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Note 19 - Redeemable Preferred Units | 3 Months Ended
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Mar. 31, 2026
Notes to Financial Statements |
Summary of Redeemable Preferred Shares [Text Block] | 19. Redeemable Preferred Units On August 8, 2022 (the “Effective Date”), Ting Fiber, LLC (“Ting”) entered into a Series A Preferred Unit Purchase Agreement (the “Unit Purchase Agreement”) with Generate TF Holdings ("Generate"), and closed the transaction on August 11, 2022 (the “Transaction Close”). Ting issued and sold 10,000,000 Series A Preferred Units to Generate at $6.00 per unit, resulting in gross proceeds of $60.0 million. The investment provided an additional $140 million of capital commitments available to Ting over the subsequent three year period, if certain milestones were achieved. On December 5, 2022, Ting issued and sold an additional 4,583,333 Series A Preferred Units for gross proceeds of $27.5 million. During the year ended December 31, 2023, Ting issued an aggregate of 5,833,333 additional Series A Preferred Units for gross proceeds of $35.0 million. On May 4, 2023, Ting redeemed 5,173,067 Series A Preferred Units for $45.7 million, including a make-whole premium of $14.7 million. The redemption was accounted for as a debt extinguishment, and the associated loss was recognized in other income (expense). As of March 31, 2026, the redeemable preferred units have an aggregate liquidation preference of $91.5 million, plus a make-whole premium should redemption occur before the fourth anniversary of the Transaction Close and are senior to the Ting Fiber, LLC common units with respect to sale, dissolution, liquidation or winding up of Ting. Ting had the option to issue additional Series A Preferred Units through August 8, 2025, subject to milestone achievement. Until this date, Ting was required to pay a standby fee of 0.50% per annum on the undrawn commitment, payable quarterly. The Series A Preferred Units accrue a preferred return at 15% per annum, subject to adjustment between 13% and 17% based on certain project approval and contribution conditions. The preferred return accrues daily and compounds quarterly. The preferred return accrued during the first two years is not payable unless and until the Series A Preferred Units are redeemed. The preferred return accrued after the second anniversary of the Transaction Close is payable by Ting quarterly. Ting incurred $0.8 million of legal fees related to the redeemable preferred unit issuance, which have been reflected as a reduction to the carrying amount of the redeemable preferred unit balance and will be amortized to interest expense, net in the accompanying Consolidated Statements of Operations and Comprehensive Loss over the expected six-year term of the instrument. The liability was initially recorded at fair value and subsequently recorded at the present value of the settlement amount, which includes the preferred return payments required until the instrument's expected maturity on the sixth anniversary of the Transaction Close, August 10, 2028 using the implicit rate of return of the instrument, 15%. For the period ended March 31, 2026, Ting recorded an interest expense of $5.0 million, the total of which was accreted. For the year ended December 31, 2025, Ting recorded an interest expense of $19.3 million, of which $14.7 million was accreted. Interest expense related to amortization of issuance costs was $0.1 million in each of those periods. Commencing in the second quarter of 2025, Ting has not paid the quarterly preferred return for more than two consecutive quarters. The unpaid amount as of March 31, 2026 is $19.7 million and has been added to the redeemable preferred units balance in the Consolidated Balance Sheets. The impact of this failure to pay is outlined below under Return Breach and Trigger Event. The following table summarizes Ting's borrowings under the Unit Purchase Agreement (Dollar amounts in thousands of U.S. dollars):
|  | March 31, 2026 |  |  | December 31, 2025 |
Opening Balance |  | $ | 137,252 |  |  | $ | 122,556 |
Add: Accretion of redeemable preferred units(1) |  |  | 5,032 |  |  |  | 14,696 |
Redeemable preferred shares balance |  |  | 142,284 |  |  |  | 137,252 |
Less: Deferred preferred financing costs |  |  | (260 | ) |  |  | (289 | )
Total Redeemable preferred units |  | $ | 142,024 |  |  | $ | 136,963 |
(1) Ting capitalizes interest expenses directly attributable to the development of qualifying assets. Qualifying assets include IUS, AUC, equipment, or other long-lived assets that meet the capitalization criteria prescribed by ASC 350. During the three months ended March 31, 2026 and March 31, 2025 Ting capitalized $0.1 million of interest expenses pertaining to the redeemable preferred units directly attributable to the development of certain AUC assets. Return Breach and Trigger Event On December 1, 2025, Ting received written notice from Generate asserting that a Return Breach had occurred due to Ting’s failure to pay the quarterly preferred return for the second and third quarter of 2025 and the failure to cure such nonpayment within 60 days of notice from Generate thereof. Generate further asserted that such Return Breach constituted a Trigger Event under the Ting Fiber LLC Amended and Restated Limited Liability Company Agreement, dated as of August 11, 2022 (the "LLC Agreement") and reserved its rights to pursue available remedies under the LLC Agreement and applicable law. Such remedies include the right to elect conversion of the Series A Preferred Units into common units of Ting and a call right to purchase certain fiber network assets of Ting at the lower of the fair market value of such assets, and the aggregate invested capital in such assets plus 10%. Generate has not exercised either of these rights as of March 31, 2026. Additionally, as a result of the Return Breach and related Trigger Event asserted by Generate on December 1, 2025, Generate has the ability, at its option, to make a request for redemption of all Series A Preferred Units, requiring Ting to redeem all outstanding Series A Preferred Units within 30 days of such request (a "Redemption Request"). The redemption price under such a request includes the original issue price, any unsatisfied preferred return, as well as a make-whole premium. As Ting would be required to settle the obligation within 30 days of a Redemption Request being submitted, the redeemable preferred units were reclassified from long term to current liabilities in the Consolidated Balance Sheet as of December 31, 2025. If Ting did receive a Redemption Request from Generate, Ting would be required to pay Generate an estimated $204.9 million, representing the redemption price. As of March 31, 2026, Generate had not submitted a redemption request, and payment of the Redemption Price was not due. The rights asserted by Generate in connection with the Return Breach relate to Ting and its subsidiaries, and such rights under the LLC Agreement do not extend to, or otherwise impose any liability upon, Tucows Inc. or its other subsidiaries. Under the LLC Agreement, the remedies available to Generate following a Return Breach are limited to the equity interests and assets of Ting and its subsidiaries, and are subordinate to the rights of the secured noteholders under Ting's asset-backed securitization facilities. Accordingly, the occurrence of the Return Breach and any exercise of rights by Generate do not affect Ting's securitized debt structure and have no impact on the ABS facilities or the collateral securing them. Further, there is no impact of the Return Breach or Trigger Event on the Company's 2023 Credit Facility described in "Note 7. Long Term Debt."

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