0001654954-21-005222 | 10-Q | XBRL Viewer

Leases (Tables)

3 Months Ended

Mar. 31, 2021

	March 31, 2021		December 31, 2020
Current portion of lease liabilities	$	1,020	$	1,015
Long-term lease liabilities, net of current portion		1,944		2,191
Total lease liabilities	$	2,964	$	3,206

Aggregate lease maturities

Year
2021 (remaining 9 months)	$	895
2022		881
2023		797
2024		528
2025		197
Total minimum lease payments		3,298
Less imputed interest		(334	)
Total lease liabilities	$	2,964

Share-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Share-based compensation expense included in costs and expenses

	Three Months Ended March 31,
	2021		2020

Share-based compensation expense:
Sales and marketing	$	30	$	32
Technology support		11		27
General and administrative		458		450
Share-based compensation costs		499		509

Total share-based compensation costs	$	499	$	509

Service based options granted during period

	Three Months Ended March 31,
	2021		2020

Number of service-based options granted		765,000		460,000
Weighted average grant date fair value	$	1.82	$	1.09
Weighted average exercise price	$	2.60	$	2.00

Fair value of stock options granted using the following weighted average assumptions

	Three Months Ended March 31,
	2021			2020

Dividend yield		—			—
Volatility		94.4	%		68	%
Risk-free interest rate		0.7	%		1.1	%
Expected life (years)		4.8			4.5

Stock option exercises

	Three Months Ended March 31,
	2021		2020

Number of stock options exercised		54,705		—
Weighted average exercise price	$	2.30	$	—

Leases (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020	Mar. 31, 2020
Leases [Abstract]
Current portion of lease liabilities	$ 1,020	$ 1,015	$ 1,015
Long term lease liabilities, net of current portion	1,944	$ 2,191	2,191
Total lease liabilities	$ 2,964		$ 3,206

Debt

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Debt

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’s 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 the Company’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, the Company 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 (the “Agent”), and the Company’s 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’s U.S. subsidiaries and secured by a first priority lien on all of the Company’s and the Company’s U.S. subsidiaries’ tangible and intangible assets. The CNC Credit Agreement has an average minimum borrowing usage requirement of an average of $10,000,000.

As of March 31, 2021, the Company had $10.2 million outstanding under the CNC Credit Agreement and approximately $1.2 million of net availability. To increase the borrowing base sufficient enough to meet the minimum borrowing usage requirement, the Company on June 29, 2020, placed $3.0 million into a restricted cash account that provided for greater availability under the CNC Credit Agreement. The Company placed an additional $1.0 million into the same restricted cash account in December 2020. 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 0.25% per annum.

Financing costs related to the CNC Credit Agreement, net of accumulated amortization, of approximately $0.3 million, have been deferred over the initial term of the loan and are included in other assets as of March 31, 2021. The interest rate per annum applicable to borrowings under the CNC Credit Agreement is the LIBO plus 5.5%. The LIBO Rate is 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). If adequate and reasonable means do not exist for ascertaining or the LIBOR rate is no longer available, the Company and the Agent may amend the CNC Credit Agreement to replace LIBOR with an alternate benchmark rate. If no LIBOR successor rate is determined, the obligation of the lenders to make or maintain LIBOR loans will be suspended and the LIBO Base Rate component will no longer be utilized in determining the base rate.

If, due to any circumstance affecting the London interbank market, the Agent determines that adequate and fair means do not exist for ascertaining the LIBO Rate on any applicable date (and such circumstances that are identified in the next two paragraphs below are not covered or governed by such provisions below), then until the Agent determines that such circumstance no longer exists, the obligation of lenders to make LIBOR Loans will be suspended and, if requested by the Agent, the Company must promptly, at its option, either (i) pay all such affected LIBOR Loans or (ii) convert such affected LIBOR Loans into loans that bear reference to the Base Rate plus the Applicable Margin.

If the Agent determines that for any reason (i) dollar deposits are not being offered to banks in the London interbank Eurodollar market for the applicable loan amount or applicable interest period, (ii) adequate and reasonable means do not exist for determining the LIBO Rate for the applicable interest period, or (iii) LIBOR for the applicable interest period does not adequately and fairly reflect the cost to the lenders of funding a loan, then the lenders’ obligation to make or maintain LIBOR Loans will be suspended to the extent of the affected LIBOR Loan or interest period until all such loans are converted to loans bearing interest at the Base Rate (as defined below) plus the Applicable Margin (as specified below).

