10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

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

For the quarterly period ended March 31, 2015

or

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

For the transition period from to .

Commission file number 1-34761

Autobytel Inc.

(Exact name of registrant as specified in its charter)

Delaware	33-0711569
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)
18872 MacArthur Boulevard, Suite 200, Irvine, California	92612
(Address of principal executive offices)	(Zip Code)

(949) 225-4500

(Registrant’s telephone number, including area code)

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X]  No [  ]

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

Large accelerated filer	[  ]	Accelerated filer	[X]
Non-accelerated filer (Do not check if a smaller reporting company)	[  ]	Smaller reporting company	[  ]

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

As of May 4, 2015, there were 10,480,898 shares of the Registrant’s Common Stock, $0.001 par value, outstanding.

	INDEX
		Page
	PART I. FINANCIAL INFORMATION
		1
ITEM 1.	Financial Statements
		1
	Unaudited Consolidated Condensed Balance Sheets as of March 31, 2015 and December 31, 2014
	Unaudited Consolidated Condensed Statements of Income and Comprehensive Income for the Three Months Ended March 31, 2015 and the Three Months Ended March 31, 2014	2
	Unaudited Consolidated Condensed Statements of Cash Flows for the Three Months Ended March 31, 2015 and the Three Months Ended March 31, 2014	3
	Notes to Unaudited Consolidated Condensed Financial Statements	4
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	17
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	23
ITEM 4.	Controls and Procedures	23
	PART II. OTHER INFORMATION
ITEM 1A.	Risk Factors	24
ITEM 6.	Exhibits	25
	Signatures	26

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PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

AUTOBYTEL INC.

UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS

(Amounts in thousands, except share and per-share data)

	March 31,			December 31,
	2015				2014*
Assets
Current assets:
Cash and cash equivalents	$	19,322		$	20,747
Accounts receivable, net of allowances for bad debts and customer credits of $712 and $770 at March 31, 2015 and December 31, 2014, respectively		18,779			18,311
Deferred tax asset		5,263			5,498
Prepaid expenses and other current assets		512			811
Total current assets		43,876			45,367
Property and equipment, net		2,021			1,904
Investments		3,880			3,880
Intangible assets, net		3,791			4,173
Goodwill		20,948			20,948
Long-term deferred tax asset		27,395			27,396
Other assets		1,062			1,081
Total assets	$	102,973		$	104,749
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	7,895		$	7,685
Accrued expenses and other current liabilities		6,640			9,495
Convertible note payable		5,000			5,000
Total current liabilities		19,535			22,180
Convertible note payable		1,000			1,000
Term loan payable		6,188			6,750
Borrowings under revolving credit facility		5,250			5,250
Other non-current liabilities		311			311
Total liabilities		32,284			35,491
Commitments and contingencies		—			—
Stockholders’ equity:
Preferred stock, $0.001 par value; 11,445,187 shares authorized; none outstanding		—			—
Common stock, $0.001 par value; 55,000,000 shares authorized and 8,880,630 and 8,880,377 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively		9			9
Additional paid-in capital		308,848			308,190
Accumulated deficit		(238,168	)		(238,941	)
Total stockholders’ equity		70,689			69,258
Total liabilities and stockholders’ equity	$	102,973		$	104,749

* Amounts were derived from audited financial statements

See accompanying notes to unaudited consolidated condensed financial statements.

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AUTOBYTEL INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME

AND COMPREHENSIVE INCOME

(Amounts in thousands, except per-share data)

	Three Months Ended March 31,
	2015			2014
Revenues:
Lead fees	$	24,167		$	26,013
Advertising		1,600			673
Other revenues		476			273
Total revenues		26,243			26,959
Cost of revenues		16,145			16,874
Gross profit		10,098			10,085
Operating expenses:
Sales and marketing		3,584			4,017
Technology support		1,831			1,924
General and administrative		3,046			3,022
Depreciation and amortization		485			434
Litigation settlements		(25	)		(68	)
Total operating expenses		8,921			9,329
Operating income		1,177			756
Interest and other income (expense), net		(147	)		(166	)
Income before income tax provision		1,030			590
Income tax provision		257			220
Net income and comprehensive income	$	773		$	370
Basic earnings per common share	$	0.09		$	0.04
Diluted earnings per common share	$	0.07		$	0.04

See accompanying notes to unaudited consolidated condensed financial statements.

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AUTOBYTEL INC.

UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(Amounts in thousands)

	Three Months Ended March 31,
	2015			2014
Cash flows from operating activities:
Net income	$	773		$	370
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization		603			527
Provision for bad debts		53			27
Provision for customer credits		174			207
Share-based compensation		653			286
Change in deferred tax asset		236			169
Changes in assets and liabilities:
Accounts receivable		(695	)		806
Prepaid expenses and other current assets		299			(42	)
Other assets		19			(301	)
Accounts payable		210			179
Accrued expenses and other current liabilities		(2,855	)		(1,139	)
Deferred revenues		—			11
Non-current liabilities		—			(225	)
Net cash (used in) provided by operating activities		(530	)		875
Cash flows from investing activities:
Purchases of property and equipment		(338	)		(256	)
Purchase of AutoUSA		—			(10,044	)
Net cash used in investing activities		(338	)		(10,300	)
Cash flows from financing activities:
Borrowings under credit facility		—			1,000
Borrowings under term loan		—			9,000
Payments on term loan borrowings		(562	)		(562	)
Proceeds from exercise of stock options		5			314
Net cash (used in) provided by financing activities		(557	)		9,752
Net (decrease) increase in cash and cash equivalents		(1,425	)		327
Cash and cash equivalents, beginning of period		20,747			18,930
Cash and cash equivalents, end of period	$	19,322		$	19,257
Supplemental disclosure of cash flow information:
Cash paid for income taxes	$	45		$	67
Cash paid for interest	$	171		$	110

See accompanying notes to unaudited consolidated condensed financial statements.

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AUTOBYTEL INC.

NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1. Organization and Operations

Autobytel Inc. (“Autobytel” or the “Company”) is an automotive marketing services company that assists automotive retail dealers (“Dealers”) and automotive manufacturers (“Manufacturers”) market and sell new and used vehicles through the Company's programs for online lead referrals (“Leads”), Dealer marketing products and services, online advertising programs and mobile products.

The Company’s consumer-facing automotive websites (“Company Websites”), including its flagship website Autobytel.com®, provide consumers with information and tools to aid them with their automotive purchase decisions and the ability to submit inquiries requesting Dealers to contact the consumers regarding purchasing or leasing vehicles (“Vehicle Leads”). For consumers who may not be able to secure loans through conventional lending sources, the Company Websites provide these consumers the ability to submit inquiries requesting Dealers or other lenders that may offer vehicle financing to these consumers to contact the consumers regarding vehicle financing (“Finance Leads”). The Company’s mission for consumers is to be “Your Lifetime Automotive Advisor®” by engaging consumers throughout the entire lifecycle of their automotive needs.

The Company was incorporated in Delaware on May 17, 1996. Its principal corporate offices are located in Irvine, California. The Company’s common stock is listed on The NASDAQ Capital Market under the symbol ABTL.

On January 13, 2014 (“AutoUSA Acquisition Date”), Autobytel and AutoNation, Inc., a Delaware corporation (“Seller Parent”), and AutoNationDirect.com, Inc., a Delaware corporation and subsidiary of Seller Parent (“Seller”), entered into and consummated a Membership Interest Purchase Agreement in which Autobytel acquired all of the issued and outstanding membership interests in AutoUSA, LLC, a Delaware limited liability company and a subsidiary of Seller (“AutoUSA”).  AutoUSA was a competitor to the Company and at the time of the acquisition was a (i) Lead aggregator purchasing internet-generated automotive consumer Leads from third parties and reselling those consumer Leads to automotive vehicle Dealers; and (ii) reseller of third party products and services to automotive Dealers.  See Note 4.

2. Basis of Presentation

The accompanying unaudited consolidated condensed financial statements are presented on the same basis as the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (“2014 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”).  Autobytel has made its disclosures in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included.  The statements of income and comprehensive income and cash flows for the periods ended March 31, 2015 and 2014 are not necessarily indicative of the results of operations or cash flows expected for the year or any other period.  The unaudited consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in the 2014 Form 10-K.

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3.  Recent Accounting Pronouncements

Accounting Standards Codification 225-20 “Income Statement – Extraordinary and Unusual Items.”  In January 2015, Accounting Standards Update (“ASU”) No. 2015-01, “Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” was issued.  This ASU eliminates from GAAP the concept of extraordinary items.  Preparers will not have to assess whether a particular event is extraordinary.  However, presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual and infrequently occurring.  The amendments in this ASU are effective for fiscal years, and interim periods with those fiscal years, beginning after December 15, 2015.  A reporting entity may apply the amendments prospectively.  A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements.  Early adoption is permitted provided the guidance is applied from the beginning of the fiscal year of adoption.  The Company has not yet selected a transition method nor has it determined the effect of the standard on the ongoing financial reporting.

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 1) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, 2) eliminate the presumption that a general partner should consolidate a limited partnership, 3) 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 4) 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.  Early adoption is permitted, including adoption in an interim period.  The Company has yet to determine if this ASU will be material 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 U.S. GAAP when it becomes effective. The new standard is effective on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU No. 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on the ongoing financial reporting.

4.  Acquisition

Acquisition of AutoUSA

On the AutoUSA Acquisition Date, Autobytel acquired all of the issued and outstanding membership interests in AutoUSA.  The Company acquired AutoUSA to expand its reach and influence in the industry by increasing its Dealer network.

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The AutoUSA Acquisition Date fair value of the consideration transferred totaled $11.9 million, which consisted of the following:

	(in thousands)
Cash (including a working capital adjustment of $44)	$	10,044
Convertible subordinated promissory note		1,300
Warrant to purchase 69,930 shares of Company common stock		510
	$	11,854

As part of the consideration paid for the acquisition, the Company issued a convertible subordinated promissory note for $1.0 million (“AutoUSA Note”) to the Seller.  The fair value of the AutoUSA Note as of the AutoUSA Acquisition Date was $1.3 million.  This valuation was estimated using a binomial option pricing method.  Key assumptions used by the Company's outside valuation consultants in valuing the AutoUSA Note include a market yield of 1.6% and stock price volatility of 65.0%.  As the AutoUSA 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 AutoUSA Note is to be paid in full on January 31, 2019.  At any time after January 31, 2017, the holder of the AutoUSA Note may convert all or any part, but at least 30,600 shares, of the then outstanding and unpaid principal of the AutoUSA Note into fully paid shares of the Company's common stock at a conversion price of $16.34 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The right to convert the AutoUSA 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 AutoUSA 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.

The warrant to purchase 69,930 shares of Company common stock issued in connection with the acquisition (“AutoUSA Warrant”) was valued as of the AutoUSA Acquisition Date at $7.35 per share for a total value of $0.5 million.  The Company used an option pricing model to determine the value of the AutoUSA Warrant.  Key assumptions used by the Company's outside valuation consultants in valuing the AutoUSA Warrant are as follows: risk-free rate of 1.6%, stock price volatility of 65.0% and a term of 5.0 years.  The AutoUSA Warrant was valued based on long-term stock price volatilities of the Company.  The exercise price of the AutoUSA Warrant is $14.30 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The AutoUSA Warrant becomes exercisable on the third anniversary of the issuance date and expires on the fifth anniversary of the issuance date.  The right to exercise the AutoUSA Warrant is accelerated in the event of a change in control of the Company.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of March 31, 2015. 

	(in thousands)
Net identifiable assets acquired	$	758
Definite-lived intangible assets acquired		3,750
Goodwill		7,346
	$	11,854

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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 acquired intangible assets include the following:

	Valuation Method	Estimated Fair Value		Estimated Useful Life (1)
		(in thousands)		(years)
Non-compete agreement	Discounted cash flow (2)	$	90		2
Customer relationships	Excess of earnings (3)		2,660		5
Trademark/trade names	Relief from Royalty (4)		1,000		5
Total purchased intangible assets		$	3,750

(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 are recognized over the shorter of the respective lives of the agreement or the period of time the assets are expected to contribute to future cash flows.
(2)	The non-compete agreement fair value was derived by calculating the difference between the present value of the Company's forecasted cash flows with the agreement in place and without the agreement in place.
(3)	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.
(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.

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 preliminary 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 is attributable primarily to expected synergies and the assembled workforce of AutoUSA.  The full amount is expected to be amortizable for income tax purposes.  

The Company incurred approximately $1.1 million of acquisition-related costs related to AutoUSA in 2014, all of which were expensed.

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5.  Computation of Basic and Diluted Net Earnings Per Share

Basic net earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted net earnings 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 and common shares issuable upon conversion of convertible notes.  The following are the share amounts utilized to compute the basic and diluted net earnings per share for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
	2015		2014
Basic Shares		8,880,450		8,928,400
Weighted average dilutive securities		2,216,293		1,353,938
Dilutive Shares		11,096,743		10,282,338

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”) described below.  For the three months ended March 31, 2014, weighted average dilutive securities included dilutive options and the Cyber warrant. 

