus (1)(2) ($)

Salary (1) ($)

Non-Equity Incentive Plan (2) ($)

Option Awards (3) ($)

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President and Chief Executive Officer of Tucows and Ting

Davinder Singh

Ivan Ivanov (5)

Chief Financial Officer

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Chief Legal Officer and Vice-President, Regulatory Affairs

Represents bonus earned under our incentive programs during the fiscal years ended December 31, 2023, 2022 and 2021 .

Of the 2023 amount, the following amounts will be paid in March 2024 (unaudited):

Davinder Singh (5)

Chief Financial Officer

Due to administrative error, the information in this column has been updated to reflect gross salary.

Represents bonus earned under our incentive programs during the fiscal years ended December 31, 2024, 2023 and 2022 .

Of the 2024 amount, the following amounts representing the bonus for the third and fourth quarter will be paid in March 2025:

Justin Reilly

Of the 2022 amount, the following amounts were paid in February 2023 (unaudited):

Davinder Singh

Of the 2023 amount, the following amounts representing the bonus for the third and fourth quarter were paid in March 2024:

Justin Reilly

Of the 2021 amount, the following amounts were paid in February 2022 (unaudited):

Davinder Singh

Of the 2022 amount, the following amounts representing the bonus for the third and fourth quarter were paid in February 2023:

Justin Reilly

On August 14, 2023 the NEOs received grants of common stock of the Company in lieu of a portion of their cash bonuses.

Davinder Singh

Represents the aggregate grant date fair value of such Company Options, calculated in accordance with FASB ASC 718.

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Stock Options (1)

Davinder Singh

Ivan Ivanov (5)

Justin Reilly

Davinder Singh (5)

Represents the aggregate grant date fair value of such Subsidiary Options, calculated in accordance with FASB ASC 718.

Please see “Note 15– Stock Option Plans” of the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report, for a discussion of the assumptions underlying these calculations.

Ivanov became Chief Financial Officer on August 5, 2024.

Singh served as Chief Financial Officer until his resignation effective August 2, 2024.

Executive Pay Ratio

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Threshold ($)

Davinder Singh

Ivan Ivanov (3)

Justin Reilly

Davinder Singh (3)

The amounts represent the range of payouts under the 2024 Annual Cash Incentive Bonus plan assuming the achievement of corporate and individual performance targets as further described in "Annual Cash Incentive Bonuses." Amounts above reflect adjustment for any changes in base pay and resulting target bonus percentage during 2024.

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Please see “Note 15 – Stock Option Plans” of Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report, for a discussion of the assumptions underlying these calculations.

Ivanov became Chief Financial Officer on August 5, 2024.

Singh served as Chief Financial Officer until his resignation effective August 2, 2024.

The following table sets forth information concerning Subsidiary plan-based awards granted to our NEOs in 2024:

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Grant date fair value of Subsidiary Option awards (1)

Davinder Singh

Ivan Ivanov (2)

Justin Reilly

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Ivanov became Chief Financial Officer on August 5, 2024.

Singh served as Chief Financial Officer until his resignation effective August 2, 2024.

Outstanding Equity Awards at Fiscal Year-End

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Option Expiration Date

Davinder Singh

Ivan Ivanov (1)

Justin Reilly

Davinder Singh (1)

Ivanov became Chief Financial Officer on August 5, 2024.

Singh served as Chief Financial Officer until his resignation effective August 2, 2024.

The stock options grants listed in the above table were issued under our 2006 Plan.

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Option Expiration Date

Davinder Singh

Ivan Ivanov (1)

Justin Reilly

Davinder Singh (1)

Ivanov became Chief Financial Officer on August 5, 2024.

Singh served as Chief Financial Officer until his resignation effective August 2, 2024.

The stock option grants listed in the above table were issued under the Wavelo, Inc.

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Healthcare Flexible Spending Account

Davinder Singh (1)

Ivan Ivanov (1)

without Cause (Dollar amounts in U.S.

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Total compensation is capped at 24 months.

Singh, Fausett, Reilly and Woroch, severance compensation is for six months plus one-month additional compensation for each completed year of service.

Fausett, Reilly and Woroch, severance compensation is for six months plus one-month additional compensation for each completed year of service.

Total compensation is capped at 24 months.

Severance for Mr.

Ivan is 12 months base salary prior to 18 months anniversary of August 05, 2024.

For the purpose of the table we assumed that the annual incentive bonus target as of December 31, 2024 had been achieved and that no overachievement bonus or special bonuses would be payable.

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Noss without cause all his unvested options vest automatically and that for Messrs.

Singh, Fausett, Reilly and Woroch, their options continue to vest through any severance period.

Ivanov, Fausett, Reilly and Woroch, their options continue to vest through any severance period.

On a change in control we have assumed that all unvested options for Mr.

Noss vest automatically and that for Messrs.

Singh, Fausett, Reilly and Woroch, their options continue to vest through and until the end of any severance period.

Ivanov, Fausett, Reilly and Woroch, their options continue to vest through and until the end of any severance period.

Amounts disclosed in this table equal the closing market value of our common stock as of December 31, 2024 , minus the exercise price, multiplied by the number of unvested shares of our common stock that would vest.

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Upon termination without cause, Messrs.

Woroch, Singh, Reilly and Fausett are each entitled to a severance payment in the amount of six months’ compensation plus one months’ compensation for each additional completed year of service.

Woroch, Reilly and Fausett are each entitled to a severance payment in the amount of six months’ compensation plus one months’ compensation for each additional completed year of service.

Severance payments can be made in equal monthly installments.

Woroch, Singh, Reilly and Fausett are each bound by a standard non-competition covenant for a period of twelve months following their termination.

Woroch, Reilly and Fausett are each bound by a standard non-competition covenant for a period of twelve months following their termination.

Ivanov is terminated by the Company without cause and executes a release prior to the 18-month anniversary of August 5, 2024, he will receive (a) 12 months’ base salary (at the rate then in effect), plus (b) his target annual bonus for the year of termination.

Ivanov is terminated by the Company without cause and executes a release on or after the 18-month anniversary of August 5, 2024, he will receive (a) six months base salary (at the rate then in effect), plus (b) one week of his base salary (at the rate then in effect) for each completed year of service with the Company, up to an aggregate sum for subsections (a) and (b) equal to 24 months of base salary, and (c) his target annual bonus for the year of termination.

Noss’s employment agreements is subject to early termination by us due to:

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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

The following table sets forth the beneficial ownership of our common stock, as of April 1, 2024 , by each of our directors and NEOs, as well as by all of our directors and executive officers as a group.

The following table sets forth the beneficial ownership of our common stock, as of March 13, 2025, by each of our directors and NEOs, as well as by all of our directors and executive officers as a group.

The information on beneficial ownership in the table and related footnotes is based upon data furnished to us by, or on behalf of, the persons referred to in the table.

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Company Stock Beneficially Owned Excluding Options

Company Stock

Options Exercisable

within 60 Days of

April 1, 2024

Company Stock Options Exercisable within 60 Days of March 13, 2025

Total Common Stock Beneficially Owned

Percent of Class(1)

96 Mowat Avenue

Toronto, Ontario, Canada

Davinder Singh

96 Mowat Avenue Toronto, Ontario, Canada

Justin Reilly

Jeffrey Schwartz

Davinder Singh

All directors and executive officers as a group (13 persons)

Less than 1%.

Based on 10,928,623 shares outstanding as of March 27, 2024, and stock options exercisable within 60 days of April 1, 2024.

Based on 11,032,586 shares outstanding as of March 10, 2025, and stock options exercisable within 60 days of March 13, 2025.

Includes an aggregate of 120,670 shares of common stock that are held in Mr.

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Noss in order to satisfy the required Canadian taxes and exercise price due in connection with the exercise of expiring options.

Ivanov became Chief Financial Officer on August 5, 2024.

Singh served as Chief Financial Officer until his resignation effective August 2, 2024.

Includes 54,984 shares of common stock that are held in Mr.

Woroch’s RRSP account and 10,750 shares of common stock held in his wife’s RRSP account.

Includes 3,000 shares of common stock that are held directly by Mr.

Includes 1,272 shares held in Mr.

Singh's Deferred Profit Sharing Plan (DPSP) account.

Includes 590 shares held in Mr.

Fausett's 401(K) retirement savings plan.

Includes 3,000 shares of common stock that are held directly by Mr.

Share Ownership of Certain Beneficial Owners

The following table sets forth information with respect to each shareholder known to us to be the beneficial owner of more than 5% of our outstanding common stock a s of April 1, 2024 e xcept for Mr.

The following table sets forth information with respect to each shareholder known to us to be the beneficial owner of more than 5% of our outstanding common stock a s of March 13, 2025 e xcept for Mr.

Noss, whose beneficial ownership of shares is descri bed in the table above.

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Toronto, Ontario, Canada, M5S 2X9

Investmentaktiengesellschaft fuer langfristige Invetoren TGV

Norman Rentrop

Ruengsdorfer Str.

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BlackRock, Inc.

55 East 52nd Street

50 Hudson Yards

New York, NY 10001

The Vanguard Group

100 Vanguard Blvd.

Based on 11,032,586 shares outstanding as of March 10, 2025.

Investmentaktiengesellschaft fuer langfristige Invetoren TGV has sole dispositive power and sole voting power over 2,013,932 shares of common stock.

This information is based solely on a review of a Schedule 13G filed with the SEC on February 13, 2024 by Investmentaktiengesellschaft fuer langfristige Invetoren TGV.

Edgepoint Investment Group, Inc.

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This information is based solely on a review of a Schedule 13G filed with the SEC on February 14, 2024 by Edgepoint Investment Group, Inc.

Norman Rentrop has sole dispositive power and sole voting power over 1,413,439 shares of common stock.

This information is based solely on a review of a Schedule 13G filed with the SEC on January 07, 2025 by Norman Rentrop.

Blacksheep Fund Management Ltd.

has shared voting power and shared dispositive power over 915,154 shares of common stock.

This information is based solely on a review of a Schedule 13D/A filed with the SEC on January 17, 2024 by Blacksheep Fund Management Limited.

This information is based solely on a review of a Schedule 13G/A filed with the SEC on January 17, 2024 by Blacksheep Fund Management Limited.

Blackrock Inc.

has sole voting power over 582,011 shares of common stock and sole dispositive power over 586,999 shares of common stock.

This information is based solely on a review of a Schedule 13G filed with the SEC on January 29, 2024 by Blackrock Inc.

The Vanguard Group has sole dispositive power over 681,730 shares of common stock, shared dispositive power over 12,501 shares of common stock, and shared voting power over 9,079 shares of common stock.

This information is based solely on a review of a Schedule 13G filed with the SEC on February 13, 2024 by The Vanguard Group.

This information is based solely on a review of a Schedule 13G/A filed with the SEC on November 08, 2024 by Blackrock Inc.

Equity Compensation Plan Information

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PRINCIPAL ACCOUNTANT FEES AND SERVICES

A summary of the fees of Deloitte LLP for the year ended December 31, 2023 and KPMG LLP for the year ended December 31, 2022 are set forth below:

A summary of the fees of Deloitte LLP for the year ended December 31, 2024 and December 31, 2023 are set forth below:

Audit Fees (1)

Audit related fees (2)

All Other Fees (4)

Consists of fees and expenses for (a) the annual audits of our consolidated financial statements and the accompanying attestation report regarding our ICFR contained in our Annual Report on Form 10-K, (b) the review of quarterly financial information included in our Quarterly Reports on Form 10-Q, and (c) audit services related to mergers and acquisitions.

Consists of fees and expenses for (a) the annual audits of our consolidated financial statements and the accompanying attestation report regarding our ICFR contained in our Annual Report on Form 10-K, (b) fees for statutory audits required for certain subsidiaries and (c) the review of quarterly financial information included in our Quarterly Reports on Form 10-Q.

Consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements.

Consists of fees and expenses for tax compliance and advisory services.

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EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

The following documents are filed as part of this Annual Report on Form 10-K:

The following documents are filed as part of this Annual Report:

Financial Statements.

The financial statements listed in the accompanying index to consolidated financial statements and condensed financial statements of Tucows Inc.

are filed as part of this Annual Report on Form 10-K.

are filed as part of this Annual Report.

Financial Statement Schedules.

Schedules are not submitted because they are not required or are not applicable, or the required information is shown in the consolidated financial statements or notes thereto.

The Exhibits listed below are filed or incorporated by reference as part of this Annual Report on Form 10-K.

The Exhibits listed below are filed or incorporated by reference as part of this Annual Report.

Where so indicated by footnote, exhibits which were previously filed are incorporated by reference.

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(Incorporated by reference to Exhibit 3.1 filed with Tucows’ Current Report on Form 8-K, as filed with the SEC on January 3, 2014).

Compensation Recoupment Policy of Tucows Inc., dated November 17, 2023.

Second Amended and Restated Bylaws of Tucows Inc.

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and its wholly owned subsidiaries, Tucows.com Co., Ting Inc., Tucows (Delaware) Inc., Wavelo Inc., and Tucows (Emerald), LLC, Bank of Montreal as Agent and other parties thereto (Incorporated by references to Exhibit 10.1 filed with Tucows' Current Report on Form 8-K, as filed with the SEC on September 25, 2023).

Note Purchase Agreement, dated as of May 4, 2023, by and among Ting Issuer LLC, the asset entities party thereto, Ting Holdco LLC, Ting Fiber, LLC, and each of the Purchasers listed on the Purchaser Schedule thereto (Incorporated by reference to Exhibit 10.1 filed with Tucows’ Current Report on Form 8-K, as filed with the SEC on May 5, 2023)

Note Purchase Agreement, dated as of August 20, 2024, by and among Ting Issuer LLC, the asset entities party thereto, Ting Holdco LLC, Ting Fiber, LLC, and each of the Purchasers listed in Purchaser Schedule thereto (Incorporated by reference to Exhibit 10.1* filed with Tucows’ Current Report on Form 8-K, as filed with the SEC on August 23, 2024).

Insider Trading Policy .

Subsidiaries of Tucows Inc.

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Chief Financial Officer’s Section 1350 Certification.

Compensation Recoupment Policy of Tucows Inc., dated November 17, 2023.

Inline XBRL Instance Document (the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document)

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Consolidated Balance Sheets as of December 31, 2024 and 2023

Consolidated Statements of Comprehensive Income for the years ended December 31, 2023, 2022 and 2021

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2024, 2023 and 2022

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2024, 2023 and 2022

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and subsidiaries (the “Company”) as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, because of the effect of the material weakness identified below on the achievement of the objectives of the control criteria, the Company has not maintained effective internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as at and for the year ended December 31, 2023 of the Company and our report dated April l, 2024, expressed an unqualified opinion on those financial statements.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2024, of the Company and our report dated March 13, 2025, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Material Weakness

A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.

The following material weakness has been identified and included in management's assessment:

Ineffective information technology general controls specifically associated with user access and program change management controls.

This material weakness was considered in determining the nature, timing, and extent of audit tests applied in our audit of the consolidated financial statements as of and for the year ended December 31, 2023, of the Company, and this report does not affect our report on such financial statements.

/s/ Deloitte LLP

2 unchanged sentences

Toronto, Canada

April 1, 2024

March 13, 2025

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

We have audited the accompanying consolidated balance sheets of Tucows Inc.

and subsidiaries (the "Company") as of December 31, 2023, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows, for the year ended December 31, 2023, and the related notes and the schedule of the Condensed Financial Statements of Tucows Inc.

and subsidiaries (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows, for each of the two years in the period ended December 31, 2024, and the related notes and the Parent Company Condensed Financial Statements of Tucows Inc.

(collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2023, and the results of its operations and its cash flows the year ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2023, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 1, 2024, expressed an adverse opinion on the Company’s internal control over financial reporting because of a material weakness.

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

The consolidated financial statements of the Company for the year ended December 31, 2022, before the effects of the adjustments to retrospectively adjust the segment disclosures in Note 20 for the adoption of the recent accounting pronouncement described in Note 2 to the financial statements, were audited by other auditors whose report, dated March 15, 2023, expressed an unqualified opinion on those financial statements.

We have also audited the adjustments to the 2022 consolidated financial statements to retrospectively adjust the disclosures in Note 20 for the adoption of the recent accounting pronouncement described in Note 2.

Our procedures included (1) examining evidence regarding the amounts and disclosures, and (2) evaluating the overall presentation of the amounts in Note 20.

In our opinion, such retrospective adjustments are appropriate and have been properly applied.

However, we were not engaged to audit, review, or apply any procedures to the 2022 consolidated financial statements of the Company other than with respect to the retrospective adjustments, and accordingly, we do not express an opinion or any other form of assurance on the 2022 consolidated financial statements taken as a whole.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 13, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting.

Basis for Opinion

These financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on the financial statements based on our audit.

Our responsibility is to express an opinion on the Company’s financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

5 unchanged sentences

and from (c) domain name registration contracts, other domain related value-added services, domain sale contracts, and other advertising revenue through Tucows Domains Services (“Tucows Domains”).