However, if Agent determines that (i) adequate and reasonable means do not exist for ascertaining LIBOR for any requested interest period and such circumstances are unlikely to be temporary; (ii) the administrator of the LIBOR screen rate or a governmental authority having jurisdiction over the Agent has made a public statement identifying a specific date after which LIBOR or the LIBOR screen rate shall no longer be made available, or used for determining the interest rate of loans (“Scheduled Unavailability Date”); or (iii) syndicated loans currently being executed, or that include language similar to that contained in this paragraph are being executed or amended to incorporate or adopt a new benchmark interest rate to replace LIBOR, then Agent and the Company may amend the CNC Credit Agreement to replace LIBOR with an alternate benchmark rate (“LIBOR Successor Rate”) and any such amendment will become effective unless lenders holding more than 50% in value of the loans or commitments under the CNC Credit Agreement do not accept such amendment. If no LIBOR Successor Rate has been determined and the circumstances under clause (i) above exist or the Scheduled Unavailability Date has occurred, (x) the obligation of lenders to make or maintain LIBOR Loans will be suspended (to the extent of the affected LIBOR Loans or interest periods), and (y) the LIBO Base Rate component will no longer be utilized in determining the Base Rate. The Base Rate for any day is a fluctuating rate per annum equal to the highest of: (i) the Federal Funds Rate plus 1/2 of 1%; (ii) the rate of interest in effect for such day as publicly announced from time to time by JPMorgan Chase Bank, N.A. as its “prime rate” in effect for such day; or (iii) the most recently available LIBO Base Rate (as adjusted by any minimum LIBO Rate floor) plus 1%. The Applicable Margin is equal to 5.50%. The CNC Credit Agreement expires on March 26, 2023.

On April 16, 2020, the Company received a PPP Loan in the amount of approximately $1.38 million from PNC pursuant to the PPP administered by the United States Small Business Administration (“SBA”) under the CARES Act.

On January 13, 2021, the Company received a notice from PNC Bank regarding forgiveness of the loan in the principal amount of approximately $1.38 million that was made to the Company pursuant to the SBA PPP under the CARES Act of 2020. The notice states that SBA has remitted to PNC a loan forgiveness payment equal to $1.39 million, which constitutes full payment and forgiveness of the principal amount of the PPP loan and all accrued interest. In January 2021, the Company recognized the forgiveness of the PPP Loan on its Unaudited Condensed Consolidated Statement of Operations.

On June 10, 2020, the Company entered into a thirty-six-month equipment financing agreement (“Financing Agreement”) with Dimension Funding LLC. The Financing Agreement provides for an advance payment of approximately $170,000 to be used to secure furniture and fixtures for the Company’s new office location in Irvine, California. Payments of approximately $5,300 (inclusive of imputed interest) are made monthly under the Financing Agreement. As of March 31, 2021, the Company has paid approximately $61,000. The Financing Agreement will mature on December 31, 2022.

The Company’s future commitments under the Financing Agreement as of March 31, 2021, are as follows:

Year
2021 (remaining 9 months)		47
2022		63
Total financing debt	$	110

Selected Balance Sheet Accounts (Details 3) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Accrued Expenses and Other Current Liabilities:
Accrued employee-related benefits	$ 1,568	$ 2,123
Other accrued expenses	101	143
Amounts due to customers	82	94
Other current liabilities	328	301
Total other accrued expenses and other current liabilities	511	538
Total accrued expenses and other current liabilities	$ 2,079	$ 2,661

Leases

3 Months Ended

Mar. 31, 2021

Leases [Abstract]

Leases

The Company determines if an arrangement is a lease at inception. Right-of-use (“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 commencement date of the lease based on the present value of lease payments over the lease term. The Company has lease arrangements for certain equipment and facilities that typically have original terms not exceeding five years and, in some cases, contain automatic renewal provisions that provide for multiple year renewal terms unless either party, prior to the then-expiring term, notifies the other party of the intention not to renew the lease. The Company’s lease terms may also include options to terminate the lease when it is reasonably certain that the Company will exercise such options. 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 March 31, 2021 and December 31, 2020, respectively, consist of the following:

	March 31, 2021		December 31, 2020
Current portion of lease liabilities	$	1,020	$	1,015
Long-term lease liabilities, net of current portion		1,944		2,191
Total lease liabilities	$	2,964	$	3,206

The Company’s aggregate lease maturities as of March 31, 2021, are as follows:

Year
2021 (remaining 9 months)	$	895
2022		881
2023		797
2024		528
2025		197
Total minimum lease payments		3,298
Less imputed interest		(334	)
Total lease liabilities	$	2,964

Rent expense included in operating expenses and cost of revenue was $0.3 million for the three months ended March 31, 2021, with a weighted-average remaining lease term of 2.8 years and a weighted-average discount rate of 6.25%. Rent expense included in operating expenses and cost of revenue was $0.5 million for the three months ended March 31, 2020, with a weighted average remaining lease term of 2.0 years and a weighted-average discount rate of 6.25%.

Share-Based Compensation (Details 1) - $ / shares	3 Months Ended
Share-Based Compensation (Details 1) - $ / shares	Mar. 31, 2021	Mar. 31, 2020
Stock Issued or Granted During Period, Share-based Compensation:
Number of service-based options granted	765,000	460,000
Weighted average grant date fair value	$ 1.82	$ 1.09
Weighted average exercise price	$ 2.60	$ 2.00

Net Loss Per Share and Stockholders' Equity

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Net Loss Per Share and Stockholders' Equity

Basic net income (loss) per share is computed using the weighted average number of common shares outstanding during the period, excluding any unvested restricted stock. Diluted net income (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, common shares issuable upon the exercise of stock options and the exercise of warrants.