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.  For the three months ended March 31, 2014, 2.1 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 Company’s 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 Company’s sole discretion.  The impact of repurchases on the Company’s Tax Benefit Preservation Plan and on the Company’s 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 quarters ended March 31, 2015 and March 31, 2014.

Warrants.  On September 17, 2010 (“Cyber Acquisition Date”), the Company acquired substantially all of the assets of Cyber.   In connection with the acquisition of Cyber, the Company issued to the sellers a warrant to purchase 400,000 shares of Company common stock (“Cyber Warrant”). The Cyber Warrant was valued at $3.15 per share on the Cyber Acquisition Date using an option pricing model with the following key assumptions: risk-free rate of 2.3%, stock price volatility of 77.5% and a term of 8.04 years.  The Cyber Warrant was valued based on historical stock price volatilities of the Company and comparable public companies as of the Cyber Acquisition Date.  The exercise price of the Cyber Warrant is $4.65 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The Cyber Warrant became exercisable on September 16, 2013 and expires on the eighth anniversary of the issuance date.   The Cyber Warrant had not been exercised as of March 31, 2015.

The AutoUSA Warrant issued in connection with the acquisition described in Note 4 was valued at $7.35 per share for a total value of $0.5 million.  The Company used an option pricing model to determine the value of the AutoUSA Warrant.  Key assumptions used in valuing the AutoUSA Warrant are as follows: risk-free rate of 1.6%, stock price volatility of 65.0% and a term of 5.0 years.  The AutoUSA Warrant was valued based on long-term stock price volatilities of the Company.  The exercise price of the AutoUSA Warrant is $14.30 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The AutoUSA Warrant becomes exercisable on the third anniversary of the issuance date and expires on the fifth anniversary of the issuance date.  The right to exercise the AutoUSA Warrant is accelerated in the event of a change in control of the Company.

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6. Share-Based Compensation

Share-based compensation expense is included in costs and expenses in the accompanying Unaudited Consolidated Condensed Statements of Income and Comprehensive Income as follows:

	Three Months Ended March 31,
	2015		2014
	(in thousands)
Share-based compensation expense:
Cost of revenues	$	25	$	17
Sales and marketing		140		109
Technology support		74		57
General and administrative [1]		417		104
Share-based compensation costs		656		287
Amount capitalized to internal use software		3		1
Total share-based compensation costs	$	653	$	286

[1] Certain awards were modified in accordance with Curtis DeWalt’s, the Company's former Chief Financial Officer, 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, 2015 and 2014.  

	Three Months Ended March 31,
	2015		2014
Number of service-based options granted		315,050		401,750
Weighted average grant date fair value	$	4.65	$	7.46
Weighted average exercise price	$	10.22	$	16.47

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 employee’s continued employment with the Company during the vesting period.

Performance-based Options.  During the three months ended March 31, 2014, the Company granted 40,000 performance-based inducement stock options in connection with the acquisition of AutoUSA (“2014 AutoUSA Inducement Options”), with a weighted average grant date fair value of $6.08, using a Black-Scholes option pricing model, and weighted average exercise price of $13.62.  The 2014 AutoUSA Inducement Options are subject to two vesting requirements and conditions: (i) level of achievement of performance goals based on revenue and gross margin of the Company’s retail dealer services group and (ii) service based vesting.  Based on the performance of the Company’s retail dealer services group for 2014, all 40,000 of the 2014 AutoUSA Inducement Options were awarded under the performance vesting conditions, with one-third vesting on January 21, 2015 and the remainder vesting ratably over twenty-four months from that date thereafter.  No performance options were granted during the three months ended March 31, 2015.

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Market Condition Options.  In 2009, the Company granted 213,650 stock options to substantially all employees with an exercise price of $1.75 and grant date fair value of $0.97, using a Black-Scholes option pricing model.  One-third of these options cliff vested on the first anniversary following the grant date and the remaining two-thirds vesting ratably over twenty-four months thereafter.  In addition, the remaining two-thirds of the awards were subject to satisfaction of market price conditions for the Company’s common stock, which conditions have been satisfied. During the three months ended March 31, 2015, no market condition options were exercised.  During the three months ended March 31, 2014, 10,793 of these market condition stock options were exercised, respectively.  

Stock option exercises.  The following stock options were exercised (inclusive of the market condition options exercised above) for the three months ended March 31, 2015 and 2014:  

	Three Months Ended March 31,
	2015		2014
Number of stock options exercised		253		73,603
Weighted average exercise price	$	7.17	$	4.25

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,
	2015			2014
Dividend yield		—			—
Volatility		56	%		56	%
Risk-free interest rate		1.2	%		1.3	%
Expected life (years)		4.4			4.3

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7. Investments

 The Company’s investments at March 31, 2015 and December 31, 2014 consisted primarily of investments in SaleMove, Inc., a Delaware corporation (“SaleMove”), and privately-held AutoWeb, Inc., a Delaware corporation (“AutoWeb”).  The investments in SaleMove and AutoWeb are recorded at cost.  Although there is no established market for these investments, the Company evaluated the investments for impairment by comparing them to an estimated fair value and determined that no impairment existed.  To determine the estimated fair value for the investment in SaleMove, the Company analyzed the discounted future cash flows of Autobytel’s sales of SaleMove products.  To determine the estimated fair value for the investment in AutoWeb, the Company analyzed participants in the Series B round of financing in November 2014.  These fair value measurements are based on significant inputs not observable in the market and represent a Level 3 measurement.

 The following table presents the Company’s activity for 2015:

	Note
	receivable-
Description	current		Investments
	(in thousands)
Balance at December 31, 2014	$	150	$	3,880
Total gains or (losses) (realized or unrealized)		—		—
Purchases		—		—
Sales		—		—
Transfers		—		—
Balance at March 31, 2015	$	150	$	3,880

 In September 2013 the Company entered into a Contribution Agreement with AutoWeb pursuant to 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 18, 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., (i) 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 (1) the rights of the Series A Preferred Stock are changed, or (2) the Series A Preferred Stock is exchanged for cash, securities or property; or (ii) 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 November 2014, the Company entered into a Series B Preferred Stock Purchase Agreement with AutoWeb pursuant to which we paid $880,394 in exchange for 1,076 shares of AutoWeb Series B Preferred Stock, $0.01 par value per share.  The investments in AutoWeb are recorded at cost because the Company does not have significant influence over AutoWeb.

-11-

 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%nd is due and payable in full on September 1, 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.  The $150,000 note is classified as an other current asset on the consolidated balance sheet as of March 31, 2015.  In October 2013, the Company entered into an agreement with SaleMove to become the exclusive provider to the automotive industry of SaleMove’s technology for enhancing communications with consumers.  SaleMove’s 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 SaleMove’s fifty percent share of various product development, marketing and sales costs and expenses, with the advanced funds to be recovered by the Company from SaleMove’s share of sales revenue.  As of December 31, 2014 and 2013, $1.0 million and $0.2 million had been advanced to SaleMove, respectively.  The balance of the advances on the consolidated balance sheet as of March 31, 2015 is $980,000 and is classified as an other long-term asset.  In November 2014, the Company invested an additional $400,000 in SaleMove in the form of a convertible promissory note.  The convertible promissory note accrues interest at an annual rate of 6.0% and is due and payable in full on November 18, 2016 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.  The $400,000 note is classified as an investment on the consolidated balance sheet as of March 31, 2015.

 In December 2014, the Company entered into a Series Seed Preferred Stock Purchase Agreement with GoMoto, Inc. (“GoMoto”) in which Autobytel paid $100,000 for 317,460 shares of Series Seed Preferred Stock, $0.001 par value per share.  The investment in GoMoto was recorded at cost because the Company does not have significant influence over GoMoto.

8. Selected Balance Sheet Accounts

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

	March 31,			December 31,
	2015			2014
	(in thousands)
Computer software and hardware and capitalized internal use software	$	13,290		$	12,990
Furniture and equipment		1,275			1,271
Leasehold improvements		957			957
		15,522			15,218
Less – Accumulated depreciation and amortization		(13,501	)		(13,314	)
Property and equipment, net	$	2,021		$	1,904

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.

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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, Mercedes Benz, Smart, Subaru, Toyota, Volkswagen and Volvo), General Motors and Ford Direct. During the first three months of 2015, approximately 30% of the Company’s total revenues were derived from these three customers, and approximately 44%, or $8.6 million of gross accounts receivables, related to these three customers at March 31, 2015.

During the first three months of 2014, approximately 31% of the Company’s total revenues were derived from General Motors, Urban Science Applications and Kia Corporation, and approximately 35%, or $5.7 million of gross accounts receivables, related to these three customers at March 31, 2014.

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 and AutoUSA, the Company identified $9.7 million of intangible assets.  The Company’s intangible assets will be amortized over the following estimated useful lives:

		March 31, 2015							December 31, 2014
Intangible Asset	Estimated Useful Life	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization				Net
			(in thousands)
Trademarks/trade names/licenses/domains	5 years	$	6,574	$	(5,692	)	$	882	$	6,574	$		(5,594	)	$	980
Software and publications	3 years		1,300		(1,300	)		—		1,300			(1,300	)		—
Customer relationships	2-5 years		5,074		(2,898	)		2,176		5,074			(2,696	)		2,378
Employment/non- compete agreements	5 years		700		(541	)		159		700			(500	)		200
Developed technology	5 years		820		(246	)		574		820			(205	)		615
		$	14,468	$	(10,676	)	$	3,791	$	14,468		$	(10,295	)	$	4,173

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

Year	Amortization Expense
	(in thousands)
2015	$	1,012
2016		942
2017		926
2018		879
2019		32
	$	3,791

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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 March 31, 2015 and December 31, 2014.

As of March 31, 2015, goodwill consisted of the following (in thousands):

Goodwill as of December 31, 2014	$	20,948
Current year activity		—
Goodwill as of March 31, 2015	$	20,948

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

	March 31,		December 31,
	2015		2014
	(in thousands)
Compensation and related costs	$	1,827	$	5,149
Professional fees and other accrued expenses		3,964		3,383
Amounts due to customers		291		267
Other current liabilities		558		696
Total accrued expenses and other current liabilities	$	6,640	$	9,495

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Convertible notes payable.  In connection with the acquisition of Cyber, the Company issued a convertible subordinated promissory note for $5.0 million (“Cyber Convertible Note”) to the sellers.  The fair value of the Cyber Convertible Note as of the Cyber Acquisition Date was $5.9 million.  This valuation was estimated using a binomial option pricing method.  Key assumptions used by the Company's outside valuation consultants in valuing the Cyber Convertible Note included a market yield of 15.0% and stock price volatility of 77.5%.  As the Cyber 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 Cyber Convertible Note is to be paid in full on September 30, 2015.  At any time after September 30, 2013, the holders of the Cyber Convertible Note may convert all or any part, but in 40,000 minimum share increments, of the then outstanding and unpaid principal of the Cyber 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 Cyber 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 Cyber 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.

In connection with the acquisition of AutoUSA, the Company issued the AutoUSA Note to the Seller.  The fair value of the AutoUSA Note as of the AutoUSA Acquisition Date was $1.3 million.  This valuation was estimated using a binomial option pricing method.  Key assumptions used by the Company's outside valuation consultants in valuing the AutoUSA Note include a market yield of 1.6% and stock price volatility of 65.0%.  As the AutoUSA 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 AutoUSA Note is to be paid in full on January 31, 2019.  At any time after January 31, 2017, the holder of the AutoUSA Note may convert all or any part, but at least 30,600 shares, of the then outstanding and unpaid principal of the AutoUSA Note into fully paid shares of the Company's common stock at a conversion price of $16.34 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The right to convert the AutoUSA 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 AutoUSA 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.

9. Credit Facility

On January 13, 2014, the Company entered into a Credit Facility Amendment with Union Bank, amending the Company's existing Loan Agreement with Union Bank initially entered into on February 26, 2013, and amended on September 10, 2013 (the existing Loan Agreement, as amended to date, is referred to herein collectively as the "Credit Facility Agreement"). The Credit Facility Amendment provides for (i) a new $9.0 million term loan (“Term Loan”); and (ii) amendments to the Company’s existing $8.0 million revolving line of credit (“Revolving Loan”).

The Term Loan is amortized over a period of four years, with fixed quarterly principal payments of $562,500. Borrowings under the Term Loan or under the Revolving Loan 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 both the Term Loan and the Revolving Loan adjust (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. The Company pays a commitment fee of 0.10% per year on the unused portion of the Revolving Loan payable quarterly in arrears. Borrowings under the Term Loan and the Revolving Loan 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. The Term Loan matures on December 31, 2017, and the maturity date of the Revolving Loan is March 31, 2017. Borrowings under the Revolving Loan may be used as a source to finance capital expenditures, acquisitions and stock buybacks and for other general corporate purposes. Borrowing under the Term Loan was limited to use for the acquisition of AutoUSA, and the Company drew down the entire $9.0 million of the Term Loan, together with $1.0 million under the Revolving Loan, in financing this acquisition.  The outstanding balances of the Term Loan and Revolving Loan as of March 31, 2015 were $6.2 million and $5.25 million, respectively.

