Selected Balance Sheet Accounts

9 Months Ended

Sep. 30, 2018

Selected Balance Sheet Accounts [Abstract]

Selected Balance Sheet Accounts

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

	September 30, 2018			December 31, 2017
	(in thousands)
Computer software and hardware	$	11,585		$	11,065
Capitalized internal use software		5,977			5,774
Furniture and equipment		1,743			1,703
Leasehold improvements		1,605			1,539
		20,910			20,081
Less—Accumulated depreciation and amortization		(17,296	)		(15,770	)
Property and Equipment, net	$	3,614		$	4,311

Concentration of Credit Risk and Risks Due to Significant Customers.  Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents and accounts receivable. Cash and cash equivalents are primarily maintained with two high credit quality financial institutions in the United States. Deposits held by banks exceed the amount of insurance provided for such deposits. These deposits may be redeemed upon demand.

 Accounts receivable are primarily derived from fees billed to Dealers and Manufacturers.  The Company generally requires no collateral to support its accounts receivables and maintains an allowance for bad debts for potential credit losses.

The Company has a concentration of credit risk with its automotive industry-related accounts receivable balances, particularly with Urban Science Applications (which represents Acura, Audi, Honda, Nissan, Infiniti, Subaru, Toyota, Volkswagen, and Volvo), Trilogy, General Motors and Media.net Advertising. During the first nine months of 2018, approximately 42% of the Company’s total revenues was derived from these four customers, and approximately 51%, or $13.2 million of gross accounts receivables related to these four customers at September 30, 2018. During the first nine months of 2017, approximately 33% of the Company’s total revenues was derived from Urban Science Applications, General Motors and Media.net, and approximately 43%, or $12.2 million of gross accounts receivables, related to these three customers at September 30, 2017. 

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

	September 30, 2018		December 31, 2017
	(in thousands)
Other accrued expenses	$	7,154	$	6,307
Amounts due to customers		392		438
Other current liabilities		437		507
Total other accrued expenses and other current liabilities	$	7,983	$	7,252

Convertible Notes Payable.  In connection with the acquisition of AutoUSA, the Company issued a convertible subordinated promissory note for $1.0 million (“AutoUSA Note”) to AutoNationDirect.com, Inc.  The fair value of the AutoUSA Note as of the AutoUSA acquisition date was $1.3 million.  This valuation was estimated using a binomial option pricing method.  Key assumptions used by the Company’s outside valuation consultants in valuing the AutoUSA Note included a market yield of 1.6% and stock price volatility of 65.0%.  As the AutoUSA Note was issued with a substantial premium, the Company recorded the premium as additional paid-in capital.  Interest is payable at an annual interest rate of 6% in quarterly installments.  The entire outstanding balance of the AutoUSA Note is to be paid in full on January 31, 2019.  The holder of the AutoUSA Note may at any time convert all or any part, but at least 30,600 shares, of the then outstanding and unpaid principal of the AutoUSA Note into fully paid shares of the Company's common stock at a conversion price of $16.34 per share (as adjusted for stock splits, stock dividends, combinations, and other similar events).  In the event of default, the entire unpaid balance of the AutoUSA Note will become immediately due and payable and will bear interest at the lower of 8% per year or the highest legal rate permissible under applicable law.