Company Quick10K Filing
Tucows
Price54.57 EPS1
Shares11 P/E42
MCap589 P/FCF22
Net Debt94 EBIT21
TEV683 TEV/EBIT32
TTM 2019-09-30, in MM, except price, ratios
10-Q 2020-09-30 Filed 2020-11-05
10-Q 2020-06-30 Filed 2020-08-06
10-Q 2020-03-31 Filed 2020-05-07
10-K 2019-12-31 Filed 2020-03-04
10-Q 2019-09-30 Filed 2019-11-06
10-Q 2019-06-30 Filed 2019-08-07
10-Q 2019-03-31 Filed 2019-05-08
10-K 2018-12-31 Filed 2019-03-05
10-Q 2018-09-30 Filed 2018-11-07
10-Q 2018-06-30 Filed 2018-08-08
10-Q 2018-03-31 Filed 2018-05-09
10-K 2017-12-31 Filed 2018-03-06
10-Q 2017-09-30 Filed 2017-11-09
10-Q 2017-06-30 Filed 2017-08-09
10-Q 2017-03-31 Filed 2017-05-10
10-K 2016-12-31 Filed 2017-03-08
10-Q 2016-09-30 Filed 2016-11-08
10-Q 2016-06-30 Filed 2016-08-08
10-Q 2016-03-31 Filed 2016-05-10
10-K 2015-12-31 Filed 2016-03-09
10-Q 2015-09-30 Filed 2015-11-06
10-Q 2015-06-30 Filed 2015-08-10
10-Q 2015-03-31 Filed 2015-05-08
10-K 2014-12-31 Filed 2015-03-11
10-Q 2014-09-30 Filed 2014-11-12
10-Q 2014-06-30 Filed 2014-08-13
10-Q 2014-03-31 Filed 2014-05-14
10-K 2013-12-31 Filed 2014-03-18
10-Q 2013-09-30 Filed 2013-11-13
10-Q 2013-06-30 Filed 2013-08-09
10-Q 2013-03-31 Filed 2013-05-15
10-K 2012-12-31 Filed 2013-03-15
10-Q 2012-09-30 Filed 2012-11-14
10-Q 2012-06-30 Filed 2012-08-14
10-Q 2012-03-31 Filed 2012-05-11
10-K 2011-12-31 Filed 2012-03-16
10-Q 2011-09-30 Filed 2011-11-10
10-Q 2011-06-30 Filed 2011-08-11
10-Q 2011-03-31 Filed 2011-05-13
10-K 2010-12-31 Filed 2011-03-22
10-Q 2010-09-30 Filed 2010-11-12
10-Q 2010-06-30 Filed 2010-08-13
10-Q 2010-03-31 Filed 2010-05-14
10-K 2009-12-31 Filed 2010-03-22
8-K 2020-11-05 Earnings, Exhibits
8-K 2020-09-08 Shareholder Vote
8-K 2020-08-06 Earnings, Exhibits
8-K 2020-08-01 Enter Agreement, M&A, Regulation FD, Exhibits
8-K 2020-05-07
8-K 2020-02-12
8-K 2020-02-12
8-K 2019-11-27
8-K 2019-11-06
8-K 2019-09-09
8-K 2019-08-07
8-K 2019-07-02
8-K 2019-06-14
8-K 2019-05-31
8-K 2019-05-08
8-K 2019-03-18
8-K 2019-02-13
8-K 2019-02-13
8-K 2018-11-07
8-K 2018-09-04
8-K 2018-08-08
8-K 2018-05-09
8-K 2018-02-14
8-K 2018-02-14
8-K 2018-01-24
8-K 2018-01-05

TCX 10Q Quarterly Report

Item 1. Consolidated Financial Statements
EX-10.1 ex_211180.htm
EX-10.2 ex_211174.htm
EX-31.1 ex_202961.htm
EX-31.2 ex_202962.htm
EX-32.1 ex_202963.htm
EX-32.2 ex_202964.htm

Tucows Earnings 2020-09-30

Balance SheetIncome StatementCash Flow
4203362521688402012201420172020
Assets, Equity
1008060402002012201420172020
Rev, G Profit, Net Income
804714-19-52-852012201420172020
Ops, Inv, Fin

