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Schedule I - Condensed Financial Information of Parent Company

12 Months Ended

Dec. 31, 2023

Notes to Financial Statements

Condensed Financial Information of Parent Company Only Disclosure [Text Block]

CONDENSED FINANCIAL STATEMENTS OF TUCOWS INC.

(PARENT COMPANY)

All operating activities of Tucows Inc. (the “Parent Company”) are primarily conducted by its operating subsidiaries, Tucows.com Co (“Tucows.com Co”), eNom LLC ("eNom"), EPAG Domainservices GmbH (“EPAG”), Ascio Technologies, Corp (“Ascio”), Ting Inc. (“Ting Inc”), Wavelo, Inc. (“Wavelo”) and Ting Fiber, LLC (“Ting Fiber”).

The Parent Company holds a direct 100% ownership interest in Tucows (Delaware) Inc. ("Tucows Delaware"), which holds the Parent Company’s interest in its operating subsidiaries. The Parent Company is a holding company that does not conduct any substantive business operations and does not have any assets or liabilities other than cash and cash equivalents, accounts receivables, prepaid expenses, intangible assets, derivative instruments, accounts payables, accrued liabilities, investments in its subsidiaries and due to related party. The operations of Ting Fiber, LLC are partially funded through Redeemable preferred units which have restrictions on the ability to pay dividends, loan funds and make other upstream distributions to the Parent Company without prior approval by the holder of the Redeemable preferred units.

These Condensed Parent Company financial statements have been prepared using the same accounting principles and policies described in the notes to the Consolidated Financial Statements. Refer to the Consolidated Financial Statements and notes presented above for additional information and disclosures with respect to these condensed financial statements.

PARENT COMPANY INFORMATION

TUCOWS INC

SCHEDULE I - CONDENSED BALANCE SHEETS

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

		*December 31, 2023*				*December 31, 2022*

Assets
Cash and cash equivalents		$	7,051			$	3,897
Accounts receivable			-				482
Prepaid expenses and deposits			610				528
Income taxes recoverable			508				1,716
Derivative instrument			-				1,599
Investment in subsidiaries			81,636				178,786
Intangible assets			59				59
Total Assets			89,864				187,067

Liabilities
Accounts payable			147				665
Accrued liabilities			459				265
Due to related parties			68,392				66,415
Deferred tax liability			10,991				23,065
Total Liabilities			79,989				90,410

Equity
Share capital			34,321				31,816
Additional paid-in capital			21,235				17,679
Accumulated surplus (deficit)			(45,681	)			46,314
Accumulated other comprehensive income			-				848
Total Equity			9,875				96,657
Total Liabilities and Equity		$	89,864			$	187,067

The accompanying notes to the condensed financial statements are an integral part of these financial statements

PARENT COMPANY INFORMATION

TUCOWS INC

SCHEDULE I - CONDENSED STATEMENTS OF INCOME (LOSS) AND COMPREHENSIVE INCOME (LOSS)

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

		*For the year ended December 31,*
		*2023*				*2022*				*2021*

Income (loss) of equity method investments		$	(97,150	)		$	(25,348	)		$	8,486
Operating expenses			(8,192	)			(7,095	)			(7,059	)
Interest income (expense)			1,016				1,378				(376	)
Income tax recovery			8,129				3,494				2,313
Net income (loss)			(96,197	)			(27,571	)			3,364
Other comprehensive income (loss) - Parent Company			(848	)			1,408				-
Other comprehensive income (loss) - Subsidiaries			1,792				(967	)			(1,993	)
Comprehensive income (loss)		$	(95,253	)		$	(27,130	)		$	1,371

The accompanying notes to the condensed financial statements are an integral part of these financial statements

