Financial Analysis

6. Commitments and contingencies Current and potential litigation In accordance with the accounting guidance for contingencies, the Company accrues its estimate of a contingent liability when it is both probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Where it is probable that a liability has been incurred and there is a range of expected loss for which no amount in the range is more likely than any other amount, the Company accrues at the low end of the range. The Company reviews its accruals at least quarterly and adjusts them to reflect the impact of negotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. The Company has taken certain positions related to its obligations for leased circuits for which it is reasonably possible to result in a loss of up to $4.5 million in excess of the amount accrued at December 31, 2025. In the ordinary course of business, the Company is involved in other legal activities and claims. Because such matters are subject to many uncertainties and the outcomes are not predictable with assurance, the liability related to these legal actions and claims cannot be determined with certainty. Management does not believe that such claims and actions will have a material impact on the Companys financial condition or results of operations. Judgment is required in estimating the ultimate outcome of any dispute resolution process, as w …

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8. Stock option and award plan: Incentive award plan The Company grants restricted stock and options for common stock under its award plan, as amended (the Award Plan). Stock options granted under the Award Plan generally vest over a four-year period and have a term of ten years. Grants of shares of restricted stock granted under the Award Plan generally vest over periods ranging from three to four years. Compensation expense for all awards is recognized on a straight-line basis over the service period. Awards with graded vesting terms that are subject only to service conditions are recognized on a straight-line basis. Certain option and share grants provide for accelerated vesting if there is a change in control, as defined. For grants of restricted stock, when an employee terminates prior to full vesting the employee retains their vested shares, and the employees unvested shares are returned to the Award Plan. For grants of options for common stock, when an employee terminates prior to full vesting, the employee may elect to exercise their vested options for a period of ninety days, and any unvested options are returned to the Award Plan. Shares issued to satisfy awards are provided from the Companys authorized shares. The vesting of certain shares granted to the Companys executives is subject to certain performance conditions determined by the Companys Board of Directors. The vesting of certain shares granted to the Companys CEO is subject to the total shareholder return o …

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5. Income taxes: The components of (loss) income before income taxes consist of the following (in thousands): Years Ended December 31, 2025 2024 2023 Domestic $ (244,571) $ (257,523) $ 1,217,084 Foreign (394) (2,126) 2,393 Total (loss) income before income taxes $ (244,965) $ (259,649) $ 1,219,477 The income tax benefit (expense) is comprised of the following (in thousands): Years Ended December 31, 2025 2024 2023 Current: Federal $ $ $ (3,638) State (1,161) 4,620 (11,868) Foreign (649) (351) (203) Deferred: Federal 47,887 54,859 53,393 State 17,894 (3,143) 16,086 Foreign (1,180) (410) 194 Total income tax benefit (expense) $ 62,791 $ 55,575 $ 53,964 Our consolidated temporary differences comprising our net deferred tax assets are as follows (in thousands): December 31, 2025 2024 Deferred Tax Assets: Net operating loss carry-forwards $ 290,219 $ 236,346 Interest expense limitation 86,577 66,386 Accrued liabilities and other 550 8,584 Operating leases 87,029 98,261 Total gross deferred tax assets 464,375 409,577 Valuation allowance (148,055) (131,773) 316,320 277,804 Deferred Tax Liabilities: Property & equipment 298,991 308,254 Intangibles 116,087 113,596 Deferred consideration IP Transit Services Agreement 43,261 63,070 Investment in foreign subsidiaries 107,267 95,974 Right-of-use assets 84,008 95,176 Gross deferred tax liabilities 649,614 676,070 Net deferred tax liabilities $ 333,294 $ 398,266 The acquisition of Sprint was an asset acquisition for U.S. federal income …

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4. Long-term debt: As of December 31, 2025, the Company had the following long-term debt obligations outstanding; $600.0 million aggregate principal amount of 2032 Notes, $300.0 million aggregate principal amount of 2027 Mirror Notes, $450.0 million aggregate principal amount of 2027 Notes, $206.0 million aggregate principal amount of secured IPv4 notes issued in May 2024 (the Existing IPv4 Notes) and $174.4 million aggregate principal amount of secured IPv4 notes issued in April 2025 (the New IPv4 Notes and, together with the Existing IPv4 Notes, the IPv4 Notes). o The 2032 Notes were issued in June 2025, are due on July 1, 2032, and bear interest at a rate of 6.50% per year. Interest on the 2032 Notes is paid semi-annually on January 1 and July 1 of each year beginning on January 1, 2026. The 2032 Notes were issued in connection with the redemption of the Companys $500.0 million 3.50% Senior Secured Notes due to mature in May 2026 (the 2026 Notes), that were due on May 1, 2026, and bore interest at a rate of 3.50% per year. o The Existing IPv4 Notes were issued for an aggregate principal amount of $206.0 million and bear interest at a rate of 7.924% , with an anticipated term ending in May 2029 (such anticipated repayment date, the ARD). o The New IPv4 Notes were issued for an aggregate principal amount of $174.4 million and bear interest at a rate of 6.646% , with an ARD of April 2030. Interest on the IPv4 Notes is paid monthly. o The 2027 Mirror Notes were issued for an a …