Given the Company’s process to record revenue for Ting and Tucows Domains is highly dependent on information technology systems (“IT systems”), and is impacted by the material weakness identified by management as described in Management’s Annual Report on Internal Control over Financial Reporting, we identified the evaluation of the nature and sufficiency of audit evidence over revenue as a critical audit matter, as it required an especially high level of auditor judgment.

Auditing revenue resulted in an increased extent of audit effort and the nature of audit procedures were designed to obtain and evaluate audit evidence outside of the IT systems.

The Company’s process to record revenue for Ting and Tucows Domains is highly dependent on information technology systems (“IT systems”) and is impacted by the material weakness identified by management as of December 31, 2023.

While the material weakness was remediated by December 31, 2024, the internal controls over General IT Controls (GITCs) were ineffective for a portion of the year.

We identified the evaluation of the appropriateness and sufficiency of audit evidence over revenue as a critical audit matter, as it required an especially high-level of auditor judgment.

Auditing revenue resulted in an increased extent of audit effort and the nature of audit procedures were designed to obtain audit evidence outside of the IT systems.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to revenue for Ting and Tucows Domains, taking into account ineffectiveness of certain key IT general controls, included the following, among others:

Our audit procedures related to revenue for Ting and Tucows Domains, taking into account the ineffectiveness of certain key IT general controls for a portion of the year, included the following, among others:

Reconciled the extract of revenue transactions from the billing systems to the general ledger;

For a sample of revenue transactions from the general ledger, obtained and inspected source documents, including contracts, invoices, proof of service, subsequent cash receipts, and history of customer payments where applicable;

For a sample of Tucows Domains revenue transactions, agreed them to third party registry information and Internet Corporation for Assigned Names and Numbers (ICANN) database.

For a sample of Tucows Domains revenue transactions, agreed them to confirmations, third-party registry information and Internet Corporation for Assigned Names and Numbers (ICANN) database.

Property and equipment — Refer to Notes 2 and 3 to the financial statements

Critical Audit Matter Description

The Company has been investing in its Ting fiber network.

The buildout of the fiber network includes costs relating to the design, procurement of materials, construction of primary infrastructure and customer installation.

The Company’s accounting for additions to the fiber network assets include costs relating to material, labor, capitalized interest, vehicle, installation, and construction costs associated with the construction of cable transmission and distribution facilities.

The process to determine which labor costs are eligible for capitalization is manual in nature, requires management judgment and the use of complex calculations based on various inputs and assumptions.

We identified the auditing of capitalized labor additions as a critical audit matter, as it required a high level of auditor judgment and an increased extent of audit effort.

As part of the Company’s 2024 Capital Efficiency Plan, management determined that certain assets under construction within the Ting operating segment would be disposed of by abandonment.

Management estimated the salvage values of these assets based on historical experience, available market information, third party analysis and other assumptions believed to be reasonable under the circumstances.

In addition, management considered subsequent events occurring through the reporting date.

An impairment loss was recognized for the excess of the carrying amount over the estimated salvage values of the assets.

Management’s estimates of the salvage values of the assets under construction involved a high degree of judgment.

Consequently, we identified the salvage values of the assets under construction as a critical audit matter.

Auditing these estimates required significant auditor judgment and an increased extent of audit effort.

How the Critical Audit Matter Was Addressed in the Audit

Our audit procedures related to capitalized labor additions included the following, among others:

Evaluated management’s policy for determining activities eligible for capitalization by analyzing specific facts and circumstances against relevant accounting guidance;

For a sample of additions (i) evaluated whether the activities were eligible for capitalization, (ii) obtained evidence to support the accuracy of inputs in the calculation, such as labor rate and time incurred by relevant personnel, and (iii) conducted inquiries with management and project personnel outside of finance to further assess the reasonableness of time allocated to the capitalized activities.

Our audit procedures related to the salvage values of the assets under construction, included the following, among others:

Evaluated the reasonableness of the expected salvage values, including the reasonableness of management’s assumptions regarding the probability of disposal by sale to third parties or outright abandonment by:

Conducting inquiries with finance management and operational personnel to gain an understanding of the present condition of assets under construction;

Obtaining and inspecting third party correspondence related to prospective sales.

Evaluated management’s assessment of subsequent events occurring through the reporting date by:

Conducting inquiries regarding subsequent events with senior management;

Inspecting source documents, where applicable to corroborate inquiries of management.

/s/ Deloitte LLP

2 unchanged sentences

Toronto, Canada

April 1, 2024

March 13, 2025

We have served as the Company’s auditor since 2023.

2 unchanged sentences

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of Tucows Inc.

(the Company) as of December 31, 2022, the related consolidated statements of comprehensive income, stockholders’ equity, and cash flows for each of the years in the two‑year period ended December 31, 2022, and the related notes, and the schedule of the Condensed Financial Statements of Tucows Inc.

as of December 31, 2022 and for each of the years in the two‑year period ended December 31, 2022 (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022, and the results of its operations and its cash flows for each of the years in the two‑year period ended December 31, 2022, in conformity with U.S.

We have audited, before the effect of the adjustments to retrospectively apply the change in accounting described in Notes 2(x) and 20, the consolidated statements of comprehensive income (loss), stockholders’ equity, and cash flows of Tucows Inc.

(the Company) for the year ended December 31, 2022, and the related notes, and the schedule of the condensed statements of income (loss) and comprehensive income (loss) and condensed statement of cash flows of Tucows Inc.

for the year ended December 31, 2022 (collectively, the consolidated financial statements).

The 2022 consolidated financial statements before the effects of the adjustments described in Notes 2(x) and 20 are not presented herein.

In our opinion, the consolidated financial statements, before the effects of the adjustments to retrospectively apply the change in accounting described in Notes 2(x) and 20, present fairly, in all material respects, the results of operations of the Company and its cash flows for the year ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

We were not engaged to audit, review, or apply any procedures to the adjustments to retrospectively apply the change in accounting described in Notes 2(x) and 20 and, accordingly, we do not express an opinion or any other form of assurance about whether such adjustments are appropriate and have been properly applied.

Those adjustments were audited by other auditors.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

Our responsibility is to express an opinion on these consolidated financial statements based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Our audit included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audits provide a reasonable basis for our opinion.

Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that our audit provides a reasonable basis for our opinion.

Chartered Professional Accountants, Licensed Public Accountants

We had served as the Company’s auditor from 2001 - 2023.

We served as the Company’s auditor from 2001 to 2023.

Vaughan, Canada

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$ 56,903 $ 92,687

Restricted cash (note 9)

Accounts receivable, net of allowance for doubtful accounts of $ 511 as of December 31, 2023 and $ 693 as of December 31, 2022

Restricted cash

Accounts receivable, net of expected credit losses of $ 923 as of December 31, 2024 and $ 511 as of December 31, 2023

20,878 22,206

Contract asset, net current portion

Contract asset, net

Prepaid expenses and deposits

17,314 17,387

Derivative instrument asset, current portion (note 7)

Deferred costs of fulfillment, current portion (note 12 (b))

Derivative instrument asset

Deferred costs of fulfillment, current portion

101,467 95,649

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205,382 242,757

Contract asset, net long-term portion (note 11)

Deferred costs of fulfillment, long-term portion (note 12(b))

Deferred costs of fulfillment, long-term portion

15,508 15,419

Secured notes reserve funds (note 9)

Property and equipment (note 4)

Secured notes reserve funds

Property and equipment, net

331,049 339,644

Right of use operating lease asset

Right of use assets

35,640 27,467

Contract costs (Note 12(a))

Intangible assets (note 5)

Contract costs

Intangible assets

24,755 29,484

Goodwill (note 5)

130,410 130,410

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16,660 19,335

Derivative instrument liability, current portion (note 7)

Operating lease liability, current portion (note 13)

Deferred revenue, current portion (note 11)

Derivative instrument liability

Operating lease liability, current portion

Contract liabilities, current portion

135,649 126,733

Accreditation fees payable, current portion

Accreditation fees payable

Income taxes payable

Other current liabilities

Total current liabilities

199,851 201,341

Deferred revenue, long-term portion (note 11)

Contract liabilities, long-term portion

21,155 21,350

Accreditation fees payable, long-term portion

Operating lease liability, long-term portion (note 13)

Operating lease liability, long-term portion

25,899 18,255

Syndicated revolver (note 8)

Syndicated revolver

194,426 210,354

Notes payable (note 9)

Redeemable preferred units - no par value, 33,333,333 shares authorized;

15,243,600 shares issued and outstanding as of December 31, 2023 and 14,583,333 shares issued and outstanding as of December 31, 2022 (note 14)

Notes payable

287,646 222,895

Deferred tax liability (note 10)

Stockholders' equity (note 15)

Redeemable preferred units - no par value, 33,333,333 units authorized;

15,243,600 units issued and outstanding as of December 31, 2024 and December 31, 2023

122,156 111,390

Deferred tax liability

Stockholders' equity (deficit)

Common stock - no par value, 250,000,000 shares authorized;

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Additional paid-in capital

Retained earnings (Accumulated deficit)

19,241 14,072

Accumulated other comprehensive income (loss) (note 7)

Total stockholders' equity

Total liabilities and stockholders' equity

Accumulated deficit

( 150,158 ) ( 40,298 )

Commitments and contingencies (note 20)

Accumulated other comprehensive income (loss)

( 964 ) 1,728

Total stockholders' equity (deficit)

( 95,300 ) 9,875

Total liabilities and stockholders' equity (deficit)

$ 758,796 $ 798,426

See accompanying notes to consolidated financial statements

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Income (Loss)

(Dollar amounts in thousands of U.S.

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Year ended December 31,

Net revenues (note 11)

$ 362,275 $ 339,337 $ 321,142

Cost of revenues (note 11)

Cost of revenues

209,747 202,256 196,268

Network expenses

Network, other costs

26,723 28,222 17,433

Network, depreciation of property and equipment (note 4)

Network, depreciation of property and equipment

39,872 35,864 27,589

Network, amortization of intangible assets (note 5)

Network, amortization of intangible assets

1,463 1,506 1,512

Impairment of property and equipment (note 4)

Network, impairment of property and equipment

1,441 4,822 92

Total cost of revenues

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37,068 33,406 30,845

Depreciation of property and equipment (note 4)

Depreciation of property and equipment

Loss (gain) on disposition of property and equipment

Amortization of intangible assets (note 5)

Amortization of intangible assets

3,834 9,323 9,882

Gain on currency forward contracts (note 7)

Impairment of property and equipment

Restructuring charges

Total expenses

148,042 130,319 109,910

Income from operations

Loss from operations

( 65,013 ) ( 63,652 ) ( 31,662 )

Other income (expenses):

Interest expense, net (note 18)

Interest expense, net

( 51,275 ) ( 41,771 ) ( 14,456 )

Loss on debt extinguishment (note 14)

Loss on debt extinguishment

- ( 14,680 ) -

Income earned on sale of transferred assets, net (note 18)

Income earned on sale of transferred assets, net

13,978 17,033 18,507

Other expense, net

Other income (expense), net

436 - ( 177 )

1 unchanged sentence

( 36,861 ) ( 39,418 ) 3,874

Income before provision for income taxes

( 103,070 ) ( 27,788 ) 7,270

Provision for (recovery of) income taxes (note 10)

( 6,873 ) ( 217 ) 3,906

Net income (loss) for the period

Loss before provision for income taxes

( 101,874 ) ( 103,070 ) ( 27,788 )

Other comprehensive income, net of tax

Unrealized income (loss) on hedging activities (note 7)

Provision for (recovery of) income taxes

7,986 ( 6,873 ) ( 217 )

Net amount reclassified to earnings (note 7)

Net loss for the period

( 109,860 ) ( 96,197 ) ( 27,571 )

Other comprehensive income (loss) net of tax expense (recovery) of $ 299 , $ 141 and ($ 595 ) for the years ended December 31, 2023, 2022 and 2021 (note 7)

Other comprehensive income (loss), net of tax

Unrealized income (loss) on hedging activities

( 2,681 ) 1,830 418

Comprehensive income (loss), net of tax for the period

Net amount reclassified to earnings

( 11 ) ( 886 ) 23

Basic earnings (loss) per common share (note 19)

Other comprehensive income (loss) net of tax expense (recovery) of ($ 858 ), $ 299 and $ 141 for the years ended December 31, 2024, 2023 and 2022, respectively.

( 2,692 ) 944 441

Shares used in computing basic earnings per common share (note 19)

Comprehensive loss, net of tax for the period

$ ( 112,552 ) $ ( 95,253 ) $ ( 27,130 )

Diluted earnings per common share (note 19)

Basic and diluted loss per common share

$ ( 10.02 ) $ ( 8.85 ) $ ( 2.56 )

Shares used in computing diluted earnings per common share (note 19)

Shares used in computing basic and diluted loss per common share

10,967,581 10,864,086 10,769,280

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(Dollar amounts in thousands of U.S.

Retained earnings

comprehensive

stockholders'

(Accumulated deficit)

income (loss)

Balances, December 31, 2021

10,612,414 20,798 1,458 80,106 2,336 104,698

Exercise of stock options

180,827 7,588 ( 2,770 ) - - 4,818

Shares deducted from exercise of stock options for payment of withholding taxes and exercise consideration

( 45,824 ) - ( 387 ) - - ( 387 )

Stock-based compensation (note 16)

- 129 4,463 - - 4,592

- - - 3,364 - 3,364

Other comprehensive income (loss) (note 7)

- - - - ( 1,993 ) ( 1,993 )

Stock-based compensation

Other comprehensive income (loss)

Balances, December 31, 2022

10,747,417 $ 28,515 $ 2,764 $ 83,470 $ 343 $ 115,092

Exercise of stock options

40,459 1,593 ( 497 ) - - 1,096

Shares deducted from exercise of stock options for payment of withholding taxes and exercise consideration

( 3,053 ) - - - - -

Stock-based compensation (note 16)

32,287 1,760 5,839 - - 7,599

Net income (loss)

- - - ( 27,571 ) - ( 27,571 )

Other comprehensive income (loss) (note 7)

- - - - 441 441

Stock-based compensation

Other comprehensive income (loss)

Balances, December 31, 2023

10,817,110 $ 31,868 $ 8,106 $ 55,899 $ 784 $ 96,657

Stock-based compensation (note 16) (1)

86,295 2,505 5,966 8,471

Net income (loss)

( 96,197 ) ( 96,197 )

Other comprehensive income (loss) (note 7)

Exercise of stock options

Stock-based compensation

Other comprehensive income (loss)

Balances, December 31, 2024

10,903,405 $ 34,373 $ 14,072 $ ( 40,298 ) $ 1,728 $ 9,875

See accompanying notes to consolidated financial statements

(1) The Company capitalizes stock-based compensation costs directly attributable to the development of qualifying assets.

Qualifying assets include internally use software (IUS), assets under construction (AUC), equipment, or other long-lived assets that meet the capitalization criteria prescribed by ASC 350.

During the twelve months ended December 31, 2023 the Company capitalized $

million of stock-based compensation directly attributable to the development of certain IUS assets.

