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| PART I |
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| Item 1 | Business | 3 |
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| Item 1A | Risk Factors | 10 |
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| Item 1B | Unresolved Staff Comments | 21 |
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| Item 1C | Cybersecurity | 22 |
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| Item 2 | Properties | 23 |
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| Item 3 | Legal Proceedings | 23 |
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| Item 4 | Mine Safety Disclosures | 23 |
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| PART II |
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| Item 5 | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 24 |
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| Item 6 | Reserved | 25 |
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| Item 7 | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 |
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| Item 7A | Quantitative and Qualitative Disclosures About Market Risk | 53 |
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| Item 8 | Financial Statements and Supplementary Data | 54 |
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| Item 9 | Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 54 |
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| Item 9A | Controls and Procedures | 54 |
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| Item 9B | Other Information | 55 |
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| Item 9C | Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 55 |
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| PART III |
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| Item 10 | Directors, Executive Officers and Corporate Governance | 56 |
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| Item 11 | Executive Compensation | 64 |
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| Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 81 |
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| Item 13 | Certain Relationships and Related Transactions, and Director Independence | 84 |
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| Item 14 | Principal Accountant Fees and Services | 84 |
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| PART IV |
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| Item 15 | Exhibits and Financial Statement Schedules | 85 |
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TRADEMARKS, TRADE NAMES AND SERVICE MARKS
Tucows®, EPAG®, Hover®, OpenSRS®, Ting®, Enom®, Ascio®, Simply Bits®, and Wavelo® 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 Annual Report on Form 10-K (this “Annual Report”). All other service marks, trademarks and trade names referred to in this Annual Report are the property of their respe ctive owners. Solely for convenience, any trademarks referred to in this Annual 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.
Information Concerning Forward-Looking Statements
This Annual Report contains, in addition to historical information, forward-looking statements by Tucows Inc. (the “Company”, “we”, “us” “Tucows” or “our”) with regard to our expectations as to financial results and other aspects of our business that involve risks and uncertainties and may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “may,” “should,” “anticipate,” “believe,” “plan,” “estimate,” “expect,” and “intend,” and other similar expressions are intended to identify forward-looking statements. The forward-looking statements contained in this report include statements regarding, among other things, the competition we expect to encounter as our business develops and competes in a broader range of Internet services, the Company's foreign currency requirements, specifically for the Canadian dollar, Euro and Indian Rupee; Wavelo, and Ting subscriber growth and retention rates; the number of new, renewed and transferred-in domain names we register as our business develops and competes; the effect of a potential generic top level domain (“gTLD”) expansion by the Internet Corporation for Assigned Names and Numbers (“ICANN”) on the number of domains we register and the impact it may have on related revenues; our belief regarding the underlying platform for our domain services; our expectation regarding the trend of sales of domain names; our belief that, by increasing the number of services we offer, we will be able to generate higher revenues; our expectation regarding litigation; the potential impact of current and pending claims on our business; our valuations of certain deferred tax assets; our expectation to collect our outstanding receivables, net of our expected credit losses; our expectation regarding fluctuations in certain expense and cost categories; our expectations regarding the liquidity and capital requirements of the Ting internet business as well as the outcome of any process to assess strategic alternatives for this business; our expectations regarding our unrecognized tax; our expectations regarding cash from operations to fund our business; the timing, implementation and impact of the 2024 Capital Efficiency Plan (as defined below); the impact of cancellations of or amendments to market development fund programs under which we receive funds; our expectation regarding our ability to manage realized gains/losses from foreign currency contracts; our arrangement with an affiliate of Generate TF Holdings, LLC, a Delaware limited liability company ("Generate"); and general business conditions and economic uncertainty. These statements are based on management’s current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Many factors affect our ability to achieve our objectives and to successfully develop and commercialize our services including:
| • | Our ability to continue to generate sufficient working capital to meet our operating requirements; |
| • | Our ability to service our debt commitments and preferred unit commitments; |
| • | Our ability to maintain a good working relationship with our vendors and customers; |
| • | The ability of vendors to continue to supply our needs; |
| • | Actions by our competitors; |
| • | Our ability to attract and retain qualified personnel in our business and address operational efficiencies, such as the February 2024 Workforce Reduction and 2024 Capital Efficiency Plan; |
| • | Our ability to effectively manage our business; |
| • | The effects of any material impairment of our goodwill or other indefinite-lived intangible assets; |
| • | Our ability to obtain and maintain approvals from regulatory authorities on regulatory issues; |
| • | Our ability to invest in the build-out of fiber networks into selected towns and cities to provide Internet access services to residential and commercial customers while maintaining the development and sales of our established services; |
| • | Adverse tax consequences such as those related to changes in tax laws or tax rates or their interpretations, including with respect to the impact of the Tax Cuts and Jobs Act of 2017 and the Organization for Economic Cooperation and Development ("OECD") model global minimum tax rules; |
| • | Our ability to effectively respond or comply with new data protection regulations and any conflicts that may arise between such regulations and our ICANN contractual requirements; |
| • | The application of business judgment in determining our global provision for income taxes, deferred tax assets or liabilities or other tax liabilities given that the ultimate tax determination is uncertain; |
| • | Our ability to effectively integrate acquisitions; |
| • | Our ability to monitor, assess and respond to changing geopolitical and economic environments including changing inflation and interest rates, tariffs and trade disputes, and geopolitical conflict; |
| • | Our ability to collect anticipated payments from DISH in connection with the 10-year payment stream that is a function of the margin generated by the transferred subscribers over a 10-year period pursuant to the terms of the Asset Purchase Agreement dated August 1, 2020 between the Company and DISH Wireless LLC ("EchoStar", DISH's post-merger parent) (the “EchoStar Purchase Agreement”); |
| • | Our ability to maintain compliance with the operational and financial covenants of the 2023 and 2024 Notes as defined in "Note 8. Notes Payable" to the Consolidated Financial Statements; |
| • | Our ability to maintain the safety and security of our systems and data; |
| • | Our ability to successfully identify and implement any potential strategic alternatives for Ting; |
| • | Pending or new litigation; and |
| • | Factors set forth herein under the caption “Item 1A Risk Factors”. |
This list of factors that may affect our future performance and financial and competitive position and the accuracy of forward-looking statements is illustrative, but it is by no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-looking statements included in this document are based on information available to us as of the date of this document, and we assume no obligation to update these cautionary statements or any forward-looking statements, except as required by law. These statements are not guarantees of future performance.
We qualify all the forward-looking statements contained in this Annual Report by the foregoing cautionary statements.
