TUCOWS FINANCIAL STATEMENTS, Q3 2004

Tucows Inc. Consolidated Balance Sheets (Dollar amounts in U.S. dollars)
		September 30, 2004 (unaudited)		December 31, 2003
Assets
Current assets:
Cash and cash equivalents	$	13,132,599	$	12,912,811
Restricted cash		212,500		132,500
Accounts receivable		1,021,235		486,289
Prepaid expenses and deposits		2,076,208		2,061,948
Prepaid domain name registry fees, current portion		14,965,313		13,204,566
Total current assets		31,407,855		28,798,114
Prepaid domain name registry fees, long-term portion		6,302,125		5,136,194
Property and equipment		780,276		1,048,400
Intangible assets		1,301,280		-
Goodwill		964,467		-
Investments		353,737		353,737
Cash held in escrow		1,000,000		-
Total assets	$	42,109,740	$	35,336,445
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	1,344,361	$	1,632,294
Accrued liabilities		2,731,033		2,088,235
Customer deposits		2,005,901		2,160,601
Deferred revenue, current portion		23,085,010		20,715,191
Total current liabilities		29,166,305		26,596,321
Deferred revenue, long-term portion		9,420,767		7,874,001
Stockholders' equity:
Preferred stock - no par value, 1,250,000 shares authorized; none issued and outstanding		-		-
Common stock - no par value, 250,000,000 shares authorized; 66,817,250 shares issued and outstanding as of September 30, 2004 and 64,626,429 shares issued and outstanding as of December 31, 2003		9,541,277		8,540,687
Additional Paid-in Capital		49,992,129		49,992,129
Deferred stock-based compensation		-		(20,593)
Deficit		(56,010,738)		(57,646,100)
Total stockholders' equity		3,522,668		866,123
Total liabilities and stockholders' equity	$	42,109,740	$	35,336,445

Tucows Inc. Consolidated Statements of Operations (Dollar amounts in U.S. dollars) (unaudited)
	Three months ended September 30,				Nine months ended September 30,
	2004		2003		2004		2003
Net revenues	$	12,381,326	$	9,315,760	$	33,195,200	$	27,479,973
Cost of revenues		7,654,475		5,807,808		20,658,290		17,067,173
Gross profit		4,726,851		3,507,952		12,536,910		10,412,800
Operating expenses:
Sales and marketing (*)		1,370,932		922,028		3,716,192		2,791,251
Technical operations and development		1,107,590		1,016,404		3,259,882		2,867,098
General and administrative(*)		1,388,421		1,266,708		3,295,996		3,044,907
Depreciation of property and equipment		187,158		289,424		817,475		1,166,340
Amortization of intangible assets		59,040		-		98,720		-
Total operating expenses		4,113,141		3,494,564		11,188,265		9,869,596
income from operations		613,710		13,388		1,348,645		543,204
Other Income
Interest income, net		56,549		37,888		136,285		94,384
Gain on disposal of Liberty Registry Management Services Inc.		-		128,110		-		1,000,000
Total other income		56,549		165,998		136,285		1,094,384
Income before provision for income taxes		670,259		179,386		1,484,930		1,637,588
Provision for (recovery of) income taxes		(150,432)		-		(150,432)		-
Net income for the period	$	820,691	$	179,386	$	1,635,362	$	1,637,588
Basic and diluted earnings per common share	$	0.01	$	0.00	$	0.02	$	0.03
Shares used in computing basic earnings per common share		66,800,369		64,626,429		65,831,258		64,626,429
Shares used in computing diluted earnings per common share		68,477,632		64,726,663		67,728,525		64,677,776
(*) Stock-based compensation has been included in operating expenses as follows:
Sales and marketing	$	-	$	27,707	$	16,834	$	82,218
General and administrative	$	-	$	13,303	$	3,759	$	39,474

Tucows Inc. Consolidated Statements of Cash Flows (Dollar amounts in U.S. dollars) (unaudited)
	Three months ended September 30,				Nine months ended September 30,
	2004		2003		2004		2003
Cash provided by:
Operating activities:
Net income for the period	$	820,691	$	179,386	$	1,635,362	$	1,637,588
Items not involving cash:
Depreciation of property and equipment		187,158		289,424		817,475		1,166,340
Amortization of intangible assets		59,040		-		98,720		-
(Gain) loss on change in the fair value of forward contracts		(97,512)		307,758		(188,775)		(576,470)
Stock-based compensation		-		41,010		20,593		121,692
Gain on disposal of Liberty Registry Management Services Inc.		-		(128,110)		-		(1,000,000)
Change in non-cash operating working capital:
Accounts receivable		(382,631)		(107,592)		(456,915)		(73,478)
Prepaid expenses and deposits		68,578		414,888		179,193		411,311
Prepaid domain name registry fees		369,522		(803,976)		(2,926,678)		(2,472,612)
Accounts payable		61,324		(90,237)		(287,933)		(300,808)
Accrued liabilities		668,181		(317,806)		445,699		(21,168)
Customer deposits		(167,189)		(65,056)		(163,589)		76,653
Deferred revenue		(460,375)		856,702		3,916,585		3,116,892
Cash provided by operating activities		1,126,787		576,391		3,089,737		2,085,940
Financing activities:
Proceeds received on exercise of stock options		81,581		-		726,050		-
Cash provided by financing activities		81,581		-		726,050		-
Investing activities:
Additions to property and equipment		(143,239)		(160,252)		(496,489)		(780,874)
(Increase) decrease in restricted cash - being margin security against forward exchange contracts		148,750		224,888		(80,000)		674,888
Acquisition of Boardtown Corporation, net of cash acquired		-		-		(2,019,510)		-
Increase in cash held in escrow		-		-		(1,000,000)		-
Proceeds on disposal of Liberty Registry Management Services Inc., net of cash disposed		-		128,110		-		1,000,000
Cash provided by (used in) investing activities		5,511		192,746		(3,595,999)		894,014
Increase in cash and cash equivalents		1,213,879		769,137		219,788		2,979,954
Cash and cash equivalents, beginning of period		11,918,720		11,055,646		12,912,811		8,844,829
Cash and cash equivalents, end of period	$	13,132,599	$	11,824,783	$	13,132,599	$	11,824,783
Supplemental cash flow information:
Interest paid	$	113	$	39	$	166	$	355
Supplemental disclosure of non-cash investing and financing activities:
Common stock issued on the acquisition of Boardtown Corporation	$	-	$	-	$	274,540	$	-