Delaware
|
|
33-0711569
|
(State or other jurisdiction of incorporation or
organization)
|
|
(I.R.S. Employer Identification Number)
|
|
|
|
Title of each class
|
Trading Symbol
|
Name of each exchange on which registered
|
Common Stock, par value $0.001 per share
|
AUTO
|
The Nasdaq Capital Market
|
Large accelerated filer ☐
|
Accelerated filer ☐
|
Non-accelerated filer ☐
|
Smaller reporting company ☒
|
|
Emerging growth company ☐
|
INDEX
|
|
|
|
|
Page
|
PART I. FINANCIAL INFORMATION
|
|
|
|
|
|
|
|
|
|
|
|
|
1
|
|
|
|
|
|
2
|
|
|
|
|
|
3
|
|
|
|
|
|
5
|
|
|
|
|
|
6
|
|
|
|
|
|
16
|
|
|
|
|
|
21
|
|
|
|
|
|
21
|
|
|
|
|
PART II. OTHER INFORMATION
|
|
|
|
|
|
|
22
|
|
|
|
|
|
24
|
|
|
|
|
|
25
|
|
|
|
|
|
June 30,
2020
|
December 31,
2019
|
Assets
|
|
|
Current
assets:
|
|
|
Cash
and cash equivalents
|
$5,210
|
$892
|
Restricted
cash
|
3,300
|
5,054
|
Accounts
receivable, net of allowances for bad debts and customer credits of
$638 and $740 at June 30, 2020 and December 31, 2019,
respectively
|
14,679
|
24,051
|
Prepaid
expenses and other current assets
|
1,939
|
1,265
|
Total
current assets
|
25,128
|
31,262
|
Property
and equipment, net
|
3,026
|
3,349
|
Right-of-use
assets
|
3,246
|
2,528
|
Intangible
assets, net
|
5,537
|
7,104
|
Other
assets
|
745
|
661
|
Total
assets
|
$37,682
|
$44,904
|
Liabilities
and Stockholders’ Equity
|
|
|
Current
liabilities:
|
|
|
Accounts
payable
|
$5,899
|
$14,080
|
Borrowings
under revolving credit facility
|
7,181
|
3,745
|
Current
portion of the PPP Loan
|
615
|
—
|
Accrued
employee-related benefits
|
1,928
|
1,004
|
Other
accrued expenses and other current liabilities
|
1,257
|
2,315
|
Current
portion of lease liabilities
|
820
|
1,167
|
Total
current liabilities
|
17,700
|
22,311
|
PPP
Loan
|
769
|
—
|
Lease
liabilities, net of current portion
|
2,524
|
1,497
|
Total
liabilities
|
20,993
|
23,808
|
Commitments
and contingencies (Note 10)
|
|
|
Stockholders’
equity:
|
|
|
Preferred
stock, $0.001 par value, 11,445,187 shares authorized,
|
—
|
—
|
Series
A Preferred Stock, 2,000,000 shares authorized, none issued and
outstanding at June 30, 2020 and December 31, 2019
|
|
|
Common
stock, $0.001 par value; 55,000,000 shares authorized, and
13,146,831 shares issued and outstanding at June 30, 2020 and
December 31, 2019, respectively
|
13
|
13
|
Additional
paid-in capital
|
365,056
|
364,028
|
Accumulated
deficit
|
(348,380)
|
(342,945)
|
Total
stockholders’ equity
|
16,689
|
21,096
|
Total
liabilities and stockholders’ equity
|
$37,682
|
$44,904
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
Revenues:
|
|
|
|
|
Lead
generation
|
$14,263
|
$21,691
|
$32,723
|
$47,389
|
Digital
advertising
|
2,756
|
5,432
|
8,768
|
11,310
|
Other
revenues
|
14
|
19
|
14
|
47
|
Total
revenues
|
17,033
|
27,142
|
41,505
|
58,746
|
Cost
of revenues
|
10,993
|
21,758
|
30,108
|
47,605
|
Gross
profit
|
6,040
|
5,384
|
11,397
|
11,141
|
Operating
expenses:
|
|
|
|
|
Sales
and marketing
|
2,026
|
2,956
|
4,158
|
5,834
|
Technology
support
|
1,786
|
2,182
|
3,643
|
4,962
|
General
and administrative
|
2,901
|
4,026
|
6,844
|
8,316
|
Depreciation
and amortization
|
559
|
1,201
|
1,281
|
2,440
|
Total
operating expenses
|
7,272
|
10,365
|
15,926
|
21,552
|
|
|
|
|
|
Operating
loss
|
(1,232)
|
(4,981)
|
(4,529)
|
(10,411)
|
Interest
and other (expense) income:
|
|
|
|
|
Interest
(expense) income:
|
(204)
|
(36)
|
(1,036)
|
(35)
|
Other
income (expense)
|
62
|
69
|
130
|
138
|
Loss
before income tax provision
|
(1,374)
|
(4,948)
|
(5,435)
|
(10,308)
|
Income
tax provision
|
—
|
5
|
—
|
5
|
Net
loss
|
$(1,374)
|
$(4,953)
|
$(5,435)
|
$(10,313)
|
|
|
|
|
|
Basic
loss per common share
|
$(0.10)
|
$(0.38)
|
$(0.41)
|
$(0.79)
|
|
|
|
|
|
Diluted
loss per common share
|
$(0.10)
|
$(0.38)
|
$(0.41)
|
$(0.79)
|
Three Months Ended June 30, 2019
|
|||||||
|
Common Stock
|
Preferred Stock
|
Additional Paid-in-
|
Accumulated
|
|
||
|
Number of Shares
|
Amount
|
Number of Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
|
|
|
|
|
|
|
|
Balance
at March 31, 2019
|
13,116,462
|
$13
|
—
|
$—
|
$362,076
|
$(333,076)
|
$29,013
|
Share-based
compensation
|
—
|
—
|
—
|
—
|
560
|
—
|
560
|
Issuance
of common stock upon exercise of stock options
|
57,036
|
—
|
—
|
—
|
101
|
—
|
101
|
Cancellation
of restricted stock
|
(26,667)
|
—
|
—
|
—
|
—
|
—
|
—
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(4,953) )
|
(4,953)
|
Balance
at June 30, 2019
|
13,146,831
|
$13
|
—
|
$—
|
$362,737
|
$(338,029) )
|
$24,721
|
Three Months Ended June 30, 2020
|
|||||||
|
Common Stock
|
Preferred Stock
|
Additional Paid-in-
|
Accumulated
|
|
||
|
Number of Shares
|
Amount
|
Number of Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
|
|
|
|
|
|
|
|
Balance
at March 31, 2020
|
13,146,831
|
$13
|
—
|
$—
|
$364,537
|
$(347,006)
|
$17,544
|
Share-based
compensation
|
—
|
—
|
—
|
—
|
519
|
—
|
519
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(1,374)
|
(1,374)
|
Balance
at June 30, 2020
|
13,146,831
|
$13
|
—
|
$—
|
$365,056
|
$(348,380)
|
$16,689
|
Six Months Ended June 30, 2019
|
|||||||
|
Common Stock
|
Preferred Stock
|
Additional Paid-in-
|
Accumulated
|
|
||
|
Number of Shares
|
Amount
|
Number of Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2018
|
12,960,450
|
$13
|
—
|
$—
|
$361,218
|
$(327,716) )
|
$33,515
|
Share-based
compensation
|
—
|
—
|
—
|
—
|
1,111
|
—
|
1,111
|
Issuance
of common stock upon exercise of stock options
|
213,048
|
—
|
—
|
—
|
408
|
—
|
408
|
Cancellation
of restricted stock
|
(26,667)
|
—
|
—
|
—
|
—
|
—
|
—
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(10,313) )
|
(10,313)
|
Balance
at June 30, 2019
|
13,146,831
|
$13
|
—
|
$—
|
$362,737
|
$(338,029) )
|
$24,721
|
Six Months Ended June 30, 2020
