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Tucows Inc.
Summary Revenue and Cost of Revenue
(Dollar amounts in U.S.$000's)
(unaudited)
3 Months 3 Months 3 Months 3 Months Year
Ended Ended Ended Ended Ended
Mar 31, Jun 30, Sep 30, Dec 31, Dec 31,
2007 2007 2007 2007 2007
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Revenues
Traditional Domain
Registration $11,901 $12,274 $12,332 $12,574 $49,081
Premium Domain Revenue 637 3,606 538 830 5,611
Messaging 2,133 1,881 1,771 1,675 7,460
Retail 1,207 1,208 1,462 1,528 5,405
Other 1,893 1,846 1,709 1,633 7,081
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TOTAL - Revenues $17,771 $20,815 $17,812 $18,240 $74,638
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Cost of revenues
Traditional Domain
Registration $8,731 $9,110 $9,159 $9,672 $36,672
Premium Domain Revenue 100 158 161 171 590
Messaging 247 253 197 259 956
Retail 405 417 441 513 1,776
Other 366 369 373 382 1,490
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TOTAL - Cost of
revenues $9,849 $10,307 $10,331 $10,997 $41,484
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3 Months 3 Months 3 Months 3 Months Year
Ended Ended Ended Ended Ended
Mar 31, Jun 30, Sep 30, Dec 31, Dec 31,
2006 2006 2006 2006 2006
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Revenues
Traditional Domain
Registration $10,667 $10,559 $11,272 $11,646 $44,144
Premium Domain Revenue 55 236 538 565 1,394
Messaging 1,907 2,067 2,151 2,057 8,182
Retail 948 936 1,043 1,075 4,002
Other 1,710 1,881 1,860 1,856 7,307
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TOTAL - Revenues $15,287 $15,679 $16,864 $17,199 $65,029
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Cost of revenues
Traditional Domain
Registration $7,673 $7,492 $8,034 $8,373 $31,572
Premium Domain Revenue 2 17 36 115 170
Messaging 255 311 307 306 1,179
Retail 332 353 476 438 1,599
Other 345 347 345 352 1,389
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TOTAL - Cost of revenues $8,607 $8,520 $9,198 $9,584 $35,909
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Tucows Inc.
Consolidated Balance Sheets
(Dollar amounts in U.S. dollars)
(unaudited)
December 31, December 31,
2007 2006
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Assets
Current assets:
Cash and cash equivalents $ 8,093,476 $ 6,256,392
Restricted cash - 1,019,423
Accounts receivable 3,422,180 2,969,997
Prepaid expenses and deposits 3,132,129 2,394,627
Prepaid domain name registry and other
Internet services fees, current portion 25,473,465 22,168,558
Cash held in escrow 1,070,632 -
Deferred tax asset, current portion 2,000,000 1,000,000
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Total current assets 43,191,882 35,808,997
Prepaid domain name registry and other
Internet services fees, long-term portion 10,765,862 9,511,341
Property and equipment 4,963,311 5,647,532
Deferred financing charges 128,200 -
Deferred tax asset, long-term portion 1,000,000 2,000,000
Intangible assets 22,150,738 18,554,436
Goodwill 17,490,807 12,094,817
Investment 353,737 353,737
Cash held in escrow - 694,579
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Total assets $100,044,537 $ 84,665,439
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Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ 2,689,346 $ 2,867,814
Accrued liabilities 3,289,087 2,567,012
Customer deposits 3,267,784 3,144,119
Promissory note payable, current portion 6,000,000 -
Loan payable, current portion 1,914,242 -
Deferred revenue, current portion 35,465,584 31,658,081
Accreditation fees payable, current portion 483,090 847,325
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Total current liabilities 53,109,133 41,084,351
Deferred revenue, long-term portion 15,147,644 13,478,525
Accreditation fees payable, long-term portion 181,345 163,988
Promissory note payable, long-term portion - 6,000,000
Loan payable, long-term portion 6,859,366 -
Deferred tax liability 5,396,000 5,396,000
Stockholders' equity:
Preferred stock - no par value,
1,250,000 shares authorized; none issued
and outstanding - -
Common stock - no par value, 250,000,000 shares
authorized; 73,888,542 shares issued and
outstanding at December 31, 2007 and
75,978,502 shares issued and outstanding at
December 31, 2006 15,350,915 15,395,381
Additional paid-in capital 48,537,313 50,359,906
Deficit (44,537,179) (47,212,712)
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Total stockholders' equity 19,351,049 18,542,575
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Total liabilities and stockholders' equity $100,044,537 $ 84,665,439
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Tucows Inc.
