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Note 19 - Segment Reporting
 12 Months Ended
Dec. 31, 2020
Notes to Financial Statements  
Segment Reporting Disclosure [Text Block]

 19. 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 “Note 2 – Significant Accounting Policies”, and “Note 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

 

Year Ended December 31, 2020

            
             

Net Revenues

 $68,948  $242,254  $311,202 
             

Cost of revenues

            

Cost of revenues

  32,950   167,451   200,401 

Network expenses

  2,430   7,764   10,194 

Depreciation of property and equipment

  10,544   1,600   12,144 

Amortization of intangible assets

  98   1,242   1,340 
Impairment of Property Plant and Equipment  1,638   -   1,638 

Total cost of revenues

  47,660   178,057   225,717 

Gross Profit

  21,288   64,197   85,485 
             

Expenses:

            

Sales and marketing

          34,274 

Technical operations and development

          12,427 

General and administrative

          20,268 

Depreciation of property and equipment

          488 
Loss on disposition of property and equipment          (17)

Amortization of intangible assets

          10,080 
Impairment of definite life intangible assets          1,431 

Loss (gain) on currency forward contracts

          (383)

Income from operations

          6,917 

Other income (expenses), net

          3,843 

Income before provision for income taxes

         $10,760 

 

  

Network Access Services

  

Domain Services

  

Consolidated Totals

 

Year Ended December 31, 2019

            
             

Net Revenues

 $95,663  $241,482  $337,145 
             

Cost of revenues

            

Cost of revenues

  48,343   169,236   217,579 

Network expenses

  2,007   7,183   9,190 

Depreciation of property and equipment

  6,877   1,598   8,475 

Amortization of intangible assets

  46   1,078   1,124 

Total cost of revenues

  57,273   179,095   236,368 

Gross Profit

  38,390   62,387   100,777 
             

Expenses:

            

Sales and marketing

          34,270 

Technical operations and development

          9,717 

General and administrative

          17,880 

Depreciation of property and equipment

          486 
Loss on disposition of property and equipment          73 

Amortization of intangible assets

          9,209 

Loss (gain) on currency forward contracts

          (198)

Income from operations

          29,340 

Other income (expenses), net

          (4,769)

Income before provision for income taxes

         $24,571 

 

  

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 

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 

 

(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):

 

  

2020

  

2019

  

2018*

 
             

Network Access Services:

            
Mobile Services            

Retail mobile services

 $22,942  $44,415  $46,061 
Mobile platform services  56   -   - 

Other professional services

  2,970   -   - 
Total Mobile  25,968   44,415   46,061 
             
Fiber Internet Services  6,982   3,928   3,994 

Total Network Access Services

  32,950   48,343   50,055 
             

Domain Services:

            

Wholesale

            

Domain Services

  146,788   148,530   160,216 

Value Added Services

  3,161   2,986   3,154 

Total Wholesale

  149,949   151,516   163,370 
             

Retail

  17,023   17,093   17,725 

Portfolio

  479   627   953 

Total Domain Services

  167,451   169,236   182,048 
             

Network Expenses:

            

Network, other costs

  10,194   9,190   9,846 

Network, depreciation and amortization costs

  13,484   9,599   7,294 
Network, impairment  1,638   -   - 
Total Network Expenses  25,316   18,789   17,140 
             
  $225,717  $236,368  $249,243 

 

(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, 2020

  

December 31, 2019

 
         

Canada

 $2,521  $2,319 

United States

  114,968   79,758 

Europe

  41   44 
  $117,530  $82,121 

 

(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, 2020

  

December 31, 2019

 
         

Canada

 $2,385  $5,207 

United States

  32,767   40,138 
  $35,152  $45,345 

 

(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, 2020

  

December 31, 2019

 
         

Germany

 $226  $- 
  $226  $- 

 

(f)           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

 
                 

Year Ended December 31, 2020

 $131  $91  $-  $222 

Year Ended December 31, 2019

 $132  $(1) $-  $131