Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | May. 02, 2016 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AUTOBYTEL INC | |
Entity Central Index Key | 1,023,364 | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 10,686,382 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Mar. 31, 2016 | |
Trading Symbol | ABTL |
UNAUDITED CONSOLIDATED CONDENSE
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 24,027 | $ 23,993 |
Accounts receivable, net of allowances for bad debts and customer credits of $1,027 and $1,045 at March 31, 2016 and December 31, 2015, respectively | 27,764 | 28,091 |
Deferred tax asset | 4,237 | 3,642 |
Prepaid expenses and other current assets | 852 | 1,276 |
Total current assets | 56,880 | 57,002 |
Property and equipment, net | 4,812 | 4,296 |
Investments | 680 | 680 |
Intangible assets, net | 28,085 | 29,515 |
Goodwill | 42,789 | 42,903 |
Long-term deferred tax asset | 17,820 | 17,820 |
Other assets | 1,296 | 1,372 |
Total assets | 152,362 | 153,588 |
Current liabilities: | ||
Accounts payable | 9,310 | 7,643 |
Accrued expenses and other current liabilities | 7,775 | 10,744 |
Current portion of term loan payable | 5,250 | 5,250 |
Total current liabilities | 22,335 | 23,637 |
Convertible note payable | 1,000 | 1,000 |
Long-term portion of term loan payable | 11,437 | 12,750 |
Borrowings under revolving credit facility | 8,000 | 8,000 |
Total liabilities | $ 42,772 | $ 45,387 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, $0.001 par value; 55,000,000 shares authorized and 10,680,463 and 10,626,624 shares issued and outstanding at March 31, 2016 and December 31, 2015, respectively | $ 11 | $ 11 |
Additional paid-in capital | 344,550 | 342,485 |
Accumulated deficit | (234,971) | (234,295) |
Total stockholders' equity | 109,590 | 108,201 |
Total liabilities and stockholders' equity | $ 152,362 | $ 153,588 |
Preferred Class A [Member] | ||
Stockholders' equity: | ||
Preferred stock | ||
Preferred Class B [Member] | ||
Stockholders' equity: | ||
Preferred stock |
UNAUDITED CONSOLIDATED CONDENS3
UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Accounts receivable, allowances for bad debts and customer credits | $ 1,027 | $ 1,045 |
Stockholders' equity: | ||
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 55,000,000 | 55,000,000 |
Common stock, issued (in shares) | 10,680,463 | 10,626,624 |
Common stock, outstanding (in shares) | 10,680,463 | 10,626,624 |
Preferred Class A [Member] | ||
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 11,445,187 | 11,445,187 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Preferred Class B [Member] | ||
Stockholders' equity: | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 500,000 | 500,000 |
Preferred stock, Issued (in shares) | 168,007 | 168,007 |
Preferred stock, outstanding (in shares) | 168,007 | 168,007 |
UNAUDITED CONSOLIDATED CONDENS4
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Revenues: | ||
Lead fees | $ 31,996 | $ 24,167 |
Advertising | 3,766 | 1,600 |
Other revenues | 485 | 476 |
Total revenues | 36,247 | 26,243 |
Cost of revenues | 22,612 | 16,145 |
Gross profit | 13,635 | 10,098 |
Operating expenses: | ||
Sales and marketing | 5,677 | 3,584 |
Technology support | 4,188 | 1,831 |
General and administrative | 3,373 | 3,046 |
Depreciation and amortization | 1,286 | 485 |
Litigation settlements | (5) | (25) |
Total operating expenses | 14,519 | 8,921 |
Operating income (loss) | (884) | 1,177 |
Interest and other income (expense), net | (224) | (147) |
Income (loss) before income tax provision (benefit) | (1,108) | 1,030 |
Income tax provision (benefit) | (432) | 257 |
Net income (loss) and comprehensive income (loss) | $ (676) | $ 773 |
Basic earnings (loss) per common share | $ (0.06) | $ 0.09 |
Diluted earnings (loss) per common share | $ (0.06) | $ 0.07 |
UNAUDITED CONSOLIDATED CONDENS5
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (676) | $ 773 |
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 1,813 | 603 |
Provision for bad debts | 54 | 53 |
Provision for customer credits | 181 | 174 |
Share-based compensation | 1,364 | 653 |
Change in deferred tax asset | (595) | 236 |
Changes in assets and liabilities: | ||
Accounts receivable | 206 | (695) |
Prepaid expenses and other current assets | 426 | 299 |
Other assets | 76 | 19 |
Accounts payable | 1,667 | 210 |
Accrued expenses and other current liabilities | (2,969) | $ (2,855) |
Non-current liabilities | 13 | |
Net cash provided by (used in) operating activities | 1,560 | $ (530) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (899) | (338) |
Net cash used in investing activities | (899) | (338) |
Cash flows from financing activities: | ||
Payments on term loan borrowings | (1,313) | (562) |
Proceeds from exercise of stock options | 699 | $ 5 |
Payment of contingent fee arrangement | (13) | |
Net cash used in financing activities | (627) | $ (557) |
Net increase (decrease) in cash and cash equivalents | 34 | (1,425) |
Cash and cash equivalents, beginning of period | 23,993 | 20,747 |
Cash and cash equivalents, end of period | $ 24,027 | 19,322 |
Supplemental disclosure of cash flow information: | ||
Cash paid for income taxes | 45 | |
Cash paid for interest | $ 230 | $ 171 |
Organization and Operations
Organization and Operations | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations | Autobytel Inc. ( Autobytel Company Dealers Manufacturers Leads The Companys consumer-facing automotive websites ( Company Websites Vehicle Leads Finance Leads The Company was incorporated in Delaware on May 17, 1996. Its principal corporate offices are located in Irvine, California. The Companys common stock is listed on The NASDAQ Capital Market under the symbol ABTL. On October 1, 2015 ( AutoWeb Merger Date Merger Sub AutoWeb In connection with the AutoWeb acquisition, Autobytel obtained AutoWebs Guatemalan website, software development and operations, which were provided as a contract service provider organization through Endine Enterprises Corp., a British Virgin Islands business company effectively controlled by AutoWeb. The Company currently plans to terminate this arrangement and maintain the forgoing services and operations directly under a wholly-owned, indirect Guatemalan subsidiary of Autobytel with employees located in Guatemala. On May 21, 2015 ( Dealix/Autotegrity Acquisition Date CDK Dealix Autotegrity Dealix/Autotegrity |
Basis of Presentation
Basis of Presentation | 3 Months Ended |
Mar. 31, 2016 | |
Basis of Presentation [Abstract] | |
Basis of Presentation | The accompanying unaudited consolidated condensed financial statements are presented on the same basis as the Companys Annual Report on Form 10-K for the year ended December 31, 2015 ( 2015 Form 10-K SEC GAAP |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 3 Months Ended |
Mar. 31, 2016 | |
New Accounting Pronouncements and Changes in Accounting Principles [Abstract] | |
Recent Accounting Pronouncements | Accounting Standards Codification 225-20 Income Statement Extraordinary and Unusual Items. In January 2015, Accounting Standards Update ( ASU Accounting Standards Codification 810 Consolidation. In February 2015, ASU No. 2015-02, Amendments to the Consolidation Analysis was issued. This ASU was issued to respond to stakeholders concerns about current accounting for consolidation of certain legal entities. The amendments in the ASU (i) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, (ii) eliminate the presumption that a general partner should consolidate a limited partnership, (iii) affect the consolidation analysis of reporting entities that are involved with variable interest entities, particularly those that have fee arrangements and related party relationships and (iv) provide a scope exception from consolidation guidance for reporting entities with interests in legal entities that are required to comply with or operate in accordance with requirements that are similar to those in Rule 2a-7 of the Investment Company Act of 1940 for registered money market funds. The amendments in this ASU are effective for public business entities for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015. The Company believes this ASU will be immaterial to the consolidated financial statements. Accounting Standards Codification 606 Revenue from Contracts with Customers. In May 2014, ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) was issued. This ASU requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The standard will replace most existing revenue recognition guidance in GAAP when it becomes effective. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. In August 2015, the FASB voted to defer the effective date and it is now effective for public entities for annual periods ending after December 15, 2017. Early adoption of the standard is permitted, but not before the original effective date of December 15, 2016. This update permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect this guidance will have on the consolidated financial statements and related disclosures. Accounting Standards Codification 805 Business Combinations. In September 2015, ASU No. 2015-16, Simplifying the Accounting for Measurement-Period Adjustments was issued. This ASU requires that an acquirer recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. The amendments require that the acquirer record, in the same periods financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. The amendments in this ASU are effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The amendments in this ASU should be applied prospectively to adjustments to provisional amounts that occur after the effective date of this ASU with earlier application permitted for financial statements that have not been issued. The Company believes this ASU will be immaterial to the consolidated financial statements. Accounting Standards Codification 740 Income Taxes. In November 2015, ASU No. 2015-17, Balance Sheet Classification of Deferred Taxes was issued. This ASU requires that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in this Update apply to all entities that present a classified statement of financial position. The amendments in this ASU are effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company believes this ASU will be immaterial to the consolidated financial statements. Accounting Standards Codification 842 Leases. In February 2016, ASU No. 2016-02, Leases (Topic 842) was issued. This ASU will require lessees to recognize on the balance sheet the assets and liabilities for the rights and obligations created by those leases of terms more than 12 months. The ASU will require both capital and operating leases to be recognized on the balance sheet. Qualitative and quantitative disclosures will also be required to help investors and other financial statement users better understand the amount, timing and uncertainty of cash flows arising from leases. The ASU will take effect for public companies for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company has yet to determine if this ASU will be material to the consolidated financial statements. Accounting Standards Codification 323 Investments-Equity Method and Joint Ventures. In March 2016, ASU No. 2016-07, Simplifying the Transition to the Equity Method of Accounting was issued. This ASU eliminates the requirement that when an investment qualifies for use of the equity method as a result of an increase in the level of ownership interest or degree of influence, an investor must adjust the investment, results of operations, and retained earnings retroactively on a step-by-step basis as of the equity method had been in effect during all previous periods that the investment was held. The amendments require that the equity method investor add the cost of acquiring the additional interest in the investee to the current basis of the investors previously held interest and adopt the equity method of accounting as of the date the investment becomes qualifies for equity method accounting. Thus, upon qualifying for the equity method of accounting, no retroactive adjustment of the investment is required. The amendments in this ASU are effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Earlier application is permitted. The Company has yet to determine if this ASU will be material to the consolidated financial statements. Accounting Standards Codification 718 Compensation-Stock Compensation. In March 2016, ASU No. 2016-09, Improvements to Employee Share-Based Payment Accounting was issued. This ASU provides for areas of simplification for several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. The amendments in this ASU are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted in any interim or annual period. The Company has yet to determine if this ASU will be material to the consolidated financial statements. |
Acquisition
Acquisition | 3 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Acquisition | Acquisition of AutoWeb On the AutoWeb Merger Date, Merger Sub merged with and into AutoWeb, with AutoWeb continuing as the surviving corporation and as a wholly-owned subsidiary of Autobytel. The AutoWeb Merger Date fair value of the consideration transferred totaled $23.8 million consisting of (i) 168,007 newly issued shares of Series B Junior Participating Convertible Preferred Stock, par value $0.001 per share, of Autobytel ( Series B Preferred Stock AutoWeb Warrants (in thousands) Series B Preferred Stock $ 20,989 Series B Preferred warrants to purchase 148,240 shares of Series B Preferred Stock 2,542 Cash 279 Fair value of prior ownership in AutoWeb 4,016 $ 27,826 The shares of Series B Preferred Stock are convertible, subject to certain limitations, into ten (10) shares of Common Stock. All shares will automatically convert upon stockholder approval. The AutoWeb Warrants were valued at $1.72 per share for a total value of $2.5 million. The Company used a Monte Carlo simulation model to determine the value of the AutoWeb Warrants. Key assumptions used in valuing the AutoWeb Warrants are as follows: risk-free rate of 1.9%, stock price volatility of 74.0% and a term of 7.0 years. The AutoWeb Warrants become exercisable on October 1, 2018, subject to the following vesting conditions: (i) with respect to the first one-third of the warrant shares, if at any time after the issuance date of the AutoWeb Warrants and prior to the expiration date of the AutoWeb Warrants the weighted average closing price of the Common Stock for the preceding 30 trading days (adjusted for any stock splits, stock dividends, reverse stock splits or combinations of the Common Stock occurring after the issuance date) ( Weighted Average Closing Price The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the AutoWeb Merger Date. (in thousands) Net identifiable assets acquired: Total tangible assets acquired $ 4,456 Total liabilities assumed 543 Net identifiable assets acquired 3,913 Definite-lived intangible assets acquired 17,690 Goodwill 5,954 $ 27,557 The fair value of the acquired intangible assets was determined using the below valuation approaches. In estimating the fair value of the acquired intangible assets, the Company utilized the valuation methodology determined to be most appropriate for the individual intangible asset being valued as described below. The intangible assets related to the AutoWeb acquisition include the following: Valuation Method Estimated Fair Value Estimated Useful Life (1) (in thousands) (years) Customer relationships Excess of earnings (2) $ 7,470 4 Trademark/trade names Relief from Royalty (3) 2,600 6 Developed technology Excess of earnings (4) 7,620 7 Total purchased intangible assets $ 17,690 (1) Determination of the estimated useful lives of the individual categories of purchased intangible assets was based on the nature of the applicable intangible asset and the expected future cash flows to be derived from such intangible asset. Amortization of intangible assets with definite lives is recognized over the shorter of the respective life of the agreement or the period of time the assets are expected to contribute to future cash flows. (2) The excess of earnings method estimates a purchased intangible asset's value based on the present value of the prospective net cash flows (or excess earnings) attributable to it. The value attributed to these intangibles was based on projected net cash inflows from existing contracts or relationships. (3) The relief from royalty method is an earnings approach which assesses the royalty savings an entity realizes since it owns the asset and isnt required to pay a third party a license fee for its use. (4) The excess of earnings method estimates a purchased intangible asset's value based on the present value of the prospective net cash flows (or excess earnings) attributable to it. The method takes into account technological and economic obsolescence of the technology. Additionally, in connection with the acquisition of AutoWeb, the Company entered into non-compete agreements with key executives of AutoWeb. The fair value of the AutoWeb non-compete agreements was $270,000 and was derived by calculating the difference between the present value of the Companys forecasted cash flows with the agreements in place and without the agreements in place. The Company is amortizing the value of the AutoWeb non-compete agreements over two years. Some of the more significant estimates and assumptions inherent in the estimate of the fair value of the identifiable purchased intangible assets include all assumptions associated with forecasting cash flows and profitability. The primary assumptions used for the determination of the fair value of the purchased intangible assets were generally based upon the discounted present value of anticipated cash flows. Estimated years of projected earnings generally follow the range of estimated remaining useful lives for each intangible asset class. The goodwill recognized of $6.0 million was attributable primarily to expected synergies and the assembled workforce of AutoWeb. The Company incurred approximately $1.1 million of acquisition-related costs related to the AutoWeb acquisition, of which $0.2 million was expensed in the first quarter of 2016. Acquisition of Dealix/Autotegrity On the Dealix/Autotegrity Acquisition Date, Autobytel acquired all of the issued and outstanding shares of common