|
|||||||
|
Common Stock
|
Preferred Stock
|
Additional Paid-in-
|
Accumulated
|
|
||
|
Number of Shares
|
Amount
|
Number of Shares
|
Amount
|
Capital
|
Deficit
|
Total
|
|
|
|
|
|
|
|
|
Balance
at December 31, 2019
|
13,146,831
|
$13
|
—
|
$—
|
$364,028
|
$(342,945)
|
$21,096
|
Share-based
compensation
|
—
|
—
|
—
|
—
|
1,028
|
—
|
1,028
|
Net
loss
|
—
|
—
|
—
|
—
|
—
|
(5,435)
|
(5,435)
|
Balance
at June 30, 2020
|
13,146,831
|
$13
|
—
|
—
|
$365,056
|
$(348,380)
|
$16,689
|
|
Six Months Ended
June 30,
|
|
|
2020
|
2019
|
Cash
flows from operating activities:
|
|
|
Net
loss
|
$(5,435)
|
$(10,313)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
Depreciation
and amortization
|
2,278
|
3,509
|
Provision
for bad debts
|
94
|
122
|
Provision
for customer credits
|
33
|
120
|
Share-based
compensation
|
1,028
|
1,111
|
Right-of-use
assets
|
767
|
924
|
Lease
liabilities
|
(805)
|
(924)
|
Changes
in assets and liabilities:
|
|
|
Accounts
receivable
|
9,245
|
3,325
|
Prepaid
expenses and other current assets
|
(674)
|
(410)
|
Other
assets
|
(84)
|
(303)
|
Accounts
payable
|
(8,181)
|
(1,945)
|
Accrued
expenses and other current liabilities
|
(135)
|
(787)
|
Net
cash used in operating activities
|
(1,869)
|
(5,571)
|
Cash
flows from investing activities:
|
|
|
Purchases
of property and equipment
|
(388)
|
(990)
|
Net
cash used in investing activities
|
(388)
|
(990)
|
Cash
flows from financing activities:
|
|
|
Borrowings
under PNC credit facility
|
28,564
|
16,940
|
Principal
payments on PNC credit facility
|
(32,308)
|
(16,940)
|
Borrowings
under CNC credit facility
|
33,201
|
—
|
Principal
payments on CNC credit facility
|
(26,020)
|
—
|
Borrowings
under PPP Note
|
1,384
|
—
|
Payments
on convertible note
|
—
|
(1,000)
|
Proceeds
from exercise of stock options
|
—
|
408
|
Net
cash provided by (used in) financing activities
|
4,821
|
(592)
|
Net
increase (decrease) in cash and cash equivalents
|
2,564
|
(7,153)
|
Cash
and cash equivalents and restricted cash, beginning of
period
|
5,946
|
13,600
|
Cash
and cash equivalents and restricted cash, end of
period
|
$8,510
|
$6,447
|
|
|
|
Reconciliation of
cash and cash equivalents and restricted cash
|
|
|
Cash
and cash equivalents at beginning of period
|
$892
|
$13,600
|
Restricted
cash at beginning of period
|
5,054
|
—
|
Cash
and cash equivalents and restricted cash at beginning of
period
|
$5,946
|
$13,600
|
|
|
|
Cash
and cash equivalents at end of period
|
$5,210
|
$1,431
|
Restricted
cash at end of period
|
3,300
|
5,016
|
Cash
and cash equivalents and restricted cash at end of
period
|
$8,510
|
$6,447
|
|
|
|
Supplemental
disclosure of cash flow information:
|
|
|
Cash
paid for income taxes
|
$—
|
$1
|
Cash
refunds for income taxes
|
381
|
124
|
Cash
paid for interest
|
$449
|
$40
|
Supplemental
disclosure of non-cash financing activities:
|
|
|
Right-of-use
assets obtained in exchange for operating lease
liabilities
|
$1,485
|
$—
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
Lead
generation
|
$14,263
|
$21,691
|
$32,723
|
$47,389
|
Digital
advertising
|
|
|
|
|
Clicks
|
2,321
|
4,456
|
7,670
|
9,515
|
Display
and other advertising
|
435
|
976
|
1,098
|
1,795
|
Total
digital advertising
|
2,756
|
5,432
|
8,768
|
11,310
|
|
|
|
|
|
Other
revenues
|
14
|
19
|
14
|
47
|
Total
revenues
|
$17,033
|
$27,142
|
$41,505
|
$58,746
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||
|
2020
|
2019
|
2020
|
2019
|
Basic
Shares:
|
|
|
|
|
Weighted
average common shares outstanding
|
13,146,831
|
13,147,741
|
13,146,831
|
13,066,617
|
Weighted
average unvested restricted stock
|
(13,333)
|
(36,850)
|
(13,333)
|
(48,362)
|
Basic
Shares
|
13,133,498
|
13,110,891
|
13,133,498
|
13,018,255
|
|
|
|
|
|
Diluted
Shares:
|
|
|
|
|
Basic
shares
|
13,133,498
|
13,110,891
|
13,133,498
|
13,018,255
|
Weighted
average dilutive securities
|
—
|
—
|
—
|
—
|
Diluted
Shares
|
13,133,498
|
13,110,891
|
13,133,498
|
13,018,255
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||
|
2020
|
2019
|
2019
|
2018
|
|
|
|
|
|
Share-based
compensation expense:
|
|
|
|
|
Sales
and marketing
|
$29
|
$66
|
$61
|
$138
|
Technology
support
|
28
|
52
|
55
|
93
|
General
and administrative
|
462
|
442
|
912
|
880
|
Share-based
compensation costs
|
519
|
560
|
1,028
|
1,111
|
|
|
|
|
|
Amount
capitalized to internal use software
|
—
|
—
|
—
|
—
|
Total
share-based compensation costs
|
$519
|
$560
|
$1,028
|
$1,111
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
Number
of service-based options granted
|
55,000
|
140,000
|
515,000
|
1,182,883
|
Weighted
average grant date fair value
|
$0.67
|
$1.84
|
$1.05
|
$1.82
|
Weighted
average exercise price
|
$1.08
|
$3.45
|
$1.90
|
$3.42
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
Dividend
yield
|
—
|
—
|
—
|
—
|
Volatility
|
81%
|
66%
|
70%
|
65%
|
Risk-free
interest rate
|
0.3%
|
2.2%
|
1.1%
|
2.5%
|
Expected
life (years)
|
4.6
|
4.4
|
4.6
|
4.4
|
|
Three Months Ended
June 30,
|
Six Months Ended
June 30,
|
||
|
2020
|
2019
|
2020
|
2019
|
|
|
|
|
|
Number
of stock options exercised
|
—
|
57,036
|
—
|
213,048
|
Weighted
average exercise price
|
$—
|
$1.77
|
$—
|
$1.92
|
|
June 30,
2020
|
December 31,
2019
|
|
|
|
Computer
software and hardware
|
$11,679
|
$12,804
|
Capitalized
internal use software
|
7,391
|
5,878
|
Furniture
and equipment
|
1,743
|
1,743
|
Leasehold
improvements
|
1,613
|
1,613
|
|
22,426
|
22,038
|
Less—Accumulated
depreciation and amortization
|
(19,400)
|
(18,689)
|
Property
and equipment, net
|
$3,026
|
$3,349
|
|
|
June 30, 2020
|
December 31, 2019
|
||||
Definite-lived
Intangible Asset
|
Estimated Useful Life
|
Gross
|
Accumulated Amortization
|
Net
|
Gross
|
Accumulated Amortization
|
Net
|
|
|
|
|
|
|
|
|
Trademarks/
