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Published: 2020-05-07

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 10-Q

☒

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2020

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 1-32600

TUCOWS INC.

(Exact Name of Registrant as Specified in Its Charter)

Pennsylvania

23-2707366

(State or Other Jurisdiction of

(I.R.S. Employer

Incorporation or Organization)

Identification No.)

96 Mowat Avenue,

Toronto, Ontario M6K 3M1, Canada

(Address of Principal Executive Offices) (Zip Code)

(416) 535-0123

(Registrant's Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Exchange Act:

Trading

Title of each class

Symbol(s)

Name of each exchange on which registered

Common Stock

TCX

NASDAQ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T§232.405 of this chapter during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growthcompany. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the ExchangeAct.

Large accelerated filer ☐

Accelerated filer ☒

Non-accelerated filer ☐

Smaller reporting company ☐

Emerging Growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of May 4, 2020, there were 10,567,675 outstanding shares of common stock, no par value, of the registrant.

Table of Contents
	TUCOWS INC.
		Form 10-Q Quarterly Report
	INDEX

	PART I
		FINANCIAL INFORMATION

Item 1.			Consolidated Financial Statements	3

			Consolidated Balance Sheets (unaudited) as of March 31, 2020 and December 31, 2019	3

			Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three months ended March 31, 2020 and 2019	4

			Consolidated Statements of Cash Flows (unaudited) for the three months ended March 31, 2020 and 2019	5

			Notes to Consolidated Financial Statements (unaudited)	6

Item 2.			Management's Discussion and Analysis of Financial Condition and Results of Operations	26

Item 3.			Quantitative and Qualitative Disclosures About Market Risk	47

Item 4.			Controls and Procedures	48

	PART II
	OTHER INFORMATION

Item 1.			Legal Proceedings	49

Item 1A.			Risk Factors	49

Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds	50

Item 3.			Defaults Upon Senior Securities	50

Item 4.			Mine Safety Disclosures	50

Item 5.			Other Information	50

Item 6.			Exhibits	51

Signatures				52
					TRADEMARKS, TRADE NAMES AND SERVICE MARKS

						Tucows®, EPAG®, Hover®, OpenSRS®, Platypus®, Ting®, eNom®, Roam®, Roam Mobility®, Bulkregister®, Ascio®, Cedar®, and YummyNames® 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 thisQuarterly Report on Form 10-Q (this “Quarterly Report”). All other service marks, trademarks and trade names referred to in this Quarterly Report are the property oftheir respective owners. Solely for convenience, any trademarks referred to in this Quarterly Report may appear without the ® or TM symbol, but such references arenot 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, orthe right of the applicable licensor, to these trademarks.

							2

Table of Contents
	PART I. FINANCIAL INFORMATION
	Item 1. Consolidated Financial Statements
		Tucows Inc.
	Consolidated Balance Sheets

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

				March 31,		December 31,
				2020		2019

Assets

Current assets:
Cash and cash equivalents			$		12,446 $		20,393
Accounts receivable, net of allowance for doubtful accounts of $195 as of March 31, 2020 and $131 as of December
31, 2019					12,480		14,564
Inventory					2,553		3,457
Prepaid expenses and deposits					13,464		13,478
Derivative instrument asset, current portion (note 5)					172		731
Prepaid domain name registry and ancillary services fees, current portion (note 11)					93,893		91,252
Income taxes recoverable					1,460		1,800
Total current assets								136,468	145,675

Prepaid domain name registry and ancillary services fees, long-term portion (note 11)					18,127		17,915
Derivative instrument asset, long-term portion (note 5)					370		-
Property and equipment					94,289		82,121
Right of use operating lease asset					11,463		11,335
Contract costs					1,371		1,400
Intangible assets (note 6)					59,915		57,654
Goodwill (note 6)								115,837	109,818
Total assets			$					437,840 $	425,918


Liabilities and Stockholders' Equity

Current liabilities:
Accounts payable			$		8,996 $		6,671
Accrued liabilities					7,838		9,373
Customer deposits					14,132		14,074
Derivative instrument liability (note 5)					1,718		-
Operating lease liability, current portion (note 12)					1,488		1,413
Deferred revenue, current portion (note 10)								126,152	123,101
Accreditation fees payable, current portion					1,045		952
Income taxes payable					1,302		1,324
Total current liabilities								162,671	156,908

Deferred revenue, long-term portion (note 10)					26,493		26,202
Accreditation fees payable, long-term portion					208		216
Operating lease liability, long-term portion (note 12)					9,293		9,424
Loan payable, long-term portion (note 7)								113,545	113,503
Other long-term liability (note 4 (b))					3,152		-
Deferred tax liability					27,122		25,471

Stockholders' equity (note 14)
Preferred stock - no par value, 1,250,000 shares authorized; none issued and outstanding					-		-
Common stock - no par value, 250,000,000 shares authorized; 10,562,774 shares issued and outstanding as of March
31, 2020 and 10,585,159 shares issued and outstanding as of December 31, 2019					18,751		16,633
Additional paid-in capital					-		880
Retained earnings					77,323		76,208
Accumulated other comprehensive income (loss) (note 5)					(718)		473
Total stockholders' equity					95,356		94,194
Total liabilities and stockholders' equity			$					437,840 $	425,918

Contingencies (note 17)




										See accompanying notes to consolidated financial statements

		3

Table of Contents
	Tucows Inc.
		Consolidated Statements of Operations and Comprehensive Income

		(Dollar amounts in thousands of U.S. dollars, except per share amounts)
	(unaudited)

				For the Three Months Ended March 31,
					2020		2019


Net revenues (note 10)			$			83,985 $	78,953

Cost of revenues (note 10)
Cost of revenues						53,188	51,932
Network expenses						2,416	2,395
Depreciation of property and equipment						2,877	1,801
Amortization of intangible assets (note 6)						354	174
Total cost of revenues						58,835	56,302

Gross profit						25,150	22,651

Expenses:
Sales and marketing						8,985	8,741
Technical operations and development						2,751	2,523
General and administrative						4,741	4,448
Depreciation of property and equipment						113	124
Amortization of intangible assets (note 6)						2,947	1,866
Loss (gain) on currency forward contracts (note 5)						441	(79)
Total expenses						19,978	17,623

Income from operations						5,172	5,028

Other income (expenses):
Interest expense, net						(1,150)	(972)
Other income, net						(87)	-
Total other income (expenses)						(1,237)	(972)

Income before provision for income taxes						3,935	4,056

Provision for income taxes (note 8)						1,101	1,257

Net income for the period						2,834	2,799

Other comprehensive income, net of tax
Unrealized income (loss) on hedging activities (note 5)						(1,234)	549
Net amount reclassified to earnings (note 5)						43	61
Other comprehensive income (loss) net of tax (expense) recovery of $366 and ($194) for the periods ended March 31,2020 and March 31, 2019, respectively (note 5)
						(1,191)	610

Comprehensive income, net of tax for the period			$			1,643 $	3,409


Basic earnings per common share (note 9)			$			0.27 $	0.26

Shares used in computing basic earnings per common share (note 9)					10,612,230		10,634,842

Diluted earnings per common share (note 9)			$			0.26 $	0.26

Shares used in computing diluted earnings per common share (note 9)					10,713,678		10,835,897

		See accompanying notes to consolidated financial statements

	4

Table of Contents
	Tucows Inc.
		Consolidated Statements of Cash Flows

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

				For the Three Months Ended March 31,
					2020		2019
Cash provided by:
Operating activities:
Net income for the period			$			2,834 $	2,799
Items not involving cash:
Depreciation of property and equipment						2,990	1,925
Loss on write off of property and equipment						-	22
Amortization of debt discount and issuance costs						67	78
Amortization of intangible assets						3,301	2,040
Net amortization contract costs						29	19
Accretion of contingent consideration						87	-
Deferred income taxes (recovery)						(190)	462
Excess tax benefits on share-based compensation expense						(180)	(356)
Net Right of use operating assets/Operating lease liability						(179)	(30)
Loss on disposal of domain names						13	4
Loss (gain) on change in the fair value of forward contracts						348	(118)
Stock-based compensation						801	525
Change in non-cash operating working capital:
Accounts receivable						2,151	(1,188)
Inventory						904	408
Prepaid expenses and deposits						25	(390)
Prepaid domain name registry and ancillary services fees						(2,853)	(1,716)
Income taxes recoverable						500	(1,236)
Accounts payable						1,771	786
Accrued liabilities						(1,831)	1,321
Customer deposits						58	287
Deferred revenue						3,342	3,269
Accreditation fees payable						85	80
Net cash provided by operating activities						14,073	8,991

Financing activities:
Proceeds received on exercise of stock options						17	71
Payment of tax obligations resulting from net exercise of stock options						(182)	(340)
Repurchase of common stock						(3,117)	-
Proceeds received on loan payable						-	32,940
Repayment of loan payable							(4,600)
Payment of loan payable costs						(25)	(205)
Net cash (used in) provided by financing activities						(3,307)	27,866

Investing activities:
Additions to property and equipment						(9,943)		(10,435)
Acquisition of Cedar Holdings Group, net of cash of $66 (note 4(b))						(8,770)	-
Acquisition of Ascio Technologies, net of cash of $1 (note 4(a))						-		(28,024)
Net cash used in investing activities									(18,713)	(38,459)

Increase (decrease) in cash and cash equivalents						(7,947)	(1,602)

Cash and cash equivalents, beginning of period						20,393	12,637
Cash and cash equivalents, end of period			$			12,446 $	11,035



Supplemental cash flow information:
Interest paid			$			1,154 $	976
Income taxes paid, net			$			956 $	2,118
Supplementary disclosure of non-cash investing and financing activities:
Property and equipment acquired during the period not yet paid for			$			1,102 $	392
Fair value of shares issued for acquisition of Cedar Holdings Group			$			2,000 $	-
Fair value of contingent consideration for acquisition of Cedar Holdings Group			$			3,065 $	-


										See accompanying notes to consolidated financial statements

	5

Table of Contents NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (UNAUDITED)1. Organization of the Company:
	Tucows Inc. (referred to throughout this report as the “Company”, “Tucows”, “we”, “us” or through similar expressions) provides simple useful services that
help people unlock the power of the Internet. The Company provides US consumers and small businesses with mobile phone services nationally and high-speed fixedInternet access in selected towns. The Company is also a global distributor of Internet services, including domain name registration, digital certificates, and email. Itprovides these services primarily through a global Internet-based distribution network of Internet Service Providers, web hosting companies and other providers ofInternet services to end-users.

2. Basis of presentation:
	The accompanying unaudited interim consolidated balance sheets, and the related consolidated statements of operations and comprehensive income and cash
flows reflect all adjustments, consisting of normal recurring adjustments, that are, in the opinion of management, necessary for a fair presentation of the financialposition of Tucows and its subsidiaries as at March 31, 2020 and the results of operations and cash flows for the interim periods ended March 31, 2020 and 2019. Theresults of operations presented in this Quarterly Report on Form 10-Q are not necessarily indicative of the results of operations that may be expected for future periods.
	The accompanying unaudited interim consolidated financial statements have been prepared by Tucows in accordance with the rules and regulations of the
United States Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in the Company's annual auditedconsolidated financial statements and accompanying notes have been condensed or omitted. Other than the exception noted below, these interim consolidated financialstatements and accompanying notes follow the same accounting policies and methods of application used in the annual financial statements and should be read inconjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included in Tucows' 2019 AnnualReport on Form 10-K filed with the SEC on March 4, 2020 (the “2019 Annual Report”). There have been no material changes to our significant accounting policies andestimates during the three months ended March 31, 2020 as compared to the significant accounting policies and estimates described in our 2019 Annual Report, exceptas described in Note 3 – Recent accounting pronouncements.

3. Recent accounting pronouncements: Recent Accounting Pronouncements Adopted
	In August 2018, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2018-15, Intangibles—Goodwill and Other—Internal-Use
Software (Subtopic 350-40): Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement (“ASU 2018-15”). ASU 2018-15 helps entities evaluate theaccounting for fees paid by a customer in a cloud computing arrangement (hosting arrangement) by providing guidance on accounting for implementation costs whenthe cloud computing arrangement does not include a license and is accounted for as a service contract. The amendments in ASU 2018-15 require an entity (customer) ina hosting arrangement to assess which implementation costs to capitalize vs expense as it relates to a service contract. The amendments also require the entity(customer) to expense the capitalized implementation costs of a hosting arrangement that is a service contract over the term of the hosting arrangement. ASU 2018-15is effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. The Company adopted ASU 2018-15 in the first quarter of2020 to all implementation costs incurred after the date of adoption. The new guidance did not have a material impact on our consolidated financial statements.
		6

Table of Contents Recent Accounting Pronouncements Not Yet Adopted
In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting
(“ASU 2020-04”), which provides optional guidance for a limited period of time to ease the potential burden of reference rate reform on financial reporting. Theamendments in ASU 2020-04 apply to contract modifications that replace a reference rate affected by reference rate reform and contemporaneous modifications of othercontract terms related to the replacement of the reference rate. The following optional expedients for applying the requirements of certain Topics or Industry Subtopicsin the Codification are permitted for contracts that are modified because of reference rate reform and that meet certain scope guidance:

	1.	Modifications of contracts within the scope of Topics 310, Receivables, and 470, Debt, should be accounted for by prospectively adjusting the effectiveinterest rate.
2.	Modifications of contracts within the scope of Topic 842, Leases, should be accounted for as a continuation of the existing contracts with no reassessments ofthe lease classification and the discount rate or remeasurements of lease payments that otherwise would be required under those Topics for modifications notaccounted for as separate contracts.

3.	Modifications of contracts do not require an entity to reassess its original conclusion about whether that contract contains an embedded derivative that isclearly and closely related to the economic characteristics and risks of the host contract under Subtopic 815-15, Derivatives and Hedging— EmbeddedDerivatives


	The amendments in ASU 2020-04 are effective for all entities as of March 12, 2020 through December 31, 2022. The Company is currently charged interest and
standby fees associated with its 2019 Amended Credit Facility (as defined below) based on LIBOR, which will need to be amended when an alternative reference rate ischosen, at which time we may adopt some of the practical expedients provided by ASU 2020-04.

4. Acquisitions:
(a) Ascio

	On March 18, 2019, the Company entered into an Asset Purchase Agreement to purchase all of the equity of Ascio Technologies, Inc. (“Ascio”), a domain
registrar business, and all of CSC’s assets related to that business. For more information, see Note 3 - Acquisitions of the 2019 Annual Report.
(b) Cedar

	In the fourth quarter of 2019, the Company entered into a Stock Purchase Agreement to purchase all of the issued and outstanding shares of Cedar Holdings
Group, Incorporated (“Cedar”), a fiber Internet provider business based in Durango, Colorado. The transaction closed on January 1, 2020, following receipt of allregulatory approvals. The purchase price was $14.1 million, less an estimated purchase price adjustment of approximately $0.2 million relating to a working capital deficitand assessment of the fair value of contingent consideration, for net purchase consideration of $13.9 million. In addition to $9.0 million cash consideration due atclosing, the Company also issued 32,374 ($2.0 million) of Tucows Inc. shares with a two-year restriction period at closing. Included in the agreement is contingentconsideration totaling up to $4.0 million, due on the 24th and 36th month anniversaries of the closing of the transaction dependent upon the achievement of certainmilestones as defined in the Share Purchase Agreement. The fair value of the contingent consideration was determined to be $3.1 million using a discount rate of 11.3%.The Company has prepared a preliminary purchase price allocation of the assets acquired and the liabilities assumed of Cedar based on management’s best estimates offair value. The final purchase price allocation may vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumedliabilities.
	The amortization period for the customer relationships and network rights are 7 and 15 years, respectively.
		7

Table of Contents
	The following table shows the preliminary allocation of the purchase price for Cedar to the acquired identifiable assets and liabilities assumed (thousands of U.S.
		dollars): Cash Consideration, including working capital adjustment
			$	8,836
		Share-based payment		2,000
		Fair value of contingent consideration		3,065
	Total estimated purchase price			13,901

		Cash and Cash Equivalents		66
		Accounts Receivables, net		67
		Other current assets		22
		Property and equipment		4,661
		Right of use operating lease		18
		Intangible assets, consisting of customer relationships and network rights		5,575
	Total identifiable assets			10,409
		Accounts payable and accrued liabilities		(307)
		Deferred tax liability		(2,207)
		Operating lease liability		(13)
	Total liabilities assumed			(2,527)
	Total net assets (liabilities) assumed			7,882
	Total goodwill		$	6,019

	The goodwill related to this acquisition is primarily attributable to synergies expected to arise from the acquisition and is not deductible for tax purposes.
	In connection with this acquisition, the Company incurred total acquisition related costs of $0.1 million, of which nil were included in General & Administrative
		expenses in the consolidated statements of Operations and comprehensive Income for the three months ended March 31, 2020.
	The following table presents selected unaudited pro forma information for the Company assuming the acquisition of Cedar had occurred as of January 1, 2019.
		This pro forma information does not purport to represent what the Company’s actual results would have been if the acquisition had occurred as of the date indicated orwhat results would be for any future periods.
					Unaudited
			For the Three
			Months Ended
					March 31,
					2019

		Net revenues	$	80,181
		Net income		2,700

		Basic earnings per common share		0.25
		Diluted earnings per common share	$	0.25

	The amount of revenue recognized since the acquisition date included in the consolidated statements of operations and comprehensive income statement for the
		three months ended March 31, 2020 is $1.2 million.
	The net income recognized since the acquisition date included in the consolidated statements of operations and comprehensive income for the three months
		ended March 31, 2020 is a loss of $0.3 million.