stock of Dealix and Autotegrity. The Company acquired Dealix/Autotegrity to further expand its reach and influence in the industry by increasing its Dealer network. The Dealix/Autotegrity Acquisition Date fair value of the consideration transferred totaled $25.0 million in cash (plus a working capital adjustment of $11,000). The results of operations of Dealix/Autotegrity have been included in the Companys results of operations since the Dealix/Autotegrity Acquisition Date. The following table summarizes the estimated fair values of the assets acquired and liabilities assumed as of the Dealix/Autotegrity Acquisition Date. During the three months ended March 31, 2016, the Company made adjustments to the purchase price allocation due to changes in accounts receivable acquired. (in thousands) Net identifiable assets acquired: Total tangible assets acquired $ 9,778 Total liabilities assumed 2,488 Net identifiable assets acquired 7,290 Definite-lived intangible assets acquired 7,655 Indefinite-lived intangible assets acquired 2,200 Goodwill 7,326 $ 24,471 The fair value of the acquired intangible assets was determined using the below valuation approaches. In estimating the fair value of the acquired intangible assets, the Company utilized the valuation methodology determined to be most appropriate for the individual intangible asset being valued as described below. The intangible assets related to the Dealix/Autotegrity acquisition include the following: Valuation Method Estimated Fair Value Estimated Useful Life (1) (in thousands) (years) Customer relationships Excess of earnings (2) $ 7,020 10 Trademark/trade names Autotegrity Relief from Royalty (3) 120 3 Trademark/trade names UsedCars.com Relief from Royalty (3) 2,200 Indefinite Developed technology Cost Approach (4) 515 3 Total purchased intangible assets $ 9,855 (1) Determination of the estimated useful lives of the individual categories of purchased intangible assets was based on the nature of the applicable intangible asset and the expected future cash flows to be derived from such intangible asset. Amortization of intangible assets with definite lives is recognized over the shorter of the respective life of the agreement or the period of time the assets are expected to contribute to future cash flows. (2) The excess of earnings method estimates a purchased intangible asset's value based on the present value of the prospective net cash flows (or excess earnings) attributable to it. The value attributed to these intangibles was based on projected net cash inflows from existing contracts or relationships. (3) The relief from royalty method is an earnings approach which assesses the royalty savings an entity realizes since it owns the asset and isnt required to pay a third party a license fee for its use. (4) The cost approach estimates the cost required to repurchase or reproduce the intangible assets. The method takes into account technological and economic obsolescence of the technology. Additionally, in connection with the acquisition of Dealix/Autotegrity, the Company entered into non-compete agreements with CDK and a key executive of Dealix/Autotegrity. The fair values of the non-compete agreements with CDK and the key executive were $0.5 million and $40,000, respectively, and were derived by calculating the difference between the present value of the Companys forecasted cash flows with the agreements in place and without the agreements in place. The Company is amortizing the value of the non-compete agreements with CDK and the key executive over two and one year(s), respectively. Some of the more significant estimates and assumptions inherent in the estimate of the fair value of the identifiable purchased intangible assets include all assumptions associated with forecasting cash flows and profitability. The primary assumptions used for the determination of the fair value of the purchased intangible assets were generally based upon the discounted present value of anticipated cash flows. Estimated years of projected earnings generally follow the range of estimated remaining useful lives for each intangible asset class. The goodwill recognized of $7.3 million was attributable primarily to expected synergies and the assembled workforce of Dealix/Autotegrity. The Company incurred approximately $1.6 million of acquisition-related costs related to the Dealix/Autotegrity acquisition, of which $0.3 million was expensed in the first quarter of 2016. Pro forma information for Dealix/Autotegrity and AutoWeb The following unaudited pro forma information presents the consolidated results of the Company, Dealix/Autotegrity and AutoWeb for the three months ended March 31, 2015, with adjustments to give effect to pro forma events that are directly attributable to the acquisition and have a continuing impact, but excludes the impact of pro forma events that are directly attributable to the acquisition and are one-time occurrences. The unaudited pro forma information is presented for illustrative purposes only and is not necessarily indicative of the results of operations of future periods, the results of operations that actually would have been realized had the entities been a single company during the periods presented or the results of operations that the combined company will experience after the acquisition. The unaudited pro forma information does not give effect to the potential impact of current financial conditions, regulatory matters or any anticipated synergies, operating efficiencies or cost savings that may be associated with the acquisition. The unaudited pro forma information also does not include any integration costs or remaining future transaction costs that the companies may incur as a result of the acquisition and combining the operations of the companies. The unaudited pro forma consolidated results of operations, assuming the acquisition had occurred on January 1, 2015, are as follows: Three Months Ended March 31, 2015 (in thousands) Unaudited pro forma consolidated results: Revenues $ 38,634 Net income $ 1,502 |
Computation of Basic and Dilute
Computation of Basic and Diluted Net Earnings (Loss) Per Share | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Earnings (Loss) Per Share | Basic net earnings (loss) per share is computed using the weighted average number of common shares outstanding during the period, excluding any unvested restricted stock. Diluted net earnings (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 common shares issuable upon the exercise of stock options, common shares issuable upon the exercise of warrants, common shares issuable upon conversion of convertible notes and unvested restricted stock. The following are the share amounts utilized to compute the basic and diluted net earnings (loss) per share for the three months ended March 31, 2016 and 2015: Three Months Ended March 31, 2016 2015 Basic Shares: Weighted average common shares outstanding 10,633,907 8,880,450 Weighted average unvested restricted stock (125,000 ) Basic Shares 10,508,907 8,880,450 Diluted Shares: Basic shares 10,508,907 8,880,450 Weighted average dilutive securities 2,216,293 Diluted Shares 10,508,907 11,096,743 For the three months ended March 31, 2015, weighted average dilutive securities included dilutive options and the warrant and convertible note issued in connection with the acquisition of Autotropolis, Inc. and Cyber Ventures, Inc. (collectively referred to in this Quarterly Report on Form 10-Q as Cyber For the three months ended March 31, 2016, 2.8 million of potentially anti-dilutive shares of common stock have been excluded from the calculation of diluted net loss per share. For the three months ended March 31, 2015, 1.4 million of potentially anti-dilutive shares of common stock have been excluded from the calculation of diluted net earnings per share. On June 7, 2012, the Company announced that its board of directors had authorized the Company to repurchase up to $2.0 million of Company common stock, and on September 17, 2014 the Company announced that the board of directors had approved the repurchase of up to an additional $1.0 million of Company common stock. The authorization may be increased or otherwise modified, renewed, suspended or terminated by the Company at any time, without prior notice. The Company may repurchase common stock from time to time on the open market or in private transactions. Shares repurchased under this program have been retired and returned to the status of authorized and unissued shares. The Company funded repurchases and anticipates that the Company would fund future repurchases through the use of available cash. The repurchase authorization does not obligate the Company to repurchase any particular number of shares. The timing and actual number of repurchases of additional shares, if any, under the Companys stock repurchase program will depend upon a variety of factors, including price, market conditions, release of quarterly and annual earnings and other legal, regulatory and corporate considerations at the Companys sole discretion. The impact of repurchases on the Companys Tax Benefit Preservation Plan and on the Companys use of its net operating loss carryovers