PARENT COMPANY INFORMATION

TUCOWS INC

SCHEDULE I - CONDENSED STATEMENTS OF CASH FLOWS

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

		*For the year ended December 31,*
		*2023*				*2022*				*2021*

Operating activities
Net income (loss)		$	(96,197	)		$	(27,571	)		$	3,364
Non-cash items affecting net income
Excess tax benefits on stock-based compensation expense			-				(193	)			(1,554	)
Stock-based compensation			6,035				5,779				4,592
Deferred income taxes (recovery)			(11,804	)			(6,689	)			(1,251	)
Amortization of discontinued cash flow hedge from Accumulated other income			(1,144	)			(761	)			-
Loss (gain) on change in the fair value of forward contracts			1,624				281				-
Equity in undistributed earnings of subsidiaries			97,150				25,348				(8,486	)
Changes in non-cash balances related to operations
Accounts receivable			381				(482	)			-
Prepaid expenses and deposits			(82	)			(49	)			(191	)
Income taxes recoverable			1,208				532				108
Accounts payable			(492	)			507				102
Accrued liabilities			195				196				254
Customer deposits			-				(1	)			-
Cash from operating activities			(3,126	)			(3,103	)			(3,062	)

Financing activities
Net proceeds received from (paid to) subsidiaries			6,280				1,101				(1,650	)
Net Proceeds received on exercise of stock options			-				1,096				4,431
Cash from financing activities			6,280				2,197				2,781

Investing activities
Investment in unrelated company			-				(2,012	)			-
Acquisition of intangible assets			-				-				(59	)
Cash from investing activities			-				(2,012	)			(59	)

Increase (decrease) in cash and cash equivalents			3,154				(2,918	)			(340	)

Cash and cash equivalents, beginning of period			3,897				6,815				7,155
Cash and cash equivalents, end of year		$	7,051			$	3,897			$	6,815

The accompanying notes to the condensed financial statements are an integral part of these financial statements

SCHEDULE I - NOTES TO THE CONDENSED FINANCIAL STATEMENTS

NOTE 1. BASIS OF PRESENTATION

Tucows Inc. (the “Parent Company”) is a holding company that conducts substantially all of its business operations through its subsidiaries. The Parent Company holds a direct 100% ownership interest in Tucows (Delware) Inc., which holds the Parent Company’s interest in Tucows.com Co (“Tucows.com Co”), eNom LLC ("eNom"), EPAG Domainservices GmbH (“EPAG”), Ascio Technologies, Corp (“Ascio”), Ting Inc. (“Ting Inc”), Wavelo, Inc. (“Wavelo”) and Ting Fiber, LLC (“Ting Fiber”).

The Parent Company was incorporated under the laws of the Commonwealth of Pennsylvania in November 1992 under the name Infonautics, Inc. In August 2001, we completed our acquisition of Tucows Inc., a Delaware corporation, and we changed our name from Infonautics, Inc. to Tucows Inc.

The Parent Company was established to allocate capital and manage internet and telecom infrastructure businesses. Through its operating subsidiaries, the Parent Company offers a broad range of services including fixed Internet access, billing and subscription management platform services for communication service providers and distribution of global internet services through the provision of domain name registrations, digital certificates and email services.

As of December 31, 2023 the restricted net assets for Ting Fiber LLC totaled $89.3 million. The restrictions on these net assets primarily affect our ability to transfer funds from our subsidiaries without violating contractual agreements. The Company continuously evaluates the impact of these restrictions on our liquidity and capital resource planning.

The Company operates within a consolidated tax group, comprising the Parent Company and its wholly-owned subsidiaries. Deferred taxes are not separately identified and recorded at the parent level.

No dividends have been received from any of our subsidiaries in the past three years.

NOTE 2. COMMITMENTS AND CONTINGENCIES

The Parent Company and its subsidiaries, excluding Ting Fiber, LLC, have revolving credit facilities through third-party financial institutions. The total available amount on the credit facilities is $240 million, and as at December 31, 2023, $211.9 million was drawn on the credit facilities. The Parent Company had no other material commitments or contingencies during the reported periods.

NOTE 3. SHARE CAPITAL

The Company's authorized common share capital is 250 million shares of common stock without nominal or par value. As of December 31, 2023, and 2022, the number of outstanding shares of common stock was 10,903,405 and 10,817,110, respectively. The Parent Company issued 86,295, 40,459, and nil common stock during the twelve months ended December 31, 2023, December 31, 2022 and December 31, 2021, respectively related to stock based compensation. The Parent Company retired nil, 3,053 and 45,824 common stock during the twelve months ended December 31, 2023, December 31, 2022 and December 31, 2021, respectively related to stock options exercised.