						8

Table of Contents 5. Derivative instruments and hedging activities: Foreign currency forward contracts
	Since October 2012, the Company has employed a hedging program with a Canadian chartered bank to limit the potential foreign exchange fluctuations incurred
on its future cash flows related to a portion of payroll, taxes, rent and payments to Canadian domain name registry suppliers that are denominated in Canadian dollarsand are expected to be paid by its Canadian operating subsidiary. As part of its risk management strategy, the Company uses derivative instruments to hedge a portionof the foreign exchange risk associated with these costs. The Company does not use these forward contracts for trading or speculative purposes. These forwardcontracts typically mature between one and eighteen months.
	The Company has designated certain of these transactions as cash flow hedges of forecasted transactions under ASU 2017-12, Derivatives and Hedging (Topic
815) (“ASC Topic 815”). For certain contracts, as the critical terms of the hedging instrument, and of the entire hedged forecasted transaction, are the same, inaccordance with ASC Topic 815, the Company has been able to conclude that changes in fair value and cash flows attributable to the risk of being hedged are expectedto completely offset at inception and on an ongoing basis. Accordingly, unrealized gains or losses on the effective portion of these contracts have been included withinother comprehensive income. The fair value of the contracts, as of March 31, 2020 and December 31, 2019, is recorded as derivative instrument assets or liabilities. Forcertain contracts where the hedged transactions are no longer probable to occur, the loss on the associated forward contract is recognized in earnings.
	As of March 31, 2020, the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars was $61.8 million, of
which $51.0 million met the requirements of ASC Topic 815 and were designated as hedges.
	As of December 31, 2019 the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars was $30.5 million,
of which $26.1 million met the requirements of ASC Topic 815 and were designated as hedges.
	As of March 31, 2020, we had the following outstanding forward contracts to trade U.S. dollars in exchange for Canadian dollars:

				Weighted average
		Notional amount of		exchange rate of U.S.
	Maturity date (Dollar amounts in thousands of U.S. dollars)		U.S. dollars		dollars		Fair value

	April - June 2020			9,653		1.3296		(526)
	July - September 2020			10,656		1.3227		(627)
	October - December 2020			9,658		1.3227		(565)
	January - March 2021			11,124		1.4283		172
	April - June 2021			9,878		1.4283		150
	July - September 2021			10,782		1.4362		220
		$		61,751		1.3795 $		(1,176)

		9

Table of Contents Fair value of derivative instruments and effect of derivative instruments on financial performance
	The effect of these derivative instruments on our consolidated financial statements were as follows (amounts presented do not include any income tax effects).
Fair value of derivative instruments in the consolidated balance sheets
				As of March 31,2020 Fair Value		As of December
						31, 2019 Fair
Derivatives (Dollar amounts in thousands of U.S. dollars)			Balance Sheet Location		Liability		Value Asset
Foreign Currency forward contracts designated as cash flow hedges (net)		Derivative instruments		$		(932) $		626
Foreign Currency forward contracts not designated as cash flow hedges (net)		Derivative instruments				(244)		105
Total foreign currency forward contracts (net)		Derivative instruments		$		(1,176) $		731
Movement in accumulated other comprehensive income (AOCI) balance for the three months ended March 31, 2020 (Dollar amounts in thousands of U.S. dollars)
			Gains and losses on
				cash flow hedges							Tax impact			Total AOCI
Opening AOCI balance - December 31, 2019			$						625 $	(152) $			473
Other comprehensive income (loss) before reclassifications									(1,615)	381	(1,234)
Amount reclassified from AOCI									58	(15)		43
Other comprehensive income (loss) for the three months ended March 31, 2020									(1,557)	366	(1,191)

Ending AOCI Balance - March 31, 2020			$						(932) $	214 $	(718)
Effects of derivative instruments on income and other comprehensive income (OCI) for the three months ended March 31, 2020 are as follows (Dollar amounts inthousands of U.S. dollars)
			Amount of Gain or			Amount of Gain or
			(Loss) Recognized in						Location of Gain or (Loss)	(Loss) Reclassified
			OCI, net of tax, on						Reclassified from AOCI	from AOCI into
Derivatives in Cash Flow Hedging Relationship				Derivative							into Income			Income
									Operating expenses	$		(45)
Foreign currency forward contracts for the three months ended March 31, 2020			$								(1,191) Cost of revenues	$		(13)

									Operating expenses	$		(64)
Foreign currency forward contracts for the three months ended March 31, 2019			$						610 Cost of revenues	$		(15)

	In addition to the above, for those foreign currency forward contracts not designated as hedges, the Company recorded the following fair value adjustments on
settled and outstanding contracts (Dollar amounts in thousands of U.S. dollars):

										March 31, 2020			March 31, 2019
Forward currency contracts not designated as hedges:									Three months ended Three months ended

Gain (loss) on settlement									$	(93) $		(39)

Gain (loss) on change in fair value									$	(348) $			118

		10

Table of Contents 6. Goodwill and Other Intangible Assets Goodwill
	Goodwill represents the excess of the purchase price over the fair value of tangible and identifiable intangible assets acquired and liabilities assumed in our
acquisitions.
	The Company's Goodwill balance is $115.8 million as of March 31, 2020 and $109.8 million as of December 31, 2019. The Company's goodwill relates
93% ($107.7 million) to its Domain Services operating segment and 7% ($8.1 million) to its Network Access Services operating segment.
	Goodwill is not amortized, but is subject to an annual impairment test, or more frequently if impairment indicators are present. No impairment was recognized
during the three months ended March 31, 2020 and 2019.

Other Intangible Assets:
	Intangible assets consist of acquired brand, technology, customer relationships, surname domain names, direct navigation domain names and network rights. The
Company considers its intangible assets consisting of surname domain names and direct navigation domain names as indefinite life intangible assets. The Company hasthe exclusive right to these domain names as long as the annual renewal fees are paid to the applicable registry. Renewals occur routinely and at a nominal cost. Theindefinite life intangible assets are not amortized but are subject to impairment assessments performed throughout the year. As part of the normal renewal evaluationprocess during the periods ended March 31, 2020 and March 31, 2019, the Company assessed that certain domain names that were originally acquired in the June 2006acquisition of Mailbank.com Inc. that were up for renewal, should not be renewed.
	Intangible assets, comprising brand, technology, customer relationships and network rights are being amortized on a straight-line basis over periods of two to
fifteen years.
	Acquired intangible assets consist of the following (Dollar amounts in thousands of U.S. dollars):
				Direct
		Surname	navigation
		domain		domain			Customer	Network
			names		names		Brand		relationships Technology	rights	Total
		indefinite	indefinite
Amortization period											life		life		7 years		3 - 7 years	2 - 7 years	15 years

Balances, December 31, 2019		$	11,166 $	1,144 $		9,091 $							34,268 $	1,516 $	469 $	57,654
Cedar Networks acquisition (Note 4 (b))			-		-		-						4,630	-	945	5,575
Additions to/(disposals from) domain portfolio,
net			(4)		(9)		-					-	-	-	(13)
Amortization expense			-		-	(518)							(2,429)	(327)	(27)	(3,301)
Balances, March 31, 2020		$	11,162 $	1,135 $		8,573 $							36,469 $	1,189 $	1,387 $		59,915
	The following table shows the estimated amortization expense for each of the next 5 years, assuming no further additions to acquired intangible assets are made
(Dollar amounts in thousands of U.S. dollars):

									Year ending
									December 31,
	Remainder of 2020							$	8,054
	2021								12,152
	2022								11,208
	2023								9,180
	2024								2,644
	Thereafter								4,380
	Total							$	47,618

					11

Table of Contents 7. Loan Payable:
Amended 2019 Credit Facility

	On June 14, 2019, the Company and its wholly-owned subsidiaries, Tucows.com Co., Ting Fiber, Inc., Ting Inc., Tucows (Delaware) Inc. and Tucows (Emerald),
LLC entered into an Amended and Restated Senior Secured Credit Agreement with Royal Bank (“RBC”), as administrative agent, and lenders party thereto (collectivelywith RBC, the “Lenders”) under which the Company has access to an aggregate of up to $240 million in funds, which consists of $180 million guaranteed credit facilityand a $60 million accordion facility. The Amended 2019 Credit Facility replaced the Company’s 2017 Amended Credit Facility. On November 27, 2019, the Companyentered into Amending Agreement No. 1 to the Amended and Restated Senior Secured Credit Agreement (collectively with the Amended and Restated Senior SecuredCredit Agreement, the “Amended 2019 Credit Facility”) to amend certain defined terms in connection with the Cedar acquisition.
	The Amended 2019 Credit Facility replaced a secured Credit Agreement dated January 20, 2017 with Bank of Montreal RBC and Bank of Nova Scotia (as amended,
the “2017 Amended Credit Facility”).
	In connection with the Amended 2019 Credit Facility, the Company incurred $0.4 million of fees paid to lenders are debt issuance costs, which have been reflected
as a reduction to the carrying amount of the loan payable and will be amortized over the term of the credit facility agreement and $0.1 million have been recorded inGeneral and administrative expenses.
	The obligations of the Company under the Amended 2019 Credit Agreement are secured by a first priority lien on substantially all of the personal property and
assets of the Company and has a four-year term, maturing on June 13, 2023.
Credit Facility Terms

	The Amended 2019 Credit Facility is revolving with interest only payments with no scheduled repayments during the term.

	The Amended 2019 Credit Facility contains customary representations and warranties, affirmative and negative covenants, and events of default. The Amended
2019 Credit Facility requires that the Company to comply with the following financial covenants: (i) at all times, a Total Funded Debt to Adjusted EBITDA Ratio (asdefined in the Amended 2019 Credit Agreement) of 3.50:1; and (ii) with respect to each fiscal quarter, an Interest Coverage Ratio (as defined in the Amended 2019 CreditAgreement) of not less than 3.00:1. Further, the Company’s maximum annual Capital Expenditures cannot exceed 110% of the forecasted capital expenditures of its annualbusiness plan. In addition, share repurchases require the Lenders’ consent if the Company’s Total Funded Debt to Adjusted EBITDA ratio exceeds 2.00:1. During thethree months ended March 31, 2020, the Company was in compliance with these covenants. During the three months ended March 31, 2019, the Company was incompliance with the covenants under the 2017 Amended Credit Facility.

	Borrowings under the Amended 2019 Credit Facility will accrue interest and standby fees based on the Company’s Total Funded Debt to Adjusted EBITDA ratio
and the availment type as follows:
			If Total Funded Debt to EBITDA is:
			Greater than or	Greater than or
			equal to 1.00 and	equal to 2.00 and	Greater than or
Availment type or fee		Less than 1.00	less than 2.00		less than 2.50		equal to 2.50
Canadian dollar borrowings based on Bankers’ Acceptance or U.S. dollarborrowings based on LIBOR (Margin)
						1.50%	1.85%	2.35%	2.85%
Canadian or U.S. dollar borrowings based on Prime Rate or U.S. dollar borrowingsbased on Base Rate (Margin)
						0.25%	0.60%	1.10%	1.60%
Standby fees						0.30%	0.37%	0.47%	0.57%

		12

Table of Contents
	The following table summarizes the Company’s borrowings under the credit facilities (Dollar amounts in thousands of U.S. dollars):
			March 31, 2020		December 31, 2019

Revolver		$			114,400 $	114,400
Less: unamortized debt discount and issuance costs			(855)	(897)
Total loan payable					113,545	113,503
Less: loan payable, current portion			-	-
Loan payable, long-term portion		$			113,545 $	113,503
	The following table summarizes our scheduled principal repayments as of March 31, 2020 (Dollar amounts in thousands of U.S. dollars):
Remainder of 2020			$	-
2021				-
2022				-
2023						114,400
			$			114,400
Other Credit Facilities
	Prior to the Company entering into the Amended 2019 Credit Facility and the 2017 Amended Credit Facility, the Company had credit agreements (collectively the
“Prior Credit Facilities”) with BMO, which provided the Company with access to a treasury risk management facility and a credit card facility. All remaining creditfacilities under the 2017 Amended Credit Facility and the Prior Credit Facilities have been terminated.

8. Income Taxes:
	For the three months ended March 31, 2020, we recorded an income tax expense of $1.1 million on income before income taxes of $3.9 million, using an estimated
effective tax rate for the fiscal year ending December 31, 2020 (“Fiscal 2020”) adjusted for certain minimum state taxes as well as the inclusion of a $0.2 million taxrecovery related to ASU No. 2016-09—Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), which requires all excess tax benefits and tax deficiencies related to employee share-based payments to be recognized through income tax expense. Comparatively,for the three months ended March 31, 2019, the Company recorded an income tax expense of $1.3 million on income before taxes of $4.1 million, using an estimatedeffective tax rate for the 2019 fiscal year and adjusted for the $0.4 million tax recovery impact related to ASU 2016-09.

	In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will
not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the years in which those temporarydifferences become deductible. Management considers projected future taxable income, uncertainties related to the industry in which the Company operates, and taxplanning strategies in making this assessment.
	In connection with the eNom acquisition in 2017, we acquired deferred tax liabilities primarily composed of prepaid registry fees. As a result, we aligned our tax
methodology pertaining to the deductibility of prepaid registry fees for our other subsidiaries. In the first quarter of 2019, we determined that we were in technicalviolation with respect to the administrative application of the accounting method change relating to the deductibility of prepaid registry fees for these additionalsubsidiaries. In February 2019, the Company filed an application for relief ("9100 Relief") to correct the issue. In November 2019, the Company was granted 9100 Reliefand was given 30 days to file the appropriate forms based on prescribed instructions. The Company filed the forms in December 2019 and now awaits the final IRSresponse and acceptance of the change in accounting method. Management is of the view that it is more likely than not that the IRS will accept the 9100 Relief and filingof the prescribed forms. As such, no additional tax uncertainties or related interest or penalties have been recorded as at March 31, 2020.

	The Company recognizes accrued interest and penalties related to income taxes in income tax expense. The Company did not have significant interest and
penalties accrued at March 31, 2020 and December 31, 2019, respectively.

		13

Table of Contents 9. Basic and diluted earnings per common share:
	The following table reconciles the numerators and denominators of the basic and diluted earnings per common share computation (Dollar amounts in thousands
of US dollars, except for share data):
			Three Months Ended March 31,
			2020		2019

Numerator for basic and diluted earnings per common share:
Net income for the period		$		2,834 $	2,799

Denominator for basic and diluted earnings per common share:
Basic weighted average number of common shares outstanding			10,612,230		10,634,842
Effect of outstanding stock options						101,448	201,055
Diluted weighted average number of shares outstanding			10,713,678		10,835,897

Basic earnings per common share		$		0.27 $	0.26

Diluted earnings per common share		$		0.26 $	0.26

	For the three months ended March 31, 2020, options to purchase 138,506 common shares were not included in the computation of diluted income per common
share because the options’ exercise price was greater than the average market price of the common shares for the period as compared to the three months ended March31, 2019, where 121,300 outstanding options were not included in the computation. 10. Revenue: Significant accounting policy
	The Company’s revenues are derived from (a) the provisioning of mobile and fiber Internet services; and from (b) domain name registration contracts, other
domain related value-added services, domain sale contracts, and other advertising revenue. Amounts received in advance of meeting the revenue recognition criteriadescribed below are recorded as deferred revenue. All products are generally sold without the right of return or refund.
	Revenue is measured based on consideration specified in a contract with a customer and excludes any sales incentives and amounts collected on behalf of third
parties. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. Nature of goods and services
	The following is a description of principal activities – separated by reportable segments – from which the Company generates its revenue. For more detailed
information about reportable segments, see Note 13 – Segment reporting.
(a) Network Access Services

	The Company generates Network Access Services revenues primarily through the provisioning of mobile services (“Ting Mobile”). Other sources of revenue
include the provisioning of fixed high-speed Internet access (“Ting Internet”) as well as billing solutions to Internet Service Providers (“ISPs”).
	Ting Mobile wireless usage contracts grant customers access to standard talk, text and data mobile services. Ting Mobile contracts are billed based on the actual
amount of monthly services utilized by each customer during their billing cycle and charged to customers on a postpaid basis. Voice minutes, text messages andmegabytes of data are each billed separately based on a tiered pricing program. The Company recognizes revenue for Ting Mobile usage based on the actual amount ofmonthly services utilized by each customer.

