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Note 3 - Business Acquisitions:
 12 Months Ended
Dec. 31, 2012
Business Combination Disclosure [Text Block]
3. Business acquisitions:

a.     Acquisition of EPAG Domainservices GMBH:

On August 1, 2011, Tucows (Germany) Inc. (“Tucows Germany”), one of the Company’s wholly owned subsidiaries, acquired 100% of the outstanding capital stock of EPAG, from QSC AG. EPAG, based in Bonn, Germany, is an ICANN-accredited registrar with over 400,000 domains under management and is notable for offering over 200 Top Level Domains (TLDs). Consideration for the acquisition of EPAG was approximately US$2.4 million (€1.7 million to purchase the shares and the settlement of a working capital adjustment of €0.25 million) through an all-cash transaction which was financed by utilizing the Company’s non-revolving, reducing demand loan facility in the amount of US$2.5 million. In August 2011, the Company repaid $1.0 million of this loan. The acquisition consideration is net of cash acquired of US$0.1 million and a loan receivable from EPAG assumed in the amount of US$0.1 million. In connection with the acquisition, the Company incurred approximately US$0.1 million of acquisition costs during the three months ended September 30, 2011 and recorded the expenses in the general and administrative expenses line in the consolidated statement of comprehensive income. These costs include legal and other professional services.

The Company has accounted for the acquisition of EPAG using the acquisition method as required in ASC 805, Business Combinations. As such, fair values have been assigned to the assets acquired and liabilities assumed and the excess of the total purchase price over the fair value of the net assets acquired is recorded as goodwill. The Company has completed the final valuation of the fair value assessment of the assets and liabilities acquired. The goodwill represents business benefits the Company anticipates realizing from optimizing resources and access to additional domain name TLD’s. The goodwill is not expected to be deductible for tax purposes.

Purchase price allocation

The following table summarizes the Company’s purchase price allocation based on the fair value of the assets acquired and liabilities assumed on August 1, 2011:

Accounts receivable
 
$
587,595
       
Cash acquired
   
118,477
       
Prepaid expenses and deposits
   
468,523
       
Prepaid domain name registry fees
   
1,116,798
       
Property and equipment
   
29,198
       
Intangible assets
   
1,723,800
       
Goodwill
   
882,320
       
Total assets acquired
           
4,926,711
 
                 
Accounts payable
   
92,950
         
Accrued liabilities
   
140,658
         
Customer deposits
   
32,603
         
Deferred revenue
   
1,425,182
         
Income taxes payable
   
172,380
         
Deferred tax liability
   
552,000
         
Total liabilities acquired
           
2,415,773
 
                 
Purchase price
         
$
2,510,938
 

The intangible assets acquired include technology in the amount of $0.3 million, the EPAG brand in the amount of $0.2 million and customer relationships in the amount of $1.2 million. The residual value from the purchase price has been allocated to goodwill. The technology is being amortized over two years, while the customer relationships and brand are being amortized over seven years.

The amount of EPAG’s revenues and net loss included in Tucows’ Consolidated Statements of Comprehensive Income for the years ended December 31, 2011, and the unaudited pro forma revenues and net income of the combined entity had the acquisition been consummated as of January 1, 2010, are set forth below:

   
Revenues
   
Net loss *
 
             
Actual from August 1, 2011 to December 31, 2011
 
$
1,588,228
   
$
29,184
 

   
Year ended December 31,
 
     
2011
     
2010
 
Supplemental Unaudited Pro Forma Information
               
                 
Total revenue
 
$
99,299,279
   
$
87,341,726
 
Net income **
 
$
5,903,687
   
$
2,300,429
 

*
Included within net loss for the period reported above are $57,440 of estimated amortization charges relating to the allocated values of intangible assets.

**
Included in pro forma net income are estimated amortization charges relating to the allocated values of intangible assets for all periods reported above.

The unaudited pro forma financial information in the table above is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented or the result that may be realized in the future.

b.          Goodwill:

Goodwill represents the excess of purchase price over the fair value of tangible or identifiable intangible assets acquired and liabilities assumed in our acquisitions. Intangible assets consist of acquired technology, brand, customer relationships, non-competition agreements, surname domain names and direct navigation domain names. Intangible assets, comprising technology, brand, customer relationships and non-competition arrangements related to the acquisition of Boardtown Corporation in April 2004, the acquisition of the Hosted Messaging Business of Critical Path, Inc. in January 2006, the acquisition of Mailbank.com Inc. in June 2006, the acquisition of Innerwise, Inc. in July 2007 and the acquisition of EPAG Domainservices GmbH in August 2011, are being amortized on a straight-line basis over periods of two to seven years.

The Company has other finite life intangible assets consisting of patented and non-patented technologies. These intangible assets are amortized over their expected economic lives. The lives are determined based upon the expected use of the asset, the estimated average life of the replacement parts of the reporting unit’s products, the stability of the industry, expected changes in and replacement value of distribution networks and other factors deemed appropriate.

Goodwill consists of the following:

   
Boardtown
Corporation
   
Hosted
Messaging
Assets of
Critical Path
   
Innerwise
Inc.
   
Mailbank.com
Inc.
   
EPAG
Domainservices
GmbH
   
Total
 
Balances, December 31, 2010
 
$
2,044,847
   
$
4,072,297
   
$
5,801,040
   
$
6,072,623
   
$
—
   
$
17,990,807
 
Balances, December 31, 2011
 
$
2,044,847
   
$
4,072,297
   
$
5,801,040
   
$
6,072,623
   
$
882,320
   
$
18,873,127
 
Balances, December 31, 2012
 
$
2,044,847
   
$
4,072,297
   
$
5,801,040
   
$
6,072,623
   
$
882,320
   
$
18,873,127
 

The Company accounts for goodwill in accordance with FASB’s authoritative guidance, which requires that goodwill and certain intangible assets are not amortized, but are subject to an annual impairment test. The Company completes its goodwill and certain intangible assets impairment test on an annual basis, during the fourth quarter of its fiscal year, or more frequently, if changes in facts and circumstances indicate that impairment in the value of goodwill and certain intangible assets recorded on its balance sheet may exist. The Company determined the estimated fair value for its reporting unit using the market approach that is based on the publicly traded common shares of the Company to estimate fair value. The carrying value was greater than the fair value, therefore no impairment exists and the second step was not performed.

With regards to property, equipment and definite life intangible assets, the Company continually evaluates whether events or circumstances have occurred that indicate the remaining estimated useful lives of its definite-life intangible assets may warrant revision or that the remaining balance of such assets may not be recoverable. The Company measures recoverability of assets to be held and used by comparing the carrying amount of the assets to future undiscounted net cash flows expected to be generated by the assets. Recoverability measurement and estimation of undiscounted cash flows is done at the lowest possible levels for which there are identifiable cash flows. If such assets fail the recoverability test, the impairment to be recognized is measured as the amount by which the carrying amount of assets exceeds the fair value of the assets. Assets to be disposed of are recorded at the lower of the carrying amount or fair value less costs to sell. Management must exercise judgment in determining whether an event has occurred that may impair the value of the long-lived assets. Factors that could indicate that impairment may exist include significant underperformance relative to a plan or long-term projections, significant changes in business strategy, significant negative industry or economic trends or a significant decline in our stock price or in the value of our reporting units for a sustained period of time. There was no impairment recorded on definite-life intangible assets and property and equipment during 2012 and 2011. As of December 31, 2012, the Company had $16.4 million in intangible assets.