TUCOWS INC /PA/

The following risk factors are provided to update the risk factors previously disclosed under the heading "Risk Factors" in our Annual Report on Form 10-K for the year ended December 31, 2024. The risks described in this Quarterly Report and in our Annual Report on Form 10-K and other Quarterly Reports are not the only risks facing the Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition or operating results.

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.

Ting incurred a net loss of $26.7 million, $68.5 million, $23.3 million and $75.7 million for the three and nine months ended September 30, 2025 and 2024, respectively. As of September 30, 2025, Ting had $50.4 million in cash and cash equivalents, restricted cash and restricted cash equivalents, $3.6 million in accounts receivable, $1.3 million in accounts payable, and $8.1 million in accrued liabilities. Ting’s long-term liabilities included $290.6 million payable on the 2023 and 2024 Term Notes as well as $131.8 million on the redeemable preferred units. Ting incurred an operating cash flow deficit of $7.0 million, $25.1 million, $14.9 million and $41.8 million for the three and nine months ended September 30, 2025 and 2024, respectively, and has scheduled interest payments of $20.6 million in the twelve months following September 30, 2025.

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.

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.

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.

The success of our Ting workforce reductions involves ongoing risks that could adversely affect our business operations, financial condition, and growth strategy, including risks related to operational execution, employee engagement, and long-term competitiveness.

As part of our continued focus on operational efficiency and strategic alignment, we completed two workforce reductions within the Ting segment on February 7, 2024 and October 30, 2024. These reductions were designed to streamline operations, reduce costs, improve efficiency and align our resources with strategic priorities. While reductions have been implemented, the full benefits are still being realized, and we continue to monitor the impact of these actions. Residual risks associated with the workforce reductions include the following:

Risks Related to Our Review of Strategic Alternatives for Ting

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.

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.

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.

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.

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.

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.

We are subject to minimum purchase commitments with our Mobile Network Operator (“MNO”).* *

Following the sale of the majority of our Ting Mobile customer base on August 1, 2020, we retained a small subset of mobile customers to which we continue to provide retail mobile services through our partnership with our MNO supplier. The Company is subject to minimum purchase commitments with our MNO supplier through a “take or pay” arrangement. We are committed to a minimum of $5.1 million in remaining payments through January 16, 2026. If we are unable to grow the Ting Mobile subscriber base or renegotiate the contract, our cost of revenues could grow significantly, and may result in a significant increase to the Company’s net loss.