trade names/ licenses/ domains
|
3 - 7 years
|
$16,589
|
$(15,701)
|
$888
|
$16,589
|
$(15,442)
|
$1,147
|
Customer
relationships
|
2 - 5 years
|
19,563
|
(19,563)
|
—
|
19,563
|
(18,800)
|
763
|
Developed
technology
|
5 - 7 years
|
8,955
|
(6,506)
|
2,449
|
8,955
|
(5,961)
|
2,994
|
|
|
$45,107
|
$(41,770)
|
$3,337
|
$45,107
|
$(40.203)
|
$4,904
|
|
|
June 30, 2020
|
December 31, 2019
|
||||
Definite-lived
Intangible Asset
|
Estimated Useful Life
|
Gross
|
Accumulated Amortization
|
Net
|
Gross
|
Accumulated Amortization
|
Net
|
|
|
|
|
|
|
|
|
Domain
|
Indefinite
|
$2,200
|
$—
|
$2,200
|
$2,200
|
$—
|
$2,200
|
Year
|
Amortization
Expense
|
|
|
2020
|
$804
|
2021
|
1,499
|
2022
|
902
|
2023
|
86
|
2024
|
46
|
|
$3,337
|
|
June 30,
2020
|
December 31,
2019
|
|
|
|
Accrued
employee-related benefits
|
$1,928
|
$1,004
|
Other
accrued expenses and other current liabilities:
|
|
|
Other
accrued expenses
|
617
|
1,264
|
Amounts
due to customers
|
338
|
355
|
Other
current liabilities
|
302
|
696
|
Total
other accrued expenses and other current liabilities
|
1,257
|
2,315
|
|
|
|
Total
accrued expenses and other current liabilities
|
$3,185
|
$3,319
|
Current
portion of lease liabilities
|
$820
|
Long
term lease liabilities, net of current portion
|
2,524
|
Total
lease liabilities
|
$3,344
|
Year
|
|
2020
(remaining 6 months)
|
$499
|
2021
|
997
|
2022
|
791
|
2023
|
786
|
2024
|
528
|
Thereafter
|
197
|
Total
minimum lease payments
|
3,798
|
Less
imputed interest
|
(454)
|
Total
lease liabilities
|
$3,344
|
|
2020
|
% of
Total
Revenues
|
2019
|
% of
Total
Revenues
|
Change
|
% Change
|
(Dollar amounts in thousands)
|
||||||
Revenues:
|
|
|
|
|
|
|
Lead
generation
|
$14,263
|
84%
|
$21,691
|
80%
|
$(7,428)
|
(34)%
|
Digital
advertising
|
2,756
|
16
|
5,432
|
20
|
(2,676)
|
(49)
|
Other
revenues
|
14
|
—
|
19
|
—
|
(5)
|
(26)
|
Total
revenues
|
17,033
|
100
|
27,142
|
100
|
(10,109)
|
(37)
|
Cost
of revenues
|
10,993
|
65
|
21,758
|
80
|
(10,765)
|
(49)
|
Gross
profit
|
6,040
|
35
|
5,384
|
20
|
656
|
12
|
Operating
expenses:
|
|
|
|
|
|
|
Sales
and marketing
|
2,026
|
12
|
2,956
|
11
|
(930)
|
(31)
|
Technology
support
|
1,786
|
10
|
2,182
|
8
|
(396)
|
(18)
|
General
and administrative
|
2,901
|
17
|
4,026
|
15
|
(1,125)
|
(28)
|
Depreciation
and amortization
|
559
|
3
|
1,201
|
4
|
(642)
|
(53)
|
Total
operating expenses
|
7,272
|
42
|
10,365
|
38
|
(3,093)
|
(30)
|
Operating
loss
|
(1,232)
|
(7)
|
(4,981)
|
(18)
|
3,749
|
(75)
|
Interest
and other income (expense), net
|
(142)
|
(1)
|
33
|
—
|
(175)
|
(530)
|
Loss
before income tax provision
|
(1,374)
|
(8)
|
(4,948)
|
(18)
|
3,574
|
(72)
|
Income
tax provision
|
—
|
—
|
5
|
—
|
(5)
|
(100)
|
Net
loss
|
$(1,374)
|
(8)%
|
$(4,953)
|
(18)%
|
$3,579
|
(72)%
|
|
2020
|
% of
Total
Revenues
|
2019
|
% of
Total
Revenues
|
Change
|
% Change
|
(Dollar amounts in thousands)
|
||||||
Revenues:
|
|
|
|
|
|
|
Lead
generation
|
$32,723
|
79%
|
$47,389
|
81%
|
$(14,666)
|
(31)%
|
Digital
advertising
|
8,768
|
21
|
11,310
|
19
|
(2,542)
|
(22)
|
Other
revenues
|
14
|
—
|
47
|
—
|
(33)
|
(70)
|
Total
revenues
|
41,505
|
100
|
58,746
|
100
|
(17,241)
|
(29)
|
Cost
of revenues
|
30,108
|
73
|
47,605
|
81
|
(17,497)
|
(37)
|
Gross
profit
|
11,397
|
27
|
11,141
|
19
|
256
|
2
|
Operating
expenses:
|
|
|
|
|
|
|
Sales
and marketing
|
4,158
|
10
|
5,834
|
10
|
(1,676)
|
(29)
|
Technology
support
|
3,643
|
9
|
4,962
|
8
|
(1,319)
|
(27)
|
General
and administrative
|
6,844
|
16
|
8,316
|
14
|
(1,472)
|
(18)
|
Depreciation
and amortization
|
1,281
|
3
|
2,440
|
4
|
(1,159)
|
(48)
|
Total
operating expenses
|
15,926
|
38
|
21,552
|
37
|
(5,626)
|
(26)
|
Operating
loss
|
(4,529)
|
(11)
|
(10,411)
|
(18)
|
5,882
|
(56)
|
Interest
and other income (expense), net
|
(906)
|
(2)
|
103
|
—
|
(1,009)
|
(980)
|
Loss
before income tax provision
|
(5,435)
|
(13)
|
(10,308)
|
(18)
|
4,873
|
(47)
|
Income
tax provision
|
—
|
—
|
5
|
—
|
(5)
|
(100)
|
Net
loss
|
$(5,435)
|
(13)%
|
$(10,313)
|
(18)%
|
$4,878
|
(47)%
|
|
Six Months Ended
June 30,
|
|
|
2020
|
2019
|
|
(in thousands)
|
|
Net
cash used in operating activities
|
$(1,869)
|
$(5,571)
|
Net
cash used in investing activities
|
(388)
|
(990)
|
Net
cash provided by (used in) financing activities
|
4,821
|
(592)
|
Number
|
|
Description
|
|
|
|
|
Seventh Amended and Restated Certificate of Incorporation of
AutoWeb, Inc., incorporated by reference
to Exhibit 3.1
to the Current Report on Form 8-K
filed with the SEC on June 23, 2020 (SEC File No.
001-34761)
|
|
|
|
|
|
Seventh Amended and Restated Bylaws of AutoWeb, Inc. dated October
9, 2017, incorporated by reference to Exhibit
3.5
to the Current Report on Form 8-K
filed with the SEC on October 10, 2017 (SEC File No.
001-34761)
|
|
|
|
|
|
Tax Benefit Preservation Plan dated as of May 26, 2010 between
Company and Computershare Trust Company, N.A., as rights agent,
together with the following exhibits thereto: Exhibit A –
Form of Right Certificate; and Exhibit B – Summary of Rights
to Purchase Shares of Preferred Stock of Company, incorporated by
reference to Exhibit
4.1 to
the Current Report on Form 8-K filed
with the SEC on June 2, 2010 (SEC File No. 000-22239),
Amendment No. 1 to Tax Benefit Preservation Plan dated as of April
14, 2014, between Company and Computershare Trust Company, N.A., as
rights agent, incorporated by reference to Exhibit
4.1 to
the Current Report on Form 8-K filed
with the SEC on April 16, 2014 (SEC File No. 001-34761),
Amendment No. 2 to Tax Benefit Preservation Plan dated as of
April 13, 2017, between Company and Computershare Trust
Company, N.A., as rights agent, incorporated by reference
to Exhibit
4.1 to
the Current Report on Form
8-K filed with the SEC on April 14, 2017 (SEC File No.
