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

(

$2.1

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

(g) and there were

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

fifteen

years.

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.

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

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

years.

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

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

years, assuming

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