XML 54 R15.htm IDEA: XBRL DOCUMENT v2.4.0.8
Note 9 - Segment Reporting
 6 Months Ended
Jun. 30, 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 June 30, 2014

 

Domain Name

Services

   

Network

Access

Services

   

Consolidated

Totals

 

Net Revenues

  $ 27,328,156     $ 8,259,845     $ 35,588,001  

Cost of Revenues

    19,696,030       5,039,974       24,736,004  

Gross Profit before network expenses

    7,632,126       3,219,871       10,851,997  
                         

Network expenses

                    1,318,660  

Gross Profit

                    9,533,337  
                         

Expenses:

                       

Sales and marketing

                    3,762,441  

Technical operations and development

                    1,107,532  

General and administrative

                    1,886,319  

Depreciation of property and equipment

                    52,538  

Amortization of intangibles

                    219,030  

Write-off / impairment of indefinite life intangible assets

                    326,457  

Loss on currency forward contracts

                    96,545  

Income from operations

                    2,082,475  

Other expenses, net

                    69,348  

Income before provision for income taxes

                  $ 2,013,127  

Six months ended June 30, 2014

 

Domain Name

Services

   

Network

Access

Services

   

Consolidated

Totals

 

Net Revenues

  $ 55,018,398     $ 14,971,997     $ 69,990,395  

Cost of Revenues

    39,731,238       9,321,405       49,052,643  

Gross Profit before network expenses

    15,287,160       5,650,592       20,937,752  
                         

Network expenses

                    2,645,278  

Gross Profit

                    18,292,474  
                         

Expenses:

                       

Sales and marketing

                    7,784,215  

Technical operations and development

                    2,197,430  

General and administrative

                    3,654,119  

Depreciation of property and equipment

                    108,842  

Amortization of intangibles

                    438,060  

Write-off / impairment of indefinite life intangible assets

                    577,145  

Loss on currency forward contracts

                    647,916  

Income from operations

                    2,884,747  

Other expenses, net

                    143,181  

Income before provision for income taxes

                  $ 2,741,566  

Three months ended June 30, 2013

 

Domain Name Services

   

Network Access Services

   

Consolidated Totals

 

Net Revenues

  $ 27,439,382     $ 3,733,975     $ 31,173,357  

Cost of Revenues

    20,067,878       2,939,628       23,007,506  

Gross Profit before network expenses

    7,371,504       794,347       8,165,851  
                         

Network expenses

                    1,457,074  

Gross Profit

                    6,708,777  
                         

Expenses:

                       

Sales and marketing

                    2,946,586  

Technical operations and development

                    748,137  

General and administrative

                    1,698,697  

Depreciation of property and equipment

                    54,922  

Amortization of intangibles

                    219,030  

Loss on currency forward contracts

                    146,639  

Income from operations

                    894,766  

Other expenses, net

                    93,428  

Income before provision for income taxes

                  $ 801,338  

Six months ended June 30, 2013

 

Domain Name Services

   

Network Access Services

   

Consolidated Totals

 

Net Revenues

  $ 55,076,140     $ 6,082,239     $ 61,158,379  

Cost of Revenues

    40,035,792       5,049,613       45,085,405  

Gross Profit before network expenses

    15,040,348       1,032,626       16,072,974  
                         

Network expenses

                    2,884,269  

Gross Profit

                    13,188,705  
                         

Expenses:

                       

Sales and marketing

                    5,793,672  

Technical operations and development

                    1,881,967  

General and administrative

                    3,397,329  

Depreciation of property and equipment

                    105,861  

Amortization of intangibles

                    438,060  

Loss on currency forward contracts

                    381,277  

Income from operations

                    1,190,539  

Other expenses, net

                    192,790  

Income before provision for income taxes

                  $ 997,749  

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


      Three months ended June 30,       Six months ended June 30,  
   

2014

   

2013

   

2014

   

2013

 

Domain Services:

                               

Wholesale

                               

Domain Services

  $ 21,503,086     $ 21,800,101     $ 43,152,040     $ 43,696,001  

Value Added Services

    2,395,726       2,559,427       4,999,331       5,248,117  

Total Wholesale

    23,898,812       24,359,528       48,151,371       48,944,118  
                                 

Retail

    2,540,538       2,001,354       4,924,601       3,919,798  

Portfolio

    888,806       1,078,500       1,942,446       2,212,224  

Total Domain Services

    27,328,156       27,439,382       55,018,418       55,076,140  
                                 

Network Access Services:

                               

Ting

    8,259,845       3,733,975       14,971,977       6,082,239  

Total Network Access Services

    8,259,845       3,733,975       14,971,977       6,082,239  
                                 
    $ 35,588,001     $ 31,173,357     $ 69,990,395     $ 61,158,379  

During the three and six months ended June 30, 2014 and 2013, no customer accounted for more than 10% of total revenue. As at June 30, 2014, one customer accounted for 12% of accounts receivable, while as at June 30, 2013, no customer accounted for more than 10% of accounts receivable.


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


      Three months ended June 30,       Six months ended June 30,  
   

2014

   

2013

   

2014

   

2013

 

Domain Services:

                               

Wholesale

                               

Domain Services

  $ 17,809,325     $ 18,484,667     $ 36,044,540     $ 36,938,969  

Value Added Services

    563,011       520,456       1,103,733       1,082,494  

Total Wholesale

    18,372,336       19,005,123       37,148,273       38,021,463  
                                 

Retail

    1,110,659       833,327       2,126,075       1,583,923  

Portfolio

    213,035       229,428       456,890       430,406  

Total Domain Services

    19,696,030       20,067,878       39,731,238       40,035,792  
                                 

Network Access Services:

                               

Ting

    5,039,974       2,939,628       9,321,405       5,049,613  

Total Network Access Services

    5,039,974       2,939,628       9,321,405       5,049,613  
                                 

Network Expenses:

                               

Network, other costs

    1,144,697       1,269,808       2,288,341       2,524,021  

Network, depreciation and amortization costs

    173,963       187,266       356,937       360,248  

Total Network Expenses

    1,318,660       1,457,074       2,645,278       2,884,269  
                                 
    $ 26,054,664     $ 24,464,580     $ 51,697,921     $ 47,969,674  

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


   

June 30, 2014

   

December 31, 2013

 

Canada

  $ 1,184,101     $ 1,292,425  

United States

    464,442       453,223  

Germany

    45,177       12,188  
    $ 1,693,720     $ 1,757,836  

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


   

June 30, 2014

   

December 31, 2013

 

Canada

  $ 55,900     $ 271,300  

Germany

    838,390       1,061,050  
    $ 894,290     $ 1,332,350  

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


   

June 30, 2014

   

December 31, 2013

 

Canada

  $ 7,065,143     $ 6,451,563  
    $ 7,065,143     $ 6,451,563