TUCOWS INC /PA/

Current report

Slower-than-expected subscriber growth and ongoing operating losses could impair Ting’s ability to meet future financial and operational obligations and limit its access to additional financing.

Current report

Ting’s ability to meet its financing commitments, including scheduled interest and principal payments under its outstanding term notes and obligations under its redeemable preferred units, depends on achieving growth levels consistent with its operating plan. Ting’s recent subscriber growth has been below internal forecasts and may continue to underperform expectations in future periods. Lower net additions to Ting’s subscriber base would result in reduced recurring revenue and cash flow, which would impair Ting’s ability to fund operations, raise additional capital and service its debt obligations.

Current report

Ting has historically relied on proceeds from its redeemable preferred units and Term Notes to fund its operations and the expansion of its fiber Internet footprint. Ting currently has limited borrowing capacity under the Base Indenture, and its ability to access additional financing, including future asset-backed securitizations is dependent on maintaining sufficient growth in its subscriber base and related recurring revenue. If subscriber growth continues to underperform, the size and credit quality of the receivable and subscription pools available for securitization would decline, reducing Ting’s capacity to raise incremental funding on acceptable terms or at all. This would limit Ting’s flexibility to refinance existing indebtedness, fund network expansion, or pursue strategic initiatives.

Current report

If Ting is unable to obtain additional financing when required or on acceptable terms, it could be required to further restrict operations, obtain funds under unfavorable conditions, or consider other alternatives to raise capital, which would materially and adversely affect its business, financial condition, and results of operations. Sustained underperformance or an inability to secure financing would increase liquidity pressures and, if severe, may require Ting to seek bankruptcy protection or consider other alternatives that could result in a loss of investment for the Company’s stockholders.

Current report

Risks Related to Our Review of Strategic Alternatives for Ting

Current report

We may not be successful in identifying and implementing any potential strategic alternatives for Ting in a timely manner, or at all, and any strategic transactions that we may consummate in the future could have negative consequences.

Current report

The Company has commenced a process to review strategic alternatives for the Ting business. We expect to devote substantial time and resources to exploring strategic alternatives for Ting. However, there can be no assurance that this strategic review process will result in us pursuing any transaction or that we will be able to successfully consummate a transaction on attractive terms, on a timely basis, or at all. Additionally, there can be no assurance that any particular course of action, business arrangement or transaction, or series of transactions, will be pursued, successfully consummated or lead to increased stockholder value.

Current report

The process of continuing to evaluate our strategic alternatives may be costly, time-consuming and complex, and we may incur significant legal, accounting and advisory fees and other expenses, some of which may be incurred regardless of whether we successfully enter into a transaction. Our ability to pursue or consummate strategic transactions also depends upon our ability to retain certain of our employees, the loss of whose services may adversely impact the ability to identify, negotiate and consummate such transaction. If we are unable to successfully retain certain of our key remaining personnel, we are at risk of a disruption to our exploration and consummation of one or more strategic transactions.

Current report

If we are not successful in setting forth a new strategic path for us, or if our plans are not executed in a timely fashion, this may cause reputational harm with our stockholders and the value of our securities may be adversely impacted. In addition, speculation regarding any developments related to the review of strategic alternatives and perceived uncertainties related to the future of us could cause our stock price to fluctuate significantly.

Current report

We may become involved in litigation in connection with any strategic alternative we explore for Ting, including securities class action litigation, that could divert our management’s attention and harm our business, and insurance coverage may not be sufficient to cover all costs and damages.

Current report

Litigation, including securities class action litigation, often follows certain significant business transactions, such as the announcement of any strategic transaction, or the announcement of negative events. These events may also result in investigations by the SEC. We may be exposed to such litigation even if no wrongdoing occurred. Litigation is usually expensive and diverts management’s attention and resources, which could adversely affect our business and cash resources and our ability to consummate a potential strategic transaction or the ultimate value our stockholders receive in any such transaction.

Current report

As of September 2025, Ting has not paid the preferred return due to Generate for two consecutive quarters amounting to $9.5 million in the aggregate. Ting received a notice from Generate on October 1, 2025 stating that if Ting does not cure the failure to pay such preferred return amounts by November 30, 2025, it shall be classified as Return Breach under the LLC Agreement, and Generate has the right to pursue certain remedies as described in "Note 19. Redeemable preferred units" of the Notes to the Condensed Consolidated Financial Statements included in Part I, of this Quarterly Report, which carries the risks outlined in the risk factor titled “Slower-than-expected subscriber growth and ongoing operating losses could impair Ting’s ability to meet future financial and operational obligations and limit its access to additional financing.”

Previous report

*The Company’s bankruptcy remote subsidiary Ting will require additional financing in order to meet its future financial obligations. *

Previous report

Ting may not be able to meet its financial obligations over the twelve months following June 30, 2025 without additional financing. Ting has historically relied on the proceeds from its redeemable preferred units as well as its 2023 and 2024 Term Notes to fund its operations and the expansion of the Ting fiber Internet footprint. Ting currently has limited capacity to expand its borrowings under the Base Indenture and it is uncertain whether Ting will be able to access additional Milestone Fundings under the redeemable preferred unit facility. Our ability to obtain additional financing if required will be subject to a number of factors, including market conditions, our operating performance and investor sentiment.

Previous report

In addition, should Ting fail to pay the Unsatisfied Preferred Return (as defined in "Note 18. Redeemable preferred units" of the Notes to the Consolidated Financial Statements included in Part I, of this Quarterly Report) associated with the Series A Preferred Units for two consecutive quarters, the “Cure”. Generate has the option to either (i) require Ting to redeem the Series A Preferred Units at the Redemption Price; or (ii) compel the sale of certain assets of Ting and/or its subsidiaries to Generate with a value equal to the Redemption Price. The Redemption Price is an amount equal to the outstanding Unreturned Series A Capital Balance plus the Unsatisfied Preferred Return (and pay a Make-Whole Premium if the redemption of the preferred units occurs within the four years following the Transaction Close). The Make-Whole Premium is an amount calculated immediately prior to redemption equal to:(i) (A) the Unreturned Series A Capital Balance and Unsatisfied Preferred Return outstanding immediately prior to such redemption plus (B) the cumulative and compounded Preferred Return that would have accrued (at the Preferred Rate as in effect immediately prior to such redemption) on such Unreturned Series A Capital Balance through and including the six-year anniversary of the Effective Date had such Series A Preferred Units not been redeemed, and thereafter applying to such sum a discount rate on a quarterly compounded basis equal to the Applicable Treasury Rate plus 50 basis points, less (ii) the Unreturned Series A Capital Balance and Unsatisfied Preferred Return outstanding immediately prior to such redemption.

Previous report

If Ting fails to Cure and Generate exercises its rights under the LLC Agreement and if Ting is unable to raise additional capital when required or on acceptable terms, we may have to further restrict our operations or obtain funds by entering into agreements on unattractive terms, which would likely have a material adverse effect on our business, stock price and our relationships with third parties with whom we have business relationships, at least until additional funding is obtained, and which could result in additional dilution to our stockholders. If we do not have sufficient funds to continue operations, Ting could be required to seek bankruptcy protection or other alternatives that would likely result in our stockholders losing some or all of their investment in us.

Previous report

None.