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Tucows Inc.
Consolidated Balance Sheets
(Dollar amounts in U.S. dollars)
(unaudited)
March 31, December 31,
2008 2007
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Assets
Current assets:
Cash and cash equivalents $ 7,506,468 $ 8,093,476
Accounts receivable 3,488,300 3,422,180
Prepaid expenses and deposits 2,992,440 3,132,129
Prepaid domain name registry and other
Internet services fees, current portion 27,498,326 25,473,465
Cash held in escrow 1,078,031 1,070,632
Deferred tax asset, current portion 2,000,000 2,000,000
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Total current assets 44,563,565 43,191,882
Prepaid domain name registry and other
Internet services fees, long-term portion 11,271,602 10,765,862
Property and equipment 4,779,837 4,963,311
Deferred financing charges 114,700 128,200
Deferred tax asset, long-term portion 1,000,000 1,000,000
Intangible assets 21,698,540 22,150,738
Goodwill 17,490,807 17,490,807
Investment 353,737 353,737
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Total assets $ 101,272,788 $ 100,044,537
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,747,421 $ 2,689,346
Accrued liabilities 3,012,682 3,289,087
Customer deposits 3,167,194 3,267,784
Promissory note payable, current portion 6,000,000 6,000,000
Loan payable, current portion 2,914,242 1,914,242
Deferred revenue, current portion 37,757,064 35,465,584
Accreditation fees payable, current portion 533,187 483,090
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Total current liabilities 56,131,790 53,109,133
Deferred revenue, long-term portion 15,835,098 15,147,644
Accreditation fees payable, long-term portion 188,064 181,345
Loan payable, long-term portion 5,380,806 6,859,366
Deferred tax liability 5,396,000 5,396,000
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; 73,888,542 shares
issued and outstanding at March 31, 2008
and 73,888,542 shares issued and
outstanding at December 31, 2007 15,350,915 15,350,915
Additional paid-in capital 48,609,513 48,537,313
Deficit (45,619,398) (44,537,179)
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Total stockholders' equity 18,341,030 19,351,049
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Total liabilities and stockholders'
equity $ 101,272,788 $ 100,044,537
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Tucows Inc.
Consolidated Statements of Operations
(Dollar amounts in U.S. dollars)
(unaudited)
Three months ended March 31,
2008 2007
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Net revenues $ 18,711,207 $ 17,771,217
Cost of revenues:
Cost of revenues(*) 13,149,932 11,232,789
Depreciation of property and equipment 825,837 809,666
Amortization of intangible assets 73,457 63,532
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Total cost of revenues 14,049,226 12,105,987
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Gross profit 4,661,981 5,665,230
Expenses:
Sales and marketing(*) 1,696,132 1,344,444
Technical operations and development(*) 1,565,854 1,812,279
General and administrative(*) 1,794,865 1,498,769
Depreciation of property and equipment 61,070 61,524
Amortization of intangible assets 385,161 233,301
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Total expenses 5,503,082 4,950,317
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Income (loss) from operations (841,101) 714,913
Other income (expenses):
Interest income (expense), net (209,984) (41,649)
Other income, net - 88,431
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Total other income (expense) (209,984) 46,782
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Income (loss) before provision for
income taxes (1,051,085) 761,695
Provision for income taxes 31,134 12,000
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Net income (loss) for the period $ (1,082,219) $ 749,695
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Basic earnings (loss) per common share $ (0.01) $ 0.01
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Shares used in computing basic earnings
(loss) per common share 73,888,542 75,459,822
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Diluted earnings (loss) per common share $ (0.01) $ 0.01
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Shares used in computing diluted earnings
(loss) per common share 73,888,542 77,959,165
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(*) Stock-based compensation has been included in expenses as follows:
Cost of revenues $ 4,300 $ 2,500
Sales and marketing $ 18,300 $ 14,200
Technical operations and development $ 20,700 $ 20,100
General and administrative $ 28,900 $ 25,900
Tucows Inc.
Reconciliation of EBITDA and Adjusted Net Income
(Dollar amounts in U.S. dollars)
(unaudited)
Three months ended March 31,
2008 2007
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Net income (loss) for the period $ (1,082,219) $ 749,695
Depreciation of property and equipment 886,907 871,190
Amortization of intangible assets 458,618 296,833
Interest income (expense), net 209,984 41,649
Provision for income taxes 31,134 12,000
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EBITDA 504,424 1,971,367
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Adjustments to EBITDA (1)
Change in prepaid domain name registry
and other Internet services fees (2,530,601) (1,980,653)
Change in deferred revenue 2,978,934 2,896,925
Dividend income - (88,431)
Reversal of contingencies - (357,500)
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Subtotal Adjustments to EBITDA 448,333 470,341
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Adjusted Net Income $ 952,757 $ 2,441,708
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(1) Adjustments to EBITDA
We define Adjusted EBITDA as net income adjusted for depreciation,
amortization, interest, taxes and further adjusted for certain cash
and non-cash charges.
The net amount of cash we collected for domain registrations and
other Internet services paid for the full term at the time of
activation and deferred amounted to $448,333 for the three months
ended March 31, 2008 compared to $916,272 for the three months ended
March 31, 2007.
Tucows Inc.
Consolidated Statements of Cash Flows
(Dollar amounts in U.S. dollars)
(unaudited)
Three months ended March 31,
2008 2007
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Cash provided by (used in):
Operating activities:
Net income (loss) for the period $ (1,082,219) $ 749,695
Items not involving cash:
Depreciation of property and equipment 886,907 871,190
Amortization of deferred financing charges 13,500 -
Amortization of intangible assets 458,618 296,833
Unrealized change in the fair value of
forward exchange contracts 255,433 (216,789)
Stock-based compensation 72,200 62,700
Change in non-cash operating working
capital:
Accounts receivable (66,120) (852,623)
Prepaid expenses and deposits 139,689 (727,236)
Prepaid fees for domain name registry
and other Internet services fees (2,530,601) (1,980,653)
Accounts payable (433,827) (408,137)
Accrued liabilities (531,838) 649,139
Customer deposits (100,590) (175,124)
Deferred revenue 2,978,934 2,896,925
Accreditation fees payable 56,816 (708)
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Cash provided by operating activities 116,902 1,165,212
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Financing activities:
Proceeds received on exercise of stock
options - 101,071
Repurchase of shares - (1,327,500)
Repayment of loan payable (478,560) -
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Cash used in financing activities (478,560) (1,226,429)
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Investing activities:
Cost of domain names acquired (6,420) (28,728)
Additions to property and equipment (211,531) (1,202,630)
Decrease in restricted cash - being margin
security against forward exchange contracts - 251,638
Acquisition of Hosted Messaging Assets from
Critical Path Inc., net of cash acquired - (90,050)
(Decrease) increase in cash held in escrow (7,399) 694,579
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Cash used in investing activities (225,350) (375,191)
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Decrease in cash and cash equivalents (587,008) (436,408)
Cash and cash equivalents, beginning
of period 8,093,476 6,256,392
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Cash and cash equivalents, end of period $ 7,506,468 $ 5,819,984
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Supplemental cash flow information:
Interest paid $ 259,337 $ 105,000
Supplementary disclosure of non-cash
investing activity:
Capital assets acquired during the
period not yet paid for $ 764,972 $ 1,146,066
Dividend receivable $ - $ 88,431
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