Intangible Assets — Defensive Intangible Assets

We periodically acquire internet domain names for defensive purposes, to prevent their use by competitors and to protect our brand from third-party use and is not used actively in our operations. Such domain names are recognized as separate intangible assets, apart from goodwill, and are initially measured at cost, including the purchase price and direct costs incurred to acquire and register the domain. Although we do not intend to actively use these domain names and the underlying registrations are indefinitely renewable, defensive intangible assets are not assigned an indefinite useful life. Consistent with ASC 350 "Intangibles - Goodwill and Other," we estimate a finite useful life for each defensive domain name based on the expected period over which the domains' defensive values are expected to continue and indirectly benefit us. These assets are amortized on a straight-line basis over their estimated useful lives. Defensive intangible assets are tested for impairment in accordance with our policy for other finite-lived intangible assets — that is,

whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable, rather than through an annual indefinite-lived impairment test. Such indicators may include a change in our assessment of the continued strategic need to hold the domain name defensively, or a decision to cease renewing the underlying registration.

Warrants

We have warrants classified on the consolidated balance sheet as a liability, which are revalued at each balance sheet date subsequent to the initial issuance. Determining the appropriate fair-value model and calculating the fair value of warrants requires considerable judgment, including estimating stock price volatility and expected warrant life. We use the Black-Scholes pricing model to value the warrants. The computation of expected volatility was based on the historical volatility of shares of our common stock for a period that coincides with the expected life of the warrants. A small change in the estimates used may have a relatively large change in the estimated valuation. Changes in the fair value of the warrants are reflected in the consolidated statement of loss as gain (loss) on revaluation of warrants.