Other Intangible Assets and Goodwill

12 Months Ended

Dec. 31, 2012

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets and Goodwill

During 2012, we evaluated our other intangible assets and goodwill for impairment at the reporting unit level. Based on the results of step 1 of our evaluation, there were no indications of impairment. During 2011, we also evaluated our other intangible assets and goodwill for impairment at the reporting unit level. Based on the results of our evaluation, there were indications of impairment within our web properties primarily due to the cessation of our call center activities in 2011. We completed step 2 of the analysis on the intangible assets related to our web properties and we determined that there was an impairment of our goodwill and names database and consequently we recognized an impairment charge of approximately $2.6 million.

Additionally, beginning in 2012 we are amortizing the names database costs over nine months as management has determined that the useful life for our names database has decreased due to the cessation of our call center operations. The following is a schedule of our intangible assets from continuing operations as of December 31, 2012:



	Term	Carrying Value		Accumulated Amortization and Impairment			Net Carrying Value		2012 Amortization Expense
Names database (1)	9 months	$	17,417,397	$	(17,094,626	)	$	322,771	$	1,590,529
Bundled downloads (1)	4.5 months	2,447,075		(2,441,181		)	5,894		2,441,181
Intangible assets classified as current		$	19,864,472	$	(19,535,807	)	$	328,665	$	4,031,710

Customer list, Google	20 years	8,820,000		(367,500		)	8,452,500		367,500
Customer list, all other	10 years	1,610,000		(134,170		)	1,475,830		134,170
Exclusivity agreement	1 year	120,000		(100,000		)	20,000		100,000
Trade names, ALOT (2)	5 years	960,000		(160,000		)	800,000		160,000
Trade names, web properties (2)	-	390,000		—			390,000		—
Intangible assets classified as long-term		$	11,900,000	$	(761,670	)	$	11,138,330	$	761,670

Goodwill		$	5,760,808	$	—		$	5,760,808	N/A

The following is a schedule of our intangible assets from continuing operations as of December 31, 2011:



	Term	Carrying Value		Accumulated Amortization and Impairment			Net Carrying Value		2011 Amortization Expense
Names database, classified as current (1)	9 months	$	16,130,086	$	(15,182,204	)	$	947,882	$	3,582,107

Website development	5 years	4,210,000		(4,210,000		)	—		99,171
Customer lists	5 years	3,500,000		(3,500,000		)	—		22,186
Exclusivity agreement	1 year	150,000		(150,000		)	—		37,500
Tradenames, web properties (2)	-	390,000		—			390,000		—
Intangible assets classified as long-term		$	8,250,000	$	(7,860,000	)	$	390,000	$	158,857

Goodwill		$	3,893,405	$	(2,116,861	)	$	1,776,544	N/A

___________

(1)

The amortization of our names database and bundled downloads assets are included in cost of revenue. As of January 1, 2012, the names database is amortized over nine months due to the change in our estimate of their useful life. The change in estimate resulted in the names database being classified as current in the 2012 and 2011 consolidated balance sheets, respectively. Per ASC 250, Accounting Changes and Error Corrections, this change in estimate does not require a restatement in amounts in prior periods and will only change classifications prospectively.


(2)	We have determined that our Inuvo trade name intangible has an indefinite life, and as such it is not amortized. We determined our ALOT trade names acquired with Vertro should be amortized over five years.

Our amortization expense over the next five years and thereafter is as follows:



2013	$	1,142,669
2014	794,004
2015	794,004
2016	794,004
2017	634,004
Thereafter	$	6,918,310
Total	$	11,076,995

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

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