tcx20191231_10k.htm
0000909494 TUCOWS INC /PA/ false --12-31 Q3 2020 216 131 0 0 1,250,000 1,250,000 0 0 0 0 0 0 250,000,000 250,000,000 10,593,514 10,593,514 10,585,159 10,585,159 230 47 262 250 66 1 7 15 0 1 18 0 0 0 0 0 2 15 0 4 3.50 3 2 0.3 0 0 1 10 0 0 0 0 1 10 12 1 10 0 8.24 8.62 2 0 101,816 5.0 0 0 10.16 19.95 21.10 27.53 32.25 37.35 46.90 48.00 51.82 59.98 60.01 68.41 0 0 4.6 4.6 00009094942020-01-012020-09-30 xbrli:shares 00009094942020-11-02 thunderdome:item iso4217:USD 00009094942020-09-30 00009094942019-12-31 iso4217:USDxbrli:shares 00009094942020-07-012020-09-30 00009094942019-07-012019-09-30 00009094942019-01-012019-09-30 0000909494tcx:CedarHoldingsGroupIncorporatedMember2020-01-012020-09-30 0000909494tcx:CedarHoldingsGroupIncorporatedMember2020-07-012020-09-30 0000909494tcx:CedarHoldingsGroupIncorporatedMember2019-07-012019-09-30 0000909494tcx:CedarHoldingsGroupIncorporatedMember2019-01-012019-09-30 0000909494tcx:AscioTechnologiesIncMember2019-01-012019-09-30 0000909494tcx:AscioTechnologiesIncMember2020-07-012020-09-30 0000909494tcx:AscioTechnologiesIncMember2019-07-012019-09-30 0000909494tcx:AscioTechnologiesIncMember2020-01-012020-09-30 00009094942020-06-30 00009094942019-06-30 00009094942018-12-31 00009094942019-09-30 0000909494tcx:CedarHoldingsGroupIncorporatedMember2020-01-012020-01-01 0000909494tcx:CedarHoldingsGroupIncorporatedMember2020-01-01 xbrli:pure 0000909494tcx:CedarHoldingsGroupIncorporatedMemberus-gaap:MeasurementInputDiscountRateMember2020-01-01 utr:Y 0000909494tcx:CedarHoldingsGroupIncorporatedMemberus-gaap:CustomerRelationshipsMember2020-01-012020-01-01 0000909494tcx:CedarHoldingsGroupIncorporatedMembertcx:NetworkRightsMember2020-01-012020-01-01 0000909494tcx:CedarHoldingsGroupIncorporatedMember2020-09-30 0000909494tcx:CedarHoldingsGroupIncorporatedMemberus-gaap:GeneralAndAdministrativeExpenseMember2020-07-012020-09-30 0000909494tcx:CedarHoldingsGroupIncorporatedMemberus-gaap:GeneralAndAdministrativeExpenseMember2020-01-012020-09-30 0000909494us-gaap:InterestRateSwapMember2020-05-31 utr:M 0000909494us-gaap:ForwardContractsMembersrt:MinimumMember2020-05-012020-05-31 0000909494us-gaap:ForwardContractsMembersrt:MaximumMember2020-05-012020-05-31 0000909494us-gaap:ForwardContractsMember2020-09-30 0000909494us-gaap:ForwardContractsMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-09-30 0000909494us-gaap:ForwardContractsMember2019-12-31 0000909494us-gaap:ForwardContractsMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-12-31 0000909494tcx:ForeignExchangeForward1Member2020-09-30 0000909494tcx:ForeignExchangeForward2Member2020-09-30 0000909494tcx:ForeignExchangeForward3Member2020-09-30 0000909494tcx:ForeignExchangeForward4Member2020-09-30 0000909494tcx:ForeignExchangeForward5Member2020-09-30 0000909494us-gaap:InterestRateSwapMember2020-09-30 0000909494us-gaap:InterestRateSwapMember2019-12-31 0000909494tcx:DerivativeInstrumentsMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2020-09-30 0000909494tcx:DerivativeInstrumentsMemberus-gaap:CashFlowHedgingMemberus-gaap:DesignatedAsHedgingInstrumentMember2019-12-31 0000909494tcx:DerivativeInstrumentsMember2020-09-30 0000909494tcx:DerivativeInstrumentsMember2019-12-31 0000909494tcx:DerivativeInstrumentsMemberus-gaap:NondesignatedMember2020-09-30 0000909494tcx:DerivativeInstrumentsMemberus-gaap:NondesignatedMember2019-12-31 0000909494us-gaap:OperatingExpenseMember2020-07-012020-09-30 0000909494us-gaap:CostOfSalesMember2020-07-012020-09-30 0000909494us-gaap:InterestExpenseMember2020-07-012020-09-30 0000909494us-gaap:OperatingExpenseMember2019-07-012019-09-30 0000909494us-gaap:CostOfSalesMember2019-07-012019-09-30 0000909494us-gaap:InterestExpenseMember2019-07-012019-09-30 0000909494us-gaap:OperatingExpenseMember2020-01-012020-09-30 0000909494us-gaap:CostOfSalesMember2020-01-012020-09-30 0000909494us-gaap:InterestExpenseMember2020-01-012020-09-30 0000909494us-gaap:OperatingExpenseMember2019-01-012019-09-30 0000909494us-gaap:CostOfSalesMember2019-01-012019-09-30 0000909494us-gaap:InterestExpenseMember2019-01-012019-09-30 0000909494us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMembersrt:MaximumMember2020-07-012020-09-30 0000909494us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2019-07-012019-09-30 0000909494us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2020-01-012020-09-30 0000909494us-gaap:ForeignExchangeForwardMemberus-gaap:NondesignatedMember2019-01-012019-09-30 0000909494tcx:DomainServicesOperatingSegmentMember2020-09-30 0000909494tcx:NetworkAccessServicesMember2020-09-30 0000909494srt:MinimumMember2020-01-012020-09-30 0000909494srt:MaximumMember2020-01-012020-09-30 0000909494us-gaap:DisposalGroupHeldforsaleNotDiscontinuedOperationsMembertcx:TingMobileMember2020-06-30 00009094942020-04-012020-09-30 0000909494tcx:SurnameDomainNamesMember2020-06-30 0000909494tcx:DirectNavigationDomainNamesMember2020-06-30 0000909494tcx:BrandMember2020-06-30 0000909494us-gaap:CustomerRelationshipsMember2020-06-30 0000909494us-gaap:TechnologyBasedIntangibleAssetsMember2020-06-30 0000909494tcx:NetworkRightsMember2020-06-30 0000909494tcx:SurnameDomainNamesMember2020-07-012020-09-30 0000909494tcx:DirectNavigationDomainNamesMember2020-07-012020-09-30 0000909494tcx:BrandMember2020-07-012020-09-30 0000909494us-gaap:CustomerRelationshipsMember2020-07-012020-09-30 0000909494us-gaap:TechnologyBasedIntangibleAssetsMember2020-07-012020-09-30 0000909494tcx:NetworkRightsMember2020-07-012020-09-30 0000909494tcx:SurnameDomainNamesMember2020-09-30 0000909494tcx:DirectNavigationDomainNamesMember2020-09-30 0000909494tcx:BrandMember2020-09-30 0000909494us-gaap:CustomerRelationshipsMember2020-09-30 0000909494us-gaap:TechnologyBasedIntangibleAssetsMember2020-09-30 0000909494tcx:NetworkRightsMember2020-09-30 0000909494tcx:SurnameDomainNamesMember2019-12-31 0000909494tcx:DirectNavigationDomainNamesMember2019-12-31 0000909494tcx:BrandMember2019-12-31 0000909494us-gaap:CustomerRelationshipsMember2019-12-31 0000909494us-gaap:TechnologyBasedIntangibleAssetsMember2019-12-31 0000909494tcx:NetworkRightsMember2019-12-31 0000909494tcx:SurnameDomainNamesMember2020-01-012020-09-30 