The following are the share amounts utilized to compute the basic and diluted net income (loss) per share for the three months ended March 31, 2021 and 2020, respectively:

	Three Months Ended March 31,
	2021			2020
Basic Shares:
Weighted average common shares outstanding		13,253,050			13,146,831
Weighted average unvested restricted stock		(75,944	)		(13,333	)
Basic Shares		13,177,106			13,133,498

Diluted Shares:
Basic shares		13,177,106			13,133,498
Weighted average dilutive securities		140,281			—
Diluted Shares		13,317,387			13,133,498

For the three months ended March 31, 2021, weighted average dilutive securities included dilutive options and restricted stock awards. For the three months ended March 31, 2020, 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 months ended March 31, 2021 and 2020, 4.4 million and 4.5 million, respectively, of potentially anti-dilutive securities related to common stock have been excluded from the calculation of diluted net earnings per share.

Share-Based Compensation (Details 3) - $ / shares	3 Months Ended
Share-Based Compensation (Details 3) - $ / shares	Mar. 31, 2021	Mar. 31, 2020
Share-based Payment Arrangement [Abstract]
Number of stock options exercised	54,705	0
Weighted average exercise price	$ 2.30	$ .00

Selected Balance Sheet Accounts (Details 2) $ in Thousands	Mar. 31, 2021 USD ($)
Amortization Expense for the Remainder of the Year and for the Next Five Years:
2021	$ 1,097
2022	902
2023	86
2024	46
Total	$ 2,131

Net Loss Per Share and Stockholders' Equity (Details Narrative) - shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Earnings Per Share [Abstract]
Anti-dilutive potential shares of common stock	4,400	4,500

Revenue Recognition

3 Months Ended

Mar. 31, 2021

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:

●	Lead generation – paid by Dealers and Manufacturers participating in the Company’s Lead programs and are comprised of Lead transaction and/or monthly subscription fees. Lead generation is recognized in the period when service is provided.

●

Digital advertising – fees paid by Dealers, Manufacturers and third-party wholesale suppliers for (i) the Company’s click traffic program, (ii) display advertising on the Company’s websites and (iii) email and other direct marketing. Revenue is recognized in the period advertisements are displayed on the Company’s Websites or the period in which clicks have been delivered, as applicable. The Company recognizes revenue from the delivery of action-based advertisement (including email and other direct marketing) in the period in which a user takes the action for which the marketer contracted with the Company. For advertising revenue arrangements where the Company is not the principal, the Company recognizes revenue on a net basis.

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. Some leads also are subject to pricing adjustments based upon their subsequent conversion into vehicle sales. Rights-of-returns and lead conversions are estimable, and provisions for these estimates are recorded as a reduction in revenue by the Company in the period revenue is recognized, and thereby accounted for as variable consideration. The Company includes the allowance for customer credits in its net accounts receivable balances on the Company’s balance sheet at period end. Allowance for customer credits approximated $153,000 and $64,000 as of March 31, 2021 and December 31, 2020, 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 March 31, 2021 and December 31, 2020. 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 three months ended March 31, 2021.

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 months ended March 31, 2021 and 2020. Revenue is recognized net of allowances for returns and any taxes collected from customers, which are subsequently remitted to governmental authorities.

	Three Months Ended March 31,
	2021		2020

Lead generation	$	14,186	$	18,460
Digital advertising
Clicks		2,932		5,349
Display and other advertising		762		663
Total digital advertising		3,694		6,012

Total revenues	$	17,880	$	24,472

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

Selected Balance Sheet Accounts (Tables)

3 Months Ended

Mar. 31, 2021

Balance Sheet Related Disclosures [Abstract]

Property and equipment

	March 31, 2021			December 31, 2020

Computer software and hardware	$	4,938		$	4,940
Capitalized internal use software		7,390			7,391
Furniture and equipment		1,105			935
Leasehold improvements		883			884
Construction in progress		1,001			805
		15,317			14,955
Less—Accumulated depreciation and amortization		(12,237	)		(12,002	)
Property and Equipment, net	$	3,080		$	2,953

Intangible assets amortized over the estimated useful lives

			March 31, 2021										December 31, 2020
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		$	(16,091	)		$	498		$	16,589		$	(15,961	)		$	628
Customer relationships	2 – 5 years			19,563			(19,563	)			—			19,563			(19,563	)			—
Developed technology	5 – 7 years			8,955			(7,322	)			1,633			8,955			(7,050	)			1,905
			$	45,107		$	(42,976	)		$	2,131		$	45,107		$	(42,574	)		$	2,533

			March 31, 2021									December 31, 2020
Indefinite-Lived Intangible Asset		Estimated Useful Life			Gross			Accumulated Amortization			Net			Gross			Accumulated Amortization			Net

