. 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) 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):

Three months ended June 30, 2019	Network Access Services		Domain Services		Consolidated Totals
Net Revenues	$	23,630	$	60,487	$	84,117

Cost of revenues
Cost of revenues		11,762		43,111		54,873
Network expenses		516		1,869		2,385
Depreciation of property and equipment		1,656		382		2,038
Amortization of intangible assets		12		302		314
Total cost of revenues		13,946		45,664		59,610
Gross Profit		9,684		14,823		24,507

Expenses:
Sales and marketing						8,856
Technical operations and development						2,752
General and administrative						4,796
Depreciation of property and equipment						134
Amortization of intangible assets						2,251
Loss (gain) on currency forward contracts						(31	)
Income from operations						5,749
Other income (expenses), net						(1,314	)
Income before provisions for income taxes					$	4,435

Three months ended June 30, 2018	Network Access Services		Domain Services		Consolidated Totals
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 provisions for income taxes					$	4,836

Six months ended June 30, 2019	Network Access Services		Domain Services		Consolidated Totals
Net Revenues	$	46,882	$	116,188	$	163,070

Cost of revenues
Cost of revenues		23,574		83,231		106,805
Network expenses		1,038		3,742		4,780
Depreciation of property and equipment		3,109		730		3,839
Amortization of intangible assets		23		465		488
Total cost of revenues		27,744		88,168		115,912
Gross Profit		19,138		28,020		47,158

Expenses:
Sales and marketing						17,597
Technical operations and development						5,275
General and administrative						9,244
Depreciation of property and equipment						258
Amortization of intangible assets						4,117
Loss (gain) on currency forward contracts						(110	)
Income from operations						10,777
Other income (expenses), net						(2,286	)
Income before provisions for income taxes					$	8,491

Six months ended June 30, 2018	Network Access Services		Domain Services		Consolidated Totals
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 provisions for income taxes					$	9,763

(b)

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

Dollar amounts in thousands of U.S. dollars

Property and Equipment by region
	June 30, 2019		December 31, 2018
Canada	$	2,247	$	1,393
United States		61,558		46,631
Germany		205		41
	$	64,010	$	48,065

(c)

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

Amortizable assets by region
	June 30, 2019		December 31, 2018
Canada	$	5,883	$	6,553
United States		41,153		30,421
	$	47,036	$	36,974

(d)

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

Allowance for doubtful accounts	Balance at beginning of period		Charged to costs and expenses			Write- offs during period		Balance at end of period
Six months ended June 30, 2019	$	132	$	-		$	-	$	132
Year ended December 31, 2018	$	168	$	(36	)	$	-	$	132