8-K/A

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________

FORM 8-K/A

(Amendment No. 1)

__________________

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) October 1, 2015

__________________

Autobytel Inc.

(Exact name of registrant as specified in its charter)

__________________

Delaware	1-34761	33-0711569
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

18872 MacArthur Boulevard, Suite 200

 Irvine, California 92612-1400

(Address of principal executive offices)

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

______________

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Explanatory Note

Autobytel Inc., a Delaware corporation (“Autobytel”), is filing this Amendment No. 1 (“Amendment No. 1”) to supplement the Current Report on Form 8-K that was filed by Autobytel on October 6, 2015 (“Original Form 8-K”).  The Original Form 8-K reported that on October 1, 2015 Autobytel entered into and consummated an Agreement and Plan of Merger (the “Merger Agreement”), by and among Autobytel, New Horizon Acquisition Corp., a Delaware corporation and wholly owned subsidiary of Autobytel (“Merger Sub”), AutoWeb, Inc., a Delaware corporation (“AutoWeb”), and Jose Vargas, in his capacity as Stockholder Representative. Pursuant to the Merger Agreement, Merger Sub merged with and into AutoWeb, with AutoWeb continuing as the surviving corporation and wholly owned subsidiary of Autobytel. The Original Form 8-K stated that the financial statements and pro forma financial information required under Item 9.01 of Form 8-K would be filed by amendment to the Original Form 8-K no later than 71 calendar days after the date the Original Form 8-K was required to be filed.  This Amendment No. 1 to the Original Form 8-K supplements Item 9.01 of the Original Form 8-K to include the required financial statements of AutoWeb and the unaudited pro forma condensed combined financial information required pursuant to Rule 3-05 and Article 11 of Regulation S-X in connection with the acquisition of AutoWeb.  No other amendments to the Original Form 8-K are being made by this Amendment No. 1.

Item 9.01                      Financial Statements and Exhibits.

(a)           Financial Statements of Businesses Acquired.

The audited financial statements of AutoWeb and unaudited interim financial statements of AutoWeb required by Item 9.01(a) of Form 8-K are filed herewith as Exhibit 99.1 and Exhibit 99.2, respectively, and incorporated herein by reference in this Item 9.01(a).

(b)           Pro Forma Financial Information.

The unaudited pro forma financial information of Autobytel and AutoWeb required by Item 9.01(b) of Form 8-K is filed herewith as Exhibit 99.3 and incorporated herein by reference in this Item 9.01(b).

(c)           Not applicable.

(d)           Exhibits.

Exhibit No.	Description
23.1	Consent of Independent Auditors
99.1	Audited Financial Statements of AutoWeb, Inc. as of and for the years ended December 31, 2013 and December 31, 2014
99.2	Unaudited Financial Statements of AutoWeb, Inc. as of and for the nine months ended September 30, 2014 and September 30, 2015
99.3	Unaudited Pro Forma Condensed Combined Financial Information of Autobytel Inc. and AutoWeb, Inc. for the year ended December 31, 2014 and as of and for the nine months ended September 30, 2015

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SIGNATURES

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

	AUTOBYTEL INC.
Date: December 16, 2015
	By:	/s/ Glenn E. Fuller
		Glenn E. Fuller
		Executive Vice President, Chief Legal and
		Administrative Officer and Secretary

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EX-23.1

EXHIBIT 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements on Form S-8 (333-197325, 333-168834, 333-135076, 333-116930, 333-90045, 333-77943, 333-39396 and 333-67692) and Registration Statement on Form S-3 (333-194187) of Autobytel Inc. of our report dated December 16, 2015, with respect to the financial statements of AutoWeb, Inc., included in the Form 8-K/A of Autobytel Inc.

/s/ Moss Adams LLP

Los Angeles, California

December 16, 2015

EX-99.1

Exhibit 99.1

Financial Statements and Report of Independent Auditors

AutoWeb, Inc.

December 31,  2014 & 2013

Contents

	Page
Report of Independent Auditors	1
Balance Sheet	2
Statement of Operations	3
Statement of Stockholders’ Equity	4
Statement of Cash Flows	5
Notes to Financial Statements	6 - 14

i

REPORT OF INDEPENDENT AUDITORS

The Board of Directors

AutoWeb, Inc.

Report on the Financial Statements

We have audited the accompanying financial statements of AutoWeb, Inc., which comprise the balance sheetsas of December 31, 2014 and 2013, and the related statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2014 and for the period from August 29, 2013 (inception) through December 31, 2013, and the related notes to the financial statements.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements  in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of AutoWeb, Inc. as of December 31, 2014 and 2013, and the results of its operations and its cash flows for the for the year ended December 31, 2014 and for the period from August 29, 2013 (inception) through December 31, 2013 in accordance with accounting principles generally accepted in the United States of America.

/s/ Moss Adams LLP

Los Angeles, California

December 16, 2015

1

Balance Sheet

	December 31,
	2014			2013
ASSETS
Current assets:
Cash and cash equivalents	$	2,334,612		$	2,088,406
Accounts receivable		615,531			-
Due from related party		155,894			100,312
Advances made to related party		150,000			-
Prepaid expenses		3,876			-
Total current assets		3,259,913			2,188,718
Furniture, fixtures, software, and equipment, net		800,962			197,378
Intangible assets, net		1,704,752			2,159,353
Other assets		37,452			10,628
Total assets	$	5,803,079		$	4,556,077
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	44,372		$	3,491
Due to related party		342,372			38,050
Accrued expenses		55,445			2,919
Total current liabilities		442,189			44,460
Deferred tax liability		-			685,572
Total liabilities		442,189			730,032
Stockholders' equity
Common stock, par value $0.01 per share - 80,000 shares authorized; 42,000 shares issued and outstanding		100			100
Series A Preferred stock, 13,000 shares authorized, 8,000 shares issued and outstanding		4,000,000			4,000,000
Series B Preferred stock, 8,000 shares authorized, 7,798 shares issued and outstanding		6,380,382			-
Preferred stock subscription receivable		(2,499,632	)		-
Accumulated deficit		(2,519,960	)		(174,055	)
Total stockholders' equity		5,360,890			3,826,045
Total liabilities and stockholders' equity	$	5,803,079		$	4,556,077

2

Statements of Operations

	Year ended			Period from August 29, 2013 (Inception) through
	December 31,			December 31,
	2014			2013
Revenue	$	1,112,541		$	-
Revenue from related party		1,254,454			100,312
Total revenue		2,366,995			100,312
Cost of revenue (including amortization of capitalized software for internal use of $148,986 and $6,483 at December 31, 2014 and 2013, respectively)		551,424			11,556
Cost of revenue with related party		1,182,181			30,682
Total cost of revenue		1,733,605			42,238
Expenses:
Selling, general and administrative		3,070,375			191,059
Marketing		111,343			14,250
Depreciation and amortization		476,041			115,239
Total operating expenses		3,657,759			320,548
Loss from operations		(3,024,369	)		(262,474	)
Other (income)/expense, net		6,308			(988	)
Loss before income taxes		(3,030,677	)		(261,486	)
Income tax provision/(benefit)		(684,772	)		(87,431	)
Net loss	$	(2,345,905	)	$	(174,055	)

3

Statements of Stockholders' Equity

	Common Stock				Preferred Stock (Series A)				Preferred Stock (Series B)				Preferred Stock Subscription			Accumulated			Total Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Receivable			Deficit			Equity
Inception - August 29, 2013		-	$	-		-	$	-		-	$	-	$	-		$	-		$	-
Capital contribution		42,000		100		5,000		2,500,000		-		-		-			-			2,500,100
Contributed domain name		-		-		3,000		1,500,000		-		-		-			-			1,500,000
Net loss		-		-		-		-		-		-		-			(174,055	)		(174,055	)
Balance at December 31, 2013		42,000	$	100		8,000	$	4,000,000		-	$	-	$	-		$	(174,055	)	$	3,826,045
Capital contribution		-	$	-		-	$	-		7,798	$	6,380,382	$	(2,499,632	)	$	-		$	3,880,750
Net loss		-		-		-		-		-		-		-			(2,345,905	)		(2,345,905	)
Balance at December 31, 2014		42,000	$	100		8,000	$	4,000,000		7,798	$	6,380,382	$	(2,499,632	)	$	(2,519,960	)	$	5,360,890

