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Note 13 - Segment Reporting
 9 Months Ended
Sep. 30, 2020
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]
13. 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:

 

1.     Network Access Services - This segment derives revenue from the retail sale of mobile phones, retail telephony services, retail high speed Internet access to individuals and small businesses primarily through the Ting website. The segment also derives revenue from MSE services and professional services to wholesale customers. Revenues are generated in the United States. 

 

2.     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 Notes 2 – Basis of Presentation, 3 – Recent Accounting Pronouncements, and 10 - Revenue.

 

Information by reportable segments (with the exception of disaggregated revenue, which is discussed in Note 10 – 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 
Three Months Ended September 30, 2020            
             
Net Revenues $13,509  $60,802  $74,311 
             
Cost of revenues            
Cost of revenues  6,389   41,941   48,330 
Network expenses  484   2,128   2,612 
Depreciation of property and equipment  2,631   354   2,985 
Amortization of intangible assets  26   304   330 
Impairment of Property Plant and Equipment  113   -   113 
Total cost of revenues  9,643   44,727   54,370 
Gross Profit  3,866   16,075   19,941 
             
Expenses:            
Sales and marketing          8,318 
Technical operations and development          3,162 
General and administrative          4,868 
Depreciation of property and equipment          125 
Amortization of intangible assets          2,315 
Loss (gain) on currency forward contracts          (159)
Income from operations          1,312 
Other income (expenses), net          244 
Income before provision for income taxes         $1,556 

 

  

Network Access Services

  

Domain Services

  

Consolidated Totals

 

Three Months Ended September 30, 2019

            
             

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

  10,181   17,393   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 provision for income taxes

         $7,338 

 

  

Network Access Services

  

Domain Services

  

Consolidated Totals

 

Nine Months Ended September 30, 2020

            
             

Net Revenues

 $59,946  $180,472  $240,418 
             

Cost of revenues

            

Cost of revenues

  28,287   125,021   153,308 

Network expenses

  1,627   5,886   7,513 

Depreciation of property and equipment

  7,629   1,263   8,892 

Amortization of intangible assets

  74   936   1,010 
Impairment of Property Plant and Equipment  1,638   -   1,638 

Total cost of revenues

  39,255   133,106   172,361 

Gross Profit

  20,691   47,366   68,057 
             

Expenses:

            

Sales and marketing

          26,521 

Technical operations and development

          8,980 

General and administrative

          15,074 

Depreciation of property and equipment

          363 

Amortization of intangible assets

          7,766 
Impairment of definite life intangible assets          1,431 

Loss (gain) on currency forward contracts

          (99)

Income from operations

          8,021 

Other income (expenses), net

          (1,924)

Income before provision for income taxes

         $6,097 

 

  

Network Access Services

  

Domain Services

  

Consolidated Totals

 

Nine Months Ended September 30, 2019

            
             

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 provision for income taxes

         $15,829 

 

(b)           The following is a summary of the Company’s property and equipment by geographic region (Dollar amounts in thousands of US dollars): 
 
  September 30, 2020  December 31, 2019 
         
Canada $2,249  $2,319 
United States  107,475   79,758 
Europe  43   44 
  $109,767  $82,121 

 

(c)           The following is a summary of the Company’s amortizable intangible assets by geographic region (Dollar amounts in thousands of US dollars): 
 
  September 30, 2020  December 31, 2019 
         
Canada $2,635  $5,207 
United States  35,157   40,137 
  $37,792  $45,344 

 

(d)           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): 
 
  September 30, 2020  December 31, 2019 
         
Canada $-  $- 
  $-  $- 

 

(e)           Valuation and qualifying accounts (Dollar amounts in thousands of US 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, 2020 $131  $85  $-  $216 
Twelve months ended December 31, 2019 $132  $(1) $-  $131