UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

☒	☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~June 30, 2021~~

March 31, 2022

☐	☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ~~______~~ to ~~______~~

Commission file number 1-34761

AutoWeb, Inc.

(Exact name of registrant as specified in its charter)

~~AutoWeb, Inc.~~Delaware

~~(Exact name of registrant as specified in its charter)~~

~~Delaware~~		33-0711569
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

400 North Ashley Drive, Suite 300

Tampa, Florida 33602

(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code:(949) 225-4500

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, par value $0.001 per share	AUTO	The Nasdaq Capital Market

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☒
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~August 3, 2021,~~May 13, 2022, there were ~~13,465,871~~14,051,149 shares of the Registrant’s Common Stock, $0.001 par value, outstanding.

Table of Contents

	INDEX
		~~Page~~
~~PART I. FINANCIAL INFORMATION~~Page

~~ITEM 1.~~PART I. FINANCIAL INFORMATION	~~Financial Statements~~	3

ITEM 1.	Financial Statements

	Unaudited Condensed Consolidated Balance Sheets as of ~~June 30, 2021,~~March 31, 2022, and December 31, ~~2020~~2021	3	1

	Unaudited Condensed Consolidated Statements of Operations for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022, and 2021 ~~and 2020~~	4	2

	Unaudited Condensed Consolidated Statements of Stockholders’ Equity for the Three ~~and Six~~ Months Ended ~~June 30,~~March 31, 2022, and 2021 ~~and 2020~~	5	3

	Unaudited Condensed Consolidated Statements of Cash Flows for the ~~Six~~Three Months Ended ~~June 30,~~March 31, 2022, and 2021 ~~and 2020~~	7	4

	Notes to Unaudited Condensed Consolidated Financial Statements	8	5

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19	17

ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	27

~~ITEM 4.~~	~~Controls and Procedures~~23	27

~~PART II. OTHER INFORMATION~~

~~ITEM 1A.~~	~~Risk Factors~~	28

ITEM 6.4.	~~Exhibits~~Controls and Procedures	30	23

	PART II. OTHER INFORMATION

ITEM 1A.	Risk Factors	24

ITEM 6.	Exhibits	25

	Signatures	31	26

P~~ART~~

		June 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021
Assets	Assets										*(Audited)*
Current assets:
Cash and cash equivalents		$	10,849		$	10,803		$	3,792		$	7,315
Restricted cash			4,309			4,304			4,317			4,314
Accounts receivable, net of allowances for bad debts and customer credits of $326 and $406 at June 30, 2021, and December 31, 2020, respectively			14,860			13,955
Accounts receivable, net of allowances for bad debts and customer credits of $49 and $101 at March 31, 2022 and December 31, 2021, respectively									10,881			11,433
Vehicle inventory									480			1,076
Prepaid expenses and other current assets			1,400			847			631			998
Total current assets			31,418			29,909			20,101			25,136
Property and equipment, net			3,537			2,953			3,900			3,853
Right-of-use assets			2,439			2,892			1,822			1,993
Intangible assets, net			3,929			4,733			3,340			3,634
Other assets			508			642			474			516
Total assets		$	41,831		$	41,129		$	29,637		$	35,132
Liabilities and Stockholders’ Equity
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable		$	8,459		$	7,233		$	7,249		$	7,705
Borrowings under revolving credit facility			10,155			10,185			9,108			10,001
Current portion of the PPP Loan			0			1,384
Accrued employee-related benefits			2,025			2,123			1,517			1,782
Other accrued expenses and other current liabilities			945			538			717			610
Current portion of lease liabilities			951			1,015			729			781
Current portion of financing debt			64			65			48			64
Total current liabilities			22,599			22,543			19,368			20,943
Lease liabilities, net of current portion			1,763			2,191			1,303			1,432
Financing debt, net of current portion			28			60
Total liabilities			24,390			24,794			20,671			22,375
Commitments and contingencies (Note 10)
Commitments and contingencies (Note 9)
Stockholders’ equity:
Preferred stock, $0.001 par value, 11,445,187 shares authorized,
Series A Preferred Stock, 2,000,000 shares authorized, none- issued and outstanding at June 30, 2021, and December 31, 2020			0			0
Common stock, $0.001 par value; 55,000,000 shares authorized, 13,465,871 and 13,169,204 shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively			13			13
Preferred stock, $0.001 par value, 11,445,187 shares authorized
Series A Preferred stock, 2,000,000 shares authorized, none issued and outstanding at March 31, 2022 and December 31, 2021, respectively.									0			0
Common stock, $0.001 par value; 55,000,000 shares authorized, 14,051,149 and 13,489,482 shares issued and outstanding at March 31, 2022 and December 31, 2021, respectively									14			13
Additional paid-in capital			367,187			366,087			368,683			368,168
Accumulated deficit			(349,759	)		(349,765	)		(359,731	)		(355,424	)
Total stockholders’ equity			17,441			16,335			8,966			12,757
Total liabilities and stockholders’ equity		$	41,831		$	41,129		$	29,637		$	35,132

See accompanying notes to unaudited condensed consolidated financial statements.

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021

Revenues:
Lead generation	$	15,225		$	14,263		$	29,411		$	32,723		$	10,576		$	14,186
Digital advertising		3,511			2,770			7,205			8,782			4,137			3,694
Used vehicle sales														4,351			0
Total revenues		18,736			17,033			36,616			41,505			19,064			17,880
Cost of revenues		12,179			10,993			24,250			30,108
Cost of revenues – lead generation and digital advertising														10,954			12,071
Cost of revenues – used vehicles														4,206			0
Gross profit		6,557			6,040			12,366			11,397			3,904			5,809
Operating expenses:
Sales and marketing		2,103			2,026			4,303			4,158			2,650			2,200
Technology support		1,271			1,786			2,638			3,643			1,533			1,367
General and administrative		3,089			2,901			6,221			6,844			3,562			3,132
Depreciation and amortization		196			559			400			1,281			65			204
Total operating expenses		6,659			7,272			13,562			15,926			7,810			6,903

Operating loss		(102	)		(1,232	)		(1,196	)		(4,529	)		(3,906	)		(1,094	)
Interest and other (expense) income:
Interest (expense) income, net		(248	)		(204	)		(498	)		(1,036	)
Other income		46			62			1,700			130
Interest expense, net														(266	)		(251	)
Other income (expense)														(9	)		1,655
Income (loss) before income tax provision		(304	)		(1,374	)		6			(5,435	)		(4,181	)		310
Income tax provision		0			0			0			0			126			0
Net income (loss)	$	(304	)	$	(1,374	)	$	6		$	(5,435	)	$	(4,307	)	$	310

Basic income (loss) per common share	$	(0.02	)	$	(0.10	)	$	0.00		$	(0.41	)	$	(0.32	)	$	0.02

Diluted income (loss) per common share	$	(0.02	)	$	(0.10	)	$	0.00		$	(0.41	)	$	(0.32	)	$	0.02

See accompanying notes to unaudited condensed consolidated financial statements.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF ~~STOCKHOLDERS’~~STOCKHOLDERS’ EQUITY

~~UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY CONTINUED~~

See accompanying notes to unaudited condensed consolidated financial statements.

Three Months Ended
March 31,

2022

2021

Cash flows from operating activities:

Net income (loss)
$ (4,307 ) $ 310
Adjustments to reconcile net income (loss) to net cash used in operating activities:

Depreciation and amortization
569 641
Provision for bad debts and customer credits, net of recoveries
(33 ) (40 )
Forgiveness of the PPP Loan
0 (1,384 )
Share-based compensation
516 499
Amortization of right-of-use assets
241 224
Deferred tax liability
110 0
Changes in assets and liabilities:

Accounts receivable
585 79
Prepaid expenses and other current assets
367 157
Vehicle inventory
596 0
Other assets
42 91
Accounts payable
(569 ) 598
Accrued expenses and other current liabilities
(193 ) (583 )
Lease liabilities
(251 ) (242 )
Net cash (used in) provided by operating activities
(2,327 ) 350
Cash flows from investing activities:

Purchases of property and equipment
(209 ) (66 )
Purchase of intangible asset
(75 ) 0
Net cash used in investing activities
(284 ) (66 )
Cash flows from financing activities:

Borrowings under CNC credit facility
18,627 18,144
Payments under CNC credit facility
(19,520 ) (18,121 )
Proceeds from exercise of stock options
0 126
Payments under financing agreement
(16 ) (15 )
Net cash (used in) provided by financing activities
(909 ) 134
Net (decrease) increase in cash and cash equivalents and restricted cash
(3,520 ) 418
Cash and cash equivalents and restricted cash, beginning of period
11,629 15,107
Cash and cash equivalents and restricted cash, end of period
$ 8,109 $ 15,525

Reconciliation of cash and cash equivalents and restricted cash

Cash and cash equivalents at beginning of period
$ 7,315 $ 10,803
Restricted cash at beginning of period
4,314 4,304
Cash and cash equivalents and restricted cash at beginning of period
$ 11,629 $ 15,107

Cash and cash equivalents at end of period
$ 3,792 $ 11,218
Restricted cash at end of period
4,317 4,307
Cash and cash equivalents and restricted cash at end of period
$ 8,109 $ 15,525

Supplemental disclosure of cash flow information:

Cash paid for interest
$ 216 $ 215
Supplemental disclosure of non-cash financing activities:

Right-of-use assets obtained in exchange for operating lease liabilities
$ 70 $ 0
Purchases on account related to capitalized software
$ 113 $ 300

See accompanying notes to unaudited condensed consolidated financial statements.

AutoWeb, Inc. (“AutoWeb” or the “Company”) is ~~a digital marketing company for the~~an automotive industry marketing and used vehicle acquisition and reselling company focused on being a “matchmaker” to better connect consumers seeking to acquire vehicles and vehicle sellers that can meet the consumers’ needs. The Company assists consumers in multiple aspects of the vehicle transaction, including providing content and information helpful to their next vehicle acquisition. The Company has also assisted consumers choosing to sell their current vehicle, which provides an added monetization opportunity in addition to the Company’s existing consumer offerings. The Company primarily generates revenue through automotive retail dealers (“Dealers”) and automotive manufacturers (“Manufacturers”) by helping them market and sell new and used vehicles to consumers through ~~its~~the Company’s programs for online lead and traffic referrals, dealer marketing products and services, and online advertising. The Company also acquires used vehicles from consumers and sells those vehicles through third party wholesale auctions and directly to Dealers.

The Company primarily generates revenue through assisting Dealers and Manufacturers by marketing and selling new and used vehicles to consumers through the Company’s programs for online lead and traffic referrals, dealer marketing products and services, and online advertising. The Company has also generated revenue through its used vehicle acquisition business by offering automotive consumers an option to sell their used vehicle outside of a dealership location through the Company’s wholly owned subsidiary, Tradein Expert, Inc., dba CarZeus. The Company resells these used vehicles indirectly to Dealers through wholesale auctions or through direct to Dealer sale.

The Company’s consumer-facing websites (“Company Websites”) provide consumers with information and tools to aid them with their automotive purchase decisions and the ability to submit inquiries requesting Dealers to contact consumers regarding purchasing or leasing vehicles (“Leads”). Leads are internally generated from Company Websites or acquired from third parties that generate Leads from their websites.

The Company’s click traffic referral program provides consumers who are shopping for vehicles online with targeted offers based on make, model and geographic location. As these consumers conduct online research on Company Websites or on the site of one of the Company’s network of automotive publishers, they are presented with relevant offers on a timely basis and, upon the consumer clicking on the displayed advertisement, are sent to the appropriate website location of one of the Company’s Dealer, Manufacturer or advertising customers.

~~On July 31, 2021, the Company and Tradein Expert, Inc., (“~~~~Purchaser~~~~”) a Delaware corporation and wholly owned subsidiary of the Company, entered into and consummated an Asset Purchase Agreement (“~~~~Purchase Agreement~~~~”), by and among the Company, Purchaser, Car Acquisition, LLC, a Texas limited liability company dba CarZeus (“~~~~Seller~~”), Carzuz.com LLC, a Texas limited liability company, McCombs Family Partners, Ltd., a Texas limited partnership and Phil Kandera, an individual, pursuant to which Purchaser acquired specified assets of Seller’s San Antonio, Texas-based used vehicle acquisition platform that operates under the name CarZeus (“~~CarZeus Purchase Transaction~~”). CarZeus purchases vehicles directly from consumers and resells them through wholesale channels. The aggregate consideration of the CarZeus Purchase Transaction was $0.4 million in cash. This acquisition will provide the Company with the opportunity to purchase vehicles directly from consumers and resell them primarily through wholesale auctions, forming a complementary, retail-ready product line extension to the Company’s existing consumer offerings.

The Purchase Agreement contains representations, warranties, covenants and conditions that the Company believes are customary for a transaction of this size and type, as well as indemnification provisions subject to specified conditions, including a six-month holdback of approximately $0.1 million (“Holdback Amount”) of the purchase price as a source of security for any indemnification obligations. On August 2, 2021, the Company paid approximately $0.3 million of the purchase consideration, and, subject to any indemnification obligations arising, the Holdback Amount is payable to the Seller on January 31, 2022.

The accompanying unaudited condensed consolidated financial statements are presented on the same basis as the Company’s Annual Report on Form ~~10-K~~10-K for the year ended December 31, ~~2020~~2021 (“~~2020~~ 2021Form ~~10-K~~10-K”) filed with the Securities and Exchange Commission (“SEC”)~~. AutoWeb~~ on March 24, 2022. The Company has made its disclosures in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form ~~10-Q~~10-Q and Rule ~~8-03~~8-03 of Regulation ~~S-X.~~S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of Company management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included. The unaudited condensed consolidated statement of operations and cash flows for the period ended June 30, 2021, are not necessarily indicative of the results of operations or cash flows expected for the year or any other period. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in the ~~2020~~2021 Form ~~10-K.~~10-K.

~~Certain amounts have been reclassified from the prior year presentation to conform to the current year presentation.~~ References to amounts in the condensed consolidated financial statement sections are in thousands, except share and per share data, unless otherwise specified.

As of ~~June 30, 2021,~~ March 31, 2022, and December 31, ~~2020,~~ 2021, restricted cash primarily consisted of pledged cash pursuant to the CIT Northbridge Credit LLC (“CNC Credit Agreement”) discussed in Note 9.11 of these Notes to Unaudited Condensed Consolidated Financial Statements.

The accompanying unaudited condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

During the three-month period ended March 31, 2022, the Company incurred a net loss of $4.3 million and had net cash flows used in operating activities of $2.3 million. On March 31, 2022, the Company had $3.8 million in cash and cash equivalents and an accumulated deficit of $359.7 million. Based on current operating and cash forecasts, the Company does not believe that it currently has sufficient cash to sustain operations for the entire remainder of 2022. Other than the CNC Credit Agreement, which expires March 26, 2023, the Company currently has no committed source of funding from either debt or equity financings. Borrowings under the CNC Credit Agreement are dependent on, among other things, the level of the Company’s eligible accounts receivable. Given these factors, management believes that there is substantial doubt about the Company’s ability to continue as a going concern for a period of one year after the date the financial statements are issued.