4

Statements of Cash Flows

	Year ended			Period from August 29, 2013 (Inception) through
	December 31,			December 31,
	2014			2013
Cash flows fom operating activities:
Net loss	$	(2,345,905	)	$	(174,055	)
Adjustments to reconcile net loss to cash flows used in operating activities:
Depreciation and amortization		625,026			121,722
Deferred taxes		(685,572	)		(87,431	)
Changes in operating assets and liabilities:
Accounts receivable		(671,113	)		(100,312	)
Prepaid and other assets		(180,700	)		(10,628	)
Accounts payable		40,881			3,491
Accrued expenses and other current liabilities		356,850			40,969
Net cash flows used in operating activities		(2,860,533	)		(206,244	)
Cash flows from investing activities:
Purchases of property and equipment		(774,011	)		(205,450	)
Net cash flows used in investing activities		(774,011	)		(205,450	)
Cash flows from financing activities:
Proceeds from stock issuance		3,880,750			2,500,100
Net cash flows provided by financing activities		3,880,750			2,500,100
Net increase in cash and cash equivalents		246,206			2,088,406
Cash and cash equivalents, beginning of period		2,088,406			-
Cash and cash equivalents, end of period	$	2,334,612		$	2,088,406
Non-cash financing activities
The Company exchanged 3,000 shares of Series A Preferred stock to Autobytel, Inc., a shareholder of the Company, for a domain name, which was valued at $1,500,000. The domain name carrying value was increased by an additional $773,003 due to tax rules under ASC 740-10-25, for acquired temporary differences in certain purchase transactions that are not accounted for as business combinations.

5

NOTES TO FINANCIAL STATEMENTS

NOTE A - ORGANIZATION AND NATURE OF BUSINESS

AutoWeb, Inc. (the “Company”) was incorporated in the State of Delaware on August 29, 2013 under the name AutoWeb, Inc. The Company was formed through initial contributions from its founders and others in the lead generation industry.  Effective September 18, 2013, the Company acquired the domain name from Autobytel, Inc. (“Autobytel”), a shareholder of the Company, for $1,500,000 worth of Series A Preferred stock, which was used to launch the Company into its current market.  The Company is a programmatic pay-per-click platform that provides services to advertisers in the automotive industry including car dealers and third-party websites. Advertisers (the “Customers”) create listings for their campaigns and pay for advertising on a cost-per-click (“CPC”) basis. The Company has operating offices in Miami and Detroit and back office support in Guatemala. The Customers’ advertisements appear as a search result on user-initiated queries on various web domains owned by the Company and third parties matched by category, location and demographic qualifiers.

On October 1, 2015, the Company entered into and consummated an Agreement and Plan of Merger (the “Merger Agreement”), by and among Autobytel and New Horizon Acquisition Corp., wholly owned subsidiary of Autobytel (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Autobytel.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The Company’s financial statements include all revenue, costs, assets, liabilities, and cash flows directly attributable to the Company.

Use ofEstimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.

CashandCashEquivalents

Cash and cash equivalents include all highly liquid investments with an original maturity of 90 days or less. The Company maintains its cash in bank deposit accounts with major financial institutions, which at times may exceed federally insured limits. The Company has not experienced any losses in regards to these deposits.

AccountsReceivable

The Company’s accounts receivable are based on the number of clicks charged to the customer. The Company considers previous operating history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and industry as a whole in determining an allowance for doubtful accounts. The Company writes off receivables when they become uncollectible with any subsequent receipt of amounts previously written off credited to the allowance for doubtful accounts. As of December 31, 2014 and December 31, 2013 the Company did not record an allowance for doubtful accounts.

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NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

ConcentrationofCreditRisk

The Company’s financial instruments, which are potentially subject to concentration of credit risk, are primarily accounts receivable.  For the year ended December 31, 2014 the Company had four customers that had accounts receivable balances in excess of 10%.  Two of these customers accounted for 72% of the Company’s revenues.  For the period from August 29, 2013 (inception) through December 31, 2013 the Company had one major customer that accounted for 100% of the revenues of the Company and the accounts receivable.

ConcentrationofSupplierRisk

The Company has two main suppliers that represent the majority of its purchases as of the year ended December 31, 2014 and for the period ended from August 29, 2013 (inception) through December 31, 2013.  These two suppliers represent 85% and 91% of its accounts payable at December 31, 2014 and December 31, 2013.

The application of existing laws and regulations to the internet industry is continually evolving and is not entirely settled.  The business may be negatively affected by a variety of new or existing laws and regulations, which may expose the Company to substantial compliance costs and liabilities and may impede growth in the use of the internet.

RevenueRecognition

The Company sells hyperlink advertising on the Company’s and third parties’ web sites on a pay-per-click (PPC) basis. Revenue is earned each time a visitor to the Company’s or third parties’ web site clicks on a hyperlink advertisement, net of invalid clicks. Advertisers and the Company enter into contracts that include agreed upon rates. The Company recognizes revenue once the valid click is made. The Company bills their customers monthly based on the number of valid clicks multiplied by the contracted rate. In addition, the Company has entered into a contract with a related party in Guatemala, for use of the Company’s personnel. Revenue is recognized on this contract as the services are provided.

FairValueofFinancialInstruments

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short term maturities of these assets and liabilities.

Furniture,Fixtures,SoftwareandEquipment

Furniture, fixtures, software and equipment is stated at cost. Depreciation is computed using the straight- line and accelerated methods over the estimated useful lives of the assets. The estimated useful lives are as follows:

	Years
Capitalized software for internal use	5
Furniture and fixtures	5
Computer equipment	5

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NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Domain Name

Domain names may be acquired individually or as part of a portfolio for prices based on arm’s-length negotiations.  Domain purchases are recorded at acquisition cost and are amortized using the straight-line method over their estimated useful lives, which is five years.  In order to secure and maintain the rights to each domain name acquired, the Company pays registration fees which generally cover a minimum period of 12 months.  The Company records all registration fees, including the initial fee upon name transfer and subsequent renewal fees, as deferred domain registration fees and recognizes the cost over the related performance period in service costs.

ImpairmentofLong-LivedAssetsIncludingIntangibleAssets

FASB ASC 350, Intangibles - Goodwill and Other requires that intangible assets with finite lives be amortized over their estimated useful life and reviewed for impairment. The Company continually monitors events and changes in circumstances that could indicate carrying amounts of our long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of the long-lived assets including intangible assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. There was no impairment of long-lived assets, including intangible assets for the year ended December 31, 2014 and for the period from August 29, 2013(inception) through December 31, 2013.

Capitalized Software for Internal Use

The Company incurs costs to develop software for internal use which are accounted for under ASC 350- 40, Intangibles—Goodwill and Other—Internal-Use Software. The Company expenses all costs that relate to the preliminary project and post-implementation operation phases of development as product development expense. Costs incurred in the application development phase are capitalized until the project is completed and the asset is placed in service. The Company capitalized software for internal use totaling approximately $615,000 during the year ended December 31, 2014 and $130,000 during the year ended December 31, 2013, which are recorded as a component of furniture, fixtures, software and equipment, on the balance sheet. The Company recorded $149,000 and $6,000 of amortization expense for the year ended December 31, 2014 and for the period from August 29, 2013(inception) through December 31, 2013, respectively.

IncomeTaxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results, or the ability to implement tax-planning strategies varies, adjustments to the carrying value of the deferred tax assets and liabilities may be required. Valuation allowances are based on the “more likely than not” criteria of ASC 740.

