Tucows 2014 Annual Report Download - page 191

(b) In January 2015, the Company borrowed $3.5 million under its Amended Credit Facility in order to
fund the acquisition of a controlling ownership in Ting Virginia, LLC (see note 16(d)). This borrowing is subject to
the terms and conditions described in note 8 to the Consolidated Financial Statements. See item (d) below.
(c) On February 11, 2015, the Board of Directors approved a stock buyback program to repurchase up to
$20 million of its common stock in the open market and privately negotiated transactions. Purchases will be made
exclusively through the facilities of the NASDAQ Capital Market. The stock buyback program commenced on
February 16, 2015 and will terminate on or before February 15, 2016. As of March 6, 2015, the Company has spent a
total of $2.0 million to repurchase 108,605 shares under this stock buyback program, and therefore, the remaining
repurchase authorization is $18.0 million.
All shares purchased by Tucows under the stock buyback program will be retired and returned to treasury.
(d) On February 24, 2015, Ting Fiber, Inc., one of the Company’s wholly owned subsidiaries, acquired a
controlling ownership interest in the newly formed Ting Virginia, LLC and its acquired subsidiaries, Blue Ridge
Websoft LLC (doing business as Blue Ridge InternetWorks), Fiber Roads, LLC and Navigator Network Services,
LLC (the BRI Group) for a consideration of approximately $3.6 million. Ting Virginia, LLC is an independent
Internet service provider in Charlottesville, Virginia, doing business primarily as Blue Ridge InternetWorks. The BRI
Group provides high speed internet access, Internet hosting and network consulting services to over 3,000 customers
in central Virginia. Tucows will satisfy the purchase price through an advance under its 2012 DLR Loan facility.
(e) In February 2015, the Company waived our rights under the proposed joint venture to operate
the .online registry and instead entered into a Joint Marketing agreement with our venture partners under which our
original capital contributions have been returned and a set of go-forward marketing arrangements have been created
instead. These marketing arrangements have resulted in a positive financial contribution for us, which will be
recognized once all the terms of the contract have been satisfied, commencing in the three months ending March
31, 2015.
17. Segment Reporting:
(a) The Company is organized and managed based on two segments, which are differentiated primarily by
their services, the markets they serve and the regulatory environments in which they operate. The two segments are
Domain Services and Network Access Services and are described as follows:
1. 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.
2. Network Access Services - This segment derives revenue from the sale of retail mobile phones and
services to individuals and small businesses through the Ting website. Revenues are generated in
the United States.
The Chief Executive Officer is the chief operating decision maker and regularly reviews the operations and
performance by segment. The chief operating decision maker reviews gross profit as a key measure of performance for
each segment and 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, loss on
disposition of property and equipment, amortization of intangibles, impairment of indefinite life intangible assets, loss
(gain) on currency forward contracts, other income (expense), and provision for income taxes, 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 chief operating decision maker. The Company
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