0000909494tcx:DirectNavigationDomainNamesMember2020-01-012020-09-30 0000909494tcx:BrandMember2020-01-012020-09-30 0000909494us-gaap:CustomerRelationshipsMember2020-01-012020-09-30 0000909494us-gaap:TechnologyBasedIntangibleAssetsMember2020-01-012020-09-30 0000909494tcx:NetworkRightsMember2020-01-012020-09-30 0000909494tcx:RoyalBankBankOfMontrealBankOfNovaScotiaHsbcAndCibcMember2019-06-14 0000909494tcx:GuaranteedCreditFacilityMembertcx:RoyalBankBankOfMontrealBankOfNovaScotiaHsbcAndCibcMember2019-06-14 0000909494tcx:AccordionFacilityMembertcx:RoyalBankBankOfMontrealBankOfNovaScotiaHsbcAndCibcMember2019-06-14 0000909494us-gaap:GeneralAndAdministrativeExpenseMembertcx:RoyalBankBankOfMontrealBankOfNovaScotiaHsbcAndCibcMember2019-06-142019-06-14 0000909494tcx:RoyalBankBankOfMontrealBankOfNovaScotiaHsbcAndCibcMember2019-06-142019-06-14 0000909494tcx:RoyalBankBankOfMontrealBankOfNovaScotiaHsbcAndCibcMember2020-09-30 0000909494tcx:BankOfMontrealAndRoyalBankOfCanadaMembertcx:DebtToEBITDAIsLessThan1Memberus-gaap:LondonInterbankOfferedRateLIBORMember2020-01-012020-09-30 0000909494tcx:BankOfMontrealAndRoyalBankOfCanadaMembertcx:DebtToEBITDAIsGreaterThanOrEqualTo1AndLessThan2Memberus-gaap:LondonInterbankOfferedRateLIBORMember2020-01-012020-09-30 0000909494tcx:BankOfMontrealAndRoyalBankOfCanadaMembertcx:DebtToEBITDAIsGreaterThanOrEqualTo2AndLessThan250Memberus-gaap:LondonInterbankOfferedRateLIBORMember2020-01-012020-09-30 0000909494tcx:BankOfMontrealAndRoyalBankOfCanadaMembertcx:DebtToEBITDAIsGreaterThanOrEqualTo250Memberus-gaap:LondonInterbankOfferedRateLIBORMember2020-01-012020-09-30 0000909494tcx:BankOfMontrealAndRoyalBankOfCanadaMembertcx:DebtToEBITDAIsLessThan1Memberus-gaap:BaseRateMember2020-01-012020-09-30 0000909494tcx:BankOfMontrealAndRoyalBankOfCanadaMembertcx:DebtToEBITDAIsGreaterThanOrEqualTo1AndLessThan2Memberus-gaap:BaseRateMember2020-01-012020-09-30 0000909494tcx:BankOfMontrealAndRoyalBankOfCanadaMembertcx:DebtToEBITDAIsGreaterThanOrEqualTo2AndLessThan250Memberus-gaap:BaseRateMember2020-01-012020-09-30 0000909494tcx:BankOfMontrealAndRoyalBankOfCanadaMembertcx:DebtToEBITDAIsGreaterThanOrEqualTo250Memberus-gaap:BaseRateMember2020-01-012020-09-30 0000909494tcx:DebtToEBITDAIsLessThan1Member2020-01-012020-09-30 0000909494tcx:DebtToEBITDAIsGreaterThanOrEqualTo1AndLessThan2Member2020-01-012020-09-30 0000909494tcx:DebtToEBITDAIsGreaterThanOrEqualTo2AndLessThan250Member2020-01-012020-09-30 0000909494tcx:DebtToEBITDAIsGreaterThanOrEqualTo250Member2020-01-012020-09-30 0000909494tcx:RevolverFacilityMember2020-09-30 0000909494tcx:RevolverFacilityMember2019-12-31 0000909494us-gaap:AccountingStandardsUpdate201609Member2020-07-012020-09-30 0000909494us-gaap:AccountingStandardsUpdate201609Member2019-07-012019-09-30 0000909494us-gaap:AccountingStandardsUpdate201609Member2020-01-012020-09-30 0000909494us-gaap:AccountingStandardsUpdate201609Member2019-01-012019-09-30 0000909494us-gaap:EmployeeStockOptionMember2020-07-012020-09-30 0000909494us-gaap:EmployeeStockOptionMember2019-07-012019-09-30 0000909494us-gaap:EmployeeStockOptionMember2020-01-012020-09-30 0000909494us-gaap:EmployeeStockOptionMember2019-01-012019-09-30 0000909494tcx:RetailMobileServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2020-07-012020-09-30 0000909494tcx:RetailMobileServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2019-07-012019-09-30 0000909494tcx:RetailMobileServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2020-01-012020-09-30 0000909494tcx:RetailMobileServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2019-01-012019-09-30 0000909494tcx:MobilePlatformServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2020-07-012020-09-30 0000909494tcx:MobilePlatformServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2019-07-012019-09-30 0000909494tcx:MobilePlatformServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2020-01-012020-09-30 0000909494tcx:MobilePlatformServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2019-01-012019-09-30 0000909494tcx:OtherServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2020-07-012020-09-30 0000909494tcx:OtherServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2019-07-012019-09-30 0000909494tcx:OtherServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2020-01-012020-09-30 0000909494tcx:OtherServicesMembertcx:NetworkAccessServicesMembertcx:MobileServicesMember2019-01-012019-09-30 0000909494tcx:NetworkAccessServicesMembertcx:MobileServicesMember2020-07-012020-09-30 0000909494tcx:NetworkAccessServicesMembertcx:MobileServicesMember2019-07-012019-09-30 0000909494tcx:NetworkAccessServicesMembertcx:MobileServicesMember2020-01-012020-09-30 0000909494tcx:NetworkAccessServicesMembertcx:MobileServicesMember2019-01-012019-09-30 0000909494tcx:FiberInternetServicesMembertcx:NetworkAccessServicesMember2020-07-012020-09-30 0000909494tcx:FiberInternetServicesMembertcx:NetworkAccessServicesMember2019-07-012019-09-30 0000909494tcx:FiberInternetServicesMembertcx:NetworkAccessServicesMember2020-01-012020-09-30 0000909494tcx:FiberInternetServicesMembertcx:NetworkAccessServicesMember2019-01-012019-09-30 0000909494tcx:NetworkAccessServicesMember2020-07-012020-09-30 0000909494tcx:NetworkAccessServicesMember2019-07-012019-09-30 0000909494tcx:NetworkAccessServicesMember2020-01-012020-09-30 0000909494tcx:NetworkAccessServicesMember2019-01-012019-09-30 0000909494tcx:DomainServicesMembertcx:DomainNameServicesMembertcx:WholesaleMember2020-07-012020-09-30 0000909494tcx:DomainServicesMembertcx:DomainNameServicesMembertcx:WholesaleMember2019-07-012019-09-30 0000909494tcx:DomainServicesMembertcx:DomainNameServicesMembertcx:WholesaleMember2020-01-012020-09-30 0000909494tcx:DomainServicesMembertcx:DomainNameServicesMembertcx:WholesaleMember2019-01-012019-09-30 0000909494tcx:ValueAddedServicesMembertcx:DomainNameServicesMembertcx:WholesaleMember2020-07-012020-09-30 0000909494tcx:ValueAddedServicesMembertcx:DomainNameServicesMembertcx:WholesaleMember2019-07-012019-09-30 0000909494tcx:ValueAddedServicesMembertcx:DomainNameServicesMembertcx:WholesaleMember2020-01-012020-09-30 0000909494tcx:ValueAddedServicesMembertcx:DomainNameServicesMembertcx:WholesaleMember2019-01-012019-09-30 