Consolidated Statements of Cash Flows

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Operating activities:

Net income (loss) for the period

$ ( 96,197 ) $ ( 27,571 ) $ 3,364

Items not involving cash:

Net loss for the period

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

Depreciation of property and equipment

36,431 28,187 17,986

Impairment of property and equipment

Amortization of debt discount and issuance costs

3,331 685 300

Amortization of intangible assets

10,829 11,394 10,007

Net amortization contract costs

( 754 ) ( 748 ) ( 717 )

Net amortization of contract costs

Accretion of contingent consideration

Deferred income taxes (recovery)

( 13,040 ) ( 6,981 ) ( 1,328 )

Excess tax benefits on share-based compensation expense

- ( 193 ) ( 1,554 )

Net Right of use operating assets/Operating lease liability

( 406 ) ( 897 ) ( 2,204 )

Loss on disposal of domain names

Net Right of use assets/Operating lease liability

Disposal of domain names

Accretion of redeemable preferred units

14,163 3,896 -

Loss on debt extinguishment

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Loss (gain) on change in the fair value of forward contracts

1,624 281 606

Amortization of discontinued cash flow hedge

( 1,144 ) ( 761 ) -

Stock-based compensation

8,134 7,599 4,592

Loss (gain) on disposal of property and equipment

Stock-based compensation expense

Remeasurement of contingent consideration

Undistributed earnings of equity method investee

Change in non-cash operating working capital:

Accounts receivable

( 3,802 ) ( 3,825 ) 1,586

Contract assets

6,070 ( 6,709 ) ( 778 )

361 ( 4,007 ) ( 787 )

Prepaid expenses and deposits

( 382 ) 3,981 ( 3,974 )

Deferred costs of fulfillment

( 394 ) 2,037 ( 1,645 )

Income taxes recoverable

734 3,355 ( 1,394 )

Accounts payable

( 5,319 ) 6,754 4,068

Accrued liabilities

9,044 7,411 4,857

Customer deposits

3,552 ( 1,191 ) 645

Deferred revenue

2,952 ( 2,667 ) ( 4,495 )

Contract liabilities

Accreditation fees payable

( 342 ) ( 101 ) ( 83 )

Net cash provided by (used in) operating activities

( 4,771 ) 19,876 29,637

Financing activities:

Proceeds received on exercise of stock options

- 1,096 4,818

Proceeds from issuance of notes payable

Redeemable preferred units redemption

( 45,718 ) 87,500 -

Proceeds from redeemable preferred units

Deferred notes payable financing costs

( 6,738 ) - -

Deferred preferred financing costs

145 ( 1,016 ) -

Payment of tax obligations resulting from net exercise of stock options

Proceeds received on syndicated revolver

52,382 48,300 69,000

Repayment of syndicated revolver

( 80,182 ) ( 748 ) ( 296 )

Deferred syndicate revolver issued

( 1,711 ) - -

Payment of syndicated revolver costs

Contingent consideration for acquisitions

( 1,600 ) ( 3,125 ) -

Net cash (used in) provided by financing activities

178,836 132,007 73,135

Investing activities:

Additions to property and equipment

( 92,055 ) ( 136,710 ) ( 73,175 )

Proceeds on disposal of property and equipment

Acquisition of Uniregistry, (note 3(a))

- - ( 2,499 )

Acquisition of Simply Bits, net of cash of $801 (note 3(b))

- - ( 24,028 )

Additions to property and equipment

Acquisition of other intangible assets

( 528 ) ( 782 ) ( 774 )

Investment in securities

- - ( 2,012 )

Net cash used in investing activities

( 92,583 ) ( 137,492 ) ( 101,978 )

Increase (decrease) in cash and cash equivalents, restricted cash, and restricted cash equivalents

81,482 14,391 794

Cash and cash equivalents, restricted cash, and restricted cash equivalents beginning of year

23,496 9,105 8,311

Cash and cash equivalents, restricted cash, and restricted cash equivalents end of year

$ 104,978 $ 23,496 $ 9,105

Reconciliation of cash, cash equivalents, restricted cash, and restricted cash equivalents within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows above:

Cash and cash equivalents

92,687 23,496 9,105

Restricted cash included in funds held by trustee

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Total Cash and cash equivalents, restricted cash, and restricted cash equivalents end of period

$ 104,978 $ 23,496 $ 9,105

Supplemental cash flow information:

Interest paid

$ 24,736 $ 10,289 $ 4,485

Income taxes paid, net

$ 4,929 $ 3,883 $ 8,828

Supplementary disclosure of non-cash investing and financing activities:

Property and equipment acquired during the period not yet paid for

$ 6,948 $ 501 $ 99

See accompanying notes to consolidated financial statements

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Organization of the Company:

(referred to as the “Company”, “Tucows”, “we”, “us” or through similar expressions) is a corporate parent, allocating capital and providing efficient shared services to its three businesses Ting, Wavelo and Tucows Domains Services.

Ting, Wavelo and Tucows Domains Services.

Ting provides retail consumers and small businesses with high-speed fixed Internet access in a number of towns and cities across the United States.

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Significant Accounting Policies:

The consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S.

The consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“U.S.

GAAP”) and are stated in U.S.

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(b) Use of estimates

The preparation of the consolidated financial statements in accordance with U.S.

The preparation of the consolidated financial statements in conformity with U.S.

GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities.

On an on-going basis, management evaluates its judgements and estimates, the recoverability of goodwill and intangible assets which requires judgment over qualitative indicators of impairment and loss contingencies.

On an ongoing basis, management evaluates its judgments and estimates, the recoverability of goodwill and intangible assets which requires judgment over qualitative indicators of impairment and loss contingencies.

If these indicators suggest potential impairment, the Company performs a quantitative impairment test as required under ASC 350.

For acquired customer relationships, the Company estimates the fair value based on the income approach.

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This valuation involves significant subjectivity and estimation uncertainty, including assumptions related to future revenues attributable to acquired customer relationships, attrition rates and discount rates.

Management bases its estimates on historical experience, available market information as applicable, and on various other assumptions that are believed to be reasonable under the circumstances at the time they are made.

As part of the Company’s 2024 Capital Efficiency Plan, management also estimated the salvage value of certain Ting assets that the Company determined would be disposed of by abandonment.

Management bases its estimates on historical experience, available market information as applicable, third party analysis and on various other assumptions that are believed to be reasonable under the circumstances at the time they are made.

Under different assumptions or conditions, the actual results will differ, potentially materially, from those previously estimated.

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(d) Restricted cash

Restricted cash is solely in connection with the 2023 Term Notes as defined in "Note 9 - Notes Payable" and consists of (i) securitized assets cash receipts held by trustee related to securitized assets and (ii) liquidity reserve funds.

Restricted cash is solely in connection with the 2023 Term Notes and 2024 Term Notes as defined in "Note 8 - Notes Payable" and consists of (i) securitized assets cash receipts held by trustee and (ii) liquidity reserve funds.

The non-current portion of the restricted cash is presented in "Secured notes reserve funds" on the Consolidated Balance Sheet.

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All inventory is stated at the lower of cost or net realizable value.

Cost is determined based on actual cost of the mobile device, accessory shipped or optical network terminals.

Cost is determined based on the weighted average cost of the mobile device, accessory shipped or optical network terminals.

The net realizable value of inventory is analyzed for signs of obsolescence or damage on a regular basis.

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(f) Property and equipment

Property and equipment are stated at cost, net of accumulated depreciation.

Property and equipment are stated at cost, net of accumulated depreciation and impairment.

Assets deemed to have been abandoned are recorded at their salvage value and are not depreciated.

Depreciation is provided on a straight-line basis so as to depreciate the cost of depreciable assets over their estimated useful lives at the following rates:

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Computer software

33 1/3 - 100 %

Furniture and equipment

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The Company reviews the carrying values of its property and equipment for potential impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

If the estimated undiscounted future cash flows expected to result from the use of the group of assets and their eventual disposition is less than their carrying amount, they are considered to be impaired.

The amount of the impairment loss recognized is measured as the amount by which the carrying value of the asset exceeds the fair value of the asset, with fair value being determined based upon discounted cash flows or appraised values, depending on the nature of the assets.

In instances where inventory is found to be damaged, it is written off.

The Company performs impairment testing at the asset group level unless an asset generates independent cash flows.

The Company first performs a qualitative assessment to determine whether events or circumstances indicate that it is more likely than not that the carrying amount of the asset (group) is not recoverable.

If such indicators exist, the Company then compares the estimated undiscounted future cash flows expected to result from the use of the asset (group) and if their eventual disposition is less than their carrying amount.

If the carrying amount exceeds the undiscounted future cash flows, the assets (group) are considered to be impaired.

The amount of the impairment loss recognized is measured as the amount by which the carrying value of the asset (group) exceeds fair value, with fair value being determined based upon discounted cash flows or appraised values, depending on the nature of the assets.

For certain assets that the Company determined would be disposed of by abandonment, management estimated the salvage value.

The salvage value was estimated based on management’s judgment regarding realizability in secondary markets.

Management based its estimates on historical experience, available market information as applicable, third party analysis and on various other assumptions that are believed to be reasonable under the circumstances at the time they are made.

In instances where assets under construction or computer equipment is found to be damaged, it is written off.

During the year ended December 31, 2024, the Company recorded impairment charges related to assets under construction and computer equipment no longer contributing to future operations due to the 2024 Capital Efficiency Plan.

The valuation of assets under construction and computer equipment at salvage value involves significant estimates, and it is reasonably possible that salvage value could materially change in the near term due to changing market conditions, market demand and subsequent asset sales.

Additions to the fiber network are recorded at cost, including all material, labor, capitalized interest, vehicle and installation and construction costs associated with the construction of cable transmission and distribution facilities.

While the Company’s capitalization is based on specific activities, once capitalized, costs are tracked by fixed asset category at the fiber network level and not on a specific asset basis.

For assets that are retired, the estimated historical cost and related accumulated depreciation is removed.

For assets that are retired, the estimated historical cost and related accumulated depreciation is derecognized.

Additions to land are recorded at cost, and include any direct costs associated with the purchase, as well as any direct costs incurred to bring it to the condition necessary for its intended use, such as legal fees associated with the acquisition and the cost of permanent improvements.

Land is not depreciated.

We capitalize costs for software to be used internally when we enter the application development stage.

We capitalize the development costs for software to be used internally when software development projects enter the application development stage.

This occurs when we complete the preliminary project stage, management authorizes and commits to funding the project, and it is feasible that the project will be completed and the software will perform the intended function.

We cease to capitalize costs related to a software project when it enters the post implementation and operation stage.

We cease to capitalize costs related to a software project when it enters the post implementation and operation stage, which is the point at which a software project is substantially completed and ready for its intended use.

Costs capitalized during the application development stage consist of payroll and related costs for employees who are directly associated with, and who devote time directly to, a project to develop software for internal use.

External contractor costs who are directly associated with, and who devote time directly to, a project to develop software for internal use are also capitalized.

Generally, we do not capitalize any general and administrative or overhead costs or costs incurred during the application development stage related to research and development, training or data conversion costs.

Research and development costs and data conversion costs may be capitalized as Costs to fulfill a contract, if they relate to a specific professional services customer contract (see Note 12 - Costs to obtain and fulfill a contract).

We do not capitalize any general and administrative or overhead costs or costs incurred during the application development stage related to research and development, training or data conversion costs.

Research and development costs and data conversion costs may be recorded as Costs to fulfill a contract, if they relate to a specific professional services customer contract (see Note 11 - Costs to obtain and fulfill a contract).

Costs related to upgrades and enhancements to internal-use software, if those upgrades and enhancements result in additional functionality, are capitalized.

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Topic 815 also requires that changes in our derivative financial instruments’ fair values be recognized in earnings, unless specific hedge accounting and documentation criteria are met (i.e., the instruments are accounted for as hedges).

The Company recorded the effective portions of the gain or loss on derivative financial instruments that were designated as cash flow hedges in accumulated other comprehensive income in our accompanying Consolidated Balance Sheets.

For certain foreign currency contracts, when the Company has not complied with the documentation standards required for its forward foreign exchange contracts to be accounted for as hedges the Company accounts for such forward foreign exchange contracts at their fair values with the changes in fair value recorded in net income.

The fair value of the forward exchange contracts is determined using an estimated credit adjusted mark-to-market valuation which takes into consideration the Company's and the counterparty's credit risk.

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In the event that the qualitative tests indicate that there may be impairment, quantitative impairment testing is required.

If required to perform the quantitative test, the Company uses a discounted cash flow or income approach in which future expected cash flows at the operating segment level are converted to present value using factors that consider the timing and risk of the future cash flows.

If required to perform the quantitative test, the Company compares the reporting unit's carrying amount to its fair value, which is typically estimated using a discounted cash flow or income approach in which future expected cash flows at the operating segment level are converted to present value using factors that consider the timing and risk of the future cash flows.

The estimate of cash flows used is prepared on an unleveraged debt-free basis.

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The Company re-evaluates the useful life determination for domain names in the portfolio each year to determine whether events and circumstances continue to support an indefinite useful life.

The Company reviews individual domain names in the portfolio for potential impairment throughout the fiscal year in determining whether a particular name should be renewed.

The indefinite life intangible assets are not amortized, but are subject to an annual impairment assessment, during which the Company evaluates whether changes in circumstances indicate potential impairment.

Additionally, the Company reviews individual domain names in the portfolio for potential impairment throughout the fiscal year in determining whether a particular name should be renewed.

Impairment is recognized for names that are not renewed.

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(j) Contract balances

The Company accounts for contract assets and liabilities (deferred revenue) on a contract-by-contract basis, with each contract presented as either a net contract asset or a net contract liability accordingly.

The Company accounts for contract assets and liabilities on a contract-by-contract basis, with each contract presented as either a net contract asset or a net contract liability accordingly.

Contract assets are recorded for services delivered under contracts, to the extent that the services delivered exceed the services which have been billed to the customer at the reporting date.

1 unchanged sentence

Contract assets primarily relate to long-term mobile platform services contracts.

Deferred revenue primarily relates to the unearned portion of revenues received in advance related to the unexpired term of registration fees from domain name registrations and other domain related Internet services, on both a wholesale and retail basis, net of external commissions.

To a lesser extent, deferred revenue also includes a portion of the transaction price received from other professional services.

Contract liabilities primarily relate to the unearned portion of revenues received in advance related to the unexpired term of registration fees from domain name registrations and other domain related Internet services, on both a wholesale and retail basis, net of external commissions.

To a lesser extent, contract liabilities also include a portion of the transaction price received from other professional services.

(k) Contract Costs

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Non-lease components primarily include payments for maintenance and utilities.

We combine fixed payments for non-lease components with lease payments and account for them together as a single lease component which increases the amount of our lease assets and liabilities.

Certain lease agreements contain variable payments, which are expensed as incurred and not included in the lease assets and liabilities.

These amounts include payments affected by payments contingent on the number of Ting internet subscribers connected to a leased fiber network, and payments for maintenance and utilities.

We combine fixed payments for non-lease components with lease payments and account for them together as a single lease component which increases the amount of our right of use assets and lease liabilities.

Certain lease agreements contain variable payments, which are expensed as incurred and not included in the right of use assets and lease liabilities.

These payments include amounts contingent on the number of Ting internet subscribers connected to a leased fiber network, and payments for maintenance, utilities and property taxes.

We have elected to consider leases with a term of 12 months or less as short-term, and as such these have not been recognized on the balance sheet.

We recognize lease expense for short-term leases on a straight-line basis over the lease term.

Lease assets and liabilities are recognized at the present value of the future lease payments at the lease commencement date.

Right of use assets and lease liabilities are recognized at the present value of the future lease payments at the lease commencement date.

The interest rate used to determine the present value of the future lease payments is our incremental borrowing rate, because the interest rate implicit in our leases is not readily determinable.

Our incremental borrowing rate is estimated to approximate the interest rate on a collateralized basis with similar terms and payments, and in economic environments where the leased asset is located.

Our lease terms include periods under options to extend or terminate the lease when it is reasonably certain that we will exercise that option.

We generally use the base, non-cancelable, lease term when determining the lease assets and liabilities.

Lease assets also include any prepaid lease payments.

Our lease terms include periods under options to extend the lease when it is reasonably certain that we will exercise that option, and periods covered by options terminate the lease if we are reasonably certain not to exercise that option.

The lease term used in determining our right of use assets and lease liabilities is generally the non-cancelable period of the lease excluding any periods covered by an option to extend the lease or terminate the lease.

Operating lease expense is recognized on a straight-line basis over the lease term.

(n) Accreditation fees payable

In accordance with ICANN rules, the Company has elected to pay ICANN fees incurred on the registration of Generic Top-Level Domains on an annual basis.

Accordingly, accreditation fees that relate to registrations completed prior to ICANN rendering a bill are accrued and reflected as accreditation fees payable.

(o) Translation of foreign currency transactions

(n) Translation of foreign currency transactions

The Company's functional currency is the United States dollar.

2 unchanged sentences

Transactions included in operations are translated at the rate at the date of the transactions.

(p) Income taxes

(o) Income taxes

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss carry forwards.

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The liability for unrecognized tax benefits is classified as non-current unless the liability is expected to be settled in cash within 12 months of the reporting date.

(q) Redeemable preferred units

(p) Redeemable preferred units

See "Note 13 - Redeemable preferred units" for the description and treatment of the Company's Series A Preferred Unit Purchase Agreement.

(r) Stock-based compensation

(q) Stock-based compensation

Stock-based compensation expense recognized during the period is based on the value of the portion of stock-based payment awards that is ultimately expected to vest, reduced for estimated forfeitures.

1 unchanged sentence

Stock Option Plans."

(s) Earnings per common share

(r) Earnings per common share

Basic earnings per common share has been calculated on the basis of net income for the year divided by the weighted average number of common shares outstanding during each year.

2 unchanged sentences

When there is a net loss from operations, the Company considers all options anti-dilutive for the purposes of calculating a diluted earnings per share.

(t) Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, restricted cash, accounts receivable, forward foreign exchange contracts and pay-fixed, receive-variable interest rate swap contracts.

(s) Concentration of credit risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash equivalents, restricted cash, accounts receivable and forward foreign exchange contracts.

Cash equivalents consist of deposits with major commercial banks, the maturities of which are three months or less from the date of purchase.

2 unchanged sentences

Management assesses the need for allowances for potential credit losses by considering the credit risk of specific customers, historical trends and other information.

(u) Fair value measurement

(t) Fair value measurement

Fair value of financial assets and liabilities is defined as an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

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The fair value of the derivative financial instruments is determined using an estimated credit-adjusted mark-to-market valuation (a Level 2 measurement) which takes into consideration the Company and the counterparty credit risk.

(v) Investments

(u) Investments

The Company accounts for investment in entities over which it has the ability to exert significant influence, but does not control and is not the primary beneficiary of, using the equity method of accounting.

The Company includes the proportionate share of earnings (loss) of the equity method investees in Other Income in the Consolidated Statements of Comprehensive Income.