and other tax attributes if the Company were to experience an ownership change, as defined in Section 382 of the Internal Revenue Code, is also a factor that the Company considers in connection with share repurchases. No shares were repurchased in the three months ended March 31, 2016 and March 31, 2015, respectively. Warrants. The warrant to purchase 69,930 shares of Company common stock issued in connection with the acquisition of AutoUSA, LLC ( AutoUSA AutoUSA Acquisition Date AutoUSA Warrant The Company issued the AutoWeb Warrants in connection with the acquisition of AutoWeb. The AutoWeb Warrants were valued at $1.72 per share for a total value of $2.5 million. The Company used a Monte Carlo simulation model to determine the value of the AutoWeb Warrants. Key assumptions used in valuing the AutoWeb Warrants are as follows: risk-free rate of 1.9%, stock price volatility of 74.0% and a term of 7.0 years. The AutoWeb Warrants become exercisable on October 1, 2018, subject to the following vesting conditions: (i) with respect to the first one-third of the warrant shares, if at any time after the issuance date of the AutoWeb Warrants and prior to the expiration date of the AutoWeb Warrants the Weighted Average Closing Price is at or above $30.00; (ii) with respect to the second one-third of the warrant shares, if at any time after the issuance date of the AutoWeb Warrants and prior to the expiration date the Weighted Average Closing Price is at or above $37.50; and (iii) with respect to the last one-third of the warrant shares, if at any time after the issuance date of the AutoWeb Warrants and prior to the expiration date the Weighted Average Closing Price is at or above $45.00. The AutoWeb Warrants expire on October 1, 2022. |
Share-Based Compensation
Share-Based Compensation | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-Based Compensation | Share-based compensation expense is included in costs and expenses in the accompanying Unaudited Consolidated Condensed Statements of Operations and Comprehensive Income (Loss) as follows: Three Months Ended March 31, 2016 2015 (in thousands) Share-based compensation expense: Cost of revenues $ 14 $ 25 Sales and marketing (1) 632 140 Technology support (2) 332 74 General and administrative (3) 388 417 Share-based compensation costs 1,366 656 Amount capitalized to internal use software 2 3 Total share-based compensation costs $ 1,364 $ 653 (1) Certain awards were modified in connection with the termination of one of the Companys executive officers employment with the Company and their vesting accelerated in accordance with the terms of the applicable option agreements. The total expense related to these modifications and acceleration of vested awards was approximately $0.3 million in the three months ended March 31, 2016. (2) The vesting of certain awards was accelerated in accordance with the terms of the applicable option agreements in connection with the termination of one of the Companys executive officers employment with the Company. The total expense related to acceleration of vested awards was approximately $0.2 million in the three months ended March 31, 2016. (3) Certain awards were modified in accordance with the Companys former Chief Financial Officers consulting agreement and their vesting accelerated in accordance with the terms of the applicable option agreements. The total expense related to these modifications and acceleration of vested awards was approximately $0.2 million in the three months ended March 31, 2015. Service-Based Options. The Company granted the following service-based options for the three months ended March 31, 2016 and 2015: Three Months Ended March 31, 2016 2015 Number of service-based options granted 428,900 315,050 Weighted average grant date fair value $ 8.12 $ 4.65 Weighted average exercise price $ 17.12 $ 10.22 These options are valued using a Black-Scholes option pricing model and generally vest 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 employees continued employment with the Company during the vesting period. Market Condition Options. On January 21, 2016, the Company granted 100,000 stock options to its CEO with an exercise price of $17.09 and grant date fair value of $2.94 per option, using a Monte Carlo simulation model ( CEO Market Condition Options Weighted Average Closing Price Stock option exercises . The following stock options were exercised for the three months ended March 31, 2016 and 2015, respectively: Three Months Ended March 31, 2016 2015 Number of stock options exercised 53,839 253 Weighted average exercise price $ 12.97 $ 7.17 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: Three Months Ended March 31, 2016 2015 Dividend yield Volatility 58 % 56% Risk-free interest rate 1.3 % 1.2% Expected life (years) 4.4 4.4 Restricted Stock Awards. The Company granted an aggregate of 125,000 restricted stock awards ( RSAs Termination Date |
Investments
Investments | 3 Months Ended |
Mar. 31, 2016 | |
Investments [Abstract] | |
Investments | The Companys investments at March 31, 2016 and December 31, 2015 consisted primarily of investments in privately-held SaleMove, Inc., a Delaware corporation ( SaleMove ., (GoMoto) In September 2013, the Company entered into a Convertible Note Purchase Agreement in which Autobytel invested $150,000 in SaleMove in the form of an interest bearing, convertible promissory note. In November 2014, the Company invested an additional $400,000 in SaleMove in the form of an interest bearing, convertible promissory note. Upon closing of a preferred stock financing by SaleMove in July 2015, these two notes were converted in accordance with their terms into an aggregate of 190,997 Series A Preferred Stock, which shares are classified as a long-term investment on the consolidated balance sheet as of March 31, 2016. In October 2013, the Company entered into an agreement with SaleMove to become the exclusive provider to the automotive industry of SaleMoves technology for enhancing communications with consumers. SaleMoves patent-pending technology allows Dealers and Manufacturers to enhance the online shopping experience by interacting with consumers in real-time, including live video, audio and text-based chat or by phone. The Company and SaleMove will equally share in revenues from automotive-related sales of the SaleMove products and services. In connection with this reseller arrangement, the Company advanced to SaleMove $1.0 million to fund SaleMoves fifty percent share of various product development, marketing and sales costs and expenses, with the advanced funds to be recovered by the Company from SaleMoves share of sales revenue. SaleMove advances are repaid to the Company from SaleMoves share of net revenues from the reseller agreement. As of March 31, 2016, the net advances due from SaleMove totaled $671,000. In December 2014, the Company entered into a Series Seed Preferred Stock Purchase Agreement with GoMoto in which we paid $100,000 for 317,460 shares of Series Seed Preferred Stock, $0.001 par value per share. The $100,000 investment in GoMoto was recorded at cost because the Company does not have significant influence over GoMoto. In October 2015 the Company invested an additional $375,000 in GoMoto in the form of a convertible promissory note ( GoMoto Note |
Selected Balance Sheet Accounts
Selected Balance Sheet Accounts | 3 Months Ended |
Mar. 31, 2016 | |
Selected Balance Sheet Accounts [Abstract] | |
Selected Balance Sheet Accounts | Property and Equipment . Property and equipment consists of the following: March 31, December 31, 2016 2015 (in thousands) Computer software and hardware and capitalized internal use software $ 16,629 $ 15,741 Furniture and equipment 1,424 1,419 Leasehold improvements 1,429 1,424 19,482 18,584 Less Accumulated depreciation and amortization (14,670 ) (14,288 ) Property and equipment, net $ 4,812 $ 4,296 The Company periodically reviews long-lived assets to determine if there are any impairment indicators. The Company assesses the impairment of these assets, or the need to accelerate amortization, whenever events or changes in circumstances indicate that the carrying value may not be recoverable. The Companys judgments regarding the existence of impairment indicators are based on legal factors, market conditions and operational performance of the Companys long-lived assets. If such indicators exist, the Company evaluates the assets for impairment based on the estimated future undiscounted cash flows expected to result from the use of the assets and their eventual disposition. Should the carrying amount of an asset exceed its estimated future undiscounted cash flows, an impairment loss is recorded for the excess of the assets carrying amount over its fair value. Fair value is generally determined based on a valuation process that provides an estimate of the fair value of these assets using a discounted cash flow model, which includes assumptions and estimates. 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 two high credit quality financial institutions in the United States. Deposits held by banks exceed the amount of insurance provided for such deposits. These deposits may be redeemed upon demand. 