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, 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 these 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 under Accounting Standards Codification (“ASC”) Topic

815,

Derivatives and Hedging

. 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

March 31, 2018,

is recorded as derivative instrument assets. For certain contracts where the hedged transactions are

longer probable to occur, the loss on the associated forward contract is reclassified from AOCI to earnings.

As of

March 31, 2018,

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

$12.8

million, of which

$11.3

million were designated as hedges as compared to the period as of

December 31, 2017

when the Company held

nil

contracts to trade U.S. dollars in exchange for Canadian dollars.

As of

March 31, 2018,

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

April - June 2018		3,176,805		1.2919		7,737
July - September 2018		3,394,161		1.2893		7,165
October - December 2018		1,604,112		1.2873		3,421
January - March 2019		1,639,448		1.2852		3,192
April - June 2019		1,599,200		1.2831		2,788
July - September 2019		1,366,226		1.2809		1,800
	$	12,779,952		1.2875	$	26,103

Fair value of derivative instruments and effect of derivative instruments on financial performance

The effect of these derivative instruments on our consolidated financial statements were as follows (amounts presented do

not

include any income tax effects).

Fair value of derivative

instruments in the consolidated balance sheets

		As of March 31, 2018		As of December 31, 201 7
Derivatives	Balance Sheet Location	Fair Value Asset (Liability)		Fair Value Asset (Liability)

Foreign currency forward contracts designated as cash flow hedges (net)	Derivative instruments	$	23,010	$	-

Foreign currency forward contracts not designated as cash flow hedges (net)	Derivative instruments	$	3,093	$	-

Total foreign currency forward contracts (net)	Derivative instruments	$	26,103	$	-

Movement in Accumulated Other Comprehensive

Income ("AOCI") balance for the

three

months ended

March 31, 2018

	Gains and losses on cash flow hedges		Tax impact			Total AOCI
Opening AOCI balance – December 31, 2017	$	-	$		-	$	-

Other comprehensive income (loss) before reclassifications		23,010		(5,585	)		17,425
Amount reclassified from accumulated other comprehensive income		-		-			-
Other comprehensive income (loss) for the three months ended March 31, 2018		23,010		(5,585	)		17,425

Ending AOCI balance – March 31, 2018	$	23,010	$	(5,585	)	$	17,425

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

three

months ended

March 31, 2018

and

March 31, 2017

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 AOCI into Income (Effective Portion)	Amount of Gain or (Loss) Reclassified from AOCI 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	$	-	Operating expenses	$	—
Foreign currency forward contracts for the three months ended March 31, 2018	$	-	Cost of revenues	$	-	Cost of revenues		—

			Operating expenses	$	105,355	Operating expenses	$	—
Foreign currency forward contracts for the three months ended March 31, 2017	$	105,609	Cost of revenues	$	21,128	Cost of revenues		—

In addition to the above, for those foreign currency forward contracts

not

designated as hedges, the Company recorded a gain of

$3,093

for the change in fair value of outstanding contracts for the

three

months ended

March 31, 2018,

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

$34,425

for the change in fair value of outstanding contracts and the settlement of contracts

not

designated as hedges for the

three

months ended

March 31, 2017,

in the consolidated statement of operations and comprehensive income.