The Company includes the proportionate share of earnings (loss) of the equity method investees in Other Income in the Consolidated Statements of Comprehensive Income (Loss).

The proportional shares of affiliate earnings or losses accounted for under the equity method of accounting were not material for all periods presented.

Equity investments without readily determinable fair value include ownership rights that do not provide the Company with control or significant influence.

Such equity investments are recorded at cost, less any impairment, and adjusted for subsequent observable price changes as of the date that an observable transaction takes place.

Subsequent adjustments are recorded in Other income (expense), net.

(w) Segment reporting

The Company operates in three operating segments, Ting, Wavelo and Tucows Domains.

Equity investments in which the Company does not have significant influence are accounted for under Topic 321 - “Accounting for Equity Interests”.

These investments are recorded in Investments on the Consolidated Balance Sheets.

If the fair value of these investments is readily determinable, they are measured at fair value, with changes recognized in Other Income (Expense), net.

If the fair value is not readily determinable, the Company applies the measurement alternative, recording investment at cost, less any impairment, and adjusting for subsequent observable price changes when an observable transaction occurs.

These adjustments are recorded in Other Income (Expense).

The Company has determined that the fair value of its equity investments is not readily determinable and, therefore, applies the measurement alternative, recording investments at cost, less any impairment, and adjusting for observable price changes when applicable.

Ting Memphis Co is a limited partnership established to support the marketing and local presence of the Company’s internet and mobile services in Memphis, Tennessee, in which the Company holds a general partnership interest.

To simplify the presentation of our consolidated financial statements, we have fully consolidated Ting Memphis Co as the non-controlling interest is considered immaterial.

As a result, no separate presentation or disclosure of non-controlling interest has been made in the financial statements.

(v) Segment reporting

The Company is organized and managed based on three operating segments which are differentiated primarily by their services, the markets they serve and the regulatory environments in which they operate.

No operating segments have been aggregated to determine our reportable segments.

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Domain Services revenues are attributed to the country in which the contract originates, primarily Canada and the United States.

Our segmented results include shared services allocations, including a profit margin, from Tucows Corporate for Finance, Human Resources and other technical services, to the operating units.

In addition, Wavelo charges Ting a subscriber based monthly charge for services rendered.

Financial impacts from these allocations and cross segment charges are eliminated as part of the Tucows Corporate results.

Our segmented results include shared services allocations to the operating segments, including a profit margin, for Finance, Human Resources and other technical services.

In addition, Wavelo charges Ting a subscriber based monthly charge service rendered.

Financial impacts from these allocations and cross segment charges are eliminated as part of the consolidation.

The Company’s assets are primarily located in Canada, the United States and Europe.

(w) Government Grants

The Company is the beneficiary of government grants from the City of Greenwood Village, Colorado, to support the construction of a fiber-to-the-premises (FTTP) network.

The grant is intended to subsidize network construction, with the goal of providing broadband internet access service (BIAS) to all serviceable addresses within the city.

The government grant is accounted for as a reduction of the cost basis of property and equipment in the Company's Consolidated Balance Sheet.

Depreciation is calculated based on the reduced cost of the asset over its estimated useful life.

( x ) Recent Accounting Pronouncements

Recent Accounting Pronouncements Adopted

Recent Accounting Pronouncements Not Yet Adopted

In November 2023, the FASB issued ASU 2023 - 07, "Segment Reporting (Topic 280 ):

Improvements to Reportable Segment Disclosures." The amendments in ASU 2023 - 07 improve financial reporting by requiring disclosure of incremental segment information, including significant segment expenses, on an annual and interim basis for all public entities to enable investors to develop more useful financial analyses.

Currently, Topic 280 requires that a public entity disclose certain information about its reportable segments.

For example, a public entity is required to report a measure of segment profit or loss that the Chief Operating Decision Maker (“CODM”) uses to assess segment performance and make decisions about allocating resources.

Topic 280 also requires other specified segment information, such as depreciation, amortization and depletion expense amounts, to be disclosed under certain circumstances.

The amendments in ASU 2023 - 07 do not change or remove those disclosure requirements.

Prior to this update, Topic 280 required public entities to disclose certain information about reportable segments, including a measure of segment profit or loss used by the Chief Operating Decision Maker ("CODM") to assess performance and allocate resources.

Other disclosures, such as depreciation, amortization, and depletion expenses, were required under certain conditions.

ASU 2023 - 07 retained these existing requirements while introducing expanded disclosures.

The amendments in ASU 2023 - 07 also do not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments.

As a result of the amendments, the Company has provided additional disclosure in respect of its significant segment expenses as well as how the CODM uses our reporting measure of segment profit or loss.

The Company adopted these amendments for the fiscal year ending December 31, 2024.

The amendments in ASU 2023 - 07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

A public entity should apply the amendments in ASU 2023 - 07 retrospectively to all prior periods presented in the financial statements.

The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

The adoption of this guidance did not have a material impact on the Company’s financial statements and related disclosures.

Recent Accounting Pronouncements Not Yet Adopted

In December 2023, the FASB issued ASU 2023 - 09 "Income Taxes (Topic 740 ):

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The Company is currently evaluating the impact of this ASU on its consolidated financial statements and related disclosures.

In March 2024, the SEC adopted new rules relating to the disclosure of a range of climate-change-related physical and transition risks, data, and opportunities.

The adopted rule contains several new disclosure obligations, including, (i) disclosure on how the board of directors and management oversee climate-related risks and certain climate-related governance items, (ii) disclosure of information related to a registrant’s climate-related targets, goals, and/or transition plans, and (iii) disclosure on whether and how climate-related events and transition activities impact line items above a threshold amount on a registrant’s consolidate financial statements, including the impact of the financial estimates and the assumptions used.

This new rule will first be effective in our annual disclosures for the year ending December 31, 2027.

We are in the process of assessing the impact on our consolidated financial statements and disclosures.

Acquisitions:

(a) Uniregistry

On October 1, 2021, the Company acquired the domain registry related assets of UNR Corp., UNR Inc.

and Uni Naming and Registry Ltd.

(each a seller and collectively "UNR").

The purchase price was $ 3.0 million, less a purchase price adjustment of approximately $ 0.5 million relating to a working capital deficit, for net purchase consideration of $ 2.5 million.

Cash Consideration, including working capital adjustment

Total purchase price

Accounts Receivables, net

Other current assets

Total identifiable assets

Accounts payable and accrued labilities

Total liabilities assumed

Total net assets (liabilities) assumed

Total goodwill

The technology assets acquired are amortized over periods of 5 - 7 years.

(b) Simply Bits

On November 8, 2021, the Company acquired 100 % of Simply Bits, LLC via an Agreement and Plan of Merger with one of our wholly owned subsidiaries.

The purchase price was $ 25.0 m illion, plus a purchase price adjustment of approximately $ 0.8 million relating to a working capital surplus and the estimated fair value of contingent consideration, for net purchase consideration of $ 25.8 million.

Included in the agreement was contingent consideration totaled up to $ 1.0 million, which was due 60 days from December 31, 2021 and was paid in 2022.

Cash Consideration, including working capital adjustment

Fair value of contingent payments

Total purchase price

Cash and Cash Equivalents

Accounts Receivables, net

Other current assets

Property and equipment

Right of use operating lease

Customer relationships

Total identifiable assets

Accounts payable and accrued labilities

Deferred tax liability

Operating lease liability

Other liabilities

Total liabilities assumed

Total net assets (liabilities) assumed

Total goodwill

In November 2024, the FASB issued ASU No.

2024 - 03, “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220 - 40 ):

Disaggregation of Income Statement Expenses” (ASU 2024 - 03 ), which requires that a public entity disclose the amounts of (a) purchases of inventory, (b) employee compensation, (c) depreciation and (d) intangible asset amortization included in each relevant expense caption presented on the face of the income statement.

The standard also requires an entity to disclose a qualitative description of the amounts remaining in relevant expense captions that are not separately disaggregated quantitatively as well as disclose the total amount of selling expenses and, annually, the entity’s definition of selling expenses.

ASU 2024 - 03 will be effective for annual periods beginning after December 15, 2026, with either retrospective or prospective application.

The standard allows for early adoption of these requirements;

we are currently evaluating the disclosure impacts of our adoption.

Property and Equipment:

7 unchanged sentences

Vehicles and tools

10,638 10,594

Fiber network (1)

9 unchanged sentences

$ 331,049 $ 339,644

( 1 ) Fiber network is presented net of $ 1.6 million government grants ( 2023:

nil ), with an impact of $ 0.1 million on accumulated depreciation ( 2023:

Depreciation of property and equipment (Dollar amounts in thousands of U.S.

4 unchanged sentences

$ 40,323 $ 36,431 $ 28,187

During the years ended December 31, 2023 , 2022, and 2021 property, plant, and equipment with net book values of $ 4.8 million, $ 0.1 million, and $ 0.2 million, respectively, were written off and included in impairment of property and equipment in the consolidated statement of comprehensive income.

Impairment of Property and Equipment

During the year ended December 31, 2024, the Company recognized a total impairment expense of $ 19.1 million.

In the fourth quarter of 2024, the Board formally approved and the Company implemented the 2024 Capital Efficiency Plan, which included the decision to cease new market expansions in Ting (see note 21 – Restructuring Costs).

As part of the 2024 Capital Efficiency plan, management conducted a review of Assets under construction, Computer equipment, Fiber network and Customer and equipment installation to determine if there were specific assets that would no longer contribute to future operations.

This review resulted in the identification of assets within Assets under construction and Computer equipment that are no longer intended for deployment in the Company's fiber network expansion.

These assets relate to specific work zones under construction, related capitalized design costs, and materials held for construction (“the impaired construction assets”).

Prior to the 2024 Capital Efficiency Plan, the impaired construction assets were planned for future deployment in the operations of the Company's Ting reportable segment.

The impaired construction assets were deemed to be abandoned in accordance with ASC 360 - 10 and recorded at their salvage value, and the impairment charge was recognized immediately.

In total, $ 33.6 million in assets were impaired, with an estimated salvage value of $ 15.9 million, resulting in a recorded impairment charge of $ 17.7 million.

This charge is recorded under “Impairment of property and equipment” in the consolidated statements of comprehensive income (loss).

The remaining $ 1.4 million impairment charges relate to specific network assets that were identified through routine inspections as being damaged and no longer in use and are recorded under “Network, impairment of property and equipment” in the consolidated statements of comprehensive Income (loss).

During the years ended December 31, 2023, and 2022 property and equipment with net book values of $ 4.8 million, and $ 0.1 million, respectively, were written off and included in network, impairment of property and equipment in the consolidated statement of comprehensive income (loss).

The impairment losses incurred in 2023 related to specific network assets that were identified as being damaged and no longer in use.

8 unchanged sentences

$ 22,724 $ - $ 107,686 $ 130,410

The Company's Goodwill balance is $ 130.4 million as of December 31, 2023 and $ 130.4 million as of December 31, 2022 .

The Company's Goodwill balance is $ 130.4 million as of December 31, 2024 and December 31, 2023 .

The Company's goodwill relates 83 % ($ 107.7 million) to its Tucows Domains operating segment and 17 % ($ 22.7 million) to its Ting operating segment.

Goodwill is not amortized, but is subject to an annual impairment test.

The Company performed an impairment analysis as outlined in “Note 2 (h) – Significant Accounting Policies” and there were no indications of impairment for Fiscal 2023 and Fiscal 2022 .

The Company performed a qualitative impairment analysis as outlined in “Note 2 (h) – Significant Accounting Policies” and determined it was not more likely than not that Goodwill was impaired for Fiscal 2024 and Fiscal 2023 .

Other Intangible Assets

1 unchanged sentence

The Company considers its intangible assets consisting of surname domain names and direct navigation domain names as indefinite life intangible assets.

The Company has the exclusive right to these domain names as long as the annual renewal fees are paid to the ap plica ble registry.

The Company has the exclusive right to these domain names as long as the annual renewal fees are paid to the applicable registry.

Renewals occur routinely and at a nominal cost.

The indefinite life intangible assets are not amortized, but are subject to impairment assessments performed throughout the year.

During Fiscal 2023 , we assessed whether the specific domain names acquired through the acquisition of Mailbank.com Inc.

in June 2006, which were due for renewal should not be renewed.

Upon review, the Company decided to renew these domain names.

Additionally, throughout the year, management assessed specific domain names acquired through the acquisition of Mailbank.com Inc.

in June 2006, that were due for renewal, and decided to renew.

During the years ended December 31, 2024 , December 31, 2023 , and December 31, 2022 , no impairment of indefinite life intangible assets was recorded.

Finite-life intangible assets, comprising brand, technology, customer relationships and network rights are being amortized on a straight-line basis over periods of two to fifteen years.

The weighted average amortization period for all finite-life intangible assets is 5.4 years.

Throughout 2024, the Company purchased $ 0.6 million in customer relationship assets through hosting agreements whereby customer assets and domain names were obtained.

59 unchanged sentences

Fair Value Measurement Using

Assets (Liabilities)

at Fair value

Derivative instrument asset, net

Derivative instrument asset (liability), net

$ - $ ( 1,270 ) $ - $ ( 1,270 )

Total assets, net

Total assets (liabilities), net

$ - $ ( 1,270 ) $ - $ ( 1,270 )

2 unchanged sentences

Fair Value Measurement Using

Assets (Liabilities)

at Fair value

Derivative instrument asset, net

Derivative instrument asset (liability), net

$ - $ 2,277 $ - $ 2,277

Total assets, net

Total assets (liabilities), net

$ - $ 2,277 $ - $ 2,277

16 unchanged sentences

The Company designated the interest rate swap as a cash flow hedge of expected future interest payments at the inception of the contract.

Accordingly, for the foreign exchange, unrealized gains or losses on the effective portion of these contracts were included within other comprehensive income and reclassified to earnings when the hedged transaction is settled.

Accordingly, for the foreign exchange, unrealized gains or losses on the effective portion of these contracts were included within other comprehensive income (loss) and reclassified to earnings when the hedged transaction is settled.

Cash flows from hedging activities were classified under the same category as the cash flows from the hedged items in the consolidated statements of cash flows.

16 unchanged sentences

11,181 1.3692 ( 458 )

July - September 2024

$ 29,399 1.3695 $ ( 1,270 )

October - December 2024

13,795 1.3686 526

$ 61,449 1.3681 $ 2,277

Fair value of derivative instruments and effect of derivative instruments on financial performance

3 unchanged sentences

Balance Sheet Location

As of December 31, 2023 Fair Value Asset

As of December 31, 2022 Fair Value Asset

As of December 31, 2024 Fair Value Asset (Liability)

As of December 31, 2023 Fair Value Asset (Liability)

Foreign Currency forward contracts designated as cash flow hedges (net)

1 unchanged sentence

$ ( 1,270 ) $ 2,277

Interest rate swap contract designated as a cash flow hedge (net)

Derivative instruments

Total foreign currency forward contracts and interest rate swaps (net)

Total foreign currency forward contracts (net)

Derivative instruments

8 unchanged sentences

( 14 ) 3 ( 11 )

Amortization of discontinued cash flow hedge

( 1,118 ) 270 ( 848 )

Other comprehensive income (loss) for the year ended December 31, 2024

24 unchanged sentences

793 ( 193 ) 600

Amortization of discontinued cash flow hedge

( 761 ) 184 ( 577 )

Other comprehensive income (loss) for the year ended December 31, 2022

13 unchanged sentences

$ 1,830 Cost of revenues

Interest rate swap contract for the year ended December 31, 2022

$ 1,430 Interest expense, net

Operating expenses

3 unchanged sentences

$ 1,430 Interest expense, net

For those foreign currency forward contracts not designated as hedges, the Company recorded the following fair value adjustments, on settled and outstanding contracts (Dollar amounts in thousands of U.S.

Year Ended December 31,

Forward currency contracts not designated as hedges:

Gain (loss) on settlement

$ - $ - $ 883

Gain (loss) on change in fair value

$ - $ - $ 277

Syndicated Revolver:

Third Amended 2019 Credit Facility

In connection with entering into the 2023 Credit Agreement, on September 22, 2023, the Company paid off the principal balance, including accrued interest thereon, of the revolving loans outstanding under the Third Amended and Restated Credit Agreement (the “RBC Credit Agreement”), dated as of August 8, 2022, as amended, by and among the Company, certain subsidiaries of the Company as borrowers, certain other subsidiaries of the Company as guarantors, Royal Bank of Canada, as administrative agent (“RBC”), and the lenders party thereto, pursuant to which Tucows’ prior credit facility that provided the Borrowers with a $ 240 million revolving credit facility (the "2019 Credit Facility").

The RBC Credit Agreement automatically terminated upon the receipt by RBC of certain backstop letters of credit delivered by BMO.

Prior to entering into the 2023 Credit Facility, during the year ended December 31, 2023 the Company made repayments of $ 16.3 million on the 2019 Credit Facility.

