XML 28 R13.htm IDEA: XBRL DOCUMENT v3.8.0.1
Note 5 - Goodwill and Other Intangible Assets
 12 Months Ended
Dec. 31, 2017
Notes to Financial Statements  
Goodwill and Intangible Assets Disclosure [Text Block]
5.
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
$90.1
million as of
December 31, 2017,
up
$69.0
million from
December 31, 2016,
as a result of the acquisition of eNom (note
3
(b)). The Company's goodwill relates
98%
(
$88.0
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 annual impairment test. The Company performed an impairment analysis as outlined in note
2
(g) and there were
no
indications of impairment in the
201
7
and
2016
impairment tests.
 
 
 
Other Intangible Assets:
 
Intangible assets consist of acquired brand, technology, customer relationships, surname domain names, direct navigation domain names and network rights. The Company considers its intangible assets consisting of surname domain names and direct navigation
domain names as indefinite life intangible assets. The Company has the exclusive right to these domain names as long as the annual renewal fees are paid to the applicable registry. Renewals occur routinely and at a nominal cost. The indefinite life intangible assets are
not
amortized, but are subject to impairment assessments performed throughout the year. During
2017,
we assessed that certain of the domain names that were originally acquired in the
June 2006
acquisition of Mailbank.com Inc. that were up for renewal, should
not
be renewed. During the year ended
December 31, 
2017,
domain names, with a book value of
$0.1
million, were
not
renewed and were recorded as an impairment of indefinite life intangible assets. During the year ended
December 31, 
2016
domain names, with a book value of
$42,673,
were
not
renewed and were recorded as impairments of indefinite life intangible assets. Impairment of
$0.2
million was recorded for the year ended
December 31, 2015.
 
Intangible assets, comprising brand,
technology, customer relationships and network rights are being amortized on a straight-line basis over periods of
four
to
fifteen
years.
 
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
3
(b) for further details.
 
On
September 19, 2017,
the Company acquired the consumer related assets of Otono, Networks Inc. for consideration of
$2.
6
million and assumed working capital liabilities of
$1.4
million. The intangible assets acquired relate to customer relationships and are being amortized on a straight-line basis over a period of
7
years.   
 
In Fiscal
201
7,
the Company also completed
two
smaller domain related asset acquisitions, primarily domain hosting customer relationships, for a total consideration of
$0.3
million. These assets have been assigned to Customer Relationships and are being amortized over
7
years. 
 
  
Acquired intangible assets consist of the following:
 
   
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, 2015
   $
11,339,355
     $
1,897,318
     $
79,670
     $
499,854
     $
-
     $
653,480
     $
14,469,677
  
Acquisition of customer relationships
    
-
      
-
      
-
      
6,529,654
      
-
      
-
      
6,529,654
  
Additions to/(disposals from) domain portfolio, net
    
(6,166
 )    
(23,525
 )    
-
      
-
      
-
      
-
      
(29,691
 )
Impairment of indefinite life intangible assets
    
(37,968
 )    
(4,705
 )    
-
      
-
      
-
      
-
      
(42,673
 )
Amortization expense
    
-
      
-
      
(74,460
 )    
(830,697
 )    
-
      
(48,017
 )    
(953,174
 )
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 3(b))
    
-
      
-
      
12,400,000
      
28,000,000
      
3,900,000
      
-
      
44,300,000
  
Acquisition of consumer related assets of Otono Networks, Inc.
    
-
      
-
      
-
      
2,622,670
      
-
      
-
      
2,622,670
  
Acquisition of customer relationships
    
-
      
-
      
-
      
319,694
      
-
      
-
      
319,694
  
Additions to/(disposals from) domain portfolio, net
    
(38,291
 )    
(252,501
 )    
-
      
-
      
-
      
-
      
(290,792
 )
Impairment of indefinite life intangible assets
    
-
      
(111,251
 )    
-
      
-
      
-
      
-
      
(111,251
 )
Amortization expense
    
-
      
-
      
(1,656,040
 )    
(4,910,268
 )    
(1,787,500
 )    
(46,128
 )    
(8,399,936
 )
Balances December 31, 2017
   $
11,256,930
     $
1,505,336
     $
10,792,790
     $
32,185,398
     $
2,112,500
     $
561,224
     $
58,414,178
  
 
 
The following table shows the estimated amortization expense for each of the next
5
years, assuming
no
further additions to acquired
intangible assets are made:
 
   
Year ending
December 31,
  
201
8
   $
9,246,620
  
201
9
    
7,335,572
  
20
20
    
7,173,072
  
202
1
    
7,173,072
  
202
2
    
7,173,072
  
Thereafter
    
7,550,504
  
Total
   $
45,651,912