10. 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.

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 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.

11. 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 in accordance with the estimated annual rate, plus 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 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 Company’s effective tax rate for the three months ended March 31, 2015 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 $0.6 million as of March 31, 2015, of which $0.1 million would impact the effective tax rate if recognized.

 The total balance of accrued interest and penalties related to state uncertain tax positions was $12,000 and $28,000 as of March 31, 2015 and December 31, 2014, 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 Company’s condensed consolidated balance sheets.  There were no material interest or penalties included in income tax expense for the three months ended March 31, 2015 and March 31, 2014.

The Company is subject to taxation in the U.S. and in various state jurisdictions.  Due to expired statutes of limitation, the Company’s federal income tax returns for years prior to calendar year 2011 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 2010 are no longer subject to examination.  The Company is currently under examination by the State of California for the years 2011 and 2012, 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.

12. Subsequent Event

 On April 27, 2015, Auto Holdings Ltd., a British Virgin Islands business company (“Auto Holdings”), acquired from Atrop, Inc., a Florida corporation (formerly Autotropolis, Inc.) (“Atrop”), and IBBF Ventures, Inc., a Florida corporation (formerly Cyber Ventures, Inc.) (“IBBF”), the Cyber Convertible Note discussed in Note 8 and the Cyber Warrant discussed in Note 5.

 Upon acquisition of the Cyber Convertible Note and the Cyber Warrant, Auto Holdings converted the entire principal balance of the Cyber Convertible Note at its conversion price of $4.65 per share and fully exercised the Cyber Warrant at its exercise price of $4.65 per share.  Upon conversion of the Cyber Convertible Note and exercise of the Cyber Warrant, the Company issued to Auto Holdings, 1,475,268 shares of the Company’s common stock.  As a result of the conversion and exercise of the Cyber Convertible Note and Cyber Warrant on April 27, 2015, Auto Holdings owns approximately 14.25% of Autobytel’s current issued and outstanding shares.

 Autobytel received approximately $1.9 million in cash as a result of the exercise of the Cyber Warrant.  The Company also removed the liability from the consolidated balance sheet related to the Cyber Convertible Note and increased stockholders’ equity related to the Cyber Convertible Note and receipt of cash from exercise of the Cyber Warrant.

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand a company’s future prospects and make informed investment decisions. This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Words such as “anticipates,” “estimates,” “expects,” “projects,” “intends,” “plans,” “believes,” “will” and words of similar substance used in connection with any discussion of future operations or financial performance identify forward-looking statements. In particular, statements regarding expectations and opportunities, industry trends, new product expectations and capabilities, and our outlook regarding our performance and growth are forward-looking statements. This Quarterly Report on Form 10-Q also contains statements regarding plans, goals and objectives. There is no assurance that we will be able to carry out our plans or achieve our goals and objectives or that we will be able to do so successfully on a profitable basis. These forward-looking statements are just predictions and involve risks and uncertainties, many of which are beyond our control, and actual results may differ materially from these statements. Factors that could cause actual results to differ materially from those reflected in forward-looking statements include, but are not limited to, those discussed in this Item 2 and under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014 (“2014 Form 10-K”). Investors are urged not to place undue reliance on forward-looking statements. Forward-looking statements speak only as of the date on which they were made. Except as may be required by law, we do not undertake any obligation, and expressly disclaim any obligation, to update or alter any forward-looking statements, whether as a result of new information, future events or otherwise. All forward-looking statements contained herein are qualified in their entirety by the foregoing cautionary statements.

You should read the following discussion of our results of operations and financial condition in conjunction with our unaudited consolidated condensed financial statements and related notes included in Part I, Item 1 of this Quarterly Report on Form 10-Q and our audited consolidated financial statements and the notes thereto in the 2014 Form 10-K.

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

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

Basis of Presentation

The accompanying unaudited consolidated condensed financial statements presented herein are presented on the same basis as the 2014 Form 10-K.  We have made disclosures in accordance with U.S. generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included.  The statements of income and comprehensive income and cash flows for the periods ended March 31, 2015 and 2014 are not necessarily indicative of the results of operations or cash flows expected for the year or any other period.  The unaudited consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in the 2014 Form 10-K.

On January 13, 2014 (“AutoUSA Acquisition Date”), Autobytel and AutoNation, Inc., a Delaware corporation (“Seller Parent”), and AutoNationDirect.com, Inc., a Delaware corporation and subsidiary of Seller Parent (“Seller”), entered into and consummated a Membership Interest Purchase Agreement in which Autobytel acquired all of the issued and outstanding membership interests in AutoUSA, LLC, a Delaware limited liability company and a subsidiary of Seller (“AutoUSA”).  AutoUSA was a (i) Lead aggregator purchasing internet-generated automotive consumer Leads from third parties and reselling those consumer Leads to automotive vehicle Dealers; and (ii) reseller of third party products and services to automotive Dealers.  

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Overview

We are an automotive marketing services company that assists automotive retail dealers (“Dealers”) and automotive manufacturers (“Manufacturers”) market and sell new and used vehicles to consumers through our programs for online purchase request referrals (“Leads”), Dealer marketing products and services, online advertising programs and mobile products.  Our consumer-facing automotive websites (“Company Websites”), including our flagship website Autobytel.com®, provide consumers with information and tools to aid them with their automotive purchase decisions and the ability to submit inquiries requesting Dealers to contact the consumers regarding purchasing or leasing vehicles (“Vehicle Leads”).  For consumers who may not be able to secure loans through conventional lending sources, our Company Websites provide these consumers the ability to submit inquiries requesting Dealers or other lenders that may offer vehicle financing to these consumers to contact the consumers regarding vehicle financing (“Finance Leads”).  The Company’s mission for consumers is to be “Your Lifetime Automotive Advisor"® by engaging consumers throughout the entire lifecycle of their automotive needs.

 Lead quality is measured by the conversion of Leads to actual vehicle sales.  Leads are internally-generated from our Company Websites (“Internally-Generated Leads”) or acquired from third parties (“Non-Internally-Generated Leads”) that generate Leads from their websites (“Non-Company Websites”).  We measure Lead quality by the conversion of Leads to actual vehicle sales, which we refer to as the “buy rate.” Buy rate is the percentage of the consumers submitting Leads that we delivered to our customers represented by the number of these consumers who purchased vehicles within ninety days of the date of the Lead submission.  We rely on detailed feedback from Manufacturers and wholesale customers to confirm the performance of our Leads.  In addition, in 2011 we began using R.L. Polk & Co., later acquired by IHS, to evaluate the performance quality of all Leads that we send to our customers.  Our Manufacturers, wholesale customers and IHS each match the Leads we deliver to our customers against vehicle sales or registration data to provide us with information about vehicle purchases by the consumers who submitted Leads that we delivered to our customers. This information allows us to estimate the buy rates for the consumers who submitted our Internally-Generated Leads and our Non-Internally Generated Leads and based on these estimates, to estimate an industry average buy rate. Based on the most current IHS data (which is provided to us only on an aggregated non-personally identifiable basis), we have estimated that, on average, consumers who submit Internally-Generated Leads that we deliver to our customers have an estimated buy rate of approximately 18%, which is three times our internal estimate of the industry average buy rate.  Buy rates that individual Dealers may achieve can be impacted by factors such as the strength of processes and procedures within the dealership to manage communications and follow up with consumers.

 In addition, we report a number of key metrics to our customers, allowing them to gain a better understanding of the revenue opportunities that they may realize from acquiring Leads from us.  We can now optimize the mix of Leads we deliver to our Dealers based on multiple sources of quality measurements. Also, by reporting the buying behavior of potential customers, the findings also can help shape improvements to online Lead management; online advertising and dealership sales process training.  By providing actionable data, we place considerable intelligence in the hands of our customers.

For the three months ended March 31, 2015, our business, results of operations and financial condition were affected, and may continue to be affected in the future, by general economic and market factors, conditions in the automotive industry, the market for Leads and the market for advertising services, including, but not limited to, the following:

● The effect of unemployment on the number of vehicle purchasers;

● Pricing and purchase incentives for vehicles;

● The expectation that consumers will be purchasing fewer vehicles overall during their lifetime as a result of better quality vehicles and longer warranties;

● The impact of gasoline prices on demand for the number and types of vehicles;

● Increases or decreases in the number of retail Dealers or in the number of Manufacturers and other wholesale customers in our customer base;

● Volatility in spending by Manufacturers and others in their marketing budgets and allocations;

● The effect of changes in search engine algorithms and methodologies on our Lead generation and website advertising activities and margins; and

● The competitive impact of consolidation in the online automotive referral industry.

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Results of Operations

Three Months Ended March 31, 2015 Compared to the Three Months Ended March 31, 2014

 The following table sets forth certain income statement data for the three-month periods ended March 31, 2015 and 2014 (certain amounts may not calculate due to rounding):

	2015			% of total revenues			2014			% of total revenues			$ Change			% Change
	(Dollar amounts in thousands)
Revenues:
Lead fees	$	24,167			92	%	$	26,013			96	%	$	(1,846	)		(7	)%
Advertising		1,600			6			673			3			927			138
Other revenues		476			2			273			1			203			74
Total revenues		26,243			100			26,959			100			(716	)		(3	)
Cost of revenues		16,145			62			16,874			63			(729	)		(4	)
Gross profit		10,098			38			10,085			37			13			—
Operating expenses:
Sales and marketing		3,584			14			4,017			15			(433	)		(11	)
Technology support		1,831			7			1,924			7			(93	)		(5	)
General and administrative		3,046			11			3,022			11			24			1
Depreciation and amortization		485			2			434			2			51			12
Litigation settlements		(25	)		—			(68	)		—			43			(63	)
Total operating expenses		8,921			34			9,329			35			(408	)		(4	)
Operating income		1,177			4			756			2			421			56
Interest and other income (expense), net		(147	)		—			(166	)		(1	)		19			(11	)
Income before income tax provision		1,030			4			590			1			440			75
Income tax provision		257			1			220			—			37			17
Net income	$	773			3	%	$	370			1	%	$	403			109	%

-19-

 Leads.  Purchase request revenues decreased $1.8 million, or 7%, in the first quarter of 2015 compared to the first quarter of 2014 primarily due to a decrease in Lead volume from retail new cars as a result of Dealer churn related to the AutoUSA acquisition.

 Advertising. Advertising revenues increased $0.9 million, or 138%, in the first quarter of 2015 compared to the first quarter of 2014 as a result of increased website traffic and monetization of traffic through our relationship with Jumpstart Automotive Group, as well as increased AutoWeb click revenue.

 Other Revenues.  Other revenues increased $0.2 million in the first quarter of 2015 compared to the first quarter of 2014 due to increased sales of the Company’s mobile products and an increase in revenue associated with SaleMove products.

 Cost of Revenues.  Cost of revenues consists of purchase request and traffic acquisition costs and other cost of revenues. Purchase request and traffic acquisition costs consist of payments made to our purchase request providers, including internet portals and on-line automotive information providers. Other cost of revenues consists of search engine marketing (“SEM”) and fees paid to third parties for data and content, including search engine optimization (“SEO”) activity, included on our websites, connectivity costs, development costs related to our websites, compensation related expense and technology license fees, server equipment depreciation and technology amortization directly related to the Company’s websites. SEM, sometimes referred to as paid search marketing, is the practice of bidding on keywords on search engines to drive traffic to a website.

 Cost of revenues decreased $0.7 million, or 4%, in the first quarter of 2015 compared to the first quarter of 2014 primarily due to a corresponding decrease in Lead volume.

 Sales and Marketing. Sales and marketing expense includes costs for developing our brand equity, personnel costs and other costs associated with Dealer sales, website advertising, Dealer support and bad debt expense. Sales and marketing expense in the first quarter of 2015 decreased by $0.4 million, or 11%, compared to the first quarter of 2014 due principally to reduced headcount related expenses.

 Technology Support. Technology support expense includes compensation, benefits, software licenses and other direct costs incurred by the Company to enhance, manage, maintain, support, monitor and operate the Company’s websites and related technologies, and to operate the Company’s internal technology infrastructure. Technology support expense in the first quarter of 2015 decreased by $0.1 million, or 5%, compared to the first quarter of 2014 due to reduced headcount related expenses.

 General and Administrative. General and administrative expense consists of executive, financial and legal personnel expenses and costs related to being a public company. General and administrative expense in the first quarter of 2015 remained relatively flat at $3.0 million from the first quarter of 2014.

 Depreciation and amortization.  Depreciation and amortization expense in the first quarter of 2015 increased $51,000 to $0.5 million compared to the first quarter of 2014 primarily due to the addition of intangible assets related to the acquisition of AutoUSA.

 Litigation settlements.  Payments primarily from 2010 settlements of patent infringement claims against third parties relating to the third parties’ methods of Lead delivery for the first quarter of 2015 were $25,000.

 Interest and other income (expense), net.  Interest and other expense was $0.1 million for the first quarter of 2015 compared to $0.2 million for thefirst quarter of 2014.  

