Tucows Inc.
Consolidated Balance Sheets
(Dollar amounts in U.S. dollars)

September 30, December 31,
2011 2010
(unaudited) (unaudited)
Assets
Current assets:
Cash and cash equivalents $ 4,653,765 $ 4,205,729
Accounts receivable 4,289,462 3,021,995
Prepaid expenses and deposits 3,756,375 2,363,876
Derivative instrument asset, current portion 1,090 833,960
Prepaid domain name registry and ancillary services fees, current portion 43,005,543 37,016,871
Income taxes recoverable 330,093 620,000
Total current assets 56,036,328 48,062,431
Prepaid domain name registry and ancillary services fees, long-term portion 12,693,752 12,820,479
Property and equipment 1,313,611 1,552,349
Deferred financing charges 4,500 15,600
Deferred tax asset, long-term portion 3,569,000 4,155,600
Intangible assets 17,741,695 16,883,401
Goodwill 18,873,127 17,990,807
Total assets $ 110,232,013 $ 101,480,667
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $ $ 1,301,612 $ $ 1,664,006
Accrued liabilities 1,720,279 1,346,436
Customer deposits 3,903,564 3,960,312
Derivative instrument liability current portion 1,193,751 -
Loan payable, current portion 1,559,722 1,305,883
Deferred revenue, current portion 52,372,852 45,832,374
Accreditation fees payable, current portion 562,374 547,810
Deferred tax liability, current portion 569,000 1,155,600
Income taxes payable 200,940 -
Total current liabilities 63,384,094 55,812,421
Derivative instrument liability long-term portion 431,483 -
Deferred revenue, long-term portion 16,564,604 16,738,429
Accreditation fees payable, long-term portion 159,614 168,580
Deferred rent, long-term portion 19,274 -
Deferred tax liability, long-term portion 5,373,600 4,840,000
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; 53,477,874
shares issued and outstanding as of September 30, 2011 and 53,448,591
shares issued and outstanding as of December 31, 2010 		11,349,613 11,324,866
Additional paid-in capital 40,938,602 40,700,587
Accumulated other comprehensive income (26,121) -
Deficit (27,962,750) (28,104,216)
Total stockholders' equity 24,299,344 23,921,237
Total liabilities and stockholders' equity $ $ 110,232,013 $ $ 101,480,667

Tucows Inc. Tucows Inc.
Consolidated Statements of Operations Consolidated Statements of Operations
(Dollar amounts in U.S. dollars) (Dollar amounts in U.S. dollars)
Three months ended September 30, Nine months ended September 30,
2011 2010 2011 2010
(unaudited) (unaudited)
Net revenues $ 25,094,056 $ 21,209,468 $ 70,695,186 $ 62,501,219
Cost of revenues:
Cost of revenues (*) 17,658,648 14,903,525 49,578,724 42,871,489
Network expenses 1,193,669 1,087,930 3,691,995 3,500,826
Depreciation of property and equipment 159,191 231,253 608,961 794,368
Amortization of intangible assets 23,960 74,802 49,680 224,406
Total cost of revenues 19,035,468 16,297,510 53,929,360 47,391,089
Gross profit 6,058,588 4,911,958 16,765,826 15,110,130
Expenses:
Sales and marketing (*) 1,867,085 1,830,999 5,663,759 5,480,228
Technical operations and development (*) 1,220,953 1,053,768 3,651,782 3,486,718
General and administrative (*) 1,279,082 633,457 3,509,395 2,049,813
Depreciation of property and equipment 48,874 40,239 140,556 127,559
Amortization of intangible assets 201,180 360,540 785,920 1,081,620
Loss (gain) on change in fair value of forward exchange contracts 2,152,243 (141,981) 2,458,104 1,669,031
Total expenses 6,769,417 3,777,022 16,209,516 13,894,969
Income (loss) from operations (710,829) 1,134,936 556,310 1,215,161
Other income (expenses):
Interest (expense) income, net (18,718) (26,917) (38,915) (99,812)
Other income - - 374,977 -
Total other income (expenses) (18,718) (26,917) 336,062 (99,812)
Income (loss) before provision for income taxes (729,547) 1,108,019 892,372 1,115,349
Provision for income taxes 422,592 24,863 750,906 235,105
Net income (loss) for the period $ (1,152,139) $ 1,083,156 $ 141,466 $ 880,244
Basic earnings (loss) per common share $ (0.02) $ 0.02 $ - $ 0.01
Shares used in computing basic earnings (loss) per common share 53,452,205 57,351,161 53,444,959 59,255,739
Diluted earnings (loss) per common share $ (0.02) $ 0.02 $ - $ 0.01
Shares used in computing diluted earnings (loss) per common share 53,452,205 59,185,793 55,748,777 61,223,369
(*) Stock-based compensation has been included in expenses as follows:
Network expenses $ 5,808 $ 6,557 $ 17,170 $ 15,759
Sales and marketing $ 22,695 $ 30,358 $ 67,155 $ 71,589
Technical operations and development $ 13,020 $ 19,058 $ 40,122 $ 51,903
General and administrative $ 79,364 $ 99,813 $ 124,170 $ 174,437