A Special Committee of the Company’s Board of Directors (“Special Committee”) has been created to explore strategic alternatives for the Company and will consider a full range of operational, financial, and other strategic alternatives (“Strategic Alternatives”). The Special Committee has retained Houlihan Lokey Capital, Inc. as its financial advisor to assist with this process. Strategic Alternatives that may be explored or evaluated as part of this process include, but are not limited to:

The Company’s ability to continue to fund its operations for the entire remainder of 2022 is dependent upon Company management’s near-term operating plans to address the Company’s near-term cash and liquidity needs (“Near-Term Operating Plans”), which plans may include, but are not limited to:

The Company’s ability to continue as a going concern is contingent upon the successful execution of Strategic Alternatives and the Near-Term Operating Plans, but the Near-Term Operating Plans, may themselves have a material and adverse effect on the Company’s business, results of operations, financial condition, earnings per share, cash flow or the trading price of the Company’s stock (individually and collectively referred to as the Company’s “financial performance”). There can be no assurance that the Company will be successful in achieving either the Strategic Alternatives or Near-Term Operating Plans or that new financings or other transactions will be available to the Company on commercially acceptable terms, or at all. Additionally, any debt or equity financing that may be obtained may result in substantial shareholder dilution and could have a material and adverse impact on the Company’s financial performance.

The Special Committee and the Company’s management team, working with the Company’s financial, legal and other advisers, plan to proceed in a timely and orderly manner, but have not set a definitive timetable for completion of this process, nor has it made any decisions related to Strategic Alternatives at this time. The Company undertakes no obligation to provide further disclosure regarding developments or the status of the process, the Company’s efforts to pursue implementation of potential Strategic Alternatives or Near-Term Operating Plans, or a decision to seek bankruptcy protection under the U.S. Bankruptcy Code and does not intend to make such disclosure unless and until events warrant disclosure, the Company has filed for protection under the U.S. Bankruptcy Code, or further disclosure is legally required.

The Company has reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a material impact to its condensed consolidated financial statements.

Revenue is recognized upon transfer of control of promised goods or services to the Company’s customers or when the Company satisfies any performance obligations under contract. The amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for respective goods or services provided. Further, under Accounting Standards Codification 606, “Revenue from Contracts with Customers”, (“ASC ~~606”~~606”) contract assets or contract liabilities that arise from past performance but require a further performance before the obligation can be fully satisfied must be identified and recorded on the balance sheet until respective settlements have been met.

The Company has ~~two~~three main revenue sources – Lead ~~generation~~Generation, Digital Advertising and ~~Digital advertising.~~Used Vehicle Sales. Accordingly, the Company recognizes revenue for each source as described below:

Leads are generally sold with a right-of-return for services that do not meet customer requirements as specified by the relevant contract. Some leads are also ~~are subject to pricing adjustments based~~contingent upon their subsequent conversion into vehicle ~~sales. Rights-of-return~~sales which may require pricing adjustments. Rights-of-returns and lead conversions are estimable, and provisions for these estimates are recorded as a reduction in revenue by the Company in the period revenue is recognized, and thereby accounted for as variable consideration. The Company includes the allowance for customer credits in its net accounts receivable balances on the Company’s balance sheet at period end. ~~Allowance~~The Company did not have an allowance for customer credits as of March 31, 2022. The allowance for customer credits approximated ~~$190,000 and $64,000~~$27,000 as of ~~June 30, 2021, and~~ December 31, ~~2020, respectively.~~2021.

Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when revenue is recognized prior to invoicing. From time to time, the Company may have balances on its balance sheet representing revenue that has been recognized by the Company upon satisfaction of performance obligations and earning a right to receive payment. These ~~not-yet invoiced~~not-yet-invoiced receivable balances are driven by the timing of administrative transaction processing and are not indicative of partially complete performance ~~obligations, or unbilled revenue.~~ obligations.

The Company defers the recognition of revenue when cash payments are received or due in advance of satisfying the Company’s performance obligations, including amounts which are refundable. Such activity is not typical for the Company. The Company had ~~zero~~no deferred revenue included in its condensed consolidated balance sheets as of ~~June 30, 2021,~~ March 31, 2022, and December 31, ~~2020.~~ 2021. Payment terms and conditions can vary by contract type. Generally, payment terms within the Company’s customer contracts include a requirement of payment within 30 to 60 days from date of invoice. Typically, customers make payments after receipt of invoice for billed services, and less typically, in advance of rendered services.

The Company has not made any significant changes in applying ASC 606 during the ~~six~~three months ended ~~June 30, 2021.~~March 31,2022.

The Company disaggregates revenue from contracts with customers by revenue source and has determined that disaggregating revenue into ~~the~~these categories ~~listed below~~ sufficiently depicts the differences in the nature, amount, timing and uncertainty of revenue streams.

The following table summarizes revenue from contracts with customers, disaggregated by revenue source, for the three ~~and six~~ months ended ~~June 30, 2021,~~March 31,2022, and ~~2020.~~2021. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

Basic net ~~loss~~income (loss) per share is computed using the weighted average number of common shares outstanding during the ~~three-and-six-month periods reflected in the following table,~~period, excluding any unvested restricted stock. Diluted net ~~loss~~income (loss) per share is computed using the weighted average number of common shares, and if dilutive, potential common shares outstanding, as determined under the treasury stock and if-converted methods, during the period. Potential common shares consist of unvested restricted stock, ~~and~~ common shares issuable upon the exercise of stock options and the exercise of warrants.

The following are the share amounts utilized to compute the basic and diluted net ~~loss~~income (loss) per share for the three ~~and six~~ months ended ~~June 30, 2021,~~ March 31, 2022, and ~~2020:~~2021, respectively:

	Three Months Ended June 30,						Six Months Ended June 30,						Three Months Ended March 31,
	2021			2020			2021			2020			2022			2021
Basic Shares:
Weighted average common shares outstanding		13,461,044			13,146,831			13,357,622			13,146,831			13,843,260			13,253,050
Weighted average unvested restricted stock		(220,000	)		(13,333	)		(148,370	)		(13,333	)		(548,463	)		(75,944	)
Basic Shares		13,241,044			13,133,498			13,209,252			13,133,498			13,294,797			13,177,106

Diluted Shares:
Basic shares		13,241,044			13,133,498			13,209,252			13,133,498			13,294,797			13,177,106
Weighted average dilutive securities		0			0			204,543			0			—			140,281
Diluted Shares		13,241,044			13,133,498			13,413,795			13,133,498			13,294,797			13,317,387

For the three months ended ~~June 30, 2021,~~ March 31, 2022, the Company’s basic and diluted net loss per share are the same because the Company generated a net loss for the ~~period and~~period. As a result, potentially dilutive securities are excluded from diluted net loss per share because they have an anti-dilutive impact. For the ~~six~~three months ended ~~June 30,~~March 31, 2021, weighted average dilutive securities ~~include~~included dilutive options and restricted stock awards.

For the three ~~and six~~ months ended ~~June 30, 2020, the Company’s basic~~ March 31, 2022, and diluted net loss per share are the same because the Company generated a net loss for the period and potentially dilutive securities are excluded from diluted net loss per share because they have an anti-dilutive impact.

~~For the three and six months ended June 30,~~ 2021, ~~the Company had 4.6~~ 0.1 million and ~~4.5~~4.4 million, respectively, of potentially anti-dilutive securities related to common stock ~~that~~ have been excluded from the calculation of diluted net earnings per share. For the three and six months ended June 30, 2020, the Company had 4.0 million of potentially anti-dilutive securities related to common stock that have been excluded from the calculation of diluted net earnings per share.

Share-based compensation expense is included in costs and expenses in the unaudited condensed consolidated statements of operations as follows:

Service-Based Options. The Company granted the following service-based options for the three ~~and six~~ months ended ~~June 30, 2021,~~ March 31, 2022, and ~~2020,~~2021, respectively:

These options are valued using a Black-Scholes option pricing model. Options issued to employees generally vest ~~one-third~~one-third on the first anniversary of the grant date and ratably over twenty-four months thereafter. The vesting of these awards is contingent upon the employee’s continued employment with the Company during the vesting period and vesting may be accelerated under certain conditions, including upon a change in control of the Company and, in the case of certain officers of the Company, termination of employment by the Company without cause and voluntary termination of employment by such officer with good reason. Options issued to non-employee directors generally vest monthly over a ~~12-month~~12-month period and vesting may be accelerated under certain conditions, including upon a change in control of the Company and upon the termination of service as a director of the Company in the event such termination of service is due to resignation, failure to be re-elected, failure to be nominated for re-election, or without removal for cause.

The grant date fair value of stock options granted during these periods was estimated using the following weighted average assumptions:

Stock option exercises. The following stock options were exercised during the three months ended March 31, 2022, and 2021, respectively:

A summary of the Company’s outstanding stock options as of March 31, 2022, and changes during the three months then ended is presented below:

Restricted Stock Awards.The Company granted an aggregate of 575,000 and 220,000 restricted stock awards (“RSAs”) ~~in the first quarter of 2021~~ to certain executive officers of the ~~Company.~~Company during the first quarter of 2022 and 2021, respectively. The RSAs are service-based and the forfeiture restrictions lapse with respect to ~~one-third~~one-third of the restricted stock on each of the first, second and third anniversaries of the date of the award. Lapsing of the forfeiture restrictions may be accelerated in the event of a change in control of the Company and will accelerate upon the death or disability of the holder of the RSAs.

~~The grant date fair value of stock options granted during these periods was estimated using the Black-Scholes option pricing model using the following weighted average assumptions:~~

~~Stock option exercises~~7.~~. The following stock options were exercised during the three and six months ended June 30, 2021, and 2020, respectively:~~

Property and Equipment, net. Property and equipment consist of the following:

Intangible Assets, net. Intangible assets, net consisted of the following (in thousands):

The Company amortizes specifically identified definite-lived intangible assets using the straight-line method over the estimated useful lives of the assets.

Amortization expense is included in “Cost of revenues – lead generation and digital advertising” and “Depreciation and amortization” in the Unaudited Condensed Consolidated Statements of Operations. Amortization expense was $0.3 million and $0.4 million for the three months ended March 31, 2022, and 2021, respectively.

Amortization expense for the remainder of the year and for future years is as follows:

Accrued Expenses and Other Current Liabilities. Accrued expenses and other current liabilities consisted of the following:

Concentration of Credit Risk and Risks Due to Significant Customers. Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents are primarily maintained with high credit quality financial institutions in the United States. Deposits held by banks exceed the amount of insurance provided for such deposits.

Accounts receivable are primarily derived from fees billed to Dealers and Manufacturers. The Company generally requires no collateral to support its accounts receivables and maintains an allowance for bad debts for potential credit losses.

The Company has a concentration of credit risk with its accounts receivable balances. Approximately ~~64%~~53%, or ~~$9.7~~$5.8 million, of gross accounts receivable at ~~June 30, 2021,~~ March 31, 2022, and approximately ~~46%~~30% of total revenues for the ~~six months~~quarter ended ~~June 30, 2021,~~March 31,2022, are related to Autodata Solutions, Urban Science Applications (which represents ~~Acura, Honda, Subaru,~~several Manufacturer programs) and ~~Volvo),~~ Carat Detroit ~~(General~~(which represents General Motors)~~, Ford Direct and Autodata Solutions. For 2020, 60%~~.

During 2021, approximately 59%, or ~~$8.9~~$8.3 million, of gross accounts receivable at ~~June 30, 2020,~~ March 31, 2021, and approximately ~~45%~~41% of total revenues for the ~~six months~~quarter ended ~~June 30, 2020,~~March 31,2021, are related to Urban Science Applications, Carat, ~~Detroit,~~Autodata Solutions and Ford ~~Direct and Autodata Solutions.~~Direct.

~~On May 24, 2021, the Company received written notice from Direct Dealer LLC dba (~~~~“FordDirect”~~) that FordDirect decided to suspend its new vehicle lead marketing program for the near future and notified the Company that FordDirect was terminating its new vehicle leads program with the Company effective September 30, 2021. On June 11, 2021, the Company and FordDirect agreed to amend the Lead Agreement dated December 1, 2020, between the Company and FordDirect to provide for an early termination of the new vehicle leads program, with the early termination being effective June 30, 2021, in exchange for a lump sum payment of approximately $0.5 million from FordDirect to the Company.

~~Intangible Assets.~~ 8.~~The Company amortizes specifically identified definite-lived intangible assets using the straight-line method over the estimated useful lives of the assets.~~

~~The Company’s intangible assets are amortized over the following estimated useful lives:~~

The Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at commencement date of the lease based on the present value of lease payments over the lease term. The Company has lease arrangements for certain equipment and facilities that typically have original terms not exceeding five years and, in some cases, contain automatic renewal provisions that provide for multiple year renewal terms unless either party, prior to the then-expiring term, notifies the other party of the intention not to renew the lease. The Company’s lease terms may also include options to terminate the lease when it is reasonably certain that the Company will exercise such options. When readily determinable, the Company uses the implicit rate in determining the present value of lease payments. The ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term.

Lease Liabilities. Lease liabilities as of ~~June 30,~~March 31, 2022, and December 31, 2021,respectively, consist of the following:

The Company’s aggregate lease maturities as of ~~June 30, 2021,~~ March 31, 2022, are as follows:

Rent expense included in operating expenses and cost of ~~revenues~~revenue was $0.3 million ~~and $0.6 million~~ for the three ~~and six~~ months ended ~~June 30, 2021, respectively. The Company had~~March 31,2022, with a ~~weighted average~~weighted-average remaining lease term of ~~3.2~~2.7 years and a ~~weighted average~~weighted-average discount rate of ~~6.25%~~6.28%. Rent expense included in operating expenses and cost of ~~revenues~~revenue was ~~$0.4 million and $0.9~~$0.3 million for the three ~~and six~~ months ended ~~June 30, 2020, respectively. The Company had~~March 31,2021, with a ~~weighted average~~weighted-average remaining lease term of ~~4.0~~2.8 years and a ~~weighted average~~weighted-average discount rate of 6.25%.

~~On April 30, 2019, the Company entered into a $25.0 million Revolving Credit and Security Agreement (“~~~~PNC Credit Agreement~~~~”) with PNC Bank, N.A. (“~~~~PNC~~~~”) as agent, and the Company’s U.S. subsidiaries Car.com, Inc., Autobytel, Inc., and AW GUA USA, Inc. (“~~~~Company U.S. Subsidiaries~~”). The obligations under the PNC Credit Agreement were guaranteed by the Company’s U.S. subsidiaries and secured by a first priority lien on all of the Company’s and the Company U.S. subsidiaries’ tangible and intangible assets. The PNC Credit Agreement provided a subfacility of up to $5.0 million for letters of credit. The PNC Credit Agreement was to expire on April 30, 2022.

~~The interest rates per annum applicable to borrowings under the PNC Credit Agreement were, at the Company’s option (subject to certain conditions), equal to either a domestic rate (“~~~~Domestic Rate Loans~~~~”) or a LIBOR rate for one, two, or three-month interest periods chosen by the Company (“~~~~LIBOR Rate Loans~~”), plus the applicable margin percentage of 2% for Domestic Rate Loans and 3% for LIBOR Rate Loans. The domestic rate for Domestic Rate Loans would be the highest of (i) the base commercial lending rate of the lender, (ii) the overnight bank funding rate plus 0.50%, or (iii) the LIBOR rate plus 1.00% so long as the daily LIBOR rate is offered, ascertainable and not unlawful. The PNC Credit Agreement also provided for commitment fees ranging from 0.5% to 1.5% applied to unused funds (with the applicable fee based on quarterly average borrowings) but with the fees fixed at 1.5% until September 30, 2019. Fees for letters of credit were to be equal to 3% for LIBOR Rate Loans, with a fronting fee for each Letter of Credit in an amount equal to 0.5% of the daily average aggregate undrawn amount of all letters of credit outstanding. The Company was required to maintain a $5.0 million pledged interest-bearing deposit account with the lender until the Company’s consolidated EBITDA is greater than $10.0 million.