Domain	Indefinite		$	2,200		$	—		$	2,200		$	2,200		$	—		$	2,200

Future amortization expense

Year	Amortization Expense

2021	$	1,097
2022		902
2023		86
2024		46
	$	2,131

Accrued expenses and other current liabilities

	March 31, 2021		December 31, 2020

Accrued employee-related benefits	$	1,568	$	2,123
Other accrued expenses and other current liabilities:
Other accrued expenses		101		143
Amounts due to customers		82		94
Other current liabilities		328		301
Total other accrued expenses and other current liabilities		511		538

Total accrued expenses and other current liabilities	$	2,079	$	2,661

Leases (Details 1) - USD ($) $ in Thousands	Mar. 31, 2021	Mar. 31, 2020
Leases [Abstract]
2021 (remaining 9 months)	$ 895
2022	881
2023	797
2024	528
2025	197
Total minimum lease payments	3,298
Less imputed interest	334
Total lease liabilities	$ 2,964	$ 3,206

CONSOLIDATED CONDENSED BALANCE SHEETS - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 11,218	$ 10,803
Restricted cash	4,307	4,304
Accounts receivable, net of allowances for bad debts and customer credits of $307 and $406 at March 31, 2021 and December 31, 2020, respectively	13,916	13,955
Prepaid expenses and other current assets	690	847
Total current assets	30,131	29,909
Property and equipment, net	3,080	2,953
Right-of-use assets	2,668	2,892
Intangible assets, net	4,331	4,733
Other assets	551	642
Total assets	40,761	41,129
Current liabilities:
Accounts payable	8,131	7,233
Borrowings under revolving credit facility	10,207	10,185
Accrued employee-related benefits	1,568	2,123
Other accrued expenses and other current liabilities	511	538
Current portion of the PPP Loan	0	1,384
Current portion of lease liabilities	1,020	1,015
Current portion of financing debt	66	65
Total current liabilities	21,503	22,543
Lease liabilities, net of current portion	1,944	2,191
Financing debt, net of current portion	44	60
Total liabilities	23,491	24,794
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 March 31, 2021 and December 31, 2020, respectively.	0	0
Common stock, $0.001 par value; 55,000,000 shares authorized, 13,443,909 and 13,169,204 shares issued and outstanding at March 31, 2021 and December 31, 2020, respectively	13	13
Additional paid-in capital	366,712	366,087
Accumulated deficit	(349,455)	(349,765)
Total stockholders' equity	17,270	16,335
Total liabilities and stockholders' equity	40,761	41,129
Series A
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 March 31, 2021 and December 31, 2020, respectively.	$ 0	$ 0

Leases (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
Leases (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2021	Mar. 31, 2020
Leases [Abstract]
Rent expense	$ 300	$ 500
Weighted average remaining lease term	2 years 9 months 18 days	2 years
Weighted average discount rate	6.25%	6.25%

Selected Balance Sheet Accounts (Details 1) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Intangible Assets
Gross	$ 47,307		$ 47,307
Accumulated amortization	(42,976)		(42,574)
Net	4,331		4,733
Trademarks and Trade Names
Intangible Assets
Gross	16,589		16,589
Accumulated amortization	(16,091)		(15,961)
Net	$ 498		$ 628
Trademarks and Trade Names \| Minimum
Finite-Lived Intangible Assets
Estimated useful life	3 years		3 years
Trademarks and Trade Names \| Maximum
Finite-Lived Intangible Assets
Estimated useful life	7 years		7 years
Customer Relationships
Intangible Assets
Gross	$ 19,563		$ 19,563
Accumulated amortization	(19,563)		(19,563)
Net	$ 0		$ 0
Customer Relationships \| Minimum
Finite-Lived Intangible Assets
Estimated useful life	2 years		2 years
Customer Relationships \| Maximum
Finite-Lived Intangible Assets
Estimated useful life	5 years		5 years
Developed Technology Rights
Intangible Assets
Gross	$ 8,955		$ 8,955
Accumulated amortization	(7,322)		(7,050)
Net	$ 1,633		1,905
Developed Technology Rights \| Minimum
Finite-Lived Intangible Assets
Estimated useful life	5 years	5 years
Developed Technology Rights \| Maximum
Finite-Lived Intangible Assets
Estimated useful life	7 years	7 years
Domain
Intangible Assets
Gross	$ 2,200		2,200
Accumulated amortization	0		0
Net	$ 220		$ 2,200

Net Loss Per Share and Stockholders' Equity (Tables)

3 Months Ended

Mar. 31, 2021

Earnings Per Share [Abstract]

Computation of basic and diluted net loss per share

	Three Months Ended March 31,
	2021			2020
Basic Shares:
Weighted average common shares outstanding		13,253,050			13,146,831
Weighted average unvested restricted stock		(75,944	)		(13,333	)
Basic Shares		13,177,106			13,133,498

