4. Selected Balance Sheet Accounts

Property and Equipment

Property and equipment consists of the following:

	As of December 31,
	2013			2012
	(in thousands)
Computer software and hardware and capitalized internal use software	$	11,924		$	11,729
Furniture and equipment		1,256			1,252
Leasehold improvements		937			892
		14,117			13,873
Less—Accumulated depreciation and amortization		(12,569	)		(12,280	)
Property and Equipment, net	$	1,548		$	1,593

As of December 31, 2013 and 2012, capitalized internal use software, net of amortization, was $0.6 million and $0.8 million, respectively. Depreciation and amortization expense related to property and equipment was $0.7 million for the year ended December 31, 2013. Of this amount, $0.2 million was recorded in cost of revenues and $0.5 million was recorded in operating expenses. Depreciation and amortization expense related to property and equipment was $0.8 million for the year ended December 31, 2012. Of this amount, $0.2 million was recorded in cost of revenues and $0.6 million was recorded in operating expenses.

Investments. In August 2010, the Company acquired less than a 5% equity interest in Driverside, Inc. ("Driverside"), a non-publicly traded company, for $1.0 million. Driverside provides consumers with a broad set of content, features, tools, technology, systems, products, services and programs related to the efficient ownership of motor vehicles. The Company received 1,352,082 shares of Series C preferred stock in Driverside for its investment. The Company made an additional investment in Driverside in 2011 for $16,737. The Company recorded the investments in Driverside at cost because the Company does not have significant influence over Driverside. In 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. In 2012 the Company received $326,000, which represented its pro rata share of contingent payments upon milestones achieved by Driverside. Of the $326,000 received in 2012, $194,000 was recorded as a complete reduction to the investment in Driverside and $132,000 was recorded as other income. In 2013 the Company received $108,000 from Driverside, which represented its pro rata share of amounts released from an escrow account established to satisfy post-closing indemnification claims. The Company recorded the $108,000 as other income. There are no further amounts due associated with the Driverside investment.

In September 2013 the Company entered into a Contribution Agreement with AutoWeb, in which Autobytel contributed to AutoWeb $2.5 million and assigned to AutoWeb all the ownership interests in the autoweb.com domain name and two registered trademarks related to the AutoWeb name and related goodwill in exchange for 8,000 shares of AutoWeb Series A Preferred Stock, $0.01 par value per share. The 8,000 shares of AutoWeb Series A Preferred Stock represented 16% of all issued and outstanding common stock of AutoWeb as of September 18, 2013, assuming conversion of the Series A Preferred Stock into AutoWeb common stock as of this date. The Company also obtained an option to acquire an additional 5,000 shares of AutoWeb Series A Preferred Stock at a per share exercise price of $500.00, which option expires September 2015. In connection with this investment, the Company also entered into arrangements with AutoWeb to use the AutoWeb pay-per-click, auction-driven automotive marketplace technology platform as both a publisher and as an advertiser. Upon the occurrence of a liquidation event (i.e., a liquidation, dissolution or winding up of AutoWeb; a consolidation or merger where AutoWeb is not the surviving entity; a consolidation or merger where AutoWeb is the surviving entity and either (i) the rights of the Series A Preferred Stock are changed, or (ii) the Series A Preferred Stock is exchanged for cash, securities or property); or a sale or transfer of all or substantially all of AutoWeb's assets), the Series A Preferred Stock is entitled to a liquidation preference of the greater of (i) $1,000 per share (subject to adjustments for stock splits, stock dividends combinations and recapitalizations); and (ii) the amount that would be distributed with respect to AutoWeb's common stock, assuming full conversion of the Series A Preferred Stock into common stock.

In September 2013 the Company entered into a Convertible Note Purchase Agreement in which Autobytel invested $150,000 in SaleMove in the form of a convertible promissory note. The convertible promissory note accrues interest an annual rate of 6.0% and is due and payable in full on August 14, 2015 unless converted prior to the maturity date. The convertible note will be converted into preferred stock of SaleMove in the event of a preferred stock financing by SaleMove of at least $1.0 million prior to the maturity date of the convertible note.

