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Tucows Inc.
Consolidated Balance Sheets
(Dollar amounts in U.S. dollars)
December 31, December 31,
2008 2007
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(unaudited)
Assets
Current assets:
Cash and cash equivalents $ 5,427,467 $ 8,093,476
Accounts receivable 3,200,362 3,422,180
Prepaid expenses and deposits 2,274,043 3,132,129
Prepaid domain name registry and other
Internet services fees, current portion 29,212,610 25,473,465
Cash held in escrow - 1,070,632
Deferred tax asset, current portion 500,000 500,000
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Total current assets 40,614,482 41,691,882
Prepaid domain name registry and other
Internet services fees, long-term portion 11,855,971 10,765,862
Property and equipment 3,072,958 4,963,311
Deferred financing charges 78,500 128,200
Deferred tax asset, long-term portion 2,500,000 2,500,000
Intangible assets 20,206,996 22,150,738
Goodwill 17,990,807 17,490,807
Investment 200,000 353,737
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Total assets $ 96,519,714 $ 100,044,537
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 1,633,830 $ 2,689,346
Accrued liabilities 2,000,146 3,289,087
Customer deposits 3,319,241 3,267,784
Derivative instrument liability 1,974,919 -
Promissory note payable - 6,000,000
Loan payable, current portion 2,624,242 1,914,242
Deferred revenue, current portion 37,985,821 35,465,584
Accreditation fees payable, current
portion 510,548 483,090
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Total current liabilities 50,048,747 53,109,133
Deferred revenue, long-term portion 16,201,804 15,147,644
Accreditation fees payable, long-term portion 187,374 181,345
Loan payable, long-term portion 3,235,125 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;
73,073,782 shares issued and
outstanding at December 31, 2008
and 73,888,542 shares issued and
outstanding at December 31, 2007 15,198,358 15,350,915
Additional paid-in capital 48,714,676 48,537,313
Deficit (42,462,370) (44,537,179)
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Total stockholders' equity 21,450,664 19,351,049
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Total liabilities and stockholders'
equity $ 96,519,714 $ 100,044,537
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Tucows Inc.
Consolidated Statements of Operations
(Dollar amounts in U.S. dollars)
Three months ended December 31, Year ended December 31,
2008 2007 2008 2007
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(unaudited) (unaudited)
Net revenues $ 19,159,149 $ 18,240,184 $ 78,467,880 $ 74,638,196
Cost of revenues:
Cost of
revenues(*) 13,819,760 13,040,271 54,614,036 48,742,915
Depreciation of
property and
equipment 472,311 947,274 2,909,853 3,738,324
Amortization of
intangible
assets 29,199 92,700 163,796 302,832
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Total cost of
revenues 14,321,270 14,080,245 57,687,685 52,784,071
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Gross profit 4,837,879 4,159,939 20,780,195 21,854,125
Expenses:
Sales and
marketing(*) 1,536,504 1,808,801 6,668,884 6,345,999
Technical
operations and
development(*) 1,505,596 1,422,012 6,172,428 6,710,841
General and
administrative(*) 2,003,748 501,423 6,809,601 5,232,385
Depreciation of
property and
equipment 86,428 64,994 263,745 263,101
Loss on disposition
of property and
equipment - - 498,529 -
Amortization of
intangible assets 360,540 396,041 1,483,195 1,174,864
Loss (gain) in
fair value of
forward exchange
contracts 1,419,555 666,862 1,974,919 (497,253)
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Total expenses 6,912,371 4,860,133 23,871,301 19,229,937
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Income (loss) from
operations (2,074,492) (700,194) (3,091,106) 2,624,188
Other income
(expenses):
Interest income
(expense), net (116,647) (222,531) (583,911) (516,853)
Other income, net 3,239,950 - 5,870,960 619,014
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Total other
income 3,123,303 (222,531) 5,287,049 102,161
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Income (loss)
before provision
for income taxes 1,048,811 (922,725) 2,195,943 2,726,349
Provision for
income taxes 30,000 12,000 121,134 50,816
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Net income (loss)
for the period $ 1,018,811 $ (934,725) $ 2,074,809 $ 2,675,533
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Basic earnings
(loss) per
common share $ 0.01 $ (0.01) $ 0.03 $ 0.04
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Shares used in
