Note 6 - Goodwill and Other Intangible Assets

9 Months Ended

Sep. 30, 2021

Notes to Financial Statements

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  September 30, 2021 and $116.3 million as of December 31, 2020. The Company's goodwill relates 7% ($8.6 million) to its Fiber Internet Services operating segment, nil to its Mobile Services operating segment and 93% ($107.7 million) to its Domain 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 nine months ended September 30, 2021 and 2020.

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  September 30, 2021 and September 30, 2020, the Company assessed that all domain names that were originally acquired in the June 2006 acquisition of Mailbank.com Inc. that were up for renewal, should 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.

Net book value of 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, June 30, 2021	$	11,156	$	1,135	$	5,986		$	23,273		$	-	$	1,145		$	42,695
Acquisition of customer relationships		-		-		-			6			-		-			6
Amortization expense		-		-		(518	)		(1,749	)		-		(21	)		(2,288	)
Balances, September 30, 2021	$	11,156	$	1,135	$	5,468		$	21,530		$	-	$	1,124		$	40,413

	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, 2020	$	11,157		$	1,135	$	7,021		$	26,664		$	274		$	1,193		$	47,444
Acquisition of customer relationships		-			-		-			221			-			-			221
Acquisition of network rights		-			-		-			-			-			2			2
Additions to/(disposals from) domain portfolio, net		(1	)		-		-			-			-			-			(1	)
Amortization expense		-			-		(1,553	)		(5,355	)		(274	)		(71	)		(7,253	)
Balances, September 30, 2021	$	11,156		$	1,135	$	5,468		$	21,530		$	-		$	1,124		$	40,413

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 2021	$	2,343
2022		9,377
2023		8,684
2024		3,227
2025		2,587
Thereafter		1,904
Total	$	28,122