2023 Credit Facility

On September 22, 2023, the Company and its wholly owned subsidiaries, Tucows.com Co., Ting Inc., Tucows (Delaware) Inc., Wavelo, Inc.

and Tucows (Emerald), LLC (each, a “Borrower” and together, the “Borrowers,” collectively with the Company, “Tucows”) and certain other subsidiaries of the Company, as guarantors, entered into the 2023 Credit Agreement with Bank of Montreal, as administrative agent (“BMO” or the “Agent”), and the lenders party thereto, to, among other things, provide the Borrowers with a revolving credit facility in an aggregate amount not to exceed $ 240 million (the “2023 Credit Facility”).

and Tucows (Emerald), LLC (each, a “Borrower” and together, the “Borrowers,” collectively with the Company, “Tucows”) and certain other subsidiaries of the Company, as guarantors, entered into a Credit Agreement (the “2023 Credit Agreement”) with Bank of Montreal, as administrative agent (“BMO” or the “Agent”), and the lenders party thereto, to, among other things, provide the Borrowers with a revolving credit facility in an aggregate amount not to exceed $ 240 million (the “2023 Credit Facility”).

The Borrowers may request an increase to the Credit Facility through new commitments of up to $ 60 million if the Total Funded Debt to Adjusted EBITDA Ratio (as defined in the Credit Agreement) is less than 3.75:1.00.

6 unchanged sentences

The remaining loan principal on the 2023 Credit Facility was treated as a loan modification within the guidance of ASC 470.

In accordance with the debt extinguishment, the Company expensed $ 0.1 million of the unamortized debt issuance costs to Interest expense, net in the Consolidated Statements of Comprehensive Income.

In accordance with the debt extinguishment, the Company expensed $ 0.1 million of the unamortized debt issuance costs to Interest expense, net in the Consolidated Statements of Comprehensive Income (Loss).

During the twelve months ended December 31, 2024, the Company made repayments of $ 16.5 million on the 2023 Credit Facility.

During the year ended December 31, 2023, the Company made net cash repayments of $ 17.8 million and $ 10.0 million under the 2019 Credit Facility and the 2023 Credit Facility, respectively.

Third Amended 2019 Credit Facility

In connection with entering into the 2023 Credit Facility, on September 22, 2023, the Company paid off the principal balance, including accrued interest thereon, of the revolving loans outstanding under the Third Amended and Restated Credit Agreement (the “RBC Credit Agreement”), dated as of August 8, 2022, as amended, by and among the Company, certain subsidiaries of the Company as borrowers, certain other subsidiaries of the Company as guarantors, Royal Bank of Canada, as administrative agent (“RBC”), and the lenders party thereto, pursuant to which Tucows’ prior credit facility that provided the Borrowers with a $ 240 million revolving credit facility (the "2019 Credit Facility").

The RBC Credit Agreement automatically terminated upon the receipt by RBC of certain backstop letters of credit delivered by BMO.

2023 Credit Facility Terms

3 unchanged sentences

( 1 ) a leverage ratio by maintaining at all times a Total Funded Debt to Adjusted EBITDA Ratio of not more than (i) 4.50:1:00 at any time from and after the Closing Date to and including December 30, 2023; ( ii) 4.25:1:00 from December 31, 2023 to and including March 30, 2024; ( iii) 4.00:1.00 from March 31, 2024 to and including June 29, 2024; and (iv) 3.75:1.00 thereafter; and ( 2 ) an interest coverage ratio by maintaining as of the end of each rolling four financial quarter period, an Interest Coverage Ratio (as defined in the Credit Agreement) of not less than 3.00:1.00.

The required principal repayment of $ 211.9 million is due in 2026.

The required principal repayment of $ 195.4 million is due in September 2026.

During the years ended December 31, 2024 and December 31, 2023 the Company was in compliance with the covenants under its credit agreements in effect at the time.

During the year ended December 31, 2023, the Company made net cash repayments o f $ 17.8 million and $ 10.0 m illion under the 2019 Credit Facility and the 2023 Credit Facility respectively.

Borrowings under the 2023 Credit Agreement will accrue interest and standby fees based on the Company's Total Funded Debt to Adjusted EBITDA ratio and the availment type as follows:

6 unchanged sentences

Greater than or equal to 4.00

Canadian dollar borrowings based on the Canadian Dollar Offered Rate or U.S.

Canadian dollar borrowings based on the Canadian overnight repo rate average or U.S.

dollar borrowings based on SOFR and letter of credit fees (Margin)

10 unchanged sentences

( 974 ) ( 1,546 )

Total loan payable

210,354 238,930

loan payable, current portion

Loan payable, long-term portion

Total Syndicated Revolver, long-term portion

$ 194,426 $ 210,354

8 unchanged sentences

The debt discount and issuance costs of the 2023 Term Notes are being amortized using the straight line method over a five -year period between the Closing date and the anticipated repayment date.

During the year ended December 31, 2023, the Company recognized $ 2.4 million of interest expense related to the amortization of the debt discount and issuance costs of the 2023 Term Notes.

The 2023 Term Notes are issued under an indenture, dated May 4, 2023 ( the “Base Indenture”) between the Issuer and Citibank, N.A., as trustee (the “Indenture Trustee”) as supplemented by the Series 2023 - 1 supplemental indenture dated May 4, 2023, ( the “Series 2023 - 1 Supplement” and, together with the Base Indenture, the “Indenture”), between the Issuer and the Trustee.

2 unchanged sentences

If the Issuer has not repaid or refinanced the 2023 Term Notes prior to the anticipated repayment date, additional interest will accrue on the 2023 Term Notes in an amount equal to the greater of (A) 5.00 % per annum and (B) a per annum interest rate equal to the excess, if any, by which the sum of the following exceeds the original interest rate of such 2023 Term Note (i) 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 such anticipated repayment date of the United States Treasury Security having a term closest to 10 years, plus (ii) 5.00 %, plus (iii) ( x ) for the 2023 Class A- 2 Notes, 3.50 %, (y) for the 2023 Class B Notes, 5.00 % and (z) for the 2023 Class C Notes, 7.82 %.

The 2023 Term Notes are secured by certain of the Company’s revenue-generating assets, consisting principally of fiber-network related agreements, fiber-network assets and customer contracts (collectively, the “Securitized Assets”) that are owned by certain other limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company that act as the Guarantors (collectively with the Issuer, the “Obligor”) under the Base Indenture.

The 2023 Term Notes are subject to a series of covenants, restrictions and other investor protections including (i) that the Issuer maintains specified reserve accounts to be used to make required payments in respect of the 2023 Term Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, (iii) certain indemnification payments (iv) the guarantors comply with standard bankruptcy-remoteness covenants, including not guaranteeing or being liable for other affiliates debts or liabilities and (v) covenants relating to recordkeeping, access to information, and similar matters.

20 24 Term Notes

On August 20, 2024, Tucows Inc., through its indirect and wholly owned subsidiaries, including Ting Fiber, LLC, entered into a definitive agreement relating to a securitized financing facility related to a privately placed securitization transaction.

On August 20, 2024, the Issuer, a limited purpose, bankruptcy-remote, indirect wholly owned subsidiary of the Company, issued:

(i) $ 55,000,000 of its 5.63 % Secured Fiber Revenue Notes, Series 2024 - 1, Class A- 2 (the “2024 Class A- 2 Notes”), (ii) $ 8,000,000 of its 6.85 % Secured Fiber Revenue Notes, Series 2024 - 1, Class B (the “2024 Class B Notes”), and (iii) $ 16,000,000 initial principal amount of 9.15 % Secured Fiber Revenue Notes, Series 2024 - 1, (the “Class C Notes” together with the 2024 Class A- 2 Notes and the 2024 Class B Notes, the “2024 Term Notes”).

The Tranche C notes were not sold in this transaction, and they remain available for future sale depending on market conditions.

The net proceeds from the issuance of the 2024 Term Notes were $ 61.0 million, after deducting a debt discount of Nil and issuance costs of $ 2.0 million.

The 2024 Term Notes were issued under the Base Indenture dated May 4, 2023, and the related Series 2024 - 1 Supplement (the “Series 2024 - 1 Supplement”), dated August 20, 2024, by and between the Issuer, the asset parties thereto, and the Indenture Trustee Citibank, N.A., and securities intermediary.

The Base Indenture and the Series 2024 - 1 Supplement allow the Issuer to issue additional series of notes in the future, subject to certain conditions set forth therein.

Interest payments on the 2024 Term Notes are payable on a monthly basis.

The legal final maturity date of the 2024 Term Notes is in August of 2054, but, unless earlier prepaid to the extent permitted under the Indenture, the anticipated repayment date of the 2024 Term Notes will be in August 2029.

The debt discount and issuance costs of the 2024 Term Notes are being amortized using the straight-line method over a five -year period between August 20, 2024 and the anticipated repayment date.

The 2023 Term Notes and 2024 Term Notes are secured by certain of the Company’s revenue-generating assets, consisting principally of fiber-network related agreements, fiber-network assets and customer contracts (collectively, the “Securitized Assets”) that are owned by certain other limited-purpose, bankruptcy-remote, wholly owned indirect subsidiaries of the Company that act as the Guarantors (collectively with the Issuer, the “Obligor”) under the Base Indenture.

The 2023 Term Notes and 2024 Term Notes are subject to a series of covenants, restrictions and other investor protections including (i) that the Issuer maintains specified reserve accounts to be used to make required payments in respect of the 2023 Term Notes and 2024 Term Notes, (ii) provisions relating to optional and mandatory prepayments and the related payment of specified amounts, (iii) certain indemnification payments, (iv) the guarantors comply with standard bankruptcy-remoteness covenants, including not guaranteeing or being liable for other affiliates debts or liabilities, and (v) covenants relating to recordkeeping, access to information, and similar matters.

As of December 31, 2024, the Company was in compliance with all required covenants.

As of December 31, 2023, the Company's scheduled principal repayments for the 2023 Term Notes are set to occur after 2027.

The following table summarizes Ting's borrowings under the 2023 Term Notes (Dollar amounts in thousands of U.S.

As of December 31, 2024, the Company’s scheduled principal repayments for the 2023 Term Notes of $ 238.5 million is due in April 2028 and 2024 Term Notes of $ 63.0 million is due in August 2029.

During the twelve months ended December 31, 2024, the Company recognized $ 3.7 million of interest expense related to the amortization of the debt discount and issuance costs of the 2023 Term Notes and 2024 Term Notes.

During the twelve months ended December 31, 2023, the Company recognized $ 2.4 million of interest expense related to the amortization of the debt discount and issuance costs of the 2023 Notes.

As of December 31, 2024, the Company was in compliance with all required covenants.

As of December 31, 2024, the Company's scheduled principal repayments for the 2023 Term Notes and 2024 Term Notes are set to occur after 2027.

The following table summarizes Ting Issuer LLC.

borrowings under the 2023 Term Notes and 2024 Term Notes (Dollar amounts in thousands of U.S.

December 31, 2024

2 unchanged sentences

unamortized issuance costs

( 6,341 ) ( 5,847 )

unamortized discount

Total notes payable

notes payable, current portion

( 7,518 ) ( 9,763 )

Note payable, long-term portion (1)

1 unchanged sentence

( 1 ) The Company capitalizes interest expenses directly attributable to the development of qualifying assets.

Qualifying assets include internally use software (IUS), assets under construction (AUC), equipment, or other long-lived assets that meet the capitalization criteria prescribed by ASC 350.

During the year ended December 31, 2023, the Company capitalized $ 1.0 mi llion of interest expenses pertaining to the 2023 Term Notes directly attributable to the development of certain AUC assets, respectively.

Qualifying assets include internal use software (IUS), assets under construction (AUC), equipment, or other long-lived assets that meet the capitalization criteria prescribed by ASC 350.

During the year ended December 31, 2024, the Company capitalized $ 1.2 mi llion of interest pertaining to the 2023 and 2024 Notes that were directly attributable to the development of certain AUC assets.

During the year ended December 31, 2023, the Company capitalized $ 1.0 million of interest expenses pertaining to the 2023 Notes directly attributable to the development of certain AUC assets.

Restricted Cash

3 unchanged sentences

Funds held in trust with the Indenture Trustee at the reporting date are presented as “Restricted cash” on the Company’s Consolidated Balance Sheet.

At December 31, 2023, Restricted cash totaled $ 3.6 million.

Under the terms of the Indenture, the Company is also required to maintain a liquidity reserve fund equal to the sum of (A) six times the total amount of fund administration fees payable on each payment date after May 20, 2023 and (B) six times the total amount of monthly interest on the 2023 Notes due and payable on each payment date after May 20, 2023.

The liquidity reserve is maintained with the Indenture Trustee until the maturity of the 2023 Term Notes and the balance is presented as “Secured notes reserve funds” on the Company’s Consolidated Balance Sheet.

At December 31, 2023 Secured notes reserve funds totaled $ 8.7 million.

As of December 31, 2024 and December 31, 2023, Restricted cash totaled $ 4.6 million and $ 3.6 million, respectively.

Under the terms of the Indenture, the Company is also required to maintain a liquidity reserve fund equal to the sum of (A) six times the total amount of fund administration fees payable on each payment date after May 20, 2023 and (B) six times the total amount of monthly interest on the 2023 and 2024 Term Notes due and payable on each payment date after May 20, 2023.

The liquidity reserve is maintained with the Indenture Trustee until the maturity of the 2023 and 2024 Term Notes and the balance is presented as “Secured notes reserve funds” on the Company’s Consolidated Balance Sheet.

As of December 31, 2024 and December 31, 2023, Secured notes reserve funds totaled $ 11.7 million and $ 8.7 million, respectively.

Income Taxes:

3 unchanged sentences

$ ( 101,874 ) $ ( 103,070 ) $ ( 27,788 )

Computed federal tax expense

Computed federal tax expense (recovery)

( 21,394 ) ( 21,644 ) ( 5,836 )

13 unchanged sentences

Shortfall (excess) tax benefits on share-based compensation

- 138 ( 1,556 )

Provision (recovery) for income taxes

9 unchanged sentences

12,534 13,040

Deferred revenue

Share based compensation

Contract liabilities

Interest expense limitation

14 unchanged sentences

( 2,965 ) ( 2,966 )

Limited life intangible assets

Foreign branch deferred tax liabilities

( 2,205 ) ( 4,862 )

Foreign branch deferred tax liabilities

Total deferred tax liabilities

2 unchanged sentences

$ ( 2,963 ) $ ( 2,966 )

In assessing the need for valuation allowance, historical and future levels of income, expectations and risks associated with estimates of future taxable income and tax planning strategies are considered.

In assessing the need for a valuation allowance, historical and future levels of income, expectations and risks associated with estimates of future taxable income and tax planning strategies are considered.

In 2024, we have determined that it is not more likely than not that we will ultimately be able to fully utilize the net operating losses, foreign tax credits and interest expense limitation in future years.

As of December 31, 2024, a valuation allowance of $ 51.7 million is recorded against net deferred tax assets.

The increase in the valuation allowance was primarily attributable to an increase in deferred tax assets resulting from the loss from operations and interest expense limitation.

Should our operating results continue to improve and projections to show utilization of the deferred tax assets, we would take the positive evidence into consideration and reassess our valuation allowance position.

The increase in the valuation allowance was primarily attributable to an increase in deferred tax assets resulting from the loss from operations.

As of December 31, 2024, the Company had net federal and state operating loss carryforwards of approximately $ 295.7 million and interest expense carryforwards of $ 18.1 million respectively.

8 unchanged sentences

tax purposes.

No material interest and penalties were recognized as of December 31, 2022.

No other material interest and penalties were recognized as of December 31, 2024.

Significant accounting policy

The Company’s revenues are derived from (a) the provisioning of retail fiber Internet services through Ting, (b) the CSP solutions and professional services through Wavelo; and from (c) domain name registration contracts, other domain related value-added services, domain sale contracts, and other advertising revenue through Tucows Domains Services.

Certain revenues are disclosed under Tucows Corporate as they are considered non-core business activities including retail mobile services, Transition Services Agreement ("TSA") revenue and eliminations of intercompany revenue.

Amounts received in advance of meeting the revenue recognition criteria described below are recorded as deferred revenue.

The Company’s revenues are derived from (a) the provisioning of retail fiber Internet services through Ting, (b) the Communication Service Providers ("CSP") solutions and professional services through Wavelo; and from (c) domain name registration contracts, other domain related value-added services, domain sale contracts, and other advertising revenue through Tucows Domains Services.

Certain revenues are disclosed under Corporate and all other as they are considered non-core business activities including retail mobile services, Transition Services Agreement ("TSA") revenue and eliminations of intercompany revenue.

Amounts received in advance of meeting the revenue recognition criteria described below are recorded as contract liabilities.

All products are generally sold without the right of return or refund.

Revenue is measured based on consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties.

Revenue is measured based on the consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third parties.

The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer.

9 unchanged sentences

The Company’s billing cycle for all Ting Internet customers is computed based on the customer’s activation date.

In addition, revenues associated with the sale of Internet hardware to subscribers are recognized when title and risk of loss is transferred to the subscriber and shipment has occurred.

