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ORBCOMM, Inc.Table of ContentsUNITED STATES SECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 10-K(Mark One)☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934.For the fiscal year ended December 31, 2021OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934.For the transition period from to Commission file number 000-51829COGENT COMMUNICATIONS HOLDINGS, INC.(Exact Name of Registrant as Specified in Its Charter)Delaware(State or Other Jurisdiction of Incorporation or Organization)46-5706863 (I.R.S. Employer Identification No.)2450 N Street N.W. Washington, D.C. (Address of Principal Executive Offices)20037 (Zip Code)(202) 295-4200Registrant’s Telephone Number, Including Area CodeSecurities registered pursuant to Section 12(b) of the Act:Title of each class Trading SymbolName of exchange on which registered:Common Stock, par value $0.001 per shareCCOINASDAQ Global Select MarketSecurities registered pursuant to Section 12(g) of the Act: NoneIndicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☒ No ☐Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act. Yes ☐ No ☒Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past90 days. Yes ☒ No ☐Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T(§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerginggrowth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of theExchange Act.Large accelerated filer ☒Accelerated filer ☐Non-accelerated filer ☐ Smaller reporting company ☐ 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 revisedfinancial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control overfinancial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒The number of shares outstanding of the registrant’s common stock, par value $0.001 per share, as of January 31, 2022 was 47,928,016.The aggregate market value of the Common Stock held by non-affiliates of the registrant, based on the closing price of $76.89 per share on June 30, 2021 as reportedby the NASDAQ Global Select Market was approximately $3.3 billion.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrant’s definitive proxy statement on Schedule 14A for the registrant’s 2022 annual shareholders meeting are incorporated by reference in Part III ofthis Form 10-K. Table of ContentsCOGENT COMMUNICATIONS HOLDINGS, INC.ANNUAL REPORT ON FORM 10-KFOR THE YEAR ENDED DECEMBER 31, 2021TABLE OF CONTENTS PagePart IItem 1Business4Item 1ARisk Factors12Item 1BUnresolved Staff Comments23Item 2Properties23Item 3Legal Proceedings23Item 4Mine Safety Disclosures23Part IIItem 5Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities24Item 7Management’s Discussion and Analysis of Financial Condition and Results of Operations25Item 7AQuantitative and Qualitative Disclosures About Market Risk34Item 8Financial Statements and Supplementary Data35Item 9Changes in and Disagreements with Accountants on Accounting and Financial Disclosure62Item 9AControls and Procedures62Item 9BOther Information65Item 9CDisclosures Regarding Foreign Jurisdictions that Prevent Inspections65Part IIIItem 10Directors, Executive Officers and Corporate Governance65Item 11Executive Compensation65Item 12Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters65Item 13Certain Relationships and Related Transactions and Director Independence65Item 14Principal Accountant Fees and Services65Part IVItem 15Exhibit and Financial Statement Schedules66Item 16Form 10-K Summary69Signatures70 Table of ContentsPage 3 of 70SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTSThis Annual Report on Form 10-K of Cogent Communications Holdings, Inc. (the “Company,” “Cogent,” “we,” “our” or “us”) maycontain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the“Exchange Act”). Forward-looking statements are not statements of historical facts, but rather reflect our current expectations concerningfuture results and events. You can identify these forward-looking statements by our use of words such as “anticipates,” “believes,”“continues,” “expects,” “intends,” “likely,” “may,” “opportunity,” “plans,” “potential,” “project,” “will,” and similar expressions toidentify forward-looking statements, whether in the negative or the affirmative. We cannot guarantee that we actually will achieve theseplans, intentions or expectations. These forward-looking statements are subject to risks and uncertainties including those discussed inItem 1A “Risk Factors” and other factors, some of which are beyond our control, which could cause actual results to differ materially fromthose forecasts or anticipated in such forward-looking statements.You should not place undue reliance on these forward-looking statements, which reflect our view only as of the date of this report. Weundertake no obligation to update these statements or publicly release the result of any revisions to these statements to reflect events orcircumstances after the date of this report or to reflect the occurrence of unanticipated events. Table of ContentsPage 4 of 70PART IITEM 1. BUSINESSWe are a facilities-based provider of low-cost, high-speed Internet access, private network services, and data center colocation space.Our network is specifically designed and optimized to transmit packet switched data. We deliver our services primarily to small andmedium-sized businesses, communications service providers and other bandwidth-intensive organizations in 50 countries across NorthAmerica, Europe, Asia, South America, Australia and Africa. We are a Delaware corporation, and we are headquartered in Washington,DC.We offer on-net Internet access services exclusively through our own facilities, which run from our network to our customers’premises. We offer our on-net services to customers located in buildings that are physically connected to our network. As a result, we arenot dependent on local telephone companies or cable TV companies to serve our customers for our on-net Internet access and privatenetwork service. Our on-net service consists of high-speed Internet access and private network services offered at speeds ranging from 100megabits per second (“Mbps”) to 400 gigabits per second (“Gbps”).We provide our on-net Internet access and private network services to our corporate and net-centric customers. Our corporatecustomers are located in multi-tenant office buildings and typically include law firms, financial services firms, advertising and marketingfirms , as well as health care providers, educational institutions and other professional services businesses. Our net-centric customersinclude bandwidth-intensive users that leverage our network to either deliver content to end users or to provide access to residential orcommercial internet users. Content delivery customers include over the top (“OTT”) media service providers, content delivery networks,web hosting companies, and commercial content and application software providers. Our net-centric customers include access networkscomprised of other Internet service providers (“ISPs”), telephone companies, mobile phone operators and cable television companies thatcollectively provide internet access to a substantial number of broadband subscribers and mobile phone subscribers across the world.These net-centric customers generally receive our services in carrier neutral colocation facilities and in our data centers. We operate datacenters throughout North America and Europe that allow our customers to collocate their equipment and access our network.In addition to providing our on-net services, we provide Internet access and private network services to customers that are not locatedin buildings directly connected to our network. We provide these off-net services primarily to corporate customers using other carriers’circuits to provide the “last mile” portion of the link from the customers’ premises to our network.Competitive AdvantagesWe believe we address many of the data communications needs of small and medium-sized businesses, communications serviceproviders and other bandwidth-intensive organizations by offering them high-quality, high-speed Internet access and private networkservices at attractive prices. We believe that our organization has the following competitive advantages:Low Cost of Operation: We believe that the wireline telecom industry is undergoing, and will continue to face, significant pricedeflation for its applications and services. This price deflation is a result of a variety of factors including increased competition, enhancedsubstitutability of certain products and services and the continued impact of Moore’s Law, which has driven down the cost of technology,particularly for fiber optic Wavelength Division Multiplexing (“WDM”) equipment and optically interfaced routers. Faced with thebackdrop of continued price deflation in our industry, we have made a series of discreet choices around our network design, operatingstrategy and product offering that are consistent with our objective of becoming the low cost operator in our industry. Since we initiatedoperations, this strategy has resulted in a rapid decline in our cost to transmit bits, which has increased our margins and decreased ourcapital intensity as measured by our capital expenditures per total revenues. Over the last five fiscal years, our cost of goods sold per bitdelivered for our customers has declined at a compounded annual rate of 23.3.%. Important components of our low cost operating strategyinclude:●One Network Protocol. Upon our founding, we selected to operate our network solely using Ethernet protocol. We made thisselection in order to take advantage of the significantly greater installed base and lower cost of Ethernet network equipment versusother protocols, the substantially lower costs associated with operating and maintaining one network protocol and the continuedbenefits of the rapid price performance ratio improvements of Ethernet-related equipment. Our single network design allows us toavoid many of the costs that our competitors who operate circuit-switched, TDM and hybrid fiber coaxial networks incur related toprovisioning, monitoring and maintaining multiple transport protocols. Selecting one operating protocol has also had positiveeffects in terms of our operating overhead and the simplicity of our organization. We believe the vast majority of our competitioncurrently operates their networks with multiple protocols and we believe that attempts to upgrade their networks to one protocolwould be operationally challenging and costly. Table of ContentsPage 5 of 70●Wide Spread Access to Fiber on a Cost Effective, Long-Term Basis. We have acquired a large portfolio of dark fiber leases fromaround the world sourced from the excess inventory of existing networks. The choice to lease rather than build reduces our capitalintensity and the operating costs of our intercity and metro networks. The nature of this portfolio and the individual leases providesus long-term access to dark fiber at attractive rates and the opportunity in many cases to extend these leases for multiple terms. Onaverage, a modest number of our dark fiber leases come up for renewal each year. We have relationships with 295 dark fibervendors across the globe enabling us to lease dark fiber on a long-term, cost-effective basis to virtually any geographic route orfacility we require.●Narrow and Focused Product Set. Since our founding, we have strategically focused on delivering a very narrow product set to ourcustomers. The vast majority of our revenue is driven or related to our high-capacity, bi-directional, symmetric internet accessservices which can be accessed on-net in large multi-tenant office buildings and carrier neutral data centers or off-net through othercarriers’ “last mile” connections to customer facilities. There are significant cost advantages as a result of this narrow product set.We believe that the relative size of our salesforce training, support and overhead is lower than comparable telecom providers whichtend to offer a broader, “one-stop shop” product set to their client base.●Scalable Network Equipment and Hub Configurations. Due to our single network protocol and narrow product set, ourtransmission and network operations rely mainly on two sets of equipment for operation. In order to further scale our operatingleverage, we have systematically reused older equipment in less dense portions of our network. Due to interoperability between thegenerations of products, we are able to transfer older equipment from our core, high-traffic areas to newer, less congested routes.The result of this dynamic grooming process is that we are able to utilize our equipment for materially longer time frames than theexpected life of this equipment thereby reducing our capital investment in our network. We design and build all of our networkhubs to the same standards and configurations. This replication strategy provides us scale benefits in equipment purchases,training, and maintenance.Greater Control and Superior Delivery. Our on-net service does not rely on circuits that must be provisioned by a third-party carrier.In our on-net multi-tenant office buildings (“MTOBs”) we provide our customers the entire network, including the “last mile” and the in-building wiring connecting to our customer’s suite. In our carrier neutral data centers (“CNDCs”) we are collocated with our customers.As a result, only a cross-connection within the data center is required to provide our services to our customers. The structure of our on-netservice provides us more control over our service, quality and pricing. It also allows us to provision services more quickly and efficientlythan provisioning services on a third-party carrier network. The vast majority of our on-net services can be installed in less than two weekswhich is materially faster than the installation times for some of our incumbent competitors.High-Quality, Reliable Service. We are able to offer high-quality Internet service due to our network design and composition. Webelieve that we deliver a high level of technical performance because our network is optimized for packet switched traffic. Its designincreases the speed and throughput of our network and reduces the number of data packets dropped during transmission compared totraditional circuit-switched networks. We believe that our network is more reliable and carries traffic at lower cost than networks built asoverlays to traditional circuit-switched, or TDM networks.Large Addressable Market. We have systematically evaluated and chosen our network extensions to buildings, data centers andmarkets based upon a rigorous set of criteria to evaluate the economic opportunity of network locations. Additional factors relevant to ourpursuit of new buildings include the willingness of building owners to grant us access rights, the availability of optical fiber networks toserve those buildings, the costs to connect buildings to our network and equipment availability. We have also begun to evaluate thesustainability of new locations by evaluating the LEED Green Rating of Buildings, the potential to source renewable energy at potentiallocations and the potential impact of climate change on a location including access to water and the risk of flooding. Our network isconnected to 3,035 total buildings located in 216 metropolitan markets. These buildings include 1,817 large MTOBs (totaling 986.9million square feet of office space) in major North American cities where we offer our services to a diverse set of high-quality corporatecustomers within close physical proximity of each other. These buildings also include 1,359 CNDCs located in 1,164 buildings in NorthAmerica, Europe, Asia, South America, Australia and Africa where our net-centric customers directly interconnect with our network. Wealso operate 54 of our own data centers across the United States and in Europe which comprise over 600,000 square feet of floor space andare directly connected to our network. We believe that these network points of presence strategically position our network to attract highlevels of Internet traffic and maximize our revenue opportunities and profitability.Balanced, High-Traffic Network. Since its inception, our network has grown significantly in terms of its geographic reach, customerconnections, and traffic. We currently serve 7,569 access networks as well as numerous large and small content providers and 45,423corporate customer connections. As a result of these growing bases of customers who distribute (content providers) and receive (accessnetworks) content on our network, the majority of all the traffic on our network remains “on-net’ by both originating and terminating onour network. This control of traffic is an important differentiator as it increases our service reliability and speed of traffic delivery. Theincreasing share of traffic delivered from content providers to access networks also enhances our margins as we are compensated by boththe originator and terminating customers. The breadth of our network, extensive size of our customer base, Table of ContentsPage 6 of 70and the volume of our network traffic enables us to be one of a handful of Tier 1 networks that are interconnected on a settlement-freebasis. This Tier 1 interconnection status broadens our geographic delivery capability and materially reduces our network costs.Proven and Experienced Management Team. Our senior management team is composed of seasoned executives with extensiveexpertise in the telecommunications industry as well as knowledge of the markets in which we operate. The members of our seniormanagement team have an average of over 20 years of experience in the telecommunications industry and many have been workingtogether at the Company for several years. Several members of the senior management team have been working together at the Companysince 2000. Our senior management team has designed and built our network and, during our formative years, led the integration ofnetwork assets we acquired through 13 significant acquisitions and managed the expansion and growth of our business.Our StrategyWe intend to become the leading provider of high-quality, high-speed Internet access and private network services and to continue toimprove our profitability and cash flow. The principal elements of our strategy include:Grow our Corporate Customer Base. Our on-net corporate customers are typically small to medium-sized businesses connected to ournetwork through multi-tenant office buildings or connected to our network through one of our carrier neutral data centers. We generallysell two types of services to our corporate customers: dedicated internet access and private network services. We typically sell dedicatedinternet access at the same price per connection as our competitors, but our customers benefit from our significantly faster speeds andrapid installation times. These customers are increasingly integrating off-site data centers and cloud services into their IT infrastructure inorder to take advantage of the safety, security and redundancy that is offered by locating company processing power, storage and softwareat a data center. An important part of this new infrastructure is a high-speed, dedicated internet connection from the corporate premises tothe data center and the Internet and from one corporate premises to another corporate premises. We believe that the importance of datacenters will increasingly lead tenants to reconfigure their communications infrastructure to include dedicated internet access across theirlocations.Increase our Share of the Net-Centric Market. We are currently one of the leading providers of high-speed internet access to a varietyof content providers and access networks across the world. We intend to further load our high-capacity network as a result of the growingdemand for high-speed internet access generated by these types of bandwidth-intensive applications such as over-the-top (“OTT”) mediaservices, online gaming, video, Internet of Things (“IoT”), voice over IP (“VOIP”), remote data storage, and other services. We expect thatwe will continue to grow our shares of these segments by offering our customers a series of attractive features including:●Geographic breadth – We have the broadest carrier neutral data center footprint in the industry and currently offer network servicesin 50 countries – as net-centric customers seek a more international audience this footprint is a significant advantage;●High capacity and reliability – We offer 100 Mbps to 400 Gbps ports in all of the carrier neutral data centers and 400Gbps inselected locations on our network, which differentiates the capacity choices we provide our net-centric clients;●Balanced customer base – Our leading share of content providers and access networks increases the amount of traffic thatoriginates and terminates on our network thereby reducing latency and enhancing reliability;●Large and dedicated salesforce – Our team of 207 net-centric sales professionals is one of the largest salesforces in this industrysegment and enables us to better serve this customer segment while also identifying new sales opportunities and gaining newbusiness and customers; and●Competitive pricing – We aggressively price and offer discounts for our services to customers in order to attract new customers anddrive volume.Develop a Worldwide Peering Platform. In late 2020 we introduced a new product, Global Peer Connect (“GPC”), targeted at thegrowing demand for certain net-centric customers to dynamically peer traffic anywhere on our global platform. Our GPC product providesaccess to our Global Peer Exchange (“GPE”) which is a worldwide connectivity platform for the exchange of peering traffic destined forthe Internet. Similar product offerings in the marketplace offer a materially smaller geographic footprint configuration and require a higherfixed cost for customers.Pursue On-Net Customer Growth. Our high-capacity network provides us with the ability to add a significant number of customers toour network with minimal direct incremental costs. We intend to increase usage of our network and operational infrastructure by addingcustomers in our existing on-net buildings, as well as developing additional markets and connecting more multi-tenant office buildings andcarrier neutral data centers to our network. We emphasize our on-net services because they generate greater profit margins and we havemore control over service levels, quality, pricing and our on-net services are provisioned in considerably less time than our off-netservices. Our fiber network connects directly to our on-net customers’ premises and we pay no local access (“last mile”) charges to othercarriers to provide our on-net services. Table of ContentsPage 7 of 70Continue to Improve our Sales Efforts and Productivity. A critical factor in our success has been our investment and focus on our salesand marketing efforts. We seek to maintain a consistent level of sales productivity as measured by the number of connections sold persalesperson per month, taking into account adjustments to the changing mix of products sold and installed. In order to gain market share inour targeted businesses, we expect to continue our sales efforts including introducing strategies and tools to optimize and improve oursales productivity.Expand our Off-Net Corporate Internet Access Business. We have agreements with national carriers providing us last mile networkaccess to over 4.0 million commercial buildings across North America that are lit by fiber optic cable and that are not currently served byour network. We believe these agreements broaden our addressable market for corporate dedicated internet access and enhances ourcompetitive position through the ability to provide enterprise-wide connectivity for corporate customers. In order to take advantage of thislarge set of commercial buildings we have developed an automated process to enable our salesforce to identify opportunities in the off-netmarket for dedicated internet access and to quickly offer pricing proposals to potential customers. We continue to negotiate reducedpricing under our numerous carrier agreements that enable us to reduce our cost of off-net services which enhances our competitiveposition in the marketplace.Our NetworkOur network is comprised of in-building riser facilities, metropolitan optical networks, metropolitan traffic aggregation points andinter-city transport facilities. We believe that we deliver a high level of technical performance because our network is optimized for packetswitched traffic. We believe that our network is more reliable and carries packet switched traffic at lower cost than networks built asoverlays to traditional circuit-switched telephone networks.Our network is comprised of 3,035 buildings which are on net and we serve 216 metropolitan markets in North America, Europe,Asia, South America, Australia and Africa. Important strategic components of our Network include:●1,817 multi-tenant office buildings strategically located in commercial business districts;●1,359 carrier neutral data centers located in 1,164 buildings offering our customers the largest portfolio of CNDCs of any carrier;●54 Cogent Data Centers;●1,033 intra-city networks, or rings, consisting of 39,559 fiber miles and 16,338 fiber route miles;●an inter-city network of 60,676 fiber route miles; and●multiple high-capacity transoceanic circuits that connect the North American, European, Asian, South American, Australian andAfrican portions of our network.We have created our network by leasing on a long-term basis optical fiber from carriers with large amounts of unused fiber anddirectly connecting Internet routers to our existing optical fiber national backbone. We have expanded our network through keyacquisitions of financially distressed companies or their assets at a significant discount to their original cost. Due to our network designand acquisition strategy, we believe we are positioned to grow our revenue and increase our profitability with limited incremental capitalexpenditures.Inter-city Networks.Our inter-city network consists of optical fiber, including transoceanic capacity circuits for undersea portions, connecting major citiesin North America, Europe, Asia, South America, Australia and Africa. Our network was built by acquiring from various owners of fiberoptic networks the right to use typically two strands of optical fiber out of the multiple fibers owned by the cable operator. We install theoptical and electronic equipment necessary to amplify, regenerate, and route the optical signals along these networks. We have the right touse the optical fiber under long-term agreements. We pay these providers our annual pro rata fees for the operation and maintenance of theoptical fiber and we provide our own equipment maintenance. Table of ContentsPage 8 of 70Intra-city Networks.In each metropolitan area in which we provide our high-speed on-net Internet access services, our backbone network is connected toone or more routers that are connected to one or more of our metropolitan optical networks. We created our intra-city networks byobtaining the right to use optical fiber from carriers with optical fiber networks in those cities. These metropolitan networks consist ofoptical fiber that runs from the central router in a market into routers located in our on-net buildings. Our metropolitan fiber runs in a ringarchitecture, which provides redundancy so that if the fiber is cut, data can still be transmitted to the central router by directing traffic inthe opposite direction around the ring. The router in the building provides the connection to each of our on-net customers.Within the cities where we offer our off-net Internet access services, we lease circuits from telecommunications carriers, primarilylocal telephone companies and cable TV companies, to provide the “last mile” connection to our customer’s premises. Typically, thesecircuits are aggregated at various locations in those cities onto higher-capacity leased circuits that ultimately connect the local aggregationrouter to our network.Multi-Tenant Office Buildings (“MTOBs”). We have network access to a portfolio of 1,817 MTOBs which provide us access to ahighly attractive base of bandwidth intensive tenants. In MTOBs where we provide service to multiple tenants, we connect our routers to acable typically containing 12 to 288 optical fiber strands that run from our equipment that is generally located in the basement of thebuilding through the building riser to the customer location. Our service is initiated by connecting a fiber optic cable from our customer’slocal area network in their suite to the infrastructure in the building riser giving our customer dedicated and secure access to our networkusing an Ethernet connection. We believe that Ethernet is the lowest cost network connection technology and is almost universally used forthe local area networks that businesses operate.Carrier Neutral Data Centers (“CNDCs”). Our network is collocated in and can provide connectivity to customers in 1,359 CNDCslocated in 1,164 buildings across our footprint. CNDCs are an integral component of the Internet Infrastructure where Content Providers,Application Service Providers, Carriers and Corporates locate their server and service infrastructure. CNDCs offer highly reliable, secure,cost effective and convenient space for these operators to access important services including connectivity, power, rack space and securityall on a 24 hour basis in order to support their Internet activities. We believe we are connected to more CNDCs than any other IP transitprovider enabling us to offer greater coverage, more network configuration choices and increased reliability for our net-centric customers.Cogent Data Centers. We operate 54 data centers across the United States and in Europe. These facilities comprise over 600,000square feet of floor space and are directly connected to our network. Each location is equipped with secure access, uninterruptable powersupplies (UPS), and backup generators. Our customers typically purchase bandwidth, rack space, and power within these facilities.Internetworking. The Internet is an aggregation of interconnected networks. Larger Internet service providers, or ISP’s, exchangetraffic and interconnect their networks by means of direct private connections referred to as private peering. We interconnect with thenetworks of our customers, which represents the majority of our interconnections and network traffic, through the sale of our transitservices. We currently interconnect with 7,569 networks who pay to exchange traffic with us as customers. We supplement our customernetwork interconnections with settlement-free, peering to our non-customer ISP’s. We have settlement-free private peeringinterconnections between our network and 24 other major ISP’s who are not our customers.Tier 1 ISP Status. We directly connect with 7,569 total networks. As a result of the size and breadth of our customer base and theextensive footprint and scale of our network we are a Tier 1 ISP. We currently exchange traffic with 24 other Tier 1 ISPs on a settlementfree basis. The remaining networks are customers whom we charge for Internet access. We believe our standing as a Tier 1 ISP provides uswith a reputation for size, breadth and reliability. These relationships also reduce our cost of operating the network versus non-Tier 1 ISPPeer Networks who must compensate other networks in order to deliver a significant portion of their traffic. Peering agreements betweenISPs enable them to exchange traffic.Without settlement-free peering agreements, each ISP backbone would have to buy Internet accessfrom every other ISP backbone in order for its customer’s traffic to reach and be received from customers of other ISP backbones. We areconsidered a Tier 1 ISP with a large customer base and, as a result, we have settlement-free peering arrangements with other providerswith which we wish to peer. We do not purchase transit services or paid peering to reach any portion of the Internet. This allows us toexchange traffic with those ISPs without payment by either party. In such arrangements, each party exchanging traffic bears its own cost ofdelivering traffic to the point at which it is handed off to the other party. We do not treat our settlement-free peering arrangements asgenerating revenue or expense related to the traffic exchanged. We do not sell or purchase paid peering on our transit network. Table of ContentsPage 9 of 70Network Management and Customer Care. Our primary network operations centers are located in Washington, D.C. and Madrid,Spain. These facilities provide continuous operational support for our network. Our network operations centers are designed toimmediately respond to any problems in our network. Our customer care call centers are located in Washington D.C., Herndon Virginia,Madrid Spain, Paris France, and Frankfurt Germany. To ensure the quick replacement of faulty equipment in the intra-city and long-haulnetworks, we have deployed field engineers across North America and Europe. In addition, we have maintenance contracts with third-party vendors that specialize in maintaining optical and routed networks.Our CustomersWe offer our high-speed Internet access and IP connectivity services to two sets of customers: corporates customers, which primarilyinclude small and medium-sized businesses located in North America, and net-centric customers, which include, content providers,applications service providers and access networks, comprised of ISPs, cable operators, mobile operators and phone companies located inNorth America, Europe, Asia, South America, Australia and Africa.Our corporate customers primarily purchase direct internet access from us on-net in multi-tenant office buildings and carrier neutraldata centers or off-net through other carriers’ “last mile” connections to those customer facilities in metropolitan markets in NorthAmerica. This service enables these customers to access the Internet with a high-speed, bi-directional, symmetric circuit with a very highdegree of reliability and 100% access to that contractual capacity at all times. Depending upon the geographic breadth of our customers’footprint and their communications requirements, we also sell these corporate customers private network services. Private networkservices provide connectivity on a point to point or point to multi-point basis. This service allows customers to connect geographicallydispersed local area networks in a seamless manner. We primarily offer these corporate customers speeds ranging from 100 Mbps persecond to 1 Gbps per second and in some cases up to 10 Gbps per second. The continued growth in demand for increased bandwidth hasled to a rapid shift towards higher capacity circuits.We have agreements with multiple national and regional carriers providing us “last mile” network access to over 4 million buildingsacross North America that are not currently served by our network. We believe these agreements broaden our addressable market forcorporate dedicated internet access and VPN services and enable us to better leverage the skills and capacity of our direct salesforce. Asour sales of off-net services has increased, the pricing in our carrier agreements has commensurately decreased in light of our increasedvolume.Our net-centric customers purchase IP connectivity and other services in our 1,359 carrier neutral data centers as well as our 54 datacenters for a total of 1,413 data centers. We support these services in 216 metropolitan markets in 50 countries across the world. Thesebandwidth intensive organizations typically purchase circuits ranging from 10 Gbps up to 400 Gbps, designed to provide them high-speed,bi-directional, symmetric circuits with a high degree of reliability and 100% access to the contractual capacity at all times. In addition tocontractual capacity, certain net-centric customers also purchase metered service that enables customers to pay for actual volume of bitsdelivered on a per bit per second basis. We also offer a burst product that allows net-centric customers to utilize capacity when they exceedtheir contractual capacity. The per bit charge for this burst capacity typically exceeds the rate for contractual services. Overall, we believethat, on a per megabit basis, our service offering is one of the lowest priced in the marketplace. We also offer colocation services in ourdata centers. This service offers Internet access combined with rack space and power in our facilities, allowing the customer to locate aserver or other equipment at that location and connect to our Internet access service.We offer lower prices for longer term and volume commitments. We emphasize the sale of our on-net services over our off-netservices, as on-net services generate higher gross margins, and we believe we can offer faster installation and greater reliability with ouron-net offerings.Our People – Human Capital ManagementWe strive to become a leading employer in our industry by creating a workplace where employees have the tools and resources theyneed to hone their talents, advance in their careers and be rewarded for their hard work. We also seek to create a diverse workplace that isrespectful of all employees, as we