false 0000909494 0000909494 2024-10-30 2024-10-30
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
 
 
FORM 8-K
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
 
Date of report (Date of earliest event reported): October 30, 2024
 
 
TUCOWS INC.
(Exact Name of Registrant Specified in Charter)
 
 
Pennsylvania
(State or Other
Jurisdiction of
Incorporation)
0-28284
(Commission File
Number)
23-2707366
(IRS Employer
Identification No.)
 
   
96 Mowat Avenue, Toronto, Ontario, Canada
    
M6K 3M1
(Address of Principal Executive Offices)
    
(Zip Code)
 
Registrant’s telephone number, including area code: (416) 535-0123
 
 
Not Applicable
 
 
(Former Name or Former Address, if Changed Since Last Report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
☐
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
 
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 revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
 
Securities registered pursuant to Section 12(b) of the Exchange Act:
 
Title of each class
  
Trading
Symbol(s)
  
Name of each exchange on which registered
Common Stock
  
TCX
  
NASDAQ
 
 
 
 
Item 2.05 Costs Associated with Exit or Disposal Activities.
 
On October 30, 2024, Tucows, Inc. (the “Company”) and its wholly-owned subsidiary, Ting Fiber, LLC ("Ting"), undertook a capital efficiency plan (the “Plan”) to reflect the ongoing operational and financial prioritizations of the Ting business and to lower the Company’s year-over-year operating expenses. The Plan is expected to impact approximately 42% of Ting's workforce and 17% of the Company’s total workforce.
 
The Company estimates that it will incur non-recurring charges of approximately $7.4 million in connection with the Plan, primarily consisting of severance payments, notice pay, employee benefits contributions and outplacement costs. The Company expects that the implementation of the headcount reductions and majority of the charges associated with the Plan and cash payments will be incurred in the fourth quarter of fiscal 2024.
 
Potential position eliminations are subject to legal requirements that vary by jurisdiction, which may extend this process beyond the fourth quarter of fiscal 2024 in certain cases. The charges that the Company expects to incur are subject to a number of assumptions, including legal requirements in various jurisdictions, and actual expenses may differ materially from the estimates disclosed above. The Company may also incur other charges or cash expenditures not currently contemplated in connection with the Plan.
 
 
Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
 
Departure of Chief Operating Officer
 
Attendant to the Plan, Tucows is eliminating the Chief Operating Officer position and will be distributing the position’s functions within existing units in the organization. Accordingly, Michael Koenig, the Chief Operating Officer since October 31, 2022, has left the Company effective October 30, 2024.
 
 
Item 9.01 Financial Statements and Exhibits.
 
(d) Exhibits
 
Exhibit No.
Description
99.1
104 Cover Page Interactive Data File (embedded within the Inline XBRL document)
 
Forward-Looking Statements
 
This Current Report on Form 8-K contains “forward-looking” statements that are based on the Company’s beliefs and assumptions and on information currently available to the Company on the date of this Current Report on Form 8-K. Forward-looking statements include all statements that are not historical facts and can be identified by terms such as “anticipate,” “believe,” “continue,” “could,” “design,” “estimate,” “expect,” “may,” “seek,” “should,” “will,” “would” or similar expressions and the negatives of those terms. Forward-looking statements may involve known and unknown risks, uncertainties and other factors that may cause the Company’s actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements. These statements include, but are not limited to, the percentage of employee positions that will be affected; the estimate and timing of the charges that will be incurred; and the impact on the Company’s operating expense growth rate. Further information on factors that could cause the Company’s actual results to differ materially from the results anticipated by the Company’s forward-looking statements is included in the reports the Company has filed with the U.S. Securities and Exchange Commission, including our Annual Report on Form 10-K for the year ended December 31, 2023. Except as required by law, the Company does not have any obligation or intention to update these forward-looking statements or to update the reasons actual results may differ materially from those anticipated in the forward-looking statements, even if new information becomes available in the future.
 
 
 
 
SIGNATURE
 
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 undersigned hereunto duly authorized.
 
 
Date: October 31, 2024
TUCOWS INC.
   