001-34761), Amendment No. 3 to
Tax Benefit Preservation Plan dated as of March 31, 2020, between
Company and Computershare Trust Company, N.A., as rights agent,
incorporated by reference to Exhibit
4.1 to the
Current Report on Form 8-K filed with the SEC on April 2, 2020 (SEC
File No. 001-34761).
|
|
|
|
|
|
Certificate of Adjustment Under Section 11(m) of the Tax Benefit
Preservation Plan, incorporated by reference to Exhibit
4.3 to
the Quarterly Report on Form 10-Q for the quarterly period ended
September 30, 2012 filed with the SEC on November 8, 2012 (SEC File
No. 001-34761)
|
|
|
|
|
|
First Amendment to Loan, Security and Guarantee Agreement by and
among CIT Northbridge Credit LLC, as Agent, the Lenders Party
thereto, and AutoWeb, Inc., as Borrower, and Car.com, Inc.,
Autobytel, Inc., and AW GUA USA, Inc., as Guarantors, dated May 18,
2020, incorporated by reference to Exhibit
10.1 to
the Current Report on Form 8-K filed with the SEC on May 19, 2020
(SEC File No. 001-34761).
|
|
|
|
|
|
Paycheck Protection Program Term Note dated as of April 16,
2020, incorporated by
reference to Exhibit
10.1 to the Current
Report on Form 8-K filed with the SEC on April 17, 2020 (SEC File
No. 001-34761).
|
|
|
|
|
31.1*
|
|
Rule
13a-14(a)/15d-14(a) Certification by Principal Executive
Officer
|
|
|
|
31.2*
|
|
Rule
13a-14(a)/15d-14(a) Certification by Principal Financial
Officer
|
|
|
|
32.1*
|
|
Section
1350 Certification by Principal Executive Officer and Principal
Financial Officer
|
|
|
|
101.INS††
|
|
XBRL
Instance Document
|
|
|
|
101.SCH††
|
|
XBRL
Taxonomy Extension Schema Document
|
|
|
|
101.CAL††
|
|
XBRL
Taxonomy Calculation Linkbase Document
|
|
|
|
101.DEF††
|
|
XBRL
Taxonomy Extension Definition Document
|
|
|
|
101.LAB††
|
|
XBRL
Taxonomy Label Linkbase Document
|
|
|
|
101.PRE††
|
|
XBRL
Taxonomy Presentation Linkbase Document
|
|
|
|
|
|
|
AutoWeb, Inc.
|
|
||
|
|
|
|
|
|
|
|
|
|
|
Date: August 5, 2020
|
By:
|
/s/ Joseph P. Hannan
|
|
|
|
|
Joseph P. Hannan
|
|
|
|
|
Executive Vice President, Chief Financial Officer
|
|
|
|
|
(Principal Financial Officer)
|
|
|
|
|
|
|
|
|
|
|
|
|
Date: August 5, 2020
|
By:
|
/s/ Cheray Duran
|
|
|
|
|
Cheray Duran
|
|
|
|
|
Corporate Controller
|
|
|
|
|
(Principal Accounting Officer)
|
|
Date: August 5, 2020
|
By: /s/ Jared R. Rowe
|
|
|
Jared
R. Rowe
|
|
|
President and Chief Executive Officer
|
|
Date: August 5, 2020
|
By: /s/ Joseph P. Hannan
|
|
|
Joseph
P. Hannan
|
|
|
Executive Vice President, Chief Financial Officer
|
|
Date: August 5, 2020
|
By: /s/ Jared R. Rowe
|
|
|
Jared
R. Rowe
|
|
|
President and Chief Executive Officer
|
|
|
|
|
Date: August 5, 2020
|
By: /s/ Joseph P. Hannan
|
|
|
Joseph
P. Hannan
|
|
|
Executive Vice President, Chief Financial Officer
|
|
|
|
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Aug. 03, 2020 |
|
Document and Entity Information [Abstract] | ||
Entity Registrant Name | AutoWeb, Inc. | |
Entity Central Index Key | 0001023364 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | true | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 13,146,831 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Jun. 30, 2020 | |
Entity Interactive Data Current | Yes | |
Entity Incorporation State Country Code | DE | |
Entity File Number | 1-34761 |
CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Current assets: | ||
Accounts receivable, allowances for bad debts and customer credits | $ 638 | $ 740 |
Stockholders' equity: | ||
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, authorized | 55,000,000 | 55,000,000 |
Common stock, issued | 13,146,831 | 13,146,831 |
Common stock, outstanding | 13,146,831 | 13,146,831 |
Preferred Class A | ||
Stockholders' equity: | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, authorized | 11,445,187 | 11,445,187 |
Preferred stock, issued | 0 | 0 |
Preferred stock, outstanding | 0 | 0 |
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Revenues: | ||||
Lead generation | $ 14,263 | $ 21,691 | $ 32,723 | $ 47,389 |
Digital advertising | 2,756 | 5,432 | 8,768 | 11,310 |
Other revenues | 14 | 19 | 14 | 47 |
Total revenues | 17,033 | 27,142 | 41,505 | 58,746 |
Cost of revenues | 10,993 | 21,758 | 30,108 | 47,605 |
Gross profit (loss) | 6,040 | 5,384 | 11,397 | 11,141 |
Operating expenses: | ||||
Sales and marketing | 2,026 | 2,956 | 4,158 | 5,834 |
Technology support | 1,786 | 2,182 | 3,643 | 4,962 |
General and administrative | 2,901 | 4,026 | 6,844 | 8,316 |
Depreciation and amortization | 559 | 1,201 | 1,281 | 2,440 |
Total operating expenses | 7,272 | 10,365 | 15,926 | 21,552 |
Operating (loss) | (1,232) | (4,981) | (4,529) | (10,411) |
Interest and other income (expense), net | ||||
Interest income (expense) | (204) | (36) | (1,036) | (35) |
Other income (expense) | 62 | 69 | 130 | 138 |
Loss before income tax provision | (1,374) | (4,948) | (5,435) | (10,308) |
Income tax provision | 0 | 5 | 0 | 5 |
Net loss | $ (1,374) | $ (4,953) | $ (5,435) | $ (10,313) |
Basic loss per common share | $ (0.10) | $ (0.38) | $ (0.41) | $ (0.79) |
Diluted loss per common share | $ (0.10) | $ (0.38) | $ (0.41) | $ (0.79) |
Organization and Operations |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Operations | AutoWeb, Inc. (“AutoWeb” or the “Company”) is a digital marketing company for the automotive industry that assists automotive retail dealers (“Dealers”) and automotive manufacturers (“Manufacturers”) market and sell new and used vehicles to consumers by utilizing the Company’s digital sales enhancing products and services.
The Company’s consumer-facing websites (“Company Websites”) provide consumers with information and tools to aid them with their automotive purchase decisions and the ability to connect with Dealers regarding purchasing or leasing vehicles (“Leads”). The Company’s click traffic referral program provides consumers who are shopping for vehicles online with targeted offers based on make, model and geographic location. As these consumers conduct online research on Company Websites or on the site of one of our network of automotive publishers, they are presented with relevant offers on a timely basis and, upon the consumer clicking on the displayed advertisement, are sent to the appropriate website location of one of the Company’s Dealer, Manufacturer or advertising customers.
The Company was incorporated in Delaware on May 17, 1996. The Company’s common stock is listed on The Nasdaq Capital Market under the symbol AUTO. |
Basis of Presentation |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited condensed consolidated financial statements are presented on the same basis as the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 (“2019 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”). AutoWeb has made its disclosures in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of Company management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation with respect to interim financial statements, have been included. The unaudited condensed consolidated statement of operations and cash flows for the period ended June 30, 2020 are not necessarily indicative of the results of operations or cash flows expected for the year or any other period. The unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto in the 2019 Form 10-K.
