. 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 September 30, 2019	Network Access Services		Domain Services		Consolidated Totals
Net Revenues	$	24,612	$	63,517	$	88,129

Cost of revenues
Cost of revenues		12,107		43,649		55,756
Network expenses		515		1,739		2,254
Depreciation of property and equipment		1,797		434		2,231
Amortization of intangible assets		12		302		314
Total cost of revenues		14,431		46,124		60,555
Gross Profit						27,574

Expenses:
Sales and marketing						8,769
Technical operations and development						2,876
General and administrative						4,574
Depreciation of property and equipment						117
Loss on disposition of property and equipment						73
Amortization of intangible assets						2,544
Loss (gain) on currency forward contracts						20
Income from operations						8,601
Other income (expenses), net						(1,263	)
Income before provisions for income taxes					$	7,338

Three months ended September 30, 2018	Network Access Services		Domain Services		Consolidated Totals
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
Loss on disposition of property and equipment						-
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 provisions for income taxes					$	6,716

Nine months ended September 30, 2019	Network Access Services		Domain Services		Consolidated Totals
Net Revenues	$	71,493	$	179,706	$	251,199

Cost of revenues
Cost of revenues		35,681		126,880		162,561
Network expenses		1,552		5,482		7,034
Depreciation of property and equipment		4,907		1,163		6,070
Amortization of intangible assets		34		768		802
Total cost of revenues		42,174		134,293		176,467
Gross Profit		29,319		45,413		74,732

Expenses:
Sales and marketing						26,366
Technical operations and development						8,151
General and administrative						13,818
Depreciation of property and equipment						375
Loss on disposition of property and equipment						73
Amortization of intangible assets						6,661
Loss (gain) on currency forward contracts						(90	)
Income from operations						19,378
Other income (expenses), net						(3,549	)
Income before provisions for income taxes					$	15,829

Nine months ended September 30, 2018	Network Access Services		Domain Services		Consolidated Totals
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		935		3,697
Amortization of intangible assets		34		1,463		1,497
Total cost of revenues		42,151		149,211		191,362
Gross Profit		30,342		38,697		69,039

Expenses:
Sales and marketing						24,629
Technical operations and development						6,657
General and administrative						12,906
Depreciation of property and equipment						309
Loss on disposition of property and equipment						-
Amortization of intangible assets						5,456
Loss (gain) on currency forward contracts						22
Income from operations						19,060
Other income (expenses), net						(2,580	)
Income before provisions for income taxes					$	16,480

(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

	September 30, 2019		December 31, 2018
Canada	$	2,164	$	1,393
United States		69,586		46,631
Germany		417		41
	$	72,167	$	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

	September 30, 2019		December 31, 2018
Canada	$	5,548	$	6,553
United States		42,169		30,421
	$	47,717	$	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
Nine months ended September 30, 2019	$	132	$	(2	)	$	-	$	130
Year ended December 31, 2018	$	168	$	(36	)	$	-	$	132