0000909494tcx:DomainNameServicesMembertcx:WholesaleMember2020-07-012020-09-30 0000909494tcx:DomainNameServicesMembertcx:WholesaleMember2019-07-012019-09-30 0000909494tcx:DomainNameServicesMembertcx:WholesaleMember2020-01-012020-09-30 0000909494tcx:DomainNameServicesMembertcx:WholesaleMember2019-01-012019-09-30 0000909494tcx:DomainNameServicesMembertcx:RetailServicesMember2020-07-012020-09-30 0000909494tcx:DomainNameServicesMembertcx:RetailServicesMember2019-07-012019-09-30 0000909494tcx:DomainNameServicesMembertcx:RetailServicesMember2020-01-012020-09-30 0000909494tcx:DomainNameServicesMembertcx:RetailServicesMember2019-01-012019-09-30 0000909494tcx:DomainNameServicesMembertcx:PortfolioMember2020-07-012020-09-30 0000909494tcx:DomainNameServicesMembertcx:PortfolioMember2019-07-012019-09-30 0000909494tcx:DomainNameServicesMembertcx:PortfolioMember2020-01-012020-09-30 0000909494tcx:DomainNameServicesMembertcx:PortfolioMember2019-01-012019-09-30 0000909494tcx:DomainNameServicesMember2020-07-012020-09-30 0000909494tcx:DomainNameServicesMember2019-07-012019-09-30 0000909494tcx:DomainNameServicesMember2020-01-012020-09-30 0000909494tcx:DomainNameServicesMember2019-01-012019-09-30 0000909494us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-09-30 0000909494us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2020-07-012020-09-30 0000909494us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-01-012019-09-30 0000909494us-gaap:SalesRevenueNetMemberus-gaap:CustomerConcentrationRiskMember2019-07-012019-09-30 0000909494us-gaap:AccountsReceivableMemberus-gaap:CustomerConcentrationRiskMember2020-01-012020-09-30 0000909494tcx:NetworkExpensesMember2020-07-012020-09-30 0000909494tcx:NetworkExpensesMember2019-07-012019-09-30 0000909494tcx:NetworkExpensesMember2020-01-012020-09-30 0000909494tcx:NetworkExpensesMember2019-01-012019-09-30 0000909494tcx:ActiveDomainNameContractsMembersrt:MinimumMember2020-01-012020-09-30 0000909494tcx:ActiveDomainNameContractsMembersrt:MaximumMember2020-01-012020-09-30 0000909494tcx:DomainRegistrationContractsMember2020-10-012020-09-30 0000909494tcx:DeferredCostsOfAcquisitionMembersrt:MinimumMember2020-09-30 0000909494tcx:DeferredCostsOfAcquisitionMembersrt:MaximumMember2020-09-30 0000909494tcx:DeferredCostsOfAcquisitionMember2020-01-012020-09-30 0000909494tcx:DeferredCostsOfAcquisitionMember2019-12-31 0000909494tcx:DeferredCostsOfAcquisitionMember2020-09-30 0000909494srt:MinimumMember2020-09-30 0000909494srt:MaximumMember2020-09-30 0000909494tcx:CorporateOfficeLeaseMember2020-03-012020-09-30 0000909494country:CA2020-09-30 0000909494country:CA2019-12-31 0000909494country:US2020-09-30 0000909494country:US2019-12-31 0000909494srt:EuropeMember2020-09-30 0000909494srt:EuropeMember2019-12-31 00009094942019-01-012019-12-31 0000909494us-gaap:CommonStockMember2020-06-30 0000909494us-gaap:AdditionalPaidInCapitalMember2020-06-30 0000909494us-gaap:RetainedEarningsMember2020-06-30 0000909494us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-30 0000909494us-gaap:CommonStockMember2020-07-012020-09-30 0000909494us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-30 0000909494us-gaap:RetainedEarningsMember2020-07-012020-09-30 0000909494us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-30 0000909494us-gaap:CommonStockMember2020-09-30 0000909494us-gaap:AdditionalPaidInCapitalMember2020-09-30 0000909494us-gaap:RetainedEarningsMember2020-09-30 0000909494us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-30 0000909494us-gaap:CommonStockMember2019-12-31 0000909494us-gaap:AdditionalPaidInCapitalMember2019-12-31 0000909494us-gaap:RetainedEarningsMember2019-12-31 0000909494us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-31 0000909494us-gaap:CommonStockMember2020-01-012020-09-30 0000909494us-gaap:AdditionalPaidInCapitalMember2020-01-012020-09-30 0000909494us-gaap:RetainedEarningsMember2020-01-012020-09-30 0000909494us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-30 0000909494tcx:StockBuybackProgram2020Member2020-02-12 0000909494tcx:StockBuybackProgram2020Member2020-07-012020-09-30 0000909494tcx:StockBuybackProgram2020Member2020-01-012020-09-30 0000909494tcx:StockBuybackProgram2019Member2019-02-13 0000909494tcx:StockBuybackProgram2019Member2019-07-012019-09-30 0000909494tcx:StockBuybackProgram2019Member2019-01-012019-09-30 0000909494tcx:StockBuybackProgram2019Member2020-01-012020-09-30 0000909494tcx:StockBuybackProgram2018Member2018-02-14 0000909494tcx:StockBuybackProgram2018Member2019-01-012019-09-30 0000909494tcx:ExercisePriceRange01Member2020-01-012020-09-30 0000909494tcx:ExercisePriceRange01Member2020-09-30 0000909494tcx:ExercisePriceRange02Member2020-01-012020-09-30 0000909494tcx:ExercisePriceRange02Member2020-09-30 0000909494tcx:ExercisePriceRange03Member2020-01-012020-09-30 0000909494tcx:ExercisePriceRange03Member2020-09-30 0000909494tcx:ExercisePriceRange04Member2020-01-012020-09-30 0000909494tcx:ExercisePriceRange04Member2020-09-30 0000909494tcx:ExercisePriceRange05Member2020-01-012020-09-30 0000909494tcx:ExercisePriceRange05Member2020-09-30 0000909494tcx:ExercisePriceRange06Member2020-01-012020-09-30 0000909494tcx:ExercisePriceRange06Member2020-09-30 0000909494us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2020-09-30 0000909494us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-09-30 0000909494us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2020-09-30 0000909494us-gaap:FairValueMeasurementsRecurringMember2020-09-30 0000909494us-gaap:FairValueInputsLevel1Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-31 0000909494us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-31 0000909494us-gaap:FairValueInputsLevel3Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-31 0000909494us-gaap:FairValueMeasurementsRecurringMember2019-12-31 0000909494tcx:PurchaseAgreementWithDISHWirelessLLCMember2020-08-012020-08-01 0000909494tcx:PurchaseAgreementWithDISHWirelessLLCMember2020-07-012020-09-30 0000909494tcx:PurchaseAgreementWithDISHWirelessLLCMember2020-01-012020-09-30 0000909494tcx:PurchaseAgreementWithDISHWirelessLLCMember2019-07-012019-09-30 0000909494tcx:PurchaseAgreementWithDISHWirelessLLCMember2019-01-012019-09-30
 