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NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

The accounting for uncertain tax positions guidance under ASC 740 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely- than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties on uncertain tax positions as a component of income tax expense, if applicable. The Company does not have any material uncertain tax positions; therefore, there was no impact on the Company’s financial statements.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 requires an entity to recognize revenue depicting the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will also result in enhanced revenue related disclosures.  In July 2015, the FASB decided to defer the effective date of ASU 2014-09 by one year. As a result, this standard will be effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2019. The Company has not yet determined the impact of ASU 2014-09 on its consolidated results of operations, financial condition, or cash flows.

NOTE C - FURNITURE, FIXTURES AND EQUIPMENT

At December 31, 2014 and 2013 furniture, fixtures and equipment consisted of the following:

	December 31,
	2014		2013
Furniture and fixtures	$	41,570	$	27,923
Project in process		64,848		-
Capitalized software for internal use		744,932		129,658
Computer equipment		128,110		47,869
		979,460		205,450
Less accumulated depreciation and amortization		178,498		8,072
	$	800,962	$	197,378

Depreciation and amortization for the year ended December 31, 2014 and for the period from August 29, 2013 (inception) through December 31,2013 were $170,426 and $8,072, respectively.

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NOTE D - INTANGIBLE ASSETS

The Company acquired the domain name on September 18, 2013 from Autobytel, Inc., one of the shareholders of the Company, for 3,000 shares of Series A Preferred stock.  The Company valued the domain name at $1,500,000, which was based upon the relative fair value of the stock exchanged.  The carrying value of the domain name acquired was further increased by $773,003, for a total carrying value of $2,273,003, due to tax rules under ASC 740-10-25 for acquired temporary differences in certain purchase transactions that are not accounted for as business combinations.  The domain name is being amortized over five years.  The domain name was assessed for impairment and no losses were recorded for the year ended December 31, 2014 and for the period from August 29, 2013 (inception) through December 31, 2013.

Amortization expense was approximately $113,650 and $454,601 for the year ended December 31, 2014 and for the period from August 29, 2013 (inception) through December 31, 2013, respectively.  Future amortization expense as of December 31, 2014 is expected to be:

	Amortization
Year ending December 31:	Expense
2015	$	454,601
2016		454,601
2017		454,601
2018		340,949
	$	1,704,752

NOTE E - STOCKHOLDERS’ EQUITY

During 2013, 42,000 shares of common stock were issued for $100 to the majority owner of the Company. The common stockholders have voting rights and give each of the holders the right to participate in the governance of the Company (one vote per share).

In addition during 2013, the Company issued 8,000 of Series A Preferred Stock. The preferred stock has a par value or $0.01 per share and was issued at a price of $500 per share.  Of the 8,000 shares of Series A Preferred Stock, 5,000 shares were issued for cash consideration of $2,500,000 and the remaining 3,000 shares were issued in exchange for a domain name valued at $1,500,000. The holders of these shares have the right to participate in the governance of the Company through their voting rights of one vote per share on all matters to be voted on by the Company’s stockholders. The Preferred A shares have a liquidation value of $1,000 and have a preference over the Company’s common stock upon liquidation or dissolution of the Company. The Preferred A shares are convertible into a fixed number of common shares in a 1:1 ratio. The holders of he Preferred A shares have an option to purchase 5,000 additional shares of Preferred A shares at $500 a share, that is exercisable through September 2015.

On February 14, 2014, the Company’s Board of Directors approved the adoption of the AutoWeb, Inc. 2014 Equity Incentive Plan (“the Plan”) and reserved 5,000 shares of common stock for grants to be issued under the plan.  At December 31, 2014 and 2013 no grants were issued under the Plan.

On November 17, 2014, the Company issued 7,798 shares of its Series B preferred stock. The preferred stock was issued at a price of $818.21. Of the 7,798 shares issued, proceeds for 3,055 shares were not received at the date of issuance, resulting in a preferred stock subscription receivable of $2,499,632.  The holders of these shares have the right to participate in the governance of the Company through their voting rights. The Preferred B shares have a liquidation value of $818.21 and have a preference over the Company’s common stock upon liquidation or dissolution of the Company. The Preferred B shares are convertible into a fixed number of common shares in a 1:1 ratio.

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NOTE F - RELATED-PARTY TRANSACTIONS

The Company has an investor, customer and vendor relationship with Autobytel. The Company’s accounts receivable balance contains approximately $156,000 and $100,000 due from Autobytel for the years ended December 31, 2014 and 2013, respectively, and accounts payable balance of approximately $206,000 and $30,000 owing to Autobytel for the years ended December 31, 2014 and 2013, respectively. In addition, the Company’s revenue includes $1,254,000 and $100,000 of revenue with Autobytel for the year ended December 31, 2014 and for the period from August 29, 2013 (inception) through December 31, 2013, respectively, and publisher costs of $1,103,000 and $30,000 with Autobytel for the year ended December 31, 2014 and for the period from August 29, 2013 (inception) through December 31, 2013, respectively. In 2013, the Company purchased a domain name from Autobytel, in the amount of $1,500,000 and the purchase was funded by issuance of Preferred Series A shares.

In addition, the Company has made an advance, in the amount of $150,000 to a related party in Guatemala which will be settled in 2015. This related party performs certain development and related services for the Company. These services totaled $811,000 and $43,000 for the year ended December 31 2014 and for the period from August 29, 2013 (inception) through December 31, 2013, respectively, of which $79,000 and $1,000 was recorded in cost of revenue with related party for the year ended December 31, 2014 and for the period from August 29, 2013 (inception) through December 31, 2013, respectively, and $732,000 and $16,000 for the year ended December 31, 2014 and for the period from August 29, 2013 (inception) through December 31, 2013 are recorded in operating expense.

NOTE G - INCOME TAXES

Income tax expense (benefit) from continuing operations for the year ended December 31, 2014 and for the period August 29, 2013 (inception) through December 31, 2013 are as follows:

	2014			2013
Current
Federal		-			-
State		800			-
		800			-
Deferred
Federal		(685,327	)		(87,400	)
State		(245	)		(31	)
		(685,572	)		(87,431	)
Total income tax expense (benefit)		(684,772	)		(87,431	)

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NOTE G - INCOME TAXES - Continued

The reconciliations of the U.S. federal statutory rate to the effective income tax rate for the year ended December 31, 2014 and for the period August 29, 2013 (inception) through December 31, 2013 are as follows:

	2014			2013
Tax provision at U.S. Federal statutory rates		34.0	%		34.0	%
State income taxes net of federal benefit		1.7	%		0.0	%
Non-deductible permanent items		-0.3	%		-.06	%
Other		0.0	%		0.0	%
Change in valuation allowance		-12.8	%		0.0	%
Effective income tax rate		22.6	%		33.4	%

Deferred income taxes reflect the net tax effect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.  Significant components of the Company's deferred taxes as of December 31, 2014 and 2013 are as follows:

	2014			2013
Deferred tax assets:		1,011,215			27,071
Net operating loss carryforwards		272			-
Other		1,011,487			27,071
Total deferred tax assets		(387,229	)		-
Valuation allowance		624,258			27,071
Deferred tax liabilities
Intangibles and fixed assets		(624,258	)		(712,643	)
Total deferred tax liabilities		(624,258	)		(712,643	)
Net deferred tax assets / (liabilities)		-			(685,572	)

FASB ASC 740 - Income Taxes requires that a valuation allowance be established to reduce a deferred tax asset to its realizable value when it is more likely than not that all or a portion of a deferred tax asset will not be realized.  A review of all positive and negative evidence needs to be considered, including the utilization of past tax credits and length of carry-back and carry-forward periods, reversal of temporary differences, tax planning strategies, our current and past performance, the market environment in which we operate, and the evaluation of tax planning strategies to generate future taxable income.