Consolidated Statements of Operations
(Dollar amounts in U.S. dollars)
(unaudited)
Three months ended December 31, Year ended December 31,
2007 2006 2007 2006
------------- ------------- ------------- -------------
Net revenues $ 18,240,184 $ 17,199,194 $ 74,638,196 $ 65,029,490
Cost of revenues:
Cost of
revenues(*) 13,040,271 11,076,018 48,742,915 41,534,963
Depreciation of
property and
equipment 947,274 865,937 3,738,324 2,755,736
Amortization of
intangible assets 92,700 63,540 302,832 207,168
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Total cost of
revenues 14,080,245 12,005,495 52,784,071 44,497,867
------------- ------------- ------------- -------------
Gross profit 4,159,939 5,193,699 21,854,125 20,531,623
Expenses:
Sales and
marketing(*) 1,808,801 1,247,510 6,345,999 5,985,907
Technical
operations and
development(*) 1,422,012 1,816,264 6,710,841 8,152,138
General and
administrative(*) 1,168,285 1,624,594 4,735,132 5,890,123
Depreciation of
property and
equipment 64,994 98,015 263,101 223,131
Amortization of
intangible assets 396,041 233,301 1,174,864 669,476
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Total expenses 4,860,133 5,019,684 19,229,937 20,920,775
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Income (loss) from
operations (700,194) 174,015 2,624,188 (389,152)
Other income
(expenses):
Interest income
(expense), net (222,531) (24,731) (516,853) 110,525
Other income, net - - 619,014 2,347,026
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Total other
income (expense) (222,531) (24,731) 102,161 2,457,551
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Income before
provision for
income taxes (922,725) 149,284 2,726,349 2,068,399
Provision for
income taxes 12,000 (7,140) 50,816 (92,035)
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Net income (loss)
for the period $ (934,725) $ 156,424 $ 2,675,533 $ 2,160,434
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Basic earnings
per common share $ (0.01) $ 0.00 $ 0.04 $ 0.03
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Shares used in
computing basic
earnings per
common share 73,805,296 75,856,208 74,361,470 74,032,830
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Diluted earnings
per common share $ (0.01) $ 0.00 $ 0.03 $ 0.03
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Shares used in
computing diluted
earnings per
common share 75,990,226 78,186,255 77,046,519 76,489,381
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(*)Stock-based
compensation has
been included in
expenses as
follows:
Cost of
revenues $ 4,000 $ 2,000 $ 15,000 $ 9,700
Sales and
marketing $ 19,100 $ 14,100 $ 80,200 $ 64,900
Technical
operations
and
development $ 16,500 $ 19,400 $ 78,800 $ 91,700
General and
administra-
tive $ 29,500 $ 52,540 $ 147,600 $ 131,740
Tucows Inc.
Reconciliation of EBITDA and Adjusted Net Income
(Dollar amounts in U.S. dollars)
(unaudited)
Three months ended December 31, Year ended December 31,
2007 2006 2007 2006
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Net income (loss)
for the period $ (934,725) $ 156,424 $ 2,675,533 $ 2,160,434
Depreciation of
property and
equipment 1,012,268 963,952 4,001,425 2,978,867
Amortization of
intangible assets 488,741 296,841 1,477,696 876,644
Interest income
(expense), net 222,531 24,731 516,853 (110,525)
Provision for
income taxes 12,000 (7,140) 50,816 (92,035)
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EBITDA 800,815 1,434,808 8,722,323 5,813,385
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Adjustments to
EBITDA(1)
Change in prepaid
domain name
registry and
other Internet
services fees (1,010,927) (572,163) (4,559,427) (5,801,972)
Change in
deferred revenue 765,306 400,162 5,476,621 7,102,935
Dividend income - - (619,014) -
Transitional costs 105,209 - 349,545 1,278,842
Other income - - - (2,347,026)
Reversal of
contingencies - (237,500) (451,249) (237,500)
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Subtotal Adjustments
to EBITDA (140,412) (409,501) 196,476 (4,721)
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Adjusted Net
Income $ 660,403 $ 1,025,307 $ 8,918,799 $ 5,808,664
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(1) Adjustments to EBITDA
We define Adjusted EBITDA as net income adjusted for depreciation,
amortization, interest, taxes and further adjusted for certain cash and
non-cash charges.