computing basic
earnings (loss)
per common share 73,559,276 73,805,296 73,817,347 74,361,470
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Diluted earnings
(loss) per
common share $ 0.01 $ (0.01) $ 0.03 $ 0.03
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Shares used in
computing diluted
earnings (loss)
per common share 72,274,490 75,990,226 74,830,217 77,046,519
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(*) Stock-based compensation has been included in expenses as follows:
Cost of revenues $ 5,100 $ 4,000 $ 19,700 $ 15,000
Sales and
marketing $ 15,700 $ 19,100 $ 64,200 $ 80,200
Technical
operations and
development $ 10,900 $ 16,500 $ 52,700 $ 78,800
General and
administrative $ 22,600 $ 29,500 $ 151,200 $ 147,600
Consolidated Statements of Cash Flows
(Dollar amounts in U.S. dollars)
Three months ended December 31, Year ended December 31,
2008 2007 2008 2007
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(unaudited) (unaudited)
Cash provided by
(used in):
Operating activities:
Net income (loss)
for the period $ 1,018,811 $ (934,725) $ 2,074,809 $ 2,675,533
Items not
involving cash:
Depreciation of
property and
equipment 558,739 1,012,268 3,173,598 4,001,425
Loss on
disposition of
property and
equipment - - 498,529 -
Amortization
of deferred
financing
charges 11,300 14,400 49,700 26,616
Amortization
of intangible
assets 389,739 488,741 1,646,991 1,477,696
Gain on sale
of customer
relationships (49,546) - (2,091,995) -
Disposal of
domain names 5,030 - 5,030 -
Unrealized change
in the fair
value of forward
exchange
contracts 1,419,555 666,861 1,974,919 (497,253)
Stock-based
compensation 54,300 69,100 287,800 321,600
Gain on
disposal of
Afilias Inc. (3,090,404) - (3,090,404) -
Change in non-cash
operating working
capital:
Accounts
receivable 456,205 549,770 221,818 (425,959)
Prepaid expenses
and deposits 321,694 (323,705) 858,086 (485,374)
Prepaid fees for
domain name
registry and
other Internet
services fees (346,502) (1,010,927) (4,829,254) (4,559,427)
Accounts payable (557,655) 839,356 (789,425) (67,268)
Accrued
liabilities (420,176) 250,812 (1,288,941) 902,001
Customer deposits 200,149 289,225 51,457 123,665
Deferred revenue (193,558) 765,306 3,574,397 5,476,621
Accreditation
fees payable (6,878) 3,405 33,487 (346,878)
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Net cash provided
by operating
activities (229,197) 2,679,887 2,360,602 8,622,998
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Financing
activities:
Proceeds received
on exercise of
stock options - 54,040 9,450 258,296
Repurchase of
shares (272,444) - (272,444) (2,446,955)
Proceeds received
on loan payable - - - 9,416,393
Repayment of
promissory note
and loan payable (478,560) (478,561) (8,914,241) (797,601)
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Net cash (used
in) provided by
financing
activities (751,004) (424,521) (9,177,235) 6,430,133
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Investing activities:
Cost of domain
names
(acquired)/sold (4,705) (5,573) (8,944) (23,999)
Additions to
property and
equipment (191,140) (315,037) (2,113,904) (3,408,403)
Proceeds on
disposition of
property and
equipment - - 66,039 -
Decrease in
restricted cash -
being margin
security against
forward exchange
contracts - 255,000 - 1,019,423
Acquisition of
Hosted Messaging
Assets from
Critical Path
Inc., net of
cash acquired - - - (90,050)
Acquisition of
Boardtown
Corporation, net
of cash acquired - - - (4,900)
Acquisition of
Innerwise Inc.,
net of cash
acquired (500,000) - (500,000) (10,332,065)
Proceeds on
disposal of
Afilias Inc. 3,244,141 - 3,244,141 -
Sale of customer
relationships 49,546 - 2,392,660 -
(Decrease) increase
in cash held in
escrow 1,088,793 (12,012) 1,070,632 (376,053)
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Net cash provided
by (used in)
investing
activities 3,686,635 (77,622) 4,150,624 (13,216,047)
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Increase (decrease)
in cash and cash
equivalents 2,706,434 2,177,744 (2,666,009) 1,837,084
Cash and cash
equivalents,
beginning of
period 2,721,033 5,915,732 8,093,476 6,256,392
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Cash and cash
equivalents, end
of period $ 5,427,467 $ 8,093,476 $ 5,427,467 $ 8,093,476
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Supplemental cash
flow information:
Interest paid $ 78,431 $ 299,893 $ 630,729 $ 784,263
Supplementary
disclosure of
non-cash investing
activity:
Capital assets
acquired during
the period not
yet paid for $ 6,979 $ 273,070 $ 6,979 $ 273,070
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