~~On October 29, 2019, the Company, the Company’s U.S. subsidiaries, and PNC entered into a First Amendment to the PNC Credit Agreement (“~~~~PNC Credit Agreement First Amendment~~”) that provided for an amended financial covenant related to the Company’s minimum required EBITDA (as defined in the PNC Credit Agreement). This amended financial covenant required the Company to maintain its consolidated EBITDA (as defined in the PNC Credit Agreement) at stated minimum levels (i) of $0.7 million for the quarter ended September 30, 2019; (ii) $250,000for the month of October 2019; (iii) $600,000 for the two months ended November 30, 2019; and ranging from $3.6 million to $7.5 million for the later periods set forth in the PNC Credit Agreement First Amendment during the remaining term of the PNC Credit Agreement. In addition, the PNC Credit Agreement First Amendment added a new financial covenant requiring the Company to maintain at least a 1.20 to 1.00 Fixed Charge Coverage Ratio (as defined in the PNC Credit Agreement First Amendment) for the periods set forth in the PNC Credit Agreement First Amendment. If the Company failed to comply with the minimum EBITDA requirements or the Fixed Charge Coverage Ratio, the Company had the right to cure (“~~Cure Right~~”) through the application of the proceeds from the sale of new equity interests in the Company, subject to the conditions set forth in the PNC Credit Agreement First Amendment. The Cure Right could not be exercised more than three times during the term of the PNC Credit Agreement and any proceeds from a sale of equity interests could not be less than the greater of (i) the amount required to cure the applicable default; and (ii) $500,000.

~~On January 16, 2020, the Company received a notice of event of default and reservation of rights (“~~~~Default Notice~~”) from PNC Bank under the PNC Credit Agreement advising the Company that an event of default had occurred and was continuing under Section 10.3 of the PNC Credit Agreement by reason of the Company’s failure to deliver to PNC the financial statements and related compliance certificate for the month ended November 30, 2019. Although not covered by the Default Notice at the time, the Company also was not in compliance with the minimum EBITDA financial covenant under the PNC Credit Agreement. As a result of the Default Notice, PNC increased the interest rate under the PNC Credit Agreement by 2.0% per annum.

On March 26, 2020, the Company fully paid the PNC Credit Agreement, at which time it was terminated, and in conjunction with the termination of the PNC Credit Agreement, on March 26, 2020, the Company entered into a $20.0 million Loan, Security and Guarantee Agreement (“~~CNC Credit Agreement~~”) with CIT Northbridge Credit LLC, as agent (the “Agent”), and the Company’s U.S. subsidiaries. The CNC Credit Agreement provides for a $20.0 million revolving credit facility with borrowings subject to availability based primarily on limits of 85% of eligible billed accounts receivable and 75% against eligible unbilled accounts receivable. The obligations under the CNC Credit Agreement are guaranteed by the Company’s U.S. subsidiaries and secured by a first priority lien on all of the Company’s and the Company’s U.S. subsidiaries’ tangible and intangible assets. The CNC Credit Agreement has an average minimum borrowing usage requirement of an average of $10,000,000.

As of June 30, 2021, the Company had $10.2 million outstanding under the CNC Credit Agreement and approximately $2.2 million of net availability. To increase the borrowing base sufficient enough to meet the minimum borrowing usage requirement, the Company on June 29, 2020, placed $3.0 million into a restricted cash account that provided for greater availability under the CNC Credit Agreement. The Company placed an additional $1.0 million into the same restricted cash account in December 2020. The Company can borrow up to97.5% of the total restricted cash amount. The restricted cash accrues interest at a variable rate currently averaging 0.25% per annum.

Financing costs related to the CNC Credit Agreement, net of accumulated amortization, of approximately $0.3 million, have been deferred over the initial term of the loan and are included in other assets as of June 30, 2021. The interest rate per annum applicable to borrowings under the CNC Credit Agreement is the LIBO plus 5.5%. The LIBO Rate is equal to the greater of (i) 1.75%, and (ii) the rate determined by the Agent to be equal to the quotient obtained by dividing (1) the LIBO Base Rate (i.e., the rate per annum determined by Agent to be the offered rate that appears on the applicable Bloomberg page) for the applicable LIBOR Loan for the applicable interest period by (2) one minus the Eurodollar Reserve Percentage (i.e., the reserve percentage in effect under regulations issued from time to time by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement with respect to Eurocurrency funding for the applicable LIBOR Loan for the applicable interest period). If adequate and reasonable means do not exist for ascertaining or the LIBOR rate is no longer available, the Company and the Agent may amend the CNC Credit Agreement to replace LIBOR with an alternate benchmark rate. If no LIBOR successor rate is determined, the obligation of the lenders to make or maintain LIBOR loans will be suspended and the LIBO Base Rate component will no longer be utilized in determining the base rate.

If, due to any circumstance affecting the London interbank market, the Agent determines that adequate and fair means do not exist for ascertaining the LIBO Rate on any applicable date (and such circumstances that are identified in the next two paragraphs below are not covered or governed by such provisions below), then until the Agent determines that such circumstance no longer exists, the obligation of lenders to make LIBOR Loans will be suspended and, if requested by the Agent, the Company must promptly, at its option, either (i) pay all such affected LIBOR Loans or (ii) convert such affected LIBOR Loans into loans that bear reference to the Base Rate plus the Applicable Margin.

If the Agent determines that for any reason (i) dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable loan amount or applicable interest period, (ii) adequate and reasonable means do not exist for determining the LIBO Rate for the applicable interest period, or (iii) LIBOR for the applicable interest period does not adequately and fairly reflect the cost to the lenders of funding a loan, then the lenders’ obligation to make or maintain LIBOR Loans will be suspended to the extent of the affected LIBOR Loan or interest period until all such loans are converted to loans bearing interest at the Base Rate (as defined below) plus the Applicable Margin (as specified below).

However, if Agent determines that (i) adequate and reasonable means do not exist for ascertaining LIBOR for any requested interest period and such circumstances are unlikely to be temporary; (ii) the administrator of the LIBOR screen rate or a governmental authority having jurisdiction over the Agent has made a public statement identifying a specific date after which LIBOR or the LIBOR screen rate shall no longer be made available, or used for determining the interest rate of loans (“~~Scheduled Unavailability Date~~”); or (iii) syndicated loans currently being executed, or that include language similar to that contained in this paragraph are being executed or amended to incorporate or adopt a new benchmark interest rate to replace LIBOR, then Agent and the Company may amend the CNC Credit Agreement to replace LIBOR with an alternate benchmark rate (“~~LIBOR Successor Rate~~”) and any such amendment will become effective unless lenders holding more than 50% in value of the loans or commitments under the CNC Credit Agreement do not accept such amendment. If no LIBOR Successor Rate has been determined and the circumstances under clause (i) above exist or the Scheduled Unavailability Date has occurred, (x) the obligation of lenders to make or maintain LIBOR Loans will be suspended (to the extent of the affected LIBOR Loans or interest periods), and (y) the LIBO Base Rate component will no longer be utilized in determining the Base Rate. The Base Rate for any day is a fluctuating rate per annum equal to the highest of: (i) the Federal Funds Rate plus 1/2 of 1%; (ii) the rate of interest in effect for such day as publicly announced from time to time by JPMorgan Chase Bank, N.A. as its “prime rate” in effect for such day; or (iii) the most recently available LIBO Base Rate (as adjusted by any minimum LIBO Rate floor) plus 1%. The Applicable Margin is equal to 5.50%. The CNC Credit Agreement expires on March 26, 2023.

~~On July 30, 2021, the Company and the Agent entered into a Second Amendment to and Consent Under Loan, Security and Guarantee Agreement (“~~~~Credit Facility Amendment~~”). The Credit Facility Amendment provides for: (i) the Agent’s and lenders’ consent to the CarZeus Purchase Transaction; (ii) the inclusion of the Purchaser as a guarantor, obligor, and pledgor under the Credit Facility Agreement upon the satisfaction of certain conditions; and (iii) a new permitted use of borrowings under the Credit Facility Agreement that will allow Purchaser to acquire used vehicle inventories, which this new use of borrowings is limited in the amount of: (a) $1.5 million prior to Purchaser becoming a guarantor, obligor, and pledgor under the Credit Facility Agreement; and (b) $3.0 million subsequent to Purchaser becoming a guarantor, obligor, and pledgor under the Credit Facility Agreement.

~~On April 16, 2020, the Company received a Paycheck Protection Program loan (“~~~~PPP Loan~~~~”) in the amount of approximately $1.38 million from PNC pursuant to the PPP administered by the United States Small Business Administration (“~~~~SBA~~~~”) under the CARES Act.~~

On January 13, 2021, the Company received a notice from PNC Bank regarding forgiveness of the loan in the principal amount of approximately $1.38 million that was made to the Company pursuant to the SBA PPP under the CARES Act of 2020. The notice states that SBA has remitted to PNC a loan forgiveness payment equal to $1.39 million, which constitutes full payment and forgiveness of the principal amount of the PPP loan and all accrued interest. In January 2021, the Company recognized the forgiveness of the PPP Loan on its Unaudited Condensed Consolidated Statement of Operations.

~~On June 10, 2020, the Company entered into a thirty-six-month equipment financing agreement (“~~~~Financing Agreement~~”) with Dimension Funding LLC. The Financing Agreement provides for an advance payment of approximately $170,000 to be used to secure furniture and fixtures for the Company’s new office location in Irvine, California. Payments of approximately $5,300 (inclusive of imputed interest) are made monthly under the Financing Agreement. As of June 30, 2021, the Company has paid approximately $78,000. The Financing Agreement will mature on December 31, 2022.

~~The Company’s future commitments under the Financing Agreement as of June 30, 2021, are as follows:~~

The Company has employment agreements and severance benefits agreements with certain key employees. A number of these agreements require severance payments and continuation of certain insurance benefits in the event of a termination of the employee’s employment by the Company without cause or by the employee for good reason (as defined in these agreements). Stock option agreements and restricted stock award agreements with some key employees provide for acceleration of vesting of stock options and lapsing of forfeiture restrictions on restricted stock in the event of a change in control of the Company, upon termination of employment by the Company without cause or by the employee for good reason, or upon the employee’s death or disability.

From time to time, the Company may be involved in litigation matters arising from the normal course of its business operations. Such litigation, even if not meritorious, could result in substantial costs and diversion of resources and management attention, and an adverse outcome in litigation could materially adversely affect its business, results of operations, financial condition, and cash flows. The Company assesses the likelihood of any adverse judgments or outcomes of these matters as well as potential ranges of probable losses. The Company records a loss contingency when an unfavorable outcome is probable, and the amount of the loss can be reasonably estimated. The amount of allowances required, if any, for these contingencies is determined after analysis of each individual case. The amount of allowances may change in the future if there are new material developments in each matter. Gain contingencies are not recorded until all elements necessary to realize the revenue are present. Any legal fees incurred in connection with a contingency are expensed as incurred.

On an interim basis, the Company estimates what its anticipated annual effective tax rate will be and records a quarterly income tax provision in accordance with the estimated annual rate, adjusted accordingly by the tax effect of certain discrete items that arise during the quarter. As the year progresses, the Company refines its estimated annual effective tax rate based on actual year-to-date results. This process can result in significant changes to the Company's estimated effective tax rate. When such activity occurs, the income tax provision is adjusted during the quarter in which the estimates are refined and adjusted. As such, the Company’s year-to-date tax provision reflects the estimated annual effective tax rate. Therefore, these changes along with the adjustments to the Company’s deferred taxes and related valuation allowance may create fluctuations in the overall effective tax rate from period to period.

Due to overall cumulative losses incurred in recent years, the Company maintained a valuation allowance against its deferred tax assets as of ~~June 30, 2021,~~ March 31, 2022 and December 31, ~~2020.~~ 2021. The Company’s effective tax rate for the ~~six~~three months ended ~~June 30, 2021,~~ March 31, 2022, differed from the U.S. federal statutory rate primarily due to operating losses that receive no tax benefit as a result of a valuation allowance recorded against the Company's existing tax assets. The total amount of unrecognized tax benefits, excluding associated interest and penalties, was $0.2 million as of ~~June 30, 2021,~~March 31,2022, all of which, if subsequently recognized, would have affected the ~~Company’s~~Company's tax rate.

As of ~~June 30, 2021,~~March 31,2022 and December 31, ~~2020,~~2021, there were no0 accrued interest and penalties related to uncertain tax positions. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense, and the accrued interest and penalties are included in deferred and other long-term liabilities in the Company’s unaudited condensed consolidated balance sheets. There were no material interest or penalties included in income tax expense for the ~~six~~three months ended ~~June 30, 2021,~~March 31,2022, and ~~2020.~~2021.

The Company is subject to taxation in the U.S. and in various foreign and state jurisdictions. Due to expired statutes of limitation, the Company’s federal income tax returns for years prior to calendar year 2018 and 2017, respectively are not subject to examination by the U.S. Internal Revenue ~~Service.~~Service (except for the use of tax losses generated prior to 2018 that may be used to offset taxable income in subsequent years). Generally, for the majority of state jurisdictions where the Company does business, periods prior to calendar year ~~2016~~2017 are no longer subject to examination. The Company does not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months.

In response to the coronavirus pandemic, the ~~Coronavirus Aid, Relief and Economic Security Act (“~~CARES Act”) was signed into law in March 2020. The CARES Act ~~lifted~~lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act (“TCJA”). Corporate taxpayers may carryback net operating losses (“NOL’s”) originating during 2018 through 2020 for up to five years, which was not previously allowed under the TCJA. The CARES Act in part also ~~eliminated~~provides for an employee retention credit, which is a refundable tax credit against certain employment taxes equal to 50% of qualified wages an eligible employer pays to employees (“Employee Retention Credit”). In March 2022, we amended certain payroll tax filings in conjunction with the ~~80%~~Employee Retention Credit and are awaiting confirmation of ~~taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020.~~the credit from the IRS.

~~The Consolidated Appropriations Act of 2021 (the “~~~~Act~~”) was signed into law on December 27, 2020. The Act enhanced and expanded certain provisions of the CARES Act. The Act permits taxpayers whose PPP Loan are forgiven to deduct the expenses relating to their loans to the extent they would otherwise qualify as ordinary and necessary business expenses. This rule was applied retroactively to the effective date of the CARES Act, so that expenses paid using funds from PPP loans previously issued under the CARES Act are deductible, regardless of when the loan was forgiven. The Company’s $1.4 million PPP loan was completely forgiven in January 2021 and the expenses are currently deductible on the Company’s 2020 federal tax return.

On ~~July 30, 2021,~~ March 26, 2020, the Company entered into a $20.0 million Loan, Security and Guarantee Agreement (“CNC Credit Agreement”) with CIT Northbridge Credit LLC, as agent (the “Agent”), and the Company’s U.S. subsidiaries. The CNC Credit Agreement provides for a $20.0 million revolving credit facility with borrowings subject to availability based primarily on limits of 85% of eligible billed accounts receivable and 75% against eligible unbilled accounts receivable. The obligations under the CNC Credit Agreement are guaranteed by the Company’s U.S. subsidiaries and secured by a first priority lien on all of the Company’s and the Company’s U.S. subsidiaries’ tangible and intangible assets.

As of March 31, 2022, the Company had $9.1 million outstanding under the CNC Credit Agreement and approximately $0.4 million of net availability. To increase the borrowing base sufficient enough to meet the minimum borrowing usage requirement, the Company on June 29, 2020, placed $3.0 million into a restricted cash account that provided for greater availability under the CNC Credit Agreement. The Company placed an additional $1.0 million into the same restricted cash account in December 2020. The Company can borrow up to 97.5% of the total restricted cash amount. The restricted cash accrues interest at a variable rate currently averaging 0.25% per annum.

