. 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 United States.

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 United States.

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 (i) a key measure of performance for each segment and (ii) 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 Note

– “Significant Accounting Policies”, and “Note

– “Revenue”.

Information by reportable segments (with the exception of disaggregated revenue, which is discussed in Note

- Revenue), which is regularly reported to the chief operating decision maker is as follows (Dollar amounts in thousands of US dollars):

	Network Access Services		Domain Services		Consolidated Totals
Year ended December 31, 2018

Net Revenues	$	97,324	$	248,689	$	346,013

Cost of revenues
Cost of revenues		50,055		182,048		232,103
Network expenses		2,029		7,817		9,846
Depreciation of property and equipment		4,063		1,235		5,298
Amortization of intangible assets		46		1,950		1,996
Total cost of revenues		56,193		193,050		249,243
Gross Profit		41,131		55,639		96,770

Expenses:
Sales and marketing						33,063
Technical operations and development						8,748
General and administrative						17,710
Depreciation of property and equipment						424
Amortization of intangible assets						7,247
Impairment of indefinite life intangible assets						-
Loss (gain) on currency forward contracts						254
Income from operations						29,324
Other income (expenses), net						(3,169	)
Income before provision for income taxes					$	26,155

	Network Access Services		Domain Services		Consolidated Totals
Year ended December 31, 2017

Net Revenues	$	89,452	$	239,969	$	329,421

Cost of revenues
Cost of revenues		48,640		181,960		230,600
Network expenses		1,861		7,463		9,324
Depreciation of property and equipment		2,201		941		3,142
Amortization of intangible assets		46		1,788		1,834
Total cost of revenues		52,748		192,152		244,900
Gross Profit		36,704		47,817		84,521

Expenses:
Sales and marketing						29,423
Technical operations and development						7,258
General and administrative						13,594
Depreciation of property and equipment						585
Amortization of intangible assets						6,566
Impairment of indefinite life intangible assets						111
Loss (gain) on currency forward contracts						(98	)
Income from operations						27,082
Other income (expenses), net						(3,007	)
Income before provision for income taxes					$	24,075

	Network Access Services		Domain Services		Consolidated Totals
Year ended December 31, 2016

Net Revenues	$	74,306	$	115,513	$	189,819

Cost of revenues
Cost of revenues		37,825		82,362		120,187
Network expenses		1,399		3,811		5,210
Depreciation of property and equipment		977		343		1,320
Amortization of intangible assets		48		-		48
Total cost of revenues		40,249		86,516		126,765
Gross Profit		34,057		28,997		63,054

Expenses:
Sales and marketing						20,755
Technical operations and development						4,495
General and administrative						11,405
Depreciation of property and equipment						504
Amortization of intangible assets						905
Impairment of indefinite life intangible assets						42
Loss (gain) on currency forward contracts						(99	)
Income from operations						25,047
Other income (expenses), net						66
Income before provision for income taxes					$	25,113

(b) The following is a summary of the Company’s cost of revenues from each significant revenue stream (Dollar amounts in thousands of US dollars):

	Year ended December 31,
	2018		2017		2016

Network Access Services:
Mobile Services	$	46,061	$	45,335	$	35,915
Other Services		3,994		3,305		1,910
Total Network Access Services		50,055		48,640		37,825

Domain Services:
Wholesale
Domain Services		160,216		161,013		72,948
Value Added Services		3,154		2,450		2,032
Total Wholesale		163,370		163,463		74,980

Retail		17,725		17,346		6,766
Portfolio		953		1,151		616
Total Domain Services		182,048		181,960		82,362

Network Expenses:
Network, other costs		9,846		9,324		5,210
Network, depreciation and amortization costs		7,294		4,976		1,368
		17,140		14,300		6,578

	$	249,243	$	244,900	$	126,765

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

	December 31, 2018		December 31, 2017

Canada	$	1,393	$	1,176
United States		46,631		23,417
Germany		41		27
	$	48,065	$	24,620

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

	December 31, 2018		December 31, 2017

Canada	$	6,553	$	7,749
United States		30,421		37,783
Germany		-		120
	$	36,974	$	45,652

(e) The following is a summary of the Company’s deferred tax asset, net of valuation allowance, by geographic region (Dollar amounts in thousands of US dollars):

	December 31, 2018		December 31, 2017

Canada	$	-	$	-
	$	-	$	-

(f) Valuation and qualifying accounts (Dollar amounts in thousands of US 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

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