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 automotive industry related accounts receivable balances, particularly with Urban Science Applications (which represents Acura, Audi, Honda, Nissan, Infiniti, Scion, Subaru, Toyota, Volkswagen and Volvo), General Motors and Jumpstart Automotive Group. During the first three months of 2016, approximately 26% of the Companys total revenues was derived from these three customers, and approximately 41%, or $11.7 million of gross accounts receivables, related to these three customers at March 31, 2016. During the first three months of 2015, approximately 30% of the Companys total revenues was derived from General Motors, Urban Science Applications and Ford Direct, and approximately 44%, or $8.6 million of gross accounts receivables, related to these three customers at March 31, 2015. Intangible Assets. The Company amortizes specifically identified intangible assets using the straight-line method over the estimated useful lives of the assets. In connection with the acquisitions of Cyber, Advanced Mobile, LLC, AutoUSA, Dealix/Autotegrity and AutoWeb, the Company identified $38.1 million of intangible assets. The Companys intangible assets are amortized over the following estimated useful lives: Estimated Useful Life March 31, 2016 December 31, 2015 Intangible Asset Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Trademarks/trade names/licenses/domain 5 years Indefinite $ 11,494 $ (6,245 ) $ 5,249 $ 11,494 $ (6,071 ) $ 5,423 Software and publications 3 years 1,300 (1,300 ) 1,300 (1,300 ) Customer relationships 2-10 years 19,563 (5,127 ) 14,436 19,563 (4,341 ) 15,222 Employment/non-compete agreements 5 years 1,510 (963 ) 547 1,510 (849 ) 661 Developed technology 1-5 years 8,955 (1,102 ) 7,853 8,955 (746 ) 8,209 $ 42,822 $ (14,737 ) $ 28,085 $ 42,822 $ (13,307 ) $ 29,515 Amortization expense for the remainder of the year and for the next five years is as follows: Year Amortization Expense (in thousands) 2016 $ 4,217 2017 5,427 2018 5,052 2019 3,655 2020 2,224 2021 2,116 $ 22,691 Goodwill. Goodwill represents the excess of the purchase price over the fair value of net assets acquired. Goodwill is not amortized and is assessed annually for impairment or earlier, when events or circumstances indicate that the carrying value of such assets may not be recoverable. The Company did not record impairment related to goodwill as of December 31, 2015 and March 31, 2016. Goodwill consisted of the following (in thousands): Goodwill as of December 31, 2015 $ 42,903 Current year activity (114 ) Goodwill as of March 31, 2016 $ 42,789 During the three months ended March 31, 2016, the Company made adjustments to the Dealix/Autotegrity purchase price allocation due to changes in accounts receivable acquired and adjusted goodwill accordingly. Accrued Expenses and Other Current Liabilities . Accrued expenses and other current liabilities consisted of the following: March 31, December 31, 2016 2015 (in thousands) Compensation and related costs and professional fees $ 1,793 $ 3,981 Other accrued expenses 4,937 5,715 Amounts due to customers 575 486 Other current liabilities 470 562 Total accrued expenses and other current liabilities $ 7,775 $ 10,744 Convertible notes payable . In connection with the acquisition of AutoUSA, the Company issued a convertible subordinated promissory note for $1.0 million ( AutoUSA Note |
Credit Facility
Credit Facility | 3 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
Credit Facility | On May 20, 2015, the Company entered into a Third Amendment to Loan Agreement ( Credit Facility Amendment Union Bank Credit Facility Agreement Term Loan 1 Term Loan 2 Revolving Loan Term Loan 1 is amortized over a period of four years, with fixed quarterly principal payments of $562,500. Borrowings under Term Loan 1 bear interest at either (i) the bank's Reference Rate (prime rate) minus 0.50% or (ii) the LIBOR plus 2.50%, at the option of the Company. Interest under Term Loan 1 adjusts (i) at the end of each LIBOR rate period (1, 2, 3, 6 or 12 months terms) selected by the Company, if the LIBOR rate is selected; or (ii) with changes in Union Bank's Reference Rate, if the Reference Rate is selected. Borrowings under Term Loan 1 are secured by a first priority security interest on all of the Company's personal property (including, but not limited to, accounts receivable) and proceeds thereof. Term Loan 1 matures on December 31, 2017. Borrowing under Term Loan 1 was limited to use for the acquisition of AutoUSA, and the Company drew down the entire $9.0 million of Term Loan 1, together with $1.0 million under the Revolving Loan, in financing this acquisition. The outstanding balance of Term Loan 1 as of March 31, 2016 was $3.9 million. Term Loan 2 is amortized over a period of five years, with fixed quarterly principal payments of $750,000. Borrowings under Term Loan 2 bear interest at either (i) the London Interbank Offering Rate ( LIBOR The Credit Facility Agreement contains certain customary affirmative and negative covenants and restrictive and financial covenants, including that the Company maintain specified levels of minimum consolidated liquidity and quarterly and annual earnings before interest, taxes and depreciation and amortization, which the Company was in compliance with as of March 31, 2016. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Employment Agreements The Company has employment agreements and retention agreements with certain key employees. A number of these agreements require severance payments, continuation of certain insurance benefits and acceleration of vesting of stock options in the event of a termination of employment by the Company without cause or by the employee for good reason. Litigation From time to time, the Company may be involved in litigation matters arising from the normal course of its business activities. The actions filed against the Company and other 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. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | On an interim basis, the Company estimates what its anticipated annual effective tax rate will be and records a quarterly income tax provision (benefit) in accordance with the estimated annual rate, in addition to the tax effect of certain discrete items that arise during the quarter. As the fiscal year progresses, the Company refines its estimates based on actual events and financial results during the year. This process can result in significant changes to the Company's estimated effective tax rate. When this occurs, the income tax provision (benefit) is adjusted during the quarter in which the estimates are refined so that the year-to-date provision reflects the estimated annual effective tax rate. These changes, along with adjustments to the Company's deferred taxes and related valuation allowance, may create fluctuations in the overall effective tax rate from quarter to quarter. The Companys effective tax rate for the three months ended March 31, 2016 differed from the U.S. federal statutory rate primarily due to unrecognized tax benefits, state income taxes and permanent non-deductible tax items. The total amount of unrecognized tax benefits, excluding associated interest and penalties, was $0.5 million as of March 31, 2016, all of which, if subsequently recognized, would have affected the Companys tax rate. The total balance of accrued interest and penalties related to state uncertain tax positions was $11,000 and $10,000 as of March 31, 2016 and December 31, 2015, respectively. The Company recognizes interest and penalties related to state 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 Companys condensed consolidated balance sheets. There were no material interest or penalties included in income tax expense (benefit) for the three months ended March 31, 2016 and March 31, 2015. The Company is subject to taxation in the U.S. and in various state jurisdictions. Due to expired statutes of limitation, the Companys federal income tax returns for years prior to calendar year 2012 are not subject to examination by the U.S. Internal Revenue Service. Generally, for the majority of state jurisdictions where the Company does business, periods prior to calendar year 2011 are no longer subject to examination. The Company is currently under examination by the State of Michigan for the years 2011 through 2014, but does not anticipate any material adjustments. The Company does not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months. Audit outcomes and the timing of settlements are subject to significant uncertainty. |
Acquisition (Tables)
Acquisition (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Dealix [Member] | |
Fair value of assets and liabilities assumed | (in thousands) Net identifiable assets acquired: Total tangible assets acquired $ 9,778 Total liabilities assumed 2,488 Net identifiable assets acquired 7,290 Definite-lived intangible assets acquired 7,655 Indefinite-lived intangible assets acquired 2,200 Goodwill 7,326 $ 24,471 |
