2. Basis of Presentation

The accompanying unaudited interim consolidated balance sheets, and the related consolidated statements of operations and comprehensive loss 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 financial position of Tucows and its subsidiaries as of March 31, 2025 and the results of operations and cash flows for the interim periods ended March 31, 2025 and 2024. The results 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 conformity with the rules and regulations of the U.S. Securities and Exchange Commission (the “SEC”) and U.S. Generally Accepted Accounting Principles (“GAAP”). Certain information and footnote disclosures normally included in the Company's annual audited consolidated financial statements and accompanying notes have been condensed or omitted. These interim consolidated financial statements and accompanying notes follow the same accounting policies and methods of application used in the annual financial statements and should be read in conjunction with the Company's audited consolidated financial statements and notes thereto for the year ended December 31, 2024 included in Tucows' 2024 Annual Report on Form 10-K filed with the SEC on March 13, 2025 (the “2024 Annual Report”). There have been no material changes to our significant accounting policies and estimates during the three months ended March 31, 2025 as compared to the significant accounting policies and estimates described in our 2024 Annual Report.

Change in Presentation of [Condensed] Consolidated Financial Statements

Effective with this Form 10-Q, the Company has updated the format of its Condensed Consolidated Financial Statements, including the Balance Sheets, Statements of Operations and Comprehensive Income (Loss), and Statements of Cash Flows. This revision condenses certain previously displayed line items to streamline presentation and improve clarity for the users of the financial statements. 

Change in presentation of Condensed Consolidated Balance Sheet 

Prior period balances have been adjusted to combine following line items:

1. “Inventory”, “Asset held for sale” and “Income taxes recoverable” within the line item “Prepaid expenses and other”

2. “Investments” and “Contract costs” within the line item “Other Assets”

3. “Accounts payable” and “Accrued liabilities” within the line item “Accounts payable and accrued liabilities”

4. “Customer deposits”, “Accreditation fees payable” and “Income taxes payable” within the line item “Other Current Liabilities”

These line items are adjusted on the Company’s unaudited Condensed Consolidated Balance Sheets to conform to the current period presentation. The Company continues to present the condensed line item information in “Note 20 – Additional Financial Information”.

Change in presentation of Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)

Prior period balances have been adjusted to combine following line items:

1. “Network, depreciation of property and equipment” and “Network, amortization of intangible assets” within the line item “Network, depreciation and amortization”

2. “Network, impairment of intangible assets” within the line item “Network, other costs”

3. “Depreciation of property and equipment” and “Amortization of intangible assets” within the line item “Depreciation and amortization”

4. “Income earned on sale of transferred assets, net” within the line item “Other income (expense)”

These line items are adjusted on the Company’s unaudited Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) to conform to the current period presentation. Also, the Company provides additional disclosure related to “Income earned on sale of transferred assets, net” in “Note 17 – Other income (expense)”

Change in presentation of Condensed Consolidated Statements of Cash flows

Prior period balances have been adjusted to combine following line items:

1. “Impairment of property and equipment”, “Net amortization contract costs”, “Net Right of use operating assets/Operating lease liability”, “Disposal of domain names”, “Contract assets”, “Inventory”, “Income taxes recoverable”, “Customer deposits” and “Accreditation fees payable” and “Undistributed earnings of equity method investee” within the line item “Other operating assets and liabilities”

These line items are adjusted on the Company’s unaudited Condensed Consolidated Statements of Cash flows to conform to the current period presentation. 

These presentational changes do not impact previously reported financial results and are intended to improve readability and align with industry best practices. Comparative periods have been revised to conform to the current period’s presentation where applicable.

This revised format does not impact the totals reported in primary financial statement sections. Specifically, there are no changes to total assets, total liabilities, or stockholders' deficit within the Balance Sheets. Similarly, within the Statements of Operations and Comprehensive Income (Loss), total net revenues, total expenses, net income (loss), and earnings (loss) per share remain unchanged. Furthermore, the Statements of Cash Flows reflects no alterations to the total cash flows from operating, investing, or financing activities.

This updated presentation represents the Company’s preferred format, ensuring adherence to relevant accounting standards, and will be consistently applied in future annual and interim filings.