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Note 12 - Segment Reporting | 9 Months Ended
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Sep. 30, 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 Network Access Services and Domain Services are described as follows:
1. | 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.
2. | 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.
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:
|  | Domain Name Services |  |  | Network Access Services |  |  | Consolidated Totals |
Three months ended September 30, 2015 |  |  |  |  |  |  |  |  |  |  |  |
Net Revenue |  | $ | 28,011,427 |  |  | $ | 16,540,482 |  |  | $ | 44,551,909 |
Cost of Revenues |  |  | 19,568,741 |  |  |  | 9,211,141 |  |  |  | 28,779,882 |
Gross Profit before network expenses |  |  | 8,442,686 |  |  |  | 7,329,341 |  |  |  | 15,772,027 |
Network expenses |  |  |  |  |  |  |  |  |  |  | 1,756,977 |
Gross Profit |  |  |  |  |  |  |  |  |  |  | 14,015,050 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |
Sales and marketing |  |  |  |  |  |  |  |  |  |  | 4,740,662 |
Technical operations and development |  |  |  |  |  |  |  |  |  |  | 1,101,581 |
General and administrative |  |  |  |  |  |  |  |  |  |  | 2,607,916 |
Depreciation of property and equipment |  |  |  |  |  |  |  |  |  |  | 63,790 |
Amortization of intangibles |  |  |  |  |  |  |  |  |  |  | 56,997 |
Impairment of indefinite life intangible assets |  |  |  |  |  |  |  |  |  |  | 18,550 |
Loss on currency forward contracts |  |  |  |  |  |  |  |  |  |  | 352,738 |
Income from operations |  |  |  |  |  |  |  |  |  |  | 5,072,816 |
Other expenses, net |  |  |  |  |  |  |  |  |  |  | 78,959 |
Income before provision for income taxes |  |  |  |  |  |  |  |  |  | $ | 4,993,857 |
|  | Domain Name Services |  |  | Network Access Services |  |  | Consolidated Totals |
Nine months ended September 30, 2015 |  |  |  |  |  |  |  |  |  |  |  |
Net Revenue |  | $ | 83,023,497 |  |  | $ | 44,885,465 |  |  | $ | 127,908,962 |
Cost of Revenues |  |  | 58,796,993 |  |  |  | 25,054,935 |  |  |  | 83,851,928 |
Gross Profit before network expenses |  |  | 24,226,504 |  |  |  | 19,830,530 |  |  |  | 44,057,034 |
Network expenses |  |  |  |  |  |  |  |  |  |  | 4,968,938 |
Gross Profit |  |  |  |  |  |  |  |  |  |  | 39,088,096 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |
Sales and marketing |  |  |  |  |  |  |  |  |  |  | 13,387,800 |
Technical operations and development |  |  |  |  |  |  |  |  |  |  | 3,405,052 |
General and administrative |  |  |  |  |  |  |  |  |  |  | 7,826,405 |
Depreciation of property and equipment |  |  |  |  |  |  |  |  |  |  | 185,074 |
Amortization of intangibles |  |  |  |  |  |  |  |  |  |  | 167,209 |
Impairment of indefinite life intangible assets |  |  |  |  |  |  |  |  |  |  | 68,848 |
Loss on currency forward contracts |  |  |  |  |  |  |  |  |  |  | 681,988 |
Income from operations |  |  |  |  |  |  |  |  |  |  | 13,365,720 |
Other expenses, net |  |  |  |  |  |  |  |  |  |  | 161,136 |
Income before provision for income taxes |  |  |  |  |  |  |  |  |  | $ | 13,204,584 |
|  | Domain Name Services |  |  | Network Access Services |  |  | Consolidated Totals |
Three months ended September 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |
Net Revenue |  | $ | 29,125,494 |  |  | $ | 9,748,689 |  |  | $ | 38,874,183 |