In addition, revenue from the sale of internet hardware to subscribers is recognized when control transfers, which occurs upon shipment .

Incentive marketing credits given to customers are recorded as a reduction of revenue.

In those cases where payment is not received at the time of sale, revenue is not recognized at contract inception unless the collection of the related accounts receivable is reasonably assured.

The Company records costs that reflect expected refunds, rebates and credit card charge-backs as a reduction of revenues at the time of the sale based on historical experiences and current expectations.

The Company generates Wavelo revenues by providing billing and provisioning platform services to Communication Service Providers ("CSPs") to whom we also provide other professional services.

The Company records expected refunds, rebates and credit card charge-backs as a reduction of revenues at the time of the sale based on historical experiences and current expectations.

The Company generates Wavelo revenues by providing billing and provisioning platform services to CSPs to whom we also provide other professional services.

Platform service agreements contain both platform services and professional services.

Platform services offer a variety of solutions that support CSPs, including subscription and billing management, network orchestration and provisioning, and individual developer tools through a single, cloud based service.

Consideration under platform service arrangements includes both a variable component that changes each month depending on the number of subscribers hosted on the platform, as well as platform payments and credits.

The Company estimates platform payment and credit consideration over the term of the contract and recognizes the portion related to platform services evenly over the term of the contract.

The Company recognizes variable subscriber fees, as the fees are invoiced.

Platform services represent a single promise to provide continuous access (i.e.

a stand-ready performance obligation) to the platform.

As each month of providing access to the platform is substantially the same and the customer simultaneously receives and consumes the benefits as access is provided, the performance obligation consists of a series of distinct service periods.

Professional services provided under platform service arrangements can include implementation, training, consulting or software development/modification services.

Revenues related to professional services are distinct from the other promises in the contract(s) and are recognized as the related services are performed, on the basis of hours consumed.

Platform payment and credit consideration is allocated between the platform services and professional services performance obligations by estimating the standalone selling price (“SSP”) of each performance obligation.

Platform services and professional services are considered to be separate performance obligations.

Platform payments and the associated credits are allocated between the platform services and professional services performance obligations by estimating the standalone selling price (“SSP”) of each performance obligation.

The Company estimates the SSP of professional services based on observable standalone sales.

The SSP of platform services is derived using the residual approach by estimating the total contract consideration and subtracting the SSP of professional services.

Total contract consideration is estimated at contract inception, considering any constraints that may apply and updating the estimates as new information becomes available.

Each month of providing access to the platform is substantially the same and the customer simultaneously receives and consumes the benefits as access is provided, therefore, the performance obligation consists of a series of distinct service periods.

Accordingly, the platform services represent a single promise to provide continuous access (i.e.

a stand-ready performance obligation) to the platform.

Accordingly, the platform payment revenue allocated to platform services is recognized evenly over the term of the contract.

Variable subscriber fees are allocated to the platform services and are recognized as the fees are invoiced.

Revenues related to professional services are distinct from the other promises in the contract(s) and are recognized as the related services are performed, on the basis of hours consumed.

Other professional services consist of professional service arrangements with platform services customers which are billed based on separate Statement of Work (“SOW”) arrangements for bespoke feature development.

15 unchanged sentences

The Company also sells the rights to the Company’s portfolio domains or names acquired through the Company’s domain expiry stream.

The domain expiry stream involves domain names whose registration has expired and as per ICAANN regulations are placed into a 40 -day grace period.

Though the domain names do not belong to the Registrant during the 40 -day grace period, the Company is restricted from allowing others to register them.

The Company monetizes its domain expiry stream both through the sale of names and by allowing advertisers to place parked pages advertisements on the domains.

Revenue generated from sale of domain name contracts, containing a distinct performance obligation to transfer the domain name rights under the Company’s control, is generally recognized once the rights have been transferred and payment has been received in full.

Advertising revenue is derived through domain parking monetization, whereby the Company contracts with third -party Internet advertising publishers to direct web traffic from the Company’s domain expiry stream domains and Internet portfolio domains to advertising websites.

Advertising revenue is derived through domain parking monetization, whereby the Company contracts with third -party Internet advertising publishers to direct web traffic from the Company’s domain expiry stream domains, surname domains and direct navigation domains to advertising websites.

Compensation from Internet advertising publishers is calculated variably on a cost-per-action basis based on the number of advertising links that have been visited in a given month.

19 unchanged sentences

254,639 242,097 243,158

Tucows Corporate:

Corporate and all other:

Mobile Services and eliminations

3 unchanged sentences

As of December 31, 2023 one customer represented 59 % of total accounts receivable.

As of December 31, 2021 , one customer represented 46 % of total accounts receivable.

During the year ended December 31, 2023 one customer accounted for 10.7 % of revenue amounting to $ 36.2 million, within the Wavelo segment.

For the years ended December 31, 2022 and December 31, 2021 no customer accounted for more than 10% of total revenue.

During the years ended December 31, 2024 and December 31, 2023 one customer within the Wavelo segment accounted for 10.7 % of revenue, amounting to $ 38.8 million and $ 36.2 million, respectively.

For the year ended December 31, 2022 no customer accounted for more than 10% of total revenue.

The following is a summary of the Company’s cost of revenue from each significant revenue stream (Dollar amounts in thousands of U.S.

16 unchanged sentences

177,083 169,414 166,890

Tucows Corporate:

Corporate and all other:

Mobile Services and eliminations

6 unchanged sentences

Network, impairment

1,441 4,822 92

Total Network Expenses

2 unchanged sentences

Contract Balances

The following table provides information about contract liabilities (deferred revenue) from contracts with customers.

The following table provides information about contract liabilities from contracts with customers.

The Company accounts for contract assets and liabilities on a contract-by-contract basis, with each contract presented as either a net contract asset or a net contract liability accordingly.

Some of the Company’s long-term contracts with customers are billed in advance of service, such as domain contracts and some professional service contracts.

Consideration received from customers related to performance obligations which have not yet been satisfied are contract liabilities and recorded as deferred revenues.

Deferred revenue primarily relates to the portion of the transaction price received in advance related to the unexpired term of domain name registrations and other domain related value-added services, on both a wholesale and retail basis, net of external commissions.

The opening balance of deferred revenue was $ 145.1 million as of January 1, 2023 .

Significant changes in deferred revenue were as follows (Dollar amounts in thousands of U.S.

Consideration received from customers related to performance obligations which have not yet been satisfied are recorded as contract liabilities.

Contract liabilities primarily relate to the portion of the transaction price received in advance related to the unexpired term of domain name registrations and other domain related value-added services, on both a wholesale and retail basis, net of external commissions.

Significant changes in contract liabilities for the year ended December 31, 2024 were as follows (Dollar amounts in thousands of U.S.

Year ended December 31, 2024

Balance, beginning of period

Deferred revenue

Contract liabilities

Recognized revenue

Balance, end of period

Significant changes in contract liabilities for the year ended December 31, 2023 were as follows (Dollar amounts in thousands of U.S.

Year ended December 31, 2023

Balance, beginning of period

Contract liabilities

Recognized revenue

Balance, end of period

Remaining Performance Obligations:

2 unchanged sentences

For retail mobile and internet access services, where the performance obligation is part of contracts that have an original expected duration of one year or less (typically one month), the Company has elected to apply a practical expedient to not disclose revenues expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied).

Although domain registration contracts are deferred over the lives of the individual contracts, which can range from one to ten years, approximately 80 percent of our deferred revenue balance related to domain contracts is expected to be recognized within the next twelve months.

Deferred revenue related to Exact hosting contracts is also deferred over the lives of the individual contracts, which are expected to be fully recognized within the next twelve months.

Professional service revenue related to platform services may be deferred over the period not exceeding the term of the contract.

Although domain registration contracts are deferred over the lives of the individual contracts, which can range from one to ten years, approximately 80 percent of our contract liabilities balance related to domain contracts is expected to be recognized within the next twelve months.

Professional services revenue related to platform services agreements is deferred and recognized as hours are incurred over the contract term.

Any revenue for unused professional service hours is recognized as revenue at the end of the contract period.

Costs to obtain and fulfill a contract

2 unchanged sentences

We have identified certain sales incentive programs and other customer acquisition fees that meet the requirements to be capitalized, and therefore, capitalized them as contract costs in the amount of $ 2.3 million at December 31, 2024 .

Capitalized contract acquisition costs are amortized into operating expense based on the transfer of goods or services to which the assets relate which typically range from two – ten years.

For the year ended December 31, 2023 , the Company capitalized $ 2.0 million and also amortized $ 1.2 million of contract costs, respectively.

Capitalized contract acquisition costs are amortized into operating expense typically over three years, based on the transfer of goods or services to which the assets relate.

The breakdown of the movement in the deferred costs of acquisition balance for the year ended December 31, 2024 is as follows (Dollar amounts in thousands of U.S.

4 unchanged sentences

Balance, end of period

The breakdown of the movement in the deferred costs of acquisition balance for the year ended December 31, 2023 is as follows (Dollar amounts in thousands of U.S.

Year ended December 31, 2023

Balance, beginning of period

Capitalization of costs

Amortization of costs

Balance, end of period

When the amortization period for costs incurred to obtain a contract with a customer is less than one year, we have elected to apply a practical expedient to expense the costs as incurred.

4 unchanged sentences

The Company also defers certain technology design and data migration costs it incurs to fulfil its performance obligations contained in our platform services arrangements.

For the year ended December 31, 2023 , the Company capitalized $ 179.5 million and also amortized $ 179.1 million of contract costs.

There were no impairment losses recognized in relation to the costs capitalized during the year ended December 31, 2024 .

6 unchanged sentences

Balance, end of period

We lease datacenters, corporate offices, antenna tower and fiber-optic cables under operating leases.

The breakdown of the movement in the deferred costs of fulfillment balance for the year ended December 31, 2023 is as follows (Dollar amounts in thousands of U.S.

Year ended December 31, 2023

Balance, beginning of period

Deferral of costs

Recognized costs

Balance, end of period

We lease datacenters, corporate offices, antenna towers and fiber-optic cables under operating leases.

The Company does not have any leases classified as finance leases.

3 unchanged sentences

December 31, 2023

Operating lease cost (leases with a total term greater than 12 months)

Operating lease expense (leases with a total term greater than 12 months)

$ 7,134 $ 5,710

Short-term lease cost (leases with a total term of 12 months or less)

Variable lease cost

Total lease cost

Short-term lease expense (leases with a total term of 12 months or less)

Variable lease expense

Total lease expense

$ 9,511 $ 7,784

Lease Cost is presented in general and administrative expenses and direct cost of revenues within our consolidated statements of operations and comprehensive income.

Lease expense is presented in general and administrative expenses and direct cost of revenues within our consolidated statements of operations and comprehensive income (loss).

Variable lease payments are determined based on specific terms and conditions outlined in the lease agreements.

These may include payments for utilities, which are based on actual usage, and maintenance costs, which are determined based on expenses incurred.

Information related to leases was as follows (Dollar amounts in thousands of U.S.

11 unchanged sentences

December 31, 2023

Weighted average discount rate

Incremental borrowing rate

8.09 % 6.92 %

3 unchanged sentences

Total future lease payments

Less interest

Operating lease payments include payments under the non-cancellable term, without any additional amounts related to options to extend lease terms that are not reasonably certain of being exercised.

18 unchanged sentences

The liability was initially recorded at fair value and subsequently recorded at the present value of the settlement amount, which includes the preferred return payments required until the instrument's expected maturity on the sixth anniversary of the Transaction Close, August 10, 2028 using the implicit rate of return of the instrument, 15 %.

The Company recorded a $ 16.6 million accretion expense on the redeemable preferred units for the year ended December 31, 2023, recorded as interest expense, net in the accompanying consolidated statements of comprehensive income.

The Company recorded a $ 10.7 million accretion expense on the redeemable preferred units for the year ended December 31, 2024, recorded as interest expense, net in the accompanying consolidated statements of comprehensive income (loss).

The Company incurred $ 0.8 million of legal fees related to the redeemable preferred unit issuance, which have been reflected as a reduction to the carrying amount of the redeemable preferred unit balance and will be amortized to interest expense, net in the accompanying consolidated statements of operations and comprehensive income (loss) over the expected six -year term instrument.

14 unchanged sentences

Opening Balance

Funding at Transaction Close

Milestone Funding

$ 111,899 $ 91,396

Milestone Funding

Accretion of redeemable preferred units (1)

10,657 16,541

Loss on debt extinguishment

8 unchanged sentences

Qualifying assets include internally use software (IUS), assets under construction (AUC), equipment, or other long-lived assets that meet the capitalization criteria prescribed by ASC 350.

During the year ended December 31, 2023, the Company capitalized $ 2.4 mi llion of interest expenses pertaining to the redeemable preferred units directly attributable to the development of certain AUC assets, respectively.

During the years ended December 31, 2024, and December 31, 2023 the Company capitalized $ 1.3 mi llion and $ 2.4 million of interest expenses pertaining to the redeemable preferred units directly attributable to the development of certain AUC assets, respectively.

The following table summarizes our scheduled repayments as of December 31, 2024 ( Dollar amounts in thousands of U.S.

9 unchanged sentences

2024 Stock Buyback Program

On February 9, 2023, the Company announced that its Board of Directors (“Board”) had approved a stock buyback program to repurchase up to $ 40 million of its common stock in the open market.

On February 22, 2024, the Company announced that its Board had approved a stock buyback program to repurchase up to $ 40 million of its common stock in the open market.

The $ 40 million buyback program commenced on February 23, 2024 and terminated on February 13, 2025 .

1 unchanged sentence

2023 Stock Buyback Program

2022, the Company announced that its Board of Directors (“Board”) had approved a stock buyback program to repurchase up to

On February 9, 2023, the Company announced that its Board had approved a stock buyback program to repurchase up to $ 40 million of its common stock in the open market.

The $ 40 million buyback program commenced on February 10, 2023 and terminated on February 9, 2024.

The Company did not repurchase shares under this program.

2022 Stock Buyback Program

2022, the Company announced that its Board had approved a stock buyback program to repurchase up to

$ 40 million of its common stock in the open market.

5 unchanged sentences

2021 Stock Buyback Program

On February 9, 2021, the Company announced that its Board of Directors (“Board”) had approved a stock buyback program to repurchase up to $ 40 million of its common stock in the open market.

The $ 40 million buyback program commenced on February 10, 2021 and terminated on February 9, 2022.

The Company did not repurchase shares under this program.

2020 Stock Buyback Program

On February 9, 2021, the Company announced that its Board had approved a stock buyback program to repurchase up to $ 40 million of its common stock in the open market.

The $ 40 million buyback program commenced on February 10, 2021 and terminated on February 9, 2022.

The Company did not repurchase shares under this program during the year ended December 31, 2021.

The Company did not repurchase shares under this program.

(b) Net Exercise of Stock Options

6 unchanged sentences

Number of shares

- 3,053 45,824

Aggregate market value of shares (in thousands)

88 unchanged sentences

, prior to the consideration of expected forfeitures, is approxi mately $ 4.4 m illion and is expected to be recognized over a weighted average period of 2.6 y ears.

no exercises of Company Options during the year ended

December 31, 2023 .

The total intrinsic value of Company Options exercised during the years ended

no exercises of Company Options during the years ended

December 31, 2024 and

December 31, 2023 .

The total intrinsic value of Company Options exercised during the year ended

December 31, 2022 wa

s $ 0.8 million and $ 6.4

million, r espectively.

Cash received from the exercise of stock options during the years ended

December 31, 2022 and

s $ 0.8 million .

Cash received from the exercise of stock options during the year ended

December 31, 2022 was

$ 1.1 million and

$ 4.8 million respectively.

$ 1.1 million.

The Company recorded stock-based compensation for Company options amounting to $ 5.2 million, $ 6.0 million and $ 5.8 million for the years ended December 31, 2024 , 2023 and 2022 respectively.

1 unchanged sentence

Year Ended December 31,

Network expenses

Network, other costs

$ 395 $ 399 $ 399

22 unchanged sentences

Year Ended December 31,

40.6 % 40.7 % N/A

42.7 % 40.6 % 40.7 %

Risk-free interest rate

4.3 % 4.4 % N/A

4.6 % 4.3 % 4.4 %

Expected life (in years)

4.17 4.16 N/A

4.38 4.17 4.16

Dividend yield

0.0 % 0.0 % N/A

0.0 % 0.0 % 0.0 %

The weighted average grant date fair value for options issued, with the exercise price equal to market value on the date of grant

$ 0.49 $ 0.49 N/A

$ 0.52 $ 0.49 $ 0.49

Details of Wavelo's stock option transactions are as follows:

9 unchanged sentences

Outstanding, beginning of period

15,975,528 $ 1.27 - $ - N/A N/A

865,000 1.37 15,975,528 1.27 N/A N/A

- - - - N/A N/A

( 451,708 ) 1.27 - - N/A N/A

( 55,587 ) 1.27 - - N/A N/A

16,333,233 $ 1.28 15,975,528 $ 1.27 - $ -

1,415,000 1.75 865,000 1.37 15,975,528 1.27

( 33,750 ) 1.27 - - - -

( 1,430,832 ) 1.28 ( 451,708 ) 1.27 - -

( 395,654 ) 1.27 ( 55,587 ) 1.27 - -

Outstanding, end of period

16,333,233 1.28 15,975,528 1.27 N/A N/A

15,887,997 1.28 16,333,233 1.28 15,975,528 1.27

Options exercisable, end of period

7,752,114 $ 1.27 15,975,528 $ 1.27 N/A N/A

11,009,285 $ 1.27 7,752,114 $ 1.27 15,975,528 $ 1.27

The total intrinsic value of the Wavelo stock options exercised during the year ended December 31, 2024 was $ 0.1 million, and the cash received from the exercise of those stock options was $ 0.1 million.

