Note 5 – Goodwill and Intangibles

We account for goodwill and other intangible assets under GAAP. Under GAAP, goodwill and intangible assets with indefinite useful lives are not amortized, but are instead tested for impairment (i) on at least an annual basis and (ii) when changes in circumstances indicate that the fair value of goodwill may be below its carrying value. Our goodwill totaled $54,741,153 and $39,805,349 at September 30, 2018 and December 31, 2017, respectively. The increase in goodwill at September 30, 2018 compared to December 31, 2017 was due to the acquisition of Scott-Rice.

As required by GAAP, we do not amortize goodwill and other intangible assets with indefinite lives, but test for impairment on an annual basis or earlier if an event occurs or circumstances change that would reduce the fair value of a reporting unit below its carrying amount. These circumstances include, but are not limited to (i) a significant adverse change in the business climate, (ii) unanticipated competition or (iii) an adverse action or assessment by a regulator. Determining impairment involves estimating the fair value of a reporting unit using a combination of (i) the income or discounted cash flows approach and (ii) the market approach that utilizes comparable companies’ data. If the carrying amount of a reporting unit exceeds its fair value, the amount of the impairment loss must be measured. The impairment loss is calculated by comparing the implied fair value of the reporting unit’s goodwill to its carrying amount. In calculating the implied fair value of the reporting unit’s goodwill, the fair value of the reporting unit is allocated to all of the assets and liabilities of the reporting unit. The excess of the fair value of a reporting unit over the amount assigned to its other assets and liabilities is the implied value of goodwill. We recognize impairment loss when the carrying amount of goodwill exceeds its implied fair value.

In 2017 and 2016, we engaged an independent valuation firm to complete our annual impairment testing for existing goodwill. For 2017 and 2016, the testing results indicated no impairment charge to goodwill as the determined fair value was sufficient to pass the first step of the impairment test.

Our intangible assets subject to amortization consist of acquired customer relationships, regulatory rights and trade names. We amortize intangible assets with finite lives over their respective estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment. In addition, we periodically reassess the carrying value, useful lives and classifications of our identifiable intangible assets.

The components of our identified intangible assets are as follows:

		September 30, 2018				December 31, 2017
		Gross Carrying Amount				Gross Carrying Amount
	Useful Lives			Accumulated Amortization				Accumulated Amortization
	Useful Lives			Accumulated Amortization				Accumulated Amortization
Definite-Lived Intangible Assets
Customers Relationships	14-15 yrs	$	45,578,445	$	19,102,071	$	29,278,445	$	17,354,646
Regulatory Rights	15 yrs		4,000,000		2,866,641		4,000,000		2,666,643
Trade Name	3-5 yrs		853,689		579,177		570,000		570,000
Indefinitely-Lived Intangible Assets
Video Franchise			3,000,000		-		3,000,000		-
Total		$	53,432,134	$	22,547,889	$	36,848,445	$	20,591,289

Net Identified Intangible Assets				$	30,884,245			$	16,257,156

Amortization expense related to the definite-lived intangible assets was $1,956,600 and $1,851,812 for the nine months ended September 30, 2018 and 2017. Amortization expense for the remaining three months of 2018 and the five years subsequent to 2018 is estimated to be:

● (October 1 – December 31)	$	874,867
● 2019	$	3,498,488
● 2020	$	3,498,488
● 2021	$	3,498,443
● 2022	$	2,127,093
● 2023	$	2,103,486