 

 

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

FORM 10-Q

 

 

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2020

 

OR

 

 

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from           to          

 

Commission file number 1-32600

 

TUCOWS INC.

(Exact Name of Registrant as Specified in Its Charter)

 

Pennsylvania

23-2707366

(State or Other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification No.)

 

96 Mowat Avenue,

Toronto, Ontario M6K 3M1, Canada

(Address of Principal Executive Offices) (Zip Code)

 

(416) 535-0123

(Registrant's Telephone Number, Including Area Code)

 

Securities registered pursuant to Section 12(b) of the Exchange Act:

Title of each class

 

Trading

Symbol(s)

 

Name of each exchange on which registered

Common Stock

 

TCX

 

NASDAQ

 

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:  Yes ☒ No ☐

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T §232.405 of this chapter during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer ☐

Accelerated filer ☒

  

  

Non-accelerated filer ☐

Smaller reporting company 

  

  

 

Emerging Growth company 

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):  Yes  No ☒

 

As of November 2, 2020, there were 10,606,267 outstanding shares of common stock, no par value, of the registrant.

 

 

 

TUCOWS INC.

Form 10-Q Quarterly Report

INDEX

 

PART I

FINANCIAL INFORMATION

 

 

 

Item 1.

Consolidated Financial Statements

3

  

  

  

  

Consolidated Balance Sheets (unaudited) as of September 30, 2020 and December 31, 2019

3

  

  

  

  

Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three and nine months ended September 30, 2020 and 2019

4

  

  

  

  

Consolidated Statements of Cash Flows (unaudited) for the three and nine months ended September 30, 2020 and 2019

5

  

  

  

  

Notes to Consolidated Financial Statements (unaudited)

6

  

  

  

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations

26

  

  

  

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

50

  

  

  

Item 4.

Controls and Procedures

51

  

  

  

PART II

OTHER INFORMATION

  

  

  

Item 1.

Legal Proceedings

52

  

  

  

Item 1A.

Risk Factors

52

  

  

  

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds 

  53

 

 

 

Item 3.

Defaults Upon Senior Securities

53

  

  

  

Item 4.

Mine Safety Disclosures

53

 

 

 

Item 5.

Other Information

53

  

  

  

Item 6.

Exhibits

54

  

  

  

Signatures

55


TRADEMARKS, TRADE NAMES AND SERVICE MARKS

 

Tucows®, EPAG®, Hover®, OpenSRS®, Platypus®, Ting®, eNom®, Roam®, Roam Mobility®, Bulkregister®, Ascio®, Cedar®, and YummyNames® are registered trademarks of Tucows Inc. or its subsidiaries. Other service marks, trademarks and trade names of Tucows Inc. or its subsidiaries may be used in this Quarterly Report on Form 10-Q (this “Quarterly Report”). All other service marks, trademarks and trade names referred to in this Quarterly Report are the property of their respective owners. Solely for convenience, any trademarks referred to in this Quarterly Report may appear without the ® or TM symbol, but such references are not intended to indicate, in any way, that we or the owner of such trademark, as applicable, will not assert, to the fullest extent under applicable law, our or its rights, or the right of the applicable licensor, to these trademarks.

 

 

 

PART I.    FINANCIAL INFORMATION

Item 1. Consolidated Financial Statements

Tucows Inc.

Consolidated Balance Sheets

 

(Dollar amounts in thousands of U.S. dollars)

(unaudited)

 

  

September 30,

  

December 31,

 
  

2020

  

2019

 
         

Assets

        
         

Current assets:

        

Cash and cash equivalents

 $10,155  $20,393 

Accounts receivable, net of allowance for doubtful accounts of $216 as of September 30, 2020 and $131 as of December 31, 2019

  12,623   14,564 

Inventory

  1,139   3,457 

Prepaid expenses and deposits

  13,703   13,478 

Derivative instrument asset, current portion (note 5)

  2,402   731 

Prepaid domain name registry and ancillary services fees, current portion (note 11)

  95,694   91,252 

Income taxes recoverable

  3,553   1,800 

Total current assets

  139,269   145,675 
         

Prepaid domain name registry and ancillary services fees, long-term portion (note 11)

  17,546   17,915 

Property and equipment

  109,767   82,121 

Right of use operating lease asset

  11,625   11,335 

Contract costs

  359   1,400 

Intangible assets (note 6)

  50,087   57,654 

Goodwill (note 6)

  116,270   109,818 

Total assets

 $444,923  $425,918 
         
         

Liabilities and Stockholders' Equity

        
         

Current liabilities:

        

Accounts payable

 $8,552  $6,671 

Accrued liabilities

  9,525   9,373 

Customer deposits

  14,372   14,074 

Derivative instrument liability, current portion (note 5)

  135   - 

Operating lease liability, current portion (note 12)

  1,692   1,413 

Deferred revenue, current portion (note 10)

  128,569   123,101 

Accreditation fees payable, current portion

  975   952 

Income taxes payable

  881   1,324 

Total current liabilities

  164,701   156,908 
         

Derivative instrument liability, long-term portion (note 5)

  112   - 

Deferred revenue, long-term portion (note 10)

  25,661   26,202 

Accreditation fees payable, long-term portion

  200   216 

Operating lease liability, long-term portion (note 12)

  9,679   9,424 

Loan payable (note 7)

  113,672   113,503 

Other long-term liability (note 4 (b))

  3,330   - 

Deferred tax liability

  27,187   25,471 
         

Stockholders' equity (note 14)

        

Preferred stock - no par value, 1,250,000 shares authorized; none issued and outstanding

  -   - 

Common stock - no par value, 250,000,000 shares authorized; 10,593,514 shares issued and outstanding as of September 30, 2020 and 10,585,159 shares issued and outstanding as of December 31, 2019

  19,989   16,633 

Additional paid-in capital

  983   880 

Retained earnings

  78,038   76,208 

Accumulated other comprehensive income (note 5)

  1,371   473 

Total stockholders' equity

  100,381   94,194 

Total liabilities and stockholders' equity

 $444,923  $425,918 
         

Contingencies (note 18)

          
         
         

 

See accompanying notes to consolidated financial statements 

 

 

 

Tucows Inc.

Consolidated Statements of Operations and Comprehensive Income

 

(Dollar amounts in thousands of U.S. dollars, except per share amounts) 

(unaudited)

 

  

For the Three Months Ended September 30,

  

For the Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

 

2019

 
                  
                  

Net revenues (note 10)

 $74,311  $88,129  $240,418   $251,199 
                  

Cost of revenues (note 10)

                 

Cost of revenues

  48,330   55,756   153,308    162,561 

Network expenses

  2,612   2,254   7,513    7,034 

Depreciation of property and equipment

  2,985   2,231   8,892    6,070 

Amortization of intangible assets (note 6)

  330   314   1,010    802 
Impairment of property and equipment  113   -   1,638    - 

Total cost of revenues

  54,370   60,555   172,361    176,467 
                  

Gross profit

  19,941   27,574   68,057    74,732 
                  

Expenses:

                 

Sales and marketing

  8,318   8,769   26,521    26,366 

Technical operations and development

  3,162   2,876   8,980    8,151 

General and administrative

  4,868   4,574   15,074    13,818 

Depreciation of property and equipment

  125   117   363    375 
Loss on disposition of property and equipment  -   73   -    73 

Amortization of intangible assets (note 6)

  2,315   2,544   7,766    6,661 
Impairment of definite life intangible assets (note 6)  -   -   1,431    - 

Loss (gain) on currency forward contracts (note 5)

  (159)  20   (99)   (90)

Total expenses

  18,629   18,973   60,036    55,354 
                  

Income from operations

  1,312   8,601   8,021    19,378 
                  

Other income (expenses):