No Wavelo stock options were exercised for the years ended December 31, 2023 and December 31, 2022.

As of December 31, 2024 , the exercise prices, weighted average remaining contractual life of outstanding options and intrinsic values were for Wavelo stock options were as follows:

12 unchanged sentences

15,887,997 $ 1.32 4.8 $ 7,347 11,009,285 $ 1.27 4.9 $ 5,588

16,333,233 $ 1.28 5.9 $ 7,588 7,752,114 $ 1.27 5.9 $ 3,643

Total unrecognized compensation cost relating to unvested Wavelo stock options at December 31, 2024 , prior to the consideration of expected forfeitures, is approxi mately $ 3.3 m illion and is expected to be recognized over a weighted average period of 1.8 y ears.

Stock-based compensation for the Wavelo stock options has been included in operating expenses as follows (Dollar amounts in thousands of US dollars):

The Company recorded stock-based compensation for Wavelo options amounting to $ 1.6 million, $ 1.8 million and $ 1.8 million for the years ended December 31, 2024 , 2023 and 2022 , respectively.

Stock-based compensation for the Wavelo stock has been included in operating expenses as follows (Dollar amounts in thousands of US dollars):

Year Ended December 31,

Network expenses

Network, other costs

$ 104 $ 131 $ 104

5 unchanged sentences

On January 16, 2023, the Board of Ting Fiber, LLC approved Ting's Equity Compensation Plan (Ting ECP), which has been established for the benefit of the employees, officers, directors and certain consultants of Ting or Tucows.

The Ting stock options were introduced in order to provide variable compensation that helps retain executives and ensure that our executives' interests are aligned with those stakeholders of the business to grow the long-term value.

The maximum number of Ting common units that have been set aside for issuance under the plan is 10 million units, currently there are 100 million common units outstanding.

Generally, options issued under the ECP vest over a four -year period and have a term not exceeding seven years.

Compensation costs for awards of stock-based compensation settled in shares are determined based on the fair value of the share-based instrument at the time of the grant and are recognized as expense over the vesting period of the share based instrument.

The Company calculates expected volatility based on the actual volatility of comparable publicly traded companies.

4 unchanged sentences

Year Ended December 31,

35.8 % N/A N/A

36.3 % 35.8 % N/A

Risk-free interest rate

3.8 % N/A N/A

3.8 % 3.8 % N/A

Expected life (in years)

4.36 4.18 N/A

Dividend yield

0.0 % N/A N/A

0.0 % 0.0 % N/A

The weighted average grant date fair value for options issued, with the exercise price equal to market value on the date of grant

$ 0.11 N/A N/A

$ 0.13 $ 0.11 N/A

Details of Ting's stock option transactions are as follows:

Year Ended December 31, 2023 Year Ended December 31, 2022 Year Ended December 31, 2021

Year Ended December 31, 2024

Year Ended December 31, 2023

Year Ended December 31, 2022

Number of shares

2 unchanged sentences

Weighted average exercise price per share

Number of shares

Weighted average exercise price per share

Outstanding, beginning of period

- $ - N/A N/A N/A N/A

8,044,000 6.00 N/A N/A N/A N/A

- - N/A N/A N/A N/A

( 438,381 ) 6.00 N/A N/A N/A N/A

( 101,350 ) 6.00 N/A N/A N/A N/A

7,504,269 $ 6.00 - $ - N/A N/A

123,000 6.00 8,044,000 6.00 N/A N/A

- - - - N/A N/A

( 1,382,845 ) 6.00 ( 438,381 ) 6.00 N/A N/A

( 284,764 ) 6.00 ( 101,350 ) 6.00 N/A N/A

Outstanding, end of period

7,504,269 6.00 N/A N/A N/A N/A

5,959,660 6.00 7,504,269 6.00 N/A N/A

Options exercisable, end of period

3,156,281 $ 6.00 N/A N/A N/A N/A

4,462,430 $ 6.00 3,156,281 $ 6.00 N/A N/A

As of December 31, 2024 , the exercise prices, weighted average remaining contractual life of outstanding options and intrinsic values were for Ting stock options were as follows:

12 unchanged sentences

5,959,660 $ 6.00 5.2 $ - 4,462,430 $ 6.00 5.3 $ -

7,504,269 $ 6.00 6.1 $ - 3,156,281 $ 6.00 6.0 $ -

Total unrecognized compensation cost relating to unvested stock options at December 31, 2024 , prior to the consideration of expected forfeitures, is approximately $ 0.5 million and is expected to be recognized over a weighted average period of 2.2 years.

Stock-based compensation for the Ting stock options has been included in operating expenses as follows (Dollar amounts in thousands of US dollars):

The Company recorded stock-based compensation for Ting options amounting to $ 0.2 million, $ 0.3 million and nil for the years ended December 31, 2024 , 2023 and 2022 respectively.

Stock-based compensation for the Ting stock has been included in operating expenses as follows (Dollar amounts in thousands of US dollars):

Year Ended December 31,

Network expenses

Network, other costs

$ 34 $ 45 $ -

Sales and marketing

10 unchanged sentences

Capitalized stock-based compensation

( 313 ) ( 337 ) -

Total Stock Based-Compensation expense

2 unchanged sentences

Qualifying assets include internal use software (IUS), assets under construction (AUC), equipment, or other long-lived assets that meet the capitalization criteria prescribed by ASC 350.

During the year ended December 31, 2023, the Company capitalize d $ 0.3 million of stock based compensation directly attributable to the development of certain IUS assets.

During the year ended December 31, 2024 and December 31, 2023, the Company capitalize d $ 0.3 million of stock-based compensation each, directly attributable to the development of certain IUS assets.

Foreign Exchange:

1 unchanged sentence

A foreign exchange loss amounting to $ 0.1 million has been recorded in general and administrative expenses during the year ended December 31, 2023 .

A foreign exchange gain amounting to $ 0.4 million has been recorded in general and administrative expenses during the year ended December 31, 2021 .

A foreign exchange loss amounting to $ 0.2 million has been recorded in general and administrative expenses during the year ended December 31, 2022 .

Other Income (Expenses):

On August 1, 2020, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”), by and between the Company and DISH Wireless L.L.C.(“DISH”).

Under the Purchase Agreement and in accordance with the terms and conditions set forth therein, the Company sold to DISH its mobile customer accounts that are marketed and sold under the Ting brand (other than certain customer accounts associated with one network operator) (“Transferred Assets”).

For a period of 10 years following the execution of the Purchase Agreement, DISH will pay a monthly fee to the Company generally equal to an amount of net revenue received by DISH in connection with the transferred customer accounts minus certain fees and expenses, as further set forth in the Purchase Agreement.

During the year ended December 31, 2023 , the Co mpany earned $ 17.0 million under the Purchase Agreement.

On August 1, 2020, the Company entered into an Asset Purchase Agreement (the “Purchase Agreement”), by and between the Company and DISH Wireless L.L.C.(“EchoStar” DISH's post-merger parent).

Under the Purchase Agreement and in accordance with the terms and conditions set forth therein, the Company sold to EchoStar its mobile customer accounts that are marketed and sold under the Ting brand (other than certain customer accounts associated with one network operator) (“Transferred Assets”).

For a period of 10 years following the execution of the Purchase Agreement, EchoStar will pay a monthly fee to the Company generally equal to an amount of net revenue received by EchoStar in connection with the transferred customer accounts minus certain fees and expenses, as further set forth in the Purchase Agreement.

The following table summarizes the Income earned on the sale of transferred assets:

For the twelve months ended

1 unchanged sentence

$ 13,978 $ 17,033 $ 18,507

Income earned on sale of Ting customer assets

$ 17,033 $ 18,507 $ 20,030

The Company recorded interest income amounting to $ 4.5 million, $ 0.1 million and nil for the years ended December 31, 2023 , 2022 and 2021 respectively.

This significant increase in 2023 was primarily due to the strategic investment of excess 2023 Term Notes proceeds into Money Market Deposit Accounts ("MMDAs") and Certificates of Deposit ("CDs"), which generated $ 4.3 million in interest income.

The Company recorded interest income amounting to $ 3.2 million, $ 4.5 million and $ 0.1 million for the years ended December 31, 2024 , 2023 and 2022 respectively.

This income primarily relates to the strategic investment of excess 2023 and 2024 Term Notes proceeds into Money Market Deposit Accounts ("MMDAs") and Certificates of Deposit ("CDs").

Interest expense, net has been included in "Other Income" as follows (Dollar amounts in thousands of US dollars):

3 unchanged sentences

Interest income

3,158 4,485 132

Interest expense, net

12 unchanged sentences

10,967,581 10,864,086 10,769,280

Basic earnings per common share

$ ( 8.85 ) $ ( 2.56 ) $ 0.32

Diluted earnings per common share

Basic and diluted earnings per common share

$ ( 10.02 ) $ ( 8.85 ) $ ( 2.56 )

For the year ended December 31, 2023 , and December 31, 2022 the Company recorded a net loss, thus all outstanding options were considered anti-dilutive and excluded from the computation of diluted income per common share.

For the year ended December 31, 2021, options to purchase 39,889 common shares were outstanding but were not included in the computation of diluted income per common share because the options' exercise price was greater than the average market price of the common shares for the year.

For the year ended December 31, 2024 , December 31, 2023 and December 31, 2022 the Company recorded a net loss, thus all outstanding options were considered anti-dilutive and excluded from the computation of diluted income per common share.

Commitments and Contingencies:

27 unchanged sentences

(c) On September 17, 2018 Ting entered into a non-exclusive access and use agreement with SiFi Networks Fullerton, LLC (“SiFi”).

The agreement memorializes a long-term ( 15 -year) relationship wherein Ting will be granted the non-exclusive right to act as an Internet service provider for a fiber-optic network to be constructed in the city of Fullerton, California.

The agreement established a fifteen -year term during which Ting has the non-exclusive right to act as an Internet service provider for a fiber-optic network to be constructed in the city of Fullerton, California.

Under the terms of the agreement, SiFi is fully responsible for constructing, operating and maintaining a wholesale fiber-optic network, as well as the financing of those activities.

2 unchanged sentences

These minimum fees are variable based on the percentage completion of the fiber optic network, and thus have not been considered an unconditional purchase obligation for the purposes of the table in Note 19 (a).

Ting is currently disputing certain charges from SiFi and has ceased accruing for these amounts, as it believes payment is unlikely.

The commitment amounts disclosed in the schedule reflect only the charges that Ting continues to accrue.

Given the ongoing dispute, these amounts may be subject to change.

(d) On November 4, 2019 Ting entered into an access and use agreement with Netly, LLC (“Netly”).

The agreement memorializes a long-term ( 12 -year) relationship wherein Ting will be granted the right to act as an Internet service provider for fiber-optic networks to be constructed in and around the cities of Solana Beach, California.

The agreement establishes twelve -year term wherein Ting will be granted the right to act as an Internet service provider for fiber-optic networks to be constructed in and around the cities of Solana Beach, California.

Under the terms of the agreement, Ting will have a 3 -year “Headstart” period over each completed segment of the network, whereby Ting shall be the exclusive provider of services to subscribers during the “Headstart” period.

3 unchanged sentences

To the extent that construction of the fiber optic network is complete, our minimum commitments have been included in the contractual lease obligations of the table in Note 19 (a).

With respect to future obligations based on the future construction of the fiber optic network, these minimum fees are variable and thus have not been considered an unconditional purchase obligation for the purposes of the table in Note 20 (a).

The Company has an ongoing billing dispute with Netly regarding the rates and methodology under which it can invoice our Ting Fiber division for our operations.

For the purposes of calculating the table in Note 19 (a), the Company reflected its future commitment under this agreement consistent with the amounts it has historically accrued in accordance with ASC 450 - 20 and, in accordance with the definition of probable loss described therein, and paid.

At this time the Company believes that the probability that this dispute will have a material adverse effect on the business, operating results or financial condition is remote.

(e) O n January 7, 2022, Ting Fiber, Inc., entered into a 25 -year lease agreement with Colorado Springs Utilities (“CSU”), a municipally owned utility.

18 unchanged sentences

Reportable operating segments:

We are organized and managed based on three operating segments which are differentiated primarily by their services, the markets they serve and the regulatory environments in which they operate.

We are organized and managed based on three reportable segments which are differentiated primarily by their services, the markets they serve and the regulatory environments in which they operate.

No operating segments have been aggregated to determine our reportable segments.

Certain revenues and expenses disclosed under the Corporate category are excluded from segment Adjusted EBITDA results as they are centrally managed and not monitored by or reported to our CEO by segment, including retail mobile services, eliminations of intercompany transactions, portions of Finance and Human Resources that are centrally managed, Legal and Corporate IT.

Our reportable operating segments and their principal activities consist of the following:

5 unchanged sentences

Domain Services revenues are attributed to the country in which the contract originates, primarily Canada and the United States.

Our segmented results include shared services allocations, including a profit margin, from Tucows Corporate for Finance, Human Resources and other technical services, to the operating units.

In addition, Wavelo charges Ting a subscriber based monthly charge services rendered.

Financial impacts from these allocations and cross segment charges are eliminated as part of the Tucows Corporate results.

Our segmented results include shared services allocations to the operating segments, including a profit margin, for Finance, Human Resources and other technical services.

In addition, Wavelo charges Ting a subscriber based monthly charge service rendered.

Financial impacts from these allocations and cross segment charges are eliminated as part of the consolidation.

Key measure of segment performance:

The CEO, as the chief operating decision maker, regularly reviews the operations and performance by segment.

The CEO reviews segment revenue, gross margin and Adjusted EBITDA (as defined below) as (i) key measures of performance for each segment and (ii) to make decisions about the allocation of resources.

Sales and marketing expenses, technical operations and development expenses and general and administrative expenses and not reviewed or managed by the CEO separate from Adjusted EBITDA, and are thus not included as separate measurements of segment profitability.

The CEO reviews Segment Adjusted EBITDA (as defined below) as (i) a key measure of performance for each segment and (ii) to make decisions about the allocation of resources.

Depreciation of property and equipment, amortization of intangible assets, impairment of indefinite life intangible assets, gain on currency forward contracts and other expense net are organized along functional lines and are not included in the measurement of segment profitability.

Total assets and total liabilities are centrally managed and are not reviewed at the segment level by the CEO.

Our key measures of segment performance and their definitions are:

Segment gross margin - Net revenues less Direct cost of revenues attributable to each segment.

Segment Adjusted EBITDA - segment gross margin as well as the recurring income earned on sale of transferred assets, less network expenses and certain operating expenses attributable to each segment, such as sales and marketing, technical operations and development, general and administration expenses but excludes gains and losses from unrealized foreign currency, stock-based compensation and transactions that are not indicative of on-going performance, including acquisition and transition costs.

Certain revenues and expenses disclosed under the Tucows Corporate category are excluded from segment Adjusted EBITDA results as they are centrally managed and not monitored by or reported to our CEO by segment, including mobile retail services, eliminations of intercompany transactions, portions of Finance and Human Resources that are centrally managed, Legal and Corporate IT.

The Company believes that both segment gross margin and Adjusted EBITDA measures are important indicators of the operational strength and performance of its segments, by identifying those items that are not directly a reflection of each segment’s performance or indicative of ongoing operational and profitability trends.

Segment gross margin and segment Adjusted EBITDA both exclude depreciation of property and equipment, amortization of intangibles assets, impairment of indefinite life intangible assets that are included in the measurement of income before provision for income taxes pursuant to generally accepted accounting principles ("GAAP").

Total assets and total liabilities are centrally managed and are not reviewed at the segment level by the CEO.

Our key measure of segment performance is Segment Adjusted EBITDA.

We calculate this as segment revenue together with recurring income earned on sale of transferred assets, less cost of revenue, network expenses and certain operating expenses attributable to each segment, such as sales and marketing, technical operations and development, general and administration expenses.

Segment Adjusted EBITDA excludes unrealized gains (losses) on foreign exchange, stock-based compensation and transactions that are not indicative of on-going performance, including acquisition and transition costs.

Certain revenues and expenses are excluded from segment Adjusted EBITDA results as they are centrally managed and not monitored by or reported to our CEO by segment, including mobile retail services, eliminations of intercompany transactions, portions of Finance and Human Resources that are centrally managed, Legal and Corporate IT.