Diluted Shares:
Basic shares		13,177,106			13,133,498
Weighted average dilutive securities		140,281			—
Diluted Shares		13,317,387			13,133,498

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Common Stock	Preferred Stock	Additional Paid-In Capital	Accumulated Deficit	Total
Beginning balance (shares) at Dec. 31, 2019	13,146,831	0
Beginning balance, amount at Dec. 31, 2019	$ 13	$ 0	$ 364,028	$ (342,945)	$ 21,096
Share-based compensation			509		$ 509
Issuance of common stock upon exercise of stock options (shares)					0
Net loss				(4,061)	$ (4,061)
Ending balance (shares) at Mar. 31, 2020	13,146,831	0
Ending balance, amount at Mar. 31, 2020	$ 13	$ 0	364,537	(347,006)	17,544
Beginning balance (shares) at Dec. 31, 2020	13,169,204	0
Beginning balance, amount at Dec. 31, 2020	$ 13	$ 0	366,087	(349,765)	16,335
Share-based compensation			499		$ 499
Issuance of common stock upon exercise of stock options (shares)	57,705				54,705
Issuance of common stock upon exercise of stock options, amount	$ 0		126		$ 126
Issuance of restricted stock	220,000
Net loss				310	310
Ending balance (shares) at Mar. 31, 2021	13,449,909	0
Ending balance, amount at Mar. 31, 2021	$ 13	$ 0	$ 366,712	$ (349,455)	$ 17,270

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

+ References + Details

CONSOLIDATED CONDENSED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Current assets:
Accounts receivable, allowances for bad debts and customer credits	$ 307	$ 406
Stockholders' equity:
Common stock, par value	$ .001	$ 0.001
Common stock, authorized	55,000,000	55,000,000
Common stock, issued	13,443,909	13,169,204
Common stock, outstanding	13,443,909	13,169,204
Series A
Stockholders' equity:
Preferred stock, par value	$ .001	$ 0.001
Preferred stock, authorized	2,000,000	2,000,000
Preferred stock, issued	0	0
Preferred stock, outstanding	0	0

Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2021	May 03, 2021
Cover [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 Interactive Data Current	Yes
Entity Incorporation State Country Code	DE
Entity File Number	1-34761
Entity Common Stock, Shares Outstanding		13,465,871
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q1
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2021

Selected Balance Sheet Accounts

3 Months Ended

Mar. 31, 2021

Balance Sheet Related Disclosures [Abstract]

Selected Balance Sheet Accounts

Property and Equipment. Property and equipment consist of the following:

	March 31, 2021			December 31, 2020

Computer software and hardware	$	4,938		$	4,940
Capitalized internal use software		7,390			7,391
Furniture and equipment		1,105			935
Leasehold improvements		883			884
Construction in progress		1,001			805
		15,317			14,955
Less—Accumulated depreciation and amortization		(12,237	)		(12,002	)
Property and Equipment, net	$	3,080		$	2,953

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 59%, or $8.3 million, of gross accounts receivable at March 31, 2021, and approximately 41% of total revenues for the quarter ended March 31, 2021, are related to Urban Science Applications (which represents several Manufacturer programs), Carat Detroit (which represents General Motors), Autodata Solutions and Ford Direct. For 2020, approximately 38%, or $8.2 million, of gross accounts receivable at March 31, 2020, and approximately 34% of total revenues for the quarter ended March 31, 2020, are related to Urban Science Applications, Carat Detroit and Media.net.

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:

			March 31, 2021										December 31, 2020
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		$	(16,091	)		$	498		$	16,589		$	(15,961	)		$	628
Customer relationships	2 – 5 years			19,563			(19,563	)			—			19,563			(19,563	)			—
Developed technology	5 – 7 years			8,955			(7,322	)			1,633			8,955			(7,050	)			1,905
			$	45,107		$	(42,976	)		$	2,131		$	45,107		$	(42,574	)		$	2,533

			March 31, 2021									December 31, 2020
Indefinite-Lived Intangible Asset		Estimated Useful Life			Gross			Accumulated Amortization			Net			Gross			Accumulated Amortization			Net

Domain	Indefinite		$	2,200		$	—		$	2,200		$	2,200		$	—		$	2,200

Amortization expense is included in “Cost of revenues” and “Depreciation and amortization” in the Unaudited Condensed Consolidated Statements of Operations. Amortization expense was $0.4 million and $0.9 million for the three months ended March 31, 2021 and 2020, respectively.

