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Note 5 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2020

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.

Goodwill consists of the following (Dollar amounts in thousands of U.S. dollars):

	Network Access Services		Domain Services		Total

Balances, December 31, 2018	$	2,132	$	87,922	$	90,054
Ascio Technologies Inc. acquisition		-		19,764		19,764
Balances, December 31, 2019	$	2,132	$	107,686	$	109,818
Cedar Holdings Group, Inc. acquisition		6,486		-		6,486
Balances, December 31, 2020	$	8,618	$	107,686	$	116,304

The Company's Goodwill balance is $116.3 million as of December 31, 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. The Company performed an impairment analysis as outlined in “Note 2(g) – Significant Accounting Policies” and there were no indications of impairment for Fiscal 2020 and Fiscal 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. During Fiscal 2020, we assessed whether 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 years ended December 31, 2020, December 31, 2019, and December 31, 2018, no impairment of indefinite life intangible assets was recorded.

Finite-life 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 the third quarter of 2019, the Company acquired the mobile customer base of FreedomPop and Unreal Mobile brands from STS Media Inc., operating on the Sprint network. The migration of these customers occurred over a 60-day period, ending in September 2019 with subscribers having the option to accept the Ting offering or cancel or port their service elsewhere. The final purchase price was $3.5 million. These assets have been assigned to Customer Relationships and are being amortized over 3 years.

In June 2020, in light of developments in the economy and the business and leisure travel industries as a result of the 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 during the year ended December 31, 2020.

In August 2020, the Company sold the mobile customer accounts that are marketed and sold under the Ting brand (other than certain customer accounts associated with one network operator), and as such de-recognized any capitalized customer relationships associated with those accounts. See Note 16 - Other income, for more information.

Throughout Fiscal 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 years*			*15 years*

Balances, December 31, 2018	$	11,176		$	1,247		$	9,004		$	27,290		$	163		$	515		$	49,395
Ascio Technologies Inc. acquisition		-			-			2,090			10,610			2,440			-			15,140
FreedomPop acquisition		-			-			-			3,475			-			-			3,475
Acquisition of customer relationships		-			-			-			91			-			-			91
Additions to/(disposals from) domain portfolio, net		(12	)		(102	)		-			-			-			-			(114	)
Amortization expense		-			-			(2,003	)		(7,197	)		(1,087	)		(46	)		(10,333	)
Balances December 31, 2019	$	11,164		$	1,145		$	9,091		$	34,269		$	1,516		$	469			57,654
Cedar Holdings Group Inc. acquisition		-			-			-			4,640			-			750			5,390
Additions to/(disposals from) domain portfolio, net		(7	)		(10	)		-			-			-			-			(17	)
Impairment of definite life intangible asset											(1,431	)								(1,431	)
Other											(223	)								(223	)
Write-down of Ting Mobile customer relationships		-			-			-			(2,581	)		-			-			(2,581	)
Acquisition of Network rights											-						72			72
Amortization expense		-			-			(2,070	)		(8,010	)		(1,242	)		(98	)		(11,420	)
Balances December 31, 2020	$	11,157		$	1,135		$	7,021		$	26,664		$	274		$	1,193		$	47,444

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,*
2021	$	9,515
2022		9,345
2023		8,669
2024		4,455
2025		2,587
Thereafter		581
Total	$	35,152