Acquired intangible assets | Valuation Method Estimated Fair Value Estimated Useful Life (1) (in thousands) (years) Customer relationships Excess of earnings (2) $ 7,020 10 Trademark/trade names Autotegrity Relief from Royalty (3) 120 3 Trademark/trade names UsedCars.com Relief from Royalty (3) 2,200 Indefinite Developed technology Cost Approach (4) 515 3 Total purchased intangible assets $ 9,855 (1) Determination of the estimated useful lives of the individual categories of purchased intangible assets was based on the nature of the applicable intangible asset and the expected future cash flows to be derived from such intangible asset. Amortization of intangible assets with definite lives is recognized over the shorter of the respective life of the agreement or the period of time the assets are expected to contribute to future cash flows. (2) The excess of earnings method estimates a purchased intangible asset's value based on the present value of the prospective net cash flows (or excess earnings) attributable to it. The value attributed to these intangibles was based on projected net cash inflows from existing contracts or relationships. (3) The relief from royalty method is an earnings approach which assesses the royalty savings an entity realizes since it owns the asset and isnt required to pay a third party a license fee for its use. (4) The cost approach estimates the cost required to repurchase or reproduce the intangible assets. The method takes into account technological and economic obsolescence of the technology. |
Autoweb [Member] | |
Fair value of consideration transferred | (in thousands) Series B Preferred Stock $ 20,989 Series B Preferred warrants to purchase 148,240 shares of Series B Preferred Stock 2,542 Cash 279 Fair value of prior ownership in AutoWeb 4,016 $ 27,826 |
Fair value of assets and liabilities assumed | (in thousands) Net identifiable assets acquired: Total tangible assets acquired $ 4,456 Total liabilities assumed 543 Net identifiable assets acquired 3,913 Definite-lived intangible assets acquired 17,690 Goodwill 5,954 $ 27,557 |
Acquired intangible assets | Valuation Method Estimated Fair Value Estimated Useful Life (1) (in thousands) (years) Customer relationships Excess of earnings (2) $ 7,470 4 Trademark/trade names Relief from Royalty (3) 2,600 6 Developed technology Excess of earnings (4) 7,620 7 Total purchased intangible assets $ 17,690 (1) Determination of the estimated useful lives of the individual categories of purchased intangible assets was based on the nature of the applicable intangible asset and the expected future cash flows to be derived from such intangible asset. Amortization of intangible assets with definite lives is recognized over the shorter of the respective life of the agreement or the period of time the assets are expected to contribute to future cash flows. (2) The excess of earnings method estimates a purchased intangible asset's value based on the present value of the prospective net cash flows (or excess earnings) attributable to it. The value attributed to these intangibles was based on projected net cash inflows from existing contracts or relationships. (3) The relief from royalty method is an earnings approach which assesses the royalty savings an entity realizes since it owns the asset and isnt required to pay a third party a license fee for its use. (4) The excess of earnings method estimates a purchased intangible asset's value based on the present value of the prospective net cash flows (or excess earnings) attributable to it. The method takes into account technological and economic obsolescence of the technology. |
Dealix/Autotegrity and AutoWeb [Member] | |
Pro forma information | Three Months Ended March 31, 2015 (in thousands) Unaudited pro forma consolidated results: Revenues $ 38,634 Net income $ 1,502 |
Computation of Basic and Dilu18
Computation of Basic and Diluted Net Earnings (Loss) Per Share (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Net Income Per Share | Three Months Ended March 31, 2016 2015 Basic Shares: Weighted average common shares outstanding 10,633,907 8,880,450 Weighted average unvested restricted stock (125,000 ) Basic Shares 10,508,907 8,880,450 Diluted Shares: Basic shares 10,508,907 8,880,450 Weighted average dilutive securities 2,216,293 Diluted Shares 10,508,907 11,096,743 |
Share-Based Compensation (Table
Share-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Share-based compensation expense included in costs and expenses | Three Months Ended March 31, 2016 2015 (in thousands) Share-based compensation expense: Cost of revenues $ 14 $ 25 Sales and marketing (1) 632 140 Technology support (2) 332 74 General and administrative (3) 388 417 Share-based compensation costs 1,366 656 Amount capitalized to internal use software 2 3 Total share-based compensation costs $ 1,364 $ 653 (1) Certain awards were modified in connection with the termination of one of the Companys executive officers employment with the Company and their vesting accelerated in accordance with the terms of the applicable option agreements. The total expense related to these modifications and acceleration of vested awards was approximately $0.3 million in the three months ended March 31, 2016. (2) The vesting of certain awards was accelerated in accordance with the terms of the applicable option agreements in connection with the termination of one of the Companys executive officers employment with the Company. The total expense related to acceleration of vested awards was approximately $0.2 million in the three months ended March 31, 2016. (3) Certain awards were modified in accordance with the Companys former Chief Financial Officers consulting agreement and their vesting accelerated in accordance with the terms of the applicable option agreements. The total expense related to these modifications and acceleration of vested awards was approximately $0.2 million in the three months ended March 31, 2015. |
Service based options granted during period | Three Months Ended March 31, 2016 2015 Number of service-based options granted 428,900 315,050 Weighted average grant date fair value $ 8.12 $ 4.65 Weighted average exercise price $ 17.12 $ 10.22 |
Stock option exercises | Three Months Ended March 31, 2016 2015 Number of stock options exercised 53,839 253 Weighted average exercise price $ 12.97 $ 7.17 |
Fair value of stock options granted using the following weighted average assumptions | Three Months Ended March 31, 2016 2015 Dividend yield Volatility 58 % 56% Risk-free interest rate 1.3 % 1.2% Expected life (years) 4.4 4.4 |
Selected Balance Sheet Accoun20
Selected Balance Sheet Accounts (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Selected Balance Sheet Accounts [Abstract] | |
Property and equipment | March 31, December 31, 2016 2015 (in thousands) Computer software and hardware and capitalized internal use software $ 16,629 $ 15,741 Furniture and equipment 1,424 1,419 Leasehold improvements 1,429 1,424 19,482 18,584 Less Accumulated depreciation and amortization (14,670 ) (14,288 ) Property and equipment, net $ 4,812 $ 4,296 |
Intangible assets amortized over the estimated useful lives | Estimated Useful Life March 31, 2016 December 31, 2015 Intangible Asset Gross Accumulated Amortization Net Gross Accumulated Amortization Net (in thousands) Trademarks/trade names/licenses/domain 5 years Indefinite $ 11,494 $ (6,245 ) $ 5,249 $ 11,494 $ (6,071 ) $ 5,423 Software and publications 3 years 1,300 (1,300 ) 1,300 (1,300 ) Customer relationships 2-10 years 19,563 (5,127 ) 14,436 19,563 (4,341 ) 15,222 Employment/non-compete agreements 5 years 1,510 (963 ) 547 1,510 (849 ) 661 Developed technology 1-5 years 8,955 (1,102 ) 7,853 8,955 (746 ) 8,209 $ 42,822 $ (14,737 ) $ 28,085 $ 42,822 $ (13,307 ) $ 29,515 |
Amortization expense for the remainder of the year and for the next four years | Year Amortization Expense (in thousands) 2016 $ 4,217 2017 5,427 2018 5,052 2019 3,655 2020 2,224 2021 2,116 $ 22,691 |
Goodwill | Goodwill as of December 31, 2015 $ 42,903 Current year activity (114 ) Goodwill as of March 31, 2016 $ 42,789 |
Accrued expenses and other current liabilities | March 31, December 31, 2016 2015 (in thousands) Compensation and related costs and professional fees $ 1,793 $ 3,981 Other accrued expenses 4,937 5,715 Amounts due to customers 575 486 Other current liabilities 470 562 Total accrued expenses and other current liabilities $ 7,775 $ 10,744 |
Organization and Operations (De
Organization and Operations (Details Narrative) | 1 Months Ended | 3 Months Ended |
Oct. 30, 2015 | Mar. 31, 2016 | |
State of incorporation | Delaware | |
Date of incorporation | May 17, 1996 | |
Trading Symbol | ABTL | |
Autoweb [Member] | ||
Date of acquisition/merger | Oct. 1, 2015 | |
Outstanding shares of percentage | 15.00% | |
Dealix [Member] | ||
Date of acquisition/merger | May 21, 2015 |
Acquisition (Details)
Acquisition (Details) - Autoweb [Member] $ in Thousands | Mar. 31, 2016USD ($) |
Consideration transferred | |
Consideration transferred | $ 27,826 |
Series B Preferred Stock [Member] | |
Consideration transferred | |
Consideration transferred | 20,989 |
Series B Preferred Warrants [Member] | |
Consideration transferred | |
Consideration transferred | 2,542 |
Cash [Member] | |
Consideration transferred | |
Consideration transferred | 279 |
Fair Value Of Prior Ownership [Member] | |