 Income taxes. Income tax expense was $0.3 million in the first quarter of 2015 compared to income tax expense of $0.2 million in the first quarter of 2014.  Income tax expense for the first quarter of 2015 and 2014 differed from the federal statutory rate primarily due to unrecognized tax benefits, state income taxes and permanent non-deductible tax items.

-20-

Liquidity and Capital Resources

 The table below sets forth a summary of our cash flows for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
	2015			2014
	(in thousands)
Net cash (used in) provided by operating activities	$	(530	)	$	875
Net cash used in investing activities		(338	)		(10,300	)
Net cash (used in) provided by financing activities		(557	)		9,752

 Our principal sources of liquidity are our cash and cash equivalents balances.  Our cash and cash equivalents totaled $19.3 million as of March 31, 2015 compared to cash and cash equivalents of $20.7 million as of December 31, 2014.

 On June 7, 2012, we announced that the board of directors had authorized the Company to repurchase up to $2.0 million of Company common stock, and on September 17, 2014 the we 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.  We 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.  We funded repurchases and anticipates that we would fund future repurchases through the use of available cash. The repurchase authorization does not obligate us to repurchase any particular number of shares.  The timing and actual number of repurchases of additional shares, if any, under our 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 our sole discretion.  The impact of repurchases on our Tax Benefit Preservation Plan and on our use of net operating loss carryovers and other tax attributes if we were to experience an “ownership change,” as defined in Section 382 of the Internal Revenue Code is also a factor that we consider in connection with share repurchases.  No shares were repurchased in the quarters ended March 31, 2015 and March 31, 2014.

Credit Facility and Term Loan.  On January 13, 2014, the Company entered into a Credit Facility Amendment with Union Bank, amending the Company's existing Loan Agreement with Union Bank initially entered into on February 26, 2013, and amended on September 10, 2013 (the existing Loan Agreement, as amended to date, is referred to herein collectively as the "Credit Facility Agreement"). The Credit Facility Amendment provides for (i) a new $9.0 million term loan (“Term Loan”); and (ii) amendments to the Company’s existing $8.0 million revolving line of credit (“Revolving Loan”).

The Term Loan is amortized over a period of four years, with fixed quarterly principal payments of $562,500. Borrowings under the Term Loan or under the Revolving Loan bear interest at either (i) the bank's Reference Rate (prime rate) minus 0.50% or (ii) the LIBOR plus 2.50% (an increase under the existing Revolving Loan from 1.50%), at the option of the Company. Interest under both the Term Loan and the Revolving Loan adjust (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. The Company also pays a commitment fee of 0.10% per year on the unused portion of the Revolving Loan payable quarterly in arrears. Borrowings under the Term Loan and the Revolving Loan 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. The Term Loan matures December 31, 2017, and the maturity date of the Revolving Loan is March 31, 2017. Borrowings under the Revolving Loan may be used as a source to finance capital expenditures, acquisitions and stock buybacks and for other general corporate purposes. Borrowing under the Term Loan was limited to use for the acquisition of AutoUSA, and the Company drew down the entire $9.0 million of the Term Loan, together with $1.0 million under the Revolving Loan, in financing this acquisition.  The outstanding balances of the Term Loan and Revolving Loan as of March 31, 2015 were $6.2 million and $5.25 million, respectively.

-21-

Net Cash (Used in) Provided by Operating Activities.  Net cash used in operating activities in the three months ended March 31, 2015 of $0.5 million resulted primarily from net income of $0.8 million, as adjusted for non-cash charges to earnings, in addition to cash used to reduce accrued liabilities of $2.9 million primarily related to the payment of annual incentive compensation amounts and severance accrued in 2014 and paid in the first three months of 2015 in addition to a $0.7 million increase in our accounts receivable balance related to the timing of payments received from our customers.

 Net cash provided by operating activities in the three months ended March 31, 2014 of $0.9 million resulted primarily from net income of $0.4 million, as adjusted for non-cash charges to earnings, in addition to cash used to reduce accrued liabilities of $1.1 million primarily related to the payment of annual incentive compensation amounts and severance accrued in 2013 and paid in the first three months of 2014 offset by a $0.8 million decrease in our accounts receivable balance related to the timing of payments received from our customers and a $0.2 million increase in our accounts payable balance related to the timing of payments made.

Net Cash Used in Investing Activities.  Net cash used in investing activities was $0.3 million in the three months ended March 31, 2015 which related to purchases of property and equipment.

Net cash used in investing activities was $10.3 million in the three months ended March 31, 2014 and primarily related to the acquisition of AutoUSA.

Net Cash (Used in) Provided by Financing Activities.  Net cash used in financing activities primarily related to payments of $0.6 million made against the Term Loan borrowings in the first three months ended March 31, 2015.

Stock options for 73,603 shares of stock were exercised in the three months ended March 31, 2014 resulting in $0.3 million cash inflow.  We also borrowed $9.0 million and $1.0 million against the Term Loan and Revolving Loan, respectively, to fund the purchase of AutoUSA in the three months ended March 31, 2014.  Payments of $0.6 million were made against the Term Loan borrowings in the three months ended March 31, 2014.

Off-Balance Sheet Arrangements

At March 31, 2015, we had no off-balance sheet arrangements as defined in Regulation S-K, Item 303(a)(4)(D)(ii).

-22-

Item 3.  Quantitative and Qualitative Disclosures about Market Risk

In the ordinary course of business, we are exposed to various market risk factors, including fluctuations in interest rates and changes in general economic conditions.  For the three months ended March 31, 2015 there were no material changes in the information required to be provided under Item 305 of Regulation S-K from the information disclosed in Item 7A of the 2014 Form 10-K.

 Item 4.  Controls and Procedures

As of the end of the period covered by this Quarterly Report on Form 10-Q, we carried out an evaluation under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rule 13a-15 under the Securities Exchange Act of 1934, as amended (“Exchange Act”). Based on the evaluation, our Chief Executive Officer and our Chief Financial Officer believe that, as of the end of the period covered by this Quarterly Report on Form  10-Q, our disclosure controls and procedures were effective at ensuring that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.

As of the end of the period covered by this Quarterly Report on Form 10-Q, there were no changes in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that have materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

Our management, including our Chief Executive Officer and our Chief Financial Officer, does not expect that our disclosure controls and internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls may be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control.

The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions; over time, a control may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

-23-

PART II. OTHER INFORMATION

Item 1A.  Risk Factors

The following factors, which supplement or update the risk factors set forth in Part I, Item 1A, “Risk Factors” of our 2014 Form 10-K, may affect our future financial condition and results of operations.  The risks described below are not the only risks we face.  In addition to the risks set forth in the 2014 Form 10-K, as supplemented or superseded by the risk factors set forth below, additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business.

If we lose our key personnel or are unable to attract, train and retain additional highly qualified sales, marketing, managerial and technical personnel, our business may suffer.

Our future success depends on our ability to identify, hire, train and retain highly qualified sales, marketing, managerial and technical personnel.  In addition, as we introduce new services we may need to hire additional personnel. We may not be able to attract, assimilate or retain such personnel in the future. The inability to attract and retain the necessary managerial, technical, sales and marketing personnel could have a material adverse effect on our business, results of operations and financial condition.

Our business and operations are substantially dependent on the performance of our executive officers and key employees.  Each of these executive officers would be difficult to replace.  There is no guarantee that these or any of our other executive officers and key employees will remain employed with us. In some cases, we may be required to severance benefits. The loss of the services of one or more of our executive officers or key employees could have a material adverse effect on our business, results of operations and financial condition.

-24-

Item 6.  Exhibits

2.1‡	Asset Purchase Agreement dated as of September 30, 2013 by and among Autobytel Inc., a Delaware corporation, Advanced Mobile, LLC, a Delaware limited liability company, and Advanced Mobile Solutions Worldwide, Inc., a Delaware corporation, which is incorporated herein by reference to Exhibit 99.1 to the Current Report on Form 8-K filed with the SEC on October 3, 2013 (SEC File No. 001-34761)
2.2‡	Membership Interest Purchase Agreement dated as of January 13, 2014 by and among Autobytel Inc., a Delaware corporation, AutoNation, Inc., a Delaware corporation, and AutoNationDirect.com, Inc., a Delaware corporation, which is incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on January 17, 2014 (SEC File No. 001-34761)
3.1	Fifth Amended and Restated Certificate of Incorporation of Autobytel Inc. (formerly Autobytel.com Inc.) certified by the Secretary of State of Delaware (filed December 14, 1998), as amended by Certificate of Amendment dated March 1, 1999, Second Certificate of Amendment of the Fifth Amended and Restated Certificate of Incorporation of Autobytel dated July 22, 1999, Third Certificate of Amendment of the Fifth Amended and Restated Certificate of Incorporation of Autobytel dated August 14, 2001, Certificate of Designation of Series A Junior Participating Preferred Stock dated July 30, 2004, and Amended Certificate of Designation of Series A Junior Participating Preferred Stock dated April 24, 2009, which are incorporated herein by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 filed with the SEC on April 24, 2009 (SEC File No. 000-22239); Fourth Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of Autobytel dated July 10, 2012, which is incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on July 12, 2012; and Fifth Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of Autobytel dated July 3, 2013, which is incorporated herein by reference to Exhibit 3.3 to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 filed with the SEC on August 1, 2013 (SEC File No. 001-34761)
3.2	Fourth Amended and Restated Bylaws of Autobytel dated October 30, 2014, which is incorporated herein by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014 filed with the SEC on November 5, 2014 (SEC File No. 001-34761)
4.1	Form of Common Stock Certificate of Autobytel, which is incorporated herein by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001 filed with the SEC on November 14, 2001 (SEC File No. 000-22239)
4.2	Tax Benefit Preservation Plan dated as of May 26, 2010 between Autobytel and Computershare Trust Company, N.A., as rights agent, together with the following exhibits thereto: Exhibit A – Form of Right Certificate; and Exhibit B – Summary of Rights to Purchase Shares of Preferred Stock of Autobytel Inc., which is incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on June 2, 2010 (SEC File No. 000-22239), as amended by Amendment No. 1 to Tax Benefit Preservation Plan dated as of April 14, 2014, between Autobytel Inc. and Computershare Trust Company, N.A., as rights agent, which is incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on April 16, 2014 (SEC File No. 001-34761)
4.3	Certificate of Adjustment Under Section 11(m) of the Tax Benefit Preservation Plan dated July 12, 2012, which is incorporated by reference to Exhibit 4.3 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012 filed with the SEC on November 8, 2012 (SEC File No. 001-34761)
31.1*	Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer
31.2*	Rule 13a-14(a)/15d-14(a) Certification by Principal Financial Officer
32.1*	Section 1350 Certification by Principal Executive Officer and Principal Financial Officer
101.INS††	XBRL Instance Document
101.SCH††	XBRL Taxonomy Extension Schema Document
101.CAL††	XBRL Taxonomy Calculation Linkbase Document
101.DEF††	XBRL Taxonomy Extension Definition Document
101.LAB††	XBRL Taxonomy Label Linkbase Document
101.PRE††	XBRL Taxonomy Presentation Linkbase Document

*          Filed or furnished herewith.

‡          Certain schedules in this Exhibit have been omitted in accordance with Item 601(b)(2) of Regulation S-K.  Autobytel will furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request; provided, however, that Autobytel may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or exhibit so furnished.