   
 
By:
/s/ Ivan Ivanov
 
Name:
Ivan Ivanov
 
Title:
Chief Financial Officer
 
 

Exhibit 99.1

 

 
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Tucows Announces Capital Efficiency Plan

 

TORONTO, October 31, 2024 – Tucows Inc. (NASDAQ:TCX, TSX:TC), a global internet services leader, has implemented a capital efficiency plan, including a significant layoff in its Ting business, in order to cut expenses and move towards Ting becoming self-sufficient. There were also layoffs at the Tucows head office level, as part of a shared services reorganization.

 

The plan includes a reduction in headcount that impacts approximately 42% of Ting's workforce and 17% of Tucows’ total workforce. “This decision was a difficult one and I want to acknowledge the impact it will have on the employees who are leaving,” said Tucows President and Chief Executive Officer, Elliot Noss. “These are hardworking people who have made significant contributions to the Company, and their dedication will be remembered. We do not take these measures lightly, and this decision was made with the deepest consideration for the future of the Ting business and its continued sustainability.”

 

“We undertook the capital efficiency plan after exploring all other options to finance Ting’s continued expansion,” Noss continued. “This plan will put the Ting and Tucows businesses back to paths of growing Adjusted EBITDA. With a more efficient cost structure and capital from our recent asset-backed securitization, we are focused on increasing penetration within our own footprints and within large partner markets like Memphis and Colorado Springs. Our goal is to transition Ting to a cash-generating business that sustains its own operations and growth.”

 

We expect this to lead to significant Adjusted EBITDA growth for Tucows in 2025 and for the Ting business to be in and around Adjusted EBITDA breakeven in 2025.

 

The capital efficiency plan will be discussed in more detail in the upcoming Q3 2024 Management Remarks on Thursday, November 7, 2024 at 5:05pm. Links to the third quarter remarks and related earnings reports will be available at www.tucows.com/investors/financials.

 

About Tucows

 

Tucows helps connect more people to the benefit of internet access through communications service technology, domain services, and fiber-optic internet infrastructure. Ting (https://ting.com) delivers fixed fiber Internet access with outstanding customer support. Wavelo (https://wavelo.com) is a telecommunications software suite for service providers that simplifies the management of mobile and internet network access; provisioning, billing and subscription; developer tools; and more. Tucows Domains (https://tucowsdomains.com) manages approximately 25 million domain names and millions of value-added services through a global reseller network of over 35,000 web hosts and ISPs. Hover (https://hover.com) makes it easy for individuals and small businesses to manage their domain names and email addresses. More information can be found on Tucows’ corporate website (https://tucows.com).

 

 
 

 

Tucows, Ting, Wavelo, and Hover are registered trademarks of Tucows Inc. or its subsidiaries.

 

This release includes forward-looking statements as that term is defined in the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding our expectations regarding our future financial results and, including, without limitation, our expectations regarding our ability to realize synergies from the Enom acquisition and our expectation for growth of Ting Internet. These statements are based on management’s current expectations and are subject to a number of uncertainties and risks that could cause actual results to differ materially from those described in the forward-looking statements. Information about other potential factors that could affect Tucows’ business, results of operations and financial condition is included in the Risk Factors sections of Tucows’ filings with the Securities and Exchange Commission. All forward-looking statements should be evaluated with the understanding of their inherent uncertainty. All forward-looking statements are based on information available to Tucows as of the date they are made. Tucows assumes no obligation to update any forward-looking statements, except as may be required by law.

 

Contact:

Monica Webb

Vice President, Investor Relations

647.898.9924

mwebb@tucows.com

 

 
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Document And Entity Information
Oct. 30, 2024
Document Information [Line Items]  
Entity, Registrant Name TUCOWS INC.
Document, Type 8-K
Document, Period End Date Oct. 30, 2024
Entity, Incorporation, State or Country Code PA
Entity, File Number 0-28284
Entity, Tax Identification Number 23-2707366
Entity, Address, Address Line One 96 Mowat Avenue
Entity, Address, City or Town Toronto
Entity, Address, State or Province ON
Entity, Address, Country CA
Entity, Address, Postal Zip Code M6K 3M1
City Area Code 416
Local Phone Number 535-0123
Written Communications false
Soliciting Material false
Pre-commencement Tender Offer false
Pre-commencement Issuer Tender Offer false
Entity, Emerging Growth Company false
Title of 12(b) Security Common Stock
Trading Symbol TCX
Security Exchange Name NASDAQ
Amendment Flag false
Entity, Central Index Key 0000909494
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