Amortization expense for the remainder of the year and for future years is as follows:

Year	Amortization Expense

2021	$	1,097
2022		902
2023		86
2024		46
	$	2,131

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

	March 31, 2021		December 31, 2020

Accrued employee-related benefits	$	1,568	$	2,123
Other accrued expenses and other current liabilities:
Other accrued expenses		101		143
Amounts due to customers		82		94
Other current liabilities		328		301
Total other accrued expenses and other current liabilities		511		538

Total accrued expenses and other current liabilities	$	2,079	$	2,661

Share-Based Compensation (Details 2)	3 Months Ended
Share-Based Compensation (Details 2)	Mar. 31, 2021	Mar. 31, 2020
Fair Value of Stock Options Granted Using the Following Weighted Average Assumptions:
Dividend yield	0.00%	0.00%
Volatility	94.40%	68.00%
Risk-free interest rate	0.70%	1.10%
Expected life (years)	4 years 9 months 18 days	4 years 6 months

Income Taxes

3 Months Ended

Mar. 31, 2021

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. As the year progresses, the Company refines its estimated annual effective tax rate based on actual year-to-date results. 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 March 31, 2021 and December 31, 2020. The Company’s effective tax rate for the three months ended March 31, 2021, 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 $0.2 million as of March 31, 2021, all of which, if subsequently recognized, would have affected the Company's tax rate.

As of March 31, 2021 and December 31, 2020, 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 the three months ended March 31, 2021 and 2020.

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 2017 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 2016 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 (“TCJA”). Corporate taxpayers may carryback net operating losses originating during 2018 through 2020 for up to five years, which was not previously allowed under the TCJA. 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 TCJA) 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 TCJA. The enactment of the CARES Act did not result in any material adjustments to the Company’s income tax provision for the three months ended March 31, 2021, or to its net deferred tax assets as of March 31, 2021.

On December 27, 2020, President Trump signed into law the Consolidated Appropriations Act of 2021 (the “Act”). The Act enhances and expands certain provisions of the CARES Act. The Act permits taxpayers whose Paycheck Protection Program loans (“PPP Loan”) are forgiven to deduct the expenses relating to their loans to the extent they would otherwise qualify as ordinary and necessary business expenses. This rule applies retroactively to the effective date of the CARES Act, so that expenses paid using funds from PPP loans previously issued under the CARES Act are deductible, regardless of when the loan was forgiven. The Company’s $1.4 million PPP loan was completely forgiven in January 2021 and the expenses are currently deductible on the Company’s 2020 federal tax return.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

Net Loss Per Share and Stockholders' Equity (Details) - shares	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Basic Shares:
Weighted average common shares outstanding	13,253,050	13,146,831
Weighted average unvested restricted stock	(75,944)	(13,333)
Basic shares	13,177,106	13,133,498
Diluted Shares:
Basic shares	13,177,106	13,133,498
Weighted average dilutive securities	140,281	0
Diluted shares	13,317,387	13,133,498

Revenue Recognition (Tables)

3 Months Ended

Mar. 31, 2021

Revenue Recognition [Abstract]

Revenue from contracts

	Three Months Ended March 31,
	2021		2020

Lead generation	$	14,186	$	18,460
Digital advertising
Clicks		2,932		5,349
Display and other advertising		762		663
Total digital advertising		3,694		6,012

Total revenues	$	17,880	$	24,472

Revenue Recognition (Details) - USD ($) $ in Thousands	3 Months Ended
Revenue Recognition (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Mar. 31, 2020
Revenue from contracts with customers	$ 17,880	$ 24,472
Lead Generation
Revenue from contracts with customers	14,186	18,460
Click Advertising
Revenue from contracts with customers	2,932	5,349
Display and Other Advertising
Revenue from contracts with customers	762	663
Advertising
Revenue from contracts with customers	$ 3,694	$ 6,012

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

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+ Details

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Revenues:
Total revenues	$ 17,880	$ 24,472
Cost of revenues	12,071	19,115
Gross profit	5,809	5,357
Operating expenses:
Sales and marketing	2,200	2,132
Technology support	1,367	1,857
General and administrative	3,132	3,943
Depreciation and amortization	204	722
Total operating expenses	6,903	8,654
Operating loss	(1,094)	(3,297)
Interest and other (expense) income:
Interest (expense) income, net	(251)	(832)
Other income (expense)	1,655	68
Total interest and other (expense) income	1,404	(4,061)
Net loss	$ 310	$ (4,061)
Basic loss per common share	$ 0.02	$ (0.31)
Diluted loss per common share	$ 0.02	$ (0.31)
Lead Generation
Revenues:
Total revenues	$ 14,186	$ 18,460
Digital Advertising
Revenues:
Total revenues	$ 3,694	$ 6,012

Organization and Operations

3 Months Ended

Mar. 31, 2021

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 through its programs for online lead and traffic referrals, dealer marketing products and services, and online advertising.

The Company’s consumer-facing automotive websites (“Company Websites”) provide consumers with information and tools to aid them with their automotive purchase decisions and the ability to submit inquiries requesting Dealers to contact the consumers regarding purchasing or leasing vehicles (“Leads”). Leads are internally generated from Company Websites or acquired from third parties that generate Leads from their websites.

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 the Company’s 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.