believe this is critical to fostering an employee culture that can deliver the best service in our industry toour customers. Our human capital objectives and initiatives are overseen by the Compensation Committee of our Board of Directors.Workforce.As of December 31, 2021, we had 1,001 employees located in 16 different countries in a variety of different roles. Approximately81.0% of our employees are located in the United States and Canada, 18.0% are located in Europe and 1.0% are located in Asia. As ofDecember 31, 2021, 49% of our employees were quota-bearing sales representatives, 14% were in sales management or sales support rolesand 37% were in operational or administrative functions. Unions represent 29 of our employees in France. We believe that we have asatisfactory relationship with our employees. Table of ContentsPage 10 of 70Diversity and Inclusion. We strive to maintain a diverse and inclusive workforce everywhere we operate. We recruit the best peoplefor the job without regard to gender, race, ethnicity or other protected traits, and it is our policy to comply fully with all domestic, foreignand local laws relating to discrimination in the workplace. At the direction of our Board of Directors, we mandated training for all of ouremployees on topics of diversity and inclusion. All employees were required to complete online training in unconscious bias, andmanagers were further required to complete additional training in inclusion. We intend to continually reinforce our commitment to globalinclusion and diversity.Employee Retention. We compete in an industry that is highly competitive for talent. Attracting, developing and retaining skilledpeople in sales, technical and other positions is crucial to executing our strategy and our ability to compete effectively. While we monitoroverall employee retention, we focus in particular on sales representative retention, as our new sales and revenue growth are driven almostentirely by the sales generated by our direct sales force. As a complement to our sales representative retention metric, we also closely trackthe pace of hiring new sales representatives.Our sales and marketing organization comprises 63% of our employees and our sales representatives comprise 49% of our employees.For the year ending December 31, 2021, we averaged a 7.0% monthly churn rate within our sales representatives. This churn was causedprimarily by failures to meet sales performance goals as well as departures precipitated, we believe, by our decision to return to a full-time,in office work environment and a requirement to be fully vaccinated against COVID-19 in the fall of 2021. During 2021, we hired 371new sales representatives and ended the year with 490 sales representatives, a net decrease of 79 sales representatives from our total salesrepresentatives at the beginning of 2021. Our ability to recruit and retain all of our employees depends on a number of factors, includingprofessional development, compensation and benefits, and employee engagement.Professional Development. We recognize the importance of retaining our sales personnel, and we continually strive to improve theperformance of our sales personnel to reduce turnover. To that end, we have invested heavily in professional development as a means forimproving performance.As part of our commitment to professional development, we established a sales training and enablement department that provides bothonline and in-person training. Our 13 regional learning managers and management development trainers are located around the world andare available for intensive, in-person group training as well as individual training with sales representatives who may need extraassistance. In 2021, our average ratio of sales representatives with less than 12 months of tenure to regional learning managers was 19 to 1.Our training group includes two additional trainers dedicated exclusively to training sales management, one technical trainer and oneon-line curriculum trainer. Our trainers also conduct training at our annual sales meeting, during which our entire sales force gathers tolearn new skills and reinforce existing skills.All sales personnel receive four weeks of live, inter-active training during their first month, which focuses on developing both generaland Cogent-specific sales skills. New sales personnel are also encouraged to, and rewarded for, completing a self-paced, online curriculumled by their manager during their first six months. Both recent and tenured sales personnel have access to online, on-demand trainingmodules and the opportunity to obtain certification in specialized services. Our CEO addresses each new hire class in an interactivetraining session.Compensation and Benefits. We are committed to rewarding, supporting, and developing our employees. To that end, we offer acomprehensive compensation program that includes market-competitive pay, stock options or restricted stock grants to all employees,healthcare benefits, a retirement savings plan, and paid time off and family leave.Employee Engagement. To foster and reinforce a company culture where employee concerns are heard, our Chief Executive Officerconducts biweekly town hall meetings to respond to employee questions, which may be submitted anonymously. On alternate weeks, weconduct online town hall chats during which a rotating member of the executive team is available to answer questions from our employees.We believe these open and unfiltered channels of communication lead to honest feedback from our employees to our management team.Health and Safety. The health and safety of our employees is of utmost important to us, and we take all necessary precautions tosafeguard our employees. While nearly all of our employees work solely in office environments, for our field personnel, we provide safetygear as appropriate given employee job duties.During the COVID-19 pandemic, we invested heavily to help ensure the health of our employees. Beginning in March 2020, weclosed all of our offices worldwide, requiring our entire workforce to work remotely whenever possible. We procured additional computerequipment to permit all employees to work remotely. While our offices have largely remained closed, we believe that it is important to ourcompany culture and employee productivity to return to an in-office environment when it is safe to do so. A cross-functional team withinCogent has established safety procedures to transition employees for a return to office, including training and additional safety andsanitation supplies. Table of ContentsPage 11 of 70In the summer of 2021, we began the process of transitioning back to an in-office environment. As part of this process, we mandatedthat all employees in the United States and Canada, except those with legal exemptions, be vaccinated against the COVID-19 virus nolater than October 2021. In September 2021, all fully-vaccinated employees returned to our offices in the United States and Canada on afull-time basis. All employees in the United States and Canada, regardless of vaccination status, returned to our offices in October 2021.Similar to our efforts in North America, we also undertook efforts to return our employees in Europe and Asia to their offices, subject tolocal laws and regulations. In November 2021, a majority of our employees outside of North America returned to the office full-time.The spread of the Omicron variant around the world in December 2021 caused us to further modify our in-office environment. First,we mandated that all U.S. employees receive a COVID-19 booster vaccine no later than six weeks after first becoming eligible for suchvaccine. Second, we mandated that all US employees provide proof of vaccination to us. Third, for offices around the world that had notbeen closed by government order, we shifted much of our workforce to a fully remote status at the end of 2021 in order to reduce thedensity of our offices. Sales representatives with less than 12 months tenure, sales representative on performance improvement plans andtheir managers are currently still working in our offices on a full-time basis in the US, as we believe that the training and coachingrequired by new sales representatives is significantly more effective when provided in an in-office environment.Sales and MarketingDirect Sales. We employ a direct sales and marketing approach. As of December 31, 2021, our sales force included 633 full-timeemployees. Our quota bearing sales force includes 490 employees with 283 employees focused primarily on the corporate market and 207employees focused primarily on the net-centric market. As of December 31, 2020, our sales force included 712 full-time employeesincluding 569 quota bearing sales force employees with 333 employees focused primarily on the corporate market and 236 employeesfocused primarily on the net-centric market. Our sales personnel work through direct contact with potential customers in, or intending tolocate in, our on-net buildings. Through agreements with building owners, we are able to initiate and maintain personal contact with ourcustomers by staging various promotional and social events in our multi-tenant office buildings and carrier neutral data centers. Salespersonnel are compensated with a base salary plus quota-based commissions and incentives. We use a customer relationship managementsystem to efficiently track sales activity levels and sales productivity.Indirect Sales. We also have an indirect sales program. Our indirect sales program includes several master agents with whom we havea direct relationship. Through our agreements with our master agents we are able to sell through thousands of sub agents. All agents haveaccess to selling to potential corporate customers and may sell all of our products. We have an indirect channel team who manages theseindirect relationships. The indirect channel team is compensated with a base salary plus quota-based commissions and incentives. We useour customer relationship management system to efficiently track indirect sales activity levels and the sales productivity of our agentsunder our indirect sales program.Marketing. Because of our historical focus on a direct sales force that utilizes direct contact, we have not spent funds on television,radio or print advertising. We use a limited amount of web-based advertising. Our marketing efforts are designed to drive awareness of ourproducts and services, to identify qualified leads through various direct marketing campaigns and to provide our sales force with productbrochures, collateral materials, in building marketing events and relevant sales tools to improve the overall effectiveness of our salesorganization. In addition, we conduct building events and public relations efforts focused on cultivating industry analyst and mediarelationships with the goal of securing media coverage and public recognition of our Internet access and private network services.CompetitionWe face competition from incumbent telephone and cable companies, and facilities-based network operators, many of whom are muchlarger than us, have significantly greater financial resources, sales and marketing capabilities, better-established brand names and large,existing installed customer bases in the markets in which we compete. We also face competition from new entrants to the communicationsservices market. Many of these companies offer products and services that are similar to our products and services.Unlike some of our competitors, we generally do not have title to most of the dark fiber that makes up our network. Our interests inthat dark fiber are in the form of long-term leases under indefeasible rights of use, or IRUs, with providers, some of which also competewith us. We rely on the owner of the fiber to maintain the fiber. We are also dependent on third-party providers, some of which competewith us, to provide intercity and intracity fiber as well as the lateral fiber connections required to add buildings to our network and toprovide the local loop facilities for the provision of connections to our off-net customers. Table of ContentsPage 12 of 70We believe that competition is based on many factors, including price, transmission speed, ease of access and use, length of time toprovision service, breadth of service availability, reliability of service, customer support, billing simplicity and brand recognition. Becauseour fiber optic networks have been recently installed compared to those of the incumbent carriers, our state-of-the-art technology mayprovide us with cost, capacity, and service quality advantages over some existing incumbent carrier networks; however, our network maynot support some of the services supported by these legacy networks, such as circuit-switched voice, ATM, MPLS, frame relay, wirelessand shared hybrid fiber coax networks. While the Internet access speeds offered by traditional ISPs serving multi-tenant office buildingsusing DSL or cable modems typically do not match our on-net offerings in terms of throughput or quality, these slower services are usuallypriced lower than our offerings and thus provide competitive pressure on pricing, particularly for more price-sensitive customers. Theseand other downward pricing pressures particularly in carrier neutral data centers have diminished, and may further diminish, thecompetitive advantages that we have enjoyed as the result of the pricing of our services. Increasingly, traditional ISPs are upgrading theirservices using optical fiber and cable technology so that they can match our transmission speed and quality.RegulationOur services are subject to the regulatory authority of various agencies in the jurisdictions in which we operate. As a provider of onlyInternet access and private networks to businesses, regulation is generally not significant. This benefits us in that we have flexibility inoffering our services and ease of entry into new markets. However, this level of regulation generally extends to our competitors, some ofwhom are incumbent telephone and cable companies with whom we need to interconnect and from whom we acquire circuits for our off-net services. The extent of regulation can change. For example, the U.S. Federal Communications Commission (“FCC”) in 2017 rescindedregulations applicable to mass market Internet access providers. In all jurisdictions regulations continue to evolve. We also enter into newmarkets with their own regulations. The regulations with which we need to comply include obtaining the proper licenses to provide ourservices, data privacy, interception of communications by law enforcement, blocking of websites, and other regulations. We believe thatwe comply with all regulations in the jurisdictions in which we operate.The laws related to Internet telecommunications are unsettled and there may be new legislation and court decisions that may affect ourservices and expose us to burdensome requirements and liabilities.Available InformationWe maintain an Internet website at www.cogentco.com. We make available free of charge through our Internet website our annualreport on Form 10-K, our quarterly reports on Form 10-Q, our current reports on Form 8-K, and any amendments to those reports filed orfurnished pursuant to Section 13(a) or 15(d) of the Exchange Act. The reports are made available through a link to the SEC’s Internetwebsite at www.sec.gov. You can find these reports and request a copy of our Code of Conduct on our website at www.cogentco.com underthe “About Cogent” tab at the “Investor Relations” link.ITEM 1A. RISK FACTORSMarket RisksThe COVID-19 pandemic has had, and may continue to have, an adverse impact on our business, financial condition and results ofoperations.We offer our services in 50 countries, most of which were significantly impacted by the COVID-19 pandemic. The extent of theimpact of the COVID-19 pandemic on our business and financial results will continue to depend on numerous evolving factors that we arenot able to accurately predict and which will vary by market. Such future uncertain and unpredictable developments include the ultimateduration and scope of the pandemic, the rise and spread of new COVID-19 variants, the availability and efficacy of vaccines andtherapeutic treatments and the willingness of the public to accept such vaccines and treatments, governmental actions that have been taken,or may be taken in the future, in response to the pandemic, and global economic conditions during and after the pandemic. Table of ContentsPage 13 of 70Approximately 60.8% of our revenue for the year ended December 31, 2021 was from our corporate customers. Corporate customersare located in multi-tenant office buildings, almost exclusively in the United States and Canada. Authorities in many of these marketsimplemented numerous measures in response to the pandemic, such as travel bans and restrictions, quarantines, curfews, shelter-in-placeand stay-at-home orders and business shutdowns and closures, and also implemented multi-step polices with the goal of re-opening thesemarkets. These measures have impacted, and continue to impact, us and our employees, customers, suppliers and other third parties withwhom we do business. The geographic areas in which we operate are in varying stages of restrictions or re-opening. Many jurisdictionshave re-opened, while other jurisdictions began re-opening only to return to restrictions in the face of increases in new COVID-19 cases.Considerable uncertainty exists regarding how current and future health and safety measures implemented in response to the pandemicwill impact our business, including whether such measures will result in further changes in demand for our services, impair our ability toaccess buildings to install our services or maintain our network or impact our supply chain. The continuing impact of existing or newmandates, restrictions, laws or regulations could have a material adverse impact on our operations and the operations of our customers orothers with whom we do business.In addition, a significant number of our corporate customers have continued remote work policies instituted at the beginning of theCOVID-19 pandemic, slowed the pace of opening new offices and closed offices due to global economic conditions. We believe the rapidspread of the Delta and Omicron variants during 2021 further exacerbated the unwillingness of corporate customers to end their remotework policies. In addition, the prevalence of hybrid or fully remote work environments during the pandemic has caused some companiesto transition to such environments on a permanent basis, and we do not know what impact this may have on demand for commercial officespace and for our services. As a result, through much of 2021, we saw corporate customers take a cautious approach to adding newservices and upgrading existing services as well as reduced demand for connecting smaller satellite offices. Since the beginning of thepandemic we have experienced a deteriorating real estate market in the buildings we serve. Vacancy rates for many of our multi-tenantoffice buildings have risen as a result of many tenants terminating leases and exiting buildings and as a result of lower new leasingactivity. The impact of this greater level of vacancy rates was more pronounced in Northern cities and in the California market and lessimpactful in our Southern marketsWhere permitted, we will require our employees to return to the office on a full-time basis. We have taken measures to protect ourworkforce and minimize their exposure to COVID-19, such as requiring our entire workforce to get vaccinated and wear masks in theoffice, establishing safety procedures in the event an employee tests positive for COVID-19 and severely curtailing all business travel. Inaddition to the associated costs incurred, these measures may be insufficient in protecting our employees. If a significant percentage of ourworkforce is unable to work due to the impact of COVID-19, our operations will be negatively impacted. In December 2021, with therapid spread of the Omicron variant, a number of our offices were required to close by local order and we voluntarily shifted a majority ofour workforce to fully remote status. We intend to return to full-time, in-office status when permitted and when we deem it to be safe. Aswe consider this return, the impact of COVID-19, our response to the pandemic, and compliance with governmental measures imposed inresponse to COVID-19 has caused, and will continue to cause us to incur additional costs and any inability to comply with such measuresmay subject us to restrictions on our business activities, fines, and other penalties, any of which may adversely affect our business.In addition, the shift of our workforce to working remotely has amplified certain risks to our business, including increased demand onour information technology resources and systems, increased phishing and other cybersecurity attacks as cybercriminals try to exploit theuncertainty surrounding the COVID-19 pandemic, and an increase in the number of points of potential attack, such as laptops and mobiledevices (both of which are now being used in increased numbers), to be secured. Any failure to effectively manage these risks, includingto timely identify and appropriately respond to any cyberattacks, may adversely affect our business.We may find it difficult to retain existing employees or to hire new employees because we have required all employees in the UnitedStates to receive the COVID-19 vaccine and boosters and to return to the office on a full-time basis.In August 2021, we notified our employees in the United States that they would be required to return to the office on a full-time basisbeginning in September 2021 and that they would be required to attest that they were fully vaccinated against the COVID-19 virus unlessthey received a medical or religious exemption. Fully vaccinated employees in the United States began returning to our offices on a full-time basis in early September 2021. Employees had until October 11, 2021 to provide their vaccine self-attestation.In October 2021, we opened most of our non-US offices for employees to return on a voluntary basis and in November 2021,wherever permitted by local law, we required our employees outside of the United States to return to full-time, in-office work. Wherepermitted by, and subject to, local laws, we will require employees outside of the United States to be fully vaccinated against the COVID-19 virus. Table of ContentsPage 14 of 70The spread of the Omicron variant around the world in December 2021 caused us to further modify our office environment. First, wemandated that all U.S. employees receive a COVID-19 booster vaccine no later than six weeks after first becoming eligible for suchvaccine. Second, we mandated that all U.S. employees provide proof of vaccination to us. Third, for offices around the world that had notbeen closed by government order, we shifted much of our workforce to fully remote status on a temporary basis at the end of 2021 in orderto reduce the density of our offices. Sales representatives with less than 12 months tenure, sales representative on performanceimprovement plans and their managers are currently still working in our offices on a full-time basis, as we believe that the training andcoaching required by new sales representatives is significantly more effective when provided in an in-office environment.Our employees have largely complied with our vaccine mandate in the United States and Canada. However, we experienced anincrease in employee departures, particularly within our sales department in the third and fourth quarters of 2021. We believe that this risein departures was attributable in part to the unwillingness of some employees to be vaccinated and/or to return to a full-time, in-officeenvironment. If we continue to mandate COVID-19 vaccinations and require employees to return to our offices on a full-time basis, wemay find it difficult to retain existing employees or hire new employees. If this occurs, this may impact our revenue growth andprofitability.We are experiencing delays in the delivery of networking equipment and other services from certain of our vendors.We have seen a slowdown in the delivery of network equipment and delays in the projected delivery time of network equipmentorders. In addition, vendors who supply us with dark fiber or lit circuits are being impacted by the spread of COVID-19 in their workforce,and this may slow the delivery of services from these vendors to us. While we believe that we can adequately manage the operation,maintenance, upgrading and growth of our network, a worsening or prolonged slowdown of the delivery of network equipment, dark fiberand lit circuits may impact our ability to expand and augment our network and service offerings. If this occurs, this may impact ourrevenue growth and profitability.Our growth and financial health are subject to a number of economic risks.A downturn in the world economy, especially the economies of North America and Europe would negatively impact our growth. Ournet-centric business would be particularly impacted by a decline in the development of new applications and businesses that make use ofthe Internet. Our corporate business would be particularly impacted by an increase in vacancy rates in the multi-tenant office buildings thatwe serve. Our total revenue growth is predicated on growth in the use of the Internet that makes up for the declining prices of Internetservice. An economic downturn could impact the Internet business more significantly than other businesses that are less dependent on newapplications and growth in the use of those applications and an increase in office vacancy rates because of the retrenchment by consumersand businesses that typically occurs in an economic downturn.Our historical reductions in our prices are expected to continue in an inflationary economy.Many of the regions in which we operate are experiencing an increase in inflation rates. Due to the nature of our product offerings andthe industry in which we operate, which is deflationary, we may be unable to raise our prices. We expect that our historical pricing patternswill continue for the foreseeable future.Events beyond our control may impact our ability to provide our services to our customers or increase the costs or reduce theprofitability of providing our servicesCatastrophic events, such as major natural disasters, extreme weather, fire, flooding or similar events as well as the continued threat ofterrorist activity and other acts of war or hostility have had, and may continue to have, an adverse effect on our headquarters, other offices,our network, infrastructure or equipment or our customers and prospective customers, which could adversely affect our business. Theseevents may also have an adverse impact on business, financial and general economic conditions around the world. We have certainlocations through which a large amount of our Internet traffic passes. Examples are facilities in which we exchange traffic with othercarriers, the facilities through which our transoceanic traffic passes, and certain of our network hub sites. We are particularly vulnerable toacts of terrorism because our largest customer concentration is located in New York, our headquarters is located in Washington, D.C., andwe have significant operations in Paris, Madrid and London, cities that have historically been targets for terrorist attacks and vulnerable topandemics. Table of ContentsPage 15 of 70If these or any other of our key facilities were destroyed or seriously damaged, a significant amount of our network traffic could bedisrupted. Because of the large volume of traffic passing through these facilities our ability (and the ability of carriers with whom weexchange traffic) to quickly restore service would be challenged. There could be parts of our network or the networks of other carriers thatcould not be quickly restored or that would experience substantially reduced service for a significant time. If such a disruption occurs, ourreputation could be negatively impacted which may cause us to lose customers and adversely affect our ability to attract new customers,resulting in an adverse effect on our business and operating results.Business RisksWe need to retain existing customers and continue to add new customers in order to become consistently profitable and cash flowpositive.In order to be consistently profitable and consistently cash flow positive, we need to both retain existing customers and continue toadd a large number of new customers. The precise number of additional customers required is dependent on a number of factors, includingthe turnover of existing customers, the pricing of our product offerings and the revenue mix among our customers. We may not succeed inadding customers if our sales and marketing efforts are unsuccessful. In addition, many of our targeted customers are businesses that arealready purchasing Internet access services from one or more providers, often under a contractual commitment. It has been our experiencethat such targeted customers are often reluctant to switch providers due to costs and effort associated with switching providers. Further, assome of our customers grow larger they may decide to build their own Internet backbone networks or enter into direct connectionagreements with telephone and cable companies that provide Internet service to consumers. A migration of a few very large Internet usersto their own networks, or to special networks that may be offered by major telephone and cable providers of last mile broadbandconnections to consumers, or the loss or reduced purchases from several significant customers could impair our growth, cash flow andprofitability.We have customers who depend on the U.S. government’s E-rate program for funding. There can be no assurance that the E-rateprogram will continue or that other governmental programs that fund governments and organizations that are or might become customerswill continue. A failure of such programs to continue could result in a loss of customers and impair our growth, cash flow and profitability.A substantial and long-term shift to remote work may impact our ability to add new customers and to retain existing customers.Through much of 2021, we saw corporate customers continue their remote work policies and take a cautious approach to new servicesand upgrades, as well as a reduced demand for connecting smaller satellite offices. We also witnessed a deteriorating real estate market inand around the buildings we service, with rising vacancy levels and falling lease initiations or renewals resulting in fewer salesopportunities for our salesforce. As a result, we experienced a slowdown in new sales to our corporate customers which negativelyimpacted our corporate revenue growth. If, after the end of the COVID-19 pandemic, a significant number of our corporate customers orpotential customers decide to retain remote work policies, we may experience increased customer turnover, fewer upgrades of existingcustomer configurations and fewer new tenant opportunities. These trends may negatively impact our revenue growth, cash flows andprofitability.Lower vacancy rates as a result of diminished lease terminations and increased leasing and subleasing activity will be a key factor indriving renewed growth in our corporate business.During the Pandemic we saw increasing vacancy rates in many of our buildings due to higher lease terminations and lower leasingactivity. This reduction in tenancy levels was particularly challenging in our Northern and Californian markets. As a result, our level ofactivity in our corporate business has been adversely affected. In order to see a growing level of corporate activity we believe there willneed to be an improvement in the tenancy levels of our buildings through a reduction in tenant exits and increased leasing activity.Our business and operations are growing rapidly and we may not be able to efficiently manage our growth.We have grown our company rapidly through network expansion and by obtaining new customers through our sales efforts. Ourexpansion places significant strains on our management, operational and financial infrastructure. Our ability to manage our growth will beparticularly dependent upon our ability to:●expand, develop and retain an effective sales force and qualified personnel;●maintain the quality of our operations and our service offerings;●maintain and enhance our system of internal controls to ensure timely and accurate compliance with our financial and regulatoryreporting requirements; and Table of ContentsPage 16 of 70●expand our accounting and operational information systems in order to support our growth.If we fail to implement these measures successfully, our ability to manage our growth will be impaired.Demand from certain employees to work remotely may reduce the attractiveness of our business as an employer versus somecompetitors who are allowing employees to work remotely.In the fall of 2021 we began to implement an in-office work policy designed to return the vast majority of our employees to an in-office work environment. A small minority of our workforce declined to return to full time in-office employment and left our employment.We are experiencing modest competitive challenges versus some competitors who are offering some employees a hybrid work option.Increasing demands to work in a hybrid work style may reduce our ability to attract and retain employees, in particular attracting andretaining salespeople.Competitive RisksOur connections to the Internet require us to establish and maintain relationships with other providers, which we may not be able tomaintain.The Internet is composed of various network providers who operate their own networks that interconnect at public and privateinterconnection points. Our network is one such network. In order to obtain Internet connectivity for our network, we must establish andmaintain relationships with other ISPs and certain of our larger customers. These providers may be customers (who connect their networkto ours by buying Internet access from us) or may be other large ISPs to whom we connect on a settlement-free peering basis as describedbelow. Both customers and settlement-free peers may be competitors of ours.By entering into what are known as settlement-free peering arrangements, providers agree to exchange traffic between their respectivenetworks without charging each other. Our ability to avoid the higher costs of acquiring paid dedicated network capacity (transit or paidpeering) and to maintain high network performance is dependent upon our ability to establish and maintain settlement-free peeringrelationships and to increase the capacity or to add additional locations of the interconnections provided by these relationships. The termsand conditions of our settlement-free peering relationships may also be subject to adverse changes, which we may not be able to control. Ifwe are not able to maintain or increase our settlement-free peering relationships in all of our markets on favorable terms or to upgrade thecapacity of our existing settlement-free peering relationships, we may not be able to provide our customers with high performance,affordable or reliable services, which could cause us to lose existing and potential customers, damage our reputation and have a materialadverse effect on our business. Additionally, certain of our current customers may seek to become settlement-free peers with us.We cannot assure you that we will be able to continue to establish and maintain relationships with other ISPs, favorably resolvedisputes with such providers, or increase the capacity of our interconnections with such providers.The sector in which we operate is highly competitive, and we may not be able to compete effectively.We face significant competition from incumbent carriers, Internet service providers and facilities-based network operators. Relative tous, many of these providers have significantly greater financial resources, more well established brand names, larger customer bases, andmore diverse strategic plans and service offerings. A number of these providers also have large bases of consumers, which makes theirnetworks particularly attractive to content providers as they can provide a direct connection to their customers.Intense competition from these traditional and new communications companies has led to declining prices and margins for manycommunications services, and we expect this trend to continue as competition intensifies in the future. Decreasing prices for high-speedInternet services have somewhat diminished the competitive advantage that we have enjoyed as a result of our service pricing.Our business is premised on the idea that customers want simple Internet access and private networks rather than a combination ofsuch services with other services such as voice services and complex managed services. Our competitors offer such services. Should themarket come to favor such services our ability to acquire and keep customers would be impaired. Our competitors may also upgrade theirexisting services or introduce new technologies or services, such as satellite-based Internet or 5G services that could make our servicesless