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Recently Adopted Accounting Standards In December 2023, the FASB issued Accounting Standards Update (ASU) No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , (ASU 2023-09) which requires a public business entity to disclose, on an annual basis, a tabular rate reconciliation disaggregated into specified categories with certain reconciling items further broken out by nature and jurisdiction to the extent those items exceed a specified threshold as defined within the standard. In addition, all entities are required to disclose income taxes paid, net of refunds received disaggregated by federal, state/local, and foreign and by jurisdiction if the amount is at least 5% of total income tax payments, net of refunds received. The amendments in ASU 2023-09 are effective for public business entities for annual periods beginning after December 15, 2024. The Company adopted ASU 2023-09 prospectively for the year ended December 31, 2025, which affects only the Companys disclosures and does not impact its results of operations or financial condition. Accounting Standards Not Yet Adopted In November 2024, the FASB issued ASU No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) Disaggregation of Income Statement Expenses , (ASU 2024-03), which requires a public business entity to disclose additional information about specific expense categories in the notes to financial statements on an annual and in …

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9. Related party transactions: The Audit Committee of the Companys Board of Directors (the Audit Committee) reviews and approves all transactions with related parties. The Companys headquarters is located in an office building owned by Sodium LLC whose owner is the Companys Chief Executive Officer and Chairman, David Schaeffer. The fixed annual rent for the headquarters building is $1.0 million per year plus an allocation of taxes and utilities. The lease began in May 2015, and the lease term was for five years. In February 2020, the lease term was extended to May 2025 and in March 2025 the lease was extended to May 2030. The lease is cancellable at no cost by the Company upon 60 days notice. On January 6, 2023, the Company entered into two lease agreements (the New Leases), one with Thorium LLC (Thorium) and one with Germanium LLC (Germanium), entities owned by the Companys Chief Executive Officer and Chairman, David Schaeffer. The first of the New Leases is with Thorium for 54,803 square feet of office space, which serves as office space for the Company replacing a portion of its office space in the Northern Virginia area (Office Lease). The second of the New Leases is with Germanium LLC for 1,587 square feet of technical space which serves as network operations space for the Company (Network Operations Lease). The term for each of the New Leases is five years beginning on April 1, 2023. Both of the New Leases are cancellable by the Company without penalty upon 60 days writ …

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10. Geographic and segment information: Operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (CODM) in deciding how to allocate resources and in assessing the Companys performance. The Companys Chief Executive Officer and Chairman, Dave Schaeffer is the Companys CODM. The Company has one operating segment. The CODM regularly reviews the following amounts on a worldwide consolidated basis as presented in the Companys consolidated statements of comprehensive income (loss); Service revenue Network operations expense Selling, general and administrative (SG&A) expenses Amortization of compensation expense o As components of SG&A and network operations expense Interest expense Gain on bargain purchase Cogent Fiber Business Net income (loss) The Companys results are evaluated for performance and resource allocation decisions based on consolidated net (loss) income. The consolidated operating segment financial information regularly reviewed by the CODM, inclusive of assets, revenue, expenses, profit or loss, and noncash items are included in the Consolidated Statements of Comprehensive Income (Loss), Consolidated Balance Sheets, and Consolidated Statements of Cash Flows.Revenues are attributed to regions based on where the services are provided. Below are the Companys service revenues and long-lived assets by geographic region - including property …

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7. Stockholders equity: Authorized shares The Company has 75.0 million shares of authorized $0.001 par value common stock and 10,000 authorized but unissued shares of $0.001 par value preferred stock. The holders of common stock are entitled to one vote per common share and, subject to any rights of any series of preferred stock, dividends may be declared and paid on the common stock when determined by the Companys Board of Directors. Common stock buybacks The Companys Board of Directors has approved purchases of the Companys common stock under a buyback program (the Buyback Program) through 2026. At December 31, 2025, there was $105.8 million remaining for purchases under the Buyback Program. In 2025, the Company purchased 341,818 shares of its common stock for $16.7 million. In 2024, the Company purchased 153,322 shares of its common stock for $8.0 million. There were no purchases of common stock in 2023. Dividends on common stock Dividends are recorded as a reduction to retained earnings. Dividends on unvested restricted shares of common stock are paid as the awards vest. The payment of any future dividends and any other returns of capital, including stock buybacks, will be at the discretion of the Companys Board of Directors and may be reduced, eliminated or increased and will be dependent upon the Companys financial position, results of operations, available cash, cash flow, capital requirements, limitations under the Companys debt indentures and other factors deemed rel …

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11. Subsequent Events: Dividend On February 18, 2026, the Companys Board of Directors approved the payment of a quarterly dividend of $0.02 per common share. The dividend for the first quarter of 2026 will be paid to holders of record on March 6, 2026. This estimated $1.0 million dividend payment is expected to be made on March 20, 2026. Interest Rate Swap Agreement The Companys Swap Agreement was settled on February 5, 2026 with a payment of $4.1 million and the total $4.3 million cash deposit was released and the account was closed. …

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