As of December 31, 2014, the Company had gross deferred tax assets in excess of deferred tax liabilities. The Company determined that it is "more likely than not" that substantially all of the deferred tax assets will not be realized and therefore a full valuation allowance has been applied to the Company's deferred tax assets as of December 31, 2014.  The valuation allowance relates primarily to the deferred tax assets arising from operating loss carry-forwards.

As of December 31, 2014 and 2013, the Company had Federal net operating loss carry-forwards of approximately $2,580,000 and $80,000, respectively.  As of December 31, 2014 and 2013, the Company had state net operating loss carry-forwards of approximately $2,394,000 and $0, respectively.  These net operating loss carry-forwards will begin to expire in 2033 for Federal and state purposes.

12

NOTE G - INCOME TAXES - Continued

As of December 31, 2014 and 2013, the Company does not have any unrecognized tax benefits related to various federal and state income tax matters.  The Company will recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.

The Company is subject to U.S. federal income tax as well as income tax in multiple state tax jurisdictions.  The Company's federal and state income tax returns are open to audit under the statute of limitations for the year ended December 31, 2014 and for the period from August 29, 2013 (inception) through December 31, 2013.  The Company does not anticipate material unrecognized tax benefits within the next twelve months.

NOTE H - COMMITMENTS AND CONTINGENCIES

Leases

The Company leases office space in certain cities in the United States. These leases are accounted for as operating leases. Total rent expense for the years ended December 31, 2014 and for the period from August 29, 2013 (inception) through December 31, 2013 amounted to approximately $116,000 and $10,000, respectively.

Future minimum lease payments under non-cancelable operating leases having initial lease terms in excess of one year as of December 31, 2014 are as follows:

Year ending December 31:	Operating Leases
2015	$	126,000
2016		157,000
2017		175,000
2018		117,000
2019		88,000
Thereafter		52,000
Total minimum lease payments	$	715,000

Litigation

The Company is, in the routine operation of its business, subject to litigation, claims, assessments and various other legal matters. However, management is not aware of any pending or threatened litigation, claims, assessments or unasserted claims or assessments that are required to be accrued or disclosed in the financial statements.

13

NOTE I - SUBSEQUENT EVENTS

On October 1, 2015, the Company entered into and consummated an Agreement and Plan of Merger (the “Merger Agreement”), by and among Autobytel and New Horizon Acquisition Corp., wholly owned subsidiary of Autobytel (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Autobytel.

The merger consideration consisted of: (1) 168,007 newly issued shares of Series B Junior Participating Convertible Preferred Stock, par value $0.001 per share, of Autobytel (“Series B Preferred Stock”), (2) warrants to purchase up to 148,240 shares of Series B Preferred Stock and (3) $279,299 in cash to cancel vested, in-the-money options to acquire shares of the Company’s common stock. The number of Series B Preferred Stock and Warrants issued are subject to a post-closing adjustment based on the Company’s working capital as of the closing date of the transaction.

The shares of Series B Preferred Stock are convertible, subject to certain limitations, into ten (10) shares of Common Stock. All shares will be automatically converted if the stockholder approval required by Section 5635 of the Nasdaq listing rules is obtained.

The Company has evaluated subsequent events through December 16, 2015, which is the date the financial statements were available to be issued.

14

EX-99.2

EXHIBIT 99.2

Unaudited Financial Statements

Autoweb, Inc.

Nine-Month Period Ending

September 30, 2015

Contents

	Page
Unaudited Balance Sheet	1
Unaudited Statement of Operations	2
Unaudited Statement of Stockholders’ Equity	3
Unaudited Statement of Cash Flows	4
Unaudited Notes to Financial Statements	5-12

-i-

Unaudited Balance Sheet

	September 30,
	2015			2014
ASSETS
Current assets:
Cash and cash equivalents	$	2,267,367		$	291,387
Accounts receivable		1,002,103			189,494
Due from related party		266,391			177,939
Prepaid expenses		3,876			-
Total current assets		3,539,737			658,820
Furniture, fixtures, software, and equipment, net		1,613,060			589,359
Intangible assets, net		1,363,802			1,818,402
Advances made to related party		150,000			150,000
Other assets		63,235			16,540
Total assets	$	6,729,834		$	3,233,121
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	77,570		$	138,104
Due to related party		436,793			716,622
Accrued expenses		30,612			55,230
Total current liabilities		544,975			909,956
Deferred tax liability		-			171,393
Total liabilities		544,975			1,081,349
Stockholders' equity
Series A Preferred stock, 13,000 shares authorized, 8,000 shares issued and outstanding		4,000,000			4,000,000
Series B Preferred stock, 8,000 shares authorized, 7,798 shares issued and outstanding		6,380,382			-
Common stock, par value $0.01 per share - 80,000 shares authorized; 42,000 shares issued and outstanding		100			100
Additional paid in capital		31			-
Accumulated deficit		(4,195,654	)		(1,848,328	)
Total stockholders' equity		6,184,859			2,151,772
Total liabilities and stockholders' equity	$	6,729,834		$	3,233,121

1

Unaudited Statements of Operations

	Nine Months Ended September 30,
	2015			2014
Revenue	$	2,854,544		$	381,605
Revenue from related party		972,636			1,015,386
Total revenue		3,827,180			1,396,991
Cost of revenue (including amortization of capitalized software for internal use of $179,509 and $83,920 at September 30, 2015 and 2014, respectively)		470,710			357,516
Cost of revenue with related party		1,728,963			703,379
Total cost of revenue		2,199,673			1,060,895
Expenses:
Selling, general and administrative		2,763,990			2,047,566
Marketing		170,186			95,973
Depreciation and amortization		371,718			354,861
Total operating expenses		3,305,894			2,498,400
Loss from operations		(1,678,387	)		(2,162,304	)
Other (income)/expense, net		(3,319	)		688
Loss before income taxes		(1,675,068	)		(2,162,992	)
Income tax provision/(benefit)		626			(488,721	)
Net Loss	$	(1,675,694	)	$	(1,674,271	)

2

Unaudited Statements of Stockholders' Equity

	Common Stock				Preferred Stock (Series A)				Preferred Stock (Series B)				Preferred Stock Subscription			Accumulated			Total Stockholders'
	Shares		Amount		Shares		Amount		Shares		Amount		Receivable			Deficit			Equity
Balance at December 31, 2013		42,000	$	100.00		8,000	$	4,000,000.00		-	$	-	$	-		$	(174,057	)	$	3,826,043
Net loss		-		-		-		-		-		-		-			(1,674,271	)		(1,674,271	)
Balance at September 30, 2014		42,000	$	100		8,000	$	4,000,000		-	$	-	$	-		$	(1,848,328	)	$	2,151,772
Balance at December 31, 2014		42,000	$	100		8,000	$	4,000,000		7,798	$	6,380,382	$	(2,499,632	)	$	(2,519,960	)	$	5,360,890
Collection on stock subscription		-		-		-		-		-		-		2,499,632			-			2,499,632
Stock award		-		31		-		-		-		-		-			-			31
Net loss		-		-		-		-		-		-		-			(1,675,694	)		(1,675,694	)
Balance at September 30, 2015		42,000	$	131		8,000	$	4,000,000		7,798	$	6,380,382	$	-		$	(4,195,654	)	$	6,184,859

3

Unaudited Statements of Cash Flows

	Nine Months Ended September 30,
	2015			2014
Cash flows fom operating activities:
Net loss	$	(1,675,694	)	$	(1,674,271	)
Adjustments to reconcile net earnings to cash flows used in operating activities:
Depreciation and amortization		551,227			438,781
Deferred taxes		-			(514,179	)
Changes in operating assets and liabilities:
Accounts receivable		(497,069	)		(267,121	)
Prepaid and other assets		(25,783	)		(155,912	)
Accounts payable		33,198			134,613
Accrued expenses and other current liabilities		69,587			730,881
Net cash flows used in operating activities		(1,544,534	)		(1,307,208	)
Cash flows from investing activities:
Purchases of property and equipment		(1,022,374	)		(489,811	)
Net cash flows used in investing activities		(1,022,374	)		(489,811	)
Cash flows from financing activities:
Collection on stock subscription		2,499,632			-
Grant of stock award		31			-
Net cash flows provided by financing activities		2,499,663			-
Net decrease in cash and cash equivalents		(67,245	)		(1,797,019	)
Cash and cash equivalents, beginning of period		2,334,612			2,088,406
Cash and cash equivalents, end of period	$	2,267,367		$	291,387

