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Note 6 - Goodwill and Other Intangible Assets | 9 Months Ended
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Sep. 30, 2017
Notes to Financial Statements |
Goodwill and Intangible Assets Disclosure [Text Block] | 6 . 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 September 30, 2017, up $66.5 million from December 31, 2016, as a result of the acquisition of eNom (note 4 (b)). The Company's goodwill relates 98% ( $85.4 million) to its Domain Services operating segment and 2% ( $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 estimated useful 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. 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 nine months ended September 30, 2017, domain names with a book value of $ 1,500 were not renewed, respectively, as compared to domain names with a book value of $2,866 and $27,745 were not renewed for the three and nine months ended September 30, 2016, respectively. On 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 7, 2 and 7 years, respectively. See note 4 (b) for further details. On September 19, 2017, the Company acquired the consumer related assets of Otono, Networks Inc. for consideration of $2.3 million and assumed working capital liabilities of $1.4 million. The intangible assets acquired relate to cust omer relationships and are being amortized on a straight line basis over a period of 7 years. A summary of acquired intangible assets for the three months ended September 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 June 30, 2017 |  | $ | 11,291,003 |  |  | $ | 1,856,542 |  |  | $ | 11,693,810 |  |  | $ | 31,919,024 |  |  | $ | 3,087,500 |  |  | $ | 584,288 |  |  | $ | 60,432,167 |
Acquisition of consumer related assets of Otono Networks, Inc. |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,294,111 |  |  |  | - |  |  |  | - |  |  |  | 2,294,111 |
Acquisition of customer relationships |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 90,187 |  |  |  | - |  |  |  | - |  |  |  | 90,187 |
Additions to/(disposals from) domain portfolio, net |  |  | (1,623 | ) |  |  | (7,774 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (9,397 | )
Amortization expense |  |  | - |  |  |  | - |  |  |  | (450,510 | ) |  |  | (1,295,413 | ) |  |  | (487,500 | ) |  |  | (11,532 | ) |  |  | (2,244,955 | )
Balances September 30, 2017 |  | $ | 11,289,380 |  |  | $ | 1,848,768 |  |  | $ | 11,243,300 |  |  | $ | 33,007,909 |  |  | $ | 2,600,000 |  |  | $ | 572,756 |  |  | $ | 60,562,113 |
A summary of acquired intangible assets for the nine months ended September 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 |
Acquisition of consumer related assets of Otono Networks, Inc. |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,294,111 |  |  |  | - |  |  |  | - |  |  |  | 2,294,111 |
Acquisition of customer relationships |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 90,187 |  |  |  | - |  |  |  | - |  |  |  | 90,187 |
Additions to/(disposals from) domain portfolio, net |  |  | (5,841 | ) |  |  | (20,320 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (26,161 | )
Amortization expense |  |  | - |  |  |  | - |  |  |  | (1,205,530 | ) |  |  | (3,529,691 | ) |  |  | (1,300,000 | ) |  |  | (34,596 | ) |  |  | (6,069,817 | )
Balances September 30, 2017 |  | $ | 11,289,380 |  |  | $ | 1,848,768 |  |  | $ | 11,243,300 |  |  | $ | 33,007,909 |  |  | $ | 2,600,000 |  |  | $ | 572,756 |  |  | $ | 60,562,113 |
The following table shows the estimated amortization expense in future periods, assuming no further additions to acquired intangible assets are made:
|  | Year ending December 31, |
Remainder of 2017 |  | $ | 2,168,927 |
2018 |  |  | 9,166,244 |
2019 |  |  | 7,255,196 |
2020 |  |  | 7,092,696 |
2021 |  |  | 7,092,696 |
Thereafter |  |  | 14,648,206 |
Total |  | $ | 47,423,965 |
As of September 30, 2017, the accumulated amortization for the definite life intangible assets was $13.0 million.

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- 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. + References Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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