							14

Table of Contents
	Ting Internet contracts provide customers Internet access at their home or business through the installation and use of our fiber optic network. Ting Internet
contracts are generally prepaid and grant customers with unlimited bandwidth based on a fixed price per month basis. Because consideration is collected before theservice period, revenue is initially deferred and recognized as the Company performs its obligation to provide Internet access. Though the Company does not considerthe installation of fixed Internet access to be a distinct performance obligation, the fees related to installation are immaterial and therefore revenue is recognized as billed.
	Both Ting Mobile and Ting Internet access services are primarily contracted through the Ting website, for one month at a time and contain no commitment to
renew the contract following each customer’s monthly billing cycle. The Company’s billing cycle for all Ting Mobile and Ting Internet customers is computed based onthe customer’s activation date. In order to recognize revenue as the Company satisfies its obligations, we compute the amount of revenues earned but not billed fromthe end of each billing cycle to the end of each reporting period. In addition, revenues associated with the sale of wireless devices and accessories and Internethardware to subscribers are recognized when title and risk of loss is transferred to the subscriber and shipment has occurred. Incentive marketing credits given tocustomers are recorded as a reduction of revenue.
	Our Roam Mobility brands also offers standard talk, text and data mobile services. Roam customers prepay for their usage through the Roam Mobility website.
When prepayments are received the amount is deferred, and subsequently recognized as the Company satisfies its obligation to provide mobile services. In addition,revenues associated with the sale of SIM cards are recognized when title and risk of loss is transferred to the subscriber and shipment has occurred. Incentive marketingcredits given to customers are recorded as a reduction of revenue.
	In those cases, where payment is not received at the time of sale, revenue is not recognized at contract inception unless the collection of the related accounts
receivable is reasonably assured. The Company records costs that reflect expected refunds, rebates and credit card charge-backs as a reduction of revenues at the timeof the sale based on historical experiences and current expectations.
(b) Domain Services

	Domain registration contracts, which can be purchased for terms of one to ten years, provide our resellers and retail registrant customers with the exclusive right
to a personalized internet address from which to build an online presence. The Company enters into domain registration contracts in connection with each new, renewedand transferred-in domain registration. At the inception of the contract, the Company charges and collects the registration fee for the entire registration period. Thoughfees are collected upfront, revenue from domain registrations are recognized rateably over the registration period as domain registration contracts contain a ‘right toaccess’ license of IP, which is a distinct performance obligation measured over time. The registration period begins once the Company has confirmed that the requesteddomain name has been appropriately recorded in the registry under contractual performance standards.
	Domain related value-added services like digital certifications, WHOIS privacy, website hosting and hosted email provide our resellers and retail registrant
customers with tools and additional functionality to be used in conjunction with domain registrations. All domain related value-added services are considered distinctperformance obligations which transfer the promised service to the customer over the contracted term. Fees charged to customers for domain related value-addedservices are collected at the inception of the contract, and revenue is recognized on a straight-line basis over the contracted term, consistent with the satisfaction of theperformance obligations.
	The Company is an ICANN accredited registrar. Thus, the Company is the primary obligor with our reseller and retail registrant customers and is responsible for
the fulfillment of our registrar services to those parties. As a result, the Company reports revenue in the amount of the fees we receive directly from our reseller and retailregistrant customers. Our reseller customers maintain the primary obligor relationship with their retail customers, establish pricing and retain credit risk to thosecustomers. Accordingly, the Company does not recognize any revenue related to transactions between our reseller customers and their ultimate retail customers.
	The Company also sells the rights to the Company’s portfolio domains or names acquired through the Company’s domain expiry stream. Revenue generated from
sale of domain name contracts, containing a distinct performance obligation to transfer the domain name rights under the Company’s control, is generally recognizedonce the rights have been transferred and payment has been received in full.
	Advertising revenue is derived through domain parking monetization, whereby the Company contracts with third-party Internet advertising publishers to direct
web traffic from the Company’s domain expiry stream domains and Internet portfolio domains to advertising websites. Compensation from Internet advertisingpublishers is calculated variably on a cost-per-action basis based on the number of advertising links that have been visited in a given month. Given that the variableconsideration is calculated and paid on a monthly basis, no estimation of variable consideration is required.

		15

Table of Contents Disaggregation of Revenue
	The following is a summary of the Company’s revenue earned from each significant revenue stream (Dollar amounts in thousands of U.S. dollars):

		Three Months Ended	Three Months Ended
			March 31, 2020	March 31, 2019

	Network Access Services:
	Mobile Services	$	20,148 $	20,809
	Other Services		4,308	2,443
	Total Network Access Services		24,456	23,252

	Domain Services:
	Wholesale
	Domain Services		45,964	42,591
	Value Added Services		4,707	4,184
	Total Wholesale		50,671	46,775

	Retail		8,449	8,642
	Portfolio		409	284
	Total Domain Services		59,529	55,701

		$	83,985 $	78,953

	During the three months ended March 31, 2020 and the three months ended March 31, 2019 no customer accounted for more than 10% of total revenue and no
customer accounted for more than 10% of accounts receivable.
	The following is a summary of the Company’s cost of revenue from each significant revenue stream (Dollar amounts in thousands of U.S. dollars):

		Three Months Ended	Three Months Ended
			March 31, 2020	March 31, 2019

	Network Access Services:
	Mobile Services	$	9,857 $	10,743
	Other Services		1,716	1,069
	Total Network Access Services		11,573	11,812

	Domain Services:
	Wholesale
	Domain Services		36,469	34,839
	Value Added Services		785	794
	Total Wholesale		37,254	35,633

	Retail		4,234	4,359
	Portfolio		127	128
	Total Domain Services		41,615	40,120

	Network Expenses:
	Network, other costs		2,416	2,395
	Network, depreciation and amortization costs		3,231	1,975
	Total Network Expenses		5,647	4,370

		$	58,835 $	56,302

					16

Table of Contents Contract Balances
	The following table provides information about contract liabilities (deferred revenue) from contracts with customers. The Company accounts for contract assets
and liabilities on a contract-by-contract basis, with each contract presented as either a net contract asset or a net contract liability accordingly.
	Given that Company’s long-term contracts with customers are billed in advance of service, the Company’s contract liabilities relate to amounts recorded as
deferred revenues. The Company does not have material streams of contracted revenue that have not been billed.
	Deferred revenue primarily relates to the portion of the transaction price received in advance related to the unexpired term of domain name registrations and other
domain related value-added services, on both a wholesale and retail basis, net of external commissions.
	Significant changes in deferred revenue were as follows (Dollar amounts in thousands of U.S. dollars):

			March 31, 2020

Balance, beginning of period		$		149,303
Deferred revenue			62,871
Recognized revenue				(59,529)
Balance, end of period		$		152,645
Remaining Performance Obligations:
	For mobile and internet access services, where the performance obligation is part of contracts that have an original expected duration of one year or less
(typically one month), the Company has elected to apply a practical expedient to not disclose revenues expected to be recognized in the future related performanceobligations that are unsatisfied (or partially unsatisfied) (Dollar amounts in thousands of US dollars).
	Although domain registration contracts are deferred over the lives of the individual contracts, which can range from one to ten years, approximately 80 percent of
our deferred revenue balance related to domain contracts is expected to be recognized within the next twelve months.
	Deferred revenue related to Roam Mobility and [Exact] hosting contracts are also deferred over the lives of the individual contracts, which are expected to be fully
recognized within the next twelve months. 11. Costs to obtain and fulfill a contract Deferred costs of fulfillment
	Deferred costs to fulfill contracts generally consist of domain registration costs which have been paid to a domain registry, and are capitalized as Prepaid domain
name registry and ancillary services fees. These costs are deferred and amortized over the life of the domain which generally ranges from one to ten years. For the threemonths ended March 31, 2020, the Company capitalized $44.4 million and also amortized $41.6 million of contract costs. There was no impairment loss recognized inrelation to the costs capitalized during the three months ended March 31, 2020. Amortization expense is primarily included in cost of revenue. The breakdown of themovement in the prepaid domain name registry and ancillary services fees balance for the three months ended March 31, 2020 is as follows (Dollar amounts in thousandsof U.S. dollars).
			March 31, 2020

Balance, beginning of period		$		109,167
Deferral of costs			44,436
Recognized costs				(41,583)
Balance, end of period		$		112,020

					17

Table of Contents 12. Leases
	We lease datacenters, corporate offices and fiber-optic cables under operating leases. The Company does not have any leases classified as finance leases. Our leases have remaining lease terms of 1 year to 20 years, some of which may include options to extend the leases for up to 5 years, and some of which may
include options to terminate the leases within 1 year.
	The components of lease expense were as follows (Dollar amounts in thousands of U.S. dollars):

		For the three months		For the three months
			ended		ended
			March 31, 2020			March 31, 2019
Operating Lease Cost (leases with a total term greater than 12 months)		$		547 $		1,071
Short-term Lease Cost (leases with a total term of 12 months or less)				244		124
Variable Lease Cost				128		171
Total Lease Cost		$		919 $		1,366

	Lease Cost is presented in general and administrative expenses and network expenses within our consolidated statements of operations and comprehensive
income.
	Information related to leases was as follows (Dollar amounts in thousands of U.S. dollars):

		For the three months		For the three months
			ended		ended
Supplemental cashflow information:			March 31, 2020			March 31, 2019
Operating Lease - Operating Cash Flows (Fixed Payments)		$		559 $		1,051
Operating Lease - Operating Cash Flows (Liability Reduction)		$		438 $		948
New ROU Assets - Operating Leases		$		875 $		4,427
Supplemental balance sheet information related to leases:
			March 31, 2020			March 31, 2019
Weighted Average Discount Rate				4.03%		5.24%
Weighted Average Remaining Lease Term			8.60 yrs		8.55 yrs

	Maturity of lease liability as of March 31, 2020 (Dollar amounts in thousands of U.S. dollars):

					March 31, 2020
Remaining of 2020				$		1,384
2021						1,741
2022						1,662
2023						1,624
2024						1,353
Thereafter						4,954
Total future lease payments						12,718
Less imputed interest						1,937
Total				$		10,781

	Operating lease payments include payments under the non-cancellable term and approximately $0.6 million related to options to extend lease terms that are
reasonably certain of being exercised.

	As of March 31, 2020, we have entered into lease agreements for total payments of $0.1 million that have not yet commenced, and therefore are not included in the
lease liability.
	In March 2020, the Company modified a corporate office lease to defer it’s April 2020 rent payment, to be paid later in four equal installments from September to
December 2020. The modification resulted in an increase to the right of use operating lease asset and right of use operating lease liability of $0.3 million and $0.6 million,respectively, which also included the foreign exchange re-measurement of the right of use asset at the date of modification. Foreign exchange revaluation on both theright of use asset and liability is presented in general and administrative expenses within our consolidated statements of operations and comprehensive income.
	The Company has elected to use the single exchange rate approach when accounting for lease modifications. Under the single exchange rate approach, the entire
right of use asset is revalued at the date of modification in the Company’s functional currency provided the re-measurement is not considered a separate contract or ifthe re-measurement is related to change the lease term or assessment of a lessee option to purchase the underlying asset being exercised.

							18


	13. Segment Reporting:
(a) We are organized and managed based on two operating segments which are differentiated primarily by their services, the markets they serve and the
	regulatory environments in which they operate and are described as follows:
1. Network Access Services - This segment derives revenue from the sale of mobile phones, telephony services, high speed Internet access, billing solutions to
	individuals and small businesses primarily through the Ting website. Revenues are generated in the United States.
2. Domain Services – This segment includes wholesale and retail domain name registration services, value added services and portfolio services. The Company
	primarily earns revenues from the registration fees charged to resellers in connection with new, renewed and transferred domain name registrations; the sale of retailInternet domain name registration and email services to individuals and small businesses; and by making its portfolio of domain names available for sale or lease.Domain Services revenues are attributed to the country in which the contract originates, primarily Canada and the United States.
The Chief Executive Officer (the “CEO”) is the chief operating decision maker and regularly reviews the operations and performance by segment. The CEO
	reviews gross profit as (i) a key measure of performance for each segment and (ii) to make decisions about the allocation of resources. Sales and marketing expenses,technical operations and development expenses, general and administrative expenses, depreciation of property and equipment, amortization of intangibles assets,impairment of indefinite life intangible assets, gain on currency forward contracts and other expense net are organized along functional lines and are not included in themeasurement of segment profitability. Total assets and total liabilities are centrally managed and are not reviewed at the segment level by the CEO. The Company followsthe same accounting policies for the segments as those described in Notes 2 – Basis of presentation, 3 – Recent accounting pronouncements, and 10 - Revenue.
Information by reportable segments (with the exception of disaggregated revenue, which is discussed in Note 10 – Revenue), which is regularly reported to the
	chief operating decision maker is as follows (Dollar amounts in thousands of US dollars):
		Network Access
			Services		Domain Services	Consolidated Totals
Three Months Ended March 31, 2020

Net Revenues		$		24,456 $	59,529 $	83,985

Cost of revenues
Cost of revenues				11,573	41,615	53,188
Network expenses				538	1,878	2,416
Depreciation of property and equipment				2,414	463	2,877
Amortization of intangible assets				27	327	354
Total cost of revenues				14,552	44,283	58,835
Gross Profit				9,904	15,246	25,150

Expenses:
Sales and marketing						8,985
Technical operations and development						2,751
General and administrative						4,741
Depreciation of property and equipment						113
Amortization of intangible assets						2,947
Loss (gain) on currency forward contracts						441
Income from operations						5,172
Other income (expenses), net						(1,237)
Income before provision for income taxes					$	3,935

		19

Table of Contents
	Network Access
		Services		Domain Services	Consolidated Totals
Three Months Ended March 31, 2019

Net Revenues	$		23,252 $	55,701 $	78,953

Cost of revenues
Cost of revenues			11,812	40,120	51,932
Network expenses			521	1,874	2,395
Depreciation of property and equipment			1,454	347	1,801
Amortization of intangible assets			11	163	174
Total cost of revenues			13,798	42,504	56,302
Gross Profit			9,454	13,197	22,651

Expenses:
Sales and marketing					8,741
Technical operations and development					2,523
General and administrative					4,448
Depreciation of property and equipment					124
Amortization of intangible assets					1,866
Loss (gain) on currency forward contracts					(79)
Income from operations					5,028
Other income (expenses), net					(972)
Income before provision for income taxes				$	4,056

	20

Table of Contents
	(b) The following is a summary of the Company’s property and equipment by geographic region (Dollar amounts in thousands of US dollars):

			March 31, 2020	December 31, 2019

	Canada	$	2,157 $	2,319
	United States		91,724	79,758
	Europe		408	44
		$	94,289 $	82,121

	(c) The following is a summary of the Company’s amortizable intangible assets by geographic region (Dollar amounts in thousands of US dollars):

			March 31, 2020	December 31, 2019

	Canada	$	4,873 $	5,207
	United States		42,745	40,137
		$	47,618 $	45,344

	(d) The following is a summary of the Company’s deferred tax asset, net of valuation allowance, by geographic region (Dollar amounts in thousands of US
dollars):
			March 31, 2020	December 31, 2019

	Canada	$	- $	-
		$	- $	-

	(e) Valuation and qualifying accounts (Dollar amounts in thousands of US dollars):

					Balance at
					beginning of		Charged to costs		Write-offs	Balance at end of
	Allowance for doubtful accounts						period			and expenses	during period	period

	Three Months Ended March 31, 2020					$	131 $	64 $	- $	195
	Twelve months ended December 31, 2019					$	132 $	(1) $	- $	131

					21

Table of Contents 14. Stockholders' Equity: The following table summarizes stockholders' equity transactions for the three-month period ended March 31, 2020 (Dollar amounts in thousands of U.S. dollars):
									Accumulated
					Additional						other		Total
	Common stock				paid in		Retained	comprehensive stockholders'
	Number			Amount		capital		earnings		income (loss)	equity

Balances, December 31, 2019	10,585,159		16,633		880		76,208					473	94,194

Exercise of stock options	25,013		236		(219)			-				-	17
Shares deducted from exercise of stock optionsfor payment of withholding taxes and exerciseconsideration
	(13,034)			-	(182)			-				-	(182)
Acquisition of Cedar Holdings Group	32,374		2,000			-		-				-	2,000
Repurchase and retirement of shares	(66,738)		(118)		(1,280)		(1,719)					-	(3,117)
Stock-based compensation		-		-	801			-				-	801
Net income		-		-		-	2,834					-	2,834
Other comprehensive income (loss)		-		-		-		-			(1,191)	(1,191)
Balances, March 31, 2020	10,562,774 $		18,751 $			- $	77,323 $					(718) $	95,356
2020 Stock Buyback Program On February 12, 2020, the Company announced that its Board had approved a stock buyback program to repurchase up to $40 million of its common stock in the openmarket. The $40 million buyback program commenced on February 13, 2020 and is expected to terminate on February 12, 2021. For the three months ended March 31,2020 the Company repurchased 66,738 shares under this program for total consideration of $3.1 million. 2019 Stock Buyback Program On February 13, 2019, the Company announced that its Board had approved a stock buyback program to repurchase up to $40 million of its common stock in the openmarket. The $40 million buyback program commenced on February 14, 2019 and terminated on February 13, 2020. During the three months ended March 31, 2019 theCompany did not repurchase any shares under this program. 2018 Stock Buyback Program On February 14, 2018, the Company announced that its Board of Directors has approved a stock buyback program to repurchase up to $40 million of its common stock inthe open market. Purchases were to be made exclusively through the facilities of the NASDAQ Capital Market. The stock buyback program commenced on February14, 2018 and terminated on February 13, 2019. During the three months ended March 31, 2019, the Company did not repurchase any shares under this program.
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Table of Contents 15. Share-based payments: Stock options

