Selected Balance Sheet Accounts

3 Months Ended

Mar. 31, 2012

Selected Balance Sheet Accounts [Abstract]

Selected Balance Sheet Accounts [Text Block]

6. Selected Balance Sheet Accounts

Property and Equipment.  Property and equipment consists of the following:

	March 31,			December 31,
	2012			2011
	(in thousands)
Computer software and hardware and capitalized internal use software	$	12,075		$	12,035
Furniture and equipment		1,272			1,272
Leasehold improvements		942			942
		14,289			14,249
Less - Accumulated depreciation and amortization		(12,787	)		(12,620	)
Property and equipment, net	$	1,502		$	1,629

 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 Company's judgments regarding the existence of impairment indicators are based on legal factors, market conditions and operational performance of our 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 asset's 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, AutoNation and General Motors. During the first three months of 2012, approximately 32% of the Company's total revenues were derived from these three customers, and approximately 26%, or $2.9 million of gross accounts receivable, related to these three customers at March 31, 2012.

During the three months ended March 31, 2011, the Company had a concentration of credit risk with General Motors and Nissan.  During the first three months of 2011, approximately 14% of the Company's total revenues were derived from General Motors and Nissan, and approximately 13%, or $1.3 million of gross accounts receivable, related to these customers at March 31, 2011.

Investments.  On August 16, 2010, the Company acquired less than a 5% interest in Driverside, Inc. ("Driverside") for $1,000,000.  The Company made an additional investment in Driverside in the three months ended June 30, 2011 for $16,737.  The Company recorded the investments in Driverside at cost because the Company does not have significant influence over Driverside.  In the three months ended September 30, 2011, Driverside merged with another entity and the Company received a cash payment of $823,000, representing the Company's pro rata share of the initial merger consideration.  The $823,000 received at closing of the transaction was recorded as a reduction to the Driverside investment on the Company's consolidated balance sheet. The Company is also entitled to receive its pro rata share of amounts, if any, payable upon satisfaction of contingent payment milestones by Driverside and amounts, if any, released from an escrow account established to satisfy post-closing indemnification claims.  The Company reviews for indicators of impairment on a quarterly basis by evaluating whether an event or change in circumstance has occurred that may have a significant adverse effect on the value of the investment.  As of March 31, 2012, there were no other changes in the recognized amount of the investment in Driverside. 

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 acquisition of Auto/Cyber on September 17, 2010, the Company identified $4.5 million of intangible assets.  The intangible assets will be amortized over the following estimated useful lives:

Intangible Asset	Estimated Useful Life
Trademarks/trade names	5 years
Software and publications	3 years
Customer relationships	3 years
Employment/non-compete agreements	5 years

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

Year	Amortization Expense
	(in thousands)
2012	$	1,013
2013		1,036
2014		284
2015		208
2016		3
	$	2,544

Goodwill.  The Company recognized $11.7 million in goodwill related to the acquisition of Auto/Cyber in 2010.  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 whenever events or circumstances indicate that the carrying value of such assets may not be recoverable.

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

	March 31,		December 31,
	2012		2011
	(in thousands)
Compensation and related costs	$	1,205	$	2,084
Professional fees and other accrued expenses		2,128		2,221
Amounts due to customers		156		180
Other current liabilities		603		509
Total accrued expenses and other current liabilities	$	4,092	$	4,994

Long-term debt.  In connection with the acquisition of Auto/Cyber, the Company issued a convertible subordinated promissory note for $5.0 million ("Note") to the sellers.  The fair value of the Note as of the Acquisition Date was $5.9 million.  This valuation was estimated using a binomial option pricing method.  Key assumptions used in valuing the Note include a market yield of 15.0% and stock price volatility of 77.5%.  As the Note was issued with a substantial premium, the Company recorded the premium as additional paid-in capital.  Interest is payable at an annual interest rate of 6% in quarterly installments.  The entire outstanding balance of the Note is to be paid in full on September 30, 2015.  At any time after September 30, 2013, the holders of the Note may convert all or any part of, but in 200,000 minimum share increments, the then outstanding and unpaid principal of the Note into fully paid shares of the Company's common stock at a conversion price of $0.93 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The right to convert the Note into common stock of the Company is accelerated in the event of a change in control of the Company.  In the event of default, the entire unpaid balance of the Note will become immediately due and payable and will bear interest at the lower of 8% per year and the highest legal rate permissible under applicable law.