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Note 5 - Goodwill and Other Intangible Assets | 12 Months Ended
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Dec. 31, 2018
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, 2018 and December 31, 2017. 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 for 2018 and 2017. 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 2018, we assessed that certain 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, 2018, domain names, with a book value of nil, were not renewed and were recorded as an impairment of indefinite life intangible assets. During the year ended December 31, 2017 domain names, with a book value of $0.1 million, were not renewed and were recorded as impairments of indefinite life intangible assets. Impairment of less than $0.1 million was recorded for the year ended December 31, 2016. Intangible assets, comprising brand, technology, customer relationships and network rights are being amortized on a straight-line basis over periods of two 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 2017, 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. On November 16, 2018, the Company acquired the right from The People’s Operator USA, LLC (“TPO”) to mass migrate TPO MVNO customers based in the United States, for consideration of $0.4 million. These assets have been assigned to Customer Relationships and are being amortized over 3 years. Acquired intangible assets consist of the following (Dollar amounts in thousands of U.S. dollars):
|  | Surname domain names |  |  | Direct navigation domain names |  |  | Brand |  |  | Customer relationships |  |  | Technology |  |  | Network rights |  |  | Total |
Amortization period |  | indefinite life |  |  | indefinite life |  |  | 7 years |  |  | 3 - 7 years |  |  | 2 years |  |  | 15 years |  |  |  |
Balances, December 31, 2016 |  | $ | 11,295 |  |  | $ | 1,869 |  |  | $ | 49 |  |  |  | 6,153 |  |  | $ | - |  |  | $ | 607 |  |  | $ | 19,973 |
Acquisition of Enom (note 3(b)) |  |  | - |  |  |  | - |  |  |  | 12,400 |  |  |  | 28,000 |  |  |  | 3,900 |  |  |  | - |  |  |  | 44,300 |
Acquisition of consumer related assets of Otono Networks, Inc. |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 2,623 |  |  |  | - |  |  |  | - |  |  |  | 2,623 |
Acquisition of customer relationships |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 320 |  |  |  | - |  |  |  | - |  |  |  | 320 |
Additions to/(disposals from) domain portfolio, net |  |  | (38 | ) |  |  | (253 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (291 | )
Impairment of indefinite life intangible assets |  |  | - |  |  |  | (111 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (111 | )
Amortization expense |  |  | - |  |  |  | - |  |  |  | (1,656 | ) |  |  | (4,911 | ) |  |  | (1,787 | ) |  |  | (46 | ) |  |  | (8,400 | )
Balances December 31, 2017 |  | $ | 11,257 |  |  | $ | 1,505 |  |  | $ | 10,793 |  |  | $ | 32,185 |  |  | $ | 2,113 |  |  | $ | 561 |  |  |  | 58,414 |
Acquisition of customer relationships |  |  | - |  |  |  | - |  |  |  | - |  |  |  | 565 |  |  |  | - |  |  |  | - |  |  |  | 565 |
Additions to/(disposals from) domain portfolio, net |  |  | (81 | ) |  |  | (260 | ) |  |  | - |  |  |  | - |  |  |  | - |  |  |  | - |  |  |  | (341 | )
Amortization expense |  |  | - |  |  |  | - |  |  |  | (1,789 | ) |  |  | (5,458 | ) |  |  | (1,950 | ) |  |  | (46 | ) |  |  | (9,243 | )
Balances December 31, 2018 |  | $ | 11,176 |  |  | $ | 1,245 |  |  | $ | 9,004 |  |  | $ | 27,292 |  |  | $ | 163 |  |  | $ | 515 |  |  | $ | 49,395 |
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 (Dollar amounts in thousands of U.S. dollars):
|  | Year ending December 31, |
2019 |  | $ | 7,488 |
2020 |  |  | 7,326 |
2021 |  |  | 7,315 |
2022 |  |  | 7,187 |
2023 |  |  | 7,187 |
Thereafter |  |  | 469 |
Total |  | $ | 36,972 |

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- Definition The entire disclosure for goodwill and intangible assets. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 350 -URI http://asc.fasb.org/topic&trid=2144416 + Details
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