The fair value of each option grant is estimated on the date of grant using the Black-Scholes option-pricing model. Because option-pricing models require the use ofsubjective assumptions, changes in these assumptions can materially affect the fair value of the options. The assumptions presented in the table below represent theweighted average of the applicable assumption used to value stock options at their grant date. The Company calculates expected volatility based on historical volatilityof the Company's common shares. The expected term, which represents the period of time that options granted are expected to be outstanding, is estimated based onhistorical exercise experience. The Company evaluated historical exercise behavior when determining the expected term assumptions. The risk-free rate assumed invaluing the options is based on the U.S. Treasury yield curve in effect at the time of grant for the expected term of the option. The Company determines the expecteddividend yield percentage by dividing the expected annual dividend by the market price of Tucows Inc. common shares at the date of grant. Details of stock option transactions for the three months ended March 31, 2020 and March 31, 2019 are as follows (Dollar amounts in thousands of U.S. dollars, exceptper share amounts):
		Three Months Ended March 31,
	Three Months Ended Mar 31, 2020		2019
						Weighted	Weighted
						average	average
	Number of				exercise price	Number of	exercise price
				shares		per share		shares						per share

Outstanding, beginning of period				754,497 $				49.94	702,337 $	43.80
Granted					5,500			47.35	-	-
Exercised				(25,013)				20.59	(29,043)	24.63
Forfeited				(3,489)				61.73	(6,751)	59.40
Expired				(1,458)				60.91	(1,387)	60.82
Outstanding, end of period				730,037				50.85	665,156	44.46
Options exercisable, end of period				349,845 $				41.65	304,007 $	29.52
As of March 31, 2020, the exercise prices, weighted average remaining contractual life of outstanding options and intrinsic values were as follows:
										Options outstanding					Options exercisable
										Weighted	Weighted	Weighted				Weighted
										average	average	average	average
										exercise	remaining	Aggregate								exercise	remaining					Aggregate
									Number	price per	contractual	intrinsic					Number			price per	contractual					intrinsic
Exercise price										outstanding	share		life (years)	value					exercisable			share		life (years)			value

$ 8.56 - $ 8.56													15,722 $	8.56				0.1 $	624	15,722 $	8.56	0.1 $	624
$10.16 - $19.95													62,990	16.23				1.5	2,018	62,990	16.23	1.5	2,018
$21.10 - $27.53													51,250	24.11				1.7	1,237	51,250	24.11	1.7	1,237
$35.25 - $37.35													14,375	35.89				3.2	178	13,125	35.95	3.1	162
$44.90 - $47.00													10,000	46.95				5.4	13	3,750	47.00	4.0	5
$51.82 - $58.65															337,353	55.53				4.2	-	176,527	55.69	4.0	-
$61.33 - $64.10															238,347	62.99				5.7	-	26,481	64.10	5.2	-
															730,037 $	50.85				4.2 $	4,070	349,845 $	41.65	3.1 $	4,046

																Total unrecognized compensation cost relating to unvested stock options at March 31, 2020, prior to the consideration of expected forfeitures, is approximately
$5.8 million and is expected to be recognized over a weighted average period of 2.2 years.
																The Company recorded stock-based compensation of $0.8 million for the three months ended March 31, 2020, and $0.5 million for the three months ended March
31, 2019, respectively.
																The Company has not capitalized any stock-based compensation expense as part of the cost of an asset.

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Table of Contents 16. Fair value measurement:
	For financial assets and liabilities recorded in our financial statements at fair value we utilize a valuation hierarchy for disclosure of the inputs to valuation used to
measure fair value. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets orliabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly orindirectly through market corroboration, for substantially the full term of the financial instrument. Level 3 inputs are unobservable inputs based on the Company’s ownassumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest levelinput that is significant to the fair value measurement. The following table provides a summary of the fair values of the Company’s derivative instruments measured at fair value on a recurring basis as at March 31,2020 (Dollar amounts in thousands of U.S. dollars):
			March 31, 2020
						Assets
				Fair Value Measurement Using		(Liabilities)
							Level 1		Level 2	Level 3	at Fair value

Derivative instrument asset		$		- $	542 $			- $	542

Derivative instrument liability		$		- $	(1,718) $			- $	(1,718)

Total assets (liability)		$		- $	(1,176) $			- $	(1,176)
The following table provides a summary of the fair values of the Company’s derivative instruments measured at fair value on a recurring basis as at December 31,2019 (Dollar amounts in thousands of U.S. dollars):
			December 31, 2019
						Assets
				Fair Value Measurement Using		(Liabilities)
							Level 1		Level 2	Level 3	at Fair value

Derivative instrument liability		$		- $	731 $			- $	731

Total liabilities		$		- $	731 $			- $	731
17. Contingencies: From time to time, the Company has legal claims and lawsuits in connection with its ordinary business operations. The Company vigorously defends such claims. Whilethe final outcome with respect to any actions or claims outstanding or pending as of March 31, 2020 cannot be predicted with certainty, management does not believethat the resolution of these claims, individually or in the aggregate, will have a material adverse effect on the Company's financial position.
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Table of Contents ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS This Quarterly Report on Form 10-Q contains, in addition to historical information, forward-looking statements by us with regard to our expectations as to financialresults and other aspects of our business that involve risks and uncertainties and may constitute forward-looking statements within the meaning of the PrivateSecurities Litigation Reform Act of 1995. Words such as “may,” “should,” “anticipate,” “believe,” “plan,” “estimate,” “expect” and “intend,” and other similarexpressions are intended to identify forward-looking statements. The forward-looking statements contained in this report include statements regarding, among otherthings: the competition we expect to encounter as our business develops and competes in a broader range of Internet services; the Company's foreign currencyrequirements, specifically for the Canadian dollar; Ting mobile, Roam mobile and fixed Internet access subscriber growth and retention rates; our belief regarding theunderlying platform for our domain services, our expectation regarding the trend of sales of domain names and advertising; our expectations regarding portfoliorevenue, our belief that, by increasing the number of services we offer, we will be able to generate higher revenues; the revenue that our parked page vendorrelationships may generate in the future; our expectation regarding litigation; the potential impact of current and pending claims on our business; our valuations ofcertain deferred tax assets; our expectation to collect our outstanding receivables, net of our allowance for doubtful accounts; our expectation regarding fluctuations incertain expense and cost categories; our expectations regarding our unrecognized tax; our expectations regarding cash from operations to fund our business; the impactof cancellations of or amendments to market development fund programs under which we receive funds, our expectation regarding our ability to manage realizedgains/losses from foreign currency contracts; our expectations regarding increased price competition among MVNO; our expectations regarding costs associated withmigrating Ting customers using the T-Mobile platform to an alternative platform, including Verizon; our expectations regarding our ability to complete the migration ofcustomers from the T-Mobile platform in a timely manner; the impact of the COVID-19 outbreak on our business, operations and financial performance; and generalbusiness conditions and economic uncertainty. These statements are based on management’s current expectations and are subject to a number of uncertainties andrisks that could cause actual results to differ materially from those described in the forward-looking statements. Many factors affect our ability to achieve our objectivesand to successfully develop and commercialize our services including:
•	Changes in the nature of key strategic relationships with our MVNO partners;

	•	The effects of vigorous competition on a highly penetrated mobile telephony market, including the impact of competition on the price we are able to chargesubscribers for services and devices and on the geographic areas served by our MVNO partner wireless networks;

	•	Our ability to manage any potential increase in subscriber churn or bad debt expense;

	•	Our ability to continue to generate sufficient working capital to meet our operating requirements;

	•	Our ability to service our debt 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;

	•	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 commercialcustomers 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 TaxCuts and Jobs Act of 2017;
	•	The application of judgment in determining our global provision for income taxes, deferred tax assets or liabilities or other tax liabilities given the ultimate taxdetermination is uncertain;

	•	Our ability to effectively integrate acquisitions;

	•	Our ability to attract and retain customers by securing access to the latest mobile network technology, and migrating existing customers when necessary;

	•	Our ability to migrate existing T-Mobile customers to one of our MVNO partners, in an efficient and cost-effective manner;

	•	Our ability to monitor, assess and respond to the rapidly changing impacts of the COVID-19 pandemic. Our current assessment of expected impacts has beenincluded below as part of the Opportunities, Challenges & Risks section

	•	Pending or new litigation; and

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Table of Contents
•	Factors set forth under the caption “Item 1A Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019 filed with the SECon March 4, 2020 (the “2019 Annual Report”).

As previously disclosed the under the caption “Item 1A Risk Factors” in our 2019 Annual Report, data protection regulations may impose legal obligations on us thatwe cannot meet or that conflict with our ICANN contractual requirements. 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 isby no means exhaustive. Accordingly, all forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-lookingstatements 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 cautionarystatements 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 Quarterly Report on Form 10-Q by the foregoing cautionary statements.

OVERVIEW Our mission is to provide simple useful services that help people unlock the power of the Internet. We accomplish this by reducing the complexity of our customers’ experience as they access the Internet (at home or on the go) and while using Internet services suchas domain name registration, email and other Internet services. We are organized, managed and report our financial results as two segments, Network Access Servicesand Domain Services, which are differentiated primarily by their services, the markets they serve and the regulatory environments in which they operate. Our management regularly reviews our operating results on a consolidated basis, principally to make decisions about how we utilize our resources and to measure ourconsolidated operating performance. To assist us in forecasting growth and to help us monitor the effectiveness of our operational strategies, our management regularlyreviews revenue for each of our service offerings in order to gain more depth and understanding of the key business metrics driving our business. Accordingly, wereport Network Access Services and Domain Services revenue separately For the three months ended March 31, 2020 and March 31, 2019, we reported revenue of $84.0 million and $79.0 million, respectively.

	Network Access Services
Network Access Services includes mobile, fixed high-speed Internet access services and other revenues, including, billing solutions to small ISPs. Our primary mobile service offering (“Ting Mobile”) is mainly distributed through the Ting website and to a lesser extent certain third-party retail stores and on-lineretailers. We generate revenues from the sale of retail telephony services, mobile phone hardware and related accessories to individuals and small businesses throughthe Ting website. Ting Mobile’s primary focus is providing simple and easy to use services, including simple value pricing, in particular for multi-line accounts, andsuperior customer care. Our Roam Mobility, Zipsim and Always Online Wireless brands (collectively “Roam Mobility brands”) operate as a MVNO on the samenationwide Global System for Mobile communications network as Ting Mobile. Roam Mobility brands cater to international travelers and distribute products throughthird-party retail stores and product branded websites.

The Company also derives revenue from the sale of fixed high-speed Internet access (“Ting Internet”) in select towns throughout the United States, with furtherexpansion underway to both new and existing Ting towns. Our primary sales channel of Ting Internet is through the Ting website. The primary focus of Ting Internet isto provide reliable Gigabit Internet services to consumer and business customers. On January 1, 2020, the Company closed its previously disclosed acquisition of CedarHoldings Group, Incorporated (“Cedar”), a fiber Internet provider business based in Durango, Colorado. Cedar is a telecommunications provider serving multiplemarkets in the Western Slope of Colorado and northwestern New Mexico. Cedar has focused the last several years on building fiber to enterprise, anchor institution, andresidential customers. Revenues from Ting Mobile and Ting Internet are generated in the U.S. and are provided on a monthly basis with no fixed contract term. Revenues from Roam Mobilitybrands are generated in the U.S. and Canada on a prepaid usage basis with no fixed contract terms. As of March 31, 2020, Ting managed mobile telephony services for approximately 272,000 subscribers and 154,000 accounts. For a discussion of subscribers and howthey impacted our financial results, see the Net Revenue discussion below.

	Domain Services
Domain Services includes wholesale and retail domain name registration services, value added services and portfolio services derived through our OpenSRS, eNom,Ascio, EPAG and Hover brands. We earn revenues primarily from the registration fees charged to resellers in connection with new, renewed and transferred domainname registrations. In addition, we earn revenues from the sale of retail domain name registration and email services to individuals and small businesses; and by makingour portfolio of domain names available for sale or lease. Domain Services revenues are attributed to the country in which the contract originates, mainly the Canadianand the U.S. Ascio domain services contracts, which were acquired by the Company on March 18, 2019, and EPAG primarily originate in Europe.
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Table of Contents Our primary distribution channel is a global network of approximately 36,000 resellers that operate in over 150 countries and who typically provide their customers, theend-users of Internet-based services, with solutions for establishing and maintaining an online presence. Our primary focus is serving the needs of this network ofresellers by providing the broadest portfolio of generic top-level domain (“gTLD”) and the country code top-level domain options and related services, a white-labelplatform that facilitates the provisioning and management of domain names, a powerful Application Program Interface, easy-to-use interfaces, comprehensivemanagement and reporting tools, and proactive and attentive customer service. Our services are integral to the solutions that our resellers deliver to their customers. Weprovide “second tier” support to our resellers by email, chat and phone in the event resellers experience issues or problems with our services. In addition, our NetworkOperating Center proactively monitors all services and network infrastructure to address deficiencies before customer services are impacted. We believe that the underlying platforms for our services are among the most mature, reliable and functional reseller-oriented provisioning and management platforms inour industry, and we continue to refine, evolve and improve these services for both resellers and end-users. Our business model is characterized primarily by non-refundable, up-front payments, which lead to recurring revenue and positive operating cash flow. Wholesale, primarily branded as OpenSRS, eNom, EPAG and Ascio, derives revenue from its domain service and from providing value-added services. The OpenSRS,eNom, EPAG and Ascio domain services manage 23.9 million domain names under the Tucows, eNom, EPAG and Ascio ICANN registrar accreditations and for otherregistrars under their own accreditations, which has decreased by 1.3 million domain names since March 31, 2019. The decrease is driven by the continued erosion ofregistrations related to non-core customers from our Enom brand. Value-Added Services include hosted email which provides email delivery and webmail access to millions of mailboxes, Internet security services, Internet hosting,WHOIS privacy, publishing tools and other value-added services. All of these services are made available to end-users through a network of 36,000 web hosts, ISPs,and other resellers around the world. In addition, we also derive revenue by monetizing domain names which are near the end of their lifecycle through advertisingrevenue or auction sale. Retail, primarily the Hover and eNom portfolio of websites, including eNom, eNom Central and Bulkregister, derive revenues from the sale of domain name registrationand email services to individuals and small businesses. Retail also includes our Personal Names Service – based on over 36,000 surname domains – that allows roughlytwo-thirds of Americans to purchase an email address based on their last name. Portfolio generates revenue by offering names in our domain portfolio for resale through a number of distribution channels including our reseller network. In the fourth quarter of 2019, the Company disposed of its entire domain portfolio, excluding surname domains used in the Realnames email service. The Companyexpects portfolio revenue to materially decline in Fiscal 2020 and thereafter. KEY BUSINESS METRICS AND NON-GAAP MEASURES
	We regularly review a number of business metrics, including the following key metrics and non-GAAP measures, to assist us in evaluating our business,
measure the performance of our business model, identify trends impacting our business, determine resource allocations, formulate financial projections and makestrategic business decisions. The following tables set forth the key business metrics which we believe are the primary indicators of our performance for the periodspresented: Adjusted EBITDA
	Tucows reports all financial information in accordance with United States generally accepted accounting principles (“GAAP”). Along with this information, to
assist financial statement users in an assessment of our historical performance, we typically disclose and discuss a non-GAAP financial measure, adjusted EBITDA, oninvestor conference calls and related events that exclude certain non-cash and other charges as we believe that the non-GAAP information enhances investors’ overallunderstanding of our financial performance. Please see discussion of adjusted EBITDA in the Results of Operations section below. Ting Mobile
		For the Three Months Ended March 31,
		2020		2019
			(in '000's)
Ting mobile accounts under management			154	160
Ting mobile subscribers under management			272	284

(1) For a discussion of these period-to-period changes in subscribers and devices under management and how they impacted our financial results, see the Net
	Revenues discussion below.
Ting Internet
		For the Three Months Ended March 31,
		2020		2019
			(in '000's)
Ting Internet accounts under management			12	8
Ting Internet serviceable addresses (1)			45	32

(1) Defined as premises to which Ting has the capability to provide a customer connection in a service area.
Domain Services
		For the Three Months Ended March 31,(1)
		2020		2019
			(in 000's)
Total new, renewed and transferred-in domain name registrations provisioned			4,756	4,562
Domains under management
Registered using Registrar Accreditation belonging to the Tucows Group			19,145	20,208
Registered using Registrar Accreditation belonging to Resellers			4,750	4,999
Total domain names under management			23,895	25,207

(1) For a discussion of these period-to-period changes in the domains provisioned and domains under management and how they impacted our financial results
	see the Net Revenues discussion below.