On July 30, 2021, the Company and the Agent entered into a Second Amendment to and Consent Under Loan, Security and Guarantee Agreement (“Credit Facility Second Amendment”). The Credit Facility Second Amendment provides for: (i) the Agent’s and lenders’ consent to the CarZeus Purchase Transaction; (ii) the inclusion of the Tradein Expert as a guarantor, obligor, and pledgor under the Credit Facility Agreement upon the satisfaction of certain conditions; and (iii) a new permitted use of borrowings under the Credit Facility Agreement that will allow Tradein Expert to acquire used vehicle inventories, which this new use of borrowings is limited in the amount of: (a) $1.5 million prior to Tradein Expert becoming a guarantor, obligor, and pledgor under the Credit Facility Agreement; and (b) $3.0 million subsequent to Tradein Expert becoming a guarantor and obligor under the Credit Facility Agreement, which occurred upon the Company and Agent entering into a Joinder Under Loan, Security and Guarantee Agreement and Pledge Agreement Supplement dated as of August 12, 2021.

On September 13, 2021, the Company entered into a Third Amendment to Loan, Security and Guarantee Agreement (“Credit Facility Third Amendment”) with CNC to amend the ~~Company’s existing~~CNC Credit Agreement to provide for, among other changes, a change in the available borrowing base calculation for the acquisition of used motor vehicle inventory by the Tradein Expert from up to (A) the lesser of (i) $3,000,000.00 and (ii) 85% of the value of eligible accounts receivable arising from the sale of used motor vehicles by Tradein Expert to (B) the lesser of (i) $3,000,000 and (ii) eighty percent (80%) of the purchase price (subject to certain limitations set forth in the Credit Facility Third Amendment) for eligible vehicles (as defined in the Credit Facility Third Amendment) in Tradein Expert’s used motor vehicle inventory. The Credit Facility Third Amendment also reduces the minimum borrowing usage requirement from fifty percent (50%) to forty percent (40%) of the aggregate revolver amount, which is a minimum borrowing usage requirement reduction from $10,000,000 to $8,000,000.

Financing costs related to the CNC Credit Agreement, net of accumulated amortization, of approximately $0.2 million, have been deferred over the initial term of the loan and are included in other assets as of March 31, 2022. The interest rate per annum applicable to borrowings under the CNC Credit Agreement is the LIBO plus 5.5%. The LIBO Rate is equal to the greater of (i) 1.75%, and (ii) the rate determined by the Agent to be equal to the quotient obtained by dividing (1) the LIBO Base Rate (i.e., the rate per annum determined by Agent to be the offered rate that appears on the applicable Bloomberg page) for the applicable LIBOR Loan for the applicable interest period by (2) one minus the Eurodollar Reserve Percentage (i.e., the reserve percentage in effect under regulations issued from time to time by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement with respect to Eurocurrency funding for the applicable LIBOR Loan for the applicable interest period). If adequate and reasonable means do not exist for ascertaining or the LIBOR rate is no longer available, the Company and the Agent may amend the CNC Credit Agreement to replace LIBOR with an alternate benchmark rate. If no LIBOR successor rate is determined, the obligation of the lenders to make or maintain LIBOR loans will be suspended and the LIBO Base Rate component will no longer be utilized in determining the base rate.

If, due to any circumstance affecting the London interbank market, the Agent determines that adequate and fair means do not exist for ascertaining the LIBO Rate on any applicable date (and such circumstances that are identified in the next two paragraphs below are not covered or governed by such provisions below), then until the Agent determines that such circumstance no longer exists, the obligation of lenders to make LIBOR Loans will be suspended and, if requested by the Agent, the Company must promptly, at its option, either (i) pay all such affected LIBOR Loans or (ii) convert such affected LIBOR Loans into loans that bear reference to the Base Rate plus the Applicable Margin.

If the Agent determines that for any reason (i) dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable loan amount or applicable interest period, (ii) adequate and reasonable means do not exist for determining the LIBO Rate for the applicable interest period, or (iii) LIBOR for the applicable interest period does not adequately and fairly reflect the cost to the lenders of funding a loan, then the lenders’ obligation to make or maintain LIBOR Loans will be suspended to the extent of the affected LIBOR Loan or interest period until all such loans are converted to loans bearing interest at the Base Rate (as defined below) plus the Applicable Margin (as specified below).

However, if Agent determines that (i) adequate and reasonable means do not exist for ascertaining LIBOR for any requested interest period and such circumstances are unlikely to be temporary; (ii) the administrator of the LIBOR screen rate or a governmental authority having jurisdiction over the Agent has made a public statement identifying a specific date after which LIBOR or the LIBOR screen rate shall no longer be made available, or used for determining the interest rate of loans (“Scheduled Unavailability Date”); or (iii) syndicated loans currently being executed, or that include language similar to that contained in this paragraph are being executed or amended to incorporate or adopt a new benchmark interest rate to replace LIBOR, then Agent and the Company may amend the CNC Credit Agreement to replace LIBOR with an alternate benchmark rate (“LIBOR Successor Rate”) and any such amendment will become effective unless lenders holding more than 50% in value of the loans or commitments under the CNC Credit Agreement do not accept such amendment. If no LIBOR Successor Rate has been determined and the circumstances under clause (i) above exist or the Scheduled Unavailability Date has occurred, (x) the obligation of lenders to make or maintain LIBOR Loans will be suspended (to the extent of the affected LIBOR Loans or interest periods), and (y) the LIBO Base Rate component will no longer be utilized in determining the Base Rate. The Base Rate for any day is a fluctuating rate per annum equal to the highest of: (i) the Federal Funds Rate plus 1/2 of 1%; (ii) the rate of interest in effect for such day as publicly announced from time to time by JPMorgan Chase Bank, N.A. as its “prime rate” in effect for such day; or (iii) the most recently available LIBO Base Rate (as adjusted by any minimum LIBO Rate floor) plus 1%. The Applicable Margin is equal to 5.50%. The CNC Credit Agreement expires on March 26, 2023.

On April 16, 2020, the Company received a Paycheck Protection Program loan (“PPP Loan”) in the amount of approximately $1.38 million from PNC pursuant to the PPP administered by the United States Small Business Administration (“SBA”) under the CARES Act. In connection with the receipt of the PPP Loan, on May 18, 2020, the Company and the Agent entered into the First Amendment to Loan, Security and Guarantee Agreement ~~with CNC initially entered into on March 26, 2020, as amended on May 18, 2020.~~ ~~See~~to accommodate the ~~description~~Company’s receipt of the ~~Credit Facility Amendment contained in Note 9 to these Notes to Unaudited Condensed Consolidated Financial Statements.~~PPP Loan.

On ~~July 31,~~January 13, 2021, the Company received a notice from PNC Bank regarding forgiveness of the loan in the principal amount of approximately $1.38 million that was made to the Company pursuant to the SBA PPP under the CARES Act of 2020. The notice states that SBA has remitted to PNC a loan forgiveness payment equal to $1.39 million, which constitutes full payment and ~~Purchaser~~forgiveness of the principal amount of the PPP loan and all accrued interest. In January 2021, the Company recognized the forgiveness of the PPP Loan as other income in the Consolidated Statements of Operations.

On June 10, 2020, the Company entered into a thirty-six-month equipment financing agreement (“Financing Agreement”) with Dimension Funding LLC. The Financing Agreement provides for an advance payment of approximately $170,000 to be used to secure furniture and ~~consummated~~fixtures for the ~~Car Zeus Purchase Transaction.~~Company’s new office location in Irvine, California. Payments of approximately $5,300 (inclusive of imputed interest) are made monthly under the Financing Agreement. As of ~~See~~March 31, 2022, the ~~description~~Company has paid approximately $0.1 million. The Financing Agreement will mature on December 31, 2022.

The Company’s future commitments under the Financing Agreement as of March 31, 2022, are as follows:

As a result of the CarZeus Purchase Transaction ~~contained~~on August 1, 2021, the Company determined that operates in ~~Note 1~~two reportable segments: Automotive digital marketing and used vehicle acquisition and resale through the Company’s Tradein Expert subsidiary. The automotive digital marketing segment consists of all aspects related to ~~these Notes to Unaudited Condensed Consolidated Financial Statements.~~automotive digital marketing, whereas the used vehicle acquisition and resale segment consists solely of the used vehicle acquisition and wholesale reselling business. Revenues generated by the automotive digital marketing segment primarily represent lead generation and digital advertising, while revenues generated by the used vehicle acquisition and resale segment primarily represent used car vehicle sales.

The segment performance is reviewed by the chief executive officer at the operating income (loss) level. The following table provides segment reporting of the Company for the three months ended March 31, 2022:

Item2.~~Management’s~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” ~~“believes,~~“could,” ~~“could,~~“may,” “estimates,” “expects,” ~~“intends,~~“projects,” ~~“may,~~“intends,” “plans,” ~~“projects,~~“believes,” “will” and words or phrases of similar substance used in connection with any discussion of future operations, or financial performance, plans, events, trends or circumstances can be used to identify some, but not all, forward-looking statements. In particular, statements regarding expectations and opportunities, industry trends, new product expectations and capabilities, and our outlook regarding our performance and growth are forward-looking statements. This Quarterly Report on Form 10-Q also contains statements regarding plans, goals and objectives. There is no assurance that we will be able to carry out our plans or achieve our goals and objectives or that we will be able to do so successfully on a profitable basis. These forward-looking statements are just predictions and involve significant risks and uncertainties, many of which are beyond our control, and actual results may differ materially from these statements. Factors that could cause actual outcomes or results to differ materially from those reflected in forward-looking statements include, but are not limited to, those discussed in this Item 2 (including in the section entitled “Overview” below), Part II, Item 1A of this Quarterly Report on Form 10-Q, and under the heading “Risk Factors” in our annual report on Form 10-K for the year ended December 31, ~~2020~~2021 (“~~2020~~ 2021Form10-K”). filed with the SEC on March 24, 2022. Investors are urged not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date on which they were made. Except as may be required by law, we do not undertake any obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained herein are qualified in their entirety by the foregoing cautionary statements.

The following discussion of our results of operations and financial condition should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the notes thereto in the ~~2020~~2021 Form 10-K.

Our corporate website is located at www.autoweb.com. Information on our website is not incorporated by reference in this Quarterly Report on Form 10-Q. At or through the Investor Relations section of our website we make available free of charge our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to these reports as soon as practicable after the reports are electronically filed with or furnished to the SEC.

Unless the context otherwise requires, the terms “we”, “us”, “our”, “AutoWeb” and “Company” refer to AutoWeb, Inc. and its consolidated subsidiaries.

See Note 2, Basis orof Presentation, of the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

We prepare our financial statements in conformity with accounting principles generally accepted in the United States of America, which require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Accordingly, actual results could differ materially from our estimates. To the extent that there are material differences between these estimates and our actual results, our financial condition or results of operations may be affected. For a detailed discussion of the application of our critical accounting policies, see Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the ~~2020~~2021 Form 10-K. There have been no changes to our critical accounting policies since we filed our ~~2020~~2021 Form 10-K.

~~Total revenues~~Commencing in the first six months of 2021 were $36.6 million compared to $41.5 million in the first six months of 2020. The decline in total revenues was directly related to the impact of the coronavirus pandemic on vehicle sales and overall demand from our clients for our products. Offsetting this reduction is a one-time lump sum payment for the early termination of the new vehicle leads program by one of our manufacturing customers which approximated $0.5 million. Although our prior strategic focus often generated higher gross revenue, the margin profile and overall quality was lower, resulting in lower overall levels of gross profit and higher client churn. As a part of our strategic decisions, we also shifted focus to our core Leads, clicks and email products and services and away from non-core products and services, such as third-party party product offerings. This shift further negatively impacted total revenues. Generally lower retail Leads sales levels resulting from retail dealer participation attrition in the retail dealer network that occurred in part of 2020 was an additional factor that contributed to lower total revenues during the six months ended June 30, 2021.

As a result of the continued impact of the coronavirus pandemic on vehicle sales, coupled with vehicle inventory and supply related issues, we have continued to intentionally operate at lower levels of media spend to match projected industry selling rates, which provides a more accurate reflection of true consumer demand. Dealers and consumers alike are still contending with broader macroeconomic uncertainty, and with this in mind, our objective is to provide the right mix of high-quality Leads and click traffic to our customers by staying aligned with automotive supply and demand dynamics. Finally, the disruption from the January 2020 malware attack on the Company’s systems also negatively impacted total revenues in 2020. In March 2021, we received an approximate $0.3 million insurance reimbursement related to the January 2020 malware attack, which is partially included in other income during the six months ended June 30, 2021.

As we continue to work with our traffic suppliers to optimize our SEM methodologies and further grow our high-quality traffic streams, we are also investing in and testing new traffic acquisition strategies and enhanced mobile consumer experiences. Further, we continue to invest in our pay-per-click approach to improve the consumer experience of that product. With a more efficient traffic acquisition model emerging, our plan for 2021 and beyond is to grow audience, improve conversion, improve Leads and clicks delivery rates, expand distribution, and increase retail Dealer Leads and clicks budget capacity. We believe that this focus, along with plans to develop or integrate new, innovative products and re-platforming existing experiences will create a more efficient process for how active vehicle shoppers with a vehicle in mind can be matched with sellers that can meet the shoppers’ needs, will create opportunities for improved quality of delivery and strengthen our position for revenue growth.

To maximize our growth potential as a matchmaker, we believe that we must continue to optimize our platform and products to facilitate more comprehensive matches between car buyer intent and transaction providers who can meet these buyers’ needs. These investments began with improvements to shop.car.com in the first quarter of 2021 and continued through the second quarter of 2021, spanning similar improvements to our additional properties. We have also made progress with layering additional retail-ready components into our platform through our strategic relationship with Credit IQ and the CarZeus Purchase Transaction.

At the beginning of June 2021, we announced our new strategic relationship with CreditIQ, an automotive retailing-focused software and service company that enables dealers to provide seamless digital retail experiences to consumers. This relationship allows shoppers using our search funnel to calculate car payments on a vehicle of interest, which streamlines the car buying process for both buyers and sellers. We believe that features like these not only enhance our platform’s user experience, but also enable us to create more tailored profiles of the buyers using our sites to understand what kind of shopping experience they’re seeking. We expect to expand both this base and the offerings of our platform even further through our recently announced acquisition of specified assets of CarZeus, which positions us to participate more meaningfully in the consumer used vehicle disposal market.

The CarZeus Purchase Transaction provides us the opportunity to purchase vehicles directly from consumers and resell them primarily through wholesale auctions, forming a complementary, retail-ready product line extension to our existing consumer offerings. We believe this acquisition will also allow us to increase our total addressable market by expanding our presence in the used car market, while giving us the opportunity to enhance the offerings and usefulness of our underutilized sites and monetize our traffic more effectively. We plan to use our traffic acquisition capabilities and operational efficiency to drive growth, improve financial performance and build scalable operating processes to enhance performance within CarZeus’ San Antonio market. With this foundation in place, we plan to prepare the business for broader geographic coverage in the long-term. We are not able at this time to provide any guidance related to CarZeus impact to our full year 2021 financial performance. ~~See~~ ~~the description of the CarZeus Purchase Transaction contained in Note 1 to these Notes to Unaudited Condensed Consolidated Financial Statements for additional information.~~

Our lead and click generation products have historically operated with limited visibility due to short sales cycles and a high rate of customer churn as clients are able to join and leave our platform with limited notice. Our advertising business is also subject to seasonal trends, with the first quarter of the calendar year typically showing sequential decline versus the fourth quarter. These factors have historically contributed to volatility in our revenues, cost of revenues, gross profit, and gross profit margin. We anticipate these trends will continue throughout 2021.