attractive to potential customers. Table of ContentsPage 17 of 70Our business could suffer because telephone companies and cable companies may provide better delivery of certain Internet content,including content originating on their own networks, than content on the public Internet.Broadband connections provided by cable TV, telephone, and fixed and mobile companies have become the predominant means bywhich consumers connect to the Internet. The providers of these broadband connections may treat Internet content or other broadbandcontent delivered from different sources differently. The possibility of this has been characterized as an issue of “net neutrality.” As manyof our customers operate websites and services that deliver content to consumers our ability to sell our services would be negativelyimpacted if Internet content delivered by us was less easily received by consumers than Internet content delivered by others. The FCC hadpromulgated rules that would have banned practices such as blocking and throttling of Internet traffic, but those rules were rescinded bythe FCC in December 2017. Some US states have either issued or are considering their own net neutrality rules. Also, the European Unionand other countries in which we operate, have issued similar net neutrality rules. We also do not know the extent to which the providers ofbroadband Internet access to consumers may favor certain content or providers in ways that may disadvantage us.Operational RisksOur network may be the target of potential cyber-attacks and other security breaches that could have significant negativeconsequences.Our business depends on our ability to limit and mitigate interruptions to or degradation of the security of our network. We areconsidered a critical infrastructure provider and therefore may be more likely to be the target of cyber-attacks. Our network, systems,applications, and routers may be vulnerable to unauthorized access, computer viruses, cyber-attacks, distributed denial of service (DDOS),and other security breaches. We experience such cyber-attacks and other security incidents of varying degrees from time to time, thoughnone which individually or in the aggregate has led to costs or consequences which have materially impacted our operations or business.An attack on or security breach of our network could result in theft of trade secrets, intellectual property, or other company confidentialinformation, the interruption, degradation, or cessation of services, an inability to meet our service level commitments or our financialreporting obligations, and potentially compromise customer data stored on or transmitted over our network. We have experienced cyber-attacks of increasing sophistication which suggest an increase in cyber-attacks that may be state-sponsored or conducted by other well-financed organizations. Moreover, as cyber warfare becomes a tool in asymmetric conflicts between the United States and other nations,we, as a US provider, may be targeted with increasing frequency. We cannot guarantee that our security measures will not becircumvented, thereby resulting in security events, network failures or interruptions that could impact our network security or availabilityand have a material adverse effect on our business, our ability to meet our financial reporting obligations, financial condition andoperational results. We may be required to expend significant resources to protect against such threats, and may experience a reduction inrevenues, litigation, and a diminution in goodwill, caused by a compromise of our cybersecurity. Although our customer contracts limitour liability, affected customers and third parties may seek to recover damages from us under various legal theories. In response to pastattacks, we have implemented further controls and taken and planned for other preventative actions to further strengthen our systemsagainst future attacks. However, we cannot assure you that such measures will provide absolute security, that we will be able to react in atimely manner, or that our remediation efforts following any past or future attacks will be successful.If the information systems that we depend on to support our customers, network operations, sales, billing and financial reporting donot perform as expected, our operations and our financial results may be adversely affected.We rely on complex information systems to operate our network and support our other business functions. Our ability to track salesleads, close sales opportunities, provision services, bill our customers for our services and prepare our financial statements depends uponthe effective integration of our various information systems. In 2020, we developed and deployed our own customer relationshipmanagement software for our sales force. We may have difficulty maintaining this software and adding features that our salesrepresentatives require. If our information systems, individually or collectively, fail or do not perform as expected, our ability to makesales, to process and provision orders, to make timely payments to vendors, to ensure that we collect amounts owed to us and prepare andfile our financial statements would be adversely affected. Such failures or delays could result in increased capital expenditures, customerand vendor dissatisfaction, loss of business or the inability to add new customers or additional services, and the inability to prepareaccurate and timely financial statements all of which would adversely affect our business and results of operations. Table of ContentsPage 18 of 70Network Augmentation and Maintenance RisksOur network is comprised of a number of separate components, and we may be unable to obtain or maintain the agreements necessaryto augment or maintain our network.Our network is primarily composed of (i) leased capacity on transoceanic optical fiber; (ii) terrestrial inter-city dark optical fiber; (iii)intra-city dark optical fiber; and (iv) the buildings that we serve and the associated optical fiber connecting those buildings. We lease ouroptical fiber and obtain access to the buildings on our network, both carrier neutral data centers and multi-tenant office buildings, from anumber of vendors. A number of our leases, both for fiber and building access, are up for renewal in any given year. A deterioration in ourexisting relationship with these operators could impact our network, harm our sales and marketing efforts and could substantially reduceour potential customer base. In addition, portions of our long-haul optical fiber and metro optical fiber are nearing the end of their originalprojected useful life. While we believe that this fiber will remain usable beyond the projected end date, we face the risk that portions ofour network may need to be replaced in the future.We expect to enter additional agreements with carriers and operators to obtain additional facilities, whether optical fiber or buildings,for our network in order to add capacity to our network and to expand our addressable market. However, we cannot assure you that we willbe able to enter into such agreements in the future, be able to do so on economically attractive terms or find an adequate substitute if weare unable to reach an agreement. Failure to acquire new facilities to augment our network could keep us from adding new markets,capacity or buildings to our network and negatively impact our growth opportunities.Our off-net business could suffer delays and problems due to the actions of “last mile” providers on whom we are partially dependent.Our off-net customers are connected to our network by means of fiber optic capacity that are provided as services by local telephoneand cable companies and others. We may experience problems with the installation, maintenance and pricing of these lines which couldadversely affect our results of operations and our plans to add additional off-net customers to our network using such services. We havehistorically experienced installation and maintenance delays when the network provider is devoting resources to other services, such astraditional telephony, cable TV services and private network services. We have also experienced pricing problems when a lack ofalternatives allows a provider to charge high prices for capacity in a particular area or to a particular building. We attempt to reduce thisproblem by using many different providers so that we have alternatives for linking an off-net customer to our network. Competition amongthe providers tends to improve installation intervals, maintenance and pricing. Additionally, these providers are often competing with usfor the same customers, and have marketed their own service to our off-net customers when our initial contract with our customer nearsthe end of its term.Our business could suffer from an interruption of service from our fiber providers.The optical fiber cable owners from whom we have obtained our inter-city and intra-city dark fiber maintain that dark fiber. We arecontractually obligated under the agreements with these carriers to pay maintenance fees, and if we are unable to continue to pay such feeswe would be in default under these agreements. If these carriers fail to maintain the fiber or disrupt our fiber connections due to our defaultor for other reasons, such as business disputes with us, bankruptcy, and governmental takings, our ability to provide service in the affectedmarkets or parts of markets would be impaired unless we have or can obtain alternative fiber routes. Some of the companies that maintainour inter-city dark fiber and some of the companies that maintain our intra-city dark fiber are also competitors of ours in portions of ourbusiness. Consequently, they may have incentives to act in ways unfavorable to us. While we have successfully mitigated the effects ofprior service interruptions and business disputes in the past, we may incur significant delays and costs in restoring service to our customersin connection with future service interruptions, and as a result we may lose customers.Substantially all of our network infrastructure equipment is manufactured or provided by a single network infrastructure vendor.We purchase from Cisco Systems, Inc. (“Cisco”) the routers and transmission equipment used in our network. We have recentlyexperienced delays in obtaining certain network equipment from Cisco due to supply chain issues. If Cisco fails to provide equipment on atimely basis or fails to meet our performance expectations, including in the event that Cisco fails to enhance, maintain, upgrade or improveits products, hardware or software we purchase from them when and how we need them, we may be delayed or unable to provide servicesas and when requested by our customers. We also may be unable to upgrade our network and face greater difficulty maintaining andexpanding our network.Transitioning from Cisco to another vendor would be disruptive because of the time and expense required to learn to install, maintainand operate the new vendor’s equipment and to operate a multi-vendor network. Any such disruption could increase our costs, decreaseour operating efficiencies and have an adverse effect on our business, results of operations and financial condition. Table of ContentsPage 19 of 70Cisco may also be subject to litigation with respect to the technology on which we depend, including litigation involving claims ofpatent infringement. Such claims have been growing rapidly in the communications industry. Regardless of the merit of these claims, theycan result in the diversion of technical and management personnel, or require us to obtain non-infringing technology or enter into licenseagreements for the technology on which we depend. There can be no assurance that such non-infringing technology or licenses will beavailable on acceptable terms and conditions, if at all.International Operations RisksOur international operations expose us to numerous risks.We have expanded our network into 50 countries worldwide on every continent other than Antarctica. We continue to exploreexpansion opportunities. We have experienced difficulties, ranging from lack of dark fiber, to regulatory issues, to slower revenue growthrates from our operations in these markets. If we are not successful in developing our market presence in these regions, our operatingresults and revenue growth could be adversely impacted.Our international operations involve a number of risks, including:●fluctuations in currency exchange rates, particularly those involving the Euro as we are required to fund certain of our cash flowrequirements of our operations outside of the United States and our €350.0 million senior unsecured notes in Euros;●exposure to additional regulatory and legal requirements, including import restrictions and controls, exchange controls, tariffs andother trade barriers and privacy and data protection regulations;●compliance with laws regarding corruption and bribery, including the United States Foreign Corrupt Practices Act;●difficulties in staffing and managing our foreign operations;●changes in political and economic conditions, and●exposure to additional and potentially adverse tax regimes.As we continue to expand into other countries, our success will depend, in part, on our ability to anticipate and effectively managethese and other risks. Our failure to manage these risks and grow our operations outside the United States may have a material adverseeffect on our business and results of operations.Litigation RisksAs an Internet service provider, we may incur liabilities for the content disseminated through our network or for network failures,delays or errors in transmissionsThe law relating to the liabilities of ISPs for information carried on or disseminated through their networks is unsettled. As the law inthis area develops and as we expand our international operations, the potential imposition of liabilities upon us for the behavior of ourcustomers or the information carried on and disseminated through our network could require us to implement measures to reduce ourexposure to such liabilities, which may require the expenditure of substantial resources or the discontinuation of certain products or serviceofferings. Any costs that are incurred as a result of such measures or the imposition of liabilities could have a material adverse effect onour business.Regulatory RisksExisting and proposed privacy regulations may impact our businessMany countries, including the United States, are considering adopting, or have already adopted, privacy regulations or laws thatwould govern the way an Internet user’s data is used. The primary impact of these rules are on businesses that collect personal informationabout consumer users of their services. We do not provide services to individual consumers and do not collect such personal information.However, we transmit data across the Internet, which data may include personal information collected by our customers. As theapplicability of privacy regulations to the types of services we provide remains unsettled, we may be required to adopt additional measuresin the future.Privacy regulations, such as the General Data Protection Regulation (“GDPR”) in the European Union and the California ConsumerPrivacy Act (“CCPA”) in California vary in scope and in the obligations they impose on us. As new laws are implemented or existingstructures are declared insufficient, such as the Privacy Shield program in place between the US and EU, we may find it difficult tocomply with such regulations or find it costly to do so. Moreover, for our customers who collect personal information, increased regulationof the collection, processing and use of personal data may impact their business and their use of services in unknown ways. Table of ContentsPage 20 of 70Changes in laws, rules, and enforcement could adversely affect us.We are not subject to substantial regulation by the FCC or the state public utilities commissions in the United States. Internet serviceis also subject to minimal regulation in Western Europe and in Canada. Elsewhere the regulation is greater, though not as extensive as theregulation for providers of voice services. However, governmental authorities may decide to impose additional regulation and taxes uponproviders of Internet access and private network services. All of these matters could inhibit our ability to remain a low-cost carrier andcould have a material adverse effect on our business, financial condition and our results of operations.As with the privacy laws described earlier, much of the laws related to the liability of Internet service providers for content on thenetwork and the behavior of our customers and their end users remains unsettled. Some jurisdictions have laws, regulations, or courtdecisions that impose obligations upon ISPs to restrict access to certain content. Other legal issues, such as the sharing of copyrightedinformation, data protection, trans-border data flow, unsolicited commercial email (“spam”), universal service, and liability for softwareviruses could become subjects of additional legislation and legal development and changes in enforcement policies. We cannot predict theimpact of these changes on us. They could have a material adverse effect on our business, financial condition and our results of operations.Changes in laws, rules and enforcement may also adversely affect our customers. For example, a possible repeal or curtailing ofSection 230 of the Communications Decency Act in the United States could have an adverse impact on our customers and, consequently,on us. While our top 25 customers represented less than 6.0% of our revenue for the year ended December 31, 2021, several large net-centric customers are or may be the subject of increased regulatory scrutiny, which may impact their businesses and, consequently, theiruse of our services in unknown ways.We may be required to censor content on the Internet, which we may find difficult to do and which may impact our ability to provideour services in some countries as well as impact the growth of Internet usage, upon which we depend.Some governments attempt to limit access to certain content on the Internet. It is impossible for us to filter all content that flowsacross the Internet connections we provide. For example, some content is encrypted when a secure website is accessed. It is difficult tolimit access to websites by blocking a fixed set of Internet addresses when the website operators engage in practices that make it difficultto block them. Should any government require us to perform these types of blocking procedures we could experience difficulties rangingfrom incurring additional expenses to ceasing to provide service in that country. We could also be subject to penalties if we fail toimplement the censorship.Tax RisksGovernments may assert that we are liable for taxes which we have not collected from our customers or paid to our vendors and wemay have to begin collecting a multitude of taxes if Internet services become subject to taxation similar to the taxation of telephoneservice.In the United States Internet services are generally not subject to taxes. Consequently, in the United States we collect few taxes fromour customers even though most telecommunications services are subject to numerous taxes. Various local jurisdictions have asserted ormay assert that some of our operations or services should be subject to local taxes. If such jurisdictions assess taxes on prior years we maybe subject to a liability for unpaid taxes that we may be unable to collect from our customers or former customers. If the taxation ofInternet service is expanded we will need to collect those taxes from our customers. The process of implementing a system to properly billand collect such taxes may require significant resources. In addition, the FCC is considering changes to its Universal Services Fund thatcould result in its application to Internet services. This too would require that we expend resources to collect this tax. Finally, thecumulative effect of these taxes levied on Internet services could discourage potential customers from using Internet services to replacetraditional telecommunication services and negatively impact our ability to grow our business.Our private network services, such as our VPN services, are subject to taxes and fees in various jurisdictions including the UniversalService Contribution tax in the US. We believe we collect all required taxes, however, a jurisdiction may assert we have failed to collectcertain taxes. The expense of paying any unpaid taxes could be substantial and we might not be able to collect such back taxes from ourcustomers.We are subject to value-added taxes and other taxes in many jurisdictions outside of the United States. We are also subject to audit ofour tax compliance in numerous jurisdictions. These may result in the assessment of amounts due that are material and therefore wouldhave an adverse effect on us. Table of ContentsPage 21 of 70The utilization of certain of our net operating loss carryforwards is limited and depending upon the amount of our taxable income wemay be subject to paying income taxes earlier than planned.Section 382 of the Internal Revenue Code in the United States limits the utilization of net operating losses when ownership changes,as defined by that section, occur. We have performed an analysis of our Section 382 ownership changes and have determined that theutilization of certain of our net operating loss carryforwards in the United States is limited. Further, recent changes to the tax law in theUnited States and changes to tax laws in other jurisdictions in which we operate may impact our utilization of our net operating losses.Risk Factors Related to Our IndebtednessWe have substantial debt which we may not be able to repay when due.Our total indebtedness, at par, at December 31, 2021 was $1.1 billion and includes $500.0 million of our 3.50% senior secured notesand €350.0 million of our 4.375% senior unsecured notes. Our $500.0 million senior secured notes are due in May 2026 and requireannual interest payments of $17.5 million per year - paid semi-annually. Our €350.0 million of senior unsecured notes are due in June2024 and require annual interest payments of €15.3 million per year - paid semi-annually. All of our noteholders have the right to be paidthe principal upon default and upon certain designated events, such as certain changes of control. Our total indebtedness at December 31,2021 included $245.9 million of finance lease obligations for dark fiber primarily under 15 — 20 year IRUs. Our total indebtedness atDecember 31, 2021 excludes $124.0 million of operating lease liabilities which we were required to be recorded as right-to-use assets andoperating lease liabilities in connection with the adoption of ASU No. 2016-02 Leases on January 1, 2019. The amount of our IRU financelease obligations may be impacted due to our expansion activities, the timing of payments and fluctuations in foreign currency rates. Theamount of US dollars required to fund our interest and principal obligations for our Euro-denominated notes may be impacted due tofluctuations in the Euro to US Dollar exchange rate. We may not have sufficient funds to pay the interest and principal related to theseobligations at the time we are obligated to do so, which could result in bankruptcy, or we may only be able to raise the necessary funds onunfavorable terms.Our substantial level of indebtedness could adversely affect our financial condition and prevent us from fulfilling our obligationsunder our notes and our other indebtedness.We have substantial indebtedness. Our substantial debt may have important consequences. For instance, it could:●make it more difficult for us to satisfy our financial obligations, including those relating to our debt;●require us to dedicate a substantial portion of any cash flow from operations to the payment of interest and principal due under ourdebt, which will reduce funds available for other business purposes, including the growth of our operations, capital expenditures,dividends, purchases of our common stock and acquisitions;●place us at a competitive disadvantage compared with some of our competitors that may have less debt and better access to capitalresources; and●limit our ability to obtain additional financing required to fund working capital and capital expenditures, for strategic acquisitionsand for other general corporate purposes.Our ability to satisfy our obligations including our debt depends on our future operating performance and on economic, financial,competitive and other factors, many of which are beyond our control. Our business may not generate sufficient cash flow, and futurefinancings may not be available to provide sufficient net proceeds, to meet these obligations or to successfully execute our businessstrategy. Table of ContentsPage 22 of 70We have assumed the risk associated with variable interest rates under our interest rate swap agreement.Beginning in August 2021 we used a derivative financial instrument to manage our interest rate risk on our 2026 Notes. As ofDecember 31, 2021, we were party to an interest rate swap agreement (the Swap Agreement”) that has the economic effect of modifyingthe fixed-interest rate obligation associated with our 2026 Notes to a variable interest rate obligation based on the Secured OvernightFinancing Rate (“SOFR”). The Swap Agreement is recorded at its fair value at each reporting period and we incur gains and losses due tochanges in market interest rates. We have a $20.0 million interest-bearing deposit with the counterparty to the Swap Agreement. If the fairvalue of the Swap Agreement exceeds a net liability of $20.0 million, we will be required to deposit additional funds with the counterpartyequal to the net liability fair value in excess of $20.0 million. As of December 31, 2021, the fair value of the Swap Agreement was a netliability of $9.0 million and, as a result, $9.0 million of the $20.0 million deposit was restricted and $11.0 million was unrestricted. Thevalues that we report for the Swap Agreement as of each reporting date are recognized as interest expense with the corresponding amountsincluded in assets or liabilities in our consolidated balance sheets. By entering into this Swap Agreement, we have assumed the riskassociated with variable interest rates based upon SOFR relate to our 2026 Notes. We did not elect hedge accounting for our SwapAgreement. We do not use derivative financial instruments for trading purposes.Despite our leverage we may still be able to incur more debt. This could further exacerbate the risks that we and our subsidiaries face.We and our subsidiaries may incur additional indebtedness, including additional secured indebtedness, in the future. The terms of ourdebt indentures restrict, but do not completely prohibit, us from doing so. In addition, the indentures allow us to issue additional notes andother indebtedness secured by the collateral under certain circumstances. Moreover, we are not prevented from incurring other liabilitiesthat do not constitute indebtedness as defined in the indentures, including additional operating leases obligations and finance leaseobligations in the form of IRUs. These liabilities may represent claims that are effectively prior to the claims of our note holders. If newdebt or other liabilities are added to our debt levels the related risks that we and our subsidiaries now face could intensify.The agreements governing our various debt obligations impose restrictions on our business and could adversely affect our ability toundertake certain corporate actions.The agreements governing our various debt obligations include covenants imposing significant restrictions on our business. Theserestrictions may affect our ability to operate our business and may limit our ability to take advantage of potential business opportunities asthey arise. These covenants place restrictions on our ability to, among other things:●incur additional debt;●create liens;●make certain investments;●enter into certain transactions with affiliates;●declare or pay dividends, redeem stock or make other distributions to stockholders; and●consolidate, merge or transfer or sell all or substantially all of our assets.Our ability to comply with these agreements may be affected by events beyond our control, including prevailing economic, financialand industry conditions. These covenants could have an adverse effect on our business by limiting our ability to take advantage offinancing, merger and acquisition or other corporate opportunities. The breach of any of these covenants or restrictions could result in adefault under the agreements governing our debt obligations.To service our indebtedness, we will require a significant amount of cash. However, our ability to generate cash depends on manyfactors many of which are beyond our control.Our ability to make payments on and to refinance our indebtedness and to fund planned capital expenditures will depend on ourability to generate cash in the future, which, in turn, is subject to general economic, financial, competitive, regulatory and other factors,many of which are beyond our control. Table of ContentsPage 23 of 70Our business may not generate sufficient cash flow from operations and we may not have available to us future borrowings in anamount sufficient to enable us to pay our indebtedness or to fund our other liquidity needs. In these circumstances, we may need torefinance all or a portion of our indebtedness on or before maturity. We may not be able to refinance any of our indebtedness oncommercially reasonable terms or at all. Without this financing, we could be forced to sell assets or secure additional financing to make upfor any shortfall in our payment obligations under unfavorable circumstances. However, we may not be able to secure additional financingon terms favorable to us or at all and, in addition, the terms of the indentures governing our notes limit our ability to sell assets and alsorestrict the use of proceeds from such a sale. We may not be able to sell assets quickly enough or for sufficient amounts to enable us tomeet our obligations, including our obligations under our notes.ITEM 1B. UNRESOLVED STAFF COMMENTSNone.ITEM 2. PROPERTIESWe lease space for offices, data centers, colocation facilities, and points-of-presence.Our headquarters facility consists of 43,117 square feet located in Washington, D.C. The lease for our headquarters is with an entitycontrolled by our Chief Executive Officer and expires in May 2025. The lease may be cancelled by us upon 60 days’ notice.We lease a total of approximately 748,000 square feet of space for our data centers, offices and operations centers. We believe thatthese facilities are generally in good condition and suitable for our operations.ITEM 3. LEGAL PROCEEDINGSWe are involved in legal proceedings in the ordinary course of our business that we do not expect to have a material adverse effect onour business, financial condition or results of operations. For a discussion of the significant proceedings in which we are involved, seeNote 6 to our consolidated financial statements.ITEM 4. MINE SAFETY DISCLOSURESNot applicable. Table of ContentsPage 24 of 70PART IIITEM 5.MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUERPURCHASES OF EQUITY SECURITIESOur sole class of common equity is our common stock, par value $0.001, which is currently traded on the NASDAQ Global SelectMarket under the symbol “CCOI.” Prior to March 6, 2006, our common stock traded on the American Stock Exchange under the symbol“COI.” Prior to February 5, 2002, no established public trading market for our common stock existed.As of February 1, 2022, there were 128 holders of record of shares of our common stock holding 46,595,035 shares of our commonstock.Performance GraphOur common stock currently trades on the NASDAQ Global Select Market. The chart below compares the relative changes in thecumulative total return of our common stock for the period from December 31, 2016 to December 31, 2021, against the cumulative totalreturn for the same period of the (1) The Standard & Poor’s 500 (S&P 500) Index and (2) the NASDAQ Telecommunications Index. Thecomparison below assumes $100 was invested on December 31, 2016 in our common stock, the S&P 500 Index and the NASDAQTelecommunications Index, with dividends, if any, reinvested. 12/16 12/17 12/18 12/19 12/20 12/21Cogent Communications Holdings $ 100.00 $ 114.31 $ 119.11 $ 180.92 $ 171.38$ 218.88S&P 500 100.00 121.83 116.49 153.17 181.35 233.41NASDAQ Telecommunications 100.00 117.62 108.29 137.49 166.70 174.78The stock price performance included in this graph is not necessarily indicative of future stock price performance.Issuer Purchases of Equity SecuritiesOur Board of Directors authorized a plan to permit the repurchase of up to $50.0 million of our common stock in negotiated and openmarket transactions through December 31, 2022. As of December 31, 2021, $30.4 million remained available for such negotiated and openmarket transactions concerning our common stock. We may purchase shares from time to time depending on market, economic, and otherfactors. We did not purchase shares of our common stock during the fourth quarter of 2021. Table of ContentsPage 25 of 70ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OFOPERATIONSYou should read the following discussion and analysis together with our consolidated financial statements and related notes includedin this report. The discussion in this report contains forward-looking statements that involve risks and uncertainties, such as statements ofour plans, objectives, expectations and intentions. The cautionary statements made in this report should be read as applying to all relatedforward-looking statements wherever they appear in this report. Factors that could cause or contribute to these differences include thosediscussed in “Item 1A. Risk Factors,” as well as those discussed elsewhere. You should read “Item 1A. Risk Factors” and “Special NoteRegarding Forward-Looking Statements.” Our actual results could differ materially from those discussed here. Factors that could causeor contribute to these differences include, but are not limited to:The COVID-19 pandemic and accompanying government policies worldwide; vaccination and in-office requirements, delays in thedelivery of network equipment and optical fiber, future economic instability in the global economy, which could affect spending on Internetservices; the impact of changing foreign exchange rates (in particular the Euro to US dollar and Canadian dollar to US dollar exchangerates) on the translation of our non-US dollar denominated revenues, expenses, assets and liabilities into US dollars; legal andoperational difficulties in new markets; the imposition of a requirement that we contribute to the US Universal Service Fund on the basisof our Internet revenue; changes in government policy and/or regulation, including rules regarding data protection, cyber security and netneutrality; increasing competition leading to lower prices for our services; our ability to attract new customers and to increase andmaintain the volume of traffic on our network; the ability to maintain our Internet peering arrangements on favorable terms; our ability torenew our long-term leases of optical fiber that comprise our network; our reliance on an equipment vendor, Cisco Systems Inc., and thepotential for hardware or software problems associated with such equipment; the dependence of our network on the quality anddependability of third-party fiber providers; our ability to retain certain customers that comprise a significant portion of our revenue base;the management of network failures and/or disruptions; our ability to make payments on our indebtedness as they become due andoutcomes in litigation, risks associated with variable interest rates under our interest rate Swap Agreement as well as other risks discussedfrom time to time in our filings with the Securities and Exchange Commission, including, without limitation, this Annual Report on Form10-K and our Quarterly Reports on Form 10-Q.Results of OperationsYear Ended December 31, 2021 Compared to the Year Ended December 31, 2020In this section, we discuss the results of our operations for the year ended December 31, 2021 compared to the year ended December31, 2020. For a discussion of the year ended December 31, 2020 compared to the year ended December 31, 2019, please refer to Part II,Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-Kfor the year ended December 31, 2020.Our management reviews and analyzes several key financial measures in order to manage our business and assess the quality andvariability of our service revenue, operating results and cash flows. The following summary tables present a comparison of our results ofoperations with respect to certain key financial measures. The comparisons illustrated in the tables are discussed in greater detail below.Year Ended December 31, Percent 2021 2020 Change (in thousands)Service revenue$ 589,797$ 568,103 3.8%On-net revenues 442,838 419,454 5.6%Off-net revenues 146,383 148,128 (1.2)%Network operations expenses (1) 226,337 219,157 3.3%Selling, general, and administrative expenses (2) 162,380 158,476 2.5%Depreciation and amortization expenses 89,240 83,477 6.9%Gain (loss) on lease terminations 7,375 (423)NMRealized gain on foreign exchange – 2024 Notes — 2,533NMUnrealized gain (loss) on foreign exchange - 2024 Notes 32,522 (36,997) NMLoss on debt extinguishment and redemption – 2021 Notes — (638)NMLoss on debt extinguishment and redemption – 2022 Notes (14,698) —NMInterest expense 67,074 62,486 7.3%Income tax expense 23,235 4,096 467.3%(1)Includes non-cash equity-based compensation expense of $2,521 and $1,219 for 2021 and 2020, respectively.