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Table of Contents OPPORTUNITIES, CHALLENGES AND RISKS
	Our revenue is primarily realized in U.S. dollars and a major portion of our operating expenses are paid in Canadian dollars. Fluctuations in the exchange rate
between the U.S. dollar and the Canadian dollar may have a material effect on our business, financial condition and results from operations. In particular, we may beadversely affected by a significant weakening of the U.S. dollar against the Canadian dollar on a quarterly and an annual basis. Our policy with respect to foreigncurrency exposure is to manage our financial exposure to certain foreign exchange fluctuations with the objective of neutralizing some or all of the impact of foreigncurrency exchange movements by entering into foreign exchange forward contracts to mitigate the exchange risk on a portion of our Canadian dollar exposure. We maynot always enter into such forward contracts and such contracts may not always be available and economical for us. Additionally, the forward rates established by thecontracts may be less advantageous than the market rate upon settlement.
	Network Access Services As a MVNO our Ting Mobile service is reliant on our Mobile Network Operators (“MNOs”) providing competitive networks. Our MNOs each continue to
invest in network expansion and modernization to improve their competitive positions. Deployment of new and sophisticated technology on a very large-scale entailsrisks. Should they fail to implement, maintain and expand their network capacity and coverage, adapt to future changes in technologies and continued access to anddeployment of adequate spectrum successfully, our ability to provide wireless services to our subscribers, to retain and attract subscribers and to maintain and grow oursubscriber revenues could be adversely affected, which would negatively impact our operating margins.
	Ting Mobile enjoyed rapid growth in its first four years of operation with the growth slowing for the past two years. During the rapid growth phase, we were
able to continue to grow gross customer additions and maintain a consistent churn rate, which allowed us to maintain net new customer additions despite the impact ofchurn on a fast-growing customer base. We have also been able to supplement organic growth with bulk migrations of customer bases of other MVNOs. We expectprice competition to grow more intense in the industry which could result in increased customer churn or reductions of customer acquisition rates either of which couldresult in a further slowing growth rate or in certain cases, our ability to maintain growth.
	Two of our current MNOs, T-Mobile and Sprint, submitted a formal merger application to the Federal Communications Commission ("FCC") in 2018, which has
since been approved. In February 2020, the lawsuit filed by certain state attorneys general opposing the merger was overruled in favour of the merger. T-Mobile andSprint successfully completed the merger on April 1, 2020. This consolidation of our MNOs could hinder our ability in the future to negotiate favourable rates andaccess to mobile services. On February 17, 2020, the Company launched its mobile services with a new MNO partner, Verizon.
	As an ISP, we have invested and expect to continue to invest in new fiber to the home (“FTTH”) deployments in select markets in the United States. The
investments are a reflection of our ongoing efforts to build FTTH network via public-private partnerships in communities we identify as having strong, unmet demandfor FTTH services. Given the significant upfront build and operational investments for these FTTH deployments, there is risk that future technological and regulatorychanges as well as competitive responses from incumbent local providers, may result in us not fully recovering these investments.
	The communications industry continues to compete on the basis of network reach and performance, types of services and devices offered, and price. Domain Services The increased competition in the market for Internet services in recent years, which we expect will continue to intensify in the short and long term, poses a
material risk for us. As new registrars are introduced, existing competitors expand service offerings and competitors offer price discounts to gain market share, we facepricing pressure, which can adversely impact our revenues and profitability. To address these risks, we have focused on leveraging the scalability of our infrastructureand our ability to provide proactive and attentive customer service to aggressively compete to attract new customers and to maintain existing customers.
	Substantially all of our Domain Services revenue is derived from domain name registrations and related value-added services from wholesale and retail
customers using our provisioning and management platforms. The market for wholesale registrar services is both price sensitive and competitive and is evolving withthe introduction of new gTLDs, particularly for large volume customers, such as large web hosting companies and owners of large portfolios of domain names. We havea relatively limited ability to increase the pricing of domain name registrations without negatively impacting our ability to maintain or grow our customer base. Growth inour Domain Services revenue is dependent upon our ability to continue to attract and retain customers by maintaining consistent domain name registration and value-added service renewal rates and to grow our customer relationships through refining, evolving and improving our provisioning platforms and customer service for bothresellers and end-users. In addition, we also generate revenue through pay-per-click advertising and the sale of names from our portfolio of domain names and throughthe OpenSRS Domain Expiry Stream. The revenue associated with names sales and advertising has recently experienced flat to declining trends due to the uncertaintyaround the implementation of ICANN’s New gTLD Program, lower traffic and advertising yields in the marketplace, which we expect to continue.
	From time-to-time certain of our vendors provide us with market development funds to expand or maintain the market position for their services. Any decision
by these vendors to cancel or amend these programs for any reason may result in payments in future periods not being commensurate with what we have achievedduring past periods.
	Sales of domain names from our domain portfolio have a negative impact on our advertising revenue as these names are no longer available for advertising
purposes. In addition, the timing of larger domain names portfolio sales is unpredictable and may lead to significant quarterly fluctuations in our Portfolio revenue. Inthe fourth quarter of 2019, the Company disposed of its remaining domain portfolio, excluding surname domains used in the Realnames email service. The Companyexpects portfolio revenue to materially decline in Fiscal 2020 and thereafter.

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Table of Contents Critical Accounting Policies

The preparation of our consolidated financial statements in conformity with U.S. GAAP requires us to make estimates and judgements that affect the reported amountsof assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. There have been no material changes to the critical accountingpolicies and estimates as previously disclosed in Part II, Item 7 of our 2019 Annual Report. For further information on our critical accounting policies and estimates, seeNote 3 – Recent accounting pronouncements to the consolidated financial statements of the Company in Part I, Item 1 in this Quarterly Report on Form 10-Q.

Current COVID-19 Response Our Employees Tucows is a global business. Our first consideration during the global pandemic as a result of the disease caused by the novel strain of coronavirus (“COVID-19”)outbreak is for the health and safety of our employees, our customers and their communities, all around the world. Tucows has long encouraged a culture of remote workeven prior to this global pandemic, and on Sunday March 8, 2020 Tucows’ executive leadership announced that all employees who could conceivably work from homewere encouraged to do so. Tucows is actively and strongly encouraging its workforce to heed travel and all other emergency advisories, including social distancing andwhere appropriate, self-isolation. We expect our work from home policy to remain in effect until emergency state and governmental declarations where we have physicaloffices have ended and we believe the risk of community spread of the disease has subsided. Given our experience with remote work prior to COVID-19, we do notexpect to have productivity issues while the overwhelming majority of our office based workforce is dispersed. For the small group of employees who are unable work from home during this time, including our order fulfillment and Fiber installation teams, many of whom work in thefield, they are encouraged to practice social distancing and to continue to follow hygiene best practices and safety protocols as outlined by the Centers for DiseaseControl and Prevention. At the initial stage of the COVID-19 outbreak, we took steps to cancel and reschedule all in-home installation and service appointments acrossour Ting Fiber footprint. Since then, the Ting Internet team has begun to rollout a install solution for our employees and customers that minimizes risks associated withperson-to-person contact. Our Customers We recognize the important role we play within the Internet space and are committed to continue providing quality service during the COVID-19 outbreak. Services likeindividual and wholesale domain names, email and hosting do not rely on in-person interaction or the supply chain in the same way physical products and services do.We are providing uninterrupted services for all Domains related services, across our OpenSRS, Enom, Ascio, EPAG & Hover brands. Our Mobile services businesses are both without any physical storefronts, are similarly well-positioned to weather this event. We are fully prepared to continueproviding uninterrupted services for all Mobile related services, across our Ting Mobile and Roam Mobility brands. We are committed to making sure no customer whois in need is without access to core mobile service while we work through this unprecedented situation together. Our Fiber Internet business does not have bandwidth caps or other such limitations. Likewise, our networks are built with the capacity to accommodate future needs. Tohelp our customers remain connected at home during this time, we upgraded all our lower-tier fiber customers to symmetrical gigabit access at no charge. Any additionaltraffic from our customers working from home has not had and is not expected to have any negative impact on connectivity. As discussed above, our install solutionwas implemented in early May 2020. With this service limitation, new customer acquisition will remain slower than pre-pandemic levels of growth and installation. Evenwith an install solution that minimizes risks, customers may be unwilling to have service personnel visit their homes or offices. Our Community Tucows believes the Internet is essential infrastructure and an immensely powerful tool, especially in times of crises where coordination is essential. From an early point in the current global crisis, it was clear to us that we were going to need to do something new and different in how we responded to COVID-19related domain registrations. Many of these domains are registered for good, helpful purposes, such as community organization, dissemination of healthcareinformation, and recording people’s experiences through this pandemic. Others, however, purport to sell COVID-19 cures, vaccines, or tests, none of which arelegitimately available on the market at the time of the registration and many of which pose a significant health risk to the general public. There are three majorcomponents to our COVID-19 activities related to domain registrations: (i) identification, (ii) assessment for harm, and (iii) stakeholder engagement. It is important tonote that our response to each and every issue that we find is contextual and dependent on the specific circumstances. We expect to return to our regular procedures asthe pandemic and corresponding risks subsides. Although this approach vastly increases the burden on our compliance staff and puts us in the uncomfortable positionof having to assess the level of harm represented by a COVID-related domain and the website to which it resolves - we feel these circumstances are exceptional and aredetermined to do our part. In order to provide Internet access and assistance to residents of cities and towns that are part of the Ting Fiber network, we have set up free, fiber-fed, drive-up Wi-Fihotspots. These hotspots enable those with no home Internet access, or insufficient access, to access critical services like online learning and telehealth services, workremotely, check in on and access vital health, government and other services and generally access information. These hotspots will remain in operation as long as theyare needed and as long as it is safe and prudent to do so. We have not experienced any material resource constraints nor do we foresee requiring any material expenditures to continue to implement our business continuityplans described above.
	29

Table of Contents Current and expected COVID-19 Impacts Financial & Operational Impacts Further to the below discussion within this Quarterly Report around the financial condition and results of operations for the current period financial results, the currentimpact from COVID-19 has been quite limited given the outbreak came late into the first quarter of 2020. Management continues to assess the impact on a daily basis andexpects greater impact through the second quarter of 2020, should the COVID-19 pandemic persist. On a segment basis, our current assessment is as follows: Network Access – Mobile Services: Both our Mobile Services businesses are completely online and do not rely on physical storefronts to attract or service customers’ needs. We are fully prepared tocontinue to provide uninterrupted services to our customers both now and into the future. Although COVID-19 has impacted the demand for our Mobile services, theoverall impact on our financial results is not material, nor do we expect it to substantially worsen over the coming months. Ting Mobile, our primary post-paid Mobile Services brand is an MVNO operating across the United States. Through the end of March 2020, we saw a moderate drop indata usage by our customers, with some small uptake in voice and messaging usage. This is a direct result of social distancing measures enacted by state and localauthorities across the United States. With our customers staying indoors and working from home, they now rely on an increased use of home Wi-Fi networks rather thanmobile data services. This reduced usage has since stabilized and we expect it to only return to pre-pandemic usage levels once social distancing measures are relaxed.Additionally, nearing the end of March 2020, we saw an increased churn rate of low-margin business accounts as their own businesses came to a halt. Our coreconsumer customer base remains intact and experiencing normal levels of growth and churn. We do not foresee any increased risk of churn or collection risk given ourcurrent situation. Although we maintain minimum purchase guarantees with our MNOs, we do not expect any material shortfalls with respect to reduced usage fromCOVID-19. Roam Mobility, our niche prepaid Mobile Services brand that provides Mobile Services for people travelling within the United States and Worldwide has accounted forthe majority of the negative financial impact caused by COVID-19. The business relies on global travel as a key factor in its success. With travel restrictions and borderclosures essentially resulting in the halt of business and leisure travel, we have seen new revenues for Roam Mobility trend toward zero through the end of March 2020.We will continue to refund or defer service plan start dates for existing customers. Management has taken substantial measures to reduce and eliminate anyunnecessary costs within that business. The assets associated with Roam are insignificant to the consolidated Company total. We continue to employ the small groupof employees focused on the Roam Mobility brands. Given the current uncertainty around reopening of borders, easing of travel restrictions and consumers’ level ofcomfort with business and leisure travel in a post pandemic world, we believe we will earn little to none of the $1.0 million of the second quarter 2020 revenues that wehad previously forecasted for this business prior to onset of the COVID-19 pandemic. Network Access – Other Services: As discussed above, upon news of the COVID-19 outbreak, we took the major step to cancel and reschedule all in-home installation and service appointments acrossour Ting Fiber footprint. Since then, the Ting Internet team has begun to rollout a smart-install solution for our employees and customers alike. Although new customerinstallations have slowed, our existing customer base continues to provide recurring revenue for us to support this business. This is aided by our most recentacquisition of Cedar, which increased our revenues significantly in period. The negative impact posed by the COVID-19 outbreak is largely operational in nature as wehave experienced delayed construction in parts of our Ting Fiber footprint and a halting of new installations for a period of time across our entire footprint. Thosetowns and cities that are serviceable for new customers’ addresses will now have a reduced level of installation and setup relative to pre-pandemic conditions. Weexpect this segment to grow at a reduced rate until such time that this pandemic subsides and social distancing measures are relaxed. Domain Services: Domain Services are foundational to the functioning of the Internet. As discussed above, services like individual and wholesale domain names, email and hosting do notrely on in-person interaction or the supply chain in the same way physical products and services do. We have not experienced any COVID-19 related impacts, eitherfinancially or operationally for Domains related services, across our OpenSRS, Enom, Ascio, EPAG & Hover brands. Our results of operations for the current periodfinancial results are in line with management’s expectation for the period given product, customer mix and current brand trajectories. We will continue to monitor theimpact but do not foresee any negative financial or operational impacts associated with this segment.

Table of Contents Liquidity & Financial Resource Impacts For a complete assessment of our liquidity and covenant positions please reference the relevant discussions within this Quarterly Report. We have experienced nosignificant change to our liquidity position or credit risk as a result of the financial and operational impacts related to COVID-19, as discussed above. Our cost or accessto funding sources has not changed and is not reasonably likely to change in the near future as a result of the pandemic. Our sources and uses of cash have not beenmaterially impacted and there is no known material uncertainty about our ongoing ability meet covenants or repayment terms of our credit agreements at this time. Internal Controls over Financial Reporting Tucows has long encouraged a culture of remote work even prior to COVID-19. Our financial reporting systems and our internal controls over financial reporting anddisclosure controls and procedures are already adapted for a remote work environment. There have been no changes during the current period that as a result ofCOVID-19 would affect our ability to maintain these systems and controls. COVID-19 Related Assistance & Support Currently, Tucows has not received any form of financial or resource related assistance from any government or local authority. There do exist programs in the regions inwhich we operate that have been developed to support corporations like Tucows during this time, primarily in the form employee wage subsidization. Tucows willcontinue to investigate these programs as their details are refined and seek out application for any that make sense for our businesses. Across our businesses, we have been able to defer portions of installment taxes payable to various Government bodies as payment timelines have been extended inresponse to the pandemic. Accounting Policy Impacts Given the rapidly changing nature of COVID-19 developments and the current uncertainty around the length and severity these developments could create, Tucowsdoes not have sufficient evidence to anticipate a material impairment with respect to goodwill, intangible assets, long-lived assets, or right of use assets. We willcontinue to monitor the impacts closely and as more information becomes available. We do not foresee any changes in accounting judgements in relation to COVID-19that will have a material impact on our financial statements.

Table of Contents RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 2020 AS COMPARED TO THE THREE MONTHS ENDED MARCH 31, 2019 NET REVENUES Network Access Services
	The Company generates Network Access Services revenues primarily through the provisioning of mobile services. Other sources of revenue include the
provisioning of fixed high-speed Internet access as well as billing solutions to ISPs. Mobile Services
	Ting Mobile wireless usage contracts grant customers access to standard talk, text and data mobile services. Ting Mobile contracts are billed based on the
actual amount of monthly services utilized by each customer during their billing cycle and charged to customers on a postpaid basis. Voice minutes, text messages andmegabytes of data are each billed separately based on a tiered pricing program. The Company recognizes revenue for Ting Mobile usage based on the actual amount ofmonthly services utilized by each customer.
	Ting Mobile services are primarily contracted through the Ting website, for one month at a time and contain no commitment to renew the contract following
each customer’s monthly billing cycle. The Company’s billing cycle for all Ting Mobile customers is computed based on the customer’s activation date. In order torecognize revenue as the Company satisfies its obligations, we compute the amount of revenues earned but not billed from the end of each billing cycle to the end ofeach reporting period. In addition, revenues associated with the sale of wireless devices and accessories are recognized when title and risk of loss is transferred to thecustomer and shipment has occurred. Incentive marketing credits given to customers are recorded as a reduction of revenue.
	Our Roam Mobility brands also offer standard talk, text and data mobile services. Roam customers prepay for their usage through the Roam Mobility website.
When prepayments are received the amount is deferred, and subsequently recognized as the Company satisfies its obligation to provide mobile services. In addition,revenues associated with the sale of SIM cards are recognized when title and risk of loss is transferred to the subscriber and shipment has occurred. Incentive marketingcredits given to customers are recorded as a reduction of revenue. Other services
	Other services derive revenues from providing Ting Internet to individuals and small businesses in select cities. In addition, we provide billing, provisioning
and customer care software solutions to Internet Service Providers (“ISPs”) through our Platypus billing software. Ting Internet access contracts provide customersInternet access at their home or business through the installation and use of our fiber optic network. Ting Internet contracts are generally prepaid and grant customerswith unlimited bandwidth based on a fixed price per month basis. Since consideration is collected before the service period, revenue is initially deferred and recognizedas the Company performs its obligation to provide Internet access.
	Ting Internet services are primarily contracted through the Ting website, for one month at a time and contain no commitment to renew the contract following
each customer’s monthly billing cycle. The Company’s billing cycle for all Ting Internet access customers is computed based on the customer’s activation date. In orderto recognize revenue as the Company satisfies its obligations, we compute the amount of revenues earned but not billed from the end of each billing cycle to the end ofeach reporting period. In addition, revenues associated with the sale of Internet hardware to subscribers are recognized when title and risk of loss is transferred to thesubscriber and shipment has occurred. Incentive marketing credits given to customers are recorded as a reduction of revenue.
	In those cases, where payment is not received at the time of sale, revenue is not recognized until contract inception unless the collection of the related
accounts receivable is reasonably assured. The Company records costs that reflect expected refunds, rebates and credit card charge-backs as a reduction of revenues atthe time of the sale based on historical experiences and current expectations.
		32