References to amounts in the consolidated financial statement sections are in thousands, except share and per share data, unless otherwise specified.
As of December 31, 2019, restricted cash primarily consisted of pledged cash pursuant to the PNC Credit Agreement. As of June 30, 2020, restricted cash primarily consisted of cash pledged pursuant to the CNC Credit Agreement.
In early 2020 and continuing as of the date of this Quarterly Report on Form 10-Q, the coronavirus pandemic has led to quarantines and stay-at-home/work-from-home orders in a number of countries, states, cities and regions and the closure or limited access to public and private offices and facilities, worldwide, causing widespread disruptions to travel, economic activity and financial markets. Management is unable to predict the extent and duration of these disruptions, which could result in a national or global recession. The pandemic has led the Company’s Manufacturer and Dealer customers to experience disruptions in the (i) supply of vehicle and parts inventories, (ii) ability and willingness of consumers to visit automotive dealerships to purchase or lease vehicles and (iii) overall health and availability of their labor force. Manufacturers also shutdown assembly plants. Volatility in the financial markets, concerns about exposure to the novel coronavirus and governmental quarantines, stay-at-home/work-from-home orders, business closures, and employment furloughs and layoffs have also impacted consumer confidence and willingness to visit dealerships and to purchase or lease vehicles. High unemployment and lower consumer confidence may continue after the stay-at-home/work-from-home orders have ended. These disruptions have impacted the willingness or desire of the Company’s customers to acquire vehicle Leads or other digital marketing services from the Company. Vehicle sales have declined, and the Company has experienced direct disruptions in its operations due to the overall health of, and concerns for, its labor force and as a result of governmental “social distancing” programs, quarantines, travel restrictions and stay-at-home/work-from-home orders, leading to office closures, operating from employee homes and restrictions on its employees traveling to its various offices. The Company continues to experience cancellations or suspensions of purchases of Leads and other digital marketing services by its customers, which materially and adversely affects its business, results of operations, financial condition, earnings per share, cash flow and the trading price of its common stock.
In April 2020, the Company implemented a series of cost actions in response to coronavirus pandemic, including reduced executive and board compensation during the three-months ended June 30, 2020, reduced recruitment, travel, consulting and business-to-business marketing expenses, consolidation of various technology tools and products, and limited employee furloughs and staff reductions. The Company also started reducing its overall lead and click generation efforts and corresponding costs to better align its volumes with industry demand and consumer intent to purchase a vehicle. Management will continue to evaluate other cost reduction measures and explore all options available to it in order to minimize the impact of the coronavirus pandemic. |
Recent Accounting Pronouncements |
6 Months Ended |
---|---|
Jun. 30, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Pronouncements | The Company has reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a material impact to its consolidated financial statements. |
Revenue Recognition |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2020 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue Recognition | Revenue is recognized upon transfer of control of promised goods or services to the Company’s customers, or when the Company satisfies any performance obligations under contract. The amount of revenue recognized reflects the consideration the Company expects to be entitled to in exchange for respective goods or services provided. Further, under Accounting Standards Codification 606, “Revenue from Contracts with Customers,” (“ASC 606”) contract assets or contract liabilities that arise from past performance but require a further performance before the obligation can be fully satisfied must be identified and recorded on the balance sheet until respective settlements have been met.
The Company has two main revenue sources – Lead generation and Digital advertising. Accordingly, the Company recognizes revenue for each source as described below:
Variable Consideration
Leads are generally sold with a right-of-return for services that do not meet customer requirements as specified by the relevant contract. Rights-of-return are estimable, and provisions for estimated returns are recorded as a reduction in revenue by the Company in the period revenue is recognized, and thereby accounted for as variable consideration. As of December 31, 2019, the Company included the allowance for customer credits in its net accounts receivable balances on the Company’s balance sheet at period end. Allowance for customer credits were approximately $106,000 and $194,000 as of June 30, 2020 and December 31, 2019, respectively.
Contract Assets and Contract Liabilities
Unbilled Revenue
Timing of revenue recognition may differ from the timing of invoicing to customers. The Company records a receivable when revenue is recognized prior to invoicing. From time to time, the Company may have balances on its balance sheet representing revenue that has been recognized by the Company upon satisfaction of performance obligations and earning a right to receive payment. These not-yet invoiced receivable balances are driven by the timing of administrative transaction processing, and are not indicative of partially complete performance obligations, or unbilled revenue.
Deferred Revenue
The Company defers the recognition of revenue when cash payments are received or due in advance of satisfying the Company’s performance obligations, including amounts which are refundable. Such activity is not typical for the Company. The Company had zero deferred revenue included in its consolidated balance sheets as of June 30, 2020 and December 31, 2019. Payment terms and conditions can vary by contract type. Generally, payment terms within the Company’s customer contracts include a requirement of payment within 30 to 60 days from date of invoice. Typically, customers make payments after receipt of invoice for billed services, and less typically, in advance of rendered services.
The Company has not made any significant changes in applying ASC 606 during the six months ended June 30, 2020.
Disaggregation of Revenue
The Company disaggregates revenue from contracts with customers by revenue source and has determined that disaggregating revenue into these categories sufficiently depicts the differences in the nature, amount, timing and uncertainty of revenue streams.
The following table summarizes revenue from contracts with customers, disaggregated by revenue source, for the three and six months ended June 30, 2020 and 2019. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.
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Net Loss Per Share |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Loss Per Share | Basic net loss per share is computed using the weighted average number of common shares outstanding during the period, excluding any unvested restricted stock. Diluted net loss per share is computed using the weighted average number of common shares, and if dilutive, potential common shares outstanding, as determined under the treasury stock and if-converted methods, during the period. Potential common shares consist of unvested restricted stock and common shares issuable upon the exercise of stock options and warrants.
The following are the share amounts utilized to compute the basic and diluted net loss per share for the three and six months ended June 30, 2020 and 2019:
For the three and six months ended June 30, 2020 and 2019, the Company’s basic and diluted net loss per share are the same because the Company generated a net loss for the period and potentially dilutive securities are excluded from diluted net loss per share because they have an anti-dilutive impact.
For the three and six months ended June 30, 2020, the Company had 4.0 million of potentially anti-dilutive securities related to common stock that have been excluded from the calculation of diluted net earnings per share. For the three and six months ended June 30, 2019, the Company had 4.2 million and 4.1 million of potentially anti-dilutive securities related to common stock that have been excluded from the calculation of diluted net earnings per share, respectively. |
Share-Based Compensation |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-Based Compensation | Share-based compensation expense is included in costs as follows:
Service-Based Options. The Company granted the following service-based options for the three and six months ended June 30, 2020 and 2019, respectively:
These options are valued using a Black-Scholes option pricing model. Options issued to employees generally vest one-third on the first anniversary of the grant date and ratably over twenty-four months thereafter. The vesting of these awards is contingent upon the employee’s continued employment with the Company during the vesting period and vesting may be accelerated under certain conditions, including upon a change in control of the Company and, in the case of certain officers of the Company, termination of employment by the Company without cause and voluntary termination of employment by such officer with good reason. Options issued to non-employee directors generally vest monthly over a 12-month period and vesting may be accelerated under certain conditions, including upon a change in control of the Company and upon the termination of service as a director of the Company in the event such termination of service is due to resignation, failure to be re-elected, failure to be nominated for re-election, or without removal for cause.
The grant date fair value of stock options granted during these periods was estimated using the Black-Scholes option pricing model using the following weighted average assumptions:
Stock option exercises. The following stock options were exercised during the three and six months ended June 30, 2020 and 2019, respectively:
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Selected Balance Sheet Accounts |
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Balance Sheet Related Disclosures [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Selected Balance Sheet Accounts | Property and Equipment. Property and equipment consist of the following:
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 high credit quality financial institutions in the United States. Deposits held by banks exceed the amount of insurance provided for such deposits.
