XML 62 R19.htm IDEA: XBRL DOCUMENT v2.4.1.9
Note 12 - Segment Reporting
 3 Months Ended
Mar. 31, 2015
Segment Reporting [Abstract]  
Segment Reporting Disclosure [Text Block]

12. 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, as well as provides high speed Internet access, Internet hosting and network consulting to customers in Central Virginia through its acquisition of a 70% share in Ting Virginia, LLC. 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, 2015

 

Domain Name

Services

   

Network

Access

Services

   

Consolidated

Totals

 

Net Revenues

  $ 27,540,819     $ 12,927,014     $ 40,467,833  

Cost of Revenues

    19,476,217       7,345,157       26,821,374  

Gross Profit before network expenses

    8,064,602       5,581,857       13,646,459  
                         

Network expenses

                    1,425,662  

Gross Profit

                    12,220,797  
                         

Expenses:

                       

Sales and marketing

                    3,799,175  

Technical operations and development

                    1,114,195  

General and administrative

                    1,815,188  

Depreciation of property and equipment

                    59,262  

Amortization of intangibles

                    53,215  

Impairment of indefinite life intangible assets

                    12,493  

Loss on currency forward contracts

                    956,858  

Income from operations

                    4,410,411  

Other expenses, net

                    24,775  

Income before provision for income taxes

                  $ 4,385,636  

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  

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  

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


    Three months ended March 31,  
   

2015

   

2014

 

Domain Services:

               

Wholesale

               

Domain Services

  $ 21,175,131     $ 21,648,954  

Value Added Services

    2,241,998       2,603,605  

Total Wholesale

    23,417,129       24,252,559  
                 

Retail

    2,875,728       2,384,063  

Portfolio

    1,247,962       1,053,640  

Total Domain Services

    27,540,819       27,690,262  
                 

Network Access Services:

               

Ting

    12,927,014       6,712,132  

Total Network Access Services

    12,927,014       6,712,132  
                 
    $ 40,467,833     $ 34,402,394  

During the three months ended March 31, 2015 and 2014, no customer accounted for more than 10% of total revenue. As at March 31, 2015 and 2014, 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 March 31,  
    2015       2014  

Domain Services:

                 

Wholesale

                 

Domain Services

  $ 17,548,027       $ 18,235,215  

Value Added Services

    536,132         540,722  

Total Wholesale

    18,084,159         18,775,937  
                   

Retail

    1,220,500         1,015,416  

Portfolio

    171,558         243,855  

Total Domain Services

    19,476,217         20,035,208  
                   
                   

Network Access Services:

                 

Ting

    7,345,157         4,281,431  

Total Network Access Services

    7,345,157         4,281,431  
                   

Network Expenses:

                 

Network, other costs

    1,222,096         1,143,644  

Network, depreciation and amortization costs

    203,566         182,974  

Total Network Expenses

    1,425,662         1,326,618  
                   
    $ 28,247,036       $ 25,643,257  

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


   

March 31,

2015

   

December 31,

2014

 

Canada

  $ 1,122,910     $ 1,131,883  

United States

    4,145,540       379,891  

Germany

    77,620       98,013  
    $ 5,346,070     $ 1,609,787  

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


   

March 31,

2015

   

December 31,

2014

 

United States

  $ 754,191     $ —  

Germany

    684,400       735,730  
    $ 1,438,591     $ 735,730  

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


   

March 31,

2015

   

December 31,

2014

 

Canada

  $ 8,107,573     $ 7,378,619  
    $ 8,107,573     $ 7,378,619  

(g)           Valuation and qualifying accounts:


   

Balance at

beginning

period

   

Charged to

(recovered)

costs and

expenses

   

Write-offs

during

period

   

Balance at

end of

period

 

Allowance for doubtful accounts, excluding provision for credit notes

                               

Three months ended March 31, 2015

  $ 125,766     $ 3,996     $ —     $ 121,770  

Year ended December 31, 2014

  $ 91,226     $ (34,540

)

  $ —     $ 125,766