Table of Contents Domain Services Wholesale
	Domain registration contracts, which can be purchased for terms of one to ten years, provide our resellers and retail registrant customers with the exclusive
right to a personalized internet address from which to build an online presence. The Company enters into domain registration contracts in connection with each new,renewed and transferred-in domain registration. At the inception of the contract, the Company charges and collects the registration fee for the entire registration period.Though fees are collected upfront, revenue from domain registrations are recognized rateably over the registration period as domain registration contracts contain a‘right to access’ license of IP, which is a distinct performance obligation measured over time. The registration period begins once the Company has confirmed that therequested domain name has been appropriately recorded in the registry under contractual performance standards.
	Historically, our wholesale domain service has constituted the largest portion of our business and encompasses all of our services as an accredited registrar
related to the registration, renewal, transfer and management of domain names. In addition, this service fuels other revenue categories as it often is the initial service forwhich a reseller will engage us, enabling us to follow on with other services and allowing us to add to our portfolio by purchasing names registered through us upontheir expiration. Domain services will continue to be the largest portion of our business and will further fuel our ability to sell add-on services.
	The Company is an ICANN accredited registrar. Thus, the Company is the primary obligor with our reseller and retail registrant customers and is responsible for
the fulfillment of our registrar services to those parties. As a result, the Company reports revenue in the amount of the fees we receive directly from our reseller and retailregistrant customers. Our reseller customers maintain the primary obligor relationship with their retail customers, establish pricing and retain credit risk to thosecustomers. Accordingly, the Company does not recognize any revenue related to transactions between our reseller customers and their ultimate retail customers. Wholesale – Value-Added Services
	We derive revenue from domain related value-added services like digital certifications, WHOIS privacy and hosted email and by providing our resellers and
retail registrant customers with tools and additional functionality to be used in conjunction with domain registrations. All domain related value-added services areconsidered distinct performance obligations which transfer the promised service to the customer over the contracted term. Fees charged to customers for domain relatedvalue-added services are collected at the inception of the contract, and revenue is recognized on a straight-line basis over the contracted term, consistent with thesatisfaction of the performance obligations.
	We also derive revenue from other value-added services, which primarily consists of Internet hosting services on the OpenSRS and eNom domain expiry
streams. Retail
	We derive revenues from Hover and eNom’s retail properties through the sale of retail domain name registration and email services to individuals and small
businesses. Portfolio
	The Company sells the rights to its portfolio domains or names acquired through the Company’s domain expiry stream. Revenue generated from sale of domain
name contracts, containing a distinct performance obligation to transfer the domain name rights under the Company’s control, is generally recognized once the rightshave been transferred and payment has been received in full. Domain portfolio names are sold through our premium domain name service, auctions or in negotiatedsales. In the fourth quarter of 2019, the Company disposed of its entire domain portfolio, excluding surname domains used in the Realnames email service. The Companyexpects portfolio revenue to materially decline in Fiscal 2020 and thereafter.
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Table of Contents The following table presents our net revenues, by revenue source (Dollar amounts in thousands of U.S. dollars):

(Dollar amounts in thousands of U.S. dollars)			For the Three Months Ended March 31,
			2020		2019

Network Access Services:
Mobile Services		$		20,148 $	20,809
Other Services				4,308	2,443
Total Network Access Services				24,456	23,252

Domain Services:
Wholesale
Domain Services				45,964	42,591
Value Added Services				4,707	4,184
						Total Wholesale	50,671	46,775

Retail				8,449	8,642
Portfolio				409	284
Total Domain Services				59,529	55,701

		$		83,985 $	78,953
Increase over prior period		$		5,032
Increase - percentage				6%

The following table presents our revenues, by revenue source, as a percentage of total revenues (Dollar amounts in thousands of U.S. dollars):

			For the Three Months Ended March 31,
			2020		2019

Network Access Services:
Mobile Services				24%	27%
Other Services				5%	3%
Total Network Access Services				29%	30%

Domain Services:
Wholesale
Domain Services				55%	54%
Value Added Services				6%	5%
						Total Wholesale	61%	59%

Retail				10%	11%
Portfolio				0%	0%
Total Domain Services				71%	70%

				100%	100%

	34

Table of Contents Total net revenues for the three months ended March 31, 2020 increased by $5.0 million, or 6%, to $84.0 million from $79.0 million when compared to the three monthsended March 31, 2019. The three-month increase in revenue was primarily driven by the $4.6 million of revenues attributable to our prior year acquisition of Ascio.Ascio revenues, which now represent a full quarter of earned revenue compared to the stub period of attributable revenue during the three months ended March 31,2019. Fiber access revenues increased $1.9 million driven by our current period acquisition of Cedar, a fiber Internet provider business based in Durango, Colorado aswell as through the expansion of our existing Ting Internet footprint. The increases in revenues were offset by a further decrease in domain name services revenue of$0.8 million, related to a continued erosion in Wholesale domain registrations by non-core customer primarily from our existing Domain Services brands. Additionally,Mobile Services revenue decreased by $0.7 million due to a decrease in mobile subscribers and reduced usage related to COVID-19. Deferred revenue from domain name registrations and other Internet services at March 31, 2020 increased to $152.6 million from $149.3 million at December31, 2019 primarily due to current period billings for domain name registration and service renewals. During the three months ended March 31, 2020, no customer accounted for more than 10% of total revenue. For the three months ended March 31, 2019, no customeraccounted for more than 10% of total revenue. As at March 31, 2020 and December 31, 2019, no customer accounted for more than 10% of accounts receivable. Thougha significant portion of the Company’s domain services revenues are prepaid by our customers, where the Company does collect receivables, significant managementjudgment is required at the time revenue is recorded to assess whether the collection of the resulting receivables is reasonably assured. On an ongoing basis, we assessthe ability of our customers to make required payments. Based on this assessment, we expect the carrying amount of our outstanding receivables, net of allowance fordoubtful accounts, to be fully collected. Network Access Services Mobile Services Net revenues from mobile phone equipment and services for the three months ended March 31, 2020 decreased by $0.7 million or 3% to $20.1 million as compared to thethree months ended March 31, 2019. This decrease reflects a decline in mobile service revenue, which decreased by $0.8 million compared to March 31, 2019, to$18.6 million, as a result of a decline in mobile subscribers and reduced usage related to the COVID-19 pandemic. Revenues from the sale of mobile hardware and relatedaccessories increased by $0.1 million compared to March 31, 2019, to $1.6 million. The increase in device revenue was primarily driven by strong sales and refreshedproduct mix for devices compared to the three months ended March 31, 2019. As of March 31, 2020, Ting Mobile, our primary post-paid Mobile Services brand had 154,000 mobile subscribers and 272,000 mobile devices under its managementcompared to 160,000 subscribers and 284,000 devices under its management as of March 31, 2019. Other Services Other revenues from Ting Internet and billing solutions generated $4.3 million in revenue during the three months ended March 31, 2020, up $1.9 million or 79%compared to the three months ended March 31, 2019. This growth is driven by the current period acquisition of Cedar, a fiber Internet provider business based inDurango, Colorado. Cedar contributed $1.2 million of revenue in the current period, with $0.7 million related to the continued expansion of our Ting Internet footprint inexisting Ting towns throughout the United States. As of March 31, 2020, Ting Internet had access to 45,000 serviceable addresses and 12,000 active accounts under its management compared to having access to32,000 serviceable addresses and 8,000 active accounts under its management as of March 31, 2019. These figures include the increase in accounts and serviceableaddresses attributable to the current period Cedar acquisition.

	35

Table of Contents Domain Services Wholesale During the three months ended March 31, 2020, Wholesale domain services revenue increased by $3.4 million or 8% to $46.0 million, when compared to the three monthsended March 31, 2019. The three-month increase was primarily driven by a $4.6 million increase in revenue related to the prior year acquisition of Ascio. Ascio revenuesnow represent a full quarter of earned revenue compared to the stub period of attributable revenue during the three months ended March 31, 2019. The increase waspartially offset by a $1.2 million decrease in Wholesale domain revenue, driven by a decline in domain registrations by non-core customers from our eNom brand. Total domains that were managed under the OpenSRS, eNom, EPAG, and Ascio domain services decreased by 1.3 million domain names to 23.9 million as of March 31,2020, when compared to 25.2 million at March 31, 2019. The decrease is a driven by the continued erosion of registrations related to non-core customers from our eNombrand. During the three months ended March 31, 2020, value-added services increased by $0.5 million to $4.7 million compared to the three months ended March 31, 2019. Thethree-month increases were primarily driven by an increase in expiry revenue of $0.7 million, offset by a decrease in hosting revenue of $0.1 million. Retail Net revenues from retail for the three months ended March 31, 2020, as compared to the three months ended March 31, 2019, decreased by less than $0.2 million to$8.4 million. Revenue decreased as a result of a shrinking eNom customer base. Portfolio Net revenues from portfolio for the three months ended March 31, 2020, increased by $0.1 million to $0.4 million, as compared to the three months ended March 31, 2019,due to higher proceeds from individual portfolio sales compared to the three months ended March 31, 2019. In the fourth quarter of 2019, the Company disposed of itsentire domain portfolio, excluding surname domains used in the Realnames email service. The Company expects portfolio revenue to materially decline in Fiscal 2020 andthereafter. COST OF REVENUES Network Access Services Mobile Services
	Cost of revenues for mobile services includes the costs of provisioning mobile services, which is primarily our customers' voice, messaging, data usage
provided by our Network Operators, and the costs of providing mobile phone hardware, which is the cost of mobile phone devices and SIM cards sold to ourcustomers, order fulfillment related expenses, and inventory write-downs. Other Services
	Cost of revenues for other services primarily includes the costs for provisioning high speed Internet access, which is comprised of network access fees and
software licenses and the costs of providing hardware. Hardware costs are comprised of network routers sold to our customers, order fulfillment related expenses,inventory write-downs and fees paid to third-party service providers primarily for printing services in connection with billing services to ISPs.
		36

Table of Contents Domain Services Wholesale Domain Service
	Cost of revenues for domain registrations represents the amortization of registry and accreditation fees on a basis consistent with the recognition of revenues
from our customers, namely rateably over the term of provision of the service. Registry fees, the primary component of cost of revenues, are paid in full when the domainis registered, and are initially recorded as prepaid domain registry fees. This accounting treatment reasonably approximates a recognition pattern that corresponds withthe provision of the services during the period. Market development funds that do not represent a payment for distinct goods or services provided by the Company,and thus do not meet the criteria for revenue recognition under ASU 2014-09, are reflected as cost of goods sold and are recognized as earned. Value-Added Services
	Costs of revenues for value-added services include licensing and royalty costs related to the provisioning of certain components of related to hosted email and
fees paid to third-party hosting services. Fees payable for trust certificates are amortized on a basis consistent with the provision of service, generally one year, whileemail hosting fees and monthly printing fees are included in cost of revenues in the month they are incurred. Retail
	Costs of revenues for our provision and management of Internet services through our retail sites, Hover.com and the eNom branded sites, include the
amortization of registry fees on a basis consistent with the recognition of revenues from our customers, namely rateably over the term of provision of the service.Registry fees, the primary component of cost of revenues, are paid in full when the domain is registered, and are recorded as prepaid domain registry fees. Portfolio
	Costs of revenues for our portfolio represent the amortization of registry fees for domains added to our portfolio over the renewal period, which is generally
one year, the value attributed under intangible assets to any domain name sold and any impairment charges that may arise from our assessment of our domain nameintangible assets. Payments for domain registrations are payable for the full term of service at the time of activation of service and are recorded as prepaid domainregistry fees and are expensed rateably over the renewal term.

		37

Table of Contents Network expenses
	Network expenses include personnel and related expenses, depreciation and amortization, communication costs, equipment maintenance, stock-based
compensation and employee and related costs directly associated with the management and maintenance of our network. Communication costs include bandwidth, co-location and provisioning costs we incur to support the supply of all our services. The following table presents our cost of revenues, by revenue source:

	(Dollar amounts in thousands of U.S. dollars)			For the Three Months Ended March 31,
					2020		2019

	Network Access Services:
	Mobile Services		$			9,857 $	10,743
	Other Services					1,716	1,069
	Total Network Access Services					11,573	11,812

	Domain Services:
	Wholesale
	Domain Services					36,469	34,839
	Value Added Services					785	794
								Total Wholesale	37,254	35,633

	Retail					4,234	4,359
	Portfolio					127	128
	Total Domain Services					41,615	40,120

	Network Expenses:
	Network, other costs					2,416	2,395
	Network, depreciation and amortization costs					3,231	1,975
						5,647	4,370

			$			58,835 $	56,302
	Increase over prior period		$			2,533
	Increase - percentage					4%

	The following table presents our cost of revenues, as a percentage of total cost of revenues for the periods presented:

				For the Three Months Ended March 31,
					2020		2019

	Network Access Services:
	Mobile Services					17%	19%
	Other Services					3%	2%
	Total Network Access Services					20%	21%

	Domain Services:
	Wholesale
	Domain Services					63%	62%
	Value Added Services					1%	1%
								Total Wholesale	64%	63%

	Retail					7%	8%
	Portfolio					0%	0%
	Total Domain Services					71%	71%

	Network Expenses:
	Network, other costs					4%	4%
	Network, depreciation and amortization costs					5%	4%
						9%	8%

						100%	100%

Total cost of revenues for the three months ended March 31, 2020, increased by $2.5 million, or 4%, to $58.8 million from $56.3 million in the three months ended March31, 2019. The three-month increase was driven by the $3.4 million increase in costs attributable to our prior year acquisition of Ascio. Ascio costs now represent a fullquarter compared to the stub period of attributable costs during the three months ended March 31, 2019. The increase in cost of revenue was also related to a $1.3million increase in Network, depreciation and amortization as well as a $0.6 million increase in direct Fiber Access costs, both associated with the expanding TingInternet footprint and the acquisition of Cedar. These increases in cost of revenue were offset by a $1.9 million decrease in domain services costs driven by the erosionin registrations by non-core customers for our eNom brand, as well as a decrease of $0.9 million in Mobile Services costs. Prepaid domain registration and other Internetservices fees as of March 31, 2020 increased by $2.8 million, or 3%, to $112.0 million from $109.2 million at December 31, 2019 primarily due to current period domain nameregistration and annual service renewals.

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Table of Contents Network Access Services Mobile Services Cost of revenues from mobile phone equipment and services for the three months ended March 31, 2020, as compared to the three months ended March 31, 2019,decreased by $0.9 million or 8% to $9.9 million. The decrease was primarily driven by reduced minimum commitment charges with network operators, which decreased by$0.9 million as compared to the three months ended March 31, 2019. Furthermore, Mobile services across both Ting Mobile and Roam Mobility brands experienceda decline in mobile subscribers and reduced usage related to the COVID-19 pandemic, attributable to a decrease in costs of $0.4 million. These decreases in costs ofrevenue were offset by a $0.4 million increase in network set-up and international long distance charges incurred by Ting Mobile in the period as well as a $0.1 millionincrease in device costs. Other Services During the three months ended March 31, 2020, costs related to provisioning high speed Internet access and billing solutions increased $0.6 million or 55%,to $1.7 million as compared to $1.1 million during three months ended March 31, 2019. The increase in costs were primarily driven by increased direct costs andbandwidth costs related to the continued expansion of the Ting Fiber network, for both existing towns and cities as well as those acquired via the Cedar acquisition. Domain Services Wholesale Domain Service Costs for Wholesale domain services for the three months ended March 31, 2020 increased by $1.7 million to $36.5 million, when compared to the three monthsended March 31, 2019. The increase was primarily driven by $3.4 million increase related to the acquisition of Ascio. Ascio costs now represent a full quarter comparedto the stub period of attributable costs during the three months ended March 31, 2019. This increase was offset by a $1.8 million decrease in wholesale domain servicescosts driven by the erosion in registrations by non-core customers for our eNom brand. Value-Added Services Costs for wholesale value-added services for the three months ended March 31, 2020 remained flat at $0.8 million, when compared to the three months ended March 31,2019. Retail Costs for retail for the three months ended March 31, 2020 decreased by $0.2 million, to $4.2 million as compared to the three months ended March 31, 2019.The decrease was a result of an overall declining volume of transactions related to the eNom retail brands. Portfolio Costs for portfolio for the three months ended March 31, 2020 remained flat at $0.1 million when compared to the three months ended March 31, 2019. In the fourthquarter of 2019, the Company disposed of its entire domain portfolio, excluding surname domains used in the Realnames email service. The Company expects portfoliocost of revenue to materially decline in Fiscal 2020. Network Expenses Network costs for the three months ended March 31, 2020 increased by $1.2 million to $5.6 million when compared to the three months ended March 31, 2019. The three-month increase was driven by depreciation as a result of the expansion of the Company’s increased network infrastructure associated with the continuing expansion ofthe Ting Fiber footprint.

