Selected Balance Sheet Accounts

12 Months Ended

Dec. 31, 2016

Selected Balance Sheet Accounts [Abstract]

Selected Balance Sheet Accounts

Property and equipment consists of the following:

	As of December 31,
	2016			2015
	(in thousands)
Computer software and hardware	$	12,027		$	12,998
Capitalized internal use software		5,359			2,743
Furniture and equipment		1,332			1,419
Leasehold improvements		1,139			1,424
		19,857			18,584
Less—Accumulated depreciation and amortization		(15,427	)		(14,288	)
Property and Equipment, net	$	4,430		$	4,296

As of December 31, 2016 and 2015, capitalized internal use software, net of amortization, was $2.7 million and $2.1 million, respectively.  Depreciation and amortization expense related to property and equipment was $1.6 million for the year ended December 31, 2016.  Of this amount, $0.7 million was recorded in cost of revenues and $0.8 million was recorded in operating expenses for the year ended December 31, 2016. 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.

Intangible Assets.  The Company amortizes specifically identified definite-lived 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, 2016							December 31, 2015
Intangible Asset	Estimated Useful Life	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Trademarks/trade names/licenses/domains	3 – 6 years	$	9,294	$	(6,756	)	$	2,538	$	9,294	$	(6,071	)	$	3,223
Tradename	Indefinite		2,200		—			2,200		2,200		—			2,200
Software and publications	3 years		1,300		(1,300	)		—		1,300		(1,300	)		—
Customer relationships	2 - 10 years		19,563		(7,454	)		12,109		19,563		(4,341	)		15,222
Employment/non-compete agreements	1-5 years		1,510		(1,273	)		237		1,510		(849	)		661
Developed technology	5-7 years		8,955		(2,256	)		6,699		8,955		(746	)		8,209
		$	42,822	$	(19,039	)	$	23,783	$	42,822	$	(13,307	)	$	29,515

Amortization expense is included in “Depreciation and amortization” in the Statements of Income.  Amortization expense was $5.7 million, $3.0 million and $1.5 million in 2016, 2015 and 2014, respectively. Amortization expense for intangible assets for the next five years is as follows:

Year	Amortization Expense
	(in thousands)
2017	$	5,366
2018		5,028
2019		3,655
2020		2,224
2021		2,116
	$	18,389

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, 2016 and 2015.  As of December 31, 2016 and 2015, 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 of December 31, 2015		42,903
Purchase price allocation adjustments from Dealix/Autotegrity acquisition		(82	)
Goodwill as December 31, 2016	$	42,821

During the year ended December 31, 2016, the Company made adjustments to the Dealix/Autotegrity purchase price allocation due to changes in accounts receivable and sales tax payable acquired, and adjusted goodwill accordingly. 

Accrued Expenses and Other Current Liabilities

As of December 31, 2016 and 2015, accrued expenses and other current liabilities consisted of the following:

	As of December 31,
	2016		2015
	(in thousands)
Accrued employee-related benefits	$	4,530	$	3,945
Other accrued expenses and other current liabilities:
Other accrued expenses		7,278		5,751
Amounts due to customers		466		486
Other current liabilities		571		562
Total other accrued expenses and other current liabilities		8,315		6,799
Total accrued expenses and other current liabilities	$	12,845	$	10,744

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.