We anticipate that our remaining 2021 financial condition may be adversely impacted when compared to 2020 by (i) the continuing impact of the coronavirus pandemic on vehicle sales and on demand for our products and services; (ii) increased competitive pressure on cost of audience acquisition that may limit how much volume we will be able to profitably source and distribute to our customers; (iii) the costs and revenue impact associated with our efforts to optimize our clicks product; and (iv) the decision to shift our focus to our core leads, clicks and email products and services and away from non-core product and services. Many industry analysts have forecast improvement in new vehicle unit sales seasonally adjusted annual rate from 14.5 million units in 2020 to a range of 15.5-16.4 million units in 2021, or 7-13% growth. The pace of growth in 2021 is expected to be uneven. The first half of 2021 franchise dealer unit volume grew 29%, but inventory shortages have reduced growth to the lower end of the range and this slower growth is expected to continue until inventory supplies normalize.

In early 2020 and continuing as of the date of this Quarterly Report on Form 10-Q, the outbreak of coronavirus and emerging variants has led to quarantines, mask mandates, vaccination requirements and stay-at-home/work-from-home orders in a number of countries, states, cities and regions and the closure or limited or restricted access to public and private offices, businesses and facilities, ~~worldwide,~~ causing ~~widespread~~ disruptions to travel, economic activity, supply chains and financial markets. The pandemic has led our Manufacturer and Dealer customers to experience disruptions in the (i) supply of vehicle and parts inventories, (ii) ability and willingness of consumers to visit automotive dealerships to purchase or lease vehicles, and (iii) overall health, safety and availability of their labor force.In particular, Manufacturers have also shut down assembly plants, adversely impacting inventories of new vehicles. Volatility in the financial markets, concerns about exposure to the virus, governmental quarantines, stay-at-home/work-from-home orders, business closures and employment furloughs and layoffs have also impacted consumer confidence and willingness to visit dealerships and to purchase or lease vehicles. High unemployment rates and lower consumer confidence may continue even after stay-at-home/work-from-home orders and business closures have ended. These disruptions have impacted the willingness or desire of our customers to acquire vehicle Leads or other digital marketing services from us. We are also experiencing direct disruptions in our operations due to the overall health and safety of, and concerns for, our labor force and as a result of governmental “social distancing” programs, quarantines, travel restrictions and stay-at-home/work-from-home orders, leading to office closures, operating from employee homes and restrictions on our employees traveling to our various offices.

~~In addition to the continued impact of the coronavirus pandemic on supply chains and vehicle inventories and sales, Manufacturers have also~~ experienced significant disruption in the supply of semiconductor chips required for new vehicles due to a worldwide shortage of these chips. As a result, the ability of Manufacturers to maintain regular production output of certain vehicles, and the corresponding reduction in available new vehicle inventories, have adversely impacted vehicle sales. Further disrupting the automotive industry and the number of vehicles available for sale or lease are disruptions in the supply of ~~seat foam and rubber, which is a key material~~other components used in ~~tires~~vehicle manufacturing. These disruptions have impacted the willingness or desire of our Dealer and other customers to acquire vehicle Leads or other digital marketing services from us. While coronavirus restrictions have eased in 2022, consumer confidence and spending has declined as ~~well~~a result of other factors, including macroeconomic conditions such as inflationary pressures and the global impact of Russia’s invasion of the Ukraine. Vehicle sales have declined, and we continue to experience cancellations, volume reductions or suspensions of purchases of Leads and other ~~components of new vehicles.~~digital marketing services by our Dealer and other customers, which has, and may continue to materially and adversely impact our financial performance.

We are unable to predict the continuing extent, duration and impact of the ~~pandemic and supply chain disruptions~~foregoing factors on the automotive industry in general, ~~and~~or on our business, operations and operations specifically. The spread of coronavirus variants and governmental responses thereto may prolong or increase the negative impacts of the pandemic. Vehicle sales have declined, and we continue to experience cancellations or suspensions of purchases of Leads and other digital marketing services by our customers, which could materially and adversely affect our future business, results of operations, financial condition, earnings per share, cash flow or the trading price of our stock (individually and collectively referred to as the Company’s “financial performance~~”).~~ specifically. In light of the impact on us from the foregoing factors, as discussed in Note 2 of the ~~pandemic~~notes to the unaudited condensed consolidated financial statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, due to our cash and liquidity position, we believe that there is substantial doubt about our ability to continue as a going concern for a period of one year after the date the financial statements contained in this Quarterly Report on Form 10-Q are issued. The Special Committee is exploring Strategic Alternatives and has retained Houlihan Lokey Capital, Inc. as its financial advisor to assist in this process. Our ability to continue funding operations is dependent upon the success in implementing Near-Term Operating Plans to address our near-term cash and liquidity needs. Our ability to continue as a going concern is contingent upon the successful execution of Strategic Alternatives and the Near-Term Operating Plans, but the Near-Term Operating Plans may themselves have a material and adverse effect on our financial performance. On May 16, 2022, we suspended our CarZeus operations and furloughed our employees within that segment in order to conserve cash. We are considering further actions and will implement these actions if and when appropriate to further conserve cash. There can be no assurance that we will be successful in achieving either the Strategic Alternatives or Near-Term Operating Plans or that new financing or other transactions will be available to us on commercially acceptable terms, or at all. Additionally, any debt or equity financing that may be obtained may result in substantial shareholder dilution and could have a material and adverse impact on our financial performance. We undertake no obligation to provide further disclosure regarding developments or the status of the process, our efforts to pursue implementation of potential Strategic Alternatives or Near-Term Operating Plans, or a decision to seek protection under the U.S. Bankruptcy Code and does not intend to make such disclosure unless and until events warrant disclosure, we have filed for protection under the U.S. Bankruptcy Code, or further disclosure is legally required.

Total revenues in the first three months of 2022 were $19.1 million compared to $17.9 million in the first three months of 2021. The increase in total revenues was largely driven by the addition of used vehicle sales revenue, a result of the CarZeus Purchase Transaction effective as of August 1, 2021. Partially offsetting the revenue increase is the continued negative impact of the supply chain ~~disruptions,~~for new vehicle inventory and sales, coupled with declining consumer confidence and economic inflation. During these times, we have ~~taken steps~~worked to ~~reduce~~shift our ~~overall~~strategy and to adapt to the changing market conditions within the automotive industry by increasing our focus to our core Leads, clicks and email products and services and away from non-core products and services, such as third-party product offerings. In addition, we have intentionally operated at lower levels of media spend in an attempt to match projected industry selling rates. We expect that the Company and its dealers and consumers alike will continue to contend with broader macroeconomic uncertainty, including uncertainties created by high inflation rates and the impact of Russia’s invasion of Ukraine.

As we continue to work with our traffic suppliers to optimize our search engine marketing ("SEM") methodologies and our high-quality traffic streams, we are also testing new traffic acquisition strategies and enhanced mobile consumer experiences. Further, we continue to improve the consumer experience of our pay per click product. Our plan is to continue to focus on growing audience, improving conversion, improving Leads and clicks delivery rates, expanding distribution, and increasing retail Dealer Leads and clicks budget capacity, subject to our efforts to conserve cash. We believe that this focus, will create a more efficient process for how active vehicle shoppers with a vehicle in mind can be matched with sellers that can meet the shoppers’ needs, which may create opportunities for improved quality of delivery and help strengthen our financial position.

Our lead and click generation ~~efforts~~products have historically operated with limited visibility regarding future performance due to short sales cycles and ~~corresponding costs~~a high rate of customer churn as customers are able to ~~better align~~join and leave our ~~volumes~~platform with ~~industry demand~~limited notice. Our advertising business is also subject to seasonal trends, with the first quarter of the calendar year typically showing sequential decline versus the fourth quarter. These factors have historically contributed to volatility in our revenues, cost of revenues, gross profit, and ~~consumer intent and ability~~gross profit margin. We expect these trends to ~~purchase or lease vehicles. We will~~ continue ~~to evaluate these and other cost reduction measures, and explore all options available to us, in order to minimize~~through the ~~impact~~remainder of ~~these events on us.~~

Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared to the Three Months Ended ~~June 30, 2020~~December 31, 2021

The following table sets forth certain statement of operations data for the three-month periods ended ~~June 30, 2021,~~March 31, 2022 and ~~2020 (certain balances~~December 31, 2021. In accordance with Regulation S-K Item 303(c), as amended, we are providing a comparison of our March 31, 2022, period against the preceding quarter. We believe this comparison is useful for investors and ~~calculations have been rounded for presentation):~~stakeholders, as it provides more clarity into our current year financial performance.

	2021			% of Total Revenues			2020			% of Total Revenues			Change			% Change			2022			% of total revenues			2021			% of total revenues			$ Change			% Change
	*(Dollar amounts in thousands)*																		*(Dollar amounts* in *thousands)*
Revenues:
Lead generation	$	15,225			81	%	$	14,263			84	%	$	962			7	%	$	10,576			56	%	$	10,673			60	%	$	(97	)		(1	)%
Digital advertising		3,511			19			2,770			16			741			27			4,137			21			3,415			19			722			21
Used vehicle sales																				4,351			23			3,722			21			629			17
Total revenues		18,736			100			17,033			100			1,703			10			19,064			100			17,810			100			1,254			7
Cost of revenues		12,179			65			10,993			65			1,186			11
Cost of revenues – lead generation and digital advertising																				10,954			58			10,770			61			184			2
Cost of revenues – used vehicle sales																				4,206			22			3,508			20			698			20
Gross profit		6,557			35			6,040			35			517			9			3,904			20			3,532			19			372			11
Operating expenses:
Sales and marketing		2,103			11			2,026			12			77			4			2,650			14			2,401			14			249			10
Technology support		1,271			7			1,786			10			(515	)		(29	)		1,533			8			1,616			9			(83	)		(5	)
General and administrative		3,089			17			2,901			17			188			6			3,562			19			1,846			10			1,716			93
Depreciation and amortization		196			1			559			3			(363	)		(65	)		65			—			74			—			(9	)		(12	)
Total operating expenses		6,659			36			7,272			42			(613	)		(8	)		7,810			41			5,937			33			1,873			32
Operating loss		(102	)		(1	)		(1,232	)		(7	)		1,130			(92	)		(3,906	)		(21	)		(2,405	)		(14	)		(1,501	)		62
Interest and other income (expense), net		(202	)		(1	)		(142	)		(1	)		(60	)		42			(275	)		(1	)		(204	)		(1	)		(71	)		(34	)
Loss before income tax provision		(304	)		(2	)		(1,374	)		(8	)		1,070			(78	)		(4,181	)		(22	)		(2,609	)		(15	)		(1,572	)		60
Income tax provision		—			—			—			—			—			—			126			—			—			—			126			100
Net loss	$	(304	)		(2	)%	$	(1,374	)		(8	)%	$	1,070			(78	)%
Net income (loss)																			$	(4,307	)		(22	)%	$	(2,609	)		(15	)%	$	(1,698	)		(65	)%

Lead generation.Lead generation revenues ~~increased $1.0~~decreased $0.1 million, or 7%1%, in the ~~second~~first quarter of 2022 compared to the fourth quarter of 2021 ~~compared to the second quarter of 2020~~ primarily asfrom a result of a one-time lump sum payment for the early termination of the new vehicle leads program by one of our manufacturing customers which approximated $0.5 million. Further contributing to this increase was an increasedecrease in the volume of automotive leads delivered to ~~manufacturers~~Manufacturers and other wholesale customers.

Digital ~~advertising.~~Advertising. Digital advertising revenues increased $0.7 million, or ~~27%~~21%, in the ~~second~~first quarter of 2022 compared to the fourth quarter of 2021, a result of an increase in click revenue associated with increased click volume. The increase in click volume is attributed to a renewed focus on higher paying advertisers.

Used vehicle sales. Used vehicle sales revenue increased $0.6 million, or 17%, in the first quarter of 2022 compared to the ~~second~~fourth quarter of ~~2020 primarily as a result of increased monetization of~~2021. The increase in used vehicle sales revenue is directly attributable to higher average sales prices for vehicles sold through our ~~website traffic. Further contributing to this increase was our internal decision to reduce overall click generation efforts during the second quarter of 2020 to better align with industry demand.~~used vehicle acquisition business.

Cost of ~~revenues.~~ Revenues – lead generation and digital advertising. Cost of revenues consists of purchase request and traffic acquisition costs and other cost of revenues. Purchase request and traffic acquisition costs consist of payments made to our third-party purchase request providers, including internet portals and online automotive information providers. Other cost of revenues consists of SEM and fees paid to third parties for data and content, including search engine optimization activity, included on our websites; connectivity costs; development costs related to our websites; technology license fees; server equipment depreciation; and technology amortization directly related to our ~~websites.~~Websites. Cost of revenues increased ~~$1.2~~$0.2 million, or ~~11%~~2%, in the ~~second~~first quarter of ~~2021~~2022 compared to the ~~second~~fourth quarter of ~~2020~~2021 primarily due to increased SEM and traffic acquisition ~~costs and click publisher~~ costs.

~~Gross profit.~~ ~~Gross Profit~~Cost of revenues – used vehicles. Used vehicle cost of revenue increased ~~$0.5~~$0.7 million, or 9%20%, in the ~~second~~first quarter of 2022 compared to the fourth quarter of 2021. The increase in used vehicle cost of revenues is directly attributable to inefficiencies with staffing and inspection processes in our used vehicle acquisition segment during the first quarter of 2022 compared to the fourth quarter of 2021.

Gross Profit. Gross profit increased $0.4 million, or 11%, compared to the fourth quarter of 2021 ~~compared~~primarily due to the ~~second quarter~~aforementioned improvements in digital advertising. Partially offsetting the increase in gross profit is the increased cost of ~~2020. This was a direct result of our continued prioritization of gross profitability as opposed to the maximization of~~revenues for lead ~~traffic~~generation and lead volume. Further contributing to this increase was the one-time lump sum payment for the early termination of the new vehicle leads program by one of our manufacturing customers which approximated $0.5 million.used vehicles.

Sales and ~~marketing.~~Marketing. Sales and marketing expense ~~include~~includes costs for developing ~~our~~ brand equity, personnel costs and other costs associated with Dealer sales, website advertising and Dealer support. Sales and marketing expense in the ~~second~~first quarter of ~~2021~~2022 increased ~~$0.1~~$0.2 million, or 4%10%, compared to the ~~second~~fourth quarter of ~~2020 due~~2021 primarily tofrom an increase in ~~SEM and advertising expense.~~employee expenses related to the expansion of CarZeus.

Technology ~~support.~~Support. Technology support expense includes compensation, benefits, software licenses and other direct costs incurred by the Company to enhance, manage, maintain, support, monitor and operate the Company’s websites and related technologies, and to operate the Company’s internal technology infrastructure. Technology support expense in the ~~second~~first quarter of ~~2021~~2022 decreased by ~~$0.5~~$0.1 million, or ~~29%~~5%, compared to the ~~second~~fourth quarter of ~~2020, due to continued expense savings resulting~~2021 primarily from ~~our internal cost reduction initiatives enacted as a result of the coronavirus pandemic on vehicle sales.~~decreased employee related expenses.