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 accounts receivable balances. Approximately 60%, or $8.9 million, of gross accounts receivable at June 30, 2020, and approximately 45% of total revenues for the six months ended June 30, 2020, are related to Urban Science Applications (which represents Acura, Honda, Subaru, and Volvo), Carat Detroit (General Motors), Ford Direct and Autodata Solutions. For 2019, 34%, or $8.0 million, of gross accounts receivable at June 30, 2019, and approximately 27% of total revenues for the six months ended June 30, 2019, are related to Urban Science Applications (which represents Acura, Honda, Nissan, Infiniti, Subaru, Toyota and Volvo) and Carat Detroit (General Motors).
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 are amortized over the following estimated useful lives:
Amortization expense is included in “Cost of revenues” and “Depreciation and amortization” in the Unaudited Consolidated Condensed Statements of Operations. Total amortization expense was $0.7 million and $1.6 million for the three and six months ended June 30, 2020, respectively. Amortization expense was $1.3 million and $2.7 million for the three and six months ended June 30, 2019, respectively.
Amortization expense for the remainder of the year and for future years is as follows:
Accrued Expenses and Other Current Liabilities. Accrued expenses and other current liabilities consisted of the following:
Convertible Notes Payable. In connection with the acquisition of AutoUSA on January 13, 2014, the Company issued a convertible subordinated promissory note for $1.0 million (“AutoUSA Note”) to AutoNationDirect.com, Inc., with interest payable at an annual interest rate of 6% in quarterly installments. The entire outstanding balance of the AutoUSA Note plus accrued interest was paid in full on January 31, 2019. |
Leases |
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Leases [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Leases | The Company determines if an arrangement is a lease at inception of the arrangement. The Company leases its facilities and certain office equipment under operating leases that expire on various dates through 2025. Right-of-use assets (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date of the lease based on the present value of lease payments over the lease term. When readily determinable, the Company uses the implicit rate in determining the present value of lease payments. The ROU asset also includes any lease payments made and excludes lease incentives. Lease expense for lease payments is recognized on a straight-line basis over the lease term.
Lease Liabilities. Lease liabilities as of June 30, 2020 consist of the following:
The Company’s aggregate lease maturities as of June 30, 2020 are as follows:
On March 11, 2020, the Company entered into a Lease Agreement (“New Irvine Lease”) with The Irvine Company LLC, a Delaware limited liability company, pursuant to which the Company will lease approximately 12,000 square feet of office space located in Irvine, California. The term of the New Irvine Lease commenced on August 1, 2020 and will continue for a period of approximately five years, unless earlier terminated in accordance with the terms of the New Irvine Lease. The Company has the option to extend the term of the New Irvine Lease for one additional period of five years. The new office space replaces the Company’s current, approximately 39,361 square feet, office space in Irvine, California, the lease for which expired July 31, 2020. The Company included the New Irvine Lease on its balance sheet and within the future minimum lease payment table above.
Rent expense included in operating expenses and cost of revenue was $0.9 million for the six months ended June 30, 2020. The Company had a weighted average remaining lease term of 1.9 years and a weighted average discount rate of 5.5% for leases prior to December 31, 2019. For leases starting January 1, 2020, the weighted average discount rate is 6.25%. Rent expense included in operating expenses and cost of revenue was $1.0 million for the six months ended June 30, 2019. The Company had a weighted average remaining lease term of 2.1 years and a weighted average discount rate of 5.5% as of June 30, 2019. In June 2017, the Company subleased one of its offices to a third party for the remainder of the lease term which expired in February 2019. Rent expense for the six months ended June 30, 2019 is net of sublease income of $26,000. |
Credit Facility |
6 Months Ended |
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Jun. 30, 2020 | |
Line of Credit Facility [Abstract] | |
Credit Facility | On April 30, 2019, the Company entered into a $25.0 million Revolving Credit and Security Agreement (“PNC Credit Agreement”) with PNC Bank, N.A. (“PNC”) as agent, and the Company’s U.S. subsidiaries Car.com, Inc., Autobytel, Inc., and AW GUA USA, Inc. (“Company U.S. Subsidiaries”). The obligations under the PNC Credit Agreement were guaranteed by the Company U.S. Subsidiaries and secured by a first priority lien on all of the Company’s and the Company U.S. Subsidiaries’ tangible and intangible assets. The PNC Credit Agreement provided a subfacility of up to $5.0 million for letters of credit. The PNC Credit Agreement was to expire on April 30, 2022.
The interest rates per annum applicable to borrowings under the PNC Credit Agreement were, at the Company’s option (subject to certain conditions), equal to either a domestic rate (“Domestic Rate Loans”) or a LIBOR rate for one, two, or three-month interest periods chosen by the Company (“LIBOR Rate Loans”), plus the applicable margin percentage of 2% for Domestic Rate Loans and 3% for LIBOR Rate Loans. The domestic rate for Domestic Rate Loans would be the highest of (i) the base commercial lending rate of the lender, (ii) the overnight bank funding rate plus 0.50%, or (iii) the LIBOR rate plus 1.00% so long as the daily LIBOR rate is offered, ascertainable and not unlawful. The PNC Credit Agreement also provided for commitment fees ranging from 0.5% to 1.5% applied to unused funds (with the applicable fee based on quarterly average borrowings), but with the fees fixed at 1.5% until September 30, 2019. Fees for Letters of Credit were to be equal to 3% for LIBOR Rate Loans, with a fronting fee for each Letter of Credit in an amount equal to 0.5% of the daily average aggregate undrawn amount of all Letters of Credit outstanding. The Company was required to maintain a $5.0 million pledged interest-bearing deposit account with the lender until the Company’s consolidated EBITDA is greater than $10.0 million.
On October 29, 2019, the Company, the Company’s U.S. Subsidiaries, and PNC entered into a First Amendment to the PNC Credit Agreement (“PNC Credit Agreement First Amendment”) that provided for an amended financial covenant related to the Company’s minimum required EBITDA (as defined in the PNC Credit Agreement). This amended financial covenant required the Company to maintain its consolidated EBITDA (as defined in the PNC Credit Agreement) at stated minimum levels (i) of $0.7 million for the quarter ended September 30, 2019; (ii) $250,000 for the month of October 2019; (iii) $600,000 for the two-months ended November 30, 2019; and ranging from $3.6 million to $7.5 million for the later periods set forth in the PNC Credit Agreement First Amendment during the remaining term of the PNC Credit Agreement. In addition, the PNC Credit Agreement First Amendment added a new financial covenant requiring the Company to maintain at least a 1.20 to 1.00 Fixed Charge Coverage Ratio (as defined in the PNC Credit Agreement First Amendment) for the periods set forth in the PNC Credit Agreement First Amendment. If the Company failed to comply with the minimum EBITDA requirements or the Fixed Charge Coverage Ratio, the Company had the right to cure (“Cure Right”) through the application of the proceeds from the sale of new equity interests in the Company, subject to the conditions set forth in the PNC Credit Agreement First Amendment. The Cure Right could not be exercised more than three times during the term of the PNC Credit Agreement and any proceeds from a sale of equity interests could not be less than the greater of (i) the amount required to cure the applicable default; and (ii) $500,000.
On January 16, 2020, the Company received a notice of event of default and reservation of rights (“Default Notice”) from PNC Bank, under the PNC Credit Agreement advising the Company that an event of default had occurred and was continuing under Section 10.3 of the PNC Credit Agreement by reason of AutoWeb’s failure to deliver to PNC the financial statements and related compliance certificate for the month ended November 30, 2019. Although not covered by the Default Notice at the time, AutoWeb also was not in compliance with the minimum EBITDA financial covenant under the PNC Credit Agreement. As a result of the Default Notice, PNC increased the interest rate under the PNC Credit Agreement by 2.0% per annum.