Table of Contents SALES AND MARKETING
	Sales and marketing expenses consist primarily of personnel costs. These costs include commissions and related expenses of our sales, product management,
public relations, call center, support and marketing personnel. Other sales and marketing expenses include customer acquisition costs, advertising and other promotionalcosts.
	(Dollar amounts in thousands of U.S. dollars)
			For the Three Months Ended March 31,
				2020		2019
	Sales and marketing	$			8,985 $	8,741
	Increase over prior period	$			244
	Increase - percentage				3%
	Percentage of net revenues				11%	11%

	Sales and marketing expenses for the three months ended March 31, 2020 increased by $0.2 million, or 3%, to $9.0 million as compared to the three months
ended March 31, 2019. This three-month increase primarily related to a $0.7 million increase in people costs driven by the acquisition of Cedar in the first quarter of2020 and inclusion of a full quarter of people costs related to workforce acquired in the Ascio acquisition on March 18, 2019. Stock-based compensation expenses alsoincreased $0.2 million in 2020 to attract and retain labor. The overall increase in sales and marketing expense was partially offset by a decrease in other marketingexpenses of $0.5 million.

TECHNICAL OPERATIONS AND DEVELOPMENT
	Technical operations and development expenses consist primarily of personnel costs and related expenses required to support the development of new or
enhanced service offerings and the maintenance and upgrading of existing infrastructure. This includes expenses incurred in the research, design and development oftechnology that we use to register domain names, network access services, email, retail, domain portfolio and other Internet services, as well as to distribute our digitalcontent services. Editorial costs relating to the rating and review of the software content libraries are included in the costs of product development. All technicaloperations and development costs are expensed as incurred.

	(Dollar amounts in thousands of U.S. dollars)		For the Three Months Ended March 31,
				2020		2019
	Technical operations and development	$			2,751 $	2,523
	Increase over prior period	$			228
	Increase - percentage				9%
	Percentage of net revenues				3%	3%

	Technical operations and development expenses for the three months ended March 31, 2020 increased by $0.2 million, or 9%, to $2.8 million when compared to
the three months ended March 31, 2019. The increase in costs relates primarily to increased salaries and benefits driven by an expanding workforce and wage inflation,including the workforce acquired in the Ascio acquisition on March 18, 2019. GENERAL AND ADMINISTRATIVE
	General and administrative expenses consist primarily of compensation and related costs for managerial and administrative personnel, fees for professional
services, public listing expenses, rent, foreign exchange and other general corporate expenses.
	(Dollar amounts in thousands of U.S. dollars)		For the Three Months Ended March 31,
				2020		2019
	General and administrative	$			4,741 $	4,448
	Increase over prior period	$			293
	Increase - percentage				7%
	Percentage of net revenues				6%	6%

	General and administrative expenses for the three months ended March 31, 2020 increased by $0.3 million, or 7%, to $4.7 million as compared to the three
months ended March 31, 2019. The increase was primarily driven by a $0.1 million increase related to the acquisition of Cedar and Ascio, an increase in foreign exchangeexpense of $0.3 million and an increase in people costs of $0.2 million. The increase in general and administrative expenses was offset by a decrease in facility andtransitional costs of $0.2 million.
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Table of Contents DEPRECIATION OF PROPERTY AND EQUIPMENT

		(Dollar amounts in thousands of U.S. dollars)		For the Three Months Ended March 31,
					2020		2019
		Depreciation of property and equipment	$			113 $	124
		Decrease over prior period	$			(11)
		Decrease - percentage				(9)%
		Percentage of net revenues				0%	0%

		Depreciation costs remained flat for the three months ended March 31, 2020 at $0.1 million when compared to the three months ended March 31, 2019.
LOSS ON DISPOSAL OF PROPERTY AND EQUIPMENT
		(Dollar amounts in thousands of U.S. dollars)		For the Three Months Ended March 31,
					2020		2019
		Loss on disposition of property and equipment	$			- $	-
		Decrease over prior period	$			-
		Decrease - percentage				N/A
		Percentage of net revenues				-%	-%

		There were no losses on disposal costs during the three months ended March 31, 2020 and March 31, 2019.
AMORTIZATION OF INTANGIBLE ASSETS

		(Dollar amounts in thousands of U.S. dollars)		For the Three Months Ended March 31,
					2020		2019
		Amortization of intangible assets	$			2,947 $	1,866
		Increase over prior period	$			1,081
		Increase - percentage				58%
		Percentage of net revenues				4%	2%

		Amortization of intangible assets for the three months ended March 31, 2020 increased $1.1 million to $2.9 million as compared to the three months ended
March 31, 2019. The increase is driven by a full quarter of amortization related to the acquisition of Ascio of $0.4 million, amortization of $0.4 million related to the currentperiod acquisition of Cedar and $0.3 million in amortization related to FreedomPop customer acquisition that closed in July 2019. Network rights, brand and customerrelationships acquired in connection with the following acquisitions are amortized on a straight-line basis over a range of two to seven years: eNom in January2017, Roam Mobility brands in September of 2017, Ascio in March of 2019, FreedomPop in July 2019, and Cedar in January 2020. LOSS (GAIN) ON CURRENCY FORWARD CONTRACTS
		Although our functional currency is the U.S. dollar, a major portion of our fixed expenses are incurred in Canadian dollars. Our goal with regard to foreign
currency exposure is, to the extent possible, to achieve operational cost certainty, manage financial exposure to certain foreign exchange fluctuations and to neutralizesome of the impact of foreign currency exchange movements. Accordingly, we enter into foreign exchange contracts to mitigate the exchange rate risk on portions of ourCanadian dollar exposure.

		(Dollar amounts in thousands of U.S. dollars)		For the Three Months Ended March 31,
					2020		2019
		Loss (gain) on currency forward contracts	$			441 $	(79)
		Increase over prior period	$			520
		Increase - percentage				658%
		Percentage of net revenues				1%	0%

		The Company recorded a net loss of $0.4 million on the change in fair value of outstanding contracts as well as realized on matured contracts during the three
months ended March 31, 2020.
		At March 31, 2020, our balance sheet reflects a derivative instrument asset of $0.5 million and a liability of $1.7 million as a result of our existing foreign
exchange contracts. Until their respective maturity dates, these contracts will fluctuate in value in line with movements in the Canadian dollar relative to the U.S. dollar.
	41

Table of Contents OTHER INCOME (EXPENSES)

		(Dollar amounts in thousands of U.S. dollars)		For the Three Months Ended March 31,
					2020		2019
		Other income (expense), net	$			(1,237) $	(972)
		Increase over prior period	$			(265)
		Increase - percentage				27%
		Percentage of net revenues				1%	1%

		Other expenses during the three months ended March 31, 2020 increased by $0.3 million when compared to the three months ended March 31, 2019. This
was primarily due to interest incurred on our credit facility with the majority of the borrowings on the credit facility to support the build-out of the Ting Fiber network.Other expense consists primarily of the interest we incur in connection with our Amended 2019 Credit Facility. The interest incurred primarily relates to our loan balancesobtained to fund the acquisition of eNom, Ascio and Cedar and funding for expenditures associated with the Company’s Fiber to the Home program. INCOME TAXES
		The following table presents our provision for income taxes for the periods presented:

		(Dollar amounts in thousands of U.S. dollars)		For the Three Months Ended March 31,
					2020		2019
		Provision for income taxes	$			1,101 $	1,257
		Decrease in provision over prior period	$			(156)
		Decrease - percentage				(12)%
		Effective tax rate				28%	31%

		We operate in various tax jurisdictions, and accordingly, our income is subject to varying rates of tax. Losses incurred in one jurisdiction cannot be used to
offset income taxes payable in another jurisdiction. Our ability to use income tax loss carry forwards and future income tax deductions is dependent upon our operationsin the tax jurisdictions in which such losses or deductions arise. Income taxes are computed using the asset and liability method, under which deferred tax assets andliabilities are determined based on the difference between the financial statement carrying values and tax base of assets and liabilities using enacted tax rates in effect forthe year in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to the amountexpected to be realized.
		For the three months ended March 31, 2020, we recorded an income tax expense of $1.1 million on income before income taxes of $3.9 million, using an estimated
effective tax rate for Fiscal 2020 adjusted for certain minimum state taxes as well as the inclusion of a $0.2 million tax recovery related to ASU 2016-09, which requires allexcess tax benefits and tax deficiencies related to employee share-based payments to be recognized through income tax expense. Comparatively, for the three monthsended March 31, 2019, we recorded an income tax expense of $1.3 million on income before taxes of $4.1 million, using an estimated effective tax rate for the 2019 fiscalyear and reflecting the $0.4 million tax recovery impact related to ASU 2016-09.
		In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets
will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the years in which those temporarydifferences become deductible. Management projected future taxable income, uncertainties related to the industry in which the Company operates, and tax planningstrategies in making this assessment.
		We recognize accrued interest and penalties related to income taxes in income tax expense. We did not have significant interest and penalties accrued at March
31, 2020 and December 31, 2019, respectively. ADJUSTED EBITDA
		We believe that the provision of this supplemental non-GAAP measure allows investors to evaluate the operational and financial performance of our core
business using similar evaluation measures to those used by management. We use adjusted EBITDA to measure our performance and prepare our budgets. Sinceadjusted EBITDA is a non-GAAP financial performance measure, our calculation of adjusted EBITDA may not be comparable to other similarly titled measures of othercompanies; and should not be considered in isolation, as a substitute for, or superior to measures of financial performance prepared in accordance with GAAP. Becauseadjusted EBITDA is calculated before recurring cash charges, including interest expense and taxes, and is not adjusted for capital expenditures or other recurring cashrequirements of the business, it should not be considered as a liquidity measure. See the Consolidated Statements of Cash Flows included in the attached financialstatements. Non-GAAP financial measures do not reflect a comprehensive system of accounting and may differ from non-GAAP financial measures with the same orsimilar captions that are used by other companies and/or analysts and may differ from period to period. We endeavor to compensate for these limitations by providingthe relevant disclosure of the items excluded in the calculation of adjusted EBITDA to net income based on U.S. GAAP, which should be considered when evaluatingthe Company's results. Tucows strongly encourages investors to review its financial information in its entirety and not to rely on a single financial measure.

	42

Table of Contents
	Our adjusted EBITDA definition excludes depreciation, amortization of intangible assets, income tax provision, interest expense (net), accretion of contingent
consideration, stock-based compensation, asset impairment, gains and losses from unrealized foreign currency transactions and infrequently occurring items. Gains andlosses from unrealized foreign currency transactions removes the unrealized effect of the change in the mark-to-market values on outstanding unhedged foreigncurrency contracts, as well as the unrealized effect from the translation of monetary accounts denominated in non-U.S. dollars to U.S. dollars.
	The following table reconciles net income to adjusted EBITDA:

Reconciliation of Net income to Adjusted EBITDA				Three Months Ended March 31,
(In Thousands of US Dollars)				2020		2019
(unaudited)				(unaudited)		(unaudited)

Net income for the period			$		2,834 $	2,799
Depreciation of property and equipment					2,990	1,925
Amortization of intangible assets					3,301	2,040
Interest expense, net					1,150	972
Accretion of contingent consideration					87	-
Provision for income taxes					1,101	1,257
Stock-based compensation					801	525
Unrealized loss (gain) on change in fair value of forward contracts					348	(118)
Unrealized loss (gain) on foreign exchange revaluation of foreign denominated monetary assets and liabilities					(42)	(328)
Acquisition and other costs1					111	359

Adjusted EBITDA			$		12,681 $	9,431

1Acquisition and other costs represents transaction-related expenses, transitional expenses, such as duplicative post-acquisition expenses, primarily related toour acquisition of eNom in January 2017, Ascio in March 2019, and Cedar in January 2020. Expenses include severance or transitional costs associated withdepartment, operational or overall company restructuring efforts, including geographic alignments.

	Adjusted EBITDA increased by $3.3 million, or 35% to $12.7 million for the three months ended March 31, 2020 when compared to the three months ended
March 31, 2019. The increase in adjusted EBITDA from period-to-period was primarily driven by an increased contribution from Ascio, which is the result of increasedoperating cost synergies realized during the first quarter of 2020, as well as an increased contribution from Ting Fiber. The overall increase in EBITDA was partiallyoffset by decreased contribution from the erosion of wholesale and retail registrations from our eNom brand as well as lower contribution from Ting Mobile, related to adecreasing subscriber base and lower usage related to COVID-19. OTHER COMPREHENSIVE INCOME (LOSS)
	To mitigate the impact of the change in fair value of our foreign exchange contracts on our financial results, in October 2012 we begun applying hedge
accounting for the majority of the contracts we need to meet our Canadian dollar requirements on a prospective basis.
	The following table presents other comprehensive income for the periods presented:

	(Dollar amounts in thousands of U.S. dollars)							For the Three Months Ended March 31,
								2020	2019
	Other comprehensive income (loss)						$	(1,191) $	610
	Decrease over prior period						$	(1,801)
	Decrease - percentage							(295)%
	Percentage of net revenues							(1)%	1%

	The impact of the fair value adjustments on outstanding hedged contracts for the three months ended March 31, 2020 was a loss in OCI of $1.2 million as
compared to a gain of $0.6 million for the three months ended March 31, 2019.

	The net amount reclassified to earnings during the three months ended March 31, 2020 was a loss of $0.0 million compared to a loss of $0.1 million during the
three months ended March 31, 2019.
		43

Table of Contents LIQUIDITY AND CAPITAL RESOURCES
	As of March 31, 2020, our cash and cash equivalents balance decreased $8.0 million when compared to December 31, 2019. Our principal uses of cash were $9.9
million for the continued investment in property and equipment, $8.8 million for the Acquisition of Cedar Holdings Group, Incorporated (“Cedar”), $3.1 million in stockrepurchases, and $0.2 million of other costs, including tax payment associated with stock option exercises. These uses of cash were offset by cash provided byoperating activities of $14.1 million.
Amended 2019 Credit Facility
	On June 14, 2019, the Company and its wholly-owned subsidiaries, Tucows.com Co., Ting Fiber, Inc., Ting Inc., Tucows (Delaware) Inc. and Tucows (Emerald),
LLC, entered into an Amended and Restated Senior Secured Credit Agreement with Royal Bank of Canada (“RBC”), as administrative agent, and lenders party thereto(collectively with RBC, the “Lenders”) under which the Company has access to an aggregate of up to $240 million in funds, inclusive of a $60 million accordionfacility. The Amended 2019 Credit Facility replaced a secured Credit Agreement dated January 20, 2017 with Bank of Montreal RBC and Bank of Nova Scotia (asamended, the “2017 Amended Credit Facility”).

	On November 27, 2019, the Company entered into Amending Agreement No. 1 to the Amended and Restated Senior Secured Credit Agreement (collectively
with the Amended and Restated Senior Secured Credit Agreement, the “Amended 2019 Credit Facility”) to amend certain defined terms in connection with the Cedaracquisition.

	In connection with the Amended 2019 Credit Facility, the Company incurred an additional $0.3 million of fees paid to lenders and $0.2 million of legal fees
related to the debt issuance. Of these fees, $0.4 million are debt issuance costs, which have been reflected as a reduction to the carrying amount of the loan payable andwill be amortized over the term of the credit facility agreement and $0.1 million have been recorded in General and administrative expenses.

	The obligations of the Company under the Amended 2019 Credit Agreement are secured by a first priority lien on substantially all of the personal property and
assets of the Company and has a four-year term.

Other Credit Facilities
	Prior to the Company entering into the Amended 2019 Credit Facility and the 2017 Amended Credit Facility, the Company had credit agreements (collectively
the “Prior Credit Facilities”) with BMO, which provided the Company with continued access to a treasury risk management facility and a credit card facility. Allremaining credit facilities under the 2017 Amended Credit Facility and the Prior Credit Facilities have been terminated.
	The treasury risk management facility under the Prior Credit Facilities provides for a $3.5 million settlement risk line to assist the Company with hedging
Canadian dollar exposure through foreign exchange forward contracts and/or currency options. Under the terms of the Prior Credit Facilities, the Company may enterinto such agreements at market rates with terms not to exceed 18 months. As of March 31, 2020, the Company held contracts in the amount of $61.8 million to trade U.S.dollars in exchange for Canadian dollars.
		44

Table of Contents Cash Flow from Operating Activities
Net cash inflows from operating activities during the three months ended March 31, 2020 was $14.1 million, an increase of 57% when compared to the three monthsended March 31, 2019.
Net income, after adjusting for non-cash charges, during the three months ended March 31, 2020 was $9.9 million, an increase of 34% when compared to the prioryear. Net income included non-cash charges and recoveries of $7.1 million such as depreciation, amortization, stock-based compensation, deferred income taxes, excesstax benefits on stock-based compensation, other income, unrealized gains on currency forward contracts, and disposal of domain names. In addition, changes in ourworking capital provided $4.2 million. Positive contributions of $8.8 million from movements in deferred revenue, accounts receivable, accounts payable, inventory,income taxes recoverable, accreditation fees payable, customer deposits and prepaid expenses and deposits were offset by $4.6 million utilized in changes from prepaiddomain name fees and accrued liabilities. Cash Flow from Financing Activities Net cash outflows from financing activities during the three months ended March 31, 2020 totaled $3.3 million as compared to cash inflows of $27.9 million during thethree months ended March 31, 2019. Total cash outflows of $3.3 million were driven by $3.1 million related to the stock repurchases, in addition to a $0.2 million outflowfor the payment of tax obligations resulting from the net exercise of stock options and loan payable costs. These cash outflows were offset by minor cash inflows relatedto the proceeds received on exercise of stock options.

