Acquisitions:

(a)

Ascio

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

- 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 all regulatory approvals. The purchase price was

$14.1

million, less an estimated purchase price adjustment of approximately

$0.2

million relating to a working capital deficit and 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 at closing, 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 contingent consideration 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 certain milestones 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 of fair value. The final purchase price allocation

may

vary based on final appraisals, valuations and analyses of the fair value of the acquired assets and assumed liabilities.

The amortization period for the customer relationships and network rights are

and

years, respectively.

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 or what 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

$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.