On March 26, 2020, the Company fully paid the PNC Credit Agreement, at which time it was terminated, and in conjunction with the termination of the PNC Credit Agreement, on March 26, 2020, the Company entered into a $20.0 million Loan, Security and Guarantee Agreement (“CNC Credit Agreement”) with CIT Northbridge Credit LLC, as agent, and the Company U.S. Subsidiaries. The CNC Credit Agreement provides for a $20.0 million revolving credit facility with borrowings subject to availability based primarily on limits of 85% of eligible billed accounts receivable and 75% against eligible unbilled accounts receivable. The obligations under the CNC Credit Agreement are guaranteed by the Company U.S. Subsidiaries and secured by a first priority lien on all of the Company’s and the Company U.S. Subsidiaries’ tangible and intangible assets. The CNC Credit Agreement has a minimum borrowing usage requirement of $8,000,000 as of June 30, 2020, which will increase to an average of $10,000,000 thereafter.
As of June 30, 2020, the Company had $7.2 million outstanding under the CNC Credit Agreement and approximately $2.5 million of net availability. To increase the borrowing base sufficient enough to meet the minimum borrowing usage requirement, on June 29, 2020, the Company placed $3.0 million into a restricted cash account that provided for greater availability under the CNC Credit Agreement. The Company can borrow up to 97.5% of the total restricted cash amount. The restricted cash accrues interest at a variable rate currently averaging 0.30% per annum. On July 2nd, 2020, the Company drew an additional $3.0 million to satisfy the increased minimum borrowing requirement.
Financing costs related to the CNC Credit Agreement, net of accumulated amortization, of approximately $0.5 million, have been deferred over the initial term of the loan and are included in other assets as of June 30, 2020. The interest rate per annum applicable to borrowings under the CNC Credit Agreement will be the LIBO plus 5.5%. The LIBO Rate will be equal to the greater of (i) 1.75%, and (ii) the rate determined by the Agent to be equal to the quotient obtained by dividing (1) the LIBO Base Rate (i.e., the rate per annum determined by Agent to be the offered rate that appears on the applicable Bloomberg page) for the applicable LIBOR Loan for the applicable interest period by (2) one minus the Eurodollar Reserve Percentage (i.e., the reserve percentage in effect under regulations issued from time to time by the Board of Governors of the Federal Reserve System for determining the maximum reserve requirement with respect to Eurocurrency funding for the applicable LIBOR Loan for the applicable interest period). The CNC Credit Agreement expires on March 26, 2023.
On April 16, 2020, the Company received a loan in the amount of approximately $1.38 million from PNC pursuant to the Paycheck Protection Program (“PPP”) administered by the United States Small Business Administration (“SBA”) under the CARES Act (“PPP Loan”). The PPP Loan was granted pursuant to a Paycheck Protection Program Term Note dated April 16, 2020, issued by the Company (“PPP Note”).
On June 5, 2020 the Paycheck Protection Program Flexibility Act (“PPPFA”) was signed into law that contained important clarifications and modifications to the previous PPP loan rules under the CARES Act. These revisions provided that at least 60% of the PPP Loan proceeds must be used for payroll expenses. Also, all, or a portion of, the PPP Loan may be forgiven based on the sum of documented payroll costs, covered lease payments, covered mortgage interest and covered utilities during an eight-week or twenty-four-week period beginning on the date on which the PPP Loan was approved.
The PPP Note matures on April 16, 2022 and bears interest at a rate of 1.00% per annum. Principal and accrued interest are payable monthly in equal installments commencing November 15, 2020, unless the PPP Loan is forgiven as described below. The PPP Note may be prepaid at any time prior to maturity with no prepayment penalties. The PPP Note contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties. The proceeds from the PPP Loan may only be used to retain workers and maintain payroll or make mortgage interest, lease and utility payments. For purposes of the CARES Act, payroll costs exclude compensation of an individual employee in excess of $100,000, prorated annually. Not more than 40% of the forgiven amount may be for non-payroll costs. Forgiveness of the PPP Loan is reduced if full-time headcount declines, or if salaries and wages for employees with salaries of $100,000 or less annually are reduced by more than 25%. The outstanding principal will be reduced in the event the Loan, or any portion thereof, is forgiven pursuant to the PPP. The Company intends to apply for forgiveness after the covered period. Furthermore, the Company expects to meet the terms of forgiveness as described above. |
Commitments and Contingencies |
6 Months Ended |
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Jun. 30, 2020 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Employment Agreements
The Company has employment agreements and severance benefits agreements with certain key employees. A number of these agreements require severance payments and continuation of certain insurance benefits in the event of a termination of the employee’s employment by the Company without cause or by the employee for good reason (as defined is these agreements). Stock option agreements and restricted stock award agreements with some key employees provide for acceleration of vesting of stock options and lapsing of forfeiture restrictions on restricted stock in the event of a change in control of the Company, upon termination of employment by the Company without cause or by the employee for good reason, or upon the employee’s death or disability.
Litigation
From time to time, the Company may be involved in litigation matters arising from the normal course of its business operations. Such litigation, even if not meritorious, could result in substantial costs and diversion of resources and management attention, and an adverse outcome in litigation could materially and adversely affect the Company’s business, results of operations, financial condition and cash flows. |
Income Taxes |
6 Months Ended |
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Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | On an interim basis, the Company estimates what its anticipated annual effective tax rate will be and records a quarterly income tax provision in accordance with the estimated annual rate, adjusted accordingly by the tax effect of certain discrete items that arise during the quarter. This process can result in significant changes to the Company’s estimated effective tax rate. When such activity occurs, the income tax provision is adjusted during the quarter in which the estimates are refined and adjusted. As such, the Company’s year-to-date tax provision reflects the estimated annual effective tax rate. Therefore, these changes along with the adjustments to the Company’s deferred taxes and related valuation allowance, may create fluctuations in the overall effective tax rate from period to period.
Due to overall cumulative losses incurred in recent years, the Company maintained a valuation allowance against its deferred tax assets as of June 30, 2020 and December 31, 2019. The Company’s effective tax rate for the six months ended June 30, 2020 differed from the U.S. federal statutory rate primarily due to operating losses that receive no tax benefit as a result of a valuation allowance recorded against the Company’s existing tax assets. The total amount of unrecognized tax benefits, excluding associated interest and penalties, was $0.5 million as of June 30, 2020, all of which, if subsequently recognized, would have affected the Company’s tax rate.
As of June 30, 2020, and December 31, 2019, there were no accrued interest and penalties related to uncertain tax positions. The Company recognizes interest and penalties related to uncertain tax positions as a component of income tax expense, and the accrued interest and penalties are included in deferred and other long-term liabilities in the Company’s unaudited condensed consolidated balance sheets. There were no material interest or penalties included in income tax expense for six months ended June 30, 2020 and 2019.
The Company is subject to taxation in the U.S. and in various foreign and state jurisdictions. Due to expired statutes of limitation, the Company’s federal income tax returns for years prior to calendar year 2016 are not subject to examination by the U.S. Internal Revenue Service. Generally, for the majority of state jurisdictions where the Company does business, periods prior to calendar year 2015 are no longer subject to examination. The Company does not anticipate a significant change to the total amount of unrecognized tax benefits within the next twelve months.
In response to the coronavirus pandemic, the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) was signed into law in March 2020. The CARES Act lifts certain deduction limitations originally imposed by the Tax Cuts and Jobs Act of 2017 (“2017 Tax Act”). Corporate taxpayers may carryback net operating losses (“NOL’s”) originating during 2018 through 2020 for up to five years, which was not previously allowed under the 2017 Tax Act. The CARES Act also eliminates the 80% of taxable income limitations by allowing corporate entities to fully utilize NOL carryforwards to offset taxable income in 2018, 2019 or 2020.
