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Note 16 - Segment Reporting
 12 Months Ended
Dec. 31, 2013
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]

16. Segment Reporting: 


(a)           We are organized and managed based on two segments, which are differentiated primarily by their services, the markets they serve and the regulatory environments in which they operate. The two segments are Domain Services and Network Access Services and are described as follows:


 

1.

Domain Services – This segment includes wholesale and retail domain name registration services, value added services and portfolio services. The Company primarily earns revenues from the registration fees charged to resellers in connection with new, renewed and transferred domain name registrations; the sale of retail Internet domain name registration and email services to individuals and small businesses; and by making its portfolio of domain names available for sale or lease. Domain Services revenues are attributed to the country in which the contract originates, primarily Canada.


 

2.

Network Access Services - This segment derives revenue from the sale of retail mobile phones and services to individuals and small businesses through the Ting website. Revenues are generated in the United States.


The Chief Executive Officer is the chief operating decision maker and regularly reviews the operations and performance by segment. The chief operating decision maker reviews gross margin as a key measure of performance for each segment and to make decisions about the allocation of resources. Sales and marketing expenses, technical operations and development expenses, general and administrative expenses, depreciation of property and equipment, loss on disposition of property and equipment, amortization of intangibles, loss (gain) on currency forward contracts, other income (expense), and provision for income taxes, are organized along functional lines and are not included in the measurement of segment profitability. Total assets and total liabilities are centrally managed and are not reviewed at the segment level by the chief operating decision maker. The Company follows the same accounting policies for the segments as those described in note 2 to these consolidated financial statements.


Information by reportable segments, which is regularly reported to the chief operating decision maker is as follows:


Year Ended December 31, 2013

 

Domain

Name

Services

   

Network Access Services

   

Consolidated Totals

 

Net Revenues

  $ 113,404,668       16,530,236       129,934,904  

Cost of Revenues

    85,886,930       12,621,093       98,508,023  

Gross Profit

    27,517,738       3,909,143       31,426,881  
                         

Expenses:

                       

Sales and marketing

                    12,141,036  

Technical operations and development

                    4,158,603  

General and administrative

                    7,204,895  

Depreciation of property and equipment

                    215,447  

Amortization of intangibles

                    876,120  

Loss on currency forward contracts

                    676,120  

Income from operations

                    6,154,660  

Other expenses, net

                    (354,857 )

Income before provision for income taxes

                    5,799,803  

Year Ended December 31, 2012

 

Domain

Name

Services

   

Network Access Services

   

Consolidated Totals

 

Net Revenues

  $ 110,761,217       3,965,684     $ 114,726,901  

Cost of Revenues

    84,388,714       4,129,019       88,517,733  

Gross Profit

    26,372,503       (163,335 )     26,209,168  
                         

Expenses:

                       

Sales and marketing

                    8,701,446  

Technical operations and development

                    4,302,820  

General and administrative

                    6,610,819  

Depreciation of property and equipment

                    190,420  

Loss on disposition of property and equipment

                    118,944  

Amortization of intangibles

                    876,120  

Gain on currency forward contracts

                    (682,851 )

Income from operations

                    6,091,450  

Other income, net

                    336,848  

Income before provision for income taxes

                  $ 6,428,298  

The net revenues and cost of revenues for Network Access Services for fiscal 2011 are not material as TING was newly formed in fiscal 2011.


(b)           The following is a summary of the Company’s revenue earned from each significant revenue stream:


           

Year ended December 31,

         
   

2013

   

2012

   

2011

 
                         

Wholesale

                       

Domain Services

  $ 87,294,173     $ 87,434,450     $ 76,201,058  

Value Added Services

    10,271,219       10,586,460       9,268,460  

Total Wholesale

    97,565,392       98,020,910       85,469,518  
                         

Retail

    24,890,272       10,740,844       5,263,118  

Portfolio

    7,479,240       5,965,147       6,332,331  
    $ 129,934,904     $ 114,726,901     $ 97,064,967  

During the years ended December 31, 2013, 2012 and 2011, no customer accounted for more than 10% of total revenue. As at December 31, 2013 and 2012, no customers accounted for more than 10% of accounts receivable, as at December 31, 2011, one customer accounted for 16% of accounts receivable.


(c)           The following is a summary of the Company’s cost of revenues from each significant revenue stream:


           

Year ended December 31,

         
   

2013

   

2012

   

2011

 
                         

Wholesale

                       

Domain Services

  $ 73,468,824     $ 73,168,196     $ 63,491,433  

Value Added Services

    2,115,167       2,032,328       1,969,374  

Total Wholesale

    75,583,991       75,200,524       65,460,807  
                         

Retail

    16,142,116       6,804,863       1,881,063  

Portfolio

    1,234,214       832,008       746,517  

Network, other costs

    4,835,939       4,925,058       4,837,650  

Network, depreciation and amortization costs

    711,763       755,280       836,045  
    $ 98,508,023     $ 88,517,733     $ 73,762,082  

(d)           The following is a summary of the Company’s property and equipment by geographic region:


   

Year ended December 31,

 
   

2013

   

2012

 

Canada

  $ 1,292,425     $ 1,026,570  

United States

    453,223       306,679  

Germany

    12,188       18,895  
    $ 1,757,836     $ 1,352,144  

(e)           The following is a summary of the Company’s amortizable intangible assets by geographic region:


   

Year ended December 31,

 
   

2013

   

2012

 

Canada

  $ 271,300     $ 1,062,100  

Germany

    1,061,050       1,230,160  
    $ 1,332,350     $ 2,292,260  

(f)           The following is a summary of the Company’s deferred tax asset, net of valuation allowance, by geographic region:


   

Year ended December 31,

 
   

2013

   

2012

 

Canada

  $ 6,451,563     $ 5,970,462  
    $ 6,451,563     $ 5,970,462  

(g)           Valuation and qualifying accounts:


   

Balance at

beginning year

   

Charged to

(recovered)

costs and

expenses

   

Write-offs

during year

   

Balance at

end of year

 

Allowance for doubtful accounts, including provision for credit notes

                               

2013

  $ 78,970     $ 17,256     $ —     $ 96,226  

2012

  $ 62,415     $ 16,555     $ —     $ 78,970  

2011

  $ 65,000     $ (2,585

)

  $ —     $ 62,415  
                                 

Valuation allowance for deferred tax asset:

                               

2013

  $ —     $ —     $ —     $ —  

2012

  $ —     $ —     $ —     $ —  

2011

  $ 3,655,070     $ (3,655,070

)

  $ —     $ —