††        Furnished with this report.  In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

-25-

SIGNATURES

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

	AUTOBYTEL INC.
Date: May 7, 2015	By:	/s/ Kimberly S. Boren
		Kimberly S. Boren
		Senior Vice President and Chief Financial Officer
		(Duly Authorized Officer and Principal Financial Officer)

Date: May 7, 2015	By:	/s/ Wesley Ozima
		Wesley Ozima
		Vice President and Controller
		(Principal Accounting Officer)

-26-

EXHIBIT INDEX

2.1‡	Asset Purchase Agreement dated as of September 30, 2013 by and among Autobytel Inc., a Delaware corporation, Advanced Mobile, LLC, a Delaware limited liability company, and Advanced Mobile Solutions Worldwide, Inc., a Delaware corporation, which is incorporated herein by reference to Exhibit 99.1 to the Current Report on Form 8-K filed with the SEC on October 3, 2013 (SEC File No. 001-34761)
2.2‡	Membership Interest Purchase Agreement dated as of January 13, 2014 by and among Autobytel Inc., a Delaware corporation, AutoNation, Inc., a Delaware corporation, and AutoNationDirect.com, Inc., a Delaware corporation, which is incorporated herein by reference to Exhibit 2.1 to the Current Report on Form 8-K filed with the SEC on January 17, 2014 (SEC File No. 001-34761)
3.1	Fifth Amended and Restated Certificate of Incorporation of Autobytel Inc. (formerly Autobytel.com Inc.) certified by the Secretary of State of Delaware (filed December 14, 1998), as amended by Certificate of Amendment dated March 1, 1999, Second Certificate of Amendment of the Fifth Amended and Restated Certificate of Incorporation of Autobytel dated July 22, 1999, Third Certificate of Amendment of the Fifth Amended and Restated Certificate of Incorporation of Autobytel dated August 14, 2001, Certificate of Designation of Series A Junior Participating Preferred Stock dated July 30, 2004, and Amended Certificate of Designation of Series A Junior Participating Preferred Stock dated April 24, 2009, which are incorporated herein by reference to Exhibit 3.1 to the Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2009 filed with the SEC on April 24, 2009 (SEC File No. 000-22239); Fourth Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of Autobytel dated July 10, 2012, which is incorporated herein by reference to Exhibit 3.1 to the Current Report on Form 8-K filed with the SEC on July 12, 2012; and Fifth Certificate of Amendment to Fifth Amended and Restated Certificate of Incorporation of Autobytel dated July 3, 2013, which is incorporated herein by reference to Exhibit 3.3 to the Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2013 filed with the SEC on August 1, 2013 (SEC File No. 001-34761)
3.2	Fourth Amended and Restated Bylaws of Autobytel dated October 30, 2014, which is incorporated herein by reference to Exhibit 3.2 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2014 filed with the SEC on November 5, 2014 (SEC File No. 001-34761)
4.1	Form of Common Stock Certificate of Autobytel, which is incorporated herein by reference to Exhibit 4.1 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2001 filed with the SEC on November 14, 2001 (SEC File No. 000-22239)
4.2	Tax Benefit Preservation Plan dated as of May 26, 2010 between Autobytel and Computershare Trust Company, N.A., as rights agent, together with the following exhibits thereto: Exhibit A – Form of Right Certificate; and Exhibit B – Summary of Rights to Purchase Shares of Preferred Stock of Autobytel Inc., which is incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on June 2, 2010 (SEC File No. 000-22239), as amended by Amendment No. 1 to Tax Benefit Preservation Plan dated as of April 14, 2014, between Autobytel Inc. and Computershare Trust Company, N.A., as rights agent, which is incorporated herein by reference to Exhibit 4.1 to the Current Report on Form 8-K filed with the SEC on April 16, 2014 (SEC File No. 001-34761)
4.3	Certificate of Adjustment Under Section 11(m) of the Tax Benefit Preservation Plan dated July 12, 2012, which is incorporated by reference to Exhibit 4.3 to the Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2012 filed with the SEC on November 8, 2012 (SEC File No. 001-34761)
31.1*	Rule 13a-14(a)/15d-14(a) Certification by Principal Executive Officer
31.2*	Rule 13a-14(a)/15d-14(a) Certification by Principal Financial Officer
32.1*	Section 1350 Certification by Principal Executive Officer and Principal Financial Officer
101.INS††	XBRL Instance Document
101.SCH††	XBRL Taxonomy Extension Schema Document
101.CAL††	XBRL Taxonomy Calculation Linkbase Document
101.DEF††	XBRL Taxonomy Extension Definition Document
101.LAB††	XBRL Taxonomy Label Linkbase Document
101.PRE††	XBRL Taxonomy Presentation Linkbase Document

*          Filed or furnished herewith.

‡          Certain schedules in this Exhibit have been omitted in accordance with Item 601(b)(2) of Regulation S-K.  Autobytel will furnish supplementally a copy of any omitted schedule or exhibit to the Securities and Exchange Commission upon request; provided, however, that Autobytel may request confidential treatment pursuant to Rule 24b-2 of the Securities Exchange Act of 1934, as amended, for any schedule or exhibit so furnished.

††        Furnished with this report.  In accordance with Rule 406T of Regulation S-T, the information in these exhibits shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to liability under that section, and shall not be incorporated by reference into any registration statement or other document filed under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Jeffrey H. Coats, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Autobytel Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2015

/s/ Jeffrey H. Coats

Jeffrey H. Coats

President and Chief Executive Officer

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Kimberly S. Boren, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Autobytel Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: May 7, 2015

/s/ Kimberly S. Boren

Kimberly S. Boren,

Senior Vice President and

Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Autobytel Inc. (the “Company”) on Form 10-Q for the period ended March 31, 2015 (the “Report”), we, Jeffrey H. Coats, President and Chief Executive Officer of the Company, and Kimberly S. Boren, Senior Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

1. The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Jeffrey H. Coats

Jeffrey H. Coats

President and Chief Executive Officer

May 7, 2015

/s/ Kimberly S. Boren

Kimberly S. Boren

Senior Vice President and

Chief Financial Officer

May 7, 2015

A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signatures that appear in typed form within the electronic version of this written statement required by Section 906, has been provided to Autobytel Inc. and will be retained by Autobytel Inc. and furnished to the Securities and Exchange Commission or its staff upon request.

XML

Selected Balance Sheet Accounts (Details 2) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015
Selected Balance Sheet Accounts [Abstract]
2015	$ 1,012
2016	942
2017	926
2018	879
2019	32
Total	$ 3,791

XML

Share-Based Compensation (Details 3)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Fair value of stock options granted using the following weighted average assumptions
Dividend yield (in hundredths)
Volatility (in hundredths)	56.00%	56.00%
Risk-free interest rate (in hundredths)	1.20%	1.30%
Expected life (years)	4 years 4 months 24 days	4 years 3 months 18 days

XML

Acquisition (Details 1) (Auto USA [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2015
Auto USA [Member]
Assets Acquired (Liabilities Assumed), Net
Net identifiable assets acquired	$ 758
Definite-lived intangible assets acquired	3,750
Goodwill	7,346
Net assets acquired	$ 11,854

XML

Selected Balance Sheet Accounts (Details Narrative) (USD $)	3 Months Ended		0 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Sep. 17, 2010	May 04, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Intangible assets acquired in business acquisitions	$ 9,700,000
Convertible note payable	1,000,000				1,000,000	[1]
Note maturity date	Mar. 31, 2017
Conversion price (in dollars per share)				$ 4.65
Sales Revenue Net [Member]
Property, Plant and Equipment [Line Items]
Concentration risk	30.00%	31.00%
Accounts Receivable [Member]
Property, Plant and Equipment [Line Items]
Concentration risk	44.00%	35.00%
Concentration risk, amount	8,600,000	5,700,000
Cyber [Member]
Property, Plant and Equipment [Line Items]
Convertible note payable			5,000,000
Fair value of note			5,900,000
Market yield (in hundredths)			15.00%
Stock price volatility (in hundredths)			77.50%
Interest is payable at an annual interest rate (in hundredths)			6.00%
Note maturity date			Sep. 30, 2015
Date after which notes can be converted			Sep. 30, 2013
Minimum share increments into which the notes can be converted (in shares)			40,000
Conversion price (in dollars per share)			$ 4.65
Interest payable on note in case of default (in hundredths)			8.00%
Auto USA [Member]
Property, Plant and Equipment [Line Items]
Market yield (in hundredths)	1.60%
Stock price volatility (in hundredths)	65.00%
Principal convertible into shares of common stock upon meeting threshold	30,600
Conversion price (in dollars per share)	$ 16.34
Interest payable on note in case of default (in hundredths)	8.00%
Auto USA [Member] | Convertible Notes Payable [Member]
Property, Plant and Equipment [Line Items]
Fair value of note	1,300,000
Stock price volatility (in hundredths)	65.00%
Interest is payable at an annual interest rate (in hundredths)	6.00%
Principal convertible into shares of common stock upon meeting threshold	$ 30,600,000
Conversion price (in dollars per share)	$ 16.34
Interest payable on note in case of default (in hundredths)	8.00%

[1] Amounts were derived from audited financial statements

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Selected Balance Sheet Accounts (Details) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Property and Equipment
Computer software and hardware and capitalized internal use software	$ 13,290	$ 12,990
Furniture and equipment	1,275	1,271
Leasehold improvements	957	957
Property and equipment, gross	15,522	15,218
Less - Accumulated depreciation and amortization	(13,501)	(13,314)
Property and equipment, net	$ 2,021	$ 1,904

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Acquisition

3 Months Ended

Mar. 31, 2015

Business Combinations [Abstract]

Acquisitions

Acquisition of AutoUSA

On the AutoUSA Acquisition Date, Autobytel acquired all of the issued and outstanding membership interests in AutoUSA.  The Company acquired AutoUSA to expand its reach and influence in the industry by increasing its Dealer network.

The AutoUSA Acquisition Date fair value of the consideration transferred totaled $11.9 million, which consisted of the following:

	(in thousands)
Cash (including a working capital adjustment of $44)	$	10,044
Convertible subordinated promissory note		1,300
Warrant to purchase 69,930 shares of Company common stock		510
	$	11,854

As part of the consideration paid for the acquisition, the Company issued a convertible subordinated promissory note for $1.0 million (“AutoUSA Note”) to the Seller.  The fair value of the AutoUSA Note as of the AutoUSA Acquisition Date was $1.3 million.  This valuation was estimated using a binomial option pricing method.  Key assumptions used by the Company's outside valuation consultants in valuing the AutoUSA Note include a market yield of 1.6% and stock price volatility of 65.0%.  As the AutoUSA 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 AutoUSA Note is to be paid in full on January 31, 2019.  At any time after January 31, 2017, the holder of the AutoUSA Note may convert all or any part, but at least 30,600 shares, of the then outstanding and unpaid principal of the AutoUSA Note into fully paid shares of the Company's common stock at a conversion price of $16.34 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The right to convert the AutoUSA 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 AutoUSA 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.

The warrant to purchase 69,930 shares of Company common stock issued in connection with the acquisition (“AutoUSA Warrant”) was valued as of the AutoUSA Acquisition Date at $7.35 per share for a total value of $0.5 million.  The Company used an option pricing model to determine the value of the AutoUSA Warrant.  Key assumptions used by the Company's outside valuation consultants in valuing the AutoUSA Warrant are as follows: risk-free rate of 1.6%, stock price volatility of 65.0% and a term of 5.0 years.  The AutoUSA Warrant was valued based on long-term stock price volatilities of the Company.  The exercise price of the AutoUSA Warrant is $14.30 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The AutoUSA Warrant becomes exercisable on the third anniversary of the issuance date and expires on the fifth anniversary of the issuance date.  The right to exercise the AutoUSA Warrant is accelerated in the event of a change in control of the Company.

The following table summarizes the fair values of the assets acquired and liabilities assumed as of March 31, 2015. 

	(in thousands)
Net identifiable assets acquired	$	758
Definite-lived intangible assets acquired		3,750
Goodwill		7,346
	$	11,854

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 acquired intangible assets include the following:

	Valuation Method	Estimated Fair Value		Estimated Useful Life (1)
		(in thousands)		(years)
Non-compete agreement	Discounted cash flow (2)	$	90		2
Customer relationships	Excess of earnings (3)		2,660		5
Trademark/trade names	Relief from Royalty (4)		1,000		5
Total purchased intangible assets		$	3,750

(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 are recognized over the shorter of the respective lives of the agreement or the period of time the assets are expected to contribute to future cash flows.
(2)	The non-compete agreement fair value was derived by calculating the difference between the present value of the Company's forecasted cash flows with the agreement in place and without the agreement in place.
(3)	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.
(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.

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 preliminary 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 is attributable primarily to expected synergies and the assembled workforce of AutoUSA.  The full amount is expected to be amortizable for income tax purposes.  

The Company incurred approximately $1.1 million of acquisition-related costs related to AutoUSA in 2014, all of which were expensed.

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Credit Facility (Details Narrative) (USD $)	3 Months Ended
	Mar. 31, 2015
Term loan	$ 9,000,000
Term loan amortization period	4 years
Term loan balance	6,200,000
Revolving loan limit	8,000,000
Revolving loan draw	1,000,000
Revolving loan current balance	5,250,000
Minimum [Member]
Quarterly principal payment	$ 562,500

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Computation of Basic and Diluted Net Earnings Per Share (Details Narrative) (USD $)	3 Months Ended		0 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Sep. 17, 2010	Sep. 17, 2014	Jun. 07, 2012	Feb. 13, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Anti-dilutive potential shares of common stock	1,400,000	2,100,000
Authorized amount of stock repurchase, minimum				$ 1,000,000	$ 2,000,000	$ 1,500,000
Warrant
Risk-free rate	1.20%	1.30%
Stock price volatility	56.00%	56.00%
Term	4 years 4 months 24 days	4 years 3 months 18 days
Cyber [Member]
Warrant
Warrant price (in dollars per share)			$ 3.15
Number of shares warrants give right to purchase (in shares)			400,000
Risk-free rate			2.30%
Stock price volatility			77.50%
Term			8 years 0 months 14 days
Exercise price of warrant (in dollars per share)			$ 4.65
Auto USA [Member]
Warrant
Warrant price (in dollars per share)	7.35
Total value	500,000
Risk-free rate	1.60%
Stock price volatility	65.00%
Term	5 years
Exercise price of warrant (in dollars per share)	14.30

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Computation of Basic and Diluted Net Earnings Per Share (Details)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Computation of Basic and Diluted Net Income Per Share [Abstract]
Basic shares (in shares)	8,880,450	8,928,400
Weighted average dilutive securities (in shares)	2,216,293	1,353,938
Dilutive Shares (in shares)	11,096,743	10,282,338

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Income Taxes (Details Narrative) (USD $)	Mar. 31, 2015	Dec. 31, 2014
Income Tax Disclosure [Abstract]
Unrecognized tax benefits	$ 600,000
Unrecognized Tax Benefits That Would Impact Effective Tax Rate	100,000
Accrued interest and penalties	$ 12,000	$ 28,000

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Share-Based Compensation (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015		Mar. 31, 2014
Share-based Compensation
Share-based compensation costs	$ 656		$ 287
Amount capitalized to internal use software	3		1
Total share-based compensation costs	653		286
Cost of revenues [Member]
Share-based Compensation
Share-based compensation costs	25		17
Sales and marketing [Member]
Share-based Compensation
Share-based compensation costs	140		109
Technology support [Member]
Share-based Compensation
Share-based compensation costs	74		57
General and administrative [Member]
Share-based Compensation
Share-based compensation costs	$ 417	[1]	$ 104	[1]

[1] Certain awards were modified and accelerated their vesting in accordance with Curtis DeWalt’s consulting agreement. 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.