Consideration transferred | |
Consideration transferred | $ 4,016 |
Acquisition (Details 1)
Acquisition (Details 1) $ in Thousands | Mar. 31, 2016USD ($) |
Autoweb [Member] | |
Net identifiable assets acquired: | |
Total tangible assets acquired | $ 4,456 |
Total liabilities assumed | 543 |
Net identifiable assets acquired | 3,913 |
Definite-lived intangible assets acquired | 17,690 |
Goodwill | 5,954 |
Net assets acquired | 27,557 |
Dealix/Autotegrity [Member] | |
Net identifiable assets acquired: | |
Total tangible assets acquired | 9,778 |
Total liabilities assumed | 2,488 |
Net identifiable assets acquired | 7,290 |
Definite-lived intangible assets acquired | 7,655 |
Indefinite-lived intangible assets acquired | 2,200 |
Goodwill | 7,326 |
Net assets acquired | $ 24,471 |
Acquisition (Details 2)
Acquisition (Details 2) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016USD ($) | ||
Autoweb [Member] | ||
Acquired Definite-Lived Intangible Assets | ||
Estimated Fair Value | $ 17,690 | |
Dealix/Autotegrity [Member] | ||
Acquired Definite-Lived Intangible Assets | ||
Estimated Fair Value | $ 9,855 | |
Developed Technology [Member] | Autoweb [Member] | ||
Acquired Definite-Lived Intangible Assets | ||
Valuation Method | Excess of earnings | [1] |
Estimated Fair Value | $ 7,620 | |
Estimated Useful Life | 7 years | [2] |
Developed Technology [Member] | Dealix/Autotegrity [Member] | ||
Acquired Definite-Lived Intangible Assets | ||
Valuation Method | Cost Approach | [3] |
Estimated Fair Value | $ 515 | |
Estimated Useful Life | 3 years | [2] |
Trademarks and Trade Names [Member] | Autoweb [Member] | ||
Acquired Definite-Lived Intangible Assets | ||
Valuation Method | Relief from Royalty | [4] |
Estimated Fair Value | $ 2,600 | |
Estimated Useful Life | 6 years | [2] |
Customer Relationships [Member] | Autoweb [Member] | ||
Acquired Definite-Lived Intangible Assets | ||
Valuation Method | Excess of earnings | [5] |
Estimated Fair Value | $ 7,470 | |
Estimated Useful Life | 4 years | [2] |
Customer Relationships [Member] | Dealix/Autotegrity [Member] | ||
Acquired Definite-Lived Intangible Assets | ||
Valuation Method | Excess of earnings | [5] |
Estimated Fair Value | $ 7,020 | |
Estimated Useful Life | 10 years | [2] |
Trademarks and Trade Names Autotegrity [Member] | Dealix/Autotegrity [Member] | ||
Acquired Definite-Lived Intangible Assets | ||
Valuation Method | Relief from Royalty | [4] |
Estimated Fair Value | $ 120 | |
Estimated Useful Life | 3 years | [2] |
Trademarks and Trade Names Usedcars.com [Member] | Dealix/Autotegrity [Member] | ||
Acquired Definite-Lived Intangible Assets | ||
Valuation Method | Relief from Royalty | [4] |
Estimated Fair Value | $ 2,200 | |
Estimated Useful Life | 0 years | [2] |
[1] | The excess of earnings method estimates a purchased intangible asset's value based on the present value of the prospective net cash flows (or excess earnings) attributable to it. The method takes into account technological and economic obsolescence of the technology. | |
[2] | Determination of the estimated useful lives of the individual categories of purchased intangible assets was based on the nature of the applicable intangible asset and the expected future cash flows to be derived from such intangible asset. Amortization of intangible assets with definite lives is recognized over the shorter of the respective life of the agreement or the period of time the assets are expected to contribute to future cash flows. | |
[3] | The cost approach estimates the cost required to repurchase or reproduce the intangible assets. The method takes into account technological and economic obsolescence of the technology. | |
[4] | The relief from royalty method is an earnings approach which assesses the royalty savings an entity realizes since it owns the asset and isn't required to pay a third party a license fee for its use. | |
[5] | The excess of earnings method estimates a purchased intangible asset's value based on the present value of the prospective net cash flows (or excess earnings) attributable to it. The value attributed to these intangibles was based on projected net cash inflows from existing contracts or relationships. |
Acquisition (Details 3)
Acquisition (Details 3) - Dealix/Autotegrity and AutoWeb [Member] $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Unaudited pro forma consolidated results: | |
Revenues | $ 38,634 |
Net income | $ 1,502 |
Acquisition (Details Narrative)
Acquisition (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Weighted Average Closing Price | $ 17.12 | $ 10.22 |
Autoweb [Member] | ||
Fair value of consideration | $ 23,800 | |
Series B Junior Participating Convertible Preferred Stock | 168,007 | |
Preferred stock par value | $ 0.001 | |
Warrants to purchase shares of Series B preferred stock | 148,240 | |
Cash to cancel vested money options to acquire shares | $ 300 | |
Gain to the pre-merger investment | $ 600 | |
Number of shares converted series B preferred stock to common stock | 10 | |
Warrant per share price | $ 1.72 | |
Warrant value | $ 2,500 | |
Risk free rate | 1.90% | |
Volatilty | 74.00% | |
Warrant term | 7 years | |
Weighted Average Closing Price | $ 30 | |
Warrants expire date | Oct. 1, 2022 | |
Contingent consideration, fair value | $ 270 | |
Acquisition related costs | 1,100 | |
Goodwill | $ 5,954 | |
Autoweb [Member] | Transaction One [Member] | ||
Weighted Average Closing Price | $ 37.50 | |
Acquisition related costs | $ 200 | |
Autoweb [Member] | Transaction Two [Member] | ||
Weighted Average Closing Price | $ 45 | |
Dealix/Autotegrity [Member] | ||
Acquisition related costs | $ 1,600 | |
Contingent consideration, potential payments | 25,000 | |
Working capital adjustment | 11 | |
Noncompete Agreement | 500 | |
Goodwill | 7,326 | |
Dealix/Autotegrity [Member] | Transaction One [Member] | ||
Acquisition related costs | 300 | |
Dealix/Autotegrity [Member] | Officer [Member] | ||
Noncompete Agreement | $ 40 |
Computation of Basic and Dilu27
Computation of Basic and Diluted Net Earnings (Loss) Per Share (Details) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Basic Shares: | ||
Weighted average common shares outstanding | 10,633,907 | 8,880,450 |
Weighted average unvested restricted stock | (125,000) | |
Basic shares | 10,508,907 | 8,880,450 |
Dilutive Shares: | ||
Basic shares | 10,508,907 | 8,880,450 |
Weighted average dilutive securities | 2,216,293 | |
Dilutive Shares | 10,508,907 | 11,096,743 |
Computation of Basic and Dilu28
Computation of Basic and Diluted Net Earnings (Loss) Per Share (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jan. 13, 2014 | Mar. 31, 2016 | Mar. 31, 2015 | Sep. 17, 2014 | Jun. 07, 2012 |
Dilutive Shares: | |||||
Authorized amount of stock repurchase, minimum | $ 1,000 | $ 2,000 | |||
Anti-dilutive potential shares of common stock | 2,800,000 | 1,400,000 | |||
Warrant | |||||
Risk-free rate | 1.30% | 1.20% | |||
Stock price volatility | 58.00% | 56.00% | |||
Term | 4 years 4 months 24 days | 4 years 4 months 24 days | |||
AutoWeb Warrants [Member] | |||||
Warrant | |||||
Warrants exercisable date | Oct. 1, 2018 | ||||
Warrants expiration date | Oct. 1, 2022 | ||||
Warrant price (in dollars per share) | $ 1.72 | ||||
Risk-free rate | 1.90% | ||||
Stock price volatility | 74.00% | ||||
Term | 7 years | ||||
Total value | $ 2,500 | ||||
AutoWeb Warrants [Member] | Warrants Closing Price One [Member] | |||||
Warrant | |||||
Weighted Average Closing Price | $ 30 | ||||
AutoWeb Warrants [Member] | Warrants Closing Price Two [Member] | |||||
Warrant | |||||
Weighted Average Closing Price | 37.50 | ||||
AutoWeb Warrants [Member] | Warrants Closing Price Three [Member] | |||||
Warrant | |||||
Weighted Average Closing Price | $ 45 | ||||
Auto USA [Member] | |||||
Warrant | |||||
Warrant price (in dollars per share) | $ 7.35 | ||||
Total value | $ 500 | ||||
Auto USA [Member] | Warrant [Member] | |||||
Warrant | |||||
Warrant issued | 69,930 | ||||
Risk-free rate | 1.60% | ||||
Stock price volatility | 65.00% | ||||
Term | 5 years | ||||
Exercise price of warrant (in dollars per share) | $ 14.30 |
Share-Based Compensation (Detai
Share-Based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | ||
Share-based compensation expense: | |||
Share-based compensation costs | $ 1,366 | $ 656 | |
Amount capitalized to internal use software | 2 | 3 | |
Total share-based compensation costs | 1,364 | 653 | |
Cost of revenues [Member] | |||
Share-based compensation expense: | |||
Share-based compensation costs | 14 | 25 | |
Sales and marketing [Member] | |||
Share-based compensation expense: | |||
Share-based compensation costs | [1] | 632 | 140 |
Technology support [Member] | |||
Share-based compensation expense: | |||
Share-based compensation costs | [2] | 332 | 74 |
General and administrative [Member] | |||
Share-based compensation expense: | |||
Share-based compensation costs | [3] | $ 388 | $ 417 |
[1] | Certain awards were modified in connection with the termination of one of the Company's executive officer's employment with the Company and their vesting accelerated in accordance with the terms of the applicable option agreements. The total expense related to these modifications and acceleration of vested awards was approximately $0.3 million in the three months ended March 31, 2016. | ||