Cost of Revenues |  |  | 20,191,680 |  |  |  | 5,794,195 |  |  |  | 25,985,875 |
Gross Profit before network expenses |  |  | 8,933,814 |  |  |  | 3,954,494 |  |  |  | 12,888,308 |
Network expenses |  |  |  |  |  |  |  |  |  |  | 1,311,534 |
Gross Profit |  |  |  |  |  |  |  |  |  |  | 11,576,774 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |
Sales and marketing |  |  |  |  |  |  |  |  |  |  | 3,593,486 |
Technical operations and development |  |  |  |  |  |  |  |  |  |  | 1,041,136 |
General and administrative |  |  |  |  |  |  |  |  |  |  | 2,727,626 |
Depreciation of property and equipment |  |  |  |  |  |  |  |  |  |  | 58,685 |
Amortization of intangibles |  |  |  |  |  |  |  |  |  |  | 107,230 |
Impairment of indefinite life intangible assets |  |  |  |  |  |  |  |  |  |  | - |
Loss on currency forward contracts |  |  |  |  |  |  |  |  |  |  | 150,227 |
Income from operations |  |  |  |  |  |  |  |  |  |  | 3,898,384 |
Other expenses, net |  |  |  |  |  |  |  |  |  |  | 63,498 |
Income before provision for income taxes |  |  |  |  |  |  |  |  |  | $ | 3,834,886 |
|  | Domain Name Services |  |  | Network Access Services |  |  | Consolidated Totals |
Nine months ended September 30, 2014 |  |  |  |  |  |  |  |  |  |  |  |
Net Revenue |  | $ | 84,143,913 |  |  | $ | 24,720,665 |  |  | $ | 108,864,578 |
Cost of Revenues |  |  | 59,922,918 |  |  |  | 15,115,600 |  |  |  | 75,038,518 |
Gross Profit before network expenses |  |  | 24,220,995 |  |  |  | 9,605,065 |  |  |  | 33,826,060 |
Network expenses |  |  |  |  |  |  |  |  |  |  | 3,956,812 |
Gross Profit |  |  |  |  |  |  |  |  |  |  | 29,869,248 |
Expenses: |  |  |  |  |  |  |  |  |  |  |  |
Sales and marketing |  |  |  |  |  |  |  |  |  |  | 11,377,701 |
Technical operations and development |  |  |  |  |  |  |  |  |  |  | 3,238,566 |
General and administrative |  |  |  |  |  |  |  |  |  |  | 6,959,984 |
Depreciation of property and equipment |  |  |  |  |  |  |  |  |  |  | 167,527 |
Amortization of intangibles |  |  |  |  |  |  |  |  |  |  | 545,290 |
Impairment of indefinite life intangible assets |  |  |  |  |  |  |  |  |  |  | 577,145 |
Loss on currency forward contracts |  |  |  |  |  |  |  |  |  |  | 219,904 |
Income from operations |  |  |  |  |  |  |  |  |  |  | 6,783,131 |
Other expenses, net |  |  |  |  |  |  |  |  |  |  | 206,679 |
Income before provision for income taxes |  |  |  |  |  |  |  |  |  | $ | 6,576,452 |
(b) The following is a summary of the Company’s revenue earned from each significant revenue stream:
|  | Three months ended September 30, |  |  | Nine months ended September 30, |
|  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Domain Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Wholesale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domain Services |  | $ | 21,137,420 |  |  | $ | 21,880,181 |  |  | $ | 63,599,414 |  |  | $ | 65,032,221 |
Value Added Services |  |  | 2,404,449 |  |  |  | 2,350,195 |  |  |  | 7,002,284 |  |  |  | 7,349,527 |
Total Wholesale |  |  | 23,541,869 |  |  |  | 24,230,376 |  |  |  | 70,601,698 |  |  |  | 72,381,748 |
Retail |  |  | 3,153,992 |  |  |  | 2,687,478 |  |  |  | 9,039,185 |  |  |  | 7,612,079 |
Portfolio |  |  | 1,315,566 |  |  |  | 2,207,640 |  |  |  | 3,382,614 |  |  |  | 4,150,086 |
Total Domain Services |  |  | 28,011,427 |  |  |  | 29,125,494 |  |  |  | 83,023,497 |  |  |  | 84,143,913 |
