Selected Balance Sheet Accounts

12 Months Ended

Dec. 31, 2015

Selected Balance Sheet Accounts [Abstract]

Selected Balance Sheet Accounts

Property and Equipment

Property and equipment consists of the following:

	As of December 31,
	2015			2014
	(in thousands)
Computer software and hardware and capitalized internal use software	$	15,741		$	12,990
Furniture and equipment		1,419			1,271
Leasehold improvements		1,424			957
		18,584			15,218
Less—Accumulated depreciation and amortization		(14,288	)		(13,314	)
Property and Equipment, net	$	4,296		$	1,904

As of December 31, 2015 and 2014, capitalized internal use software, net of amortization, was $2.1 million and $0.9 million, respectively.  Depreciation and amortization expense related to property and equipment was $1.0 million for the year ended December 31, 2015.  Of this amount, $0.4 million was recorded in cost of revenues and $0.6 million was recorded in operating expenses for the year ended December 31, 2015. Depreciation and amortization expense related to property and equipment was $0.7 million for the year ended December 31, 2014.  Of this amount, $0.2 million was recorded in cost of revenues and $0.5 million was recorded in operating expenses for the year ended December 31, 2014.

 Intangible Assets.  The Company amortizes specifically identified intangible assets using the straight-line method over the estimated useful lives of the assets.  The Company’s intangible assets will be amortized over the following estimated useful lives (in thousands): 

		December 31, 2015							December 31, 2014
Intangible Asset	Estimated Useful Life	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Trademarks/trade names/licenses/domains	3-6 years	$	11,494	$	(6,071	)	$	5,423	$	6,574	$	(5,594	)	$	980
Software and publications	3 years		1,300		(1,300	)		—		1,300		(1,300	)		—
Customer relationships	2 - 10 years		19,563		(4,341	)		15,222		5,074		(2,696	)		2,378
Employment/non-compete agreements	1-5 years		1,510		(849	)		661		700		(500	)		200
Developed technology	5-7 years		8,955		(746	)		8,209		820		(205	)		615
		$	42,822	$	(13,307	)	$	29,515	$	14,468	$	(10,295	)	$	4,173

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

Year	Amortization Expense
	(in thousands)
2016	$	5,647
2017		5,427
2018		5,052
2019		3,655
2020		2,224
	$	22,005

Goodwill.  Goodwill represents the excess of the purchase price over the fair value of net assets acquired.  Goodwill is not amortized and is assessed annually for impairment or whenever events or circumstances indicate that the carrying value of such assets may not be recoverable.  The Company did not record any impairment related to goodwill as of December 31, 2015 and 2014.  As of December 31, 2015 and 2014, goodwill consisted of the following:

	(in thousands)
Goodwill as of December 31, 2014	$	20,948
Acquisition of Dealix/Autotegrity		11,215
Acquisition of AutoWeb		10,740
Goodwill as December 31, 2015	$	42,903

In connection with the Dealix/Autotegrity stock acquisition in Note 3 above, the Company recorded net deferred tax liabilities of $3.8 million and adjusted goodwill by $3.8 million in 2015. In connection with the AutoWeb acquisition in Note 3 above, the Company recorded net deferred tax liabilities of $4.7 million and adjusted goodwill by $4.7 million in 2015.

Accrued Expenses and Other Current Liabilities

As of December 31, 2015 and 2014, accrued expenses and other current liabilities consisted of the following:

	As of December 31,
	2015		2014
	(in thousands)
Compensation and related costs and professional fees	$	3,981	$	5,149
Other accrued expenses		5,715		3,383
Amounts due to customers		486		267
Other current liabilities		562		696
Total accrued expenses and other current liabilities	$	10,744	$	9,495

Convertible Notes Payable.  In connection with the acquisition of Cyber, the Company issued the Cyber Note to the sellers.  The fair value of the Cyber 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 Note included a market yield of 15.0% and stock price volatility of 77.5%.  As the Cyber 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 Cyber Note was acquired by Auto Holdings and was converted into 1,075,268 shares of Company common stock on April 27, 2015, as discussed in Note 1. Upon conversion of the Cyber Note, the Company removed the liability from the Consolidated Balance Sheet.

In connection with the acquisition of AutoUSA, the Company issued the AutoUSA Note to the Seller. For information concerning the fair value of the AutoUSA Note, see Note 3.