General and ~~administrative.~~Administrative. General and administrative expense consists of executive, financial, human resources and legal personnel and expenses, ~~costs related to being a~~ public company costs and bad debt expense. General and administrative expense in the ~~second~~first quarter of 2022 increased by $1.7 million, or 93%, from the fourth quarter of 2021 ~~increased by $0.2 million, or 6%, from the second quarter of 2020~~ due primarily to ~~the~~timing of cost ~~action initiatives taken in the second quarter of 2020 in response~~accruals related to the ~~coronavirus pandemic. These prior-year cost reductions included reductions~~Company’s Annual Incentive Compensation plan as well as other increases in ~~executive and board compensation, recruitment, and travel-related~~employee related expenses.

Depreciation and ~~amortization.~~ Amortization.Depreciation and amortization expense in the ~~second~~first quarter of 2022 was comparable to the fourth quarter of 2021 ~~decreased $0.4 million, or 65% from the second quarter of 2020 primarily due~~as our property and equipment continues to ~~assets that have been fully depreciated as compared to the same period in the prior year.~~depreciate.

Interest and Other Income (Expense), Net.Interest and other income (expense), ~~net.~~ ~~Interest~~net was ($0.3) million for the first quarter of 2022 compared to $(0.2) million for the fourth quarter of 2021. The increase in interest and other income (expense)~~, was $0.2~~ is predominately attributable to the expiration of a licensing agreement in January 2022. The licensing agreement provided other income of $0.1 million ~~of expense for~~during the ~~second~~fourth quarter of ~~2021 compared to $0.1 million of expense in the second quarter of 2020.~~2021. Interest expense ~~increased to $0.3 million in the second quarter of 2021 from $0.2 million in the second quarter of 2020, primarily due to~~includes interest on outstanding borrowings ~~under CNC Credit Agreement coupled with~~and the amortization of debt issuance costs.

Income ~~taxes.~~Taxes. Income tax expense was ~~zero~~$0.1 million in the ~~second~~first quarter of ~~2021 and 2020, respectively. Our~~2022. The Company did not have income tax ~~rate~~expense in the fourth quarter of 2021. Income tax expense for the ~~second~~ quarter ~~of 2021~~ended March 31, 2022, differed from the federal statutory rate primarily due to operating losses that receive no tax benefit as a result of valuation allowance recorded for such losses.

Three Months Ended ~~June 30, 2021~~March 31, 2022 Compared to the ~~Six~~Three Months Ended ~~June 30, 2020~~March 31, 2021

The following table sets forth certain statement of operations data for the ~~six-month~~three-month periods ended ~~June 30,~~March 31, 2022 and 2021 ~~and 2020~~ (certain amounts may not calculate due to rounding):

	2021			% of Total Revenues			2020			% of Total Revenues			Change			% Change			2022			% of total revenues			2021			% of total revenues			$ Change			% Change
	*(Dollar amounts in thousands)*																		*(Dollar amounts* in *thousands)*
Revenues:
Lead generation	$	29,411			80	%	$	32,723			79	%	$	(3,312	)		(10	)%	$	10,576			56	%	$	14,186			79	%	$	(3,610	)		(25	)%
Digital advertising		7,205			20			8,782			21			(1,577	)		(18	)		4,137			21			3,694			21			443			12
Used vehicle sales																				4,351			23			—			—			4,351			100
Total revenues		36,616			100			41,505			100			(4,889	)		(12	)		19,064			100			17,880			100			1,184			7
Cost of revenues		24,250			66			30,108			73			(5,858	)		(19	)
Cost of revenues – lead generation and digital advertising																				10,954			58			12,071			68			(1,117	)		(9	)
Cost of revenues – used vehicle sales																				4,206			22			—			—			4,206			100
Gross profit		12,366			34			11,397			27			969			9			3,904			20			5,809			32			(1,905	)		(33	)
Operating expenses:
Sales and marketing		4,303			12			4,158			10			145			3			2,650			14			2,200			12			450			20
Technology support		2,638			7			3,643			9			(1,005	)		(28	)		1,533			8			1,367			8			166			12
General and administrative		6,221			17			6,844			16			(623	)		(9	)		3,562			19			3,132			18			430			14
Depreciation and amortization		400			1			1,281			3			(881	)		(69	)		65			—			204			1			(139	)		(68	)
Total operating expenses		13,562			37			15,926			38			(2,364	)		(15	)		7,810			41			6,903			39			907			13
Operating loss		(1,196	)		(3	)		(4,529	)		(11	)		3,333			(74	)		(3,906	)		(21	)		(1,094	)		(6	)		(2,812	)		(257	)
Interest and other income (expense), net		1,202			3			(906	)		(2	)		2,108			(233	)		(274	)		(1	)		1,404			8			(1,678	)		(120	)
Income (loss) before income tax provision		6			—			(5,435	)		(13	)		5,441			(100	)
Loss before income tax provision																				(4,181	)		(22	)		310			2			(4,490	)		(1,449	)
Income tax provision		—			—			—			—			—			—			126			—			—			—			126			100
Net income (loss)	$	6		—%			$	(5,435	)		(13	)%	$	5,441			(100	)%	$	(4,307	)		(22	)%	$	310			2	%	$	(4,617	)		(1,489	)%

Lead generation.Lead generation revenues decreased ~~$3.3~~$3.6 million, or ~~10%~~25%, in the first ~~six months~~quarter of ~~2021~~2022 compared to the first ~~six months~~quarter of ~~2020~~2021 primarily asfrom a ~~result~~decrease in the volume of ~~the impact of the coronavirus pandemic on vehicle sales. This~~automotive leads delivered to Manufacturers and other wholesale customers. Further contributing to this decrease is ~~partially offset by the one-time lump sum payment for~~ the early termination of the new vehicle leads program by one of our ~~manufacturing~~Manufacturer customers ~~which approximated $0.5 million.~~during the second half of 2021.

Digital ~~advertising.~~Advertising. Digital advertising revenues ~~decreased $1.6~~increased $0.4 million, or ~~18%~~12%, in the first ~~six months~~quarter of ~~2021~~2022 compared to the first ~~six months~~quarter of ~~2020 primarily~~2021, as a result of ~~a decrease~~an increase in click revenue ~~associated with decreased~~from increased click volume. The ~~decrease~~increase in click volume is attributed to ~~the impact~~a renewed focus on higher paying advertisers.

Used vehicle sales. As a result of the ~~coronavirus pandemic.~~CarZeus Purchase Transaction that was effective on August 1, 2021, the Company recorded used vehicle sales of $4.4 million in the first quarter of 2022. The Company had no used vehicle sales in the first quarter of 2021.

Cost of ~~revenues.~~ Revenues – lead generation and digital advertising. Cost of revenues ~~decreased $5.9 million, or 19%, in the first six months~~consists of ~~2021 compared to the first six months of 2020 primarily due to decreased SEM,~~ purchase ~~requests~~request and traffic acquisition costs and other costs of revenues. ~~Partially offsetting this decrease was an increase in click publisher costs.~~

~~Gross profit.~~ ~~Gross Profit increased $1.0~~Purchase request and traffic acquisition costs consist of payments made to our third-party purchase request providers, including internet portals and online automotive information providers. Other cost of revenues consists of SEM and fees paid to third parties for data and content, including search engine optimization activity, included on our websites; connectivity costs; development costs related to our websites; technology license fees; server equipment depreciation; and technology amortization directly related to our websites. Cost of revenues decreased $1.1 million, or 9%, ~~for~~in the first ~~six months~~quarter of ~~2021~~2022 compared to the first ~~six months~~quarter of ~~2020. This was~~2021 in line with the decrease in lead generation revenues coupled with improved efficiencies in SEM, purchase request and traffic acquisition costs.

Cost of revenues – used vehicles. As a ~~direct~~ result of ~~our continued prioritization of gross profitability as opposed to~~ the ~~maximization of lead traffic and lead volume. Further contributing to this increase~~CarZeus Purchase Transaction that was ~~a reduction in~~effective on August 1, 2021, used vehicle cost of revenues ~~primarily driven by a reduction~~was $4.2 million in ~~cost-per-click.~~2022. The Company did not have any used vehicle cost of revenues in the first quarter of 2021.

Gross Profit. Gross profit decreased $1.9 million, or 33%, compared to 2021 due to generating lower levels of gross profit as a result of the used vehicle acquisition business, which did not exist in the prior year period.

Sales and ~~marketing.~~Marketing. Sales and marketing expense include costs for developing our brand equity, personnel costs and other costs associated with Dealer sales, website advertising and Dealer support. Sales and marketing expense in the first ~~six months~~quarter of ~~2021~~2022 increased ~~$0.1~~$0.5 million, or 3%20%, compared to the first ~~six months~~quarter of ~~2020~~2021 primarily due ~~primarily~~ to an increase in ~~SEM and advertising expense.~~headcount related to CarZeus coupled with an increase in marketing expenses.

Technology ~~support.~~Support. Technology support expense includes compensation, benefits, software licenses and other direct costs incurred by the Company to enhance, manage, maintain, support, monitor and operate the Company’s websites and related technologies, and to operate the Company’s internal technology infrastructure. Technology support expense in the first ~~six months~~quarter of ~~2021 decreased~~2022 increased by ~~$1.0~~$0.2 million, or ~~28%~~12%, compared to the first ~~six months~~quarter of ~~2020 due to continued expense savings resulting~~2021 primarily from ~~our internal cost reduction initiatives enacted as a result of the coronavirus pandemic on vehicle sales.~~higher employee related expenses.

General and ~~administrative.~~Administrative. General and administrative expense consists of executive, financial, human resources and legal personnel and expenses, public company costs and bad debt expense. General and administrative expense in the first ~~six months~~quarter of 2022 increased by $0.4 million, or 14%, from the first quarter of 2021 ~~decreased $0.6 million, or 9%, compared to the first six months of 2020 due~~ primarily ~~to reductions in recruitment, travel-related expenses, rent, severance~~from higher professional and ~~consulting-related expenses.~~consulting fees.

Depreciation and ~~amortization.~~ Amortization.Depreciation and amortization expense in the first ~~six months~~quarter of 2022 decreased by $0.1 million, or 68%, from the first quarter of 2021 ~~decreased $0.9 million, or 69% compared to the first six months of 2020~~primarily due ~~primarily~~ to assets that have been fully depreciated as compared to the same period in the prior year.

Interest and Other Income (Expense), Net.Interest and other income (expense), ~~net.~~ ~~Interest and other income (expense)~~net was ~~$1.2~~$(0.3) million ~~of income~~ for the first ~~six months~~quarter of ~~2021~~2022 compared to ~~$0.9~~$1.4 million ~~of expense in~~for the first ~~six months~~quarter of ~~2020.~~2021. In the first quarter of 2021, we recorded $1.4 million of income associated with the forgiveness of our PPP Loan. Further contributing to the ~~increase~~decrease in interest and other income (expense) was an insurance reimbursement related to the January 2020 malware attack in which we recorded $0.2 million on our Unaudited Condensed Consolidated Statement of ~~Operations. Interest expense decreased to $0.5 million~~Operations in the first ~~six months~~quarter of ~~2021 from $1.0 million in the first six months of 2020, due to the prior year write-off of our deferred financing fees associated with the revolving line of credit under the PNC Credit Facility.~~2021. Interest expense includes interest on outstanding borrowings and the amortization of debt issuance costs.

Income ~~taxes.~~Taxes. Income tax expense was ~~zero~~$0.1 million in the first quarter of 2022. The Company did not have income tax expense in the first quarter of 2021. Income tax expense for the ~~first six months of 2021 and 2020, respectively. Our income tax rate for the first six months of 2021~~quarter ended March 31, 2022, differed from the federal statutory rate primarily due to operating losses that receive no tax benefit as a result of valuation allowance recorded for such losses.

~~Three Months Ended June 30, 2021 Compared to the Three Months Ended March 31, 2021~~

The following table sets forth certain statement of operations data for the three-month periods ended June 30, 2021, and March 31, 2021 (certain balances and calculations have been rounded for presentation). In accordance with Regulation S-K Item 303(c), as amended, we are providing a comparison of our June 30, 2021, period against the preceding quarter. We believe providing a sequential results-of-operations would be more useful for investors and stakeholders, as it will provide more clarity into our current year financial performance. For additional information related to the three months ended March 31, 2021, please refer to our first quarter Form 10-Q filed with the SEC on May 6, 2021.

~~Lead generation.~~ Lead generation revenues increased $1.0 million, or 7%, in the second quarter of 2021 compared to the first quarter of 2021 primarily as a result of a one-time lump sum payment for the early termination of the new vehicle leads program by one of our manufacturing customers which approximated $0.5 million. Further contributing to this increase was an increase in the volume of automotive leads delivered to manufacturers and wholesale customers when compared to the preceding quarter.

~~Digital advertising.~~ Digital advertising revenues decreased $0.2 million, or 5%, in the second quarter of 2021 compared to the first quarter of 2021 primarily as a result of a decrease in click revenue associated with decreased click volume.

~~Cost of revenues.~~ Cost of revenues increased $0.1 million, or 1%, in the second quarter of 2021 compared to the first quarter of 2021 primarily due to increased SEM, purchase requests and click publisher costs. Offsetting these increases was a decrease in traffic acquisition costs.

~~Gross profit.~~ Gross Profit increased $0.7 million, or 13%, in the second quarter of 2021 compared to the first quarter of 2021. This was a direct result of the one-time lump sum payment for the early termination of the new vehicle leads program by one of our manufacturing customers which approximated $0.5 million.

~~Sales and marketing.~~ ~~Sales and marketing expense in the second quarter of 2021 decreased $0.1 million, or 4%, compared to the first quarter of 2021 due primarily to a decrease in commission related compensation.~~

~~Technology support.~~ ~~Technology support expense in the second quarter of 2021 decreased by $0.1 million, or 7%, compared to the first quarter of 2021 due primarily to a reduction in consulting related expenses.~~

~~General and administrative.~~ ~~General and administrative expense in the second quarter of 2021 did not materially change when compared to the first quarter of 2021.~~

~~Depreciation and amortization.~~ ~~Depreciation and amortization expense in the second quarter of 2021 did not materially change when compared to the first quarter of 2021.~~

~~Interest and other income (expense), net.~~ Interest and other income (expense), was $0.2 million of expense for the second quarter of 2021 compared to $1.4 million of income in the first quarter of 2021. In the first quarter of 2021, we recorded $1.4 million of income associated with the forgiveness of our PPP Loan. Further contributing to the first quarter increase was an insurance reimbursement related to the January 2020 malware attack in which we recorded $0.2 million on our Unaudited Condensed Consolidated Statement of Operations.

~~Income taxes.~~ Income tax expense was zero in the second quarter of 2021 as well as the first quarter of 2021. Our income tax rate for the second quarter of 2021 differed from the federal statutory rate primarily due to operating losses that receive no tax benefit as a result of valuation allowance recorded for such losses.

The table below sets forth a summary of our cash flows for the ~~six~~three months ended ~~June 30, 2021,~~March 31, 2022 and ~~2020:~~2021:

Our principal sources of liquidity are our cash and cash equivalent balances and borrowings under the CNC Credit Agreement. Our cash and cash equivalents and restricted cash totaled ~~$15.2~~$8.1 million as of ~~June 30, 2021,~~March 31, 2022, compared to ~~$15.1~~$11.6 million as of December 31, ~~2020.~~2021. As of ~~June 30, 2021,~~March 31, 2022, we had a net ~~income~~loss of approximately $6,000. The net income is primarily attributable to receiving approximately $1.4 million of PPP loan forgiveness coupled with $0.2 million of income associated with the insurance reimbursement related to the January 2020 malware attack.$4.3 million. We had cash ~~provided by~~used in operations of ~~$0.7~~$2.3 million for the ~~six~~three months ended ~~June 30, 2021.~~March 31, 2022. As of ~~June 30, 2021,~~March 31, 2022, we had an accumulated deficit of ~~$349.8~~$359.7 million and stockholders' equity of ~~$17.4~~$9.0 million.