4

UNAUDITED NOTES TO FINANCIAL STATEMENTS

NOTE A - ORGANIZATION AND NATURE OF BUSINESS

Autoweb, Inc. (the “Company”) was incorporated in the State of Delaware on August 29, 2013 under the name AutoWeb, Inc. The Company was formed through initial contributions from its founders and others in the lead generation industry.  Effective September 18, 2013, the Company acquired the domain name from Autobytel Inc. (“Autobytel”), a shareholder of the Company, for $1,500,000 worth of Series A Preferred stock, which was used to launch the Company into its current market.  The Company is a programmatic pay-per-click platform that provides services to advertisers in the automotive industry including car dealers and third-party websites. Advertisers (the “Customers”) create listings for their campaigns and pay for advertising on a cost-per-click (“CPC”) basis. The Company has operating offices in Miami and Detroit and back office support in Guatemala. The Customers’ advertisements appear as a search result on user-initiated queries on various web domains owned by the Company and third parties matched by category, location and demographic qualifiers.

On October 1, 2015, the Company entered into and consummated an Agreement and Plan of Merger (the “Merger Agreement”), by and among Autobytel and New Horizon Acquisition Corp., wholly owned subsidiary of Autobytel (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Autobytel.

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“US GAAP”). The Company’s financial statements include all revenue, costs, assets, liabilities, and cash flows directly attributable to the Company.

Use ofEstimates

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent gains and losses at the date of the financial statements and the reported amounts of revenue and expenses during the period. Actual results could differ from those estimates.

CashandCashEquivalents

Cash and cash equivalents include all highly liquid investments with an original maturity of 90 days or less. The Company maintains its cash in bank deposit accounts with major financial institutions, which at times may exceed federally insured limits. The Company has not experienced any losses in regards to these deposits.

5

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

AccountsReceivable

The Company’s accounts receivable are based on the number of clicks charged to the customer. The Company considers previous operating history, the customer’s current ability to pay its obligation to the Company, and the condition of the general economy and industry as a whole in determining an allowance for doubtful accounts. The Company writes off receivables when they become uncollectible with any subsequent receipt of amounts previously written off credited to the allowance for doubtful accounts. As of September 30, 2015 and September 30, 2014 the Company did not record an allowance for doubtful accounts.

ConcentrationofCreditRisk

The Company’s financial instruments, which are potentially subject to concentration of credit risk, are primarily accounts receivable. For the nine months ended September 30, 2015, the Company had five customers that had accounts receivable balances in excess of 10%. Three of these customers accounted for 53% of the Company’s revenues.  For the nine months ended September 30, 2014, the Company had two customers that had accounts receivable balances in excess of 10% and the same two customers accounted for 89% of the Company’s revenues.

ConcentrationofSupplierRisk

The Company has three main suppliers that represent the majority of its purchases. As of the nine months ended September 30, 2015 three suppliers represented 95% of the Company’s accounts payable, and as of the nine months ended September 30, 2014 three suppliers represented 92% of the Company’s accounts payable.

RevenueRecognition

The Company sells hyperlink advertising on the Company’s and third parties’ web sites on a pay-per-click (PPC) basis. Revenue is earned each time a visitor to the Company’s or third parties’ web site clicks on a hyperlink advertisement, net of invalid clicks. Advertisers and the Company enter into contracts that include agreed upon rates. The Company recognizes revenue once the valid click is made. The Company bills their customers monthly based on the number of valid clicks multiplied by the contracted rate. In addition, the Company has entered into a contract with a related party, for use of the Company’s personnel. Revenue is recognized on this contract as the services are provided.

FairValueofFinancialInstruments

The carrying values of cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value due to the short term maturities of these assets and liabilities.

6

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

Furniture,Fixtures,SoftwareandEquipment

Furniture, fixtures, software and equipment is stated at cost. Depreciation is computed using the straight- line and accelerated methods over the estimated useful lives of the assets. The estimated useful lives are as follows:

	Years
Capitalized software for internal use	5
Furniture and fixtures	5
Computer equipment	5

Domain Name

Domain names may be acquired individually or as part of a portfolio for prices based on arm’s-length negotiations.  Domain purchases are recorded at acquisition cost and are amortized using the straight-line method over their estimated useful lives, which is five years.  In order to secure and maintain the rights to each domain name acquired, the Company pays registration fees which generally cover a minimum period of 12 months.  The Company records all registration fees, including the initial fee upon name transfer and subsequent renewal fees, as deferred domain registration fees and recognizes the cost over the related performance period in service costs.

ImpairmentofLong-LivedAssetsIncludingIntangibleAssets

FASB ASC 350, Intangibles - Goodwill and Other requires that intangible assets with finite lives be amortized over their estimated useful life and reviewed for impairment. The Company continually monitors events and changes in circumstances that could indicate carrying amounts of our long-lived assets may not be recoverable. When such events or changes in circumstances occur, the Company assesses the recoverability by determining whether the carrying value of such assets will be recovered through the undiscounted expected future cash flows. If the future undiscounted cash flows are less than the carrying amount of the long-lived assets including intangible assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. There was no impairment of long-lived assets, including intangible assets for the years ended December 31, 2014 and 2013.

7

NOTE B - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Continued

CapitalizedSoftwareforInternalUse

The Company incurs costs to develop software for internal use which are accounted for under ASC 350- 40, Intangibles—Goodwill and Other—Internal-Use Software. The Company expenses all costs that relate to the preliminary project and post-implementation operation phases of development as product development expense. Costs incurred in the application development phase are capitalized until the project is completed and the asset is placed in service. The Company capitalized software for internal use totaling approximately $452,000 during the nine months ended September 30, 2015 and $430,000 during the nine months ended September 30, 2014, which are recorded as a component of furniture, fixtures, software and equipment, on the balance sheet. The Company recorded $180,000 and $84,000 of amortization expense for the nine months ended September 30, 2015 and 2014, respectively.

IncomeTaxes

The Company accounts for income taxes in accordance with ASC 740, Income Taxes. Under this method, deferred income taxes are determined based on the estimated future tax effects of differences between the financial statement and tax basis of assets and liabilities given the provisions of enacted tax laws. Deferred income tax provisions and benefits are based on changes to the assets or liabilities from year to year. In providing for deferred taxes, we consider tax regulations of the jurisdictions in which we operate, estimates of future taxable income, and available tax planning strategies. If tax regulations, operating results, or the ability to implement tax-planning strategies varies, adjustments to the carrying value of the deferred tax assets and liabilities may be required. Valuation allowances are based on the “more likely than not” criteria of ASC 740.

The accounting for uncertain tax positions guidance under ASC 740 requires that the Company recognize the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely- than-not threshold, the amount recognized in the financial statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties on uncertain tax positions as a component of income tax expense, if applicable. The Company does not have any material uncertain tax positions; therefore, there was no impact on the Company’s financial statements.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers,” which outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. ASU 2014-09 requires an entity to recognize revenue depicting the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 will also result in enhanced revenue related disclosures.  In July 2015, the FASB decided to defer the effective date of ASU 2014-09 by one year. As a result, this standard will be effective for fiscal years, and interim reporting periods within those years, beginning after December 15, 2017. The Company has not yet determined the impact of ASU 2014-09 on its consolidated results of operations, financial condition, or cash flows.

