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Note 4 - Derivative Instrument Assets And Liabilities
 3 Months Ended
Mar. 31, 2013
Derivative Instruments and Hedging Activities Disclosure [Text Block]
4. Derivative instruments and hedging activities:

Foreign currency forward contracts

In October 2012, the Company entered into a hedging program with a Canadian chartered bank to limit the potential foreign exchange fluctuations incurred on its future cash flows related to a portion of payroll, rent and payments to a Canadian domain name registry supplier that are denominated in Canadian dollars and are expected to be paid by its Canadian operating subsidiary. As part of its risk management strategy, the Company uses derivative instruments to hedge a portion of the foreign exchange risk associated with these costs. The Company does not use these forward contracts for trading or speculative purposes. These forward contracts typically mature between one and eighteen months.

The Company has designated these transactions as cash flow hedges of forecasted transactions under ASC Topic 815 “Derivatives and Hedging” (ASC Topic 815). As the critical terms of the hedging instrument, and of the entire hedged forecasted transaction, are the same, in accordance with ASC Topic 815, the Company has been able to conclude that changes in fair value or cash flows attributable to the risk of being hedged are expected to completely offset at inception and on an ongoing basis. Accordingly, quarterly unrealized gains or losses on the effective portion of these contracts have been included within other comprehensive income. The fair value of the contracts, as of March 31, 2013, is recorded as derivative instrument assets and liabilities.

As of March 31, 2013, the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars was $23.3 million, of which $15.1 million met the requirements of ASC Topic 815 and were designated as hedges (March 31, 2012 - $25.3 million of which none were designated as hedges).

Fair value of derivative instruments and effect of derivative instruments on financial performance

The effect of these derivative instruments on our consolidated financial statements as of, and for the three months ended March 31, 2013, were as follows (amounts presented do not include any income tax effects).

Fair value of derivative instruments in the consolidated balance sheets

       
As of
March 31, 2013
   
As of
December 31, 2012
 
Derivatives
 
Balance Sheet
Location
 
Fair Value Asset
(Liability)
   
Fair Value Asset
(Liability)
 
                 
Foreign currency forward contracts designated as cash flow hedges
 
Derivative instruments
 
$
(215,483)
   
$
377,703
 
                     
Foreign currency forward contracts not designated as cash flow hedges
 
Derivative instruments
 
$
23,339
   
$
67,079
 
                     
Total foreign currency forward contracts
 
Derivative instruments
 
$
(192,144)
   
$
444,782
 

Effects of derivative instruments on income and other comprehensive income (OCI) for the three months ended March 31, 2013 is as follows:

Derivatives in Cash Flow
Hedging Relationship
 
Amount of Gain or (Loss) Recognized in OCI on Derivative (Effective Portion)
   
Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
   
Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)
   
Location of Gain or (Loss) Recognized in Income on Derivative (ineffective Portion and Amount Excluded from Effectiveness Testing)
   
Amount of Gain or (Loss) Recognized in Income on Derivative (ineffective Portion and Amount Excluded from Effectiveness Testing)
 
                               
Foreign currency forward contracts
 
$
(185,785)
     
—
     
—
     
—
     
—
 

In addition to the above, for those foreign currency forward contracts not designated as hedged, the Company has recorded a gain of $0.1 million and $0.6 million for the three months ended March 31, 2013 and March 31, 2012 respectively in the consolidated statement of operations and comprehensive income.