12.

Segment reporting:

(a) We are organized and managed based on

two

operating segments which are differentiated primarily by their services, the markets they serve and the regulatory environments in which they operate and are described as follows:

Network Access Services - This segment derives revenue from the sale of mobile phones, telephony services, high speed Internet access, billing solutions to individuals and small businesses primarily through the Ting website. Revenues are generated in the U.S.

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 and the U.S.

The Chief Executive Officer (the “CEO”) is the chief operating decision maker and regularly reviews the operations and performance by segment. The CEO reviews gross profit as (a) key measure of performance for each segment and (b) 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, amortization of intangibles assets, impairment of indefinite life intangible assets, gain on currency forward contracts and other expense net 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 CEO. The Company follows the same accounting policies for the segments as those described in Notes

and

to these consolidated financial statements.

Information by operating segments (with the exception of disaggregated revenue, which is contained in Note

), which is regularly reported to the CEO is as follows (Dollar amounts in thousands of U.S. dollars):

	Network Access Services		Domain Services		Consolidated Totals
Three months ended June 30, 2018

Net Revenues	$	24,306	$	56,781	$	81,087

Cost of revenues
Cost of revenues		13,268		41,233		54,501
Network expenses		640		2,061		2,701
Depreciation of property and equipment		903		325		1,228
Amortization of intangible assets		11		488		499
Total cost of revenues		14,822		44,107		58,929
Gross Profit		9,484		12,674		22,158

Expenses:
Sales and marketing						7,852
Technical operations and development						2,355
General and administrative						4,256
Depreciation of property and equipment						102
Amortization of intangible assets						1,827
Loss (gain) on currency forward contracts						52
Income from operations						5,714
Other income (expenses), net						(878	)
Income before provision for income taxes					$	4,836

	Network Access Services		Domain Services		Consolidated Totals
Three months ended June 30, 2017

Net Revenues	$	21,627	$	62,596	$	84,223

Cost of revenues
Cost of revenues		11,648		47,797		59,445
Network expenses		410		1,851		2,261
Depreciation of property and equipment		489		225		714
Amortization of intangible assets		11		444		455
Total cost of revenues		12,558		50,317		62,875
Gross Profit		9,069		12,279		21,348

Expenses:
Sales and marketing						7,447
Technical operations and development						1,798
General and administrative						3,285
Depreciation of property and equipment						165
Loss on disposal of property and equipment						2
Amortization of intangible assets						1,608
Loss (gain) on currency forward contracts						(27	)
Income from operations						7,070
Other income (expenses), net						(745	)
Income before provision for income taxes					$	6,325

	Network Access Services		Domain Services		Consolidated Totals
Six months ended June 30, 2018

Net Revenues	$	47,914	$	128,968	$	176,882

Cost of revenues
Cost of revenues		25,473		98,000		123,473
Network expenses		1,130		4,145		5,275
Depreciation of property and equipment		1,737		622		2,359
Amortization of intangible assets		23		975		998
Total cost of revenues		28,363		103,742		132,105
Gross Profit		19,551		25,226		44,777

Expenses:
Sales and marketing						16,217
Technical operations and development						4,450
General and administrative						8,786
Depreciation of property and equipment						203
Amortization of intangible assets						3,659
Loss (gain) on currency forward contracts						49
Income from operations						11,413
Other income (expenses), net						(1,650	)
Income before provision for income taxes					$	9,763

	Network Access Services		Domain Services		Consolidated Totals
Six months ended June 30, 2017

Net Revenues	$	40,876	$	112,915	$	153,791

Cost of revenues
Cost of revenues		22,040		86,716		108,756
Network expenses		951		3,653		4,604
Depreciation of property and equipment		916		389		1,305
Amortization of intangible assets		23		813		836
Total cost of revenues		23,930		91,571		115,501
Gross Profit		16,946		21,344		38,290

Expenses:
Sales and marketing						14,667
Technical operations and development						3,492
General and administrative						6,742
Depreciation of property and equipment						331
Loss on disposal of property and equipment						2
Amortization of intangible assets						2,989
Loss (gain) on currency forward contracts						(61	)
Income from operations						10,128
Other income (expenses), net						(1,484	)
Income before provision for income taxes					$	8,644

(b)

The following is a summary of the Company’s property and equipment by geographic region (Dollar amounts in thousands of U.S. dollars):

	June 30, 2018		December 31, 2017

Canada	$	1,518	$	1,176
United States		32,979		23,417
Germany		41		27
	$	34,538	$	24,620

(c)

The following is a summary of the Company’s amortizable intangible assets by geographic region (Dollar amounts in thousands of U.S. dollars):

	June 30, 2018		December 31, 2017

Canada	$	7,085	$	7,749
United States		33,895		37,783
Germany		17		120
	$	40,997	$	45,652

(d)

Valuation and qualifying accounts (Dollar amounts in thousands of U.S. dollars):

Allowance for doubtful accounts excluding provision for credit notes	Balance at beginning of period		Charged to costs and expenses			Write-offs during period		Balance at end of period

Six months ended June 30, 2018	$	168	$	(36	)	$	-	$	132
Year ended December 31, 2017	$	164	$	4		$	-	$	168