Network Access Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ting |  |  | 16,540,482 |  |  |  | 9,748,689 |  |  |  | 44,885,465 |  |  |  | 24,720,665 |
Total Network Access Services |  |  | 16,540,482 |  |  |  | 9,748,689 |  |  |  | 44,885,465 |  |  |  | 24,720,665 |
|  | $ | 44,551,909 |  |  | $ | 38,874,183 |  |  | $ | 127,908,962 |  |  | $ | 108,864,578 |
During the three and nine months ended September 30, 2015 and 2014, no customer accounted for more than 10% of total revenue. As at September 30, 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 September 30, |  |  | Nine months ended September 30, |
|  | 2015 |  |  | 2014 |  |  | 2015 |  |  | 2014 |
Domain Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Wholesale |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Domain Services |  | $ | 17,612,791 |  |  | $ | 18,229,841 |  |  | $ | 52,904,084 |  |  | $ | 54,274,382 |
Value Added Services |  |  | 357,058 |  |  |  | 575,813 |  |  |  | 1,394,708 |  |  |  | 1,679,546 |
Total Wholesale |  |  | 17,969,849 |  |  |  | 18,805,654 |  |  |  | 54,298,792 |  |  |  | 55,953,928 |
Retail |  |  | 1,427,267 |  |  |  | 1,196,875 |  |  |  | 3,970,387 |  |  |  | 3,322,950 |
Portfolio |  |  | 171,625 |  |  |  | 189,151 |  |  |  | 527,814 |  |  |  | 646,040 |
Total Domain Services |  |  | 19,568,741 |  |  |  | 20,191,680 |  |  |  | 58,796,993 |  |  |  | 59,922,918 |
Network Access Services: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Ting |  |  | 9,211,141 |  |  |  | 5,794,195 |  |  |  | 25,054,935 |  |  |  | 15,115,600 |
Total Network Access Services |  |  | 9,211,141 |  |  |  | 5,794,195 |  |  |  | 25,054,935 |  |  |  | 15,115,600 |
Network Expenses: |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Network, other costs |  |  | 1,421,279 |  |  |  | 1,139,515 |  |  |  | 4,138,213 |  |  |  | 3,427,856 |
Network, depreciation and amortization costs |  |  | 335,698 |  |  |  | 172,019 |  |  |  | 830,725 |  |  |  | 528,956 |
Total Network Expenses |  |  | 1,756,977 |  |  |  | 1,311,534 |  |  |  | 4,968,938 |  |  |  | 3,956,812 |
|  | $ | 30,536,859 |  |  | $ | 27,297,409 |  |  | $ | 88,820,866 |  |  | $ | 78,995,330 |
(d) The following is a summary of the Company’s property and equipment by geographic region:
|  | September 30, 2015 |  |  | December 31, 2014 |
Canada |  | $ | 1,150,695 |  |  | $ | 1,131,883 |
United States |  |  | 5,256,958 |  |  |  | 379,891 |
Germany |  |  | 64,573 |  |  |  | 98,013 |
|  | $ | 6,472,226 |  |  | $ | 1,609,787 |
(e) The following is a summary of the Company’s amortizable intangible assets by geographic region:
|  | September 30, 2015 |  |  | December 31, 2014 |
United States |  | $ | 719,793 |  |  | $ | - |
Germany |  |  | 581,740 |  |  |  | 735,730 |
|  | $ | 1,301,533 |  |  | $ | 735,730 |
(f) The following is a summary of the Company’s deferred tax asset, net of valuation allowance, by geographic region:
|  | September 30, 2015 |  |  | December 31, 2014 |
Canada |  | $ | 8,919,616 |  |  | $ | 7,378,619 |
|  | $ | 8,919,616 |  |  | $ | 7,378,619 |
(g) Valuation and qualifying accounts:
|  | Balance at beginning of 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 |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Nine months ended September 30, |  | $ | 125,766 |  |  | $ | (2,734 | ) |  | $ | - |  |  | $ | 123,032 |
Year ended December 31, 2014 |  | $ | 91,226 |  |  | $ | 34,540 |  |  | $ | - |  |  | $ | 125,766 |

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