Cash Flow from Investing Activities Investing activities during the three months ended March 31, 2020 used net cash of $18.7 million as compared to using $38.5 million during the three months endedMarch 31, 2019. Cash outflows of $8.8 million related to the acquisition of Cedar, in addition to $9.9 million invested in property and equipment, primarily to support thecontinued expansion of our fiber footprint. The Company continues to invest in our existing Ting Towns of Centennial, CO, Charlottesville, VA, Fuquay-Varina, NC,Holly Springs, NC, Sandpoint, ID and Westminster, MD as well ramping construction in Fullerton, CA, Roaring Fork, CO, Rolesville, NC, Solana Beach, CA and WakeForest, NC, as we seek to extend both our current network and expand to new towns. We expect our capital expenditures on building and expanding our fiber network tocontinue to increase during Fiscal 2020. Based on our operations, we believe that our cash flow from operations will be adequate to meet our anticipated requirements for working capital, capital expendituresand our loan repayments for at least the next 12 months. We may need additional funds or seek other financing arrangements to facilitate more rapid expansion, develop new or enhance existing products or services, respondto competitive pressures or acquire or invest in complementary businesses, technologies, services or products. We may also evaluate potential acquisitions of otherbusinesses, products and technologies. We currently have no commitments or agreements regarding the acquisition of other businesses. If additional financing isrequired, we may need additional equity or debt financing and any additional financing may be dilutive to existing investors. We may not be able to raise funds onacceptable terms, or at all. Off Balance Sheet Arrangements As of March 31, 2020 we did not have any off-balance sheet arrangements, as defined in Item 303(a)(4)(ii) of SEC Regulation S-K. Contractual Obligations In our Annual Report on Form 10-K for the year ended December 31, 2019, we disclosed our contractual obligations. As of March 31, 2020, other than the itemsmentioned above, there have been no other material changes to those contractual obligations outside the ordinary course of business.
		45

Table of Contents ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK We develop products in Canada and sell these services in North America and Europe. Our sales are primarily made in U.S. dollars, while a major portion of expenses areincurred in Canadian dollars. Our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions inforeign markets. Our interest income is sensitive to changes in the general level of Canadian and U.S. interest rates, particularly since the majority of our investments arein short-term instruments. Based on the nature of our short-term investments, we have concluded that there is no material interest rate risk exposure as of March 31,2020. We are also subject to market risk exposure related to changes in interest rates under our 2019 Amended Credit Facility. We do not expect that any changes ininterest rates will be material; however, fluctuations in interest rates are beyond our control. We will continue to monitor and assess the risks associated with interestexpense exposure and may take additional actions in the future to mitigate these risks. Although our functional currency is the U.S. dollar, a substantial portion of our fixed expenses are incurred in Canadian dollars. Our policy with respect to foreigncurrency exposure is to manage financial exposure to certain foreign exchange fluctuations with the objective of neutralizing some of the impact of foreign currencyexchange movements. Exchange rates are, however, subject to significant and rapid fluctuations, and therefore we cannot predict the prospective impact of exchangerate fluctuations on our business, results of operations and financial condition. Accordingly, we have entered into foreign exchange forward contracts to mitigate theexchange rate risk on portions of our Canadian dollar exposure.
	As of March 31, 2020, we had the following outstanding foreign exchange forward contracts to trade U.S. dollars in exchange for Canada dollars:

			Weighted average
		Notional amount of U.S.	exchange rate of U.S.
	Maturity date (Dollar amounts in thousands of U.S. dollars)		dollars	dollars	Fair value

	April - June 2020		9,653	1.3296	(526)
	July - September 2020		10,656	1.3227	(627)
	October - December 2020		9,658	1.3227	(565)
	January - March 2021		11,124	1.4283	172
	April - June 2021		9,878	1.4283	150
	July - September 2021		10,782	1.4362	220
		$	61,751	1.3795 $	(1,176)

	As of March 31, 2020, the Company had $61.8 million of outstanding foreign exchange forward contracts which will convert to CDN $85.2 million. Of these
contracts, $51.0 million met the requirements for hedge accounting. As of December 31, 2019, the Company held contracts in the amount of $30.5 million to trade U.S.dollars in exchange for $40.5 million Canadian dollars. Of these contracts, $26.1 million met the requirements for hedge accounting.
	We have performed a sensitivity analysis model for foreign exchange exposure over the three months ended March 31, 2020. The analysis used a modeling
technique that compares the U.S. dollar equivalent of all expenses incurred in Canadian dollars, at the actual exchange rate, to a hypothetical 10% adverse movement inthe foreign currency exchange rates against the U.S. dollar, with all other variables held constant. Foreign currency exchange rates used were based on the market ratesin effect during the three months ended March 31, 2020. The sensitivity analysis indicated that a hypothetical 10% adverse movement in foreign currency exchangerates would result in a decrease in net income for the three months ended March 31, 2020 of approximately $1.0 million, before the effects of hedging. Fluctuations ofexchange rates are beyond our control. We will continue to monitor and assess the risk associated with these exposures and may take additional actions in the future tohedge or mitigate these risks. Credit Risk
	Financial instruments that potentially subject us to concentrations of credit risk consist principally of cash equivalents, marketable securities, foreign exchange
contracts and accounts receivable. Our cash, cash equivalents and short-term investments are in high-quality securities placed with major banks and financialinstitutions whom we have evaluated as highly creditworthy and commercial paper. Similarly, we enter into our foreign exchange contracts with major banks and financialinstitutions. With respect to accounts receivable, we perform ongoing evaluations of our customers, generally granting uncollateralized credit terms to our customers,and maintaining an allowance for doubtful accounts based on historical experience and our expectation of future losses. Interest rate risk
	Our exposure to interest rate fluctuations relate primarily to our 2019 Amended Credit Facility. As of March 31, 2020, we had an outstanding balance of $114.4 million on the 2019 Amended Credit Facility. The 2019 Amended Credit Facility bears a base
interest rate based on borrowing elections by the Company and the Company’s total Funded Debt to EBITDA plus LIBOR. As of March 31, 2020, an adverse change ofone percent on the interest rate would have the effect of increasing our annual interest payment on 2019 Amended Credit Facility by approximately $1.1 million,assuming that the loan balance as of March 31, 2020 is outstanding for the entire period.
		46

Table of Contents Item 4. Controls and Procedures (a) Evaluation of Disclosure Controls and Procedures As required by Rule 13a-15(b) of the Securities Exchange Act of 1934 (the “Exchange Act”), management, with the participation of our Chief Executive Officer and ChiefFinancial Officer, evaluated, as of the end of the period covered by this report, the effectiveness of our disclosure controls and procedures as defined in Exchange ActRule 13a-15(e). Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance ofachieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Ourdisclosure controls and procedures are designed to provide reasonable assurance of achieving their control objectives. Based on the evaluation of our disclosurecontrols and procedures as of the end of the period covered by this quarterly report, our Chief Executive Officer and Chief Financial Officer concluded that, as of March31, 2020 our disclosure controls and procedures were effective at the reasonable assurance level. Management’s assessment of disclosure controls and proceduresexcluded consideration of Cedar’s internal control over financial reporting. Cedar was acquired during the first quarter of 2020, and the exclusion is consistent withguidance provided by the SEC staff that an assessment of a recently acquired business may be omitted from management’s report on internal control over financialreporting for up to one year from the date of acquisition, subject to specified conditions. Cedar’s total assets were approximately $14.8 million as March 31, 2020; itsrevenues during the three months ended March 31, 2020 were approximately $1.2 million. (b) Changes in Internal Control over Financial Reporting There were no changes made in our internal controls over financial reporting during the three months ended March 31, 2020 that have materially affected, or arereasonably likely to materially affect, our internal control over financial reporting. As a result of our acquisition of Cedar, we are in the process of evaluating Cedar’sinternal controls to determine the extent to which modifications to Cedar’s internal controls would be appropriate.

Table of Contents
	PART II.
		OTHER INFORMATION

Item 1. Legal Proceedings We are involved in various investigations, claims and lawsuits arising in the normal conduct of our business, none of which, individually or in the aggregate, in ouropinion, will materially harm our business. We cannot assure that we will prevail in any litigation. Regardless of the outcome, any litigation may require us to incursignificant litigation expense and may result in significant diversion of our attention. Item 1A. Risk Factors The following risk factor is provided to update the risk factors previously disclosed under the heading “Risk Factors” in our Annual Report on Form 10-K for the yearended December 31, 2019. The risks described in this Quarterly Report and in our Annual Report on Form 10-K are not the only risks facing the Company. Additionalrisks and uncertainties not currently known to us or that we currently deem to be immaterial also may adversely affect our business, financial condition or operatingresults. Health epidemics, including the recent COVID-19 pandemic, have had, and could in the future have, an adverse impact on our business, operations and financialresults, and the markets and communities in which we and our employees, Mobile Network Operators (“MNOs”), vendors and customers operate. Our business, operations and financial results could be adversely affected by health epidemics, including the recent COVID-19 pandemic, impacting the markets andcommunities in which we and our employees, MNOs, vendors and customers operate. In December 2019, a disease referred to as COVID-19 was reported and has spreadto many countries worldwide, including the United States and Canada. The ongoing global COVID-19 pandemic has adversely impacted, and may continue to adversely impact, many aspects of our business. With respect to our NetworkAccess business segment, Roam Mobility, our niche prepaid Mobile Services brand that relies on global travel as a key factor in its success, has accounted for themajority of the negative financial impact caused by COVID-19. With travel restrictions and border closures halting business and leisure travel, we have seen newrevenues for Roam Mobility trend toward zero through the end of March 2020. Given the current uncertainty around reopening of borders, easing of travel restrictionsand consumers’ level of comfortability with business and leisure travel in a post pandemic world, we do not know when revenues for Roam Mobility will return to pre-pandemic levels, if ever. A continued decline in Roam Mobility revenue could harm our Network Access business. Ting Mobile, our primary post-paid Mobile Servicesbrand, has experienced a drop in customer data usage and an increased churn rate of low-margin business accounts. We do not know when Ting Mobile customer datausage and business account churn rates will return to pre-pandemic levels, if ever, and continued declines and increases, respectively, could harm our Network Accessbusiness. Also within our Network Access business segment, we cancelled and rescheduled all in-home installation and service appointments across our Ting Fiberfootprint. While we are implementing certain smart, reduced risk installs for our Ting Fiber customers, we do not expect new customer installations to return to pre-pandemic levels in the near term. A continued decline in new customer growth and installations could harm our Network Access business. In response to the COVID-19 pandemic, many state, local, and foreign governments have put in place, and others in the future may put in place, quarantines, executiveorders, shelter-in-place orders, and similar government orders and restrictions in order to control the spread of the disease. Such orders or restrictions, or the perceptionthat such orders or restrictions could occur, have resulted in business closures, work stoppages, slowdowns and delays, work-from-home policies, travel restrictions,and cancellation or postponement of events, among other effects that could negatively impact productivity and disrupt our operations and those of our MNOs, vendorsand customers. We have implemented a work-from-home policy for substantially all of our employees, and we may take further actions that alter our operations as maybe required by federal, state, or local authorities, or which we determine are in our best interests. While most of our operations can be performed remotely, there is noguarantee that we will be as effective while working remotely because our team is dispersed, many employees may have additional personal needs to attend to (such aslooking after children as a result of school closures or family who become sick), and employees may become sick themselves and be unable to work. Decreasedeffectiveness of our team could adversely affect our results due to our inability to meet in person with vendors and service providers, longer time periods to provideservices related to domain registrations, longer time to respond to Network Access customer service issues, extended timelines for Network Access customerinstallations and repairs, or other decreases in productivity that could harm our business. The global impact of COVID-19 continues to rapidly evolve, and we will continue to monitor the situation closely. The ultimate impact of the COVID-19 pandemic or asimilar health epidemic is highly uncertain and subject to change. We do not yet know the full extent of potential delays or impacts on our business, operations, financialresults or the global economy as a whole. While the spread of COVID-19 may eventually be contained or mitigated, there is no guarantee that a future outbreak of this orany other widespread epidemics will not occur, or that the global economy will recover, either of which could seriously harm our business.
	48

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

(Dollar amounts in thousands of U.S. dollars, except per share amounts)

					Approximate
				Total Number of	Dollar value of
				Shares	shares that may
				repurchased as		yet be
	Total Number of			part of a publicly	purchased
		Shares	Average Price	announced		under the
Period		Repurchased		Paid per share	program(1)		program
January 1-31, 2020			- $	-	- $	35,016
February 1-29, 2020			- $	-	- $	40,000
March 1-31, 2020		66,738 $						46.71	66,738 $	36,883
(1) On February 12, 2020, the Company announced that its Board has approved a stock buyback program to repurchase up to $40 million of its common stock in theopen market. Purchases are to be made exclusively through the facilities of the NASDAQ Capital Market. The $40 million buyback program commenced on February12, 2020 and is expected to terminate on February 12, 2021. During the three months ended March 31, 2020, the Company repurchased and cancelled 66,738 sharesunder the terms of this program for a total of $3.1 million. Item 3. Defaults Upon Senior Securities None. Item 4. Mine Safety Disclosures Not applicable. Item 5. Other Information None.
	49

Table of Contents Item 6. Exhibits
No.	Description

	Fourth Amended and Restated Articles of Incorporation of Tucows Inc. (Incorporated by reference to Exhibit 3.1 filed with Tucows’ Current Report onForm 8-K, as filed with the SEC on November 29, 2007).
3.1.1
	Articles of Amendment to Fourth Amended and Restated Articles of Incorporation of Tucows Inc. (Incorporated by reference to Exhibit 3.1 filed withTucows’ Current Report on Form 8-K, as filed with the SEC on January 3, 2014).
3.1.2
	Second Amended and Restated Bylaws of Tucows Inc. (Incorporated by reference to Exhibit 3.2 filed with Tucows’ Annual Report on Form 10-K forthe year ended December 31, 2006, as filed with the SEC on March 29, 2007).
3.2
	Amendment No. 1 to Second Amended and Restated Bylaws of Tucows Inc. (Incorporated by Reference to Exhibit 3.3 filed with Tucows’ QuarterlyReport on Form 10-Q for the quarter ended June 30, 2012).
3.3
31.1	Chief Executive Officer's Rule 13a-14(a)/15d-14(a) Certification *
31.2	Chief Financial Officer's Rule 13a-14(a)/15d-14(a) Certification *
32.1	Chief Executive Officer's Section 1350 Certification †
32.2	Chief Financial Officer's Section 1350 Certification †
101.INS	XBRL Instance *
101.SCH	XBRL Taxonomy Extension Schema *
101.CAL	XBRL Taxonomy Extension Calculation *
101.DEF	XBRL Taxonomy Extension Definition *
101.LAB	XBRL Taxonomy Extension Labels *
101.PRE	XBRL Taxonomy Extension Presentation *

*	Management or compensatory contract.
#	Filed herewith.
†	Furnished herewith.

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Table of Contents
	SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersignedthereunto duly authorized.

Date: May 7, 2020		TUCOWS INC.

		By: /s/ ELLIOT NOSS
			Elliot Noss
			President and Chief Executive Officer

		By: /s/ DAVINDER SINGH
		Davinder SinghChief Financial Officer

			(Principal Financial and Accounting Officer)

	51

Exhibit 31.1

		Rule 13a-14(a)/15d-14(a) Certification

	I, Elliot Noss, certify that:
	1.
			I have reviewed this Quarterly Report on Form 10-Q of Tucows Inc.;
	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
	4.		The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:
			a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;
			b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;
			c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
			d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscalquarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
	5.		The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
			a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant's ability to record, process, summarize and report financial information; and
			b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting.
	Date May 7,2020
				/s/ Elliot Noss
				Elliot Noss
				President and Chief Executive Officer

Exhibit 31.2

		Rule 13a-14(a)/15d-14(a) Certification

	I, Davinder Singh, certify that:
	1.
			I have reviewed this Quarterly Report on Form 10-Q of Tucows Inc.;
	2.		Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statementsmade, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
	3.		Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financialcondition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
	4.		The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-15(e) and 15d-15(e)) and internal controls over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:
			a)	designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, toensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within thoseentities, particularly during the period in which this report is being prepared;
			b)	designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under oursupervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for externalpurposes in accordance with generally accepted accounting principles;
			c)	evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about theeffectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
			d)	disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscalquarter that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
	5.		The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to theregistrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent function):
			a)	all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likelyto adversely affect the registrant's ability to record, process, summarize and report financial information; and
			b)	any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control overfinancial reporting.

	Date May 7,2020			/s/ Davinder Singh
				Davinder Singh
				Chief Financial Officer

Exhibit 32.1

		CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

			In connection with the Quarterly Report of Tucows Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2020 as filed with the Securities and
	Exchange Commission on the date hereof (the “Report”), I, Elliot Noss, President and Chief Executive Officer of the Company, hereby certify, to my knowledge,pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

			(1)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

			(2)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.


			Date: May 7, 2020			/s/ Elliot Noss
					Elliot Noss
					President and Chief Executive Officer

Exhibit 32.2

		CERTIFICATION PURSUANT TO 18 U.S.C. SECTION 1350

			In connection with the Quarterly Report of Tucows Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2020 as filed with the Securities and
	Exchange Commission on the date hereof (the “Report”), I, Davinder Singh, Chief Financial Officer of the Company, hereby certify, to my knowledge, pursuant to 18U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

			(3)	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

			(4)	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of theCompany.


			Date: May 7, 2020			/s/ Davinder Singh
					Davinder Singh
					Chief Financial Officer