Note 6 - Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets Disclosure [Text Block]

. Goodwill and Other Intangible Assets:

Goodwill

Goodwill represents the excess of the purchase price over the fair value of tangible

and identifiable intangible assets acquired and liabilities assumed in our acquisitions.

The

Company's Goodwill balance is

$87.5

million as of

June 30, 2017,

$66.5

million from

December 31, 2016,

as a result of the acquisition of eNom (note

(b)). The Company's goodwill relates

98%

(

$85.4

million) to its Domain Services operating segment and

(

$2.1

million) to its Network Access Services operating segment.

Goodwill is

not

amortized, but is subject to an impairment

evaluation annually, or more frequently if impairment indicators are present.

Other Intangible Assets:

Intangible assets consist of network rights, brand, customer relationships, surname domain names

and our portfolio of domain names. As reflected in the table below, these balances are being amortized on a straight-line basis over the life of the intangible assets, except for the surname domain names and direct navigation domain names, which have been determined to have an indefinite life and which are evaluated at least annually for impairment.

summary of acquired intangible assets for the

three

months ended

June 30, 2017

is as follows:

	Surname domain names			Direct navigation domain names			Brand			Customer relationships			Technology			Network rights			Total
Amortization period	indefinite life			indefinite life			7 years			4 - 7 years			2 years			15 years

Balances March 31, 2017	$	11,293,275		$	1,861,246		$	12,106,378		$	33,114,944		$	3,531,370		$	595,820		$	62,503,033

Additions to/(disposals from) domain portfolio, net		(2,272	)		(4,704	)		-			-			-			-			(6,976	)
Amortization expense		-			-			(412,568	)		(1,195,920	)		(443,870	)		(11,532	)		(2,063,890	)
Balances June 30, 2017	$	11,291,003		$	1,856,542		$	11,693,810		$	31,919,024		$	3,087,500		$	584,288		$	60,432,167

summary of acquired intangible assets for the

six

months ended

June 30, 2017

is as follows:

	Surname domain names			Direct navigation domain names			Brand			Customer relationships			Technology			Network rights			Total
Amortization period	indefinite life			indefinite life			7 years			4 - 7 years			2 years			15 years

Balances December 31, 2016	$	11,295,221		$	1,869,088		$	5,210		$	6,198,811		$	-		$	605,463		$	19,973,793

Reclassifications		-			-			43,620			(45,509	)		-			1,889			-
Acquisition of Enom (note 4(b))		-			-			12,400,000			28,000,000			3,900,000			-			44,300,000
Additions to/(disposals from) domain portfolio, net		(4,218	)		(12,546	)		-			-			-			-			(16,764	)
Amortization expense		-			-			(755,020	)		(2,234,278	)		(812,500	)		(23,064	)		(3,824,862	)
Balances June 30, 2017	$	11,291,003		$	1,856,542		$	11,693,810		$	31,919,024		$	3,087,500		$	584,288		$	60,432,167

The following table shows the estimated amortization expense

in future periods, assuming

further additions to acquired intangible assets are made:

	Year ending December 31,

Remainder of 2017	$	4,464,173
2018		8,823,908
2019		6,912,860
2020		6,750,360
2021		6,750,360
Thereafter		13,582,961

Total	$	47,284,622

As of

June 30, 2017,

the accumulated amortization for the definite life intangible assets was

$10.7

million.

With regard to indefinite life intangible assets, as part of our normal renewal process we assessed that certain domain names that were acquired in the

June 2006

acquisition of Mailbank.com Inc. and that were up for

renewal should

not

be renewed. For the

three

and

six

months ended

June 30, 2017,

all domain names were renewed as compared to domain names with a book value of

$3,894

and

$24,879

were

not

renewed for the

three

and

six

months ended

June 30, 2016,

respectively.

January 20, 2017,

the Company acquired eNom, a wholesale and retail domain registrar. The Company acquired the assets and liabilities of eNom including wholesale and retail brands, proprietary technology and the existing customer relationships. The Company has accounted for these on a fair value basis and each intangible asset is being amortized over the estimated useful life. The amortization for the brands, technology and customer relationships are

and

years, respectively. See note

(b) for further details.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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