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F-8
Tucows Inc.
Notes to Consolidated Financial Statements
(Dollar Amounts in U.S. dollars)
1. Organization of the Company:
Tucows Inc. (the “Company”) is a global distributor of Internet services, including domain name registration,
security and identity products through digital certificates, email and mobile telephony services through its global
Internet-based distribution network of Internet Service Providers, web hosting companies and other providers of Internet
services to end-users.
2. Significant accounting policies:
The consolidated financial statements have been prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S. GAAP”) and are stated in U.S. dollars, except where otherwise noted.
Certain of the prior year comparative figures have been reclassified to conform with the financial statement presentation
adopted in the current year.
(a) Basis of presentation
These consolidated financial statements include the accounts of the Company and its wholly owned
subsidiaries. All significant intercompany balances and transactions have been eliminated on consolidation.
Investments over which the Company is unable to exercise significant influence, are recorded at cost and
written down only when there is evidence that a decline in value that is other than temporary has occurred.
(b) Use of estimates
The preparation of the consolidated financial statements in accordance with U.S. GAAP requires management
to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and
related disclosure of contingent assets and liabilities. On an on-going basis, management evaluates its estimates,
including those related to amounts recognized for or carrying values of revenues, bad debts, investments, goodwill and
intangible assets which require estimates of future cash flows and discount rates, income taxes, contingencies and
litigation, and estimates of credit spreads for determination of the fair value of derivative instruments. Management
bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the
circumstances at the time they are made. Under different assumptions or conditions, the actual results will differ,
potentially materially, from those previously estimated. Many of the conditions impacting these assumptions and
estimates are outside of the Company’s control.
(c) Cash and cash equivalents
All highly liquid investments, with an original term to maturity of three months or less are classified as cash
and cash equivalents.
(d) Inventory
Inventory primarily consists of mobile devices and other accessories, and is stated at the lower of cost or net
realizable value. Cost is determined based on actual cost of the mobile device or accessory shipped.
The net realizable value of inventory is analyzed on a regular basis. This analysis includes assessing
obsolescence, sales forecasts, product life cycle, marketplace and other considerations. If assessments regarding the
above factors adversely change, we may be required to write down the value of inventory.