(2)Includes non-cash equity-based compensation expense of $24,301 and $22,306 for 2021 and 2020, respectively. Table of ContentsPage 26 of 70NM - not meaningfulYear Ended December 31, Percent 2021 2020 Change Other Operating Data Average Revenue Per Unit (ARPU) ARPU—on-net$ 467$ 460 1.5%ARPU—off-net$ 990$ 1,045 (5.2)%Average price per megabit$ 0.35$ 0.46 (24.2)%Customer Connections—end of period On-net 80,723 77,305 4.4%Off-net 12,669 11,970 5.8%Service Revenue. We continually work to grow our total service revenue by increasing the number of potential customers that we canreach on our network. We do this by investing capital to expand the geographic footprint of our network, by increasing the number ofbuildings that we are connected to, including carrier neutral data centers and multi-tenant office buildings, and by increasing ourpenetration rate into our existing buildings. These efforts broaden the global reach of our network and increase the size of our potentialaddressable market. We also seek to grow our service revenue by investing in our sales and marketing team. We typically sell corporateconnections at similar pricing to our competitors, but our clients benefit from our significantly faster speeds, enhanced service levelagreements and rapid installation times. In the net-centric market, we offer comparable services in terms of capacity but typically atsignificantly lower prices.Our service revenue increased by 3.8% from 2020 to 2021. Exchange rates positively impacted our increase in service revenue by$5.3 million. All foreign currency comparisons herein reflect results for 2021 translated at the average foreign currency exchange rates for2020. We increased our total service revenue by expanding our network, by adding additional buildings to our network, by increasing ourpenetration into the buildings connected to our network and by gaining market share by offering our services at lower prices than ourcompetitors.Revenue recognition standards include guidance relating to any tax assessed by a governmental authority that is directly imposed on arevenue-producing transaction between a seller and a customer and may include, but is not limited to, gross receipts taxes, UniversalService Fund fees and certain state regulatory fees. We record these taxes billed to our customers on a gross basis (as service revenue andnetwork operations expense) in our consolidated statements of operations. The impact of these taxes including the Universal Service Fundresulted in an increase to our revenues from 2020 to 2021 of $3.4 million.Our corporate customers generally purchase their services on a price per connection basis. Our net-centric customers generallypurchase their services on a price per megabit basis. Revenues from our corporate and net-centric customers represented 60.8% and 39.2%of total service revenue, respectively, for 2021 and represented 67.5% and 32.5% of total service revenue, respectively, for 2020. Revenuesfrom corporate customers decreased by 6.5% to $358.4 million for 2021 from 2020. Revenues from our net-centric customers increased by25.3% to $231.4 million for 2021 from 2020.Our corporate customers take advantage of our superior speeds, service levels and installation times versus our competitors. Thegrowing trend of customers installing second lines for redundancy in order to construct VPNs has also led to our ability to increase ourcorporate revenues. However, beginning in the second quarter of 2020, we saw corporate customers take a more cautious approach to newconfigurations and upgrades as well as a reduction in demand for connecting smaller satellite offices as a result of the challenges anduncertainties of the COVID-19 pandemic. We also witnessed a deteriorating real estate market in and around the buildings we service,with rising vacancy levels and falling lease initiations or renewals resulting in fewer sales opportunities for our salesforce. As a result, wehave experienced a slowdown in new sales to our corporate customers which negatively impacted our corporate revenue results. While webelieve that demand for office space in the buildings in which we operate will remain among the strongest in our markets, we mayexperience increased corporate customer turnover, fewer upgrades of existing corporate customer configurations and fewer new tenantopportunities which would negatively impact our corporate revenue growth.Our revenue from our net-centric customers increased primarily due to an increase in our number of net-centric customers and growthin network traffic from these customers partly offset by a decline in our average price per megabit. Our net-centric customers purchase ourservices on a price per megabit basis. The net-centric market exhibits significant pricing pressure due to the continued introduction of newtechnology which lowers the marginal cost of transmission and routing, and the commodity nature of the service where price is typicallythe only differentiating factor for these customers. Our average price per megabit of our installed base of customers declined by 24.2%from 2020 to 2021. We expect that our average price per megabit will continue to decline at similar rates. The impact of foreign exchangerates has a more significant impact on our net-centric revenues. Table of ContentsPage 27 of 70Our on-net revenues increased by 5.6% from 2020 to 2021. Our on-net revenues increased as we increased the number of our on-netcustomer connections by 4.4% at December 31, 2021 from December 31, 2020. On-net revenues increased at a greater rate than on-netcustomer connections primarily due to an increase in our on-net ARPU from 2020 to 2021 and the positive impact of foreign exchange.ARPU is determined by dividing revenue for the period by the average customer connections for that period.Our off-net revenues decreased by 1.2% from 2020 to 2021. Our off-net revenues decreased primarily from the 5.2% decrease in ouroff-net ARPU from 2020 to 2021 offsetting the 5.8% increase in the number of our off-net customer connections from December 31, 2020to December 31, 2021.Network Operations Expenses. Network operations expenses include the costs of personnel associated with service delivery, networkmanagement and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, access andfacilities fees paid to building owners and excise taxes billed to our customers and recorded on a gross basis. Non-cash equity-basedcompensation expense is included in network operations expenses consistent with the classification of the employee’s salary and othercompensation. Our network operations expenses, including non-cash equity-based compensation expense, increased by 3.3% for 2021from 2020. The increase in network operations expense is primarily attributable to an increase in costs related to our network and facilitiesexpansion activities and an increase in equity-based compensation expense from the vesting of restricted employee shares, partly offset byprice reductions obtained in certain of our leased circuit costs and the impact of a renewal of an IRU fiber lease agreement in the secondquarter of 2020. When we adopted ASU 2016-02, we elected to apply certain practical expedients under ASU 2016-02 including notseparating the lease and non-lease components of our finance and operating leases. As a result of accounting for this IRU renewal underASU 2016-02, the present value of $1.8 million of quarterly maintenance and co-location fees (non-lease components) that werepreviously accounted for as network operations expenses prior to the second quarter of 2020, were capitalized as a finance lease liabilityand right-of-use leased asset totaling $34.0 million. Amortization of the right-of-use asset is recorded as depreciation and amortizationexpense and the payments that are made toward the finance lease liability are recorded as a reduction of the finance lease liability andinterest expense.Selling, General, and Administrative (“SG&A”) Expenses. Our SG&A expenses, including non-cash equity-based compensationexpense, increased by 2.5% for 2021 from 2020. Non-cash equity-based compensation expense is included in SG&A expenses consistentwith the classification of the employee’s salary and other compensation. SG&A expenses increased primarily from an increase in salariesand related costs required to support our expansion and increases in our sales efforts, partly offset by a reduction in sales meeting andtravel costs related to the COVID-19 pandemic and a reduction in bad debt expense. Our sales force headcount was 712 at December 31,2020 and 633 at December 31, 2021, and our total headcount was 1,083 at December 31, 2020 and 1,001 at December 31, 2021. Weexperienced an increase in both voluntary and involuntary employee departures, particularly within our sales department, in the third andfourth quarters of 2021. We believe that this rise in departures was attributable both to an increased focus on monitoring sales productivityand to the unwillingness of some employees to be vaccinated and/or to return to a full-time, in-office environment.Depreciation and Amortization Expenses. Our depreciation and amortization expense increased by 6.9% for 2021 from 2020. Theincrease is primarily due to the depreciation expense associated with the increase in deployed fixed assets and the impact of a renewal ofan IRU fiber lease agreement in the second quarter of 2020. As a result of accounting for this IRU renewal under ASU 2016-02, thepresent value of $1.8 million of quarterly maintenance and co-location fees (non-lease components) that were previously accounted for asnetwork operations expenses prior to the second quarter of 2020, were capitalized as a finance lease liability and right-of-use leased assettotaling $34.0 million. Amortization of the right-of-use asset is recorded as depreciation and amortization expense and the payments thatare made toward the finance lease liability are recorded as a reduction of the finance lease liability and interest expense.Interest Expense and Losses on Debt Extinguishment and Redemptions. Our interest expense resulted from interest incurred on our$445.0 million of our 2022 Notes until these notes were fully extinguished in May 2021, interest incurred on our €350.0 million of 2024Notes, interest incurred on our $500.0 million of 2026 Notes that we issued in May 2021, interest incurred on our installment paymentagreement and interest incurred on our finance lease obligations. We issued €215.0 million of our 2024 Notes in June 2020 and €135.0million of our 2024 Notes were issued in June 2019. In June 2020, we redeemed and extinguished our $189.2 million of 2021 Notes at parvalue resulting in a loss on debt extinguishment and redemption of $0.6 million for the year ended December 31, 2020. In March 2021, weredeemed and extinguished $115.9 million of our 2022 Notes at 103.24% of par value resulting in a loss on debt extinguishment andredemption of $3.9 million and reduced the par value from $445.0 million to $329.1 million. In May 2021, we extinguished the remaining$329.1 million of our 2022 Notes at par value and deposited funds with the trustee to pay $11.5 million of interest through December 1,2021 resulting in a loss on debt extinguishment and redemption of $10.8 million for the year ended December 31, 2021. Table of ContentsPage 28 of 70In August 2021 we entered into our Swap Agreement that has the economic effect of modifying the fixed interest rate obligationassociated with our 2026 Notes to a variable interest rate obligation based on SOFR so that the interest payable on the 2026 Noteseffectively became variable based on overnight SOFR. The Swap Agreement is recorded at its fair value at each reporting period, and weincurs gains and losses due to changes in market interest rates. The values that we report for the Swap Agreement as of each reporting dateare recognized as non-cash interest expense with the corresponding amounts included in assets or liabilities in our consolidated balancesheets. As of December 31, 2021 the fair value of our Swap Agreement was a net liability of $9.0 million and we recorded an unrealizedloss as interest expense related to our Swap Agreement of $9.0 million in 2021. We did not elect hedge accounting for our SwapAgreement. Our interest expense increased by 7.3% from 2020 to 2021. This increase was primarily due to the reduction in interestexpense from the lower interest rate on our new 2026 Notes as compared to our extinguished 2022 Notes being offset by the additional$9.0 million of additional non-cash interest expense we recorded related to our Swap Agreement.Realized Gain and Unrealized Gain (Loss) on Foreign Exchange – 2024 Notes. In June 2020, our €215.0 million of 2024 Notes wereissued at a Euro to USD rate of $1.112. We received proceeds in USD on the 2024 Notes on June 9, 2020 at a Euro to USD rate of $1.133resulting in a realized gain on foreign exchange of $2.5 million. Our 2024 Notes were issued in Euros and are reported in our reportingcurrency – US Dollars. As of December 31, 2021, our 2024 Notes were valued at $397.0 million. Our unrealized gain (loss) on foreignexchange on our 2024 Notes from converting our 2024 Notes into USD was $32.5 million for 2021 and $(37.0) million for 2020. We havenot entered into hedging arrangements for our foreign currency obligations.Income Tax Expense. Our income tax expense was $23.2 million for 2021 and $4.1 million for 2020. The increase in our income taxexpense is primarily related to an increase in certain non-deductible expenses and the increase in our income before income taxes.Buildings On-net. As of December 31, 2021 and 2020, we had a total of 3,035 and 2,914 on-net buildings connected to our network,respectively. The increase in our on-net buildings was a result of our disciplined network expansion program. We anticipate adding asimilar number of buildings to our network for the next several years.Liquidity and Capital ResourcesIn assessing our liquidity, management reviews and analyzes our current cash balances, accounts receivable, accounts payable,accrued liabilities, capital expenditure commitments, and required finance lease and debt payments and other obligations. As our businesshas grown as a result of an increasing customer base, broader geographic coverage and increased traffic on our network, we have produceda growing level of operating cash flow. As a result of the operating leverage of our network, our annual capital expenditures as measuredas a percentage of revenues has fallen over the last decade. Increasing our operating cash flow is in part dependent upon expanding ourgeographic footprint and increasing our network capacity. Recent supply chain issues may adversely impact our ability to grow ournetwork and revenue.We have also had increasing success in raising capital by issuing notes and arranging financing and leases that have had a lower costand more flexible terms. The combination of this improved operating performance and access to capital has enhanced our financialflexibility and increased our ability to make distributions to shareholders in the form of cash dividends or through share repurchases. Sinceour initial public offering, we have returned over $1.0 billion to our shareholders through share repurchases and dividends. We willcontinue to assess our capital and liquidity needs and, where appropriate, return capital to shareholders.Over the next several years we have significant contractual and anticipated cash outlays including our indicative dividend paymentson our common stock, our maturing debt obligations, interest payments on our debt obligations and our projected capital expenditurerequirements in order to help execute our business plan. Based upon our historical growth rate of our dividend, we expect that we wouldhave to provide approximately $353 million in order to meet our quarterly dividend payments over the next two years. Our $500.0 millionof Senior Secured Notes mature in May 2026 and include annual interest payments of $17.5 million until maturity. Our €350 million ofSenior Unsecured Euro Notes mature in June 2024 and include annual interest payments €15.3 million until maturity. Our €350 million ofSenior Unsecured Euro Notes are denominated in Euros and expose us to potentially unfavorable adverse movements in foreign currencyrate changes. Our overseas operations provides us access to Euros, however these amounts may be insufficient to fund our obligationsunder our Senior Unsecured Euro Notes. Additionally, we have not entered into foreign currency hedging arrangements which would seekto reduce our risks related to foreign exchange volatility.Any future acquisitions or other significant unplanned costs or cash requirements in excess of amounts we currently hold may requirethat we raise additional funds through the issuance of debt or equity. We cannot assure you that such financing will be available on termsacceptable to us or our stockholders, or at all. Insufficient funds may require us to delay or scale back the number of buildings and marketsthat we add to our network, reduce our planned increase in our sales and marketing efforts, or require us to otherwise alter our businessplan or take other actions that could have a material adverse effect on our business, results of operations and financial condition. If issuingequity securities raises additional funds, substantial dilution to existing stockholders may result. Table of ContentsPage 29 of 70We may need to or elect to refinance all or a portion of our indebtedness at or before maturity and we cannot provide assurances thatwe will be able to refinance any such indebtedness on commercially reasonable terms or at all. In addition, we may elect to secureadditional capital in the future, at acceptable terms, to improve our liquidity or fund acquisitions or for general corporate purposes. Inaddition, in an effort to reduce future cash interest payments as well as future amounts due at maturity or to extend debt maturities, wemay, from time to time, issue new debt, enter into interest rate swap agreements, enter into debt for debt, or cash transactions to purchaseour outstanding debt securities in the open market or through privately negotiated transactions. We will evaluate any such transactions inlight of the existing market conditions. The amounts involved in any such transaction, individually or in the aggregate, may be material.We or our affiliates may, at any time and from time to time, seek to retire or purchase our outstanding debt through cash purchasesand/or exchanges for equity or debt, in open-market purchases, privately negotiated transactions or otherwise. Such repurchases orexchanges, if any, will be upon such terms and at such prices as we may determine, and will depend on prevailing market conditions, ourliquidity requirements, contractual restrictions and other factors. The amounts involved may be material.In light of the economic uncertainties associated with the COVID-19 pandemic, our executive officers and Board have continued tocarefully monitor our liquidity and cash requirements. Based on current circumstances, we plan to continue our current dividend policy.Given uncertainties regarding the duration of the pandemic and timing for economic recovery, we will continue to monitor our capitalspending. As we do each year, we will continue to monitor our future sources and uses of cash, and anticipate that we will makeadjustments to our capital allocation strategies when, as and if determined by our Board of Directors.Impact of COVID-19 on Our Liquidity and Operating PerformanceWe continue to operate with a high level of liquidity, and as of December 31, 2021, we had cash, cash equivalents and restricted cashof $328.6 million. The COVID-19 pandemic has not impacted our credit rating to date, nor do we believe that it has materially changedour cost of capital. We believe we are able to timely service our debt obligations and will not require any concessions to do so. We believewe will have access to additional capital from a variety of sources and the public capital markets for debt and equity.In late March 2020, we adopted a mandatory policy through which we required all employees to work from home and follow shelterin place guidelines issued by state and local authorities. In July 2021, we allowed all employees to return voluntarily to all offices in theUnited States. In August 2021, we notified our employees that they would be required to return to the office on a full time basis in theUnited States beginning in September 2021 and that they would be required to attest that they were fully vaccinated against the COVID-19virus to do so. Employees had until October 11, 2021 to provide their vaccine self-attestation. Fully vaccinated employees in the UnitedStates returned to our offices on a full-time basis in early September 2021. In October 2021, we opened most of our non-US offices foremployees to return on a voluntary basis and, where permitted, on a mandatory basis in November 2021.The spread of the Omicron variant around the world in December 2021 caused us to modify further our office environment. First, wemandated that all U.S. employees receive a COVID-19 booster vaccine no later than six weeks after first becoming eligible for suchvaccine. Second, we mandated that all U.S. employees provide proof of vaccination to us. Third, for offices around the world that had notbeen closed by government order, we shifted much of our workforce to fully remote status on a temporary basis at the end of 2021 in orderto reduce the density of our offices. Sales representatives with less than 12 months tenure, sales representative on performanceimprovement plans and their managers are currently still working in our offices on a full-time basis, as we believe that the training andcoaching required by new and underperforming sales representatives is significantly more effective when provided in an in-officeenvironment.Our employees have largely complied with our vaccine mandate in the United States. However, we experienced an increase in bothvoluntary and involuntary employee departures, particularly within our sales department, in the third and fourth quarters of 2021. Webelieve this rise in departures is attributable both to an increased focus on managing underperforming sales representatives and to theunwillingness of some employees to be vaccinated and/or to return to a full time, in office environment. As a result of our decisions tomandate COVID vaccination and to require employees to return to our offices on a full time basis, we may find it difficult to retainexisting employees or hire new employees. If this occurs, we may experience lower sales, revenue and profitability. Table of ContentsPage 30 of 70We have experienced certain corporate customers taking a more cautious approach to new configurations and upgrades as well as areduction in demand for connecting smaller satellite offices as a result of the challenges and uncertainties of the COVID-19 pandemic. Wealso have witnessed a deteriorating real estate market in and around the buildings we service with rising vacancy levels and falling leaseinitiations or renewals which resulted in fewer sales opportunities for our salesforce and a reduction in VPN opportunities. As a result, weexperienced a slowdown in new sales to our corporate customers which negatively impacted our corporate revenue growth. Moreover,with the spread of the Delta variant of COVID-19 in the summer of 2021 and then the Omicron variant in December of 2021, we believemany companies delayed the return of their employees to in-office work. As the pandemic has continued, and the return of employees totheir offices has been delayed, a greater number of corporate customers with contracts that reached their termination date have elected notto renew their service with us. As such, we began to see increased corporate customer turnover. We also experienced a reduction in newsales to corporate customers. While we believe that demand for office space in the buildings in which we operate will remain among thestrongest in our markets, and that most employers will eventually require their employees to return to their offices, we may experienceincreased customer turnover, fewer upgrades of existing customer configurations and fewer new tenant opportunities. These trends maynegatively impact our revenue growth, cash flows and profitability.We have seen a slight slowdown in the availability and delivery of networking equipment and optical fiber. While we believe we canadequately manage the operation, maintenance, upgrading and growth of our network, a worsening or prolonged slowdown may impactour ability to expand and augment our network.Shortly after COVID-19 began its rapid spread around the world, domestic and worldwide capital markets ceased normal operationsfor a short period. While worldwide capital markets have remained unstable or unpredictable since then, particularly for non-investmentgrade issuers, legislative bodies and reserve banks have taken various actions in response to the pandemic that have impacted the capitalmarkets, and we expect that these efforts may continue. We cannot predict whether new COVID-19 variants will arise and spread widely,the impact of the spread of new COVID-19 variants on the global economy, how national and local governments may react to the spreadof new variants nor predict the impact the variants and any measures taken in response may have on our operations, employee retention,revenue growth, cash flows and our profitability.Cash FlowsThe following table sets forth our consolidated cash flows.Year Ended December 31, 2021 2020 2019(in thousands)Net cash provided by operating activities$ 170,257$ 140,320$ 148,809Net cash used in investing activities (69,916) (55,952) (46,958)Net cash (used in) provided by financing activities (140,825) (116,002) 22,020Effect of exchange rates on cash (2,193) 3,513 (542)Net (decrease) increase in cash, cash equivalents and restricted cashduring the year$ (42,677)$ (28,121)$ 123,329Net Cash Provided By Operating Activities. Our primary source of operating cash is receipts from our customers who are billed on amonthly basis for our services. Our primary uses of operating cash are payments made to our vendors, employees and interest paymentsmade to our finance lease vendors and our note holders. Our changes in cash provided by operating activities are primarily due to changesin our operating profit and changes in our interest payments. Cash provided by operating activities for 2021, 2020 and 2019 includedinterest payments on our note obligations of $50.1 million, $48.8 million and $38.0 million, respectively.Net Cash Used In Investing Activities. Our primary use of investing cash is for purchases of property and equipment. These amountswere $69.9 million, $56.0 million and $47.0 million for 2021, 2020 and 2019, respectively. The annual changes in purchases of propertyand equipment are primarily due to the timing and scope of our network expansion activities including geographic expansion and addingbuildings to our network. In 2020 and 2019 we obtained $5.8 million and $11.3 million, respectively, of network equipment and softwarein non-cash exchanges for notes payable under an installment payment agreement. There was no network equipment and software obtainedunder the installment payment agreement in 2021. Table of ContentsPage 31 of 70Net Cash (Used In) Provided By Financing Activities. Our primary uses of cash for financing activities are for dividend payments,stock purchases and principal payments under our debt and finance lease obligations. During 2021, 2020 and 2019 we paid $150.3 million,$129.4 million and $112.6 million, respectively, for our quarterly dividend payments. Our quarterly dividend payments have increased dueto regular quarterly increases in our quarterly dividend per share amounts. Amounts paid under our stock buyback program were $4.5million for 2020. There were no stock purchases during 2021 or 2019. Principal payments under our finance lease obligations were $23.1million, $24.0 million and $9.1 million for 2021, 2020 and 2019, respectively, and are impacted by the timing and extent of our networkexpansion activities. Total installment payment agreement principal payments were $6.9 million, $10.5 million and $10.0 million for 2021,2020 and 2019, respectively.We completed a series of debt redemptions and issuances in 2021, 2020 and 2019. In March 2021, we paid $119.7 million to redeemand extinguish $115.9 million of our 2022 Notes at 103.24% of par value. In May 2021, we redeemed and extinguished the remaining$329.1 million of our 2022 Notes at par value and deposited funds with the trustee to pay $11.5 million of interest through December 1,2021. The total payments to redeem our 2022 Notes were $459.3 million. In May 2021, we issued $500.0 million of our 2026 Notes fornet proceeds of $496.9 million. In June 2020, we redeemed our $189.2 million of our 2021 Notes at par value and completed an offeringof €215.0 million of our 2024 Notes for net proceeds of $240.3 million. In June 2019 we received net proceeds of $152.1 million from theissuance of €135.0 million of our 2024 Notes.IndebtednessOur total cash, cash equivalents and restricted cash at December 31, 2021 were $328.6 million. We believe this level of liquidityreduces our exposure to refinancing risk, potential underperformance of the business or other unforeseen challenges and enhances ourability to pursue acquisitions or operating opportunities. We intend upon holding levels of cash and cash equivalents sufficient to maintainour ability to fund operations, refinance indebtedness and make dividend payments to our shareholders.Our total indebtedness at December 31, 2021, at par value, was $1.1 billion. Our total indebtedness at December 31, 2021 includes$245.9 million of finance lease obligations for dark fiber under long-term IRU agreements.On May 15, 2014, pursuant to the Agreement and Plan of Reorganization (the “Merger Agreement”) by and among CogentCommunications Group, Inc. (“Group”), a Delaware corporation, Cogent Communications Holdings, Inc., a Delaware corporation(“Holdings”) and Cogent Communications Merger Sub, Inc., a Delaware corporation (“Merger Sub”), Group adopted a new holdingcompany organizational structure whereby Group is now a wholly owned subsidiary of Holdings. Holdings is a “successor issuer” toGroup pursuant to Rule 12g-3(a) under the Exchange Act.Senior secured notes—$500.0 millionIn May 2021, Group issued $500.0 million of 2026 Notes. The 2026 Notes were sold in private offerings for resale to qualifiedinstitutional buyers pursuant to SEC Rule 144A and mature on May 1, 2026. Interest accrues at 3.50% and is paid semi-annually in arrearson May 1 and November 1 of each year. Holdings provided a guarantee of the 2026 Notes but Holdings is not subject to the covenantsunder the indenture.Senior unsecured notes—€350.0 millionIn June 2019, Group completed an offering of €135.0 million of 2024 Notes. In June 2020, Group completed an offering of €215.0million of 2024 Notes. The 2024 Notes were sold in private offerings for resale to qualified institutional buyers pursuant to SEC Rule144A and mature on June 30, 2024. Interest accrues at 4.375% and is paid semi-annually in arrears on June 30 and December 30 of eachyear. Holdings provided a guarantee of the 2024 Notes but Holdings is not subject to the covenants under the indenture. Table of ContentsPage 32 of 70Limitations under the indenturesThe indenture governing the 2024 Notes (the “2024 Notes Indenture”) and the 2026 Notes (the “2026 Notes Indenture”), among otherthings, limit the Company’s ability to incur indebtedness; to pay dividends or make other distributions; to make certain investments andother restricted payments; to create liens; to consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; to incurrestrictions on the ability of a subsidiary to pay dividends or make other payments; and to enter into certain transactions with its affiliates.There are certain exceptions to the limitations on our ability to incur indebtedness under the 2024 Notes Indenture and the 2026 NotesIndenture, including IRU agreements incurred in the normal course of business and any additional indebtedness if (i) under the 2024 NotesIndenture, our consolidated leverage ratio, as defined in 2024 Notes Indenture, is less than 6.0 to 1.0 and (ii) under the 2026 NotesIndenture, either our consolidated leverage ratio, as defined in 2026 Notes Indenture, is less than 6.0 to 1.0 or our fixed charge coverageratio, as defined in the 2026 Notes Indenture, is greater than 2.0 to 1.0. We can also incur unlimited liens (which can be used, together withcapacity under the debt covenant, to incur additional secured indebtedness) if our consolidated secured leverage ratio, as defined in each ofthe 2024 Notes Indenture and the 2026 Notes Indenture, is less than 4.0 to 1.0. The 2024 Notes Indenture permits restricted payments,such as dividends and stock purchases, using accumulated consolidated cash flow, as defined in the 2024 Notes indenture, when ourconsolidated leverage ratio, as defined by the 2024 Notes Indenture, is less than 4.25 to 1.00. Under the 2026 Notes Indenture, suchaccumulated consolidated cash flow, as defined therein, can be used to make such restricted payments if we are able to incur $1 of debt, asdefined (i.e., either its consolidated leverage ratio is less than 6.0 to 1.0 or our fixed charge coverage ratio is greater than 2.0 to 1.0). Ourconsolidated leverage ratio was above 4.25 as of December 31, 2021, and our fixed charge coverage ratio was above 2.0 as of December31, 2021. As of December 31, 2021, a total of $185.5 million was unrestricted and permitted for restricted payments including dividendsand stock purchases.Summarized Financial Information of HoldingsHoldings is a guarantor under the 2024 and 2026 Notes. Under the indentures we are required to disclose financial information ofHoldings including its assets, liabilities and its operating results (“Holdings Financial Information”). The Holdings Financial Informationas of and for the year ended December 31, 2021 is detailed below (in thousands). December 31, 2021(Unaudited)Cash and cash equivalents$ 147,442Accrued interest receivable 2Total assets$ 147,444Investment from subsidiaries$ 410,113Common stock 48Accumulated deficit (262,717)Total equity$ 147,444 Year Ended December 31, 2021(Unaudited)Equity‑based compensation expense$ 30,044Interest income 101Net loss$ (29,943)Common Stock Buyback ProgramOur Board of Directors has approved through December 31, 2022, purchases of our common stock under a buyback program (the“Buyback Program”). We purchased 79,056 shares of our common stock for $4.5 million during the year ended December 31, 2020 at anaverage price per share of $56.85. There were no purchases of common stock during the years ended December 31, 2021 and December31, 2019. As of December 31, 2021 there was a total of $30.4 million available under the Buyback Program.Dividends on Common StockDividends are recorded as a reduction to retained earnings. Dividends on unvested restricted shares of common stock are paid as theawards vest. Our initial quarterly dividend payment was made in the third quarter of 2012. On February 23, 2022, our Board of Directorsapproved the payment of our quarterly dividend of $0.855 per common share. The dividend for the first quarter of 2022 will be paid toholders of record on March 11, 2022. This estimated $39.7 million dividend payment is expected to be made on March 25, 2022. Table of ContentsPage 33 of 70The payment of any future dividends and any other returns of capital, including stock buybacks, will be at the discretion of our Boardof Directors and may be reduced, eliminated or increased and will be dependent upon our financial position, results of operations,available cash, cash flow, capital requirements, limitations under our debt indentures and other factors deemed relevant by the our Boardof Directors. We are a Delaware Corporation and under the General Corporate Law of the State of Delaware distributions may be restrictedincluding a restriction that distributions, including stock purchases and dividends, do not result in an impairment of a corporation’s capital,as defined under Delaware Law. The indentures governing our notes limit our ability to return cash to our stockholders. See Note 4 to ourconsolidated financial statements for additional discussion of limitations on distributions.Future Capital RequirementsWe believe that our cash on hand and cash generated from our operating activities will be adequate to meet our working capital,capital expenditure, debt service, dividend payments and other cash requirements for the next twelve months if we execute our businessplan.Any future acquisitions or other significant unplanned costs or cash requirements in excess of amounts we currently hold may requirethat we raise additional funds through the issuance of debt or equity. We cannot assure you that such financing will be available on termsacceptable to us or our stockholders, or at all. Insufficient funds may require us to delay or scale back the number of buildings and marketsthat we add to our network, reduce our planned increase in our sales and marketing efforts, or require us to otherwise alter our businessplan or take other actions that could have a material adverse effect on our business, results of operations and financial condition. If issuingequity securities raises additional funds, substantial dilution to existing stockholders may result.We may need to or elect to refinance all or a portion of our indebtedness at or before maturity and we cannot provide assurances thatwe will be able to refinance any such indebtedness on commercially reasonable terms or at all. In addition, we may elect to secureadditional capital in the future, at acceptable terms, to improve our liquidity or fund acquisitions or for general corporate purposes. Inaddition, in an effort to reduce future cash interest payments as well as future amounts due at maturity or to extend debt maturities, wemay, from time to time, issue new debt, enter into debt for debt, or cash transactions to purchase our outstanding debt securities in the openmarket or through privately negotiated transactions. We will evaluate any such transactions in light of the existing market conditions. Theamounts involved in any such transaction, individually or in the aggregate, may be material.Off-Balance Sheet ArrangementsWe do not have relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structuredfinance or special purpose entities, which would have been established for the purpose of facilitating off-balance sheet arrangements orother contractually narrow or limited purposes. In addition, we do not engage in trading activities involving non-exchange tradedcontracts. As such, we are not materially exposed to any financing, liquidity, market or credit risk that could arise if we had engaged inthese relationships.Income TaxesSection 382 of the Internal Revenue Code in the United States limits the utilization of net operating losses when ownership changes,as defined by that section, occur. We have performed an analysis of our Section 382 ownership changes and have determined that theutilization of certain of our net operating loss carryforwards in the United States is limited.Critical Accounting Policies and Significant EstimatesOur discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements,which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of thesefinancial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue andexpenses, and the related disclosure of contingent assets and liabilities. We base our estimates on historical experience and on variousother assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgmentsabout the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from theseestimates under different assumptions or conditions.The accounting policies we believe to be most critical to understanding our financial results and condition or that require complex,significant and subjective management judgments are discussed below. Table of ContentsPage 34 of 70Finance Lease ObligationsWe record assets and liabilities under finance leases at the lesser of the present value of the aggregate future minimum lease paymentsor the fair value of the assets under lease. We establish the number of renewal option periods used in determining the lease term, if any,based upon our assessment at the inception of the lease of the number of option periods for which failure to renew the lease imposes apenalty on us in such amount that renewal appears to be reasonably certain. Useful lives are determined based on historical usage withconsideration given to technological changes and trends in the industry that could impact the asset utilization. We estimate the fair value ofleased assets primarily using estimated replacement cost data for similar assets. We determine the incremental borrowing rate for eachlease using our current borrowing rate adjusted for various factors including the level of collateralization and term to align with the term ofthe lease.ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKWe are exposed to certain market risks. These risks, which include interest rate risk and foreign currency exchange risk, arise in thenormal course of business rather than from trading activities.Interest Rate RiskInterest Expense and Restricted CashOur cash flow exposure due to changes in interest rates related to our 2024 Notes is limited as our 2024 Notes have a fixed interestrate. Beginning in August 2021 we used a derivative financial instrument to manage our interest rate risk on our 2026 Notes. As ofDecember 31, 2021, we were counterparty to our Swap Agreement that has the economic effect of modifying our fixed-interest rateobligation associated with our 2026 Notes to a variable interest rate obligation based on SOFR. The Swap Agreement is recorded at its fairvalue at each reporting period and we incur gains and losses due to changes in market interest rates. The values that we report for the SwapAgreement as of each reporting date are recognized as additional non-cash interest expense or a reduction to interest expense with thecorresponding amount included in liabilities or assets, respectively, in our consolidated balance sheets. By entering into this SwapAgreement, we have assumed the risk associated with variable interest rates based upon SOFR related to our 2026 Notes. We have notentered into hedge agreements related to our 2024 Notes and we do not use derivative financial instruments for trading purposes. We havea $20.0 million interest-bearing deposit with the counterparty to the Swap Agreement. If the fair value of the Swap Agreement exceeds anet liability of $20.0 million, we will be required to deposit additional funds with the counterparty equal to the net liability that is in excessof $20.0 million. As of December 31, 2021, the fair value of the Swap Agreement was a net liability of $9.0 million, as a result, $9.0million of the $20.0 million deposit was restricted and $11.0 million was unrestricted. A 1.0% change in interest rates as of December 31,2021 would impact our interest expense related to our Swap Agreement by approximately $20.4 million.Interest IncomeOur interest income is sensitive to changes in the general level of interest rates. However, based upon the nature and current level ofour investments, which consist of cash, cash equivalents and restricted cash, we believe that there is no material interest rate exposurerelated to our investments.Foreign Currency Exchange RiskOur operations outside of the United States and our 2024 Notes expose us to potentially unfavorable adverse movements in foreigncurrency rate changes. We have not entered into forward exchange contracts related to our foreign currency exposure. While we recordfinancial results and assets and liabilities from our international operations in the functional currency, which is generally the localcurrency, these results are reflected in our consolidated financial statements in US dollars. Therefore, our reported results are exposed tofluctuations in the exchange rates between the US dollar and the local currencies, in particular the Euro and the Canadian dollar. Inaddition, we may fund certain cash flow requirements of our international operations including our interest and principal paymentobligations, while due in Euros, on our 2024 notes primarily in US dollars. Accordingly, in the event that the local currencies strengthenversus the US dollar to a greater extent than planned, the revenues, expenses and cash flow requirements associated with our internationaloperations may be significantly higher in US-dollar terms than planned. During the year ended December 31, 2021, our foreign activitiesaccounted for 25.5% of our consolidated revenue. A 1.0% change in foreign exchange rates would impact our consolidated annual revenueby approximately $1.2 million. A 1% change in foreign exchange rates as of December 31, 2021 would impact the reported value of our2024 Notes by approximately $4.0 million. Changes in foreign currency rates could adversely and materially affect our operating resultsand cash flow. Table of ContentsPage 35 of 70ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA PageReport of Independent Registered Public Accounting Firm (PCAOB ID: 42)36Consolidated Balance Sheets as of December 31, 2021 and 202038Consolidated Statements of Comprehensive Income for Each of the Three Years Ended December 31, 202139Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for Each of the Three Years Ended December 31, 202140Consolidated Statements of Cash Flows for Each of the Three Years Ended December 31, 202141Notes to Consolidated Financial Statements42 Table of ContentsPage 36 of 70Report of Ernst & Young LLP, Independent Registered Public Accounting FirmTo the Shareholders and the Board of Directors of Cogent Communications Holdings, Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of Cogent Communications Holdings, Inc. and subsidiaries (theCompany) as of December 31, 2021 and 2020, the related consolidated statements of comprehensive income, shareholders’ equity (deficit)and cash flows for each of the three years in the period ended December 31, 2021, and the related notes and financial statement schedulelisted in the Index at Item 15(a)2 (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidatedfinancial statements present fairly, in all material respects, the financial position of the Company at December 31, 2021 and 2020, and theresults of its operations and its cash flows for each of the three years in the period ended December 31, 2021, in conformity with U.S.generally accepted accounting principles.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)(PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in InternalControl—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework)and our report dated February 25, 2022 expressed an unqualified opinion thereon.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theCompany’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to beindependent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations ofthe Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditto obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Ouraudits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error orfraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding theamounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our auditsprovide a reasonable basis for our opinion Table of ContentsPage 37 of 70Critical Audit MatterThe critical audit matters communicated below are matters arising from the current period audit of the financial statements that werecommunicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to thefinancial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical auditmatters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, bycommunicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosuresto which they relate. Determining the presentation and disclosure requirements for Indefeasible Right of Use Lease Assets andLiabilitiesDescription of theMatterAs described in Notes 1 and 2 to the consolidated financial statements, as of December 31, 2021, the Companyhas $275.4 million and $245.9 million of indefeasible right of use (IRU) finance lease assets, net, and liabilities,respectively, and recorded $50.8 million of IRU finance lease assets and liabilities additions during the yearended December 31, 2021. The Company makes certain judgments and estimates to determine whether a lease isclassified as an operating lease versus a financing lease at the lease commencement date.Auditing the classification of IRU lease agreements involved subjectivity due to the application of judgment inmanagement’s determination of the economic life of the underlying asset (the optical fiber) because there isrelatively limited publicly available information about the optical fiber market on which to base thosejudgements. Changes in this assumption may have a material effect on the presentation and disclosure of theCompany’s leasing activities within the financial statements due to the volume of the IRU lease agreementsexecuted each period.How We Addressedthe Matter in OurAuditWe tested the design and operating effectiveness of the Company’s controls over the process to determine theeconomic life of the underlying asset (the optical fiber) of the IRU leases.To test the classification of IRU lease agreements, our audit procedures included among others, assessing theCompany’s assumptions by evaluating industry practices in estimating the economic life of optical fiber,compared to those assumptions selected by management./s/ Ernst & Young LLPWe have served as the Company’s auditor since 2002Tysons, VAFebruary 25, 2022 Table of ContentsPage 38 of 70COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIESCONSOLIDATED BALANCE SHEETSAS OF DECEMBER 31, 2021 AND 2020(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 2021 2020AssetsCurrent assets:Cash and cash equivalents$319,609$371,301Restricted cash9,015—Accounts receivable, net of allowance for credit losses of $1,510 and $1,921, respectively 41,93844,185Prepaid expenses and other current assets 39,01540,851Total current assets 409,577456,337Property and equipment:Property and equipment 1,619,5151,515,867Accumulated depreciation and amortization (1,161,635)(1,085,532)Total property and equipment, net 457,880430,335Right-of-use leased assets101,68799,666Deposits and other assets 15,41314,139Total assets$984,557$1,000,477Liabilities and stockholders’ equityCurrent liabilities:Accounts payable$11,923$9,775Accrued and other current liabilities 39,05751,029Current maturities, operating lease liabilities12,19711,151Installment payment agreement, current portion, net of discount of $6 and $136, respectively7856,786Finance lease obligations, current maturities 17,04815,702Total current liabilities 81,01094,443Senior secured 2022 notes, net of unamortized debt costs of $1,052 and including premium of$544—444,492Senior unsecured 2024 Euro notes, net of unamortized debt costs of $2,121 and $2,961,respectively and net of discount of $772 and $1,142, respectively394,112425,160Senior unsecured 2026 notes, net of unamortized debt costs of $1,156 and discount of $1,536 497,308—Operating lease liabilities, net of current maturities111,794111,318Finance lease obligations, net of current maturities 228,822203,438Other long-term liabilities 44,60914,792Total liabilities 1,357,6551,293,643Commitments and contingenciesStockholders’ equity:Common stock, $0.001 par value; 75,000,000 shares authorized; 47,674,189 and 47,214,077 sharesissued and outstanding, respectively 4847Additional paid-in capital 547,734515,867Accumulated other comprehensive loss (11,003)(1,306)Accumulated deficit (909,877)(807,774)Total stockholders’ deficit (373,098)(293,166)Total liabilities and stockholders’ equity$984,557$1,000,477The accompanying notes are an integral part of these consolidated balance sheets. Table of ContentsPage 39 of 70COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 2021(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA) 2021 2020 2019Service revenue$589,797$568,103$546,159Operating expenses:Network operations (including $2,521, $1,219 and $994 of equity-based compensationexpense, respectively), exclusive of amounts shown separately 226,337219,157219,801Selling, general, and administrative (including $24,301, $22,306 and $17,466 ofequity-based compensation expense, respectively) 162,380158,476146,913Depreciation and amortization 89,24083,47780,247Total operating expenses 477,957461,110446,961Gains on equipment transactions183521,059Gains (losses) on lease terminations 7,375 (423) —Operating income119,233106,922100,257Interest expense (67,074)(62,486)(57,453)Realized foreign exchange gain on 2024 Euro Notes—2,533—Unrealized foreign exchange gain (loss) on 2024 Euro Notes32,522(36,997)2,271Loss on debt extinguishment and redemption – 2021 Notes—(638)—Loss on debt extinguishment and redemption – 2022 Notes(14,698)——Interest income and other1,4379787,599Income before income taxes 71,42010,31252,674Income tax expense (23,235)(4,096)(15,154)Net income$48,185$6,216$37,520Comprehensive income:Net income$48,185$6,216$37,520Foreign currency translation adjustment (9,697)11,020(1,398)Comprehensive income$38,488$17,236$36,122Basic net income per common share$1.04$0.14$0.82Diluted net income per common share$1.03$0.13$0.81Dividends declared per common share$3.17$2.78$2.44Weighted-average common shares-basic46,419,18045,947,77245,542,315Weighted-average common shares -diluted 46,963,92046,668,19846,080,395The accompanying notes are an integral part of these consolidated statements. Table of ContentsPage 40 of 70COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)FOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 2021(IN THOUSANDS, EXCEPT SHARE AMOUNTS)AccumulatedAdditionalOtherTotalCommon StockPaid-inComprehensiveAccumulatedStockholder’s Shares Amount Capital Income (Loss) Deficit Equity (Deficit)Balance at December 31, 2018 46,336,499$46$471,331$(10,928)$(609,451)$(149,002)Forfeitures of shares granted to employees (12,632) — — — — —Equity-based compensation — — 20,210 — — 20,210Foreign currency translation — — — (1,398) — (1,398)Issuances of common stock 473,550 1 — — — 1Exercises of options 43,017 — 1,637 — — 1,637Dividends paid — — — — (112,647) (112,647)Net income — — — — 37,520 37,520Balance at December 31, 2019 46,840,434$47$493,178$(12,326)$(684,578)$(203,679)Forfeitures of shares granted to employees (53,428)—————Equity-based compensation ——25,802——25,802Foreign currency translation ———11,020—11,020Issuances of common stock 476,030—————Exercises of options 30,097—1,382——1,382Common stock purchases and retirement(79,056)—(4,495)——(4,495)Dividends paid————(129,412)(129,412)Net income ————6,2166,216Balance at December 31, 2020 47,214,077$47$515,867$(1,306)$(807,774)$(293,166)Forfeitures of shares granted to employees (47,436)—————Equity-based compensation ——30,044——30,044Foreign currency translation ———(9,697)—(9,697)Issuances of common stock 471,0801———1Exercises of options 36,468—1,823——1,823Common stock purchases and retirement——————Dividends paid ————(150,288)(150,288)Net income ————48,18548,185Balance at December 31, 202147,674,189$48$547,734$(11,003)$(909,877)$(373,098) Table of ContentsPage 41 of 70COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF CASH FLOWSFOR EACH OF THE THREE YEARS ENDED DECEMBER 31, 2021(IN THOUSANDS) 2021 2020 2019Cash flows from operating activities:Net income$48,185$6,216$37,520Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization 89,24083,47780,247Amortization of debt discount and premium 1,7591,8941,807Equity-based compensation expense (net of amounts capitalized) 26,82223,52518,460Unrealized foreign currency exchange loss (gain) on 2024 Euro Notes(32,522)36,997(2,271)Realized foreign currency exchange gain on 2024 Euro Notes—(2,533)—Loss on extinguishment & redemption of 2022 notes14,698——Loss on extinguishment & redemption of 2021 notes—638—Gain – lease termination(7,375)——Gains—equipment transactions and other, net69(546)(358)Deferred income taxes18,15928212,158Changes in operating assets and liabilities:Accounts receivable 1,385(2,702)1,067Prepaid expenses and other current assets (17)(2,771)(3,730)Deposits and other assets (12)(873)(1,131)Accounts payable, accrued liabilities and other long-term liabilities9,866(3,284)5,040Net cash provided by operating activities 170,257140,320148,809Cash flows from investing activities:Purchases of property and equipment (69,916)(55,952)(46,958)Net cash used in investing activities (69,916)(55,952)(46,958)Cash flows from financing activities:Net proceeds from issuance of 2026 Notes, net of debt costs of $1,317496,933——Net proceeds from issuance of 2024 Euro Notes, net of debt costs of $2,137 and $1,556, respectively—240,285152,134Redemption and extinguishment of 2022 Notes(459,317)——Redemption and extinguishment of 2021 Notes—(189,225)—Dividends paid (150,288)(129,412) (112,647)Principal payments of finance lease obligations(23,054)(23,990)(9,097)Principal payments of installment payment agreement(6,922)(10,547)(10,007)Purchases of common stock—(4,495)—Proceeds from exercises of common stock options1,8231,3821,637Net cash (used in) provided by financing activities (140,825)(116,002)22,020Effect of exchange rate changes on cash (2,193)3,513(542)Net (decrease) increase in cash and cash equivalents & restricted cash (42,677) (28,121)123,329Cash and cash equivalents & restricted cash, beginning of year 371,301399,422276,093Cash and cash equivalents & restricted cash, end of year$328,624$371,301$399,422Supplemental disclosures of cash flow information:Cash paid for interest$59,497$62,917$56,022Cash paid for income taxes4,4523,4463,409Non-cash investing and financing activities:Finance lease obligations incurred50,83171,62214,307PP&E obtained for installment payment agreement—5,77111,255Fair value of equipment acquired in leases—5361,207Non-cash component of network equipment obtained in exchange transactions—320978 Table of ContentsCOGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIESNOTES TO CONSOLIDATED FINANCIAL STATEMENTSPage 42 of 701. Description of the business and summary of significant accounting policies:Reorganization and mergerOn May 15, 2014, pursuant to the Agreement and Plan of Reorganization (the “Merger Agreement”) by and among CogentCommunications Group, Inc. (“Group”), a Delaware corporation, Cogent Communications Holdings, Inc., a Delaware corporation(“Holdings”) and Cogent Communications Merger Sub, Inc., a Delaware corporation, Group adopted a new holding companyorganizational structure whereby Group is now a wholly owned subsidiary of Holdings. Holdings is a “successor issuer” to Grouppursuant to Rule 12g-3(a) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”). References to the “Company”for events that occurred prior to May 15, 2014 refer to Cogent Communications Group, Inc. and its subsidiaries and on and after May 15,2014 the “Company” refers to Cogent Communications Holdings, Inc. and its subsidiaries. Cogent Communications, Inc. is wholly ownedby Group and the vast majority of Cogent’s assets, contractual arrangements, and operations are executed by Cogent Communications, Inc.Description of businessThe Company is a facilities-based provider of low-cost, high-speed Internet access, private network services, and data centercolocation space and power. The Company’s network is specifically designed and optimized to transmit packet switched data. TheCompany delivers its services primarily to small and medium-sized businesses, communications service providers and other bandwidth-intensive organizations in 50 countries across North America, Europe, Asia, South America, Australia and Africa. The Company is aDelaware corporation and is headquartered in Washington, DC.The Company offers on-net Internet access services exclusively through its own facilities, which run from its network to itscustomers’ premises. The Company offers its on-net services to customers located in buildings that are physically connected to itsnetwork. As a result, the Company is not dependent on local telephone companies or cable TV companies to serve its customers for its on-net Internet access and private network services. The Company’s on- net service consists of high-speed Internet access and private networkservices offered at speeds ranging from 100 megabits per second to 400 gigabits per second.The Company provides its on-net Internet access and private network services to its corporate and net-centric customers. TheCompany’s corporate customers are located in multi-tenant office buildings and typically include law firms, financial services firms,advertising and marketing firms, as well as health care providers, educational institutions and other professional services businesses. TheCompany’s net-centric customers include bandwidth-intensive users that leverage its network to either deliver content to end users or toprovide access to residential or commercial internet users. Content delivery customers include over the top (“OTT”) media serviceproviders, content delivery networks, web hosting companies, and commercial content and application software providers. Accesscustomers include access networks comprised of other Internet Service Providers (“ISPs”), telephone companies, mobile phone operatorsand cable television companies that collectively provide internet access to a substantial number of broadband subscribers and mobilephone subscribers across the world. These net-centric customers generally receive the Company’s services in carrier neutral colocationfacilities and in the Company’s own data centers. The Company operates data centers throughout North America and Europe that allow itscustomers to collocate their equipment and access the Company’s network.In addition to providing on-net services, the Company provides Internet access and private network services to customers that are notlocated in buildings directly connected to its network. The Company provides these off-net services primarily to corporate customers usingother carriers’ circuits to provide the “last mile” portion of the link from the customers’ premises to the Company’s network. TheCompany also provides certain non-core services that resulted from acquisitions. The Company continues to support but does not activelysell these non-core services.Principles of consolidationThe consolidated financial statements have been prepared in accordance with United States generally accepted accounting principlesand include the accounts of the Company and all of its wholly-owned and majority-owned subsidiaries. All intercompany balances andtransactions have been eliminated in consolidation. Table of ContentsPage 43 of 70Use of estimatesThe preparation of consolidated financial statements in conformity with United States generally accepted accounting principlesrequires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures ofcontingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expensesduring the reporting period. Actual results may differ from these estimates.Allowance for credit lossesThe Company establishes an allowance for credit losses and other sales credit adjustments related to its trade receivables. Tradereceivables are recorded at the invoiced amount and can bear interest. Allowances for sales credits are established through a reduction ofrevenue, while allowances for credit losses are established through a charge to selling, general, and administrative expenses as bad debtexpense. The Company assesses the adequacy of these reserves by evaluating factors, such as the length of time individual receivables arepast due, historical collection experience, and changes in the credit worthiness of its customers. The Company also assesses the ability ofspecific customers to meet their financial obligations and establishes specific allowances related to these customers. If circumstancesrelating to specific customers change or economic conditions change such that the Company’s past collection experience and assessmentof the economic environment are no longer appropriate, the Company’s estimate of the recoverability of its trade receivables could beimpacted. Accounts receivable balances are written-off against the allowance for credit losses after all means of internal collectionactivities have been exhausted and the potential for recovery is considered remote. The Company uses third-party collection services tocontinue to seek collection for it’s written off accounts receivable.Effective January 1, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2016-13, Financial Instruments - CreditLosses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”) later codified as Accounting StandardsCodification (“ASC”) 326 (“ASC 326”), using the modified retrospective transition approach. This guidance introduces a revised approachto the recognition and measurement of credit losses, emphasizing an updated model based on expected losses rather than incurred losses.As of January 1, 2020, the Company maintained an allowance for credit losses to cover its current expected credit losses on its tradereceivables arising from the failure of customers to make contractual payments. The Company estimates credit losses expected over thelife of its trade receivables based on historical information combined with current conditions that may affect a customer’s ability to payand reasonable and supportable forecasts. While the Company uses various credit quality metrics, it primarily monitors collectability byreviewing the duration of collection pursuits on its delinquent trade receivables. Based on the Company’s experience, the customer’sdelinquency status is the strongest indicator of the credit quality of the underlying trade receivables, which is analyzed monthly. Adoptionof ASU 2016-13 did not have a material impact on the Company’s consolidated financial statements and related disclosures, and nocumulative adjustment was recorded.Current-periodBalance atProvision forWrite offsBalance at Beginning Expected Credit Charged Against End of Description of Period Losses Allowance PeriodAllowance for credit losses (deducted from accounts receivable) Year ending December 31, 2021 $1,921$5,595$(6,006)$1,510Year ending December 31, 2020 $1,771$4,997$(4,847)$1,921Year ending December 31, 2019 $1,263$6,190$(5,682)$1,771The current-period provision for expected credit losses is net of bad debt recoveries of $2.2 million, $1.2 million and $1.9 million forthe years ended December 31, 2021, 2020 and 2019, respectively. Table of ContentsPage 44 of 70LeasesIn February 2016, the FASB issued ASU No. 2016-02, Leases (“ASU 2016-02”). ASU 2016-02 replaced most existing leaseaccounting guidance. In July 2018, the FASB approved an Accounting Standards Update which, among other changes, allowed a companyto elect to adopt ASU 2016-02 using the modified retrospective method applying the transition provisions at the beginning of the period ofadoption, rather than at the beginning of the earliest comparative period presented in these financial statements. ASU 2016-02 waseffective for the Company beginning on January 1, 2019 and required the Company to record a right-of-use asset and a lease liability formost of its facilities leases. These leases were previously treated as operating leases. The Company adopted ASU 2016-02 using theoptional transition method whereby the new lease requirements under ASU 2016-02 were recorded through a cumulative-effectadjustment, which after completing the implementation analysis, did not result in an adjustment to the Company’s January 1, 2019beginning retained earnings balance. The effect of ASU 2016-02 was to record a cumulative-effect adjustment on January 1, 2019 as aright-of-use asset and an operating lease liability totaling $97.3 million. The operating lease liability is not considered a liability under theconsolidated leverage ratio calculations in the indentures governing the Company’s senior unsecured and senior secured note obligations.The Company has made an accounting policy election to not apply the recognition requirements of ASU 2016-02 to its short-term leases— leases with a term of one year or less. The Company has also elected to apply certain practical expedients under ASU 2016-02including not separating lease and non-lease components on its finance and operating leases, not reassessing whether any existingcontracts contained leases, not reconsidering lease classification, not reassessing initial direct costs and using hindsight in determining thelease reasonably certain term of its leases.YearYearEndedEnded December 31, 2021 December 31, 2020Finance lease cost amortization of right-of-use assets$26,424$22,850Interest expense on finance lease liabilities19,41918,892Operating lease cost18,38217,362Total lease costs64,22559,104Other lease information Cash paid for amounts included in the measurement of lease liabilitiesOperating cash flows from finance leases(17,366)(19,121)Operating cash flows from operating leases(20,194)(18,664)Financing cash flows from finance leases(23,054)(23,990)Right-of-use assets obtained in exchange for new finance lease liabilities50,83171,622Right-of-use assets obtained in exchange for new operating lease liabilities17,85335,659Weighted-average remaining lease term — finance leases (in years)12.612.4Weighted-average remaining lease term — operating leases (in years)18.720.2Weighted average discount rate — finance leases9.0% 10.3%Weighted average discount rate — operating leases5.4%5.6%Finance leases—fiber lease agreementsThe Company has entered into lease agreements with numerous providers of dark fiber under indefeasible-right-of-use agreements(“IRUs”). These IRUs typically have initial terms of 15-20 years and include renewal options after the initial lease term. The Companyestablishes the number of renewal option periods used in determining the lease term based upon its assessment at the inception of the leaseof the number of option periods for which failure to renew the lease imposes a penalty in such amount that renewal appears to bereasonably certain. The option to renew may be automatic, at the option of the Company or mutually agreed to between the dark fiberprovider and the Company. Once the Company has accepted the related fiber route, leases that meet the criteria for treatment as financeleases are recorded as a finance lease obligation and an IRU asset. The interest rate used in determining the present value of the aggregatefuture minimum lease payments is the Company’s incremental borrowing rate for the reasonably certain lease term. The determination ofthe Company’s incremental borrowing rate requires some judgment. Finance lease assets are included in property and equipment in theCompany’s consolidated balance sheets. As of December 31, 2021, the Company had committed to additional dark fiber IRU leaseagreements totaling $24.7 million in future payments to be paid over periods of up to 20 years. These obligations begin when the relatedfiber is accepted, which is generally expected to occur in the next 12 months. Table of ContentsPage 45 of 70Operating leasesThe Company leases office space and certain data center facilities under operating leases. In certain cases the Company also entersinto short-term operating leases for dark fiber. Right-of-use assets represent the Company’s right to use an underlying asset for the leaseterm and lease liabilities represent its obligation to make lease payments under the lease. Operating lease right-of-use assets and liabilitiesare recognized at the lease commencement date based on the present value of lease payments over the reasonably certain lease term. Theimplicit rates within the Company’s operating leases are generally not determinable and the Company uses its incremental borrowing rateat the lease commencement date to determine the present value of its lease payments. The determination of the Company’s incrementalborrowing rate requires some judgment. The Company determines its incremental borrowing rate for each lease using its currentborrowing rate, adjusted for various factors including level of collateralization and term to align with the term of the lease. Certain of theCompany’s leases include options to extend or terminate the lease. The Company establishes the number of renewal option periods used indetermining the operating lease term based upon its assessment at the inception of the operating lease of the number of option periods forwhich failure to renew the lease imposes a penalty in such amount that renewal appears to be reasonably certain. The option to renew maybe automatic, at the option of the Company or mutually agreed to between the landlord or dark fiber provider and the Company. Once theCompany has accepted the related fiber route or the facility lease term has begun, the present value of the aggregate future minimumoperating lease payments is recorded as an operating lease liability and a right-of-use leased asset. Lease incentives and deferred rentliabilities for facilities operating leases are presented with the right-of-use leased asset. Lease expense for lease payments is recognized ona straight-line basis over the term of the lease.The future minimum payments under these operating lease and finance lease agreements are as follows (in thousands): Operating FinanceFor the twelve months ending December 31,LeasesLeases2022 $17,680$36,211202318,35935,417202417,05735,766202514,56230,519202612,58527,970Thereafter111,463252,880Total minimum lease obligations191,706418,763Less—amounts representing interest(67,715)(172,893)Present value of minimum lease obligations123,991245,870Current maturities(12,197)(17,048)Lease obligations, net of current maturities$111,794$228,822Revenue