We have developed a strategic plan focused on improving operating performance in the future that includes modernizing and upgrading our technology and systems, pursuing business objectives and responding to business opportunities, developing new or improving existing products and services and enhancing operating infrastructure.

Our objective is to achieve cash generation as a business; however, there is no assurance that we will be able to achieve this objective. ~~The~~We have experienced significant historical operating losses and negative cash flows from operations. Additionally, other than the CNC Credit Agreement, ~~is expected to be used to continue to partially fund operations.~~

which expires March 26, 2023, we have no committed source of funding from either debt or equity financings. Borrowings under the CNC Credit Agreement are dependent on, among other things, the level of our eligible accounts receivable We believe that given these factors, our current cash ~~reserves~~position and anticipated cash needs for continuing operating ~~cash flows will be enough~~activities, there is substantial doubt about our ability to ~~sustain operations for the next twelve months. If we are unsuccessful in meeting our objective to sustain cash generation~~continue as a ~~business,~~going concern without obtaining additional sources of financing. Our ability to operate as a going concern is contingent upon the successful execution of the Strategic Alternatives and Near-Term Operating Plans (see Note 2 of the notes to these unaudited condensed financial statements in Part I, Item 1 of this Quarterly Report on Form 10-Q). On May 16, 2022, we ~~may need~~suspended our CarZeus operations and furloughed our employees within that segment in order to ~~seek~~conserve cash. We are considering further actions and will implement these actions if and when appropriate to ~~satisfy our future cash needs through private or public sales of securities, debt financings or partnering/licensing transactions; however, there is~~further conserve cash. There can be no assurance that we will be successful in ~~satisfying our future cash needs~~achieving any Strategic Alternatives or the Near-Term Operating Plans. Further, there can be no assurances that new financings or other transactions will be available to ~~continue operations.~~us on commercially acceptable terms, or at all.

Our future capital requirements will depend on many factors, including but not limited to, those discussed in this Item 2, Part II, Item 1A of this Quarterly Report on Form 10-Q and the risk factors set forth in Part I, Item 1A, “Risk Factors” of our ~~2020~~2021 Form 10-K. To the extent that our existing sources of liquidity are insufficient to fund our future operations, we may need to engage in equity or additional or alternative debt financings to secure additional funds. There can be no assurance that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us.

On July 30, 2021, we entered into a Credit Facility Amendment with CNC, to amend our existing Loan, Security and Guarantee Agreement with CNC initially entered into on March 26, 2020, as amended on May 18, 2020. For information concerning our CNC Credit Agreement, see Note ~~9 and Note 12~~11 included in the Notes to Unaudited Condensed Consolidated Financial Statements included in Part I, Item 1 of this Quarterly Report on Form 10-Q.

Net Cash (Used in) Provided by ~~(Used in)~~ Operating Activities. Net cash used in operating activities in the three months ended March 31, 2022 of ($2.3) million resulted primarily from a net loss of ($4.3) million, a $0.6 million net decrease in net working capital, depreciation and amortization of $0.6 million, stock compensation expense of $0.5 million, amortization of right-of-use assets of $0.2 million and a $0.1 million change in deferred tax liabilities.

Net cash provided by operating activities in the ~~six~~three months ended ~~June 30,~~March 31, 2021 of ~~$0.7~~$0.4 million resulted primarily from depreciation and amortization of ~~$1.3~~$0.6 million, stock compensation expense of ~~$0.9~~$0.5 million, ~~and the~~net income of $0.3 million, amortization of right-of-use assets of ~~$0.5 million.~~$0.2 million, and $0.1 million net decrease in net working capital. Offsetting these ~~non-cash charges~~increases was ~~the~~ forgiveness of the PPP loan of approximately $1.4 ~~million coupled with a $0.6 million net increase in net working capital.~~million.

Net cash used in operating activities in the six months ended June 30, 2020, of $1.9 million resulted primarily from net loss of $5.4 million, offset by depreciation and amortization of $2.3 million, stock compensation expense of $1.0 million and a $0.2 million net increase in net working capital.

Net Cash Used in Investing Activities. Net cash used in investing activities ~~was approximately $0.8 million in~~during the ~~six~~three months ended ~~June 30, 2021, which primarily~~March 31, 2022, of $0.3 million was related to purchases of property and equipment ~~and expenditures related to capitalized internal use software.~~of $0.2 million coupled with $0.1 million paid in conjunction with the acquisition of CarZeus.

Net cash used in investing activities ~~was approximately $0.4 million in~~during the ~~six~~three months ended ~~June 30, 2020, which primarily~~March 31, 2021 of $0.1 million was related to purchases of property and ~~equipment and expenditures related to capitalized internal use software.~~equipment.

Net Cash (Used in) Provided by Financing Activities. Net cash used in financing activities of ($0.9) million during the three months ended March 31, 202, primarily consisted of net borrowings on the Company’s credit facility.

Net cash provided by financing activities of $0.1 million during the ~~six~~three months ended ~~June 30,~~March 31, 2021 primarily consisted ~~of $0.2 million~~ of proceeds from the exercise of ~~common~~ stock ~~offset by $0.1 million of net borrowings on the credit facility coupled with payments made under the financing agreement.~~options.

Net cash provided by financing activities of $4.8 million during the six months ended June 30, 2020, primarily consisted of $3.4 million net borrowings on the credit facility coupled with proceeds from a $1.4 million PPP Note.

I~~tem~~Item 3.Quantitative and Qualitative Disclosures about Market Risk

Our Chief Executive Officer and Chief Financial Officer (our principal executive officer and principal financial officer, respectively) have evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Security Exchange Act of 1934, as amended, the “Exchange ~~Act”~~Act”) as of ~~June 30, 2021,~~March 31, 2022, the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). They have concluded that, as of the Evaluation Date, these disclosure controls and procedures were effective to ensure that material information relating to the Company and its consolidated subsidiaries would be made known to them by others within those entities and would be disclosed on a timely basis. The Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are designed, and are effective, to give reasonable assurance that the information required to be disclosed by us in reports that we file under the Exchange Act is recorded, processed, summarized and reported within the time period specified in the rules and forms of the ~~SEC.~~Securities and Exchange Commission. They have also concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed in the reports that are filed or submitted under the Exchange Act are accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

During the quarter ended ~~June 30, 2021,~~March 31, 2022, there were no changes in our “internal control over financial ~~reporting��~~reporting” (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or are reasonably likely to ~~materially~~material affect, our internal control over financial reporting.

~~For information about the significant risks that could affect the Company's financial condition,~~Our future business, results of operations, ~~liquidity,~~financial condition, earnings per share, cash flow or the trading price of our stock, individually and ~~cash flows, see the section~~collectively referred to as our (“financial performance,”) may be affected by a number of factors, including but not limited to those described in Part I, Item 1A of the ~~2020~~2021 Form 10-K ~~entitled~~under the heading “Risk ~~Factors,” as supplemented below,~~Factors” and under the ~~section~~heading “Cautionary Note Concerning Forward-Looking Statements” in Part I, Item 2 of this ~~quarterly report entitled “Forward-Looking Statements.”~~

~~Risks Associated with our Business Operations~~Quarterly Report on Form 10-Q, any one or more of which could, directly or indirectly, cause the Company’s actual financial performance to vary materially from past, or from anticipated future, financial performance. Any of these factors, in whole or in part, could materially and ~~Industry~~

~~We may be unable to increase Lead revenues and could continue to suffer declining revenues due to Dealer attrition or loss of Manufacturer customers.~~

~~We predominately derive our Lead revenues from Lead generation paid by Dealers and Manufacturers participating in our Lead programs. Our Lead generation revenues decreased $3.3 million, or 10%,~~adversely affect the Company’s financial performance. The risks described in the ~~first sixth months of~~ 2021 ~~compared~~Form 10-K are not the only risks we face. In addition to the ~~first six months of 2020. Our ability~~risks set forth in the 2021 Form 10-K as well as the risks disclosed below, additional risks and uncertainties not currently known to increase revenues from sales of Leads is dependent on a mix of interrelated factors that include increasing Lead revenues by attracting and retaining Dealers and Manufacturers and increasing the number of high-quality Leads we sell to Dealers and Manufacturers. We are also focused on higher revenue Dealers that are more cost-effective to support. Our sales strategy is intended to result in more profitable relationships with our Dealers both in terms of cost to supply Leads and to support the Dealers. Dealer churn and termination of Manufacturer Lead programs impacts our revenues, and if our sales strategy does not mitigate the loss in revenues by maintaining the overall number of Leads sold by increasing sales to other Dealersus or ~~Manufacturers while maintaining the overall margins we receive from the Leads sold, our revenues will decrease. We cannot provide any assurances~~ that we ~~will~~currently deem to be able to increase Lead generation revenues, prevent Dealer attrition or program terminations by Manufacturers or offset the revenues lost due to Dealer attrition or program terminations by Manufacturers by other means, and our failure to do so couldimmaterial may also materially and adversely affect our financial performance.

~~We may lose customers or quality Lead suppliers to our competitors.~~Financial, Accounting and Liquidity Risks

~~Our~~Management has substantial doubt about the Company’s ability to provide increased numbers of high-quality Leads to our customers is dependent on increasing the number of Internally Generated Leads and acquiring high-quality Non-Internally Generated Leads from third parties. Originating Internally Generated Leads is dependent on our ability to increase consumer traffic to our Company Websites by providing secure and easy to use websites with relevant and quality content for consumers and increasing visibility of our brands to consumers and by our SEM activities. We compete for Dealer and Manufacturer customers and for acquisition of Non-Internally Generated Leads with companies that maintain automotive Lead referral businesses that are very similar to ours. Many of these competitors are larger than us and have greater financial resources than we have. If we lose customers or quality Lead supply volume to our competitors, or if our pricing or cost to acquire Leads is adversely impacted, our financial performance will be materially and adversely affected.

~~We depend on Manufacturers, through our third-party sales channel and direct-to-Manufacturer wholesale programs, for~~continue as a ~~significant amount of our revenues, and~~going concern. As a result, we may not be able to ~~maintain~~fund operations unless we are able to obtain additional cash through private or ~~grow these relationships.~~public sales of securities, debt financings or partnering/licensing transactions.

~~We depend~~As of March 31, 2022, we had cash and cash equivalents of $3.8 million and restricted cash of $4.3 million. For the three months ended March 31, 2022, we had a net loss of $4.3 million and had net cash used in operations of $2.3 million. As of March 31, 2022, we had an accumulated deficit of $359.7 million and stockholders’ equity of $9.0 million. Based on ~~Manufacturers,~~current cash forecasts, the Company does not believe that it currently has sufficient cash to sustain operations through ~~our third-party sales channel and direct-to-Manufacturer wholesale programs for a significant amount~~the entire remainder of ~~our revenues. A decline in~~2022. Other than the CNC Credit Agreement, which expires March 26, 2023, the Company currently has no committed source of funding from either debt or equity financings. Borrowings under the CNC Credit Agreement are dependent on, among other things, the level of ~~advertising~~the Company’s eligible accounts receivable.

As discussed in Part 1, Item 2 and in Note 2 of the Notes to Unaudited Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on ~~our websites, reductions~~Form 10-Q, as a result of the Company’s cash and liquidity position and other factors, the Company’s management believes that there is substantial doubt about the Company’s ability to continue as a going concern for a period of one year after the date the financial statements contained in ~~advertising rates, terminations~~this Quarterly Report on Form 10-Q are issued. The Special Committee is exploring Strategic Alternatives and the Company’s ability to fund its operations through the entire remainder of ~~their third-party Lead programs by Manufacturers or any significant failure~~2022 is dependent upon success in implementing the Near-Term Operating Plans to ~~develop additional sources~~address the Company’s near-term cash and liquidity needs. The Company’s ability to continue as a going concern is contingent upon the successful execution of ~~advertising would cause our advertising revenues to decline, which could~~Strategic Alternatives and the Near-Term Operating Plans, but the Near-Term Operating Plans may themselves have a material and adverse effect on ~~our~~the Company’s financial ~~performance. We periodically negotiate revisions~~performance and ability to existing agreements and these revisions could decrease our wholesale program revenues in future periods. A number of our third-party sales channel agreements and Manufacturer agreements may be terminated at any time without cause or upon expiration of the current term of the agreement. We may not be able to maintain our relationships with sales channel third parties or Manufacturers on favorable terms or find alternative comparable relationships capable of replacing revenues on terms satisfactory to us. If we cannot do so, our revenues would decline, which could haveoperate as a ~~material adverse effect on our financial performance.~~

~~A reduction in the availability or access to inventory could adversely affect our business by increasing the costs of vehicles purchased.~~

~~Tradein Expert, Inc. (dba CarZeus) (“~~~~Tradein Expert~~~~”) acquires used vehicles primarily from individual consumers.~~going concern. There can be no assurance that ~~sufficient inventory of used vehicles~~the Company will ~~continue to~~be successful in achieving either the Strategic Alternatives or Near-Term Operating Plans. Further, there can be no assurance that new financings or other transactions will be available to ~~Tradein Expert, Inc.~~the Company on commercially acceptable terms, or at all. If we are unable to obtain additional debt or equity financing, we may be required to significantly reduce or cease operations and may seek protection under the U.S. Bankruptcy Code.

You may experience future dilution as a result of future equity or convertible debt offerings.

As discussed in Part 1, Item 2 and in Note 2 of the Notes to Unaudited Condensed Consolidated Financial Statements contained in Part I, Item 1 of this Quarterly Report on Form 10-Q, in order for us to continue as a going concern, we will need to obtain additional debt or equity financing. If we raise additional funds through the sale of equity or convertible debt securities, the issuance of the securities will result in dilution to our stockholders, which dilution may be ~~available~~substantial. We may sell shares or other securities in any offering at ~~prices acceptable to Tradein Expert. Tradein Expert might have to absorb~~ a ~~portion of any cost increases in inventory without being able to pass those increases to vehicle purchasers. Any reduction~~price per share that is less than the price per share paid by investors in the ~~availability of used vehicle inventory~~past, and investors purchasing shares or ~~increases~~other securities in the ~~cost~~future could have rights superior to existing stockholders. The price per share at which we sell additional shares of ~~vehicles could adversely affect Tradein Expert’s financial performance.~~

~~The retail~~our common stock, or securities convertible or exchangeable into common stock, in future transactions may be higher or lower than the price per share paid in the past. In addition, if we were to issue securities in connection with our acquisition of complementary businesses, products or technologies, our stockholders would also experience dilution. In November 2020, we filed a shelf registration statement on Form S-3, which may be used ~~vehicle industry is fragmented and highly competitive, which~~to raise additional capital in the future through a variety of equity or debt offerings that could result in ~~increased costs~~dilution to ~~acquire vehicles, lower sales prices due~~existing stockholders. In addition, we have reserved shares for issuance under our equity-based incentive plans. The issuance and subsequent sale of these shares will be dilutive to ~~competitive pressure.~~our existing stockholders and the trading price of our common stock could decline.

