. Derivative instruments and hedging activities:

Foreign currency forward contracts

October 2012,

the Company entered into a hedging program with a Canadian chartered bank to limit the potential foreign exchange fluctuations incurred on its future cash flows related to a portion of payroll, rent

, Canadian taxes and payments to Canadian domain name registry suppliers that are denominated in Canadian dollars and are expected to be paid by its Canadian operating subsidiary. As part of its risk management strategy, the Company uses derivative instruments to hedge a portion of the foreign exchange risk associated with these costs. The Company does

not

use forward contracts for trading or speculative purposes. These forward contracts typically mature between

one

and

eighteen

months.

The Company has designated certain of these transactions as cash flow hedges of forecasted transactions. For certain contracts, as the critical terms of the hedging instrument and the entire hedged forecasted transaction are the same in accordance with ASC Topic

815,

the Company has been able to conclude that changes in fair value and cash flows attributable to the risk of being hedged are expected to completely offset at inception and on an ongoing basis. Accordingly, unrealized gains or losses on the effective portion of these contracts have been included within other comprehensive income. The fair value

of the contracts, as of

June 30, 2017,

is recorded as derivative instrument assets and derivative instrument liabilities.

As of

June 30, 2017,

the notional amount of forward contracts that the Company held to sell U.S. dollars in exchange for Canadian dollars was

$13.8

million, of which

$12.5

million were designated as hedges (

December 31, 2016 -

$26.6

million of which

$24.0

million were designated as hedges).

As of

June 30, 2017,

we had the following outstanding forward exchange contracts to trade U.S. dollars in exchange for Canadian dollars:

Maturity date	Notional amount of U.S. dollars		Weighted average exchange rate of U.S. dollars		Fair value

July - September 2017		6,928,942		1.3494		289,005
October - December 2017		6,859,570		1.3478		284,373
	$	13,788,512		1.3486	$	573,378

Fair value of derivative instruments and

effect of derivative instruments on financial performance

The effect of these derivative instruments on our consolidated financial stat

ements were as follows (amounts presented do

not

include any income tax effects).

Fair value of derivative instruments in the consolidated balance sheets

		As of June 30 , 2017		As of December 31, 2016
Derivatives	Balance Sheet Location	Fair Value Asset (Liability)		Fair Value Asset (Liability)

Foreign currency forward contracts designated as cash flow hedges	Derivative instruments	$	517,894	$	155,560

Foreign currency forward contracts not designated as cash flow hedges	Derivative instruments	$	55,484	$	17,823

Total foreign currency forward contracts	Derivative instruments	$	573,378	$	172,888

Movement in

Accumulated Other Comprehensive Income ("AOCI") balance for the

three

months

ended

June 30, 2017

	Gains and losses on cash flow hedges			Tax impact			Total AOCI
Opening AOCI balance – March 31, 2017	$	321,248		$	(116,485	)	$	204,763

Other comprehensive income (loss) before reclassifications		223,983			(81,215	)		142,768
Amount reclassified from accumulated other comprehensive income		(27,337	)		9,912			(17,425	)
Other comprehensive income (loss) for the three months ended June 30, 2017		196,646			(71,303	)		125,343

Ending AOCI balance – June 30, 2017	$	517,894		$	(187,788	)	$	330,106

Movement in Accumulated Other Comprehensive Income ("AOCI") balance for the

six

months ended

June 30, 2017:

	Gains and losses on cash flow hedges			Tax impact			Total AOCI
Opening AOCI balance – December 31, 2016	$	155,560		$	(56,406	)	$	99,154

Other comprehensive income (loss) before reclassifications		516,154			(187,157	)		328,997
Amount reclassified from accumulated other comprehensive income		(153,820	)		55,775			(98,045	)
Other comprehensive income (loss) for the six months ended June 30, 2017		362,334			(131,382	)		230,952

Ending AOCI balance – June 30, 2017	$	517,894		$	(187,788	)	$	330,106

Effects of derivative instruments on income and other comprehensive income (OCI) for the

three

months ended

June 30, 2017

and

June 30, 2016

are as follows:

Derivatives in Cash Flow Hedging Relationship	Amount of Gain or (Loss) Recognized in OCI, net of tax, on Derivative (Effective Portion)		Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income, (Effective Portion)			Location of Gain or (Loss) Recognized in Income on Derivative (ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (ineffective Portion and Amount Excluded from Effectiveness Testing)

			Operating expenses	$	23,595		Operating expenses	$	—
Foreign currency forward contracts for the three months ended June 30, 2017	$	125,343	Cost of revenues	$	3,742		Cost of revenues		—


			Operating expenses	$	(88,441	)	Operating expenses	$	—
Foreign currency forward contracts for the three months ended June 30, 2016	$	106,631	Cost of revenues	$	(36,075	)	Cost of revenues		—

Effects of derivative instruments on income and other comprehensive income (OCI) for the

six

months

ended

June 30, 2017

and

June 30, 2016

are as follows:

Derivatives in Cash Flow Hedging Relationship	Amount of Gain or (Loss) Recognized in OCI, net of tax, on Derivative (Effective Portion)		Location of Gain or (Loss) Reclassified from Accumulated OCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from Accumulated OCI into Income, (Effective Portion)			Location of Gain or (Loss) Recognized in Income on Derivative (ineffective Portion and Amount Excluded from Effectiveness Testing)	Amount of Gain or (Loss) Recognized in Income on Derivative (ineffective Portion and Amount Excluded from Effectiveness Testing)

			Operating expenses	$	128,950		Operating expenses	$	—
Foreign currency forward contracts for the six months ended June 30, 2017	$	230,952	Cost of revenues	$	24,870		Cost of revenues		—


			Operating expenses	$	(460,830	)	Operating expenses	$	(47,242	)
Foreign currency forward contracts for the six months ended June 30, 2016	$	990,151	Cost of revenues	$	(142,891	)	Cost of revenues		—

addition to the above, for those foreign currency forward contracts

not

designated as hedges, the Company has recorded a gain of

$6,568

upon settlement and a gain of

$20,207

for the change in fair value of outstanding contracts for the

three

months ended

June 30, 2017,

in the consolidated statement of operations and comprehensive income. The Company has recorded a loss of

$21,008

upon settlement and a gain of

$28,977

for the change in fair value of the foreign currency forward contracts

not

designated as hedges for the

three

months ended

June 30, 2016,

in the consolidated statement of operations and comprehensive income.

The Company has recorded a gain of $

23,045

upon settlement and a gain of

$38,156

for the change in fair value of outstanding contracts for the

six

months ended

June 30, 2017,

in the consolidated statement of operations and comprehensive income. The Company has recorded a loss of

$0.2

million upon settlement and a gain of

$0.3

million for the change in fair value of the foreign currency forward contracts

not

designated as hedges for the

six

months ended

June 30, 2016,

in the consolidated statement of operations and comprehensive income.