recognitionThe Company recognizes revenue under ASU No. 2014-09, Revenue from Contracts with Customers (“ASC 606”), which requires anentity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers.Under ASC 606 installation fees for contracts with terms longer than month-to-month are recognized over the contract term. TheCompany believes that the installation fee does not give rise to a material right as defined by ASC 606 for contracts with terms longer thanmonth-to-month. The Company recognizes revenue over the estimated average customer life for installation fees associated with month-to-month contracts, because the installation fee represents a material right as defined by ASC 606. The Company capitalizes certaincontract acquisition costs that relate directly to a customer contract, including commissions paid to its sales team and sales agents andamortizes these costs on straight-line basis over the period the services are transferred to the customer for commissions paid to its salesteam (estimated customer life) and over the remaining original contract term for agent commissions. Management assesses these costs forimpairment at least quarterly and as “triggering” events occur that indicate it is more likely than not that an impairment exists. Thesecontract costs were $21.4 million as of December 31, 2021 and were $20.6 million as of December 31, 2020. Table of ContentsPage 46 of 70The Company’s service offerings consist of on-net and off-net telecommunications services. Fixed fees are billed monthly in advanceand usage fees are billed monthly in arrears. Amounts billed are due upon receipt and contract lengths range from month to month to 60months. The Company satisfies its performance obligations to provide services to customers over time as the services are rendered. Inaccordance with ASC 606, revenue is recognized when a customer obtains the promised service. The amount of revenue recognizedreflects the consideration to which the Company expects to be entitled to receive in exchange for these services. The Company hasadopted the practical expedient related to certain performance obligation disclosures since it has a right to consideration from its customerin an amount that corresponds directly with the value to the customer of the Company’s performance completed to date.To achieve this core principle, the Company follows the following five steps:1)Identification of the contract, or contracts with a customer2)Identification of the performance obligations in the contract3)Determination of the transaction price4)Allocation of the transaction price to the performance obligations in the contract5)Recognition of revenue when, or as, the Company satisfies a performance obligationFees billed in connection with customer installations are deferred (as deferred revenue) and recognized as noted above. To the extent acustomer contract is terminated prior to its contractual end the customer is subject to termination fees. The Company vigorously seekspayment of termination fees. The Company recognizes revenue for termination fees as they are collected. Service revenue recognized fromamounts in deferred revenue (contract liabilities) at the beginning of the period during the years ended December 31, 2021, 2020 and 2019was $4.6 million, $4.4 million and $4.4 million, respectively. Amortization expense for contract costs for the years ended December 31,2021, 2020 and 2019 was $18.4 million, $17.1 million and $17.3 million, respectively.Gross receipts taxes, universal service fund and other surchargesRevenue recognition standards include guidance relating to taxes or surcharges assessed by a governmental authority that are directlyimposed on a revenue-producing transaction between a seller and a customer and may include, but are not limited to, gross receipts taxes,excise taxes, Universal Service Fund fees and certain state regulatory fees. Such charges may be presented gross or net based upon theCompany’s accounting policy election. The Company records certain excise taxes and surcharges on a gross basis and includes them in itsrevenues and costs of network operations. Excise taxes and surcharges billed to customers and recorded on a gross basis (as servicerevenue and network operations expense) were $18.5 million, $15.1 million, and $14.9 million for the years ended December 31, 2021,2020 and 2019, respectively.Network operationsNetwork operations expenses include the costs of personnel and related operating expenses associated with service delivery, networkmanagement, and customer support, network facilities costs, fiber and equipment maintenance fees, leased circuit costs, access fees paid tobuilding owners and certain excise taxes and surcharges recorded on a gross basis. The Company estimates its accruals for any disputedleased circuit obligations based upon the nature and age of the dispute. Network operations costs are impacted by the timing and amountsof disputed circuit costs. The Company generally records these disputed amounts when billed by the vendor and reverses these amountswhen the vendor credit has been received or the dispute has otherwise been resolved. The Company does not allocate depreciation andamortization expense to its network operations expense.Foreign currency translation adjustment and comprehensive incomeThe consolidated financial statements of the Company’s non-US operations are translated into US dollars using the period-end foreigncurrency exchange rates for assets and liabilities and the average foreign currency exchange rates for revenues and expenses. Gains andlosses on translation of the accounts are accumulated and reported as a component of other comprehensive income in stockholders’ equity.The Company’s only components of “other comprehensive income” are currency translation adjustments for all periods presented. TheCompany considers the majority of its investments in its foreign subsidiaries to be long-term in nature. The Company’s foreign exchangetransaction gains (losses) are included within interest income and other on the consolidated statements of comprehensive income.Financial instrumentsThe Company considers all highly liquid investments with an original maturity of three months or less at purchase to be cashequivalents. The Company determines the appropriate classification of its investments at the time of purchase and evaluates suchdesignation at each balance sheet date. Table of ContentsPage 47 of 70At December 31, 2021 and December 31, 2020, the carrying amount of cash and cash equivalents, restricted cash, accountsreceivable, prepaid and other current assets, accounts payable, and accrued expenses approximated fair value because of the short-termnature of these instruments. The Company measures its cash equivalents and restricted cash at amortized cost, which approximates fairvalue based upon quoted market prices (Level 1). Based upon recent trading prices (Level 2—market approach) at December 31, 2021 thefair value of the Company’s $500.0 million senior secured notes due 2026 was $508.1 million, the fair value of the Company’s €350.0million ($397.0 million) senior unsecured notes due 2024 was $402.0 million and the estimated fair value of the Company’s interest rateswap agreement was $9.0 million.Restricted cash and interest rate swap agreementRestricted cash represents amounts held in segregated bank accounts by our clearing broker as margin in support of our interest rateswap agreement as discussed in Note 4 and was $9.0 million as of December 31, 2021. Additional cash may be further restricted tomaintain our interest rate swap instrument as interest rates fluctuate and margin requirements change. The Company does not usederivative financial instruments for trading purposes.Concentrations of credit riskThe Company’s assets that are exposed to credit risk consist of its cash and cash equivalents, other assets and accounts receivable. Asof December 31, 2021 and 2020, the Company’s cash equivalents were invested in demand deposit accounts, overnight investments andmoney market funds. The Company places its cash equivalents in instruments that meet high-quality credit standards as specified in theCompany’s investment policy guidelines. Accounts receivable are due from customers located in major metropolitan areas in the UnitedStates, Europe, Canada, Mexico, Asia, South America, Australia and Africa. Receivables from the Company’s net-centric (wholesale)customers are generally subject to a higher degree of credit risk than the Company’s corporate customers.The Company relies upon an equipment vendor for the majority of its network equipment and is also dependent upon many third-party fiber providers for providing its services to its customers.Property and equipmentProperty and equipment are recorded at cost and depreciated once deployed using the straight-line method over the estimated usefullives of the assets. Useful lives are determined based on historical usage with consideration given to technological changes and trends inthe industry that could impact the asset utilization. System infrastructure costs include the capitalized compensation costs of employeesdirectly involved with construction activities and costs incurred by third-party contractors.Assets and liabilities under finance leases are recorded at the lesser of the present value of the aggregate future minimum leasepayments or the fair value of the assets under lease. Leasehold improvements include costs associated with building improvements andcustomer installation costs. The Company determines the number of renewal option periods, if any, included in the lease term for purposesof amortizing leasehold improvements and the lease term of its finance leases based upon its assessment at the inception of the lease forwhich the failure to renew the lease imposes a penalty on the Company in such amount that a renewal appears to be reasonably assured.Expenditures for maintenance and repairs are expensed as incurred.Depreciation and amortization periods are as follows:Type of asset Depreciation or amortization periodIndefeasible rights of use (IRUs) Shorter of useful life or the IRU lease agreement; generally 15 to 20 yearsNetwork equipment 3 to 8 yearsLeasehold improvements Shorter of lease term, including reasonably assured renewal periods, or useful lifeSoftware 5 yearsOwned buildings 40 yearsOffice and other equipment 3 to 7 yearsSystem infrastructure 5 to 10 years Table of ContentsPage 48 of 70Long-lived assetsThe Company’s long-lived assets include property and equipment. These long-lived assets are reviewed for impairment wheneverevents or changes in circumstances indicate that the carrying amount may not be recoverable. Impairment is determined by comparing thecarrying value of these long-lived assets to management’s probability weighted estimate of the future undiscounted cash flows expected toresult from the use of the assets. In the event an impairment exists, a loss is recognized based on the amount by which the carrying valueexceeds the fair value of the asset, which would be determined by using quoted market prices or valuation techniques such as thediscounted present value of expected future cash flows, appraisals, or other pricing models. In the event there are changes in the planneduse of the Company’s long-term assets or the Company’s expected future undiscounted cash flows are reduced significantly, theCompany’s assessment of its ability to recover the carrying value of these assets could change.Equity-based compensationThe Company recognizes compensation expense for its share-based payments granted to its employees based on their grant date fairvalues with the expense being recognized on a straight-line basis over the requisite service period. The Company begins recording equity-based compensation expense related to performance awards when it is considered probable that the performance conditions will be metand for market-based awards compensation cost is recognized if the service condition is satisfied even if the market condition is notsatisfied. Equity-based compensation expense is recognized in the statement of operations in a manner consistent with the classification ofthe employee’s salary and other compensation.Income taxesThe Company’s deferred tax assets or liabilities are computed based upon the differences between financial statement and income taxbases of assets and liabilities using the enacted marginal tax rate. Deferred income tax expenses or benefits are based upon the changes inthe assets or liability from period to period. At each balance sheet date, the Company assesses the likelihood that it will be able to realizeits deferred tax assets. Valuation allowances are established when management determines that it is “more likely than not” that someportion or all of the deferred tax asset may not be realized. The Company considers all available positive and negative evidence inassessing the need for a valuation allowance including its historical operating results, ongoing tax planning, and forecasts of future taxableincome, on a jurisdiction by jurisdiction basis. The Company reduces its valuation allowance if the Company concludes that it is “morelikely than not” that it would be able to realize its deferred tax assets.Management determines whether a tax position is more likely than not to be sustained upon examination based on the technical meritsof the position. Once it is determined that a position meets this recognition threshold, the position is measured to determine the amount ofbenefit to be recognized in the financial statements. The Company adjusts its estimated liabilities for uncertain tax positions periodicallybecause of ongoing examinations by, and settlements with, the various taxing authorities, as well as changes in tax laws, regulations andinterpretations. The Company’s policy is to recognize interest and penalties accrued on any unrecognized tax benefits as a component ofits income tax expense.Basic and diluted net income per common shareBasic earnings per share (“EPS”) excludes dilution for common stock equivalents and is computed by dividing net income or (loss)available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted EPS is based onthe weighted-average number of shares of common stock outstanding during each period, adjusted for the effect of dilutive common stockequivalents.Shares of restricted stock are included in the computation of basic EPS as they vest and are included in diluted EPS, to the extent theyare dilutive, determined using the treasury stock method.The following details the determination of the diluted weighted average shares:Year EndedYear EndedYear EndedDecember 31, December 31, December 31, 2021 2020 2019Weighted average common shares—basic46,419,180 45,947,77245,542,315Dilutive effect of stock options34,007 80,84932,222Dilutive effect of restricted stock510,733 639,577505,858Weighted average common shares—diluted46,963,920 46,668,19846,080,395 Table of ContentsPage 49 of 70The following details unvested shares of restricted common stock as well as the anti-dilutive effects of stock options and restrictedstock awards outstanding:December 31, December 31, December 31, 202120202019Unvested shares of restricted common stock1,253,3211,339,5961,283,281Anti-dilutive options for common stock45,80932,32439,608Anti-dilutive shares of restricted common stock86,619223,1183482. Property and equipment:Property and equipment consisted of the following (in thousands):December 31, 2021 2020Owned assets:Network equipment$650,634$611,265Leasehold improvements 250,623241,379System infrastructure 160,376148,533Software 11,02810,609Office and other equipment 20,99919,611Building 1,2731,376Land 107116 1,095,0401,032,889Less—Accumulated depreciation and amortization (912,579)(856,859) 182,461176,030Assets under finance leases:IRUs 524,475482,978Less—Accumulated depreciation and amortization (249,056)(228,673) 275,419254,305Property and equipment, net$457,880$430,335Depreciation and amortization expense related to property and equipment and finance leases was $89.2 million, $83.5 million and$80.2 million, for 2021, 2020 and 2019, respectively.The Company capitalizes the compensation cost of employees directly involved with its construction activities. In 2021, 2020 and2019, the Company capitalized compensation costs of $13.4 million, $12.1 million and $10.7 million, respectively. These amounts areincluded in system infrastructure costs.Exchange agreementIn 2020 and 2019 the Company exchanged certain used network equipment and cash consideration for new network equipment. Thefair value of the new network equipment received was estimated to be $1.1 million and $3.3 million, respectively, resulting in gains of$0.3 million and $1.0 million, respectively. The estimated fair value of the equipment received was based upon the cash considerationprice the Company pays for the new network equipment on a standalone basis (Level 3). There were no exchange transactions in 2021.Installment payment agreementThe Company has entered into an installment payment agreement (“IPA”) with a vendor. Under the IPA the Company was able topurchase network equipment in exchange for interest free note obligations each with a twenty-four month term. There are no paymentsunder each note obligation for the first six months followed by eighteen equal installment payments for the remaining eighteen monthterm. As of December 31, 2021 and December 31, 2020, there was $0.8 million and $7.7 million, respectively, of note obligationsoutstanding under the IPA, secured by the related equipment. The Company recorded the assets purchased and the present value of thenote obligation utilizing an imputed interest rate. The resulting discounts under the note obligations are being amortized over the note termusing the effective interest rate method. Table of ContentsPage 50 of 703. Accrued and other liabilities:Accrued and other current liabilities consist of the following (in thousands): December 31, 2021 2020Operating accruals$16,360$24,168Deferred revenue—current portion 4,8944,651Payroll and benefits 8,4668,024Taxes—non-income based 4,2915,918Interest 5,0468,268Total$39,057$51,0294. Long-term debt:As of December 31, 2021, the Company had outstanding $500.0 million aggregate principal amount of Senior Secured Notes due2026 (the “2026 Notes”) and €350.0 million ($397.0 million USD) aggregate principal amount of Senior Unsecured Euro Notes due 2024(the “2024 Notes”). The 2026 Notes are due on May 1, 2026 and bear interest at a rate of 3.50% per year. Interest on the 2026 Notes ispaid semi-annually on May 1 and November 1 of each year. The 2024 Notes are due on June 30, 2024 and bear interest at a rate of 4.375%per year. Interest on the 2024 Notes is paid semi-annually on June 30 and December 30 of each year.Interest rate swap agreementAs of December 31, 2021, the Company was party to an interest rate swap agreement (the “Swap Agreement”) that has the economiceffect of modifying the fixed interest rate obligation associated with its 2026 Notes to a variable interest rate obligation based on theSecured Overnight Financing Rate (“SOFR”) so that the interest payable on the 2026 Notes effectively became variable based onovernight SOFR. The critical terms of the Swap Agreement match the terms of the 2026 Notes, including the notional amount and theoptional redemption date on February 1, 2026. The Company did not elect hedge accounting for the Swap Agreement. The SwapAgreement is recorded at its fair value at each reporting period, and the Company incurs gains and losses due to changes in market interestrates. By entering into the Swap Agreement, the Company has assumed the risk associated with variable interest rates. Changes in interestrates affect the interest expense that the Company recognizes in its consolidated statements of comprehensive income. The values that theCompany reports for the Swap Agreement as of each reporting date are recognized as interest expense with the corresponding amountsincluded in assets or liabilities in the Company’s consolidated balance sheets. As of December 31, 2021 the fair value of the SwapAgreement was a net liability of $9.0 million of which $1.6 million is presented with prepaid expenses and $10.6 million is presented withother long-term liabilities. The Company recorded an unrealized loss related to the Swap Agreement of $9.0 million in 2021, which ispresented in interest expense on the statement of comprehensive income. The Company has made a $20.0 million deposit with thecounterparty to the Swap Agreement. If the fair value of the Swap Agreement exceeds a net liability of $20.0 million the Company will berequired to deposit additional funds with the counterparty equal to the net liability fair value in excess of $20.0 million. As of December31, 2021, $9.0 million of the $20.0 million deposit was restricted and $11.0 million was unrestricted.Issuance of the 2026 NotesOn May 7, 2021 (the “Closing Date”), Group completed an offering of $500.0 million aggregate principal amount of its 2026 Notesfor issuance in a private placement exempt from registration under the Securities Act of 1933, as amended (the “Securities Act”). The2026 Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers pursuant to Rule 144A under theSecurities Act and to certain non-U.S. persons in transactions outside the United States in compliance with Regulation S under theSecurities Act. Table of ContentsPage 51 of 70The net proceeds from the 2026 Notes offering were $496.9 million after deducting the $1.8 million discount and $1.3 million ofoffering expenses. In May 2021 and prior to the consummation of the offering of the 2026 Notes, Group completed the redemption of$45.0 million of its 5.375% Senior Secured Notes due 2022 (the “2022 Notes”), following which $284.1 million of its 2022 Notesremained outstanding. On the Closing Date, Group issued a notice of full redemption to holders of its remaining 2022 Notes, specifyingDecember 1, 2021 as the redemption date. On the Closing Date, Group used the net proceeds from the offering of the 2026 Notes to satisfyand discharge its obligations under the remaining 2022 Notes by depositing with the trustee the funds necessary to pay the $284.1 millionaggregate principal amount and $11.5 million of interest due on the 2022 Notes through December 1, 2021. Under the indenture governingthe 2022 Notes (the “2022 Notes Indenture”), Group could redeem the 2022 Notes, in whole or in part, at a price equal to 100% of theprincipal amount of the 2022 Notes, plus accrued and unpaid interest beginning on December 1, 2021. Prior to December 1, 2021, anyredemption of the 2022 Notes would have included a “make-whole” premium as set forth in the 2022 Notes Indenture. The Companyexpects to use the remaining net proceeds from the 2026 Notes offering for general corporate purposes, to repay debt obligations, torepurchase the Company’s common stock or for special or recurring dividends to the Company’s stockholders.The 2026 Notes were issued pursuant to, and are governed by, an indenture (the “2026 Notes Indenture”), dated the Closing Date byand among Group, Holdings, the other guarantors named therein, the trustee and the collateral agent. The 2026 Notes are guaranteed on asenior secured basis, jointly and severally, by Group’s material domestic subsidiaries, subject to certain exceptions (the “SubsidiaryGuarantors”). In addition, the 2026 Notes are guaranteed on a senior unsecured basis by Holdings (together with the SubsidiaryGuarantors, the “Guarantors”). Under certain circumstances, the Guarantors may be released from these guarantees without the consent ofthe holders of the 2026 Notes.The 2026 Notes and the guarantees of the Subsidiary Guarantors (the “subsidiary guarantees”) are Group’s and the SubsidiaryGuarantors’ senior obligations, secured by a first priority lien on substantially all of Group’s and the Subsidiary Guarantors’ assets, subjectto certain exceptions, limitations and permitted liens. The 2026 Notes and the subsidiary guarantees are effectively senior to any ofGroup’s and the Subsidiary Guarantors’ existing and future senior unsecured indebtedness and future indebtedness secured by liens on thecollateral securing the 2026 Notes that are junior to the liens on the collateral securing the 2026 Notes, in each case, to the extent of thevalue of the collateral securing the 2026 Notes. The 2026 Notes and the subsidiary guarantees rank pari passu in right of payment withGroup’s and the Subsidiary Guarantors’ existing and future indebtedness that is not subordinated in right of payment to the 2026 Notes orthe subsidiary guarantees. The 2026 Notes and the subsidiary guarantees are effectively subordinated to any of Group’s and the SubsidiaryGuarantors’ indebtedness that is secured by assets that do not constitute collateral or that is secured by liens on the collateral securing the2026 Notes that are senior to the liens securing the 2026 Notes, in each case, to the extent of the value of the collateral securing suchindebtedness. In addition, the 2026 Notes and the subsidiary guarantees thereof rank contractually senior in right of payment to all ofGroup’s and the Subsidiary Guarantors’ future subordinated indebtedness and are structurally subordinated to the liabilities of the non-guarantor subsidiaries. Holdings’ guarantee is its senior unsecured obligation, and ranks equally in right of payment with all of Holdings’existing and future senior indebtedness and senior in right of payment to all of Holdings’ future subordinated indebtedness. Holdings’guarantee is effectively subordinated to its secured indebtedness to the extent of the value of the collateral securing such indebtedness.The 2026 Notes bear interest at a rate of 3.50% per annum. Interest began to accrue on the 2026 Notes on May 7, 2021 and is paidsemi-annually in arrears on May 1 and November 1 of each year, commencing on November 1, 2021. Unless earlier redeemed orrepurchased, the 2026 Notes will mature on May 1, 2026. Group may redeem some or all of the 2026 Notes at any time prior to February1, 2026 at a price equal to 100% of the principal amount of the 2026 Notes, plus a “make-whole” premium as set forth in the 2026 NotesIndenture, plus accrued and unpaid interest, if any, to, but not including, the date of redemption. Thereafter, Group may redeem the 2026Notes, in whole or in part, at a price equal to 100% of the principal amount of the 2026 Notes, plus accrued and unpaid interest, if any, to,but not including, the date of redemption.Debt extinguishment and redemption of 2022 NotesIn March 2021, Group redeemed $115.9 million aggregate principal amount of its 2022 Notes at an average price of 103.2% of theprincipal amount plus $0.4 million of accrued and unpaid interest. As a result of this transaction, the Company incurred a loss on debtextinguishment and redemption of $3.9 million from the premium payment above par value, the amortization of the remainingunamortized notes cost and certain transaction expenses. Table of ContentsPage 52 of 70On April 6, 2021, Group issued a notice of conditional partial redemption for $45.0 million of its 2022 Notes. Group redeemed the$45.0 million aggregate principal amount of its 2022 Notes on May 6, 2021 at par plus the “make-whole amount” as defined in the 2022Notes Indenture of $1.9 million ($41.41533 per $1,000 aggregate principal amount) plus accrued interest to, but excluding, the redemptiondate of $0.4 million ($9.70486 per $1,000 aggregate principal amount). Following this $45.0 million redemption there was $284.1 millionaggregate principal amount of 2022 Notes remaining. On the Closing Date of the issuance of the 2026 Notes, Group used the net proceedsfrom the offering of the 2026 Notes to satisfy and discharge its remaining obligations under its 2022 Notes. As a result of thesetransactions, the Company incurred a loss on debt extinguishment and redemption of $10.8 million from the payment of $11.5 million ofinterest on the 2022 Notes through December 1, 2021 and the amortization of the remaining unamortized notes costs and debt premium.Issuance of 2024 NotesIn June 2020, Group completed an offering of €215.0 million of 4.375% senior unsecured notes due 2024 (“2024 Notes”). The netproceeds from the June 2020 offering, after deducting offering expenses, were $240.3 million. In June 2019, Group completed an offeringof €135.0 million of 2024 Notes. The net proceeds from the June 2019 offering, after deducting offering expenses, were $152.1 million.The Company expects to use the proceeds from these offerings for general corporate purposes , to repay debt obligations, to repurchase theCompany’s common stock or for special or recurring dividends to the Company’s stockholders. The 2024 Notes are guaranteed (the“Guarantees”) on a senior unsecured basis, jointly and severally, by the Company’s material domestic subsidiaries, subject to certainexceptions, and by the Company (collectively, the “Guarantors”). Under certain circumstances, the Guarantors may be released from theseGuarantees without the consent of the holders of the 2024 Notes.The 2024 Notes and the Guarantees are Group’s and the Guarantors’ senior unsecured obligations. The 2024 Notes and theGuarantees are effectively subordinated to all of Group’s and the Guarantors’ existing and future secured indebtedness to the extent of thevalue of the collateral securing such indebtedness, and are structurally subordinated to all indebtedness and other liabilities of subsidiariesthat are not Guarantors. Without giving effect to collateral arrangements, the 2024 Notes and the Guarantees rank pari passu in right ofpayment with Group’s and the Guarantors’ existing and future senior indebtedness. The 2024 Notes and the Guarantees rank contractuallysenior in right of payment to all of Group’s and the Guarantors’ existing and future subordinated indebtedness.The 2024 Notes were offered and sold only to persons reasonably believed to be qualified institutional buyers in an unregisteredoffering pursuant to Rule 144A under the Securities Act of 1933, as amended (the “Act”), and to certain non-U.S. persons in transactionsoutside the United States in compliance with Regulation S under the Act. The 2024 Notes have not been registered under the Act, and maynot be offered or sold in the United States absent registration or an applicable exemption from registration requirements. The 2024 Notesare listed on the Official List of The International Stock Exchange; however, there can be no assurance that the listing will be maintained.The 2024 Notes bear interest at a rate of 4.375% per annum and is paid semi-annually in arrears on June 30 and December 30 of eachyear. Unless earlier redeemed, the 2024 Notes will mature on June 30, 2024. The 2024 Notes were issued in Euros and are reported in theCompany’s reporting currency — US Dollars. As of December 31, 2019, the Company’s €135.0 million of 2024 Notes were valued at$151.4 million resulting in an unrealized gain on foreign exchange of $2.3 million for the year ended December 31, 2019. As of December31, 2020, the Company’s €350.0 million of 2024 Notes were valued at $429.3 million resulting in an unrealized loss on foreign exchangeof $37.0 million for the year ended December 31, 2020. As of December 31, 2021, the Company’s €350.0 million of 2024 Notes werevalued at $397.0 million resulting in an unrealized gain on foreign exchange of $32.5 million for the year ended December 31, 2021.Group may redeem some or all of the 2024 Notes at any time prior to June 30, 2021 at a price equal to 100% of the principal amountof the 2024 Notes, plus a “make-whole” premium as set forth in the indenture, plus accrued and unpaid interest, if any, to, but notincluding, the date of redemption. Thereafter, Group may redeem the 2024 Notes, in whole or in part, at a redemption price ranging from102.188% to par (depending on the year), as set forth in the indenture. Group may also redeem up to 35% of the principal amount of the2024 Notes using proceeds of certain equity offerings completed prior to June 30, 2021 at a redemption price equal to 104.375%, plusaccrued and unpaid interest, if any, to, but not including, the date of redemption, subject to certain exceptions. Group may also redeem the2024 Notes, in whole but not in part, in the event of certain changes in the tax laws of the United States (or any taxing authority in theUnited States). This redemption would be at 100% of the principal amount of the 2024 Notes to be redeemed (plus any accrued interestand additional amounts then payable with respect to the 2024 Notes to, but not including, the redemption date). Table of ContentsPage 53 of 70If Group undergoes specific kinds of change in control accompanied by certain ratings events, it will be required to offer to repurchasethe 2024 Notes from holders at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but notincluding, the date of repurchase. Additionally, if Group or any of its restricted subsidiaries sells assets and does not apply the proceedsfrom such sale in a certain manner or certain other events have not occurred, under certain circumstances, Group will be required to usethe excess net proceeds to make an offer to purchase the 2024 Notes at an offer price in cash equal to 100% of the principal amount of the2024 Notes, plus accrued and unpaid interest, if any, to, but not including, the repurchase date.In connection with any offer to purchase all or any of the 2024 Notes (including a change of control offer, asset sale offer or anytender offer), if holders of no less than 90% of the aggregate principal amount of the 2024 Notes validly tender their 2024 Notes, Group ora third party is entitled to redeem any remaining 2024 Notes at the price offered to each holder.The 2024 Notes indenture includes covenants that restrict Group and its restricted subsidiaries’ ability to, among other things: incurindebtedness; issue certain preferred stock or similar equity securities; pay dividends or make other distributions in respect of, orrepurchase or redeem, capital stock; make certain investments and other restricted payments, such as prepayment, redemption orrepurchase of certain indebtedness; create liens; consolidate, merge, sell or otherwise dispose of all or substantially all of the assets ofGroup and its restricted subsidiaries taken as a whole; incur restrictions on the ability of a subsidiary to pay dividends or make otherpayments; and enter into transactions with affiliates. However, the covenants provide for certain exceptions to these restrictions and theCompany is not subject to the covenants under the 2024 Notes indenture. Certain covenants will cease to apply to the 2024 Notes if, andfor so long as, the 2024 Notes have investment grade ratings from any two of Moody’s Investors Service, Inc., Fitch Ratings, Inc. and S&PGlobal Ratings and so long as no default or event of default under the Indenture has occurred and is continuing.The principal amount of the 2024 Notes would become immediately due and payable upon the occurrence of certain bankruptcy orinsolvency events involving Group or certain of its subsidiaries, and may be declared immediately due and payable by the trustee or theholders of at least 25% of the aggregate principal amount of the then-outstanding 2024 Notes upon the occurrence of certain events ofdefault under the indenture.Senior secured notes - $445.0 million 2022 NotesIn February 2015, Group issued $250.0 million of 5.375% senior secured notes due 2022 (the “2022 Notes”). In December 2016, theCompany issued an additional $125.0 million par value of its 2022 Notes at a premium of 100.375% of par value. In August 2018, theCompany issued an additional $70.0 million par value of its 2022 Notes at a premium of 101.75% of par value. The 2022 Notes were soldin private offerings for resale to qualified institutional buyers pursuant to SEC Rule 144A and were scheduled to mature on March 1, 2022.Interest accrued at 5.375% and was paid semi-annually in arrears on March 1 and September 1 of each year.The 2022 Notes were redeemable prior to December 1, 2021 (three months prior to the maturity date of the Notes) in whole or fromtime to time in part, at a redemption price equal to the sum of (1) 100% of the principal amount plus accrued and unpaid interest, if any, to,but not including, the redemption date, and (2) a make-whole premium, if any. The make-whole premium is the excess of (1) the netpresent value, on the redemption date, of the principal being redeemed or paid and the amount of interest (exclusive of interest accrued tothe date of redemption) that would have been payable if such redemption had not been made, over (2) the aggregate principal amount ofthe notes being redeemed or paid. Net present value shall be determined by discounting, on a semi-annual basis, such principal and interestat the reinvestment rate (as determined in the indenture governing the 2022 Notes) from the respective dates on which such principal andinterest would have been payable if such redemption had not been made.In May 2021, Group redeemed the 2022 Notes as noted above.Senior unsecured notes—$189.2 million 2021 NotesOn April 9, 2014, Cogent Communications Finance, Inc. ( “Cogent Finance”), a newly formed financing subsidiary of Group,completed an