                 

Interest expense, net

  (760)  (1,263)  (2,756)   (3,549)
Gain on sale of Ting customer assets, net (note 17)  1,090   -   1,090    - 

Other expense, net

  (86)  -   (258)   - 

Total other income (expenses)

  244   (1,263)  (1,924)   (3,549)
                  

Income before provision for income taxes

  1,556   7,338   6,097    15,829 
                  

Provision for income taxes (note 8)

  840   3,133   2,390    6,209 
                  

Net income for the period

  716   4,205   3,707    9,620 
                  

Other comprehensive income, net of tax

                 

Unrealized income (loss) on hedging activities

  729   (175)  609    614 

Net amount reclassified to earnings (note 5)

  46   26   289    167 

Other comprehensive income (loss) net of tax expense (income) of $230 and ($47) for the three months ended September 30, 2020 and September 30, 2019, $262 and $250 for the nine months ended September 30, 2020 and September 30, 2019 (note 5)

  775   (149)  898    781 
                  

Comprehensive income, net of tax for the period

 $1,491  $4,056  $4,605   $10,401 
                  
                  

Basic earnings per common share (note 9)

 $0.07  $0.40  $0.35   $0.90 
                  

Shares used in computing basic earnings per common share (note 9)

  10,577,731   10,626,754   10,585,785    10,639,544 
                  

Diluted earnings per common share (note 9)

 $0.07  $0.39  $0.35   $0.89 
                  

Shares used in computing diluted earnings per common share (note 9)

  10,682,808   10,745,834   10,679,162    10,798,099 


See accompanying notes to consolidated financial statements 

 

 

 

Tucows Inc.

Consolidated Statements of Cash Flows

 

(Dollar amounts in thousands of U.S. dollars) 

(unaudited)

 

  

For the Three Months Ended September 30,

  

For the Nine Months Ended September 30,

 
  

2020

  

2019

  

2020

  

2019

 

Cash provided by:

                

Operating activities:

                

Net income for the period

 $716  $4,205  $3,707  $9,620 

Items not involving cash:

                

Depreciation of property and equipment

  3,110   2,348   9,255   6,445 

Impairment of property and equipment

  113   120   1,638   142 

Amortization of debt discount and issuance costs

  68   64   202   232 

Amortization of intangible assets

  2,645   2,858   8,776   7,463 

Net amortization contract costs

  (15)  (61)  109   (8)
Impairment of definite life intangible assets  -   -   1,431   - 

Accretion of contingent consideration

  86   -   258   - 
Other  -   -   223   - 

Deferred income taxes (recovery)

  180   (170)  (927)  1,741 

Excess tax benefits on share-based compensation expense

  (164)  (53)  (508)  (790)

Net Right of use operating assets/Operating lease liability

  137   (54)  249   (5)

Loss on disposal of domain names

  -   66   15   72 

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

  (175)  (16)  (263)  (204)
Disposal of Ting Mobile customer assets (note 17)  3,513   -   3,513   - 

Stock-based compensation

  1,016   830   2,664   2,040 

Change in non-cash operating working capital:

                

Accounts receivable

  118   (1,763)  2,670   (1,920)

Inventory

  (123)  (644)  1,681   (128)

Prepaid expenses and deposits

  2,905   (329)  (317)  (3,243)

Prepaid domain name registry and ancillary services fees

  984   3,819   (4,073)  3,754 

Income taxes recoverable

  (2,475)  1,576   (1,681)  (1,299)

Accounts payable

  509   (2,394)  759   (2,778)

Accrued liabilities

  (668)  3,687   (334)  7,274 

Customer deposits

  69   1,394   463   873 

Deferred revenue

  (1,070)  (4,200)  4,927   (2,062)

Accreditation fees payable

  (47)  (68)  7   (34)

Net cash provided by operating activities

  11,432   11,215   34,444   27,185 
                 

Financing activities:

                

Proceeds received on exercise of stock options

  632   118   678   312 

Payment of tax obligations resulting from net exercise of stock options

  (132)  (20)  (479)  (544)

Repurchase of common stock

  -   (4,986)  (3,281)  (4,986)

Proceeds received on loan payable

  -   5,000   -   45,371 

Repayment of loan payable

  -   3   -   (4,600)

Payment of loan payable costs

  -   2   (32)  (639)

Net cash (used in) provided by financing activities

  500   117   (3,114)  34,914 
                 

Investing activities:

                

Additions to property and equipment

  (10,636)  (10,308)  (32,729)  (31,157)

Acquisition of Cedar Holdings Group, net of cash of $66 (note 4(b))

  -   -   (8,770)  - 

Acquisition of Ascio Technologies, net of cash of $1 (note 4(a))

  -   -   -   (28,024)
Acquisition of intangible assets  -   (1,038)  (69)  (3,566)

Net cash used in investing activities

  (10,636)  (11,346)  (41,568)  (62,747)
                 

Increase (decrease) in cash and cash equivalents

  1,296   (14)  (10,238)  (648)
                 

Cash and cash equivalents, beginning of period

  8,859   12,003   20,393   12,637 

Cash and cash equivalents, end of period

 $10,155  $11,989  $10,155  $11,989 
                 
                 
                 

Supplemental cash flow information:

                

Interest paid

 $635  $1,267  $2,638  $3,561 

Income taxes paid, net

 $3,249  $1,959  $5,449  $6,123 

Supplementary disclosure of non-cash investing and financing activities:

                

Property and equipment acquired during the period not yet paid for

 $1,697  $991  $1,697  $991 

Fair value of shares issued for acquisition of Cedar Holdings Group

 $-  $-  $2,000  $- 

Fair value of contingent consideration for acquisition of Cedar Holdings Group

 $-  $-  $3,072  $- 
Acquisition of intangible assets transferred from other assets $-  $2,501  $-  $- 

 

See accompanying notes to consolidated financial statements

 

 

NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

 

 

1. Organization of the Company:

 

Tucows Inc. (referred to throughout this report as the “Company”, “Tucows”, “we”, “us” or through similar expressions) provides simple useful services that help people unlock the power of the Internet. The Company provides US consumers and small businesses with mobile phone services nationally and high-speed fixed Internet access in selected towns. The Company offers Mobile Service Enabler ("MSE") solutions, as well as professional services to other retail mobile providers. The Company is also a global distributor of Internet services, including domain name registration, digital certificates, and email. It provides these services primarily through a global Internet-based distribution network of Internet Service Providers, web hosting companies and other providers of Internet services to end-users.

 

 

2. Basis of Presentation:

 

The accompanying unaudited interim consolidated balance sheets, and the related consolidated statements of operations and comprehensive income and cash flows reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair presentation of the financial position of Tucows and its subsidiaries as at  September 30, 2020 and the results of operations and cash flows for the interim periods ended  September 30, 2020 and 2019. The results of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for future periods.

