Annual report pursuant to section 13 and 15(d)

21. Segment Information

21. Segment Information
12 Months Ended
Dec. 31, 2012
Segment Reporting [Abstract]  
21. Segment Information

The Company complies with the accounting and reporting requirements on Disclosures about Segments of an Enterprise and Related Information. The guidance requires disclosures of segment information on the basis that is used internally for evaluating segment performance and for determining the allocation of resources to the operating segments.


The Company has two reportable segments that it operates and manages – Carrier Services and Business Services. These segments are organized by the products and services that are sold and the customers that are served. The Company measures and evaluates its reportable segments based on revenues and gross profit margins. The Company’s executive, administrative and support costs are allocated to the Company’s operating segments and are included in segment income. The Company’s segments and their principal activities consist of the following:


Carrier Services

Carrier Services includes the termination of carrier traffic utilizing Voice over Internet Protocol (“VoIP”)technology as well as traditional TDM (circuit switched) technology. VoIP permits a less costly and more rapid interconnection between the Company and international telecommunications carriers, and generally provides better profit margins for the Company than does TDM technology. The Company currently interconnects with over 270 carrier customers and vendors, and is working to expand its interconnection relationships, particularly with carriers in emerging markets.


Business Services

The Company provides a full portfolio of Unified Communications and cloud services, including VoIP solutions, private network services, broadband Internet access and a variety of cloud services and other advanced communications services to small and medium-sized businesses, as well as enterprise customers. These services are sold through both the Company’s direct sales force and its partner sales program, which utilizes the efforts of independent third-party distributors to sell the Company’s products and services. The Business Services segment includes the results of operations of NBS effective as of October 29, 2012.


Operating segment information for the years ended December 31, 2012 and 2011 is summarized as follows:


     Carrier Services   Business Services      Corporate and Unallocated     Consolidated   
 Revenues   $       37,488,639  $       6,798,870    $                 -       $     44,287,509  
 Cost of revenues (exclusive of               
   depreciation and amortization)            34,022,857           3,639,514                       -              37,662,371  
 Depreciation and amortization                 391,805              606,984                       -                   998,789  
 Selling, general and administrative expenses              5,716,980           4,721,987                       -              10,438,967  
 Other (income) expenses               (195,609)              631,579                       -                   435,970  
 Loss from continuing operations   $       (2,447,394)  $     (2,801,194)    $                 -       $     (5,248,588)  
 Total assets   $         2,235,099  $     23,079,280    $    1,754,048    $     27,068,427  
 Capital expenditures   $            107,121  $          251,838    $         18,933    $          377,892  


     Carrier Services   Business Services   Corporate and Unallocated   Consolidated   
 Revenues   $       40,126,511  $      2,224,129  $                 -     $     42,350,640  
 Cost of revenues (exclusive of           
   depreciation and amortization)            36,655,722          1,412,166                     -            38,067,888  
 Depreciation and amortization                 493,809               23,083                     -                 516,892  
 Loss on impairment of long-lived assets                 109,294               53,832                163,126  
 Selling, general and administrative expenses              4,521,924          3,375,415                     -              7,897,339  
 Advertising and marketing                          57               14,902                     -                   14,959  
 Other (income) expenses                 118,169               36,695                     -                 154,864  
 Loss from continuing operations   $       (1,772,464)  $    (2,691,964)  $                 -     $     (4,464,428)  
 Total assets   $         2,694,738  $      1,418,399  $       443,831  $       4,556,968  
 Capital expenditures   $            124,345  $             4,841  $         10,748  $          139,934  


The Company employs engineering, operations, information services and finance resources that service both the carrier and corporate services business segments and across multiple products and services. Depreciation and indirect operating expenses were allocated to each segment based upon its respective percent utilization of the personnel resources. The amounts reflected as Corporate & Unallocated represent those assets and capital expenditures that were not appropriate to allocate to a business segment or product line.