~~Tradein Expert competes principally with (i) the used vehicle retail operations~~

~~All states comprehensively regulate vehicle sales and lease transactions, including strict~~licensure requirements for automotive dealers (and, in some states, brokers) and vehicle advertising. But for Tradein Expert, our used vehicle buying and selling service that is licensed as a motor vehicle dealer in the State of Texas, we do not sell motor vehicles in any state. However, state regulatory authorities or third parties could take the position that some of the regulations applicable to dealers or to the manner in which motor vehicles are advertised and sold generally are directly applicable to our digital marketing and consumer referrals business. We believe that most of these laws and regulations specifically address only traditional vehicle purchase and lease transactions, not internet-based digital marketing and consumer referral programs such as our programs. If we determine that the licensing or other regulatory requirements in a given state are applicable to our digital marketing and consumer referrals business or to a particular marketing services program, we may elect to obtain required licenses and comply with applicable regulatory requirements. However, if licensing or other regulatory requirements are overly burdensome, we may elect to terminate operations or particular marketing services programs in that state, elect to not operate or introduce particular marketing services programs in that state or modify the service to comply with applicable law without being subjected to licensing requirements. In some states we have modified our marketing programs or pricing models to reduce uncertainty regarding our compliance with local laws.

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Three Months Ended June 30,				Six Months Ended June 30,				Three Months Ended March 31,
	2021		2020		2021		2020		2021		2020

Number of service-based options granted		55,000		55,000		820,000		515,000		500,000		765,000
Weighted average grant date fair value	$	1.94	$	0.67	$	1.83	$	1.05	$	2.09	$	1.82
Weighted average exercise price	$	2.75	$	1.08	$	2.61	$	1.90	$	2.94	$	2.60

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
						*(years)*		*(thousands)*
Outstanding at December 31, 2021		4,381,348		$	3.85		4.3	$	1,662
Granted		500,000			2.94		—		—
Exercised		0			0		—		0
Forfeited or expired		(185,826	)		4.58		—		—
Outstanding at March 31, 2022		4,695,522		$	3.73		4.3	$	177
Vested and expected to vest at March 31, 2022		4,541,629		$	3.76		4.3	$	175
Exercisable at March 31, 2022		3,214,119		$	4.15		3.6	$	141

	Number of Options			Weighted Average Exercise Price per Share		Weighted Average Remaining Contractual Term		Aggregate Intrinsic Value
						*(years)*		*(thousands)*
Outstanding at December 31, 2020		3,758,670		$	4.26		4.7	$	270
Granted		820,000			2.61
Exercised		(76,667	)		2.30				55
Forfeited or expired		(87,571	)		8.87
Outstanding at June 30, 2021		4,414,432		$	3.90		4.7	$	1,020
Vested and expected to vest at June 30, 2021		4,232,627		$	3.95		4.7	$	945
Exercisable at June 30, 2021		2,666,343		$	4.62		3.9	$	340

	June 30, 2021			December 31, 2020			March 31, 2022			December 31, 2021

Computer software and hardware	$	4,965		$	4,940		$	5,027		$	5,008
Capitalized internal use software		7,457			7,391			8,378			8,362
Furniture and equipment		1,105			935			1,105			1,105
Leasehold improvements		883			884			883			883
Capital projects-in-progress		1,588			805
Construction in progress								1,766			1,478
		15,998			14,955			17,159			16,836
Less—Accumulated depreciation and amortization		(12,461	)		(12,002	)		(13,259	)		(12,983	)
Property and equipment, net	$	3,537		$	2,953
Property and Equipment, net							$	3,900		$	3,853

					March 31, 2022							December 31, 2021
Definite-Lived Intangible Asset	Estimated Useful Life (Years)				Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net

Trademarks/trade names/licenses/ domains		3	–	7	$	16,589	$	(16,393	)	$	196	$	16,589	$	(16,372	)	$	217
Developed technology		5	–	7		8,955		(8,411	)		544		8,955		(8,138	)		817
					$	25,544	$	(24,804	)	$	740	$	25,544	$	(24,510	)	$	1,034

Three Months Ended June 30, 2020
	Common Stock				Preferred Stock				Additional
	Number of Shares		Amount		Number of Shares		Amount		Paid-in- Capital			Accumulated Deficit			Total

Balance at March 31, 2020		13,146,831	$	13		0	$	0	$	364,537	$	(347,006	)	$	17,544
Share-based compensation		—		0		—		0		519		0			519
Net loss		—		0		—		0		0		(1,374	) )		(1,374	)
Balance at June 30, 2020		13,146,831	$	13		—	$	0	$	365,056	$	(348,380	) )	$	16,689

Three Months Ended March 31, 2022
	Common Stock					Preferred Stock				Additional
	Number of					Number of				Paid-In-		Accumulated
	Shares			Amount		Shares		Amount		Capital		Deficit			Total

Balance at December 31, 2021		13,489,482		$	13		0	$	0	$	368,168	$	(355,424	)	$	12,757
Share-based compensation		—			0		—		0		515		0			515
Issuance of restricted stock		575,000			1		0		0		0		0			1
Cancellation of restricted stock		(13,333	)		—		0		—		—		—			—
Net loss		—			0		—		0		0		(4,307	)		(4,307	)
Balance at March 31, 2022		14,051,149		$	14		0	$	0	$	368,683	$	(359,731	)	$	8,966

Three Months Ended June 30, 2021
	Common Stock				Preferred Stock				Additional
	Number of Shares		Amount		Number of Shares		Amount		Paid-in- Capital			Accumulated Deficit			Total

Balance at March 31, 2021		13,443,909	$	13		—	$	0	$	366,712	$	(349,455	)	$	17,270
Share-based compensation		—		0		—		0		425		0			425
Issuance of common stock upon exercise of stock options		21,962		0		—		0		50		0			50
Net loss		—		0		—		0		0		(304	)		(304	)
Balance at June 30, 2021		13,465,871	$	13		—	$	0	$	367,187	$	(349,759	)	$	17,441

Three Months Ended March 31, 2021
	Common Stock				Preferred Stock				Additional
	Number of				Number of				Paid-In-		Accumulated
	Shares		Amount		Shares		Amount		Capital		Deficit			Total

Balance at December 31, 2020		13,169,204	$	13		0	$	0	$	366,087	$	(349,765	)	$	16,335
Share-based compensation		—		0		—		0		499		0			499
Issuance of common stock upon exercise of stock options		54,705		0		0		0		126		0			126
Issuance of restricted stock		220,000		—		0		—		—		—			—
Net income		—		0		—		0		0		310			310
Balance at March 31, 2021		13,443,909	$	13		0	$	0	$	366,712	$	(349,455	)	$	17,270

Six Months Ended June 30, 2020
	Common Stock				Preferred Stock				Additional
	Number of Shares		Amount		Number of Shares		Amount		Paid-in- Capital		Accumulated Deficit			Total

Balance at December 31, 2019		13,146,831	$	13		—	$	0	$	364,028	$	(342,945	)	$	21,096
Share-based compensation		—		0		—		0		1,028		0			1,028
Net loss		—		0		—		0		0		(5,435	)		(5,435	)
Balance at June 30, 2020		13,146,831	$	13		—	$	0	$	365,056	$	(348,380	)	$	16,689

Six Months Ended June 30, 2021
	Common Stock				Preferred Stock				Additional
	Number of Shares		Amount		Number of Shares		Amount		Paid-in- Capital		Accumulated Deficit			Total

Balance at December 31, 2020		13,169,204	$	13		—	$	0	$	366,087	$	(349,765	)	$	16,335
Share-based compensation		—		0		—		0		924		0			924
Issuance of common stock upon exercise of stock options		76,667		0		—		0		176		0			176
Issuance of restricted stock		220,000		0		—		0		0		0			0
Net income		—		0		—		0		0		6			6
Balance at June 30, 2021		13,465,871	$	13		—		0	$	367,187	$	(349,759	)	$	17,441

	Three Months Ended March 31,
	2022			2021
Dividend yield		—			0
Volatility		94.8	%		94.4	%
Risk-free interest rate		1.6	%		0.7	%
Expected life (years)		4.8			4.8

		March 31, 2022						December 31, 2021
Indefinite-Lived Intangible Asset	Estimated Useful Life	Gross		Accumulated Amortization		Net		Gross		Accumulated Amortization		Net

Domain	Indefinite	$	2,600	$	—	$	2,600	$	2,600	$	—	$	2,600

Year	Amortization Expense

2022 (remaining nine months)	$	609
2023		86
2024		45
	$	740

	% of			% of
Customers	Revenue			Accounts Receivable
Autodata Solutions		9	%		19	%
Urban Science Applications		11	%		18	%
Carat Detroit		10	%		16	%
Total		30	%		53	%

	Estimated	June 30, 2021							December 31, 2020
Definite-lived Intangible Asset	Useful Life	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net

Trademarks/ trade names/ licenses/ domains	3 - 7 years	$	16,589	$	(16,221	)	$	368	$	16,589	$	(15,961	)	$	628
Developed technology	5 - 7 years		8,955		(7,594	)		1,361		8,955		(7,050	)		1,905
		$	25,544	$	23,815		$	1,729	$	25,544	$	(23,011	)	$	2,533

Year	Amortization Expense

2021 (remaining 6 months)	$	695
2022		902
2023		86
2024		46
	$	1,729

Three Months Ended March 31, 2022
(In thousands)	Automotive digital marketing			Used vehicle acquisition & resale			Total
Revenues	$	14,713		$	4,351		$	19,064
Cost of sales		10,954			4,206			15,160
Gross profit		3,759			145			3,904
Operating loss		(3,649	)		(257	)		(3,906	)
Total assets		28,236			1,401			29,637

	June 30, 2021			% of Total Revenues			March 31, 2021			% of Total Revenues			Change			% Change
	*(Dollar amounts in thousands)*
Revenues:
Lead generation	$	15,225			81	%	$	14,186			79	%	$	1,039			7	%
Digital advertising		3,511			19			3,694			21			(183	)		(5	)
Total revenues		18,736			100			17,880			100			856			5
Cost of revenues		12,179			65			12,071			68			108			1
Gross profit		6,557			35			5,809			32			748			13
Operating expenses:
Sales and marketing		2,103			11			2,200			12			(97	)		(4	)
Technology support		1,271			7			1,367			8			(96	)		(7	)
General and administrative		3,089			17			3,132			18			(43	)		(1	)
Depreciation and amortization		196			1			204			1			(8	)		(4	)
Total operating expenses		6,659			36			6,903			39			(244	)		(4	)
Operating loss		(102	)		(1	)		(1,094	)		(6	)		992			(91	)
Interest and other income (expense), net		(202	)		(1	)		1,404			8			(1,606	)		(114	)
Income (loss) before income tax provision		(304	)		(2	)		310			2			(614	)		(198	)
Income tax provision		—			—			—			—			—			—
Net income (loss)	$	(304	)		(2	)%	$	310			2	%	$	(614	)		(198	)%

Number		Description
~~2.1‡~~		Asset Purchase Agreement dated as of July 31, 2021, by and among Company, Tradein Expert, Inc., Car Acquisition, LLC, Carzuz.com LLC, McCombs Family Partners, Ltd., and Phil Kandera, incorporated by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on August 2, 2021 (SEC File No. 001-34761).
3.1
~~3.1~~		Seventh Amended and Restated Certificate of Incorporation of AutoWeb, Inc. (filed with the Secretary of the State of Delaware on June 22, 2020), incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on June 23, 2020 (SEC File No. 001-34761).

3.2		Seventh Amended and Restated Bylaws of AutoWeb, Inc. dated as of October 9, 2017, incorporated by reference to Exhibit 3.5 to the Current Report on Form 8-K filed with the SEC on October 10, 2017 (SEC File No. 001-34761) and Amendment No. 1 to Seventh Amended and Restated Bylaws of AutoWeb, Inc, effective upon expiration of the term of the Board of Directors’ Class III Directors upon commencement of the 2022 Annual Meeting of Stockholders of AutoWeb, Inc., incorporated by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on April 21, 2022 (SEC File No. 001-34761).

4.1		Tax Benefit Preservation Plan dated as of May 26, 2010, by and between Company and Computershare Trust Company, N.A., as rights agent, together with the following exhibits thereto: Exhibit A – Form of Right Certificate; and Exhibit B – Summary of Rights to Purchase Shares of Preferred Stock of Company, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on June 2, 2010 (SEC File No. 000-22239); Amendment No. 1 to Tax Benefit Preservation Plan dated as of April 14, 2014, between Company and Computershare Trust Company, N.A., as rights agent, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on April 16, 2014 (SEC File No. 001-34761); Amendment No. 2 to Tax Benefit Preservation Plan dated as of April 13, 2017, between Company and Computershare Trust Company, N.A., as rights agent, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on April 14, 2017 (SEC File No. 001-34761); Amendment No. 3 to Tax Benefit Preservation Plan dated as of March 31, 2020, between Company and Computershare Trust Company, N.A., as rights agent, incorporated by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on April 2, 2020 (SEC File No. 001-34761); and Certificate of Adjustment Under Section 11(m) of the Tax Benefit Preservation Plan, incorporated by reference to Exhibit 4.3 to the Quarterly Report on Form 10-Q for the Quarterly Period ended September 30, 2012 filed with the SEC on November 8, 2012 (SEC File No. 001-34761).

~~10.1~~31.1*		Tax Benefit Preservation Plan Exemption Agreement dated as of May 12, 2021, by and between Company and Global Value Investment Corp., incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on May 17, 2021 (SEC File No. 001-34761).

~~10.2~~		Irrevocable Proxy dated as of May 12, 2021, by and between Company and Global Value Investment Corp., incorporated by reference to Exhibit 10.2 to the Current Report on Form 8-K filed with the SEC on May 17, 2021 (SEC File No. 001-34761).

~~10.3~~		Second Amendment to and Consent Under Loan, Security and Guarantee Agreement dated as of July 30, 2021, by and between Company and CIT Northbridge Credit LLC, incorporated by reference to Exhibit 10.1 to the Current Report on Form 8-K filed with the SEC on August 2, 2021 (SEC File No. 001-34761).

31.1*		Chief Executive Officer Section 302 Certification of Periodic Report dated ~~August 5, 2021.~~May 16, 2022.

31.231.2		Chief Financial Officer Section 302 Certification of Periodic Report dated ~~August 5, 2021.~~May 16, 2022.

32.132.1		Chief Executive Officer and Chief Financial Officer Section 906 Certification of Periodic Report dated ~~August 5, 2021.~~May 16, 2022.

101.INS		XBRL Instance ~~Document.~~Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension Schema ~~Document.~~

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase ~~Document.~~

101.DEF		Inline XBRL Taxonomy Extension Definition ~~Document.~~ Linkbase

101.LAB		Inline XBRL Taxonomy Extension Label Linkbase ~~Document.~~

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase ~~Document.~~

104		Cover Page Interactive Data File ~~(formatted as~~(embedded within the Inline ~~XRBL with applicable taxonomy extension information contained~~XBRL Document and include in Exhibit 101)


*	Filed or Furnished herewith.

‡	Certain attachments to this exhibit have been omitted pursuant to Item 601(a)(5) of Regulation S-K because the information contained therein is not material and is not otherwise publicly disclosed. AutoWeb will furnish supplementally copies of such attachments to the SEC or its staff upon request.


		AutoWeb, Inc.

~~Date: August 5, 2021~~	~~By:~~	~~/s/ Michael Sadowski~~

	~~Michael Sadowski~~
	~~Executive Vice President, Chief Financial Officer~~
	~~(Principal Financial Officer)~~

Date: ~~August 5, 2021~~May 16, 2022	By:	/s/ ~~Cheray Duran~~Carlton Hamer
		~~Cheray Duran~~Carlton Hamer
		Executive Vice President, ~~Corporate Controller~~Chief Financial Officer
		(Principal Financial Officer)

Date: May 16, 2022	By:	/s/ Josh Barsetti
		Josh Barsetti
		Vice President, Controller
		(Principal Accounting Officer)