Debt (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
Debt (Details Narrative) - USD ($) $ in Thousands	Mar. 31, 2021	Mar. 31, 2020	Dec. 31, 2020
Debt Disclosure [Abstract]
Outstanding under CNC Credit Agreement	$ 10,207		$ 10,185
Payments under financing agreement	$ (15)	$ 0

- Definition

The carrying value as of the balance sheet date of the current portion of long-term obligations drawn from a line of credit, which is a bank's commitment to make loans up to a specific amount. Examples of items that might be included in the application of this element may consist of letters of credit, standby letters of credit, and revolving credit arrangements, under which borrowings can be made up to a maximum amount as of any point in time conditional on satisfaction of specified terms before, as of and after the date of drawdowns on the line. Includes short-term obligations that would normally be classified as current liabilities but for which (a) postbalance sheet date issuance of a long term obligation to refinance the short term obligation on a long term basis, or (b) the enterprise has entered into a financing agreement that clearly permits the enterprise to refinance the short-term obligation on a long term basis and the following conditions are met (1) the agreement does not expire within 1 year and is not cancelable by the lender except for violation of an objectively determinable provision, (2) no violation exists at the BS date, and (3) the lender has entered into the financing agreement is expected to be financially capable of honoring the agreement.

+ References + Details

Share-Based Compensation

3 Months Ended

Mar. 31, 2021

Share-based Payment Arrangement [Abstract]

Share-Based Compensation

Share-based compensation expense is included in costs and expenses in the Unaudited Condensed Consolidated Statements of Operations as follows:

	Three Months Ended March 31,
	2021		2020

Share-based compensation expense:
Sales and marketing	$	30	$	32
Technology support		11		27
General and administrative		458		450
Share-based compensation costs		499		509

Total share-based compensation costs	$	499	$	509

Service-Based Options. The Company granted the following service-based options for the three months ended March 31, 2021 and 2020, respectively:

	Three Months Ended March 31,
	2021		2020

Number of service-based options granted		765,000		460,000
Weighted average grant date fair value	$	1.82	$	1.09
Weighted average exercise price	$	2.60	$	2.00

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.

Restricted Stock Awards. The Company granted an aggregate of 220,000 restricted stock awards (“RSAs”) in the first quarter of 2021 to certain executive officers of the Company. The RSAs are service-based and the forfeiture restrictions lapse with respect to one-third of the restricted stock on each of the first, second and third anniversaries of the date of the award. Lapsing of the forfeiture restrictions may be accelerated in the event of a change in control of the Company and will accelerate upon the death or disability of the holder of the RSAs.

The grant date fair value of stock options granted during these periods was estimated using the following weighted average assumptions:

	Three Months Ended March 31,
	2021			2020

Dividend yield		—			—
Volatility		94.4	%		68	%
Risk-free interest rate		0.7	%		1.1	%
Expected life (years)		4.8			4.5

Stock option exercises. The following stock options were exercised during the three months ended March 31, 2021 and 2020, respectively:

	Three Months Ended March 31,
	2021		2020

Number of stock options exercised		54,705		—
Weighted average exercise price	$	2.30	$	—

Basis of Presentation

3 Months Ended

Mar. 31, 2021

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, 2020 (“2020 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 March 31, 2021, 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 2020 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 March 31, 2021 and December 31, 2020, restricted cash primarily consisted of pledged cash pursuant to the CIT Northbridge Credit LLC (“CNC Credit Agreement”) discussed in Note 11.

In early 2020 and continuing as of the date of this Quarterly Report on Form 10-Q, the outbreak of coronavirus 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, businesses and facilities, worldwide, causing widespread disruptions to travel, economic activity and financial markets. 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, safety and availability of their labor force. Manufacturers have also shut down assembly plants, adversely impacting inventories of new vehicles. Volatility in the financial markets, concerns about exposure to the virus, 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 rates and lower consumer confidence may continue even after stay-at-home/work-from-home orders and business closures 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. The Company is also experiencing direct disruptions in the Company’s operations due to the overall health and safety of, and concerns for, the Company’s 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 the Company’s employees traveling to the Company’s various offices.

In addition to the continued impact of the coronavirus pandemic on supply chains and vehicle inventories and sales, Manufacturers have also experienced significant disruption in the supply of semiconductor chips required for new vehicles due to a worldwide shortage of these chips. As a result, the ability of Manufacturers to maintain regular production output of certain vehicles, and the corresponding reduction in available new vehicle inventories, have adversely impacted vehicle sales. Further disrupting the automotive industry and the number of vehicles available for sale or lease are disruptions in the supply of seat foam and rubber, which is a key material used in tires as well as other components of new vehicles.

The Company is unable to predict the continuing extent, duration and impact of the pandemic and supply chain disruptions on the automotive industry in general, and on the Company’ business and operations specifically. Vehicle sales have declined, and the Company continues to experience cancellations or suspensions of purchases of Leads and other digital marketing services by the Company’s customers, which could materially and adversely affect the Company’s future business, results of operations, financial condition, earnings per share, cash flow or the trading price of our stock (individually and collectively referred to as the Company’s“financial performance”). In light of the impact of the pandemic and supply chain disruptions, the Company has taken steps to reduce the Company’s overall lead and click generation efforts and corresponding costs to better align the Company’s volumes with industry demand and consumer intent and ability to purchase or lease vehicles. The Company will continue to evaluate these and other cost reduction measures, and explore all options available to the Company, in order to minimize the impact of these events on the Company.