offering at par of $200.0 million of 5.625% Senior Notes due 2021 (the “2021 Notes”). The 2021 Notes were sold in privateofferings for resale to qualified institutional buyers pursuant to SEC Rule 144A, accrued interest at a rate of 5.625% and were scheduled tomature on April 15, 2021. Interest was paid semi-annually on April 15 and October 15. Cogent Finance merged with Group, with Groupcontinuing as the surviving corporation (the “Finance Merger”). At the time of consummation of the Finance Merger, Group assumed theobligations of Cogent Finance under the 2021 Notes and the indenture governing the 2021 Notes (the “Indenture”) and Group and each ofGroup’s domestic subsidiaries became party to the Indenture pursuant to a supplemental indenture to the Indenture and the obligationsunder the Indenture became obligations solely of Group and each of Group’s domestic subsidiaries. Holdings also provided a guarantee ofthe 2021 Notes but Holdings was not subject to the covenants under the Indenture. In the second quarter of 2016, the Company paid $10.9million for the purchase of $10.8 million of par value and accrued interest on its 2021 Notes reducing the principal amount to $189.2million. Table of ContentsPage 54 of 70In June 2020, Group redeemed the 2021 Notes with the proceeds from its June 2020 issuance of its 2024 Notes. The Companyredeemed the 2021 Notes at a redemption price of 100.00% of the $189.2 million principal amount plus $1.6 million of accrued interest.As a result of this transaction, the Company incurred a loss on debt extinguishment and redemption of $0.6 million from the amortizationof the remaining unamortized notes cost and certain transaction expenses.Limitations under the indenturesThe indenture governing the 2024 Notes (the “2024 Notes Indenture”) and the 2026 Notes Indenture, among other things, limit theCompany’s ability to incur indebtedness; to pay dividends or make other distributions; to make certain investments and other restrictedpayments; to create liens; to consolidate, merge, sell or otherwise dispose of all or substantially all of its assets; to incur restrictions on theability of a subsidiary to pay dividends or make other payments; and to enter into certain transactions with its affiliates. There are certainexceptions to the limitations on the Company’s ability to incur indebtedness under the 2024 Notes Indenture and the 2026 Notes Indenture,including IRU agreements incurred in the normal course of business and any additional indebtedness if (i) under the 2024 Notes Indenture,the Company’s consolidated leverage ratio, as defined in the 2024 Notes Indenture, is less than 6.0 to 1.0 and (ii) under the 2026 NotesIndenture, either the Company’s consolidated leverage ratio, as defined in the 2026 Notes Indenture, is less than 6.0 to 1.0 or theCompany’s fixed charge coverage ratio, as defined in the 2026 Notes Indenture, is greater than 2.0 to 1.0. The Company can also incurunlimited liens (which can be used, together with capacity under the debt covenant, to incur additional secured indebtedness) if theCompany’s consolidated secured leverage ratio, as defined in each of the 2024 Notes Indenture and the 2026 Notes Indenture, is less than 4.0 to 1.0. The 2024 Notes Indenture permits restricted payments, such as dividends and stock purchases, using accumulated consolidated cash flow, as defined in the 2024 Notes Indenture, when the Company’s consolidated leverage ratio, as defined by the 2024 Notes Indenture, is less than 4.25 to 1.00. Under the 2026 Notes Indenture, such accumulated consolidated cash flow, as defined therein, can be used to make such restricted payments if the Company is able to incur $1 of debt, as defined (i.e., either its consolidated leverage ratio is less than 6.0 to 1.0 or its fixed charge coverage ratio is greater than 2.0 to 1.0). The Company’s consolidated leverage ratio was above 4.25 as of December 31, 2021, and the Company’s fixed charge coverage ratio was above 2.0 as of December 31, 2021. As of December 31, 2021, a total of $185.5 million was unrestricted and permitted for restricted payments including dividends and stock purchases.The aggregate future contractual maturities of long-term debt were as follows as of December 31, 2021 (in thousands):For the year ending December 31, 2022$7912023 —2024 397,0052025 —2026 500,000Thereafter —Total$897,7965. Income taxes:The components of income before income taxes consist of the following (in thousands):Years Ended December 31, 2021 2020 2019Domestic$73,753$23,808$72,773Foreign (2,333)(13,496)(20,099)Total income before income taxes$71,420$10,312$52,674 Table of ContentsPage 55 of 70The income tax expense is comprised of the following (in thousands):Years Ended December 31, 2021 2020 2019Current:Federal$—$32$—State (3,116) (2,908) (2,647)Foreign (1,833) (947) (370)Deferred:Federal (17,959) (1,867) (10,899)State (2,348) 1,241 (1,285)Foreign 2,021 353 47Total income tax expense$(23,235)$(4,096)$(15,154)Our consolidated temporary differences comprising our net deferred tax assets are as follows (in thousands):December 31, 2021 2020Deferred Tax Assets:Net operating loss carry-forwards$246,276$273,999Tax credits 2,1191,965Equity-based compensation3,9764,901Operating leases40,62740,081Total gross deferred tax assets 292,998320,946Valuation allowance(132,800)(150,589)160,198170,357Deferred Tax Liabilities:Depreciation and amortization 46,64237,364Accrued liabilities and other 103,705105,554Right-of-use assets37,78437,097Gross deferred tax liabilities 188,131180,015Net deferred tax liabilities$27,933$9,658At each balance sheet date, the Company assesses the likelihood that it will be able to realize its deferred tax assets. The Companyconsiders all available positive and negative evidence in assessing the need for a valuation allowance. The Company maintains a fullvaluation allowance against certain of its deferred tax assets consisting primarily of net operating loss carryforwards related to its foreignoperations in Europe, Asia, South America, Australia and Africa and net operating losses in the United States that are limited for use underSection 382 of the Internal Revenue Code.As of December 31, 2021, the Company has combined net operating loss carry-forwards of $1.0 billion. This amount includes federalnet operating loss carry-forwards in the United States of $39.5 million, net operating loss carry-forwards related to its European operationsof $967.9 million and $7.3 million related to its other international operations. Section 382 of the Internal Revenue Code in the UnitedStates limits the utilization of net operating losses when ownership changes, as defined by that section, occur. The Company hasperformed an analysis of its Section 382 ownership changes and has determined that the utilization of certain of its net operating losscarryforwards in the United States is limited based on the annual Section 382 limitation and remaining carryforward period. Of the netoperating losses available at December 31, 2021 in the United States $25.6 million are limited for use under Section 382. Net operatingloss carryforwards outside of the United States totaling $1.0 billion are not subject to limitations similar to Section 382. The net operatingloss carryforwards in the United States will expire, if unused, between 2026 and 2036. The net operating loss carry-forwards related to theCompany’s European operations include $826.7 million that do not expire and $141.2 million that expire between 2022 and 2037.The Company has not provided for United States deferred income taxes or foreign withholding taxes on its undistributed earnings forcertain non-US subsidiaries earnings or cumulative translation adjustments because these earnings and adjustments are intended to bepermanently reinvested in operations outside the United States. It is not practical to determine the amount of the unrecognized deferred taxliability on such undistributed earnings or cumulative translation adjustments. Table of ContentsPage 56 of 70In the normal course of business the Company takes positions on its tax returns that may be challenged by taxing authorities. TheCompany evaluates all uncertain tax positions to assess whether the position will more likely than not be sustained upon examination. Ifthe Company determines that the tax position is not more likely than not to be sustained, the Company records a liability for the amount ofthe benefit that is not more likely than not to be realized when the tax position is settled. The Company does not have a material liabilityfor uncertain tax positions at December 31, 2021 and does not expect that its liability for uncertain tax positions will materially increaseduring the twelve months ended December 31, 2022, however, actual changes in the liability for uncertain tax positions could be differentthan currently expected. If recognized, changes in the Company’s total unrecognized tax benefits would impact the Company’s effectiveincome tax rate.The Company or one of its subsidiaries files income tax returns in the US federal jurisdiction and various state and foreignjurisdictions. The Company is subject to US federal tax and state tax examinations for years 2004 to 2021. The Company is subject to taxexaminations in its foreign jurisdictions generally for years 2005 to 2021.The following is a reconciliation of the Federal statutory income taxes to the amounts reported in the financial statements (inthousands).Years Ended December 31, 2021 2020 2019Federal income tax expense at statutory rates$(14,999)$(2,166)$(11,061)Effect of:State income taxes, net of federal benefit (4,123)(1,091)(2,973)Impact of foreign operations 715(365)(505)Non-deductible expenses (1,365)(411)(491)Tax effect of TCJA from foreign earnings (389)(66)(28)Other —32(32)Changes in valuation allowance (3,074)(29)(64)Income tax expense$(23,235)$(4,096)$(15,154)6. Commitments and contingencies:Current and potential litigationIn accordance with the accounting guidance for contingencies, the Company accrues its estimate of a contingent liability when it isboth probable that a liability has been incurred and the amount of the loss can be reasonably estimated. Where it is probable that a liabilityhas been incurred and there is a range of expected loss for which no amount in the range is more likely than any other amount, theCompany accrues at the low end of the range. The Company reviews its accruals at least quarterly and adjusts them to reflect the impact ofnegotiations, settlements, rulings, advice of legal counsel, and other information and events pertaining to a particular matter. The Companyhas taken certain positions related to its obligations for leased circuits for which it is reasonably possible could result in a loss of up to$3.6 million in excess of the amount accrued at December 31, 2021. The Company is also engaged in litigation in Virginia in which aformer provider of transoceanic capacity to the Company is seeking approximately $0.6 million for alleged unpaid fees and the Company’searly termination of the arrangement. The complaint was filed in December 2021 in the Circuit Court of Fairfax County, Virginia. TheCompany is contesting its obligation to pay these amounts.The Company was engaged in an arbitration proceeding in Spain in which a former provider of optical fiber to the Company wasseeking approximately $9 million for the Company’s early termination of the optical fiber leases, which amount the Company accrued in2015. The Company counterclaimed for damages and contested its obligation to pay the termination liability. The arbitration was beingconducted by the Civil and Commercial Arbitration Court (CIMA) in Madrid, Spain. On October 25, 2021, CIMA issued its decision,awarding the former provider approximately $0.7 million and rejecting the Company’s counterclaims. Both parties had until (i) November4, 2021 to request clarifications from CIMA regarding clerical or mathematical errors, unaddressed claims or other minor issues and (ii)two months from the later of the date of the award or a subsequent clarifying order from CIMA to file a court action before the High Courtof Justice of Madrid to annul the award. The Company’s policy is to not record the impact of legal proceedings until all appeals have beenexhausted or legal counsel has advised that any further appeal will likely not change the outcome of the matter. The appeal period haslapsed and the Company decided to pay the provider the $0.7 million award amount in the first quarter of 2022. As a result, the Companyrecorded a gain on lease termination of $7.4 million in the year ended December 31, 2021. Table of ContentsPage 57 of 70In the ordinary course of business the Company is involved in other legal activities and claims. Because such matters are subject tomany uncertainties and the outcomes are not predictable with assurance, the liability related to these legal actions and claims cannot bedetermined with certainty. Management does not believe that such claims and actions will have a material impact on the Company’sfinancial condition or results of operations. Judgment is required in estimating the ultimate outcome of any dispute resolution process, aswell as any other amounts that may be incurred to conclude the negotiations or settle any litigation. Actual results may differ from theseestimates under different assumptions or conditions and such differences could be material.Network equipment sites and data center facilitiesThe Company enters into leases for network equipment sites and for space in data center facilities. Future minimum annual paymentsunder these arrangements are as follows (in thousands):For the year ending December 31, 2022$24,7402023 12,2252024 8,4502025 6,1122026 4,711Thereafter 1,872$58,110Expenses related to these arrangements were $22.0 million in 2021, $21.0 million in 2020 and $20.6 million in 2019.Unconditional purchase obligationsUnconditional purchase obligations for equipment and services totaled $19.4 million at December 31, 2021. As of December 31,2021, the Company had also committed to additional dark fiber IRU finance and operating lease agreements totaling $24.7 million infuture payments to be paid over periods of up to 20 years. These obligations begin when the related fiber is accepted, which is generallyexpected to occur in 2022. Future minimum payments under these obligations are $2.9 million, $1.0 million, $1.0 million, $1.0 million and$1.0 million for the years ending December 31, 2022 to December 31, 2026, respectively, and $17.8 million, thereafter.Defined contribution planThe Company sponsors a 401(k) defined contribution plan that provides for a Company matching payment. The Company matchingpayments were paid in cash and were $0.9 million for 2021, $0.9 million for 2020 and $0.8 million for 2019.7. Stockholders’ equity:Authorized sharesThe 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 anyseries of preferred stock, dividends may be declared and paid on the common stock when determined by the Company’s Board ofDirectors.Common stock buybacksThe Company’s Board of Directors has approved $50.0 million for purchases of the Company’s common stock under a buybackprogram (the “Buyback Program”). At December 31, 2021, there was $30.4 million remaining for purchases under the Buyback Program.During 2020 the Company purchased 79,056 shares of its common stock for $4.5 million. These shares of common stock weresubsequently retired.There were no purchases of common stock in 2021 or 2019. Table of ContentsPage 58 of 70Dividends on common stockDividends are recorded as a reduction to retained earnings. Dividends on unvested restricted shares of common stock are paid as theawards vest. The payment of any future dividends and any other returns of capital, including stock buybacks, will be at the discretion ofthe Company’s Board of Directors and may be reduced, eliminated or increased and will be dependent upon the Company’s financialposition, results of operations, available cash, cash flow, capital requirements, limitations under the Company’s debt indentures and otherfactors deemed relevant by the Company’s Board of Directors. The Company is a Delaware Corporation and under the General CorporateLaw of the State of Delaware distributions may be restricted including a restriction that distributions, including stock purchases anddividends, do not result in an impairment of a corporation’s capital, as defined under Delaware Law. The indentures governing theCompany’s notes limit the Company’s ability to return cash to its stockholders.8. Stock option and award plan:Incentive award planThe Company grants restricted stock and options for common stock under its award plan, as amended (the “Award Plan”). Stockoptions granted under the Award Plan generally vest over a four-year period and have a term of ten years. Grants of shares of restrictedstock granted under the Award Plan generally vest over periods ranging from three to four years. Compensation expense for all awards isrecognized on a straight-line basis over the service period. Awards with graded vesting terms that are subject only to service conditions arerecognized on a straight-line basis. Certain option and share grants provide for accelerated vesting if there is a change in control, asdefined. For grants of restricted stock, when an employee terminates prior to full vesting the employee retains their vested shares and theemployees’ unvested shares are returned to the Award Plan. For grants of options for common stock, when an employee terminates prior tofull vesting, the employee may elect to exercise their vested options for a period of ninety days and any unvested options are returned tothe Award Plan. Shares issued to satisfy awards are provided from the Company’s authorized shares. The vesting of certain shares grantedto the Company’s executives is subject to certain performance conditions determined by the Company’s Board of Directors. The vesting ofcertain shares granted to the Company’s CEO is subject to the total shareholder return of the Company’s common stock compared to thetotal shareholder return of the Nasdaq Telecommunications Index, the Company’s growth rate in revenue and the Company’s growth ratein cash flow from operating activities, with each portion of the CEO’s performance-based equity award subject to a cap and no sharesearned if performance with respect to a target is less than zero.The accounting for equity-based compensation expense requires the Company to make estimates and judgments that affect itsfinancial statements. These estimates for stock options include the following.Expected Dividend Yield—The Company uses an expected dividend yield based upon expected annual dividends and the Company’sstock price.Expected Volatility—The Company uses its historical volatility for a period commensurate with the expected term of the option.Risk-Free Interest Rate—The Company uses the zero coupon US Treasury rate during the quarter having a term that most closelyresembles the expected term of the option.Expected Term of the Option—The Company estimates the expected life of the option term by analyzing historical stock optionexercises.Forfeiture Rates—The Company estimates its forfeiture rate based on historical data with further consideration given to the class ofemployees to whom the options or shares were granted.The weighted-average per share grant date fair value of options was $12.22 in 2021, $13.21 in 2020 and $8.92 in 2019. The followingassumptions were used for determining the fair value of options granted in the three years ended December 31, 2021:Years Ended December 31, Black-Scholes Assumptions 2021 2020 2019 Dividend yield 4.6% 3.4% 4.5% Expected volatility 33.4% 31.5% 28.3% Risk-free interest rate 0.6% 1.1% 2.5% Expected life of the option term (in years) 4.24.24.3 Table of ContentsPage 59 of 70Stock option activity under the Company’s Award Plan during the year ended December 31, 2021, was as follows: Number of Weighted-Average Options Exercise PriceOutstanding at December 31, 2020 159,880$54.09Granted 76,768$69.54Cancelled and expired (51,645)$68.00Exercised—intrinsic value $0.9 million; cash received $1.8 million (36,468)$50.00Outstanding at December 31, 2021—$2.4 million intrinsic value and 6.9 yearsweighted-average remaining contractual term 148,535$58.24Exercisable at December 31, 2021—$2.1 million intrinsic value and 5.5 yearsweighted-average remaining contractual term 89,904$50.70Expected to vest—$2.3 million intrinsic value and 6.6 years weighted-averageremaining contractual term 131,701$56.55A summary of the Company’s non-vested restricted stock awards as of December 31, 2021 and the changes during the year endedDecember 31, 2021 are as follows:Weighted-AverageGrant DateNon-vested awards Shares Fair ValueNon-vested at December 31, 2020 1,339,596$55.70Granted 471,080$64.59Vested (509,919)$49.12Forfeited (47,436)$57.16Non-vested at December 31, 2021 1,253,321$61.66The weighted average per share grant date fair value of restricted stock granted was $64.59 in 2021 (0.5 million shares), $75.18 in2020 (0.5 million shares) and $53.53 in 2019 (0.5 million shares). The fair value was determined using the quoted market price of theCompany’s common stock on the date of grant. Valuations were obtained to determine the fair value for the shares granted to theCompany’s CEO that are subject to the total shareholder return of the Company’s common stock compared to the total shareholder returnof the Nasdaq Telecommunications Index. Years Ended December 31,Additional Award Plan Information – Related to Stock Options & Restricted Stock (thousands) 2021 2020 2019Equity-based compensation expense$26,822$23,525$18,460Income tax benefit related to stock options and restricted stock 6,314 4,211 3,026Capitalized compensation expense related to stock options and restricted stock 3,222 2,275 1,752Intrinsic value of stock options exercised 881 841 839Fair value of shares of restricted stock vested 35,749 25,439 20,779As of December 31, 2021, there was $39.4 million of total unrecognized compensation cost related to non-vested equity-basedcompensation awards. That cost is expected to be recognized over a weighted average period of 2.0 years. Table of ContentsPage 60 of 709. Related party transactions:Office leaseThe Company’s headquarters is located in an office building owned by Sodium LLC whose owner is the Company’s Chief ExecutiveOfficer. The fixed annual rent for the headquarters building is $1.0 million per year plus an allocation of taxes and utilities. The leasebegan in May 2015 and the lease term was for five years. In February 2020 the lease term was extended to May 2025. The lease is cancellable at no cost by the Company upon 60 days’ notice. The Company’s audit committee reviews and approves all transactions with related parties. The Company paid $1.7 million in 2021, $1.7 million in 2020 and $1.7 million in 2019 for rent and related costs (including taxes and utilities) for this lease.10. Geographic information:Operating segments are defined as components of an enterprise about which separate financial information is available that isevaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing the Company’sperformance. The Company has one operating segment. Revenues are attributed to regions based on where the services are provided.Below are the Company’s service revenues and long lived assets by geographic region (in thousands):Year Ended December 31, 2021 On-net Off-net Non-core TotalNorth America$340,107$127,383$502$467,992Europe87,92917,72972105,730Asia Pacific 10,1971,094111,292South America4,10217314,276Africa5034—507Total$442,838$146,383$576$589,797Year Ended December 31, 2020 On-net Off-net Non-core TotalNorth America$330,924$129,879$474$461,277Europe 79,56817,2524796,867Asia Pacific 6,834949—7,783South America2,05648—2,104Africa72——72Total$419,454$148,128$521$568,103Year Ended December 31, 2019 On-net Off-net Non-core TotalNorth America$319,330$131,815$422$451,567Europe 72,32016,3235388,696Asia Pacific 4,615778—5,393South America48815—503Total$396,753$148,931$475$546,159December 31, December 31, 2021 2020Long lived assets, netNorth America$331,537$306,652Europe and other 126,355123,699Total$457,892$430,351 Table of ContentsPage 61 of 7011. Quarterly financial information (unaudited):Three months endedMarch 31, June 30, September 30, December 31, 2021 2021 2021 2021(in thousands, except share and per share amounts)Service revenue$146,777$147,879$147,927$147,208Network operations, including equity-based compensation expense 57,092 56,180 56,645 56,418Operating income 26,291 28,211 28,556 36,165Net income (loss) (1) 18,851 (2,493) 13,320 18,507Net income (loss) per common share - basic 0.41 (0.05) 0.29 0.40Net income (loss) per common share - diluted 0.41 (0.05) 0.28 0.39Weighted-average number of common shares—basic46,067,09646,229,60346,293,52446,420,168Weighted-average number of common shares—diluted 46,507,258 46,229,603 46,866,929 46,992,639Three months endedMarch 31, June 30, September 30, December 31, 2020 2020 2020 2020(in thousands, except share and per share amounts)Service revenue$140,915$140,990$142,302$143,901Network operations, including equity-based compensation expense 55,92153,88654,51954,829Operating income 25,85027,57426,03627,384Net income ( loss) (2) 9,2278,564(6,555)(6,620)Net income (loss) per common share - basic0.200.19(0.11)(0.14)Net income (loss) per common share - diluted 0.200.18(0.11)(0.14)Weighted-average number of common shares—basic45,658,56545,754,88045,815,71845,904,943Weighted-average number of common shares—diluted46,391,066 46,686,665 45,815,718 45,904,943(1)Included in net income (loss) for the three months ended March 31, 2021, June 30, 2021, September 30, 2021 and December 31,2021 are unrealized gains (losses) on foreign exchange on the Company’s 2024 Notes of $18.9 million, ($5.3) million, $10.2million and $8.8 million, respectively. Included in net income (loss) for the three months ended March 31, 2021 and June 30, 2021,are losses on debt extinguishment and redemption on the Company’s 2022 Notes of $3.9 million and $10.8 million, respectively.Included in net income for the three months ended December 31, 2021 is a gain on lease termination of $7.4 million.(2)Included in net income (loss) for the three months ended March 31, 2020, June 30, 2020, September 30, 2020 and December 31,2020 are unrealized gains (losses) on foreign exchange on the Company’s 2024 Notes of $2.9 million, ($3.4) million, ($17.3)million and $(19.2) million, respectively. Included in net income for the three months ended June 30, 2020 was a realized gain onforeign exchange on the Company’s 2024 Notes of $2.5 million.12. Subsequent Events:DividendOn February 23, 2022, the Company’s Board of Directors approved the payment of a quarterly dividend of $0.855 per common share.The dividend for the first quarter of 2022 will be paid to holders of record on March 11, 2022. This estimated $39.7 million dividendpayment is expected to be made on March 25, 2022. Table of ContentsPage 62 of 70ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIALDISCLOSURENone.ITEM 9A. CONTROLS AND PROCEDURESWe maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reportsunder the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the Securities and ExchangeCommission’s rules and forms, and that such information is accumulated and communicated to our management, including our ChiefExecutive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing andevaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designedand operated, can provide only reasonable assurance of achieving the desired control objectives, and management necessarily was requiredto apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.As required by SEC Rule 13a-15(b), an evaluation was performed under the supervision and with the participation of ourmanagement, including our principal executive officer and our principal financial officer, of the effectiveness of the design and operationof our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under Exchange Act) as of the end of the periodcovered by this report. Based upon that evaluation, our management, including our principal executive officer and our principal financialofficer, concluded that the design and operation of these disclosure controls and procedures were effective at the reasonable assurancelevel.There has been no change in our internal control over financial reporting during our most recent fiscal quarter that has materiallyaffected, or is reasonably likely to materially affect, our internal control over financial reporting. Table of ContentsPage 63 of 70MANAGEMENT’S REPORT ON INTERNAL CONTROLOVER FINANCIAL REPORTINGWe are responsible for the preparation and integrity of our published financial statements. The financial statements have beenprepared in accordance with accounting principles generally accepted in the United States of America and, accordingly, include amountsbased on judgments and estimates made by our management. We also prepared the other information included in the annual report and areresponsible for its accuracy and consistency with the financial statements.We are responsible for establishing and maintaining a system of internal control over financial reporting, which is intended to providereasonable assurance to our management and Board of Directors regarding the reliability of our financial statements. The system includesbut is not limited to:●a documented organizational structure and division of responsibility;●established policies and procedures, including a code of conduct to foster a strong ethical climate which is communicatedthroughout the company;●regular reviews of our financial statements by qualified individuals; and●the careful selection, training and development of our people.There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and thecircumvention or overriding of controls. Also, the effectiveness of an internal control system may change over time. We have implementeda system of internal control that was designed to provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements in accordance with generally accepted accounting principles.As required by Rule 13a-15(d) of the Exchange Act, we have assessed our internal control system in relation to criteria for effectiveinternal control over financial reporting described in “Internal Control—Integrated Framework” issued by the Committee of SponsoringOrganizations (COSO) of the Treadway Commission (2013 Framework). Based upon these criteria, we believe that, as of December 31,2021, our system of internal control over financial reporting was effective.The independent registered public accounting firm, Ernst & Young LLP, has audited our 2021 financial statements. Ernst &Young LLP was given unrestricted access to all financial records and related data, including minutes of all meetings of stockholders, theBoard of Directors and committees of the Board. Ernst & Young LLP has issued an unqualified report on our 2021 financial statements asa result of the audit and also has issued an unqualified report on our internal control over financial reporting which is attached hereto.Cogent Communications Holdings, Inc.February 25, 2022By:/s/ D S David SchaefferChief Executive Officer Table of ContentsPage 64 of 70Report of Ernst & Young LLP, Independent Registered Public Accounting FirmTo the Shareholders and the Board of Directors of Cogent Communications Holdings, Inc.Opinion on Internal Control over Financial ReportingWe have audited Cogent Communications Holdings, Inc. and subsidiaries’ internal control over financial reporting as of December31, 2021, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizationsof the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Cogent Communications Holdings, Inc. andsubsidiaries (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31,2021, based on the COSO criteria.We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States)(PCAOB), the consolidated balance sheets of the Cogent Communications Holdings, Inc. and subsidiaries as of December 31, 2021 and2020, the related consolidated statements of comprehensive income, shareholders’ equity (deficit) and cash flows for each of thethree years in the period ended December 31, 2021, and the related notes and financial statement schedule listed in the Index atItem 15(a)2 (collectively referred to as the “consolidated financial statements”) and our report dated February 25, 2022 expressed anunqualified opinion thereon.Basis for OpinionThe Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment ofthe effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control overFinancial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on ouraudit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company inaccordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission andthe PCAOB.We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the auditto obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weaknessexists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing suchother procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.Definition and Limitations of Internal Control Over Financial ReportingA company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability offinancial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenanceof records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) providereasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizationsof management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projectionsof any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes inconditions, or that the degree of compliance with the policies or procedures may deteriorate./s/ Ernst & Young LLPTysons, VAFebruary 25, 2022 Table of ContentsPage 65 of 70ITEM 9B. OTHER INFORMATIONNone.ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONSNot applicable.PART IIIITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCEThe information required by this Item 10 is incorporated in this report by reference to the information set forth under the captionsentitled “Proposal No. 1- Election of Directors,” “Executive Officers and Significant Employees,” “The Board of Directors andCommittees,” and, if applicable, ”Delinquent Section 16(a) Reports” in our Proxy Statement for the 2022 Annual Meeting ofStockholders, which is expected to be filed with the Securities and Exchange Commission within 120 days after the close of our fiscal year(the “2022 Proxy Statement”).ITEM 11. EXECUTIVE COMPENSATIONThe information required by this Item 11 is incorporated in this report by reference to the information set forth under the captionsentitled “The Board of Directors and Committees,” “Compensation Discussion and Analysis,” “Employment Agreements and PotentialPost-Employment Compensation Arrangements,” “Compensation Committee Report” and “Compensation Committee Interlocks andInsider Participation” in the 2022 Proxy Statement.ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATEDSTOCKHOLDER MATTERSThe information required by this Item 12 is incorporated in this report by reference to the information set forth under the caption“Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance Under EquityCompensation Plan” in the 2022 Proxy Statement.ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCEThe information required by this Item 13 is incorporated in this report by reference to the information set forth under the caption“Certain Relationships and Related Transactions” and “The Board of Directors and Committees” in the 2022 Proxy Statement.ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICESThe information required by this Item 14 is incorporated in this report by reference to the information set forth under the caption“Relationship With Independent Registered Public Accountants” in the 2022 Proxy Statement. Table of ContentsPage 66 of 70PART IVITEM 15. EXHIBIT AND FINANCIAL STATEMENT SCHEDULES(a)1.Financial Statements. A list of financial statements included herein is set forth in the Index to Financial Statements appearingin “ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.”2.Financial Statement Schedules. The Financial Statement Schedule described below is filed as part of the report.DescriptionSchedule II—Valuation and Qualifying Accounts.All other financial statement schedules are not required under the relevant instructions or are inapplicable and therefore have beenomitted.