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Note 9 - Segment Reporting
 3 Months Ended
Mar. 31, 2014
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]

9. 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.


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


Three months ended March 31, 2014

 

Domain Name

Services

   

Network

Access

Services

   

Consolidated

Totals

 

Net Revenues

  $ 27,690,262     $ 6,712,132     $ 34,402,394  

Cost of Revenues

    20,035,208       4,281,431       24,316,639  

Gross Profit before network expenses

    7,655,054       2,430,701       10,085,755  
                         

Network expenses

                    1,326,618  

Gross Profit

                    8,759,137  
                         

Expenses:

                       

Sales and marketing

                    4,021,774  

Technical operations and development

                    1,089,898  

General and administrative

                    1,767,800  

Depreciation of property and equipment

                    56,304  

Amortization of intangibles

                    219,030  

Write-off / impairment of indefinite life intangible assets

                    250,688  

Loss on currency forward contracts

                    551,371  

Income from operations

                    802,272  

Other expenses, net

                    73,833  

Income before provision for income taxes

                  $ 728,439  

Three months ended March 31, 2013

 

Domain Name Services

   

Network Access Services

   

Consolidated Totals

 

Net Revenues

  $ 27,636,759     $ 2,348,263     $ 29,985,022  

Cost of Revenues

    19,967,914       2,109,985       22,077,899  

Gross Profit before network expenses

    7,668,845       238,278       7,907,123  
                         

Network expenses

                    1,427,195  

Gross Profit

                    6,479,928  
                         

Expenses:

                       

Sales and marketing

                    2,847,086  

Technical operations and development

                    1,133,830  

General and administrative

                    1,698,632  

Depreciation of property and equipment

                    50,939  

Amortization of intangibles

                    219,030  

Loss on currency forward contracts

                    234,638  

Income from operations

                    295,773  

Other expenses, net

                    99,362  

Income before provision for income taxes

                  $ 196,411  

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


    Three months ended March 31,   
   

2014

   

2013

 

Domain Services:

               

Wholesale

               

Domain Services

  $ 21,648,954     $ 21,895,900  

Value Added Services

    2,603,605       2,688,690  

Total Wholesale

    24,252,559       24,584,590  
                 

Retail

    2,384,063       1,918,444  

Portfolio

    1,053,640       1,133,725  

Total Domain Services

    27,690,262       27,636,759  
                 

Network Access Services:

               

Ting

    6,712,132       2,348,263  

Total Network Access Services

    6,712,132       2,348,263  
                 
    $ 34,402,394     $ 29,985,022  

During the three months ended March 31, 2014 and 2013, no customer accounted for more than 10% of total revenue. As at March 31, 2014, one customer accounted for 12% of accounts receivable, while as at March 31, 2013, one customer accounted for 13% of accounts receivable.


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


    Three months ended March 31,  
   

2014

   

2013

 

Domain Services:

               

Wholesale

               

Domain Services

  $ 18,235,215     $ 18,454,303  

Value Added Services

    540,722       562,038  

Total Wholesale

    18,775,937       19,016,341  
                 

Retail

    1,015,416       750,595  

Portfolio

    243,855       200,978  

Total Domain Services

    20,035,208       19,967,914  
                 

Network Access Services:

               

Ting

    4,281,431       2,109,985  

Total Network Access Services

    4,281,431       2,109,985  
                 

Network Expenses:

               

Network, other costs

    1,143,644       1,254,213  

Network, depreciation and amortization costs

    182,974       172,982  

Total Network Expenses

    1,326,618       1,427,195  
                 
    $ 25,643,257     $ 23,505,094  

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


  

  

March 31, 2014

  

  

December 31, 2013

  

Canada

  

$

1,315,014

  

  

$

1,292,425

  

United States

  

  

523,526

  

  

  

453,223

  

Germany

  

  

34,584

  

  

  

12,188

  

  

  

$

1,873,124

  

  

$

1,757,836

  


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


  

  

March 31, 2014

  

  

December 31, 2013

  

Canada

  

$

223,600

  

  

$

271,300

  

Germany

  

  

889,720

  

  

  

1,061,050

  

  

  

$

1,113,320

  

  

$

1,332,350

  


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


  

  

March 31, 2014

  

  

December 31, 2013

  

Canada

  

$

6,890,534

  

  

$

6,451,563

  

  

  

$

6,890,534

  

  

$

6,451,563