Commitments and Contingencies

3 Months Ended

Mar. 31, 2021

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 in 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 adversely affect its business, results of operations, financial condition, and cash flows. The Company assesses the likelihood of any adverse judgments or outcomes of these matters as well as potential ranges of probable losses. The Company records a loss contingency when an unfavorable outcome is probable, and the amount of the loss can be reasonably estimated. The amount of allowances required, if any, for these contingencies is determined after analysis of each individual case. The amount of allowances may change in the future if there are new material developments in each matter. Gain contingencies are not recorded until all elements necessary to realize the revenue are present. Any legal fees incurred in connection with a contingency are expensed as incurred.

Recent Accounting Pronouncements

3 Months Ended

Mar. 31, 2021

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.

- Definition

The entire disclosure for change in accounting principle. Includes, but is not limited to, nature, reason, and method of adopting amendment to accounting standards or other change in accounting principle.

+ References

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+ Details

Debt (Details) $ in Thousands	Mar. 31, 2021 USD ($)
Debt Disclosure [Abstract]
2021 (remaining 9 months)	$ 47
2022	63
Total financing debt	$ 110

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Cash flows from operating activities:
Net loss	$ 310	$ (4,061)
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
Depreciation and amortization	641	1,212
Provision for bad debts	(177)	12
Provision for customer credits	137	92
Forgiveness of the PPP loan	1,384	0
Share-based compensation	499	509
Amortization of right-of-use assets	224	396
Changes in assets and liabilities:
Accounts receivable	79	3,127
Prepaid expenses and other current assets	157	97
Other assets	91	(103)
Accounts payable	598	(1,273)
Accrued expenses and other current liabilities	(583)	(560)
Lease liabilities	(242)	(402)
Net cash provided by (used in) operating activities	350	(954)
Cash flows from investing activities:
Purchase of property and equipment	(66)	(103)
Net cash used in investing activities	(66)	(103)
Cash flows from financing activities:
Borrowings under PNC credit facility	0	28,564
Principal payments on PNC credit facility	0	(32,308)
Borrowings under CNC credit facility	18,144	8,001
Principal payments on CNC credit facility	(18,121)	(1,290)
Proceeds from exercise of stock options	126	0
Payments under financing agreement	(15)	0
Net cash provided by financing activities	134	2,967
Net increase (decrease) in cash and cash equivalents and restricted cash	418	1,910
Cash and cash equivalents and restricted cash, beginning of period	15,107	5,946
Cash and cash equivalents and restricted cash, end of period	15,525	7,856
Cash and cash equivalents at beginning of period	10,803	892
Cash and cash equivalents at end of period	11,218	7,354
Restricted cash at beginning of period	4,304	5,054
Restricted cash at end of period	4,307	502
Supplemental disclosure of cash flow information:
Cash paid for income taxes	0	381
Cash paid for interest	215	323
Right-of-use-assets obtained in exchange for operating lease liabilities	0	1,501
Purchase on account related to capitalized software	$ 300	$ 0

Share-Based Compensation (Details) - USD ($) $ in Thousands	3 Months Ended
Share-Based Compensation (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Mar. 31, 2020
Share-based Compensation Expense:
Share-based compensation costs	$ 499	$ 509
Total share-based compensation costs	499	509
Sales and Marketing
Share-based Compensation Expense:
Share-based compensation costs	30	32
Technology Support
Share-based Compensation Expense:
Share-based compensation costs	11	27
General and Administrative
Share-based Compensation Expense:
Share-based compensation costs	$ 458	$ 450

Debt (Tables)

3 Months Ended

Mar. 31, 2021

Debt Disclosure [Abstract]

Future commitments under the financing agreement

Year
2021 (remaining 9 months)		47
2022		63
Total financing debt	$	110

Recent Accounting Pronouncements (Policies)

3 Months Ended

Mar. 31, 2021

Accounting Standards Update and Change in Accounting Principle [Abstract]

Recent Accounting Pronouncements

Selected Balance Sheet Accounts (Details) - USD ($) $ in Thousands	Mar. 31, 2021	Dec. 31, 2020
Property and Equipment
Computer software and hardware	$ 4,938	$ 4,940
Capitalized internal use software	7,390	7,391
Furniture and equipment	1,105	935
Leasehold improvements	883	884
Construction in progress	1,001	805
Property and equipment, gross	15,317	14,955
Less - accumulated depreciation and amortization	(12,237)	(12,002)
Property and equipment, net	$ 3,080	$ 2,953

Selected Balance Sheet Accounts (Details Narrative) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2021	Mar. 31, 2020
Balance Sheet Related Disclosures [Abstract]
Amortization expense	$ 400	$ 900