[2] | The vesting of certain awards was accelerated in accordance with the terms of the applicable option agreements in connection with the termination of one of the Company's executive officer's employment with the Company. The total expense related to acceleration of vested awards was approximately $0.2 million in the three months ended March 31, 2016. | ||
[3] | Certain awards were modified in accordance with the Company's former Chief Financial Officer's consulting agreement and their vesting accelerated in accordance with the terms of the applicable option agreements. The total expense related to these modifications and acceleration of vested awards was approximately $0.2 million in the three months ended March 31, 2015. |
Share-Based Compensation (Det30
Share-Based Compensation (Details 1) - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Stock Issued or Granted During Period, Share-based Compensation [Abstract] | ||
Number of service-based options granted | 428,900 | 315,050 |
Weighted average grant date fair value | $ 8.12 | $ 4.65 |
Weighted average exercise price | $ 17.12 | $ 10.22 |
Share-Based Compensation (Det31
Share-Based Compensation (Details 2) - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | ||
Number of stock options exercised | 53,839 | 253 |
Weighted average exercise prices | $ 12.97 | $ 7.17 |
Share-Based Compensation (Det32
Share-Based Compensation (Details 3) | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fair value of stock options granted using the following weighted average assumptions | ||
Dividend yield | ||
Volatility (in hundredths) | 58.00% | 56.00% |
Risk-free interest rate (in hundredths) | 1.30% | 1.20% |
Expected life (years) | 4 years 4 months 24 days | 4 years 4 months 24 days |
Share-Based Compensation (Det33
Share-Based Compensation (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 3 Months Ended | ||
Jan. 21, 2016 | Apr. 23, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | |
Stock Issued or Granted During Period, Share-based Compensation [Abstract] | ||||
Options granted (in shares) | 428,900 | 315,050 | ||
Options weighted average grant date fair value (in dollars per share) | $ 8.12 | $ 4.65 | ||
Options weighted average exercise price (in dollars per share) | $ 17.12 | $ 10.22 | ||
Market Condition Options [Member] | ||||
Stock Issued or Granted During Period, Share-based Compensation [Abstract] | ||||
Options granted (in shares) | 100,000 | |||
Options weighted average grant date fair value (in dollars per share) | $ 2.94 | |||
Options weighted average exercise price (in dollars per share) | $ 17.09 | |||
Proportion of options vested on first anniversary of grant date | 30 | |||
Restricted Stock [Member] | ||||
Stock Issued or Granted During Period, Share-based Compensation [Abstract] | ||||
Options granted (in shares) | 125,000 | |||
Granted for services | $ 25,000 | |||
Performance awards, officer | 100,000 |
Investments (Details Narrative)
Investments (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | ||||
Oct. 31, 2015 | Jul. 31, 2015 | Dec. 31, 2014 | Mar. 31, 2016 | Nov. 30, 2014 | |
GoMoto [Member] | |||||
Convertible promissory note | $ 375 | ||||
Payment to acquire investments | $ 100 | ||||
Preferred stock acquired (in shares) | 317,460 | ||||
Preferred stock par value | $ 0.001 | ||||
Annual interest rate (in hundredths) | 4.00% | ||||
Maturity date | Oct. 28, 2017 | ||||
Preferred shares issued upon convesion of debt, value | $ 1,000 | ||||
SaleMove Inc [Member] | |||||
Convertible promissory note | $ 150 | ||||
Advances to affiliate | 1,000 | ||||
Due from affiliates | $ 671 | ||||
SaleMove Note 2 Inc [Member] | |||||
Convertible promissory note | $ 400 | ||||
Preferred shares issued upon convesion of debt | 190,997 |
Selected Balance Sheet Accoun35
Selected Balance Sheet Accounts (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Property and Equipment | ||
Computer software and hardware and capitalized internal use software | $ 16,629 | $ 15,741 |
Furniture and equipment | 1,424 | 1,419 |
Leasehold improvements | 1,429 | 1,424 |
Property and equipment, gross | 19,482 | 18,584 |
Less - Accumulated depreciation and amortization | (14,670) | (14,288) |
Property and equipment, net | $ 4,812 | $ 4,296 |
Selected Balance Sheet Accoun36
Selected Balance Sheet Accounts (Details 1) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Intangible Assets | ||
Gross | $ 42,822 | $ 42,822 |
Accumulated Amortization | (14,737) | (13,307) |
Net | 28,085 | 29,515 |
Trademarks and Trade Names [Member] | ||
Intangible Assets | ||
Gross | 11,494 | 11,494 |
Accumulated Amortization | (6,245) | (6,071) |
Net | $ 5,249 | 5,423 |
Trademarks and Trade Names [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets | ||
Estimated Useful Life | 5 years | |
Software and publications [Member] | ||
Intangible Assets | ||
Gross | $ 1,300 | 1,300 |
Accumulated Amortization | $ (1,300) | $ (1,300) |
Net | ||
Finite-Lived Intangible Assets | ||
Estimated Useful Life | 3 years | |
Customer Relationships [Member] | ||
Intangible Assets | ||
Gross | $ 19,563 | $ 19,563 |
Accumulated Amortization | (5,127) | (4,341) |
Net | $ 14,436 | 15,222 |
Customer Relationships [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets | ||
Estimated Useful Life | 2 years | |
Customer Relationships [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets | ||
Estimated Useful Life | 10 years | |
Employment/non-compete agreements [Member] | ||
Intangible Assets | ||
Gross | $ 1,510 | 1,510 |
Accumulated Amortization | (963) | (849) |
Net | $ 547 | 661 |
Finite-Lived Intangible Assets | ||
Estimated Useful Life | 5 years | |
Developed Technology Rights [Member] | ||
Intangible Assets | ||
Gross | $ 8,955 | 8,955 |
Accumulated Amortization | (1,102) | (746) |
Net | $ 7,853 | $ 8,209 |
Developed Technology Rights [Member] | Minimum [Member] | ||
Finite-Lived Intangible Assets | ||
Estimated Useful Life | 1 year | |
Developed Technology Rights [Member] | Maximum [Member] | ||
Finite-Lived Intangible Assets | ||
Estimated Useful Life | 5 years |
Selected Balance Sheet Accoun37
Selected Balance Sheet Accounts (Details 2) $ in Thousands | Mar. 31, 2016USD ($) |
Amortization expense for the remainder of the year and for the next five years | |
2,016 | $ 4,217 |
2,017 | 5,427 |
2,018 | 5,052 |
2,019 | 3,655 |
2,020 | 2,224 |
2,021 | 2,116 |
Total | $ 22,691 |
Selected Balance Sheet Accoun38
Selected Balance Sheet Accounts (Details 3) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Goodwill | |
Goodwill as of December 31, 2015 | $ 42,903 |
Current year activity | (114) |
Goodwill as of March 31, 2016 | $ 42,789 |
Selected Balance Sheet Accoun39
Selected Balance Sheet Accounts (Details 4) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Accrued expenses and other current liabilities | ||
Compensation and related costs and professional fees | $ 1,793 | $ 3,981 |
Other accrued expenses | 4,937 | 5,715 |
Amounts due to customers | 575 | 486 |
Other current liabilities | 470 | 562 |
Total accrued expenses and other current liabilities | $ 7,775 | $ 10,744 |
Selected Balance Sheet Accoun40
Selected Balance Sheet Accounts (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Intangible assets acquired in business acquisitions | $ 38,100 | |
Sales Revenue Net [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Concentration risk | 26.00% | 30.00% |
Accounts Receivable [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Concentration risk | 41.00% | 44.00% |
Concentration risk, amount | $ 11,700 | $ 8,600 |
Auto USA Note [Member] | ||
Property, Plant and Equipment [Line Items] | ||
Fair value of note | $ 1,300 | |
Market yield (in hundredths) | 1.60% | |
Convertible subordinated promissory note issued | $ 1,000 | |
Stock price volatility (in hundredths) | 65.00% | |
Interest is payable at an annual interest rate (in hundredths) | 6.00% | |
Lower interest rate of note payable | 8.00% | |
Note maturity date | Jan. 31, 2019 | |
Date after which notes can be converted | Jan. 31, 2017 | |
Shares issued upon conversion of note | 30,600 | |
Shares issued upon conversion of note price per share | $ 16.34 |
Credit Facility (Details Narrat
Credit Facility (Details Narrative) $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($) | |
Revolving loan current balance | $ 8,000 |
Term Loan 2 | |
Term loan | $ 15,000 |
Term loan amortization period | 5 years |
Quarterly principal payment | $ 750 |
Term loan maturity date | Jun. 30, 2020 |
Revolving loan limit | $ 15,000 |
Revolving loan draw | 2,750 |
Revolving loan current balance | 12,800 |
Term Loan 1 | |
Term loan | $ 9,000 |
Term loan amortization period | 4 years |
Quarterly principal payment | $ 562 |
Term loan maturity date | Dec. 31, 2017 |
Revolving loan limit | $ 9,000 |
Revolving loan draw | 1,000 |
Revolving loan current balance | $ 3,900 |
Income Taxes (Details Narrative
Income Taxes (Details Narrative) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Income Tax Disclosure [Abstract] | ||
Unrecognized tax benefits | $ 500 | |
Accrued interest and penalties | $ 11 | $ 10 |