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relationships
domain
names
navigation
domain
names
Amortization period
2 - 7
years
7
years
4 - 7
years
indefinite
life
indefinite
life
Total
Balances, December 31,
2011
$
227,430
$
571,930
$
2,512,660
$
12,120,077
$
2,050,493
$
17,482,590
Additions
to/(disposals from)
domain portfolio, net
—
—
—
(10,060
)
(37,119
)
(47,179
)
Amortization
expense
(143,640
)
(173,640
)
(702,480
)
—
—
(1,019,760
)
Balances, December 31,
2012
83,790
398,290
1,810,180
12,110,017
2,013,374
16,415,651
Additions
to/(disposals from)
domain portfolio, net
—
—
—
(13,305
)
(39,208
)
(52,513
)
Amortization
expense
(83,790
)
(173,640
)
(702,480
)
—
—
(959,910
)
Balances, December 31,
2013
$
—
$
224,650
$
1,107,700
$
12,096,712
$
1,974,166
$
15,403,228
F-17
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:
Year ending
December 31,
2014
$
596,620
2015
205,320
2016
205,320
2017
205,320
2018
119,770
Total
$
1,332,350
Indefinite life intangible assets represent domain names acquired from third parties and surname and direct
navigation domain names related to the acquisition of Mailbank.com Inc. in June 2006. These assets are not being amortized
and are being tested for impairment annually and whenever events or changes in circumstances indicate that their carrying
value may not be recoverable. The Company uses a discounted cash flow or income approach to estimate the fair value of its
indefinite life intangible assets. In the discounted cash flow approach, expected cash flows are converted to present value
using factors that consider the timing and risk of the future cash flows. The estimate of cash flows used is prepared on an
unleveraged debt-free basis. The discount rate reflects a market-derived weighted average cost of capital. The Company
believes that this approach is appropriate because it provides a fair value estimate based upon the Company’s expected long-
term operating and cash flow performance. The projections are based upon the Company’s best estimates of projected
economic and market conditions over the related period including growth rates, estimates of future expected changes in
operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates,
terminal value margin rates, future capital expenditures and changes in future working capital. If assumptions and estimates
used to allocate the purchase price or used to assess impairment prove to be inaccurate, future asset impairment charges could
be required. At December 31, 2013, the Company had indefinite life assets of $14.1 million. The Company completed its
latest annual impairment test and fair value analysis for indefinite life intangible assets, and there were no impairments
present and no impairment charge was recorded during the years ended December 31, 2013, 2012 and 2011.
7. Loan payable:
The Company has credit agreements (collectively the “Amended Credit Facility”) with the Bank of Montreal (the
“Bank” or “BMO”) that were amended on November 19, 2012, and which provide it with access to two revolving demand
loan facilities (the “2012 Demand Loan Facilities”), a treasury risk management facility and an operating demand loan.
Two Revolving Demand Loan Facilities.