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Share-Based Compensation (Details 1) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Options granted (in shares)	315,050	401,750
Options weighted average grant date fair value (in dollars per share)	$ 4.65	$ 7.46
Options weighted average exercise price (in dollars per share)	$ 10.22	$ 16.47

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Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2015

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”) No. 2015-01, “Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” was issued.  This ASU eliminates from GAAP the concept of extraordinary items.  Preparers will not have to assess whether a particular event is extraordinary.  However, presentation and disclosure guidance for items that are unusual in nature or occur infrequently will be retained and will be expanded to include items that are both unusual and infrequently occurring.  The amendments in this ASU are effective for fiscal years, and interim periods with those fiscal years, beginning after December 15, 2015.  A reporting entity may apply the amendments prospectively.  A reporting entity also may apply the amendments retrospectively to all prior periods presented in the financial statements.  Early adoption is permitted provided the guidance is applied from the beginning of the fiscal year of adoption.  The Company has not yet selected a transition method nor has it determined the effect of the standard on the ongoing financial reporting.

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 1) modify the evaluation of whether limited partnerships and similar legal entities are variable interest entities or voting interest entities, 2) eliminate the presumption that a general partner should consolidate a limited partnership, 3) 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 4) 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.  Early adoption is permitted, including adoption in an interim period.  The Company has yet to determine if this ASU will be material 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 U.S. GAAP when it becomes effective. The new standard is effective on January 1, 2017. Early application is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU No. 2014-09 will have on its consolidated financial statements and related disclosures. The Company has not yet selected a transition method nor has it determined the effect of the standard on the ongoing financial reporting.

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Share-Based Compensation (Details 2) (USD $)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of stock options exercised	253	73,603
Weighted average exercise prices	$ 7.17	$ 4.25

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Selected Balance Sheet Accounts (Details 3) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Goodwill
Goodwill, beginning of period	$ 20,948
Current year activity
Goodwill, end of period	$ 20,948

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UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (USD $)	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 19,322,000	$ 20,747,000
Accounts receivable, net of allowances for bad debts and customer credits of $712 and $770 at March 31, 2015 and December 31, 2014, respectively	18,779,000	18,311,000
Deferred tax asset	5,263,000	5,498,000
Prepaid expenses and other current assets	512,000	811,000
Total current assets	43,876,000	45,367,000
Property and equipment, net	2,021,000	1,904,000
Investments	3,880,000	3,880,000
Intangible assets, net	3,791,000	4,173,000
Goodwill	20,948,000	20,948,000
Long-term deferred tax asset	27,395,000	27,396,000
Other assets	1,062,000	1,081,000
Total assets	102,973,000	104,749,000
Current liabilities:
Accounts payable	7,895,000	7,685,000
Accrued expenses and other current liabilities	6,640,000	9,495,000
Convertible note payable	5,000,000	5,000,000
Total current liabilities	19,535,000	22,180,000
Convertible note payable	1,000,000	1,000,000	[1]
Term loan payable	6,188,000	6,750,000
Borrowings under revolving credit facility	5,250,000	5,250,000
Other non-current liabilities	311,000	311,000
Total liabilities	32,284,000	35,491,000
Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.001 par value; 11,445,187 shares authorized; none outstanding
Common stock, $0.001 par value; 55,000,000 shares authorized and 8,880,630 and 8,880,377 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively	9,000	9,000
Additional paid-in capital	308,848,000	308,190,000
Accumulated deficit	(238,168,000)	(238,941,000)
Total stockholders' equity	70,689,000	69,258,000
Total liabilities and stockholders' equity	$ 102,973,000	$ 104,749,000

[1] Amounts were derived from audited financial statements

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Subsequent Event (Details Narrative) (USD $)	1 Months Ended
	May 04, 2015
Subsequent Events [Abstract]
Note conversion price	$ 4.65
Warrant exercise price	$ 4.65
Shares issued upon conversion of debt	1,475,268
Ownership of company by shareholder	14.25%
Proceeds from exercise of warrant	$ 1,900,000

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Organization and Operations

3 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Organization and Operations

Autobytel Inc. (“Autobytel” or the “Company”) is an automotive marketing services company that assists automotive retail dealers (“Dealers”) and automotive manufacturers (“Manufacturers”) market and sell new and used vehicles through the Company's programs for online lead referrals (“Leads”), Dealer marketing products and services, online advertising programs and mobile products.

The Company’s consumer-facing automotive websites (“Company Websites”), including its flagship website Autobytel.com®, provide consumers with information and tools to aid them with their automotive purchase decisions and the ability to submit inquiries requesting Dealers to contact the consumers regarding purchasing or leasing vehicles (“Vehicle Leads”). For consumers who may not be able to secure loans through conventional lending sources, the Company Websites provide these consumers the ability to submit inquiries requesting Dealers or other lenders that may offer vehicle financing to these consumers to contact the consumers regarding vehicle financing (“Finance Leads”). The Company’s mission for consumers is to be “Your Lifetime Automotive Advisor®” by engaging consumers throughout the entire lifecycle of their automotive needs.

The Company was incorporated in Delaware on May 17, 1996. Its principal corporate offices are located in Irvine, California. The Company’s common stock is listed on The NASDAQ Capital Market under the symbol ABTL.

On January 13, 2014 (“AutoUSA Acquisition Date”), Autobytel and AutoNation, Inc., a Delaware corporation (“Seller Parent”), and AutoNationDirect.com, Inc., a Delaware corporation and subsidiary of Seller Parent (“Seller”), entered into and consummated a Membership Interest Purchase Agreement in which Autobytel acquired all of the issued and outstanding membership interests in AutoUSA, LLC, a Delaware limited liability company and a subsidiary of Seller (“AutoUSA”).  AutoUSA was a competitor to the Company and at the time of the acquisition was a (i) Lead aggregator purchasing internet-generated automotive consumer Leads from third parties and reselling those consumer Leads to automotive vehicle Dealers; and (ii) reseller of third party products and services to automotive Dealers.  See Note 4.

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Investments (Details) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Notes Receivable Current [Member]
Balance at beginning of period	$ 150
Total gains or (losses) (realized or unrealized)
Purchases
Sales
Transfers	150
Investments [Member]
Balance at beginning of period	3,880
Total gains or (losses) (realized or unrealized)
Purchases
Sales
Transfers	$ 3,880

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Selected Balance Sheet Accounts (Tables)

3 Months Ended

Mar. 31, 2015

Selected Balance Sheet Accounts [Abstract]

Property and equipment

	March 31,			December 31,
	2015			2014
	(in thousands)
Computer software and hardware and capitalized internal use software	$	13,290		$	12,990
Furniture and equipment		1,275			1,271
Leasehold improvements		957			957
		15,522			15,218
Less – Accumulated depreciation and amortization		(13,501	)		(13,314	)
Property and equipment, net	$	2,021		$	1,904

Intangible assets amortized over the estimated useful lives

		March 31, 2015							December 31, 2014
Intangible Asset	Estimated Useful Life	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
			(in thousands)
Trademarks/trade names/licenses/domains	5 years	$	6,574	$	(5,692	)	$	882	$	6,574	$	(5,594	)	$	980
Software and publications	3 years		1,300		(1,300	)		—		1,300		(1,300	)		—
Customer relationships	2-5 years		5,074		(2,898	)		2,176		5,074		(2,696	)		2,378
Employment/non- compete agreements	5 years		700		(541	)		159		700		(500	)		200
Developed technology	5 years		820		(246	)		574		820		(205	)		615
		$	14,468	$	(10,676	)	$	3,791	$	14,468	$	(10,295	)	$	4,173

Amortization expense for the remainder of the year and for the next four years

Year	Amortization Expense
	(in thousands)
2015	$	1,012
2016		942
2017		926
2018		879
2019		32
	$	3,791

Goodwill

Goodwill as of December 31, 2014	$	20,948
Current year activity		—
Goodwill as of March 31, 2015	$	20,948

Accrued expenses and other current liabilities

	March 31,		December 31,
	2015		2014
	(in thousands)
Compensation and related costs	$	1,827	$	5,149
Professional fees and other accrued expenses		3,964		3,383
Amounts due to customers		291		267
Other current liabilities		558		696
Total accrued expenses and other current liabilities	$	6,640	$	9,495

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Investments (Details Narrative) (USD $)	12 Months Ended	0 Months Ended	1 Months Ended
	Dec. 01, 2015	Sep. 01, 2013	Nov. 30, 2013	Mar. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
SaleMove Inc [Member]
Convertible promissory note				$ 150,000
Annual interest rate (in hundredths)				6.00%
Advances to affiliate				980,000	1,000,000	200,000
SaleMove Note 2 Inc [Member]
Convertible promissory note			400,000
Annual interest rate (in hundredths)			6.00%
GoMoto [Member]
Payment to acquire investments	100,000
Preferred stock acquired (in shares)	317,460
Autoweb [Member]
Equity Interest in Driverside Inc (in hundredths)		16.00%
Payment to acquire investments		$ 2,500,000	$ 880,394
Preferred stock acquired (in shares)		8,000	1,076
Option acquired		5,000
Option exercise price		$ 500

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Acquisition (Details) (Auto USA [Member], USD $) In Thousands, unless otherwise specified	Mar. 31, 2015
Consideration transferred	$ 11,854
Cash [Member]
Consideration transferred	10,000
Working Capital [Member]
Consideration transferred	44
Convertible Notes Payable [Member]
Consideration transferred	1,300
Warrant [Member]
Consideration transferred	$ 510

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Basis of Presentation

3 Months Ended

Mar. 31, 2015

Basis of Presentation [Abstract]

Basis of Presentation

The accompanying unaudited consolidated condensed financial statements are presented on the same basis as the Company’s Annual Report on Form 10-K for the year ended December 31, 2014 (“2014 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”).  Autobytel has made its disclosures in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X.  Accordingly, they do not include all of the information and footnotes required by U.S. generally accepted accounting principles for complete financial statements.  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included.  The statements of income and comprehensive income and cash flows for the periods ended March 31, 2015 and 2014 are not necessarily indicative of the results of operations or cash flows expected for the year or any other period.  The unaudited consolidated condensed financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in the 2014 Form 10-K.

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UNAUDITED CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Accounts receivable, allowances for bad debts and customer credits	$ 712	$ 770
Stockholders' equity:
Preferred stock, par value (in dollars per share)	$ 0.001
Preferred stock, authorized (in shares)	11,445,187
Preferred stock, outstanding (in shares)	0
Common stock, par value (in dollars per share)	$ 0.001
Common stock, authorized (in shares)	55,000,000
Common stock, issued (in shares)	8,880,630	8,880,377
Common stock, outstanding (in shares)	8,880,630	8,880,377

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Subsequent Event

3 Months Ended

Mar. 31, 2015

Subsequent Events [Abstract]

Subsequent Event

 On April 27, 2015, Auto Holdings Ltd., a British Virgin Islands business company (“Auto Holdings”), acquired from Atrop, Inc., a Florida corporation (formerly Autotropolis, Inc.) (“Atrop”), and IBBF Ventures, Inc., a Florida corporation (formerly Cyber Ventures, Inc.) (“IBBF”), the Cyber Convertible Note discussed in Note 8 and the Cyber Warrant discussed in Note 5.

 Upon acquisition of the Cyber Convertible Note and the Cyber Warrant, Auto Holdings converted the entire principal balance of the Cyber Convertible Note at its conversion price of $4.65 per share and fully exercised the Cyber Warrant at its exercise price of $4.65 per share.  Upon conversion of the Cyber Convertible Note and exercise of the Cyber Warrant, the Company issued to Auto Holdings, 1,475,268 shares of the Company’s common stock.  As a result of the conversion and exercise of the Cyber Convertible Note and Cyber Warrant on April 27, 2015, Auto Holdings owns approximately 14.25% of Autobytel’s current issued and outstanding shares.

 Autobytel received approximately $1.9 million in cash as a result of the exercise of the Cyber Warrant.  The Company also removed the liability from the consolidated balance sheet related to the Cyber Convertible Note and increased stockholders’ equity related to the Cyber Convertible Note and receipt of cash from exercise of the Cyber Warrant.