8

NOTE C - FURNITURE, FIXTURES AND EQUIPMENT

At September 30, 2015 and 2014 furniture, fixtures and equipment consisted of the following:

	September 30,
	2015		2014
Furniture and fixtures	$	527,230	$	32,041
Project in process		79,383		10,452
Capitalized software for internal use		1,196,727		559,467
Computer equipment		198,495		93,301
		2,001,835		695,261
Less accumulated depreciation and amortization		388,775		105,902
	$	1,613,060	$	589,359

Depreciation and amortization for the nine months ended September 30, 2015 and 2014 were $551,227 and $438,781, respectively.

NOTE D - INTANGIBLE ASSETS

The Company acquired the domain name on September 18, 2013 from Autobytel, one of the shareholders of the Company, for 3,000 shares of Series A Preferred stock.  The Company valued the domain name at $1,500,000, which was based upon the relative fair value of the stock exchanged.  The carrying value of the domain name acquired was further increased by $773,003, for a total carrying value of $2,273,003, due to tax rules under ASC 740-10-25 for acquired temporary differences in certain purchase transactions that are not accounted for as business combinations.  The domain name is being amortized over five years.  The domain name was assessed for impairment and no losses were recorded for the nine months ended September 30, 2015 and 2014.

Amortization expense was approximately $340,950 and $340,950 for the nine months ended September 30, 2015 and 2014, respectively.  Future amortization expense as of September 30, 2015 is expected to be:

	Amortization
Year ending December 31:	Expense
October-December 2015	$	113,650
2016		454,601
2017		454,601
2018		340,950
	$	1,363,802

9

NOTE E - STOCKHOLDERS’ EQUITY

On February 14, 2014, the Company’s Board of Directors approved the adoption of the AutoWeb, Inc. 2014 Equity Incentive Plan (“the Plan”) and reserved 5,000 shares of common stock for grants to be issued under the plan.  Under such plan, the Company granted 640 options to five employees in January 2015 with a strike price of $229.29, and 100 stock options to two employees in May 2015 with a strike price of $229.29. The vested shares and related expense of these options as of the nine months ended September 30, 2015 and 2014 are immaterial and have not been recorded as of the nine months ended September 30, 2015 and 2014.  The Company also granted 3,140 stock awards to two employees in April 2015 with a per share fair market value of $229.29 and a per share purchase price of $0.01.  As of the nine months ended September 30, 2015 and 2014 no portion of these stock awards have vested.

On November 17, 2014, the Company issued 7,798 shares of its Series B preferred stock. The preferred stock was issued at a price of $818.21. Of the 7,798 shares issued, proceeds for 3,055 shares were not received at the date of issuance, resulting in a preferred stock subscription receivable of $2,499,632.  The preferred stock subscription receivable was collected in full in January 2015.  The holders of these shares have the right to participate in the governance of the Company through their voting rights. The Preferred B shares have a liquidation value of $818.21 and have a preference over the Company’s common stock upon liquidation or dissolution of the Company. The Preferred B shares are convertible into a fixed number of common shares in a 1:1 ratio.

NOTE F - RELATED-PARTY TRANSACTIONS

The Company has an investor, customer and vendor relationship with Autobytel. The Company’s accounts receivable balance contains approximately $266,000 and $178,000 due from Autobytel for the nine months ended September 30, 2015 and 2014, respectively, and accounts payable balance of approximately $256,000 and $174,000 owing to Autobytel for the nine months ended September 30, 2015 and 2014, respectively. In addition, the Company’s revenue includes $973,000 and $1,015,000 of revenue with Autobytel for the nine months ended September 30, 2015 and 2014, respectively, and publisher costs of $1,667,000 and $637,000 with Autobytel for the nine months ended September 30, 2015 and 2014, respectively.

In addition, the Company has made an advance, in the amount of $150,000 to a related party in Guatemala which will be settled in 2015. This related party performs certain development and related services for the Company. These services totaled $941,000 and $536,000 for the nine months ended September 30, 2015 and 2014, respectively, of which $52,000 and $66,000 was recorded in cost of revenue with related party for the nine months ended September 30, 2015 and 2014, respectively, and $889,000 and $470,000 for the nine months ended September 30, 2015 and 2014 are recorded in operating expense.

10

NOTE G - 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.

As of September 30, 2015, the Company had gross deferred tax assets in excess of deferred tax liabilities. The Company determined that it is "more likely than not" that substantially all of the deferred tax assets will not be realized and has maintained a full valuation allowance against its deferred tax assets as of September 30, 2015, September 30, 2014 and December 31, 2014. The valuation allowance relates primarily to the deferred tax assets arising from operating loss carry-forwards.

The Company’s effective tax rate for the nine months ended September 30, 2015 and 2014 differed from the U.S. federal statutory rate primarily due to the impact of changes in the valuation allowance.

As of September 30, 2015 and 2014, the Company does not have any unrecognized tax benefits related to various federal and state income tax matters.  The Company will recognize accrued interest and penalties related to unrecognized tax benefits in income tax expense.

The Company is subject to U.S. federal income tax as well as income tax in multiple state tax jurisdictions.  The Company's federal and state income tax returns are open to audit under the statute of limitations for the years ended December 31, 2014 and 2013.  The Company does not anticipate material unrecognized tax benefits within the next twelve months.

NOTE H - COMMITMENTS AND CONTINGENCIES

Leases

The Company leases office space in certain cities in the United States. These leases are accounted for as operating leases. Total rent expense for the nine months ended September 30, 2015 and 2014 amounted to approximately $198,000 and $79,000, respectively.

11

NOTE H - COMMITMENTS AND CONTINGENCIES - Continued

Future minimum lease payments under non-cancelable operating leases having initial lease terms in excess of one year as of September 30, 2015 are as follows:

	Operating Leases
October – December 2015	$	42,000
2016		157,000
2017		175,000
2018		117,000
2019		88,000
Thereafter		52,000
Total minimum lease payments	$	631,000

Litigation

The Company is, in the routine operation of its business, subject to litigation, claims, assessments and various other legal matters. However, management is not aware of any pending or threatened litigation, claims, assessments or unasserted claims or assessments that are required to be accrued or disclosed in the financial statements.

NOTE I - SUBSEQUENT EVENTS

On October 1, 2015, the Company entered into and consummated an Agreement and Plan of Merger (the “Merger Agreement”), by and among Autobytel and New Horizon Acquisition Corp., wholly owned subsidiary of Autobytel (“Merger Sub”). Pursuant to the Merger Agreement, Merger Sub merged with and into the Company (the “Merger”), with the Company continuing as the surviving corporation and as a wholly owned subsidiary of Autobytel.

12

EX-99.3

Exhibit 99.3

UNAUDITED PRO FORMA CONDENSED COMBINED FINANCIAL STATEMENTS

On October 1, 2015 (“Closing Date”), Autobytel Inc., a Delaware corporation (“Autobytel” or “Company”) entered into and consummated an Agreement and Plan of Merger (the “Merger Agreement”), by and among Autobytel, New Horizon Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Autobytel (“Merger Sub”), AutoWeb, Inc., a Delaware corporation (“AutoWeb”) and José Vargas, in his capacity as Stockholder Representative. Pursuant to the Merger Agreement, Merger Sub merged with and into AutoWeb (the “Merger”), with AutoWeb continuing as the surviving corporation and as a wholly owned subsidiary of Autobytel

The pro forma financial statements are prepared in conformity with the  Securities Exchange Commission ("SEC"), Regulation S-X: Article 3, Rule 3.05, Financial Statements of Businesses Acquired or to be Acquired ("Rule 3.05") and Article 11, Pro forma Financial Information ("Article 11"). Certain information and disclosures normally included in financial statements prepared in accordance with U.S. generally accepted accounting principles ("GAAP") have been condensed or omitted pursuant to such rules and regulations. However, we believe that the disclosures provided herein are adequate to make the information presented not misleading.