The net amount of cash we collected for domain registrations and other
Internet services paid for the full term at the time of activation and
deferred amounted to $917,194 for the year ended December 31, 2007
compared to $1,300,963 for the year ended December 31, 2006.
For the three and twelve months ended December 31, 2007, we incurred
$105,209 and $349,545 of transitional costs in connection with our
acquisition of Innerwise Inc., respectively
For the year ended December 31, 2006, we incurred $1.3 million of
transitional costs in connection with our acquisition of the Hosted
Messaging assets of Critical Path. In addition, during the year ended
December 31, 2006, we received $2.3 million in connection with
settlements related to patents we acquired in the merger with Infonautics
in 2001.
Tucows Inc.
Consolidated Statements of Cash Flows
(Dollar amounts in U.S. dollars)
(unaudited)
Three months ended December 31, Year ended December 31,
2007 2006 2007 2006
Cash provided by
(used in):
Operating
activities:
Net income for
the period $ (934,725) $ 156,424 $ 2,675,533 $ 2,160,434
Items not
involving cash:
Depreciation
of property
and equipment 1,012,268 963,952 4,001,425 2,978,867
Amortization of
intangible
assets 488,741 296,841 1,477,696 876,644
Unrealized change
in the fair
value of forward
exchange
contracts 666,861 625,487 (497,253) 574,762
Stock-based
compensation 69,100 88,040 321,600 298,040
Change in non-cash
operating working
capital:
Interest receivable - - - 39,574
Accounts
receivable 549,770 2,787,229 (425,959) (1,475,715)
Prepaid expenses
and deposits (323,705) (225,711) (485,374) 141,897
Prepaid fees for
domain name
registry and
other Internet
services fees (1,010,927) (572,163) (4,559,427) (5,801,972)
Deferred
financing
charges 14,400 - (128,200) -
Accounts payable 839,356 (111,467) (67,268) 745,581
Accrued
liabilities 250,812 (1,158,124) 902,001 44,828
Customer
deposits 289,225 292,691 123,665 867,482
Deferred revenue 765,306 400,162 5,476,621 7,102,935
Accreditation
fees payable 3,405 354,150 (346,878) 264,716
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Cash provided by
operating
activities 2,679,887 3,897,511 8,468,182 8,818,073
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Financing activities:
Proceeds received
on exercise of
stock options 54,040 107,648 258,295 206,608
Repurchase of shares - - (2,446,955) -
Repayment of promissory
note payable - - - (2,122,930)
Proceeds received on
loan payable, net
of repayments (478,561) - 8,773,608 -
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Cash provided by
(used in) financing
activities (424,521) 107,648 6,584,948 (1,916,322)
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Investing activities:
Cost of domain
names acquired (5,573) - (23,998) -
Additions to
property and
equipment (315,037) (528,525) (3,408,403) (4,607,774)
Decrease in
investment in
short-term
investments - - - 1,771,569
Decrease (increase)
in restricted cash
- being margin
security against
forward exchange
contracts 255,000 (756,588) 1,019,423 (959,423)
Acquisition of
Mailbank.com Inc.,
net of cash acquired - - - (6,486,732)
Acquisition of Hosted
Messaging Assets
from Critical Path
Inc., net of
cash acquired - (95,532) (90,050) (7,552,320)
Acquisition of
Boardtown Corporation,
net of cash acquired - (22,200) (4,900) (44,900)
Acquisition of
Innerwise Inc., net
of cash acquired - - (10,332,065) -
(Increase) decrease
in cash held
in escrow (12,012) 107,145 (376,053) (113,867)
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Cash used in
investing
activities (77,622) (1,295,700) (13,216,046) (17,993,447)
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Increase (decrease)
in cash and
cash equivalents 2,177,744 2,709,459 1,837,084 (11,091,696)
Cash and cash
equivalents,
beginning of
period 5,915,732 3,546,933 6,256,392 17,348,088
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Cash and cash
equivalents,
end of period $ 8,093,476 $ 6,256,392 $ 8,093,476 $ 6,256,392
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Supplemental cash
flow information:
Interest paid $ 299,895 $ 105,000 $ 784,263 $ 254,502
Supplementary
disclosure of
non-cash investing
activity:
Capital assets
acquired during
the period not
yet paid for $ 273,070 $ 384,270 $ 273,070 $ 384,270
Loan taken on
the acquisition
of Innerwise
Inc. $ 9,571,209 $ - $ 9,571,209 $ -
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