Note 6 - Goodwill and Other Intangible Assets

6 Months Ended

Jun. 30, 2020

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 $116.3 million as of June 30, 2020 and $109.8 million as of December 31, 2019. The Company's goodwill relates 93% ( $107.7 million) to its Domain Services operating segment and 7% ( $8.6 million) to its Network Access Services operating segment.

Goodwill is not amortized, but is subject to an annual impairment test, or more frequently if impairment indicators are present. No impairment was recognized during the three and six months ended June 30, 2020 and 2019.

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. As part of the normal renewal evaluation process during the periods ended June 30, 2020 and June 30, 2019, the Company 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.

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.

In June 2020, in light of developments in the economy and the business and leisure travel industries as a result of the novel strain of coronavirus (“COVID-19”) pandemic, the Company decided to discontinue the operation of Roam Mobility. As a consequence of the decision to shut down its Roam Mobility operations, the Company has recorded an impairment loss associated with Roam Mobility customer relationships of $1.4 million, as at June 30, 2020.

In June 2020, the Company committed to a plan to sell its Ting Mobile customer base and reclassified its mobile customer relationships totaling $2.6 million as held-for-sale assets (Note 9). See Note 19 - Subsequent Events for more information on the Company’s sale of its Ting Mobile customer base.

Throughout the second quarter of 2020, the Company purchased several non-exclusive land easements, totaling $0.1 million, which are necessary for the Company to install fiber internet infrastructure in conjunction with its Fiber Internet business.

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 - 7 years*			*15 years*

Balances, March 31, 2020	$	11,162		$	1,135	$	8,573		$	36,469		$	1,189		$	1,387		$	59,915
Cedar Networks acquisition (Note 4 (b))		-			-		-			10			-			(195	)		(185	)
Additions to/(disposals from) domain portfolio, net		(2	)		-		-			-			-			-			(2	)
Impairment of definite life intangible asset		-			-		-			(1,431	)		-			-			(1,431	)
Other		-			-		-			(223	)		-			-			(223	)
Classified as assets held for-sale		-			-		-			(2,581	)		-			-			(2,581	)
Acquisition of Network rights																69			69
Amortization expense		-			-		(517	)		(1,987	)		(305	)		(21	)		(2,830	)
Balances, June 30, 2020	$	11,160		$	1,135	$	8,056		$	30,257		$	884		$	1,240		$	52,732

	*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 - 7 years*			*15 years*

Balances, December 31, 2019	$	11,166		$	1,144		$	9,091		$	34,268		$	1,516		$	469		$	57,654
Cedar Networks acquisition (Note 4 (b))		-			-			-			4,640			-			750			5,390
Additions to/(disposals from) domain portfolio, net		(6	)		(9	)		-			-			-			-			(15	)
Impairment of definite life intangible asset		-			-			-			(1,431	)		-			-			(1,431	)
Other		-			-			-			(223	)		-			-			(223	)
Classifed as assets held for-sale		-			-			-			(2,581	)		-			-			(2,581	)
Acquisition of Network rights		-			-			-			-			-			69			69
Amortization expense		-			-			(1,035	)		(4,416	)		(632	)		(48	)		(6,131	)
Balances, June 30, 2020	$	11,160		$	1,135		$	8,056		$	30,257		$	884		$	1,240		$	52,732

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,*
Remainder of 2020	$	5,202
2021		11,783
2022		10,839
2023		8,811
2024		2,399
Thereafter		1,403
Total	$	40,437