(b) Exhibits2.1Agreement and Plan of Reorganization, dated as of May 15, 2014, by and among Cogent Communications Group, Inc., CogentCommunications Holdings, Inc. and Merger Sub (previously filed as Exhibit 2.1 to our Current Report on Form 8-K, filed onMay 15, 2014, and incorporated herein by reference).3.1Certificate of Incorporation of Cogent Communications Holdings, Inc. (previously filed as Exhibit 3.1 to our Current Report onForm 8-K, filed on May 15, 2014, and incorporated herein by reference).3.2Bylaws of Cogent Communications Holdings, Inc., as amended and restated on September 10, 2018 (previously filed asExhibit 3.2 to our Current Report on Form 8-K/A, filed on September 10, 2018, and incorporated herein by reference).4.4Indenture related to the 5.375% Senior Secured Notes due 2022, dated as of February 20, 2015, among Cogent CommunicationsGroup, Inc., the guarantors named therein and Wilmington Trust, National Association, as trustee and collateral agent(previously filed as Exhibit 4.1 to our Current Report on Form 8-K, filed on February 20, 2015 and incorporated herein byreference).4.5Form of 5.375% Senior Secured Notes due 2022 (previously filed as Exhibit A to the Exhibit 4.1 to our Current Report onForm 8-K, filed on February 20, 2015 and incorporated herein by reference).4.6First Supplemental Indenture related to the 5.375% Senior Secured Notes due 2022, dated as of December 2, 2016, amongCogent Communications Group, Inc., the guarantors named therein and Wilmington Trust, National Association, as trustee andcollateral agent (previously filed as Exhibit 4.1 to our Current Report on Form 8-K, filed on December 2, 2016 and incorporatedherein by reference).4.7Second Supplemental Indenture related to the 5.375% Senior Secured Notes due 2022, dated as of August 20, 2018, amongCogent Communications Group, Inc., the guarantors named therein and Wilmington Trust, National Association, as trustee andcollateral agent (previously filed as Exhibit 4.1 to our Current Report on Form 8-K, filed on August 20, 2018 and incorporatedherein by reference).4.8Indenture related to the 4.375% Senior Notes due 2024, dated as of June 25, 2019, among Cogent Communications Group, Inc.,the guarantors named therein, Wilmington Trust, National Association, as trustee, Deutsche Bank AG, London Branch, aspaying agent, and Deutsche Bank Luxembourg S.A., as authentication agent and registrar (previously filed as Exhibit 4.1 to ourCurrent Report on Form 8-K, filed on June 25, 2019, and incorporated herein by reference).4.9Form of 4.375% Senior Notes due 2024 (previously filed as Exhibit A to the Exhibit 4.1 to our Current Report on Form 8-K,filed on June 25, 2019, and incorporated herein by reference).4.10First Supplemental Indenture to the Base Indenture, dated as of June 10, 2020, among Cogent Communications Group, Inc., theguarantors named therein and Wilmington Trust, National Association, as trustee (previously filed as Exhibit 4.4 to our CurrentReport on Form 8-K, filed on June 10, 2020, and incorporated herein by reference).4.11Indenture related to the 4.375% Senior Notes due 2024, dated as of June 3, 2020, among Cogent Communications Finance, Inc.,Wilmington Trust, National Association, as trustee, Deutsche Bank AG, London Branch, as paying agent, and Deutsche BankTrust Company Americas, as authentication agent and registrar (previously filed as Exhibit 4.1 to our Current Report on Form 8-K, filed on June 9, 2020, and incorporated herein by reference).4.12Form of 4.375% Senior Notes due 2024 (previously filed as Exhibit A to the Exhibit 4.1 to our Current Report on Form 8-K,filed on June 9, 2020, and incorporated herein by reference). Table of ContentsPage 67 of 704.13First Supplemental Indenture to the Temporary Indenture, dated as of June 10, 2020, between Cogent Communications Group,Inc. and Wilmington Trust, National Association, as trustee (previously filed as Exhibit 4.1 to our Current Report on Form 8-K,filed on June 10, 2020, and incorporated herein by reference).4.14Description of Securities Registered under Section 12 of the Securities Exchange Act of 1934 (previously filed as Exhibit 4.10 toour Annual Report on Form 10-K for the year ended December 31, 2020, filed on February 28, 2020, and incorporated herein byreference).4.15Indenture related to the 3.500% Senior Secured Notes due 2026, dated as of May 7, 2021, among Cogent CommunicationsGroup, Inc., the guarantors named therein, and Wilmington Trust, National Association, as trustee and collateral agent(previously filed as Exhibit 4.1 to our Current Report on Form 8-K, filed on May 11, 2021 and incorporated herein byreference).4.16Form of 3.500% Senior Secured Notes due 2026 (previously filed as Exhibit A to the Exhibit 4.1 to our Current Report on From8-K, filed on May 11, 2021 and incorporated herein by reference).10.1Dark Fiber IRU Agreement, dated April 14, 2000, between WilTel Communications, Inc. and Cogent Communications, Inc., asamended June 27, 2000, December 11, 2000, January 26, 2001, and February 21, 2001 (previously filed as Exhibit 10.2 to ourRegistration Statement on Form S-4, Commission File No. 333-71684, filed on October 16, 2001, and incorporated herein byreference).*10.2David Schaeffer Employment Agreement with Cogent Communications Group, Inc., dated February 7, 2000 (previously filed asExhibit 10.6 to our Registration Statement on Form S-4, Commission File No. 333-71684, filed on October 16, 2001, andincorporated herein by reference).10.3Timothy G. O’Neill Employment Agreement with Cogent Communications Group, Inc., dated as of September 25, 2003(previously filed as Exhibit 10.29 to our Annual Report on Form 10-K, filed on February 27, 2012, and incorporated herein byreference).10.4Brad Kummer Employment Agreement with Cogent Communications Group, Inc., dated January 11, 2000, (previously filed asExhibit 10.23 to our Registration Statement on Form S-1, Commission File No. 333-122821, filed on February 14, 2005, andincorporated herein by reference).10.5David Schaeffer Amendment No. 2 to Employment Agreement with Cogent Communications Group, Inc., dated as of March 12,2007 (previously filed as Exhibit 10.26 to our Annual Report on Form 10-K, filed on March 14, 2007, and incorporated hereinby reference).10.6Amendment No. 3 to Employment Agreement of Dave Schaeffer, dated as of August 7, 2007 (previously filed as Exhibit 10.2 toour Quarterly Report on Form 10-Q, filed on August 8, 2007, and incorporated herein by reference).10.7Amendment No. 4 to Employment Agreement of Dave Schaeffer, dated as of February 26, 2010 (previously filed asExhibit 10.25 to our Annual Report on Form 10-K, filed on March 1, 2010, and incorporated herein by reference).10.8Amendment No. 5 to Employment Agreement of Dave Schaeffer, dated April 7, 2010 (previously filed as Exhibit 10.1 to ourCurrent Report on Form 8-K, filed on April 7, 2010, and incorporated herein by reference).10.9Cogent Communications Holdings, Inc. 2004 Incentive Award Plan (as amended through April 17, 2014) (previously filed asExhibit 10.1 to our Current Report on Form 8-K, filed April 18, 2014, and incorporated herein by reference).10.10Assignment and Assumption Agreement, dated as of May 15, 2014, by and between Cogent Communications Group, Inc. andCogent Communications Holdings, Inc. assuming the obligations of the 2004 Incentive Award Plan (previously filed asExhibit 10.1 to our Current Report on Form 8-K, filed on May 15, 2014, and incorporated herein by reference).10.11Amendment No. 6 to Employment Agreement of Dave Schaeffer, dated August 6, 2014 (previously filed as Exhibit 10.4 to ourQuarterly Report on Form 10-Q, filed on August 7, 2014, and incorporated herein by reference).10.12Lease Agreement, dated April 16, 2015, between Sodium LLC and Cogent Communications, Inc. (previously filed asExhibit 10.1 to our Current Report on Form 8-K, filed on April 17, 2015, and incorporated herein by reference).10.13First Amendment to Lease Agreement, dated February 28, 2020, between Sodium LLC and Cogent Communications, Inc.(previously filed as Exhibit 10.2 to our Current Report on Form 8-K, filed on March 2, 2020, and incorporated herein byreference).10.14Restricted Stock Award, dated as of May 3, 2017, between the Company and David Schaeffer (previously filed as Exhibit 10.1to our Current Report on Form 8-K, filed on May 3, 2017, and incorporated herein by reference). Table of ContentsPage 68 of 7010.15Form of Restricted Stock Award, dated as of May 3, 2017, between the Company and the Vice President named executiveofficers (previously filed as Exhibit 10.2 to our Current Report on Form 8-K, filed on May 3, 2017, and incorporated herein byreference).10.16Amendment No. 7 to Employment Agreement of David Schaeffer, dated November 17, 2017 (previously filed as Exhibit 10.1 toour Current Report on Form 8-K, filed on November 20, 2017, and incorporated herein by reference).10.17Amended and Restated Cogent Communications Holdings, Inc. 2017 Incentive Award Plan (previously filed as Appendix A tothe Company’s Definitive Proxy Statement on Schedule 14A filed March 15, 2019, and incorporated herein by reference).10.18First Amendment to Cogent Communications Holdings, Inc. 2018 Incentive Award Plan (previously filed as Appendix B of theCompany’s Definitive Proxy Statement on Schedule 14A filed March 15, 2019, and incorporated herein by reference).10.19Amendment No. 8 to Employment Agreement of David Schaeffer, dated February 14, 2020 (previously filed as Exhibit 10.1 toour Current Report on Form 8-K, filed on February 19, 2020, and incorporated herein by reference).10.20Restricted Stock Award, dated as of February 14, 2020, between the Company and David Schaeffer (previously filed as Exhibit10.2 to our Current Report on Form 8-K, filed on February 19, 2020, and incorporated herein by reference).10.21Employment Letter between the Company and Sean Wallace, effective April 22, 2020 (previously filed as Exhibit 10.1 to ourCurrent Report on Form 8-K, filed on May 11, 2020, and incorporated herein by reference).10.22Restricted Stock Award, dated May 11, 2020, between the Company and Sean Wallace (previously filed as Exhibit 10.2 to ourCurrent Report on Form 8-K, filed on May 11, 2020, and incorporated herein by reference).10.23Severance Agreement, dated May 11, 2020, between the Company and Sean Wallace (previously filed as Exhibit 10.3 to ourCurrent Report on Form 8-K, filed on May 11, 2020, and incorporated herein by reference).10.24Restricted Stock Award, dated as of February 24, 2021, between the Company and David Schaeffer (previously filed as Exhibit10.1 to our Current Report on Form 8-K, filed on February 26, 2021, and incorporated herein by reference).10.25John Chang Severance Agreement with Cogent Communications, Inc., dated December 18, 2012 (filed herewith).10.26Raymond B. “Brad” Kummer Severance Agreement with Cogent Communications, Inc., dated September 25, 2003 (filedherewith).21.1Subsidiaries (filed herewith)23.1Consent of Ernst & Young LLP (filed herewith)31.1Certification of Chief Executive Officer (filed herewith)31.2Certification of Chief Financial Officer (filed herewith)32.1Certification of Chief Executive Officer (furnished herewith)32.2Certification of Chief Financial Officer (furnished herewith)99.1Policy Against Excise Tax Gross-ups on “Golden Parachute” Payments, with effect from April 7, 2010 (previously filed asExhibit 99.1 to our Current Report on Form 8-K, filed on April 7, 2010, and incorporated herein by reference).101The following materials from the Annual Report on Form 10-K of Cogent Communications Group, Inc. for the year endedDecember 31, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language); (i) Consolidated Balance Sheets,(ii) Consolidated Statements of Comprehensive Income (Loss), (iii) Consolidated Statements of Changes in Stockholders’Equity (Deficit), (iv) Consolidated Statements of Cash Flows and (v) Notes to Consolidated Financial Statements.104Cover Page Interactive Data File (the cover page XBRL tags are embedded within the iXBRL document).*Confidential treatment requested and obtained as to certain portions. Portions have been omitted pursuant to this request whereindicated by an asterisk. Table of ContentsPage 69 of 70Schedule II COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES VALUATION AND QUALIFYING ACCOUNTS (in thousands)Balance atCharged toBalance atBeginning ofCosts andEnd ofDescription Period Expenses (Deductions) PeriodDeferred tax valuation allowanceYear ended December 31, 2019 $126,579$5,785$(1,295)$131,069Year ended December 31, 2020 $131,069$20,599$(1,079)$150,589Year ended December 31, 2021 $150,589$4,918$(22,707)$132,800ITEM 16. FORM 10-K SUMMARYNone Table of ContentsPage 70 of 70SIGNATURESPursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this reportto be signed on its behalf by the undersigned, thereunto duly authorized.COGENT COMMUNICATIONS HOLDINGS, INC.Dated: February 25, 2022By:/s/ DAVID SCHAEFFERName:David SchaefferTitle:Chairman and Chief Executive OfficerPursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons onbehalf of the registrant and in the capacities and on the dates indicated.Signature Title Date/s/ DAVID SCHAEFFERChairman and Chief Executive OfficerDavid Schaeffer(Principal Executive Officer)February 25, 2022/s/ SEAN WALLACEVice President, Chief Financial Officer andTreasurerSean Wallace(Principal Financial and PrincipalAccounting Officer)February 25, 2022/s/ PAUL DE SAPaul De SaDirectorFebruary 25, 2022/s/ STEVEN BROOKSSteven BrooksDirectorFebruary 25, 2022/s/ SHERYL KENNEDYSheryl KennedyDirectorFebruary 25, 2022/s/ DAVID BLAKE BATHDavid Blake BathDirectorFebruary 25, 2022/s/ MARC MONTAGNERMarc MontagnerDirectorFebruary 25, 2022/s/ LEWIS H. FERGUSON IIILewis H. Ferguson IIIDirectorFebruary 25, 2022 Exhibit 10.26Severance Agreement1.This agreement is entered into by Cogent Communications, Inc. (“Cogent”) and the executive employee signing thisAgreement, below (“Executive”).2.As an inducement for Executive to focus his or her full efforts on Cogent’s business without undue concern for futureemployment the Compensation Committee of the Cogent Board of Directors has approved the following minimum severanceprovisions for Executive. This severance is not intended to reduce any severance arrangement provided for in Executive’s offer letter orother agreement. In any case in which such offer letter or other agreement provides a greater severance compensation with respect tocash payment or continuation of benefits Executive shall receive the greater cash payment or benefit.3.If Executive is terminated other than for Cause (as defined below) or Executive terminates his or her employment for GoodReason (as defined below), Executive shall continue to receive his or her salary (reduced by all mandatory withholdings for taxes orother governmentally required payments such as garnishments) for 6 months following the date of termination, i.e. Executive shall bepaid through the 183rd day following the date of termination. However, if the termination follows a Change of Control (as definedbelow) such payment shall be made as a lump sum within 5 days of termination. Salary means Executive’s salary before voluntarywithholdings and reductions (such as those for parking, 401(k) plan, medical, dental, and life insurance) and before mandatorywithholdings for taxes and other governmentally required payments such as garnishments. At the election of Executive, the employeeshare of the cost of benefits (provided in paragraph 4) may be paid through a salary reduction agreement (in order to make suchpayments with pre-tax income). If the amount payable under this paragraph is less than the amount payable under Executive’s offerletter or other agreement no payment shall be made under this paragraph and Executive shall instead receive the payment provided forin the offer letter or other agreement.4.If Executive is terminated other than for Cause or Executive terminates his or her employment for Good Reason, Executiveshall continue to receive through the last day of the sixth month following the month in which termination occurs health insurance,dental insurance, life insurance (to the extent paid by the company), and long term disability insurance. Cogent shall pay the companyshare of such benefits and Executive shall pay the employee share, e.g. the employee portion of the premium for health and dentalinsurance. The employee share and company share shall be the same as currently applicable to the benefits at the time of termination.If the value of the benefit under this paragraph is less than the benefit under Executive’s offer letter or other agreement no benefit shallbe provided under this paragraph and Executive shall instead receive the benefit provided for in the offer letter or other agreement.5.For purposes of this agreement, Cogent shall have “Cause” to terminate the Executive’s employment hereunder (i) upon theExecutive’s conviction for the commission of an act or acts constituting a felony under the laws of the United States or any statethereof, or (ii) upon the Executive’s willful and continued failure to substantially perform his or her duties hereunder (other than anysuch failure resulting from the Executive’s incapacity due to physical or mental illness), after written notice has been 2delivered to the Executive by Cogent, which notice specifically identifies the manner in which the Executive has not substantiallyperformed his duties, and the Executive’s failure to substantially perform his duties is not cured within ten (10) business days afternotice of such failure has been given to the Executive. No act or failure to act on the Executive’s part shall be deemed “willful” unlessdone or omitted to be done, by the Executive not in good faith and without reasonable belief that the Executive’s act, or failure to act,was in the best interest of Cogent.6.“Good Reason” shall mean the occurrence (without the Executive’s express written consent) of any one of the following:a.the assignment to Executive of duties inconsistent with the Executive’s status as a senior executive officer of theCompany or a substantial adverse alteration in the nature or status of the Executive’s responsibilities; orb.if Executive is an attorney, resignation required by any applicable law, regulation, rule, or code of professionalresponsibility; orc.a reduction in Executive’s salary; ord.relocation of Executive’s principal place of employment outside of the Washington, DC area.7.“Change of Control” shall mean any of the following: (i) a consolidation, merger or reorganization of CogentCommunications Group, Inc. with or into any other corporation or corporations in which the stockholders of Cogent CommunicationsGroup , Inc. immediately before such event shall own fifty percent (50%) or less (calculated on an as converted basis, fully diluted) ofthe voting securities of the surviving corporation;(ii) a transaction or series of related transactions, other than an underwritten publicoffering, in which at least fifty percent (50%) of Cogent Communications Group, Inc.’s voting power is transferred; (iii) the sale,transfer or lease of all or substantially all of the assets of Cogent Communications Group, Inc.; (iv) the acquisition of shares of capitalstock of Cogent Communications Group, Inc. (whether through a direct issuance by Cogent Communications Group, Inc., negotiatedstock purchase, a tender for such shares, merger, consolidation or otherwise) by any party or group that did not beneficially own amajority of the voting power of the outstanding shares of capital stock of Cogent Communications Group, Inc. immediately prior tosuch purchase, the effect of which is that such party or group beneficially owns at least a majority of such voting power immediatelyafter such event; or (v) the consummation by Cogent Communications Group, Inc. of a plan of complete liquidation of CogentCommunications Group, Inc.8.Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to any act or failure to actconstituting Good Reason hereunder. Notwithstanding the foregoing, a termination shall not be treated as a Termination for GoodReason if the Executive shall have consented in writing to the occurrence of the event giving rise to the claim of Termination for GoodReason.9.Executive shall be entitled to the indemnification set forth in the certificate of organization of any entity for which he or sheperforms services to the maximum extent permitted by law. Executive shall also be entitled to the protection of any insurance 3policies Cogent may elect to maintain generally for the benefit of its directors and officers.10.Executive agrees that he or she remains an employee at will whose employment may be terminated at any time with or withoutcause.11.Cogent agrees that Executive is giving consideration for this agreement by relying upon its provisions in determining whetheror not to seek other employment.Accepted and agreed to:Cogent Communications, Inc.ExecutiveBy:/s/ Dave Schaeffer/s/ John ChangName:Dave SchaefferName:John ChangTitle:CEODate:12/18/12Date:December 17, 2022 Exhibit 10.27Severance Agreement1.This agreement is entered into by Cogent Communications, Inc. (“Cogent”) and the executive employee signing this Agreement,below (“Executive”).2.As an inducement for Executive to focus his or her full efforts on Cogent’s business without undue concern for futureemployment the Compensation Committee of the Cogent Board of Directors has approved the following minimum severance provisionsfor Executive. This severance is not intended to reduce any severance arrangement provided for in Executive’s offer letter or otheragreement. In any case in which such offer letter or other agreement provides a greater severance compensation with respect to cashpayment or continuation of benefits Executive shall receive the greater cash payment or benefit.3.If Executive is terminated other than for Cause (as defined below) or Executive terminates his or her employment for GoodReason (as defined below), Executive shall continue to receive his or her salary (reduced by all mandatory withholdings for taxes or othergovernmentally required payments such as garnishments) for 3 months following the date of termination, i.e. Executive shall be paidthrough the 91st day following the date of termination. However, if the termination follows a Change of Control (as defined below) suchpayment shall be made as a lump sum within 5 days of termination. Salary means Executive’s salary before voluntary withholdings andreductions (such as those for parking, 40l(k) plan, medical, dental, and life insurance) and before mandatory withholdings for taxes andother governmentally required payments such as garnishments. At the election of Executive, the employee share of the cost of benefits(provided in paragraph 4) may be paid through a salary reduction agreement (in order to make such payments with pre-tax income). If theamount payable under this paragraph is less than the amount payable under Executive’s offer letter or other agreement no payment shall bemade under this paragraph and Executive shall instead receive the payment provided for in the offer letter or other agreement.4.If Executive is terminated other than for Cause or Executive terminates his or her employment for Good Reason, Executive shallcontinue to receive through the last day of the sixth month following the month in which termination occurs health insurance, dentalinsurance, life insurance (to the extent paid by the company), and long term disability insurance. Cogent shall pay the company share ofsuch benefits and Executive shall pay the employee share, e.g. the employee portion of the premium for health and dental insurance. Theemployee share and company share shall be the same as currently applicable to the benefits at the time of termination. If the value of thebenefit under this paragraph is less than the benefit under Executive’s offer letter or other agreement no benefit shall be provided underthis paragraph and Executive shall instead receive the benefit provided for in the offer letter or other agreement.5.If Executive is terminated other than for Cause in conjunction with or within 90 days following a Change of Control, Executiveshall on the date of notification of such termination become fully vested in any restricted stock, options, or other similar incentive planinvolving vesting.6.For purposes of this agreement, Cogent shall have “Cause” to terminate the Executive’s employment hereunder (i) upon theExecutive’s conviction for the 2commission of an act or acts constituting a felony under the laws of the United States or any state thereof, or (ii) upon the Executive’swillful and continued failure to substantially perform his or her duties hereunder (other than any such failure resulting from theExecutive’s incapacity due to physical or mental illness), after written notice has been delivered to the Executive by Cogent, which noticespecifically identifies the manner in which the Executive has not substantially performed his duties, and the Executive’s failure tosubstantially perform his duties is not cured within ten (10) business days after notice of such failure has been given to the Executive. Noact or failure to act on the Executive’s part shall be deemed “willful” unless done or omitted to be done, by the Executive not in good faithand without reasonable belief that the Executive’s act, or failure to act, was in the best interest of Cogent.7.“Good Reason” shall mean the occurrence (without the Executive’s express written consent) of any one of the following:a.the assignment to Executive of duties inconsistent with the Executive’s status as a senior executive officer of theCompany or a substantial adverse alteration in the nature or status of the Executive’s responsibilities; orb.if Executive is an attorney, resignation required by any applicable law, regulation, rule, or code of professionalresponsibility; orc.a reduction in Executive’s salary; ord.relocat ion of Executive’s principal place of employment outside of the Washington, DC area.8.“Change of Control” shall mean any of the following: (i) a consolidation, merger or reorganization of Cogent CommunicationsGroup, Inc. with or into any other corporation or corporations in which the stockholders of Cogent Communications Group, Inc.immediately before such event shall own fifty percent (50%) or less (calculated on an as converted basis, fully diluted) of the votingsecurities of the surviving corporation; (ii) a transaction or series of related transactions, other than an underwritten public offering, inwhich at least fifty percent (50%) of Cogent Communications Group, Inc.’s voting power is transferred; (iii) the sale, transfer or lease ofall or substantially all of the assets of Cogent Communications Group, Inc.; (iv) the acquisition of shares of capital stock of CogentCommunications Group, Inc. (whether through a direct issuance by Cogent Communications Group, Inc., negotiated stock purchase, atender for such shares, merger, consolidation or otherwise) by any party or group that did not beneficially own a majority of the votingpower of the outstanding shares of capital stock of Cogent Communications Group, Inc. immediately prior to such purchase, the effect ofwhich is that such party or group beneficially owns at least a majority of such voting power immediately after such event; or (v) theconsummation by Cogent Communications Group, Inc. of a plan of complete liquidation of Cogent Communications Group, Inc..9.Executive’s continued employment shall not constitute consent to, or a waiver of rights with respect to any act or failure to actconstituting Good Reason hereunder. Notwithstanding the foregoing, a termination shall not be treated as a Termination for 3Good Reason if the Executive shall have consented in writing to the occurrence of the event giving rise to the claim of Termination forGood Reason.10.Executive shall be entitled to the indemnification set forth in the certificate of organization of any entity for which he or sheperforms services to the maximum extent permitted by law. Executive shall also be entitled to the protection of any insurance policiesCogent may elect to maintain generally for the benefit of its directors and officers.11.Executive agrees that he or she remains an employee at will whose employment may be terminated at any time with or withoutcause.12.Cogent agrees that Executive is giving consideration for this agreement by relying upon its provisions in determining whether ornot to seek other employment.Accepted and agreed to:Cogent Communications, Inc.ExecutiveBy:/s/ Dave Schaeffer/s/ Raymond B. KummerName:Dave SchaefferName:Raymond B. KummerTitle:CEODate:September 15, 2003Date:9/25/03 In Effect as of February 1, 2022EXHIBIT 21.1Legal EntityJurisdictionCOGENT COMMUNICATIONS HOLDINGS, INC.(Delaware)subsidiaries:COGENT COMMUNICATIONS GROUP, INC.(Delaware)COGENT COMMUNICATIONS, INC.(Delaware)COGENT COMMUNICATIONS OF CALIFORNIA, INC.(Delaware)COGENT AFRICAONE, LLC(Delaware)COGENT AFRICATWO, LLC(Delaware)COGENT IH, LLC(Delaware)COGENT WG, LLC(Delaware)COGENT RB, LLC(Delaware)COGENT TW, LLC(Delaware)COGENT COMMUNICATIONS OF D.C., INC.(Delaware)COGENT COMMUNICATIONS OF FLORIDA, INC.(Delaware)COGENT COMMUNICATIONS OF MARYLAND, INC.(Delaware)COGENT COMMUNICATIONS OF TEXAS USA, INC.(Delaware)COGENT CANADA, INC.(Nova Scotia)CCM COMMUNICATIONS S. de R.L. de C.V.(Mexico)COGENT ARGENTINA S.R.L.(Argentina)COGENT BRASIL HOLDINGS LTDA.(Brazil)COGENT BRASIL TELECOMUNICAÇÕES LTDA.(Brazil)COGENT COMMUNICATIONS CHILE LIMITADA(Chile)COGENT COLOMBIA S.A.S.(Colombia)COGENT PERU S.R.L.(Peru)COGENT COMMUNICATIONS AUSTRALIA PTY LTD(Australia)COGENT COMMUNICATIONS HONG KONG LIMITED(Hong Kong)COGENT JAPAN G.K.(Japan)COGENT KOREA, LLC (Cogent Korea yuhan hoesa) (South Korea)COGENT NEW ZEALAND LIMITED(New Zealand)COGENT INTERNET SINGAPORE PTE. LTD.(Singapore)COGENT TAIWAN LIMITED(Taiwan)COGENT COMMUNICATIONS (THAILAND) LIMITED(Thailand)COGENT INTERNET PRIVATE LIMITED(India)COGENT COMMUNICATIONS KENYA LIMITED(Kenya)COGENT INTERNET NIGERIA LTD(Nigeria)COGENT SOUTH AFRICA PTY. LTD.(South Africa)COGENT COMMUNICATIONS TANZANIA LIMITED(Tanzania)COGENT EUROPE HOLDINGS, S.À .R.L.(Luxembourg)COGENT EUROPE, S.À R.L.(Luxembourg)COGENT ALBANIA SH.P.K.(Albania)COGENT COMMUNICATIONS BELGIUM SPRL(Belgium)COGENT COMMUNICATIONS BULGARIA EOOD(Bulgaria)COGENT INTERNET d.o.o.(Croatia)COGENT COMMUNICATIONS CZECH REPUBLIC, s.r.o.(Czech Republic)COGENT COMMUNICATIONS DENMARK ApS(Denmark)COGENT COMMUNICATIONS ESTONIA, OÜ(Estonia)COGENT COMMUNICATIONS FINLAND OY(Finland)COGENT COMMUNICATIONS FRANCE, SAS(France)C.C.D. COGENT COMMUNICATIONS DEUTSCHLAND GMBH(this entity has branch operations in Austria and Sweden)(Germany)COGENT HELLAS INTERNET SERVICES SOLE MEMBER LLC(Greece)COGENT COMMUNICATIONS HUNGARY, KFT.(Hungary)CCE COGENT INTERNET SERVICES LIMITED(Ireland)COGENT COMMUNICATIONS ITALIA S.R.L.(Italy)COGENT LATVIA SIA(Latvia)COGENT LITHUANIA UAB(Lithuania)COMPANY FOR INTERNET SERVICES COGENT MACEDONIA DOOEL SKOPJE(Macedonia)Î.C.S. COGENT INTERNET MLD S.R.L.(Moldova)COGENT COMMUNICATIONS MONTENEGRO d.o.o.(Montenegro)COGENT COMMUNICATIONS NETHERLANDS B.V.(The Netherlands)COGENT MANAGEMENT BV(The Netherlands)COGENT NORWAY AS(Norway)COGENT COMMUNICATIONS POLAND Sp. zo. o.(Poland)COGENT COMMUNICATIONS PORTUGAL, LDA.(Portugal)COGENT COMMUNICATIONS ROMANIA SRL(Romania)COGENT SERB d.o.o. BEOGRAD(Serbia)COGENT COMMUNICATIONS SLOVAKIA s.r.o.(Slovak Republic)COGENT ADRIA, KOMUNIKACIJE , d.o.o.(Slovenia)COGENT COMMUNICATIONS ESPAÑA S.L.(Spain)COGENT INTERNET SWITZERLAND LLC(Switzerland)COGENT COMMUNICATIONS INTERNET SERVICES LLC(Turkey)TOV COGENT COMMUNICATIONS UKRAINE(Ukraine)COGENT COMMUNICATIONS UK LTD(United Kingdom) COMPANY FOR INTERNET SERVICES COGENT MACEDONIA DOOEL SKOPJE(Macedonia)Î.C.S. COGENT INTERNET MLD S.R.L.(Moldova)COGENT COMMUNICATIONS MONTENEGRO d.o.o.(Montenegro)COGENT COMMUNICATIONS NETHERLANDS B.V.(The Netherlands)COGENT MANAGEMENT BV(The Netherlands)COGENT NORWAY AS(Norway)COGENT COMMUNICATIONS POLAND Sp. zo. o.(Poland)COGENT COMMUNICATIONS PORTUGAL, LDA.(Portugal)COGENT COMMUNICATIONS ROMANIA SRL(Romania)COGENT SERB d.o.o. BEOGRAD(Serbia)COGENT COMMUNICATIONS SLOVAKIA s.r.o.(Slovak Republic)COGENT ADRIA, KOMUNIKACIJE , d.o.o.(Slovenia)COGENT COMMUNICATIONS ESPAÑA S.L.(Spain)COGENT INTERNET SWITZERLAND LLC(Switzerland)COGENT COMMUNICATIONS INTERNET SERVICES LLC(Turkey)TOV COGENT COMMUNICATIONS UKRAINE(Ukraine)COGENT COMMUNICATIONS UK LTD(United Kingdom) EXHIBIT 23.1Consent of Independent Registered Public Accounting FirmWe consent to the incorporation by reference in the following Registration Statements:(1)Registration Statement (Form S-8 No. 333-255712) pertaining to the Cogent Communications Holdings, Inc. 2017 Incentive AwardPlan.(2)Registration Statement (Form S-8 No. 333-231145) pertaining to the Cogent Communications Holdings, Inc. 2017 Incentive AwardPlan.(3)Registration Statement (Form S-8 No. 333-217608) pertaining to the Cogent Communications Holdings, Inc. 2017 Incentive AwardPlan.(4)Registration Statement (Form S-8 No. 333-196528) pertaining to the Cogent Communications Holdings, Inc. 2004 Incentive AwardPlan.(5)Registration Statement (Form S-8 No. 333-181195) pertaining to the Cogent Communications Holdings, Inc. 2004 Incentive AwardPlan.(6)Registration Statement (Form S-8 No. 333-166615) pertaining to the Cogent Communications Holdings, Inc. 2004 Incentive AwardPlan.(7)Registration Statement (Form S-8 No. 333-142759) pertaining to the Cogent Communications Holdings, Inc. 2004 Incentive AwardPlan.(8)Registration Statement (Form S-8 No. 333-126676) pertaining to the Cogent Communications Holdings, Inc. 2004 Incentive AwardPlan.of our reports dated February 25, 2022, with respect to the consolidated financial statements and schedule listed in the Index at Item 15(a)2of Cogent Communications Holdings, Inc. and the effectiveness of internal control over financial reporting of Cogent CommunicationsHoldings, Inc. included in this Annual Report (Form 10-K) of Cogent Communications Holdings, Inc. for the year ended December 31,2021./s/ Ernst & Young LLPTysons, VA February 25, 2022 Exhibit 31.1Certification of Chief Executive OfficerI, David Schaeffer, certify that:1.I have reviewed this Annual Report on Form 10-K of Cogent Communications Holdings, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respectto the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in thisreport;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f)) for the registrant and have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in which this report is being prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report basedon such evaluation; andd)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing theequivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;andb)any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.Date: February 25, 2022/s/ DAVID SCHAEFFERName:David SchaefferTitle:Chief Executive Officer Exhibit 31.2Certification of Chief Financial OfficerI, Sean Wallace, certify that:1.I have reviewed this Annual Report on Form 10-K of Cogent Communications Holdings, Inc.;2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respectto the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in thisreport;4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange ActRules 13a-15(f) and 15d-15(f)) for the registrant and have:a)designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period in which this report is being prepared;b)designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation offinancial statements for external purposes in accordance with generally accepted accounting principles;c)evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report basedon such evaluation; andd)disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during theregistrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected,or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing theequivalent functions):a)all significant deficiencies and material weaknesses in the design or operation of internal control over financial reportingwhich are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;andb)any fraud, whether or not material, that involves management or other employees who have a significant role in theregistrant’s internal control over financial reporting.Date: February 25, 2022/s/ SEAN WALLACEName:Sean WallaceTitle:Chief Financial Officer Exhibit 32.1Certification of Chief Executive OfficerPursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of CogentCommunications Holdings, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:(i)the accompanying Annual Report on Form 10-K of the Company for the year ended December 31, 2021 (the “Report”) fullycomplies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of 1934, as amended; and(ii)the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations ofthe Company.Date: February 25, 2022/s/ DAVID SCHAEFFERDavid SchaefferChief Executive OfficerThe foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed forpurposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing ofthe Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing. Exhibit 32.2Certification of Chief Financial OfficerPursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of CogentCommunications Holdings, Inc. (the “Company”) hereby certifies, to such officer’s knowledge, that:(i)the accompanying Annual Report on Form 10-K of the Company for the year ended December 31, 2021 (the“Report”) fully complies with the requirements of Section 13(a) or Section 15(d), as applicable, of the Securities Exchange Act of1934, as amended; and(ii)the information contained in the Report fairly presents, in all material respects, the financial condition andresults of operations of the Company.Date: February 25, 2022/s/ SEAN WALLACESean WallaceChief Financial OfficerThe foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed forpurposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing ofthe Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
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