Taxpayers may generally deduct interest up to the sum of 50% of adjusted taxable income plus business interest income (30% limit under the 2017 Tax Act) for tax years beginning January 1, 2019 and 2020. The CARES Act allows taxpayers with alternative minimum tax credits to claim a refund in 2020 for the entire amount of the credits instead of recovering the credits through refunds over a period of years, as originally enacted by the 2017 Tax Act. The enactment of the CARES Act did not result in any material adjustments to the Company’s income tax provision for the six months ended June 30, 2020, or to its net deferred tax assets as of June 30, 2020. |
Recent Accounting Pronouncements (Policies) |
6 Months Ended |
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Jun. 30, 2020 | |
Accounting Standards Update and Change in Accounting Principle [Abstract] | |
Recent Accounting Pronouncements | The Company has reviewed all recently issued accounting pronouncements and concluded that they were either not applicable or not expected to have a material impact to its consolidated financial statements. |
Revenue Recognition (Tables) |
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Revenue Recognition [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Revenue from contracts |
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Net Loss Per Share and Stockholders' Equity (Tables) |
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Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Computation of basic and diluted net earnings (loss) per share |
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Share-Based Compensation (Tables) |
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Share-based Payment Arrangement [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Share-based compensation expense included in costs and expenses |
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Service based options granted during period |
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Fair value of stock options granted using the following weighted average assumptions |
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Stock option exercises |
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Selected Balance Sheet Accounts (Tables) |
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Property and equipment |
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Intangible assets amortized over the estimated useful lives |
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Future amortization expense |
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Accrued expenses and other current liabilities |
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Leases (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2020 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Leases [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||
Lease liabilities |
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Aggregate lease maturities |
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Revenue Recognition (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Revenue from contracts with customers | $ 17,033 | $ 27,142 | $ 41,505 | $ 58,746 |
Lead Fees | ||||
Revenue from contracts with customers | 14,263 | 21,691 | 32,723 | 47,389 |
Click Advertising | ||||
Revenue from contracts with customers | 2,321 | 4,456 | 7,670 | 9,515 |
Display and Other Advertising | ||||
Revenue from contracts with customers | 435 | 976 | 1,098 | 1,795 |
Advertising | ||||
Revenue from contracts with customers | 2,756 | 5,432 | 8,768 | 11,310 |
Other Revenues | ||||
Revenue from contracts with customers | $ 14 | $ 19 | $ 14 | $ 47 |
Net Loss Per Share and Stockholders' Equity (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Basic Shares: | ||||
Weighted average common shares outstanding | 13,146,831 | 13,147,741 | 13,146,831 | 13,066,617 |
Weighted average unvested restricted stock | (13,333) | (36,850) | (13,333) | (48,362) |
Basic shares | 13,133,498 | 13,110,891 | 13,133,498 | 13,018,255 |
Diluted Shares: | ||||
Basic shares | 13,133,498 | 13,110,891 | 13,133,498 | 13,018,255 |
Weighted average dilutive securities | 0 | 0 | 0 | 0 |
Diluted Shares | 13,133,498 | 13,110,891 | 13,133,498 | 13,018,255 |
Net Loss Per Share and Stockholders' Equity (Details Narrative) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Earnings Per Share [Abstract] | ||||
Anti-dilutive potential shares of common stock | 4,000 | 4,200 | 4,000 | 4,100 |
Share-Based Compensation (Details) - USD ($) $ in Thousands |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Share-based compensation expense: | ||||
Share-based compensation costs | $ 519 | $ 560 | $ 1,028 | $ 1,111 |
Amount capitalized to internal use software | 0 | 0 | 0 | 0 |
Total share-based compensation costs | 519 | 560 | 1,028 | 1,111 |
Sales and marketing | ||||
Share-based compensation expense: | ||||
Share-based compensation costs | 29 | 66 | 61 | 138 |
Technology support | ||||
Share-based compensation expense: | ||||
Share-based compensation costs | 28 | 52 | 55 | 93 |
General and administrative | ||||
Share-based compensation expense: | ||||
Share-based compensation costs | $ 462 | $ 442 | $ 912 | $ 880 |
Share-Based Compensation (Details 1) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Stock Issued or Granted During Period, Share-based Compensation | ||||
Number of service-based options granted | 55,000 | 140,000 | 515,000 | 1,182,883 |
Weighted average grant date fair value | $ 0.67 | $ 1.84 | $ 1.05 | $ 1.82 |
Weighted average exercise price | $ 1.08 | $ 3.45 | $ 1.9 | $ 3.42 |
Share-Based Compensation (Details 2) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Fair value of stock options granted using the following weighted average assumptions | ||||
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
Volatility | 81.00% | 66.00% | 70.00% | 65.00% |
Risk-free interest rate | 0.30% | 2.20% | 1.10% | 2.50% |
Expected life | 4 years 7 months 6 days | 4 years 4 months 24 days | 4 years 7 months 6 days | 4 years 4 months 24 days |
Share-Based Compensation (Details 3) - $ / shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
Jun. 30, 2020 |
Jun. 30, 2019 |
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Share-based Payment Arrangement [Abstract] | ||||
Number of stock options exercised | 0 | 57,036 | 0 | 213,048 |
Weighted average exercise price | $ 0.00 | $ 1.77 | $ 0.00 | $ 1.92 |
Selected Balance Sheet Accounts (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Property and Equipment | ||
Computer software and hardware | $ 11,679 | $ 12,804 |
Capitalized internal use software | 7,391 | 5,878 |
Furniture and equipment | 1,743 | 1,743 |
Leasehold improvements | 1,613 | 1,613 |
Property and equipment, gross | 22,426 | 22,038 |
Less - Accumulated depreciation and amortization | (19,400) | (18,689) |
Property and equipment, net | $ 3,026 | $ 3,349 |
Selected Balance Sheet Accounts (Details 2) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Amortization expense for the remainder of the year and for the next five years | |
2020 | $ 804 |
2021 | 1,499 |
2022 | 902 |
2023 | 86 |
2024 | 46 |
Total | $ 3,337 |
Selected Balance Sheet Accounts (Details 3) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Accrued expenses and other current liabilities | ||
Accrued employee-related benefits | $ 1,928 | $ 1,004 |
Other accrued expenses | 617 | 1,264 |
Amounts due to customers | 338 | 355 |
Other current liabilities | 302 | 696 |
Total other accrued expenses and other current liabilities | 1,257 | 2,315 |
Total accrued expenses and other current liabilities | $ 3,185 | $ 3,319 |
Leases (Details) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Leases [Abstract] | ||
Current portion of lease liabilities | $ 820 | $ 1,167 |
Long term lease liabilities, net of current portion | 2,524 | $ 1,497 |
Total lease liabilities | $ 3,344 |
Leases (Details 1) $ in Thousands |
Jun. 30, 2020
USD ($)
|
---|---|
Leases [Abstract] | |
2020 (remaining 6 months) | $ 499 |
2021 | 997 |
2022 | 791 |
2023 | 786 |
2024 | 528 |
Thereafter | 197 |
Total minimum lease payments | 3,798 |
Less imputed interest | (454) |
Total lease liabilities | $ 3,344 |
Leases (Details Narrative) - USD ($) $ in Thousands |
6 Months Ended | |
---|---|---|
Jun. 30, 2020 |
Jun. 30, 2019 |
|
Leases [Abstract] | ||
Rent expense | $ 900 | $ 100 |
Weighted average remaining lease term | 1 year 10 months 24 days | 2 years 1 month 6 days |
Weighted average discount rate | 6.25% | 5.50% |
Sublease income | $ 26 |
Credit Facility (Details Narrative) - USD ($) $ in Thousands |
Jun. 30, 2020 |
Dec. 31, 2019 |
---|---|---|
Line of Credit Facility [Abstract] | ||
Outstanding under CNC Credit Agreement | $ 7,181 | $ 3,745 |
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