Selected Balance Sheet Accounts

12 Months Ended

Dec. 31, 2014

Selected Balance Sheet Accounts [Abstract]

Selected Balance Sheet Accounts

Property and Equipment

Property and equipment consists of the following:

	As of December 31,
	2014			2013
	(in thousands)
Computer software and hardware and capitalized internal use software	$	12,990		$	11,924
Furniture and equipment		1,271			1,256
Leasehold improvements		957			937
		15,218			14,117
Less—Accumulated depreciation and amortization		(13,314	)		(12,569	)
Property and Equipment, net	$	1,904		$	1,548

As of December 31, 2014 and 2013, capitalized internal use software, net of amortization, was $0.9 million and $0.6 million, respectively.  Depreciation and amortization expense related to property and equipment was $0.7 million each for the years ended December 31, 2014 and 2013.  Of this amount, $0.2 million was recorded in cost of revenues and $0.5 million was recorded in operating expenses for each of the years ended December 31, 2014 and 2013.

 Intangible Assets.  The Company amortizes specifically identified intangible assets using the straight-line method over the estimated useful lives of the assets. In connection with the acquisitions of Cyber, Advanced Mobile and AutoUSA, the Company identified $9.7 million of intangible assets.  The Company’s intangible assets will be amortized over the following estimated useful lives (in thousands):

		December 31, 2014							December 31, 2013
Intangible Asset	Estimated Useful Life	Gross		Accumulated Amortization			Net		Gross		Accumulated Amortization			Net
Trademarks/trade names/licenses/domains	5 years	$	6,574	$	(5,594	)	$	980	$	5,582	$	(5,209	)	$	373
Software and publications	3 years		1,300		(1,300	)		—		1,300		(1,300	)		—
Customer relationships	2 - 5 years		5,074		(2,696	)		2,378		2,320		(1,926	)		394
Employment/non-compete agreements	5 years		700		(500	)		200		610		(335	)		275
Developed technology	5 years		820		(205	)		615		820		(41	)		779
		$	14,468	$	(10,295	)	$	4,173	$	10,632	$	(8,811	)	$	1,821

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

Year	Amortization Expense
	(in thousands)
2015	$	1,394
2016		942
2017		926
2018		879
2019		32
	$	4,173

Goodwill.  Goodwill represents the excess of the purchase price over the fair value of net assets acquired.  Goodwill is not amortized and is assessed annually for impairment or whenever events or circumstances indicate that the carrying value of such assets may not be recoverable.  The Company did not record any impairment related to goodwill as of December 31, 2014 and 2013.  As of December 31, 2014 and 2013, goodwill consisted of the following:

	(in thousands)
Goodwill as of December 31, 2013	$	13,602
Acquisition of AutoUSA		7,346
Goodwill as December 31, 2014	$	20,948

Accrued Expenses and Other Current Liabilities

As of December 31, 2014 and 2013, accrued expenses and other current liabilities consisted of the following:

	As of December 31,
	2014		2013
	(in thousands)
Compensation and related costs and professional fees	$	4,989	$	3,540
Other accrued expenses		3,543		3,209
Amounts due to customers		267		208
Other current liabilities		696		691
Total accrued expenses and other current liabilities	$	9,495	$	7,648

Convertible Notes Payable.  In connection with the acquisition of Cyber on September 17, 2010 (“Cyber Acquisition Date”), the Company issued a convertible subordinated promissory note for $5.0 million (“Cyber Convertible Note”) to the sellers.  The fair value of the Cyber Convertible Note as of the Cyber Acquisition Date was $5.9 million.  This valuation was estimated using a binomial option pricing method.  Key assumptions used by the Company's outside valuation consultants in valuing the Cyber Convertible Note included a market yield of 15.0% and stock price volatility of 77.5%.  As the Cyber Convertible Note was issued with a substantial premium, the Company recorded the premium as additional paid-in capital.  Interest is payable at an annual interest rate of 6% in quarterly installments.  The entire outstanding balance of the Cyber Convertible Note is to be paid in full on September 30, 2015.  At any time after September 30, 2013, the holders of the Cyber Convertible Note may convert all or any part, but in 40,000 minimum share increments, of the then outstanding and unpaid principal of the Cyber Convertible Note into fully paid shares of the Company’s common stock at a conversion price of $4.65 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The right to convert the Cyber Convertible Note into common stock of the Company is accelerated in the event of a change in control of the Company.  In the event of default, the entire unpaid balance of the Cyber Convertible Note will become immediately due and payable and will bear interest at the lower of 8% per year and the highest legal rate permissible under applicable law.

In connection with the acquisition of AutoUSA, the Company issued the AutoUSA Note to the Seller.  The fair value of the AutoUSA Note as of the AutoUSA Acquisition Date was $1.3 million.  This valuation was estimated using a binomial option pricing method.  Key assumptions used by the Company's outside valuation consultants in valuing the AutoUSA Note include a market yield of 1.6% and stock price volatility of 65.0%.  As the AutoUSA Note was issued with a substantial premium, the Company recorded the premium as additional paid-in capital.  Interest is payable at an annual interest rate of 6% in quarterly installments.  The entire outstanding balance of the AutoUSA Note is to be paid in full on January 31, 2019.  At any time after January 31, 2017, the holder of the AutoUSA Note may convert all or any part, but at least 30,600 shares, of the then outstanding and unpaid principal of the AutoUSA Note into fully paid shares of the Company's common stock at a conversion price of $16.34 per share (as adjusted for stock splits, stock dividends, combinations and other similar events).  The right to convert the AutoUSA Note into common stock of the Company is accelerated in the event of a change in control of the Company.  In the event of default, the entire unpaid balance of the AutoUSA Note will become immediately due and payable and will bear interest at the lower of 8% per year and the highest legal rate permissible under applicable law.