The Company believes that Adjusted EBITDA is an important indicator of the operational strength and performance of its segments, by identifying those items that are not directly a reflection of each segment’s performance or indicative of ongoing operational and profitability trends.

The CODM uses Adjusted EBITDA to evaluate the overall recurring profitability of each operating segment after accounting for overhead costs.

Adjusted EBITDA is evaluated by the CODM by comparing current period to historical and forecasted results and is used to inform strategic decisions over segment profitability, operational efficiency, pricing strategies, cost optimization, customer churn, competitor benchmarking and cash flow.

Information by reportable segments (with the exception of disaggregated revenue, which is discussed in “Note 10– Revenue”), which is regularly reported to the chief operating decision maker, and the reconciliations thereof to our income before taxes, are set out in the following tables (Dollar amounts in thousands of US dollars):

Tucows Domains

Tucows Corporate and eliminations

Consolidated Totals

Year Ended December 31, 2024

External revenues

$ 50,937 $ 35,979 $ 242,097 $ 10,324 $ 339,337

Intersegment revenues

Tucows Domain

Total Reportable Segments

Revenue from external customers

$ 59,732 $ 39,003 $ 254,639 $ 353,374

Intersegment revenue (1)

Total net revenues

59,732 39,861 254,639 354,232

Direct cost of revenues

Cost of revenue

11,162 1,273 177,083 189,518

Segment gross margin

Network, other cost (2)

16,918 9,710 6,974 33,602

Network, other costs

Network, depreciation of property and equipment

Network, amortization of intangible assets

Network, impairment of property and equipment

Sales and marketing

35,502 7,585 13,776 56,863

Technical operations and development

3,230 6,826 7,106 17,162

General and administrative

Depreciation of property and equipment

Amortization of intangible assets

Loss (gain) on currency forward contracts

Total expenses

Loss from operations

Other income (expenses):

Interest expense

Interest income

Loss on debt extinguishment

Income earned on sale of transferred assets, net

Total other income (expenses)

Loss before provision for income taxes

Adjusted EBITDA

16,550 3,395 5,686 25,631

Tucows Domains

Tucows Corporate and eliminations

Consolidated Totals

Other segment items (3)

( 1,113 ) ( 2,734 ) ( 376 ) ( 4,223 )

Segment Adjusted EBITDA

$ ( 22,517 ) $ 13,806 $ 44,390 $ 35,679

Year Ended December 31, 2023

External revenues

Tucows Domain

Total Reportable Segments

Revenue from external customers

$ 50,937 $ 35,979 $ 242,097 $ 329,013

Intersegment revenues

Intersegment revenue (1)

- 2,691 - 2,691

1 unchanged sentence

50,937 38,670 242,097 331,704

Direct cost of revenues

Cost of revenue

12,727 2,626 169,414 184,767

Segment gross margin

Network, other cost (2)

17,872 9,649 6,123 33,644

Network, other costs

Network, depreciation of property and equipment

Network, amortization of intangible assets

Network, impairment of property and equipment

Sales and marketing

44,823 7,012 13,586 65,421

Technical operations and development

3,792 8,124 6,371 18,287

General and administrative

Depreciation of property and equipment

Loss (gain) on disposition of property and equipment

Amortization of intangible assets

Total expenses

Loss from operations

Other income (expenses):

Interest expense

Interest income

Gain on sale of Ting customer assets, net

Other expense, net

Total other income (expenses)

Loss before provision for income taxes

Adjusted EBITDA

16,567 3,080 4,576 24,223

Tucows Domains

Tucows Corporate and eliminations

Consolidated Totals

Other segment items (3)

( 693 ) ( 2,394 ) ( 596 ) ( 3,683 )

Segment Adjusted EBITDA

$ ( 44,151 ) $ 10,573 $ 42,623 $ 9,045

Year Ended December 31, 2022

External revenues

Tucows Domain

Total Reportable Segments

Revenue from external customers

$ 42,425 $ 23,632 $ 243,158 $ 309,215

Intersegment revenues

Intersegment revenue (1)

Total net revenues

42,425 24,344 243,158 309,927

Direct cost of revenues

Cost of revenue

17,004 2,926 166,890 186,820

Segment gross margin

Network, other cost (2)

5,107 4,245 5,876 15,228

Network, other costs

Network, depreciation of property and equipment

Network, amortization of intangible assets

Network, impairment of property and equipment

Sales and marketing

30,543 5,758 14,580 50,881

Technical operations and development

1,187 4,132 7,079 12,398

General and administrative

Depreciation of property and equipment

Loss (gain) on disposition of property and equipment

Amortization of intangible assets

Impairment of definite life intangible assets

Gain on currency forward contracts

Total expenses

Loss from operations

Other income (expenses):

Interest expense, net

Gain on sale of Ting customer assets, net

Other expense, net

Total other income (expenses)

Income before provision for income taxes

Adjusted EBITDA

10,610 3,922 5,304 19,836

Reconciliation of Income before Provision for Income Taxes to Adjusted EBITDA

Twelve months ended December 31,

Other segment items (3)

( 469 ) ( 514 ) ( 1,405 ) ( 2,388 )

Segment Adjusted EBITDA

$ ( 21,557 ) $ 3,875 $ 44,834 $ 27,152

( 1 ) Intercompany revenues earned for provision of services on the ISOS and SM platforms between Wavelo and Ting are included in Wavelo's segment revenues for purposes of segment analysis, but are ultimately eliminated upon consolidation.

( 2 ) Network Costs in segment reports provided to the CODM include certain construction expenses for Ting, which are reported as Direct Costs of Revenue in the Consolidated Statements of Operations and Comprehensive Loss.

( 3 ) Other segment items for each reportable segment includes other income, as well as adjustments to add back (deduct):

gains and losses from unrealized foreign currency, stock-based compensation expense and acquisition and transition costs, which are included in other line items but are excluded from our definition of Segment Adjusted EBITDA.

The following table reconciles Segment Adjusted EBITDA for the period to Net loss before tax for the years ended December 31, 2024, 2023 and 2022.

Year ended December 31,

Reconciliation of Net loss to Segment Adjusted EBITDA

(In Thousands of US Dollars)

Net Income (Loss) for the period

Segment Adjusted EBITDA

$ 35,679 $ 9,045 $ 27,152

Provision for income taxes

Reconciling items:

Corporate and other (1)

( 762 ) 6,406 10,438

1 unchanged sentence

( 40,323 ) ( 36,431 ) ( 28,187 )

Impairment and loss on disposition of property and equipment

Impairment and loss on disposition of property & equipment

( 19,167 ) ( 4,822 ) ( 553 )

4 unchanged sentences

Loss on debt extinguishment

- ( 14,680 ) -

Accretion of contingent liability

1 unchanged sentence

( 7,021 ) ( 8,134 ) ( 7,599 )

Unrealized loss (gain) on change in fair value of foreign currency forward contracts

Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities

2 unchanged sentences

( 13,875 ) ( 1,916 ) ( 2,660 )

Adjusted EBITDA

Net loss before tax

$ ( 101,874 ) $ ( 103,070 ) $ ( 27,788 )

1 Acquisition and other costs represents transaction-related expenses, transitional expenses, such as redundant post-acquisition expenses, primarily related to our acquisition of Cedar in January 2020 and Simply Bits in November 2021 and the disposition of certain Ting Mobile assets in August 2020.

( 1 ) Items that are centrally managed and not monitored by or reported to our CEO by segment, including retail mobile services, eliminations of intercompany transactions, portions of Finance and Human Resources that are centrally managed, Legal and Corporate IT.

( 2 ) Acquisition and other costs represent transaction-related expenses and transitional expenses.

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

Revenue from sources outside of Canada and The United States of America comprises less than 10% of our total operating revenue.

(b) The following is a summary of the Company’s property and equipment by geographic region (Dollar amounts in thousands of US dollars):

1 unchanged sentence

December 31, 2023

$ 943 $ 1,240

United States

8 unchanged sentences

$ 12,483 $ 17,205

(d) Valuation and qualifying accounts (Dollar amounts in thousands of US dollars):

Allowance for doubtful accounts

Under ASC 326, the Company assesses the adequacy of its allowance for expected credit losses based on historical loss experience, current economic conditions and reasonable forecasts.

Our evaluation considers the short-term nature of our receivables and the high credit quality of our customer base, which mitigates significant credit risk exposure.

(d) The following table summarizes our expected credit losses (Dollar amounts in thousands of US dollars):

Expected credit losses

Balance at beginning of period

6 unchanged sentences

$ 693 $ - $ ( 182 ) $ 511

Restructuring Costs:

February 2024 Workforce Reduction

On February 7, 2024, Ting committed to the February 2024 workforce reduction ( "February 2024 Workforce Reduction") which aimed to realign the Company's operational structure within the Ting operating segment and reduce Ting's workforce by 13 %, or 7 % of the Company’s total workforce, to better align with strategic objectives (the “February 2024 workforce reduction”).

The February 2024 Workforce Reduction was designed to streamline operations and reduce operating expenses within the Ting operating segment.

Substantially all of the employees impacted by the workforce reduction were notified on February 7, 2024 and have since exited the Company.

During the year ended December 31, 2024, the Company incu rred $ 3.2 million in co sts related to the February 2024 Workforce Reduction, which were accounted for under ASC 420 - Exit or Disposal Cost Obligations.

These costs associated with the February 2024 workforce reduction predominantly consisted of termination benefits for the terminated employees associated with the restructuring, and to a lesser extent, continuation of benefits and outplacement costs.

2024 Capital Efficiency Plan

On October 30, 2024, the Company expanded its cost-reduction efforts with the implementation of a 2024 Capital Efficiency Plan (the "2024 Capital Efficiency Plan").

The Plan was designed to further align operations with strategic priorities, improve operational efficiency, and reduce operating expenses within Ting.

In connection with the Capital Efficiency Plan, the Company incurred restructuring charges of $ 7.7 million durin g the year ended December 31, 2024.

These charges primarily consisted of termination benefits for the terminated employees associated with the restructuring, continuation of benefits, outplacement costs and professional services.

The components of the restructuring charges were as follows (Dollar amounts in thousands of U.S.

Cost Description

For the year ended December 31, 2024

Continuation of benefits

Outplacement costs

Professional service fees

Total restructuring charges

The liability for the February 2024 workforce reduction and 2024 Capital Efficiency Plan were included in Accrued liabilities in the consolidated balance sheet, and the following tables summarize the related activity for the February 2024 workforce reduction and 2024 Capital Efficiency Plan for the year ended December 31, 2024 (Dollar amounts in thousands of U.S.

Cost Description

As of December 31, 2023

Charges for the year ended December 31, 2024

Cash payments made for the year ended December 31, 2024

Balances as of December 31, 2024

$ - $ 6,566 $ ( 5,974 ) $ 591

Continuation of benefits

- 2,601 ( 2,602 ) - 1

Outplacement costs

- 641 ( 523 ) 118

Professional service fees

- 1,146 ( 726 ) 420

$ - $ 10,954 $ ( 9,826 ) $ 1,128

Subsequent Events:

8 unchanged sentences

(“Ting Inc”), Wavelo, Inc.

(“Wavelo”) and Ting Fiber, LLC (“Ting Fiber”).

(“Wavelo”) and Ting Fiber, LLC (“Ting Fiber”), Ting Internet, LLC ("Ting Internet"), Simply Bits, LLC ("Simply Bits"), Zippytech, LLC ("Zippytech") and Ting-Memphis Co, ("Ting Memphis").

The Parent Company holds a direct 100 % ownership interest in Tucows (Delaware) Inc.

11 unchanged sentences

$ 7,634 $ 7,051

Accounts receivable

Prepaid expenses and deposits

Income taxes recoverable

Derivative instrument

Investment in subsidiaries

81,636 178,786

Intangible assets

89,864 187,067

Accounts payable

Accrued liabilities

Customer deposits

Equity in net deficit of subsidiaries

Due to related parties

10 unchanged sentences

( 150,158 ) ( 40,298 )

Accumulated other comprehensive income

Accumulated other comprehensive income (loss)

( 964 ) 1,728

( 95,300 ) 9,875

Total Liabilities and Equity

18 unchanged sentences

Other comprehensive income (loss) - Subsidiaries

( 2,692 ) 1,792 ( 967 )

Comprehensive income (loss)

10 unchanged sentences

Excess tax benefits on stock-based compensation expense

- ( 193 ) ( 1,554 )

Stock-based compensation

5 unchanged sentences

Loss (gain) on change in the fair value of forward contracts

Equity in undistributed earnings of subsidiaries 97,150 25,348 ( 8,486 )

Undistributed earnings of equity method investments

99,393 101,352 25,348

Changes in non-cash balances related to operations

8 unchanged sentences

Accrued liabilities

1,151 195 195

Customer deposits

5 unchanged sentences

Net proceeds received on exercise of stock options

- 1,096 4,431

Cash from financing activities

3 unchanged sentences

- - ( 2,012 )

Acquisition of intangible assets

Cash from investing activities

10 unchanged sentences

(the “Parent Company”) is a holding company that conducts substantially all of its business operations through its subsidiaries.

The Parent Company holds a direct 100 % ownership interest in Tucows (Delware) Inc., which holds the Parent Company’s interest in Tucows.com Co (“Tucows.com Co”), eNom LLC ("eNom"), EPAG Domainservices GmbH (“EPAG”), Ascio Technologies, Corp (“Ascio”), Ting Inc.

The Parent Company holds a direct 100 % ownership interest in Tucows (Delaware) Inc., which holds the Parent Company’s interest in Tucows.com Co (“Tucows.com Co”), eNom LLC ("eNom"), EPAG Domainservices GmbH (“EPAG”), Ascio Technologies, Corp (“Ascio”), Ting Inc.

(“Ting Inc”), Wavelo, Inc.

5 unchanged sentences

Through its operating subsidiaries, the Parent Company offers a broad range of services including fixed Internet access, billing and subscription management platform services for communication service providers and distribution of global internet services through the provision of domain name registrations, digital certificates and email services.

As of December 31, 2023 the restricted net assets for Ting Fiber LLC totaled $ 89.3 million.

The restrictions on these net assets primarily affect our ability to transfer funds from our subsidiaries without violating contractual agreements.

The Company continuously evaluates the impact of these restrictions on our liquidity and capital resource planning.

As of December 31, 2024, Ting Fiber LLC, had restricted net assets of $( 30.6 ) million.

These restrictions primarily limit our ability to transfer funds from our subsidiaries without violating contractual agreements.

The Company continuously evaluates the impact of these restrictions on liquidity and capital resource planning.

The Company operates within a consolidated tax group, comprising the Parent Company and its wholly-owned subsidiaries.

1 unchanged sentence

No dividends have been received from any of our subsidiaries in the past three years.

Change in basis of presentation for subsidiary investment accounts and adjustment of prior period reported amounts

Certain amounts in the 2023 Parent Company Condensed Financial Statements have been adjusted to change the basis of presentation of the subsidiary investment accounts.

These changes had no impact on total net income and total shareholders' equity previously reported in the comparative figures presented in the Parent Company Condensed Financial Statements.

COMMITMENTS AND CONTINGENCIES

5 unchanged sentences

As of December 31, 2024, and 2023, the number of outstanding shares of common stock was 11,014,655 and 10,903,405 , respectively.

The Parent Company issued 86,295 , 40,459 , and nil common stock during the twelve months ended December 31, 2023 , December 31, 2022 and December 31, 2021 , respectively related to stock based compensation.

The Parent Company retired nil, 3,053 and 45,824 common stock during the twelve months ended December 31, 2023 , December 31, 2022 and December 31, 2021 , respectively related to stock options exercised.

The Parent Company issued 111,250 , 86,295 , and 40,459 common stock during the twelve months ended December 31, 2024 , December 31, 2023 and December 31, 2022 , respectively related to stock-based compensation.

The Parent Company retired nil , nil and 3,053 common stock during the twelve months ended December 31, 2024 , December 31, 2023 and December 31, 2022 , respectively related to stock options exercised.

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

April 1, 2024

March 13, 2025

/s/ E lliot Noss

3 unchanged sentences

President, Chief Executive Officer

April 1, 2024

March 13, 2025

(Principal Executive Officer) and Director

/s/ D avinder Singh

/s/ Ivan Ivanov

Chief Financial Officer

April 1, 2024

Davinder Singh

March 13, 2025

(Principal Financial and Accounting Officer)

/s/ A llen Karp

April 1, 2024

March 13, 2025

/s/ marlene carl

April 1, 2024

March 13, 2025

/s/ R obin Chase

April 1, 2024

March 13, 2025

/s/ E rez Gissin

April 1, 2024

March 13, 2025

/s/ J effrey Schwartz

April 1, 2024

March 13, 2025

Jeffrey Schwartz

/s/ gigi sohn

April 1, 2024

March 13, 2025

/s/ lee matheson

April 1, 2024

March 13, 2025

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-K

Item 9A. Controls and Procedures