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

– Basis of presentation,

– Recent accounting pronouncements, and

- Revenue.

Information by operating segments (with the exception of disaggregated revenue, which is discussed in note

- Revenue), 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 September 30, 2018

Net Revenues	$	24,579	$	58,940	$	83,519

Cost of revenues
Cost of revenues		12,271		42,834		55,105
Network expenses		479		1,836		2,315
Depreciation of property and equipment		1,026		313		1,339
Amortization of intangible assets		11		488		499
Total cost of revenues		13,787		45,471		59,258
Gross Profit		10,792		13,469		24,261

Expenses:
Sales and marketing						8,412
Technical operations and development						2,207
General and administrative						4,120
Depreciation of property and equipment						106
Amortization of intangible assets						1,797
Loss (gain) on currency forward contracts						(27	)
Income from operations						7,646
Other income (expenses), net						(930	)
Income before provision for income taxes					$	6,716

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

Net Revenues	$	23,191	$	61,817	$	85,008

Cost of revenues
Cost of revenues		12,960		47,771		60,731
Network expenses		445		2,016		2,461
Depreciation of property and equipment		578		245		823
Amortization of intangible assets		11		488		499
Total cost of revenues		13,994		50,520		64,514
Gross Profit		9,197		11,297		20,494

Expenses:
Sales and marketing						7,384
Technical operations and development						1,910
General and administrative						3,381
Depreciation of property and equipment						155
Impairment of indefinite life intangible assets						2
Amortization of intangible assets						1,746
Loss (gain) on currency forward contracts						(54	)
Income from operations						5,970
Other income (expenses), net						(707	)
Income before provision for income taxes					$	5,263

	Network Access Services		Domain Services		Consolidated T otals
Nine months ended September 30, 2018

Net Revenues	$	72,493	$	187,908	$	260,401

Cost of revenues
Cost of revenues		37,746		140,832		178,578
Network expenses		1,609		5,981		7,590
Depreciation of property and equipment		2,762		936		3,698
Amortization of intangible assets		34		1,463		1,497
Total cost of revenues		42,151		149,212		191,363
Gross Profit		30,342		38,696		69,038

Expenses:
Sales and marketing						24,629
Technical operations and development						6,657
General and administrative						12,906
Depreciation of property and equipment						309
Amortization of intangible assets						5,456
Loss (gain) on currency forward contracts						22
Income from operations						19,059
Other income (expenses), net						(2,580	)
Income before provision for income taxes					$	16,479

	Network Access Services		Domain Services		Consolidated Totals
Nine months ended September 30, 2017

Net Revenues	$	64,068	$	174,732	$	238,800

Cost of revenues
Cost of revenues		35,000		134,488		169,488
Network expenses		1,398		5,666		7,064
Depreciation of property and equipment		1,494		634		2,128
Amortization of intangible assets		35		1,300		1,335
Total cost of revenues		37,927		142,088		180,015
Gross Profit		26,141		32,644		58,785

Expenses:
Sales and marketing						22,051
Technical operations and development						5,402
General and administrative						10,124
Depreciation of property and equipment						486
Loss on disposal of property and equipment						2
Amortization of intangible assets						4,735
Loss (gain) on currency forward contracts						(115	)
Income from operations						16,100
Other income (expenses), net						(2,191	)
Income before provision for income taxes					$	13,909

(b)

The following is a summary of the Company’s property and equipment by geographic region (

Dollar amounts in thousands of U.S. dollars

	September 30, 2018		December 31, 2017*

Canada	$	1,420	$	1,176
United States		38,746		23,417
Germany		54		27
	$	40,220	$	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):

	September 30, 2018		December 31, 2017*

Canada	$	6,860	$	7,749
United States		31,954		37,783
Germany		-		120
	$	38,814	$	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

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