The following unaudited pro forma condensed combined financial statements are derived from the historical audited financial statements for the year ended December 31, 2014 and from the quarterly unaudited financial statements for the nine months ended September 30, 2015, of the Company and AutoWeb. The pro forma statements of income are presented to include the effects of the Merger Agreement as of January 1, 2014.  The unaudited pro forma condensed combined balance sheet is presented to include the effects of the Merger Agreement as of September 30, 2015. 

The unaudited pro forma condensed combined financial statements do not include any adjustments regarding liabilities incurred or cost savings achieved resulting from the integration of the two companies, as management is in the process of assessing what, if any, future actions are necessary. However, additional liabilities ultimately may be recorded for costs associated with removing redundant operations that could affect amounts in these unaudited pro forma combined financial statements, and their effects may be material and would be reflected in the statement of operations.

Significant assumptions, estimates and adjustments herein have been made solely for purposes of developing these unaudited pro forma condensed combined financial statements.

The unaudited pro forma condensed combined financial statements should be read in conjunction with the historical consolidated financial statements and related notes of the Company and "Management's Discussion and Analysis of Financial Condition and Results of Operations" contained in the Company's Annual Report on Form 10-K for the year ended December 31, 2014, as well as the audited historical financial statements and related notes of AutoWeb as of December 31, 2014 and December 31, 2013, which are attached as Exhibit 99.1 in this Form 8-K. The unaudited pro forma combined financial statements are not intended to represent or be indicative of the consolidated results of operations or financial condition of the Company that would have been reported had the merger been completed as of the dates presented, and should not be construed as representative of the future consolidated results of operations or financial condition of a combined entity.

1

AUTOBYTEL INC.

UNAUDITED PRO FORMA CONDENSED COMBINED

BALANCE SHEETAs of September 30, 2015

							Pro Forma
	Historical						Adjustments				Pro Forma
	Autobytel			AutoWeb			(Note 5 )				Combined
(in thousands)
ASSETS
Current Assets:
Cash and cash equivalents	$	18,798			2,267		$	(279	)	(a)	$	20,786
Accounts receivable, net		27,723			1,269			(523	)	(b)		28,469
Deferred tax asset		3,616			-							3,616
Prepaid expenses and other current assets		2,217			154			-				2,371
Total current assets		52,354			3,690			(802	)			55,242
Property and equipment, net		3,099			1,613			(910	)	(h)		3,802
Investments		4,060			-			(3,380	)	(e)		680
Intangible assets, net		12,996			1,364			19,016		(c)		33,376
Long-term deferred tax asset		23,615			-			-				23,615
Goodwill		32,096			-			3,534		(d)		35,630
Other assets		1,002			63			-				1,065
Total assets	$	129,222		$	6,730		$	17,458			$	153,410
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	9,564		$	514		$	(523	)	(b)	$	9,555
Accrued expenses and other current liabilities		9,934			31			-				9,965
Convertible note payable					-
Current portion of term loan payable		5,250			-
Total current liabilities		24,748			545			(523	)			24,770
Convertible note payable		1,000			-			-				1,000
Term loan payable		14,063			-			-				14,063
Borrowings under credit facility		8,000			-			-				8,000
Other non-current liabilities		25			-			-				25
Total  liabilities		47,836			545			(523	)			47,858
Commitments and Contingencies
Stockholders' Equity:
Preferred stock					10,380			(10,380	)	(e)(f)		-
Common stock		10			-							10
Additional paid-in capital		317,057			-			23,531		(a)(f)		340,588
Accumulated deficit		(235,681	)		(4,195	)		4,830		(g)		(235,046	)
Total stockholders' equity		81,386			6,185			17,981				105,552
Total liabilities and stockholders' equity	$	129,222		$	6,730		$	17,458			$	153,410

See accompanying notes to the unaudited pro forma condensed combined financial statements.

2

AUTOBYTEL INC.

UNAUDITED PRO FORMA CONDENSED COMBINED

STATEMENT OF OPERATIONS

Year Ended December 31, 2014

							Pro Forma
	Historical						Adjustments				Pro Forma
	Autobytel			AutoWeb			(Note 5)				Combined
(in thousands, except share and per share data)
Revenues:
Lead fees	$	100,744		$	-		$	-			$	100,744
Advertising		4,171		$	2,204			(2,356	)	(i)		4,019
Other revenues		1,363			163			-				1,526
Total revenues		106,278			2,367			(2,356	)			106,289
Cost of revenues		64,465			1,734			(1,237	)	(i) (j)		64,962
Gross profit		41,813			633			(1,119	)			41,327
Operating expenses:
Sales and marketing		14,404			111							14,515
Technology support		8,014			-							8,014
General and administrative		11,538			3,070							14,608
Depreciation and amortization		1,858			476			2,086		(j)		4,420
Litigation settlements		(143	)		-			-				(143	)
Total operating expenses		35,671			3,657			2,086				41,414
Operating income (loss)		6,142			(3,024	)		(3,205	)			(87	)
Interest expense, net		(694	)		(6	)						(700	)
Income tax (benefit) expense		2,037			(685	)		(1,282	)	(k)		70
Net income	$	3,411		$	(2,345	)	$	(1,923	)		$	(857	)
Earnings per share:
Basic	$	0.38								(l)	$	(0.10	)
Diluted	$	0.32								(l)	$	(0.08	)
Weighted average shares outstanding:
Basic		8,979,897										8,979,897
Diluted		11,211,908										11,211,908

See accompanying notes to the unaudited pro forma condensed combined financial statements.

3

AUTOBYTEL INC.

UNAUDITED PRO FORMA CONDENSED COMBINED

STATEMENT OF OPERATIONS

Nine Months Ended September 30, 2015

							Pro Forma
	Historical						Adjustments				Pro Forma
	Autobytel			AutoWeb			(Note 5)				Combined
(in thousands, except share and per share data)
Revenues:
Lead fees	$	88,480		$	-		$	-			$	88,480
Advertising		6,846			3,690			(2,640	)	(i)		7,896
Other revenues		1,479			137			-				1,616
Total revenues		96,805			3,827			(2,640	)			97,992
Cost of revenues		59,639			2,200			(1,757	)	(i) (j)		60,082
Gross profit		37,166			1,627			(883	)			37,910
Operating expenses:
Sales and marketing		11,430			170							11,600
Technology support		7,952			-							7,952
General and administrative		9,854			2,763							12,617
Depreciation and amortization		1,808			372			1,565		(j)		3,745
Litigation settlements		(75	)		-			-				(75	)
Total operating expenses		30,969			3,305			1,565				35,839
Operating income (loss)		6,197			(1,678	)		(2,448	)			2,071
Interest expense, net		(546	)		3							(543	)
Income tax (benefit) expense		2,391			1			(979	)	(k)		1,413
Net income	$	3,260		$	(1,676	)	$	(1,469	)		$	115
Earnings per share:
Basic	$	0.33								(l)	$	0.01
Diluted	$	0.30								(l)	$	0.01
Weighted average shares outstanding:
Basic		9,731,796										9,731,796
Diluted		10,717,740										10,717,740

See accompanying notes to the unaudited pro forma condensed combined financial statements.

4

Autobytel, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

Note 1 – Description of Transaction

On October 1, 2015, Autobytel Inc., a Delaware corporation (“Autobytel” or “Company”) entered into and consummated an Agreement and Plan of Merger (the “Merger Agreement”), by and among Autobytel, New Horizon Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of Autobytel (“Merger Sub”), AutoWeb, Inc., a Delaware corporation (“AutoWeb”) and José Vargas, in his capacity as Stockholder Representative. Pursuant to the Merger Agreement, Merger Sub merged with and into AutoWeb (the “Merger”), with AutoWeb continuing as the surviving corporation and as a wholly owned subsidiary of Autobytel.

Note 2 – Basis of Presentation

The unaudited pro forma condensed combined financial information was prepared using the September 30, 2015 and the December 31, 2014 historical financial statements of Autobytel and AutoWeb, which were prepared under United States Generally Accepted Accounting Principles (“GAAP”).