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Document and Entity Information	3 Months Ended
	Mar. 31, 2015	May 04, 2015
Document and Entity Information [Abstract]
Entity Registrant Name	AUTOBYTEL INC
Entity Central Index Key	0001023364
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		10,480,898
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015

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Acquisition (Tables) (Auto USA [Member])

3 Months Ended

Mar. 31, 2015

Auto USA [Member]

Fair value of consideration transferred

	(in thousands)
Cash (including a working capital adjustment of $44)	$	10,044
Convertible subordinated promissory note		1,300
Warrant to purchase 69,930 shares of Company common stock		510
	$	11,854

Fair value of assets and liabilities assumed

	(in thousands)
Net identifiable assets acquired	$	758
Definite-lived intangible assets acquired		3,750
Goodwill		7,346
	$	11,854

Acquired intangible assets

	Valuation Method	Estimated Fair Value		Estimated Useful Life (1)
		(in thousands)		(years)
Non-compete agreement	Discounted cash flow (2)	$	90		2
Customer relationships	Excess of earnings (3)		2,660		5
Trademark/trade names	Relief from Royalty (4)		1,000		5
Total purchased intangible assets		$	3,750

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UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Revenues:
Lead fees	$ 24,167	$ 26,013
Advertising	1,600	673
Other revenues	476	273
Total revenues	26,243	26,959
Cost of revenues	16,145	16,874
Gross profit	10,098	10,085
Operating expenses:
Sales and marketing	3,584	4,017
Technology support	1,831	1,924
General and administrative	3,046	3,022
Depreciation and amortization	485	434
Litigation settlements	(25)	(68)
Total operating expenses	8,921	9,329
Operating income	1,177	756
Interest and other income (expense), net	(147)	(166)
Income before income tax provision	1,030	590
Income tax provision	257	220
Net income and comprehensive income	$ 773	$ 370
Computation of Basic and Diluted Net Income Per Share [Abstract]
Basic income per common share (in dollars per share)	$ 0.09	$ 0.04
Diluted income per common share (in dollars per share)	$ 0.07	$ 0.04

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Investments

3 Months Ended

Mar. 31, 2015

Investments [Abstract]

Investments

 The Company’s investments at March 31, 2015 and December 31, 2014 consisted primarily of investments in SaleMove, Inc., a Delaware corporation (“SaleMove”), and privately-held AutoWeb, Inc., a Delaware corporation (“AutoWeb”).  The investments in SaleMove and AutoWeb are recorded at cost.  Although there is no established market for these investments, the Company evaluated the investments for impairment by comparing them to an estimated fair value and determined that no impairment existed.  To determine the estimated fair value for the investment in SaleMove, the Company analyzed the discounted future cash flows of Autobytel’s sales of SaleMove products.  To determine the estimated fair value for the investment in AutoWeb, the Company analyzed participants in the Series B round of financing in November 2014.  These fair value measurements are based on significant inputs not observable in the market and represent a Level 3 measurement.

 The following table presents the Company’s activity for 2015:

	Note
	receivable-
Description	current		Investments
	(in thousands)
Balance at December 31, 2014	$	150	$	3,880
Total gains or (losses) (realized or unrealized)		—		—
Purchases		—		—
Sales		—		—
Transfers		—		—
Balance at March 31, 2015	$	150	$	3,880

 In September 2013 the Company entered into a Contribution Agreement with AutoWeb pursuant to 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 18, 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., (i) 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 (1) the rights of the Series A Preferred Stock are changed, or (2) the Series A Preferred Stock is exchanged for cash, securities or property; or (ii) 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 November 2014, the Company entered into a Series B Preferred Stock Purchase Agreement with AutoWeb pursuant to which we paid $880,394 in exchange for 1,076 shares of AutoWeb Series B Preferred Stock, $0.01 par value per share.  The investments in AutoWeb are recorded at cost because the Company does not have significant influence over AutoWeb.

 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%nd is due and payable in full on September 1, 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.  The $150,000 note is classified as an other current asset on the consolidated balance sheet as of March 31, 2015.  In October 2013, the Company entered into an agreement with SaleMove to become the exclusive provider to the automotive industry of SaleMove’s technology for enhancing communications with consumers.  SaleMove’s 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 SaleMove’s fifty percent share of various product development, marketing and sales costs and expenses, with the advanced funds to be recovered by the Company from SaleMove’s share of sales revenue.  As of December 31, 2014 and 2013, $1.0 million and $0.2 million had been advanced to SaleMove, respectively.  The balance of the advances on the consolidated balance sheet as of March 31, 2015 is $980,000 and is classified as an other long-term asset.  In November 2014, the Company invested an additional $400,000 in SaleMove in the form of a convertible promissory note.  The convertible promissory note accrues interest at an annual rate of 6.0% and is due and payable in full on November 18, 2016 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.  The $400,000 note is classified as an investment on the consolidated balance sheet as of March 31, 2015.

 In December 2014, the Company entered into a Series Seed Preferred Stock Purchase Agreement with GoMoto, Inc. (“GoMoto”) in which Autobytel paid $100,000 for 317,460 shares of Series Seed Preferred Stock, $0.001 par value per share.  The investment in GoMoto was recorded at cost because the Company does not have significant influence over GoMoto.

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Share-Based Compensation

3 Months Ended

Mar. 31, 2015

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 Income and Comprehensive Income as follows:

	Three Months Ended March 31,
	2015		2014
	(in thousands)
Share-based compensation expense:
Cost of revenues	$	25	$	17
Sales and marketing		140		109
Technology support		74		57
General and administrative [1]		417		104
Share-based compensation costs		656		287
Amount capitalized to internal use software		3		1
Total share-based compensation costs	$	653	$	286

[1] Certain awards were modified in accordance with Curtis DeWalt’s, the Company's former Chief Financial Officer, 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, 2015 and 2014.  

	Three Months Ended March 31,
	2015		2014
Number of service-based options granted		315,050		401,750
Weighted average grant date fair value	$	4.65	$	7.46
Weighted average exercise price	$	10.22	$	16.47

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 employee’s continued employment with the Company during the vesting period.

Performance-based Options.  During the three months ended March 31, 2014, the Company granted 40,000 performance-based inducement stock options in connection with the acquisition of AutoUSA (“2014 AutoUSA Inducement Options”), with a weighted average grant date fair value of $6.08, using a Black-Scholes option pricing model, and weighted average exercise price of $13.62.  The 2014 AutoUSA Inducement Options are subject to two vesting requirements and conditions: (i) level of achievement of performance goals based on revenue and gross margin of the Company’s retail dealer services group and (ii) service based vesting.  Based on the performance of the Company’s retail dealer services group for 2014, all 40,000 of the 2014 AutoUSA Inducement Options were awarded under the performance vesting conditions, with one-third vesting on January 21, 2015 and the remainder vesting ratably over twenty-four months from that date thereafter.  No performance options were granted during the three months ended March 31, 2015.

Market Condition Options.  In 2009, the Company granted 213,650 stock options to substantially all employees with an exercise price of $1.75 and grant date fair value of $0.97, using a Black-Scholes option pricing model.  One-third of these options cliff vested on the first anniversary following the grant date and the remaining two-thirds vesting ratably over twenty-four months thereafter.  In addition, the remaining two-thirds of the awards were subject to satisfaction of market price conditions for the Company’s common stock, which conditions have been satisfied. During the three months ended March 31, 2015, no market condition options were exercised.  During the three months ended March 31, 2014, 10,793 of these market condition stock options were exercised, respectively.  

Stock option exercises.  The following stock options were exercised (inclusive of the market condition options exercised above) for the three months ended March 31, 2015 and 2014:  

	Three Months Ended March 31,
	2015		2014
Number of stock options exercised		253		73,603
Weighted average exercise price	$	7.17	$	4.25

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,
	2015			2014
Dividend yield		—			—
Volatility		56	%		56	%
Risk-free interest rate		1.2	%		1.3	%
Expected life (years)		4.4			4.3

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Organization and Operations (Details Narrative)	3 Months Ended
	Mar. 31, 2015
Date of incorporation	May 17, 1996
Auto USA [Member]
Date of acquisition	Jan. 13, 2014

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Computation of Basic and Diluted Net Earnings Per Share (Tables)

3 Months Ended

Mar. 31, 2015

Computation of Basic and Diluted Net Income Per Share [Abstract]

Computation of Basic and Diluted Net Income Per Share

	Three Months Ended March 31,
	2015		2014
Basic Shares		8,880,450		8,928,400
Weighted average dilutive securities		2,216,293		1,353,938
Dilutive Shares		11,096,743		10,282,338

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2015

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.

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Selected Balance Sheet Accounts

3 Months Ended

Mar. 31, 2015

Selected Balance Sheet Accounts [Abstract]

Selected Balance Sheet Accounts

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

	March 31,			December 31,
	2015			2014
	(in thousands)
Computer software and hardware and capitalized internal use software	$	13,290		$	12,990
Furniture and equipment		1,275			1,271
Leasehold improvements		957			957
		15,522			15,218
Less – Accumulated depreciation and amortization		(13,501	)		(13,314	)
Property and equipment, net	$	2,021		$	1,904

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 (which represents Acura, Audi, Honda, Nissan, Infiniti, Mercedes Benz, Smart, Subaru, Toyota, Volkswagen and Volvo), General Motors and Ford Direct. During the first three months of 2015, approximately 30% of the Company’s total revenues were derived from these three customers, and approximately 44%, or $8.6 million of gross accounts receivables, related to these three customers at March 31, 2015.

During the first three months of 2014, approximately 31% of the Company’s total revenues were derived from General Motors, Urban Science Applications and Kia Corporation, and approximately 35%, or $5.7 million of gross accounts receivables, related to these three customers at March 31, 2014.

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 and AutoUSA, the Company identified $9.7 million of intangible assets.  The Company’s intangible assets will be amortized over the following estimated useful lives:

		March 31, 2015							December 31, 2014
Intangible Asset	Estimated Useful Life	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
			(in thousands)
Trademarks/trade names/licenses/domains	5 years	$	6,574	$	(5,692	)	$	882	$	6,574	$	(5,594	)	$	980
Software and publications	3 years		1,300		(1,300	)		—		1,300		(1,300	)		—
Customer relationships	2-5 years		5,074		(2,898	)		2,176		5,074		(2,696	)		2,378
Employment/non- compete agreements	5 years		700		(541	)		159		700		(500	)		200
Developed technology	5 years		820		(246	)		574		820		(205	)		615
		$	14,468	$	(10,676	)	$	3,791	$	14,468	$	(10,295	)	$	4,173

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

Year	Amortization Expense
	(in thousands)
2015	$	1,012
2016		942
2017		926
2018		879
2019		32
	$	3,791

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 March 31, 2015 and December 31, 2014.

As of March 31, 2015, goodwill consisted of the following (in thousands):

Goodwill as of December 31, 2014	$	20,948
Current year activity		—
Goodwill as of March 31, 2015	$	20,948

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

	March 31,		December 31,
	2015		2014
	(in thousands)
Compensation and related costs	$	1,827	$	5,149
Professional fees and other accrued expenses		3,964		3,383
Amounts due to customers		291		267
Other current liabilities		558		696
Total accrued expenses and other current liabilities	$	6,640	$	9,495

Convertible notes payable.  In connection with the acquisition of Cyber, the Company issued a convertible subordinated promissory note for $5.0 million (“Cyber Convertible Note”) to the sellers.  The fair value of the Cyber Convertible Note as of the Cyber Acquisition Date was $5.9 million.  This valuation was estimated using a binomial option pricing method.  Key assumptions used by the Company's outside valuation consultants in valuing the Cyber Convertible Note included a market yield of 15.0% and stock price volatility of 77.5%.  As the Cyber 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 Cyber Convertible Note is to be paid in full on September 30, 2015.  At any time after September 30, 2013, the holders of the Cyber Convertible Note may convert all or any part, but in 40,000 minimum share increments, of the then outstanding and unpaid principal of the Cyber 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 Cyber 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 Cyber 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.

In connection with the acquisition of AutoUSA, the Company issued the AutoUSA Note to the Seller.  The fair value of the AutoUSA Note as of the AutoUSA Acquisition Date was $1.3 million.  This valuation was estimated using a binomial option pricing method.  Key assumptions used by the Company's outside valuation consultants in valuing the AutoUSA Note include a market yield of 1.6% and stock price volatility of 65.0%.  As the AutoUSA 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 AutoUSA Note is to be paid in full on January 31, 2019.  At any time after January 31, 2017, the holder of the AutoUSA Note may convert all or any part, but at least 30,600 shares, of the then outstanding and unpaid principal of the AutoUSA Note into fully paid shares of the Company's common stock at a conversion price of $16.34 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The right to convert the AutoUSA 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 AutoUSA 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.

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Credit Facility

3 Months Ended

Mar. 31, 2015

Debt Disclosure [Abstract]

Credit Facility

On January 13, 2014, the Company entered into a Credit Facility Amendment with Union Bank, amending the Company's existing Loan Agreement with Union Bank initially entered into on February 26, 2013, and amended on September 10, 2013 (the existing Loan Agreement, as amended to date, is referred to herein collectively as the "Credit Facility Agreement"). The Credit Facility Amendment provides for (i) a new $9.0 million term loan (“Term Loan”); and (ii) amendments to the Company’s existing $8.0 million revolving line of credit (“Revolving Loan”).

