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Toronto, Canada - (Cheap Web Hosting Directory) - February 21, 2007 - Provider of Internet services to web hosting companies, ISPs and other service providers worldwide, Tucows Inc., has reported its financial results for the fourth quarter of fiscal 2006 ending December 31, 2006.

Highlights for the fourth quarter included:
- A 36% year-over-year increase in net revenue to a record $17.2 million;
- Net income of $0.2 million;
- Cash flow from operating activities of $3.9 million; and
- A 19% year-over-year increase in deferred revenue to a record $45.1 million.

Highlights for the fiscal year included:
- A 34% year-over-year increase in net revenue to a record $65.0 million;
- Net income of $2.2 million;
- Cash flow from operating activities of $8.8 million; and,
-A 31% increase in adjusted Net Income to $6.3 million.

Elliot Noss, President and Chief Executive Officer, Tucows Inc. explained, “2006 was another year of solid growth, cash generation and execution for Tucows. More importantly, in 2006 Tucows established itself as an important participant in the hosted email market through the successful execution and integration of three acquisitions and the continued growth of its existing email business. For the Internet in general, the second half of 2006 was marked by a massive increase in problems associated with email including spam, phishing and general email delivery. At the same time, email is now the world’s most important communications tool. All of this, along with the fundamental strength of the Company’s domain name service offering, combines for great opportunity in 2007.”

Cash, short-term investments and restricted cash at the end of the fourth quarter of fiscal 2006 was $7.3 million compared to $3.8 million at the end of the third quarter of fiscal 2006 and $19.2 million at the end of the fourth quarter of fiscal 2005. The increase compared to the end of the third quarter of fiscal 2006 is primarily the result of the generation of cash flow from operations of $3.9 million during the fourth quarter of fiscal 2006.

Net revenue for the fourth quarter of fiscal 2006 increased 36% to $17.2 million from $12.7 million for the fourth quarter of fiscal 2005. The increase was the result of growth across all of the Company’s revenue streams.

Adjusted Net Income for the fourth quarter of fiscal 2006 decreased by $0.1 million to $1.2 million from $1.3 million for the corresponding quarter of last year. Net income for the fourth quarter of fiscal 2006 was $0.2 million, or $0.00 per share, compared with $1.0 million, or $0.01 per share, for the fourth quarter of fiscal 2005. Included in Net income and Adjusted Net Income for the fourth quarter of fiscal 2006 is a foreign exchange loss of $0.5 million ($21,000 in fiscal 2005). In the fourth quarter of 2005, other income included $0.3 million ($0 in fiscal 2006) related to the sale of patents.

Adjusted Net Income for the year ended December 31, 2006 increased by 31% to $6.3 million from $4.8 million for the year ended December 31, 2005. Net income for the year ended December 31, 2006 was $2.2 million, or $0.03 per share, compared to $2.8 million, or $0.04 per share for the year ended December 31, 2005. Included in Net income and Adjusted Net Income for fiscal 2006 are transitional costs of $1.3 million ($0 in fiscal 2005). In fiscal 2006, other income included $2.3 million ($0.03 in fiscal 2005) related to the sale of patents.

Deferred revenue at the end of the fourth quarter of fiscal 2006 was $45.1 million, an increase of 19% from $37.9 million at the end of the fourth quarter of fiscal 2005 and an increase of 1% from $44.7 million at the end of the third quarter of fiscal 2006.

Tucows Inc. provides Internet services and download libraries through a global distribution network of 6,000 service providers. This distribution network primarily consists of web hosting companies, ISPs (Internet Service Providers) and other Internet related service companies. These companies use Tucows’ provisioned services to offer solutions to their customers: enterprises, small and medium businesses and consumers. Tucows is an accredited registrar with ICANN (the Internet Corporation for Assigned Names and Numbers) and earns most of its revenue from domain name registration services plus hosted email, spam and virus protection, blogware, website building tools, the Platypus Billing System and digital certificates.

For more information, please visit: www.tucowsinc.com.

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