Tucows Inc. Tucows Inc.
Consolidated Statements of Cash Flows Consolidated Statements of Cash Flows
(Dollar amounts in U.S. dollars) (Dollar amounts in U.S. dollars)
Three months ended September 30, Nine months ended September 30,
2011 2010 2011 2010
(unaudited) (unaudited)
Cash provided by (used in):
Operating activities:
Net income (loss) for the period $ (1,152,139) $ 1,083,156 $ 141,466 $ 880,244
Items not involving cash:
Depreciation of property and equipment 208,065 271,492 749,517 921,927
Amortization of deferred financing charges 3,000 6,000 11,100 20,100
Amortization of intangible assets 225,140 435,342 835,600 1,306,026
Decrease in deferred tax liability (18,400) - (18,400) -
Deferred rent 5,310 - 19,274 -
Disposal of domain names 8,816 5,084 29,907 17,090
Unrealized loss (gain) in the fair value of forward contracts 2,152,243 (141,981) 2,458,104 1,669,031
Stock-based compensation 120,887 155,786 248,617 313,688
Changes in non-cash operating working capital:
Accounts receivable 412,735 53,373 (715,829) (510,232)
Prepaid expenses and deposits 264,660 489,843 (958,989) 61,356
Prepaid fees for domain name registry and ancillary services fees (1,074,068) (2,355,886) (4,823,650) (5,786,558)
Income taxes recoverable 173,008 (165,000) 333,008 127,000
Accounts payable (531,095) (244,194) (327,272) (443,624)
Accrued liabilities (113,972) (231,633) 267,595 (264,317)
Customer deposits 170,762 240,907 (86,941) 78,147
Deferred revenue 788,835 (14,435) 5,046,102 6,023,890
Accreditation fees payable (15,607) 2,287,739 6,185 13,882
Net cash provided by operating activities 1,628,180 1,875,593 3,215,394 4,427,650

Financing activities:
Proceeds received on exercise of stock options 10,685 - 14,145 14,809
Repurchase of common stock - - - (6,914,792)
Proceeds received on loan payable 2,530,000 (478,561) 2,530,000 (1,435,682)
Repayment of loan payable (1,319,040) - (2,276,161) -
Net cash provided by (used in) financing activities 1,221,645 (478,561) 267,984 (8,335,665)

Investing activities:
Additions to property and equipment (138,909) (33,111) (629,935) (292,790)
Acquisition of EPAG Domainservices GMBH, net of cash acquired (2,392,461) - (2,392,461) -
Net cash used in investing activities (2,531,370) (33,111) (3,022,396) (292,790)
Foreign exchange loss on cash held in foreign currencies (12,946) - (12,946) -

Increase (decrease) in cash and cash equivalents 305,509 1,363,921 448,036 (4,200,805)
Cash and cash equivalents, beginning of period 4,348,256 4,067,668 4,205,729 9,632,394
Cash and cash equivalents, end of period $ 4,653,765 $ 5,431,589 $ 4,653,765 $ 5,431,589

Supplemental cash flow information:
Interest paid $ 18,890 $ 27,001 $ 39,197 $ 99,798

Supplementary disclosure of non-cash investing activity:
Property and equipment acquired during the period not yet paid for $ 124,979 $ 146,158 $ 124,979 $ 146,158

For further information:

Lawrence Chamberlain
TMX Equicom for Tucows Inc.
(416) 815-0700 ext. 257
lchamberlain@equicomgroup.com