 

The accompanying unaudited interim consolidated financial statements have been prepared by Tucows in accordance with the rules and regulations of the United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the Company's annual audited consolidated financial statements and accompanying notes have been condensed or omitted. Other than the exception noted below, these interim consolidated financial statements and accompanying notes follow the same accounting policies and methods of application used in the annual financial statements and should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in Tucows' 2019 Annual Report on Form 10-K filed with the SEC on March 4, 2020 (the “2019 Annual Report”). There have been no material changes to our significant accounting policies and estimates during the three and nine months ended September 30, 2020 as compared to the significant accounting policies and estimates described in our 2019 Annual Report, except as described in Note 3 – Recent Accounting Pronouncements, Note 10 - Revenue and Note 17 - Other income.

 

 

3. Recent Accounting Pronouncements:

 

Recent Accounting Pronouncements Adopted
 

In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2018-15”). ASU 2018-15 helps entities evaluate the accounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance on accounting for implementation costs when the cloud computing arrangement does not include a license and is accounted for as a service contract. The amendments in ASU 2018-15 require an entity (customer) in a hosting arrangement to assess which implementation costs to capitalize vs expense as it relates to a service contract.  The amendments also require the entity (customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. ASU 2018-15 is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted ASU 2018-15 in the first quarter of 2020 to all implementation costs incurred after the date of adoption. The new guidance did not have a material impact on our consolidated financial statements.

 

Recent Accounting Pronouncements Not Yet Adopted
 

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden of reference rate reform on financial reporting.  The amendments in ASU 2020-04 apply to contract modifications that replace a reference rate affected by reference rate reform and contemporaneous modifications of other contract terms related to the replacement of the reference rate. The following optional expedients for applying the requirements of certain Topics or Industry Subtopics in the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance:

 

 

1.

Modifications of contracts within the scope of Topics 310, Receivables, and 470, Debt, should be accounted for by prospectively adjusting the effective interest rate.
 2.Modifications of contracts within the scope of Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments of the lease classification and the discount rate or remeasurements of lease payments that otherwise would be required under those Topics for modifications not accounted for as separate contracts.
 3.

Modifications of contracts do not require an entity to reassess its original conclusion about whether that contract contains an embedded derivative that is clearly and closely related to the economic characteristics and risks of the host contract under Subtopic 815-15, Derivatives and Hedging— Embedded Derivatives

 

The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently charged interest and standby fees associated with its Amended 2019 Credit Facility (as defined below) based on LIBOR which are partially hedged by interest rate swaps, which are also based on LIBOR. Both the credit facility agreement and the interest rate swaps will need to be amended when an alternative reference rate is chosen, at which time we may adopt some of the practical expedients provided by ASU 2020-04.

 

 

4. Acquisitions:

 

 

(a)

Ascio

 

On March 18, 2019, the Company entered into an Asset Purchase Agreement to purchase all of the equity of Ascio Technologies, Inc. (“Ascio”) 
with NetNames European Holdings ApS, CSC Administrative Services Limited UK, and Corporation Service Company (“CSC”)
, a domain registrar business, and all of CSC’s assets related to that business. For more information, see Note 3 - Acquisitions of the 2019 Annual Report. 

 
 

(b)

Cedar

 

In the fourth quarter of 2019, the Company entered into a Stock Purchase Agreement to purchase all of the issued and outstanding shares of Cedar Holdings Group, Incorporated (“Cedar”), a fiber Internet provider business based in Durango, Colorado.  The transaction closed on January 1, 2020, following receipt of all regulatory approvals.  The purchase price was $14.1 million, less an estimated purchase price adjustment of approximately $0.2 million relating to a working capital deficit and assessment of the fair value of contingent consideration, for net purchase consideration of $13.9 million. In addition to $9.0 million cash consideration due at closing, the Company also issued 32,374 ($2.0 million) of Tucows Inc. shares with a two-year restriction period at closing.  Included in the agreement is contingent consideration totaling up to $4.0 million, due on the 24th and 36th month anniversaries of the closing of the transaction dependent upon the achievement of certain milestones as defined in the Share Purchase Agreement. The fair value of the contingent consideration was determined to be $3.1 million using a discount rate of 11.2%. The Company has prepared a preliminary purchase price allocation of the assets acquired and the liabilities assumed of Cedar based on management’s best estimates of fair value.  The final purchase price allocation may vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumed liabilities. 

 

The amortization period for the customer relationships and network rights are 7 and 15 years, respectively.

 

7

 
The following table shows the preliminary allocation of the purchase price for Cedar to the acquired identifiable assets and liabilities assumed ( thousands of U.S. dollars):

 

Cash Consideration, including working capital adjustment

 $8,836 

Share-based payment

  2,000 

Fair value of contingent payments

  3,072 

Total estimated purchase price

  13,908 
     

Cash and Cash Equivalents

  66 

Accounts Receivables, net

  47 

Other current assets

  22 

Property and equipment

  4,661 

Right of use operating lease

  18 

Intangible assets, consisting of customer relationships and network rights

  5,390 

Total identifiable assets

  10,204 

Accounts payable and accrued liabilities

  (362)

Deferred tax liability

  (2,373)

Operating lease liability

  (13)

Total liabilities assumed

  (2,748)

Total net assets (liabilities) assumed

  7,456 

Total goodwill

 $6,452 

 

The goodwill related to this acquisition is primarily attributable to synergies expected to arise from the acquisition and is not deductible for tax purposes.
 

In connection with this acquisition, the Company incurred total acquisition related costs of $0.1 million, of which nil were included in general & administrative expenses in the consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2020.

 

The following table presents selected unaudited pro forma information for the Company assuming the acquisition of Cedar had occurred as of January 1, 2019. This pro forma information does not purport to represent what the Company’s actual results would have been if the acquisition had occurred as of the date indicated or what results would be for any future periods.

 

  

Unaudited

  

Unaudited

 
  

For the Three Months Ended September 30,

  

For the Nine Months Ended September 30,

 
  

2019

  

2019

 
         

Net revenues

 $89,357  $254,882 

Net income

  4,090   9,530 
         

Basic earnings per common share

  0.38   0.90 

Diluted earnings per common share

 $0.38  $0.88 

 

The amount of revenue recognized since the acquisition date included in the consolidated statements of operations and comprehensive income statement for the three and nine months ended September 30, 2020 is $1.1 million and $3.5 million, respectively.

 

The net income recognized since the acquisition date included in the consolidated statements of operations and comprehensive income for the three and nine months ended September 30, 2020 is a loss of $0.4 million and a loss of $0.6 million, respectively.

 

8

 
 
5. Derivative Instruments and Hedging Activities:
 
The Company is exposed to certain risks relating to its ongoing business operations. The primary risks managed by using derivative instruments are foreign exchange rate risk and interest rate risk.
 