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 and Advanced Mobile, the Company identified $5.9 million of intangible assets. The Company's intangible assets will be amortized over the following estimated useful lives:

		December 31, 2013							December 31, 2012
Intangible Asset	Estimated Useful Life	Gross		Accumulated Amortization			Net		Gross		Accumulated Amoritzation			Net
Trademarks/trade names	5 years	$	5,582	$	(5,209	)	$	373	$	5,540	$	(5,023	)	$	517
Software and publications	3 years		1,300		(1,300	)		-		1,300		(992	)		308
Customer relationships	3 years		2,320		(1,926	)		394		1,870		(1,427	)		443
Employment/non-compete agreements	5 years		610		(335	)		275		500		(229	)		271
Developed technology	5 years		820		(41	)		779		-		-			-
		$	10,632	$	(8,811	)	$	1,821	$	9,210	$	(7,671	)	$	1,539

Amortization expense is included in "Depreciation and amortization" in the Statement of Income. Amortization expense for intangible assets for the next five years is as follows:

Year	Amortization Expense
	(in thousands)

2014	$	700
2015		567
2016		195
2017		191
2018		144
	$	1,797

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 whenever events or circumstances indicate that the carrying value of such assets may not be recoverable. The Company did not record any impairment related to goodwill as of December 31, 2013 and 2012.

As of December 31, 2013 and 2012, goodwill consisted of the following:

	(in thousands)
Goodwill as of December 31, 2012	$	11,677
Acquisition of Advanced Mobile		1,925
Goodwill as of December 31, 2013	$	13,602

Accrued Expenses and Other Current Liabilities

As of December 31, 2013 and 2012, accrued expenses and other current liabilities consisted of the following:

	As of December 31,
	2013			2012
	(in thousands)
Compensation and related costs and professional fees		$	3,540	$	2,006
Other accrued expenses			3,209		2,847
Amounts due to customers			208		149
Other current liabilities			692		375
Total accrued expenses and other current liabilities		$	7,649	$	5,377

Long-term debt. In connection with the acquisition of Cyber in September 2010, the Company issued a convertible subordinated promissory note for $5.0 million ("Convertible Note") to the sellers. The fair value of the Convertible 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 Convertible Note included a market yield of 15.0% and stock price volatility of 77.5%. As the Convertible 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 Convertible Note is to be paid in full on September 30, 2015. At any time after September 30, 2013, the holders of the Convertible Note may convert all or any part of, but in 40,000 minimum share increments, the then outstanding and unpaid principal of the Convertible Note into fully paid shares of the Company's common stock at a conversion price of $4.65 per share (as adjusted for stock splits, stock dividends, combinations and other similar events). The right to convert the Convertible 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 Convertible 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.

Credit Facility. The Company entered into an $8.0 million revolving credit facility ("Facility") in February 2013 with Union Bank, N.A. The Facility may be used as a source to finance capital expenditures, acquisitions, stockholder buyback, and other general corporate purposes. Borrowings under the Facility will bear interest at either the bank's Reference Rate (prime rate) minus 0.50% or the London Interbank Offering Rate (LIBOR) plus 1.50%, at the option of the Company. The Company will also pay a commitment fee on the unused Facility of 0.10% payable quarterly in arrears. The outstanding balance as of December 31, 2013 was $4.25 million. The Facility contains certain customary representations and warranties, affirmative and negative covenants and restrictive and financial covenants, including that the Company maintain a minimum consolidated net liquidity, profitability, EBITDA and tangible net worth, with which the Company was in compliance with as of December 31, 2013. Borrowings under the Facility are secured by a first priority security interest on our accounts receivable and proceeds thereof. The Facility matures in February 2015.