The acquisition is accounted for under the acquisition method of accounting in accordance with the Financial Accounting Standards Board Accounting Standards Codification (“ASC”) Topic 805, Business Combinations. Under the acquisition method of accounting, the total purchase price, calculated as described in Note 4 to these unaudited pro forma condensed combined financial statements, is allocated to the net tangible and intangible assets acquired and liabilities assumed of the Business based on their preliminarily estimated fair values. The allocation of purchase price for an acquisition requires extensive use of accounting estimates, assumptions and judgments to allocate the purchase price to the identifiable tangible and intangible assets acquired and liabilities assumed based on their respective estimated fair values. The merger consideration for AutoWeb was allocated to tangible and intangible assets acquired and liabilities assumed based on their preliminarily estimated fair values at the merger date. Autobytel has engaged an independent third-party valuation firm to assist in determining the estimated fair values of identifiable intangible and tangible assets. Such a valuation requires significant estimates and assumptions including but not limited to: determining the timing and estimates of future cash flows and developing appropriate discount rates. Autobytel believes the preliminarily estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions. The fair value estimates for the purchase price allocation may change if additional information becomes available. Differences between these purchase price allocations and any changes thereto could have a material impact on the unaudited pro forma condensed combined financial statements and Autobytel’s future results of operations and financial position. The unaudited pro forma condensed combined financial information is presented after giving effect to the merger of AutoWeb as if it occurred on January 1, 2014, and for the year ended December 31, 2014.  Certain reclassifications have been made to the historical financial statements of AutoWeb to conform to Autobytel’s presentation.

Note 3 – Accounting Policies

As a result of the continuing review of AutoWeb’s accounting policies, Autobytel may identify differences between the accounting policies of the two businesses that, when conformed, could have a material impact on the combined financial statements. At this time, Autobytel is not aware of any differences that would have a material impact on the combined financial statements. The unaudited pro forma condensed combined financial statements do not assume any differences in accounting policies.

Note 4 – Purchase Price

On October 1, 2015, the Company completed the merger with AutoWeb. The merger was made pursuant to an Agreement and Plan of Merger by and among the Company and AutoWeb.

5

Autobytel, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

The total merger consideration paid by Autobytel of $23.81 million consisted of the issuance of 168,007 newly issued shares of Series B Preferred Stock valued at $20.99 million, the issuance of warrants to purchase up to 148,240 shares of Series B Preferred Stock valued at $2.54 million, and $0.28 million in cash paid upon the closing of the Merger Agreement, subject to an adjustment for acquired working capital.

Fair Value Estimate of Assets Acquired and Liabilities Assumed

Under the acquisition method of accounting, the total estimated purchase price is allocated to AutoWeb’s net tangible and intangible assets based on their estimated fair values as of October 1, 2015, the merger completion date. Based on the Company’s preliminary valuation of the fair value of tangible and intangible assets acquired and liabilities assumed, which are based on estimates and assumptions that are subject to change, and other factors as described in the introduction to these unaudited pro forma condensed combined financial statements, the preliminary estimated purchase price is allocated as follows (amounts in thousands).

Cash	$	2,267
Accounts receivable		1,269
Prepaid and other current assets		154
Property and equipment		703
Other long-term assets		63
Total tangible assets acquired		4,456
Accrued expenses and other current liabilities		543
Net identifiable assets acquired		3,913
Long-lived intangible assets acquired		20,380
Goodwill		3,534
Net assets acquired	$	27,827
Merger consideration	$	23,811
Fair value of prior investment in AutoWeb		4,016
Total investment	$	27,827

Prior to the end of the measurement period for finalizing the purchase price allocation, if information becomes available which would indicate adjustments are required to the purchase price allocation, such adjustments will be included in the purchase price allocation retrospectively.

The preliminary fair value of the acquired intangible assets was determined as described below. In estimating the preliminary 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 (amounts in thousands):

6

Autobytel, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

Intangible Asset	Valuation Method	Estimated Fair Value		Estimated Useful Life (1)
Trademarks/Tradenames	Relief from Royalty (2)		2,600	6 Years
Developed Technology	Excess of Earnings (3)		9,920	7 Years
Customer Relationships	Discounted cash flows (4)		7,290	4 Years
Non-Compete Agreements	Discounted cash flows (4)		570	2 Years

(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 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.

(2) 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.

(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 customer relationships and non-compete agreements fair value was derived by calculating the difference between the present value of the Company's forecasted cash flows with the customer relationships and non-compete agreements in place and without the customer relationships and non-compete agreements in place.

Goodwill represents the excess of the purchase price of an acquired business over the fair value of the net tangible and intangible assets acquired.  In accordance with ASC 350, Intangibles, Goodwill and Other, goodwill will not be amortized but instead will be tested for impairment at least annually or more frequently if indicators of impairment exist.

Purchase price adjustments recorded subsequent to the closing date of October 1, 2015 will affect the recorded amount of goodwill.

Note 5 - Unaudited Pro Forma Adjustments

Pro forma adjustments are necessary to reflect the total purchase price, to reflect amounts related to the Leads Business’s net tangible and intangible assets at an amount equal to the estimated fair values on the closing date, and to reflect changes in amortization expense resulting from the preliminarily estimated fair value adjustments to net intangible assets. The unaudited pro forma condensed combined financial statements should be read in conjunction with the accompanying notes to the unaudited pro forma condensed combined financial statements presented below and with the separate historical financial statements of Autobytel and AutoWeb.

Adjustments included in the column under the heading “Pro Forma Adjustments” represent the following:

(a) Reflects total consideration paid by Autobytel on the closing date of $23.81 million, which was funded by the issuance of 168,007 newly issued shares of Series B Preferred stock valued at $20.99 million, issuance of warrants to purchase up to 148,240 shares of Series B Preferred stock valued at $2.54 million, and $0.28 million from available cash on hand.

(b) Reflects the elimination of receivable and payable balances between Autobytel and AutoWeb.

7

Autobytel, Inc.

Notes to Unaudited Pro Forma Condensed Combined Financial Statements

(c) Reflects the portion of total merger consideration allocated to acquired intangible assets acquired of the Business as part of the acquisition based on preliminary estimated fair values assigned on the closing date.

(d) Reflects the portion of total merger consideration allocated to goodwill based on the estimated fair value of the total merger consideration less the estimated fair value assigned to identifiable tangible and intangible assets acquired and liabilities assumed on the closing date.

(e) Reflects the elimination of Autobytel's carrying value of the investment in AutoWeb prior to the merger of $3,380, and the resulting gain recognized by Autobytel of $635, as a result of the fair value of Autobytel's investment in AutoWeb prior to the merger of $4,016 less the historical carrying value of Autobytel's investment in AutoWeb.  Such gain is only included in the balance sheet pro forma adjustments and not included in the statement of operations pro forma adjustments.

(f) Reflects the elimination of AutoWeb's Preferred Stock prior to the merger of $4,880, and the exchange of $5,500 of AutoWeb’s Preferred Stock as part of merger consideration (a).

(g) Reflects the elimination of AutoWeb's historical accumulated deficit offset by the gain recognized by Autobytel as a result of the fair value of Autobytel's investment in AutoWeb prior to the merger.

(h) Reflects the fair value adjustment for AutoWeb's property and equipment.

(i) Reflects the elimination of sales between Autobytel and AutoWeb.

(j) Reflects the estimated adjustment to depreciation and amortization expense for the tangible property and equipment and intangible assets acquired as part of the merger.

(k) Reflects an estimate of the income tax benefit resulting from the net proforma adjustments, assuming a 40% tax rate

(l) Pro forma basic earnings per share are calculated by dividing the pro forma combined net earnings by the weighted average shares outstanding. Pro forma diluted earnings per share is calculated by dividing the pro forma combined net earnings by the weighted average shares outstanding and dilutive potential weighted average shares outstanding.