Since October 2012, the Company has employed a hedging program with a Canadian chartered bank to limit the potential foreign exchange fluctuations incurred on its future cash flows related to a portion of payroll, taxes, rent and payments to Canadian domain name registry suppliers that are denominated in Canadian dollars and are expected to be paid by its Canadian operating subsidiary. In May 2020, the Company entered into a pay-fixed, receive-variable interest rate swap with a Canadian chartered bank to limit the potential interest rate fluctuations incurred on its future cash flows related to variable interest payments on the Credit facility. The notional value of the interest rate swap was $70 million. 
 
The Company does not use hedged forward contracts for trading or speculative purposes. The foreign exchange contracts typically mature between one and eighteen months, and the interest rate swap matures in June 2023.

 

The Company has designated certain of these foreign exchange transactions as cash flow hedges of forecasted transactions under ASU 2017- 12, Derivatives and Hedging (Topic 815) (“ASC Topic  815”). For certain contracts, as the critical terms of the hedging instrument, and of the entire hedged forecasted transaction, are the same, in accordance with ASC Topic 815, the Company has been able to conclude that changes in fair value and cash flows attributable to the risk of being hedged are expected to completely offset at inception and on an ongoing basis. The Company has also designated the interest rate swap as a cash flow hedge of expected future interest payments. Accordingly, for the foreign exchange and interest rate swap contracts, unrealized gains or losses on the effective portion of these contracts have been included within other comprehensive income and reclassified to earnings when the hedged transaction is recognized in earnings. Cash flows from hedging activities are classified under the same category as the cash flows from the hedged items in the consolidated statements of cash flows. The fair value of the contracts, as of  September 30, 2020 and December 31, 2019, is recorded as derivative instrument assets or liabilities. For certain contracts where the hedged transactions are no longer probable to occur, the loss on the associated forward contract is recognized in earnings.

 

As of September 30, 2020, the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars was $41.4 million, of which $35.0 million met the requirements of ASC Topic 815 and were designated as hedges.

 

As of December 31,  2019, the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars wa s $30.5 million, of which $26.1 million met the requirements of ASC Topic 815 and were designated as hedges.
 
As of September 30, 2020, we had the following outstanding forward contracts to trade U.S. dollars in exchange for Canadian dollars:
 
Maturity date (Dollar amounts in thousands of U.S. dollars) Notional amount of U.S. dollars  Weighted average exchange rate of U.S. dollars  Fair value Asset / (Liability) 
             
October - December 2020  9,658   1.3227   (64)
January - March 2021  11,124   1.4283   819 
April - June 2021  9,878   1.4283   727 
July - September 2021  10,782   1.4362   856 
  $41,442   1.4058  $2,338 

 

As of September 30, 2020, the notional amount of the Company's interest rate swap designated as a cash flow hedge was $70 million. As of December 31, 2019 the Company had not entered into any interest rate swaps.

 

9

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

The effect of these derivative instruments on our consolidated financial statements were as follows (amounts presented do not include any income tax effects).

 

Fair value of derivative instruments in the consolidated balance sheets 
 
Derivatives (Dollar amounts in thousands of U.S. dollars) Balance Sheet Location As of September 30, 2020 Fair Value Asset (Liability)  As of December 31, 2019 Fair Value Asset (Liability) 
Foreign Currency forward contracts designated as cash flow hedges (net) Derivative instruments $1,971  $626 
Interest rate swap contract designated as a cash flow hedge (net) Derivative instruments  (183) $- 
Foreign Currency forward contracts not designated as cash flow hedges (net) Derivative instruments  367   105 
Total foreign currency and interest swap forward contracts (net) Derivative instruments $2,155  $731 

 

Movement in accumulated other comprehensive income (AOCI) balance for the three months ended  September 30, 2020 (Dollar amounts in thousands of U.S. dollars)
 
  

Gains and losses on cash flow hedges

  

Tax impact

  

Total AOCI

 

Opening AOCI balance - June 30, 2020

 $780  $(184) $596 

Other comprehensive income (loss) before reclassifications

  946   (217)  729 

Amount reclassified from AOCI

  59   (13)  46 

Other comprehensive income (loss) for the three months ended September 30, 2020

  1,005   (230)  775 
             

Ending AOCI Balance - September 30, 2020

 $1,785  $(414) $1,371 

 

Movement in accumulated other comprehensive income (AOCI) balance for the nine months ended September 30, 2020 (Dollar amounts in thousands of U.S. dollars)

 

  

Gains and losses on cash flow hedges

  

Tax impact

  

Total AOCI

 

Opening AOCI balance - December 31, 2019

 $625  $(152) $473 

Other comprehensive income (loss) before reclassifications

  784   (175)  609 

Amount reclassified from AOCI

  376   (87)  289 

Other comprehensive income (loss) for the nine months ended September 30, 2020

  1,160   (262)  898 
             

Ending AOCI Balance - September 30, 2020

 $1,785  $(414) $1,371 

 

Effects of derivative instruments on income and other comprehensive income (OCI) for the three months ended  September 30, 2020 are as follows (Dollar amounts in thousands of U.S. dollars) 
 
Derivatives in Cash Flow Hedging Relationship Amount of Gain or (Loss) Recognized in OCI, net of tax, on Derivative Location of Gain or (Loss) Reclassified from AOCI into Income Amount of Gain or (Loss) Reclassified from AOCI into Income 
     Operating expenses $(43)
Foreign currency forward contracts for the three months ended September 30, 2020 $762 Cost of revenues $(12)
          
Interest rate swap contract for the three months ended September 30, 2020 $13 Interest expense, net $(4)
          
     Operating expenses $(28)
Foreign currency forward contracts for the three months ended September 30, 2019 $(149)Cost of revenues $(7)
          
Interest rate swap contract for the three months ended September 30, 2019 $- Interest expense, net $- 

 

10

 

Effects of derivative instruments on income and other comprehensive income (OCI) for the nine months ended September 30, 2020 are as follows (Dollar amounts in thousands of U.S. dollars) 

 

Derivatives in Cash Flow Hedging Relationship

 

Amount of Gain or (Loss) Recognized in OCI, net of tax, on Derivative

 

Location of Gain or (Loss) Reclassified from AOCI into Income

 

Amount of Gain or (Loss) Reclassified from AOCI into Income

 
     

Operating expenses

 $(290)

Foreign currency forward contracts for the nine months ended September 30, 2020

 $1,039 

Cost of revenues

 $(82)
          
Interest rate swap contract for the nine months ended September 30, 2020 $(141)Interest expense, net $(4)
          
     

Operating expenses

 $(182)

Foreign currency forward contracts for the nine months ended September 30, 2019

 $781 

Cost of revenues

 $(38)
          
Interest rate swap contract for the nine months ended September 30, 2019 $- Interest expense, net $- 

 

In addition to the above, 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. dollars):

 

  

Three Months Ended September 30,

     

Nine Months Ended September 30,

    

Forward currency contracts not designated as hedges:

 

2020

  

2019

  

2020

  

2019

 
                 

Gain (loss) on settlement

 $(18) $(36) $(162) $(115)
                 

Gain (loss) on change in fair value

 $177  $16  $261  $205 

 

 
6. Goodwill and Other Intangible Assets