Note 5 - Goodwill and Other Intangible Assets

12 Months Ended

Dec. 31, 2019

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

$109.8

 million as of

December 31,

2019

and

$90.1

 million as of

December 31,

2018

. The Company's goodwill relates

98%

 (

$107.7

 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) – Significant Accounting Policies” and there were

no

indications of impairment for Fiscal 

2019

 and Fiscal 

2018

.

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 ap

plica

ble 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

2019

, 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 years ended

December 31, 

2019

and

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. 

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

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.

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.

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, 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
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		$	1,143		$	9,091		$	34,271		$	1,516		$	469		$	57,654

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,
2020	$	9,416
2021		10,455
2022		10,455
2023		9,386
2024		2,796
Thereafter		2,839
Total	$	45,347