The Term Loan is amortized over a period of four years, with fixed quarterly principal payments of $562,500. Borrowings under the Term Loan or under the Revolving Loan 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 both the Term Loan and the Revolving Loan adjust (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. The Company pays a commitment fee of 0.10% per year on the unused portion of the Revolving Loan payable quarterly in arrears. Borrowings under the Term Loan and the Revolving Loan 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. The Term Loan matures on December 31, 2017, and the maturity date of the Revolving Loan is March 31, 2017. Borrowings under the Revolving Loan may be used as a source to finance capital expenditures, acquisitions and stock buybacks and for other general corporate purposes. Borrowing under the Term Loan was limited to use for the acquisition of AutoUSA, and the Company drew down the entire $9.0 million of the Term Loan, together with $1.0 million under the Revolving Loan, in financing this acquisition.  The outstanding balances of the Term Loan and Revolving Loan as of March 31, 2015 were $6.2 million and $5.25 million, respectively.

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Income Taxes

3 Months Ended

Mar. 31, 2015

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 in accordance with the estimated annual rate, plus 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 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 Company’s effective tax rate for the three months ended March 31, 2015 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 $0.6 million as of March 31, 2015, of which $0.1 million would impact the effective tax rate if recognized.

 The total balance of accrued interest and penalties related to state uncertain tax positions was $12,000 and $28,000 as of March 31, 2015 and December 31, 2014, 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 Company’s condensed consolidated balance sheets.  There were no material interest or penalties included in income tax expense for the three months ended March 31, 2015 and March 31, 2014.

The Company is subject to taxation in the U.S. and in various state jurisdictions.  Due to expired statutes of limitation, the Company’s federal income tax returns for years prior to calendar year 2011 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 2010 are no longer subject to examination.  The Company is currently under examination by the State of California for the years 2011 and 2012, 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.

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Share-Based Compensation (Details Narrative) (USD $) In Thousands, except Share data, unless otherwise specified	3 Months Ended		12 Months Ended
	Mar. 31, 2015	Mar. 31, 2014	Dec. 31, 2009
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Options granted (in shares)	315,050	401,750
Options weighted average grant date fair value (in dollars per share)	4.65	7.46
Options weighted average exercise price (in dollars per share)	10.22	16.47
Stock options exercised (in shares)	253	73,603
Options exercised weighted average exercise price (in dollars per share)	7.17	4.25
General and administrative [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Expense of acceleration of vested awards	200,000
AutoUSA Inducement Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Options granted (in shares)		40,000
Options weighted average grant date fair value (in dollars per share)		6.08
Options weighted average exercise price (in dollars per share)		13.62
Market Condition Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Options granted (in shares)			213,650
Options weighted average grant date fair value (in dollars per share)			$ 0.97
Options weighted average exercise price (in dollars per share)			$ 1.75
Proportion of options vested on first anniversary of grant date			0.33
Period over which options are granted ratably			24 months
Stock options exercised (in shares)		10,793

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Investments (Tables)

3 Months Ended

Mar. 31, 2015

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Investments

	Note
	receivable-
Description	current		Investments
	(in thousands)
Balance at December 31, 2014	$	150	$	3,880
Total gains or (losses) (realized or unrealized)		—		—
Purchases		—		—
Sales		—		—
Transfers		—		—
Balance at March 31, 2015	$	150	$	3,880

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Acquisition (Details 2) (Auto USA [Member], USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015
Acquired Definite-Lived Intangible Assets
Estimated Fair Value	$ 3,750
Noncompete Agreements [Member]
Acquired Definite-Lived Intangible Assets
Valuation Method	Discounted cash flow	[1]
Estimated Fair Value	90
Estimated Useful Life	2 years	[2]
Customer Relationships [Member]
Acquired Definite-Lived Intangible Assets
Valuation Method	Excess of earnings	[3]
Estimated Fair Value	2,660
Estimated Useful Life	5 years	[2]
Trademarks and Trade Names [Member]
Acquired Definite-Lived Intangible Assets
Valuation Method	Relief from Royalty	[4]
Estimated Fair Value	$ 1,000
Estimated Useful Life	5 years	[2]

[1] The non-compete agreements fair value was derived by calculating the difference between the present value of the Company's forecasted cash flows with the agreements in place and without the agreements in place.

[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 the intangible asset. Amortization of intangible assets with definite lives are recognized over the shorter of the respective lives of the agreement or the period of time the assets are expected to contribute to future cash flows.

[3] 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.

[4] The relief from royalty method is an earnings approach which assesses the royalty savings an entity realizes since it owns the asset and doesn't have to pay a third party a license fee for it use.

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Selected Balance Sheet Accounts (Details 4) (USD $) In Thousands, unless otherwise specified	Mar. 31, 2015	Dec. 31, 2014
Selected Balance Sheet Accounts [Abstract]
Compensation and related costs	$ 1,827	$ 5,149
Professional fees and other accrued expenses	3,964	3,383
Amounts due to customers	291	267
Other current liabilities	558	696
Total accrued expenses and other current liabilities	$ 6,640	$ 9,495

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UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net income	$ 773	$ 370
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization	603	527
Provision for bad debts	53	27
Provision for customer credits	174	207
Share-based compensation	653	286
Change in deferred tax asset	236	169
Changes in assets and liabilities:
Accounts receivable	(695)	806
Prepaid expenses and other current assets	299	(42)
Other assets	19	(301)
Accounts payable	210	179
Accrued expenses and other current liabilities	(2,855)	(1,139)
Deferred revenues		11
Non-current liabilities		(225)
Net cash (used in) provided by operating activities	(530)	875
Cash flows from investing activities:
Purchases of property and equipment	(338)	(256)
Purchase of AutoUSA		(10,044)
Net cash used in investing activities	(338)	(10,300)
Cash flows from financing activities:
Borrowings under credit facility		1,000
Borrowings under term loan		9,000
Payments on term loan borrowings	(562)	(562)
Proceeds from exercise of stock options	5	314
Net cash (used in) provided by financing activities	(557)	9,752
Net (decrease) increase in cash and cash equivalents	(1,425)	327
Cash and cash equivalents, beginning of period	20,747	18,930
Cash and cash equivalents, end of period	19,322	19,257
Supplemental disclosure of cash flow information:
Cash paid for income taxes	45	67
Cash paid for interest	$ 171	$ 110

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Computation of Basic and Diluted Net Earnings Per Share

3 Months Ended

Mar. 31, 2015

Computation of Basic and Diluted Net Income Per Share [Abstract]

Computation of Basic and Diluted Net Earnings Per Share

Basic net earnings per share is computed using the weighted average number of common shares outstanding during the period. Diluted net earnings 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 and common shares issuable upon conversion of convertible notes.  The following are the share amounts utilized to compute the basic and diluted net earnings per share for the three months ended March 31, 2015 and 2014:

	Three Months Ended March 31,
	2015		2014
Basic Shares		8,880,450		8,928,400
Weighted average dilutive securities		2,216,293		1,353,938
Dilutive Shares		11,096,743		10,282,338

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”) described below.  For the three months ended March 31, 2014, weighted average dilutive securities included dilutive options and the Cyber warrant. 

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.  For the three months ended March 31, 2014, 2.1 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 Company’s 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 Company’s sole discretion.  The impact of repurchases on the Company’s Tax Benefit Preservation Plan and on the Company’s 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 quarters ended March 31, 2015 and March 31, 2014.

Warrants.  On September 17, 2010 (“Cyber Acquisition Date”), the Company acquired substantially all of the assets of Cyber.   In connection with the acquisition of Cyber, the Company issued to the sellers a warrant to purchase 400,000 shares of Company common stock (“Cyber Warrant”). The Cyber Warrant was valued at $3.15 per share on the Cyber Acquisition Date using an option pricing model with the following key assumptions: risk-free rate of 2.3%, stock price volatility of 77.5% and a term of 8.04 years.  The Cyber Warrant was valued based on historical stock price volatilities of the Company and comparable public companies as of the Cyber Acquisition Date.  The exercise price of the Cyber Warrant is $4.65 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The Cyber Warrant became exercisable on September 16, 2013 and expires on the eighth anniversary of the issuance date.   The Cyber Warrant had not been exercised as of March 31, 2015.

The AutoUSA Warrant issued in connection with the acquisition described in Note 4 was valued at $7.35 per share for a total value of $0.5 million.  The Company used an option pricing model to determine the value of the AutoUSA Warrant.  Key assumptions used in valuing the AutoUSA Warrant are as follows: risk-free rate of 1.6%, stock price volatility of 65.0% and a term of 5.0 years.  The AutoUSA Warrant was valued based on long-term stock price volatilities of the Company.  The exercise price of the AutoUSA Warrant is $14.30 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The AutoUSA Warrant becomes exercisable on the third anniversary of the issuance date and expires on the fifth anniversary of the issuance date.  The right to exercise the AutoUSA Warrant is accelerated in the event of a change in control of the Company.

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Acquisition (Details Narratives) (USD $)	3 Months Ended
	Mar. 31, 2015	May 04, 2015	Dec. 31, 2014
Convertible subordinated promissory note	$ 5,000,000		$ 5,000,000
Conversion price per share		$ 4.65
Auto USA [Member]
Convertible subordinated promissory note fair value	1,300,000
Convertible subordinated promissory note	1,000,000
Principal convertible into shares of common stock upon meeting threshold	30,600
Conversion price per share	$ 16.34
Default interest rate maximum	8.00%
Warrant per share price	$ 7.35
Valuation assumptions
Volatilty	65.00%
Warrant exercise price	$ 14.30
Assets Acquired
Goodwill	7,346,000
Acquisition related costs	1,100,000
Net assets acquired	11,854,000
Auto USA [Member] | Warrant [Member]
Valuation assumptions
Volatilty	65.00%
Risk free rate	1.60%
Warrant term	5 years
Warrant exercise price	$ 14.30
Auto USA [Member] | Convertible Notes Payable [Member]
Principal convertible into shares of common stock upon meeting threshold	$ 30,600,000
Conversion price per share	$ 16.34
Default interest rate maximum	8.00%
Warrant issued	69,930
Valuation assumptions
Market yield	1.60%
Volatilty	65.00%

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Selected Balance Sheet Accounts (Details 1) (USD $) In Thousands, unless otherwise specified	3 Months Ended
	Mar. 31, 2015	Dec. 31, 2014
Intangible Assets
Intangible assets, gross	$ 14,468	$ 14,468
Accumulated amortization	(10,676)	(10,295)
Intangible assets, net	3,791	4,173
Trademarks and Trade Names [Member]
Intangible Assets
Intangible assets, gross	6,574	6,574
Accumulated amortization	(5,692)	(5,594)
Intangible assets, net	882	980
Finite-Lived Intangible Assets
Estimated Useful Life (in years)	5 years
Software and publications [Member]
Intangible Assets
Intangible assets, gross	1,300	1,300
Accumulated amortization	(1,300)	(1,300)
Intangible assets, net
Finite-Lived Intangible Assets
Estimated Useful Life (in years)	3 years
Customer Relationships [Member]
Intangible Assets
Intangible assets, gross	5,074	5,074
Accumulated amortization	(2,898)	(2,696)
Intangible assets, net	2,176	2,378
Customer Relationships [Member] | Minimum [Member]
Finite-Lived Intangible Assets
Estimated Useful Life (in years)	2 years
Customer Relationships [Member] | Maximum [Member]
Finite-Lived Intangible Assets
Estimated Useful Life (in years)	5 years
Noncompete Agreements [Member]
Intangible Assets
Intangible assets, gross	700	700
Accumulated amortization	(541)	(500)
Intangible assets, net	159	200
Developed Technology [Member]
Intangible Assets
Intangible assets, gross	820	820
Accumulated amortization	(246)	(205)
Intangible assets, net	$ 574	$ 615
Finite-Lived Intangible Assets
Estimated Useful Life (in years)	5 years
Employment/non-compete agreements [Member]
Finite-Lived Intangible Assets
Estimated Useful Life (in years)	5 years

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Share-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2015

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Share-based compensation expense included in costs and expenses

	Three Months Ended March 31,
	2015		2014
	(in thousands)
Share-based compensation expense:
Cost of revenues	$	25	$	17
Sales and marketing		140		109
Technology support		74		57
General and administrative [1]		417		104
Share-based compensation costs		656		287
Amount capitalized to internal use software		3		1
Total share-based compensation costs	$	653	$	286

Service based options granted during period

	Three Months Ended March 31,
	2015		2014
Number of service-based options granted		315,050		401,750
Weighted average grant date fair value	$	4.65	$	7.46
Weighted average exercise price	$	10.22	$	16.47

Stock option exercises

	Three Months Ended March 31,
	2015		2014
Number of stock options exercised		253		73,603
Weighted average exercise price	$	7.17	$	4.25

Fair value of stock options granted using the following weighted average assumptions

	Three Months Ended March 31,
	2015			2014
Dividend yield		—			—
Volatility		56	%		56	%
Risk-free interest rate		1.2	%		1.3	%
Expected life (years)		4.4			4.3