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Note 12 - Segment Reporting
 9 Months Ended
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