AutoWeb, Inc. (AUTO) 2021年10-K年度報告「NASDAQ」.pdf

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1、 UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549 FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934 For the fiscal year ended December 31,2021or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACTOF 19

2、34 For the transition period from to Commission File Number 1-34761 AutoWeb,Inc.(Exact Name of Registrant as Specified in Its Charter)Delaware 33-0711569(State or other jurisdiction ofincorporation or organization)(I.R.S.Employer Identification No.)400 North Ashley Drive,Suite 300Tampa,Florida 33602

3、(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code(949)225-4500 Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading SymbolName of each exchange on which registeredCommon Stock,par value$0.001 per shareAUTOThe Nasdaq Cap

4、ital Market Securities registered pursuant to Section 12(g)of the Act:None Indicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the SecuritiesAct.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Se

5、ction 15(d)of theAct.Yes No Indicate by check mark whether the registrant:(1)has filed all reports required to be filed by Section 13 or 15(d)of theSecurities Exchange Act of 1934 during the preceding 12 months(or for such shorter period that the registrant was required tofile such reports),and(2)ha

6、s been subject to such filing requirements for the past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to besubmitted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for s

7、uchshorter period that the registrant was required to submit such files).Yes No 2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm1/89Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer

8、,a non-accelerated filer,asmaller reporting company,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer”and“smaller reporting company,”and“emerging growth company”in Rule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated

9、filer Smaller reporting company Emerging growthcompany If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transitionperiod for complying with any new or revised financial accounting standards provided pursuant to Section 13(a)of theExchange Act

10、.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment ofthe effectiveness of its internal control over financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by registered public accounting firm that prepared or

11、issued its audit report.Yes No Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act)Yes No Based on the closing sale price of$3.12 for our common stock on The Nasdaq Capital Market on June 30,2021,theaggregate market value of outstanding shares of comm

12、on stock held by non-affiliates was approximately$28 million.As of March 22,2022,there were 14,051,149 shares of our common stock outstanding.Documents Incorporated by Reference Portions of our Definitive Proxy Statement for the 2022 Annual Meeting,expected to be filed within 120 days of our fiscal

13、yearend,are incorporated by reference into Part III of this Annual Report on Form 10-K.2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm2/89Table of ContentsTable of Contents AutoWeb,Inc.ANNUAL REPORT ON FORM 10-KFOR THE FISCAL

14、YEAR ENDED DECEMBER 31,2021 PageNumberPart I Item 1Business 1Item 1A Risk Factors 9Item 1BUnresolved Staff Comments 26Item 2Properties 26Item 3Legal Proceedings 26Item 4Mine Safety Disclosures 26 Part II Item 5Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases ofEq

15、uity Securities 27Item 6Reserved 27Item 7Managements Discussion and Analysis of Financial Condition and Results of Operations 27Item 7A Quantitative and Qualitative Disclosures About Market Risk 35Item 8Financial Statements and Supplementary Data 35Item 9Changes in and Disagreements with Accountants

16、 on Accounting and Financial Disclosure 35Item 9A Controls and Procedures 35Item 9BOther Information 36Item 9CDisclosure Regarding Foreign Jurisdictions that Prevent Inspections 36 Part III Item 10Directors,Executive Officers and Corporate Governance 36Item 11Executive Compensation 36Item 12Security

17、 Ownership of Certain Beneficial Owners and Management and Related StockholderMatters 36Item 13Certain Relationships and Related Transactions,and Director Independence 36Item 14Principal Accountant Fees and Services 36 Part IV Item 15Exhibits and Financial Statement Schedules 37Item 16Form 10-K Summ

18、ary 42 Signatures 43 2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm3/89Table of Contents FORWARD-LOOKING STATEMENTS The Securities and Exchange Commission(“SEC”)encourages companies to disclose forward-looking information sot

19、hat investors can better understand a companys future prospects and make informed investment decisions.This Annual Reporton Form 10-K and our proxy statement,parts of which are incorporated herein by reference,contain such forward-lookingstatements within the meaning of the Private Securities Litiga

20、tion Reform Act of 1995.Words such as“anticipates,”“could,”“may,”“estimates,”“expects,”“projects,”“intends,”“pending,”“plans,”“believes,”“will”and words of similar substance,orthe negative of those words,used in connection with any discussion of future operations or financial performance identifyfor

21、ward-looking statements.In particular,statements regarding expectations and opportunities,new product expectations andcapabilities,and our outlook regarding our performance and growth are forward-looking statements.This Annual Report onForm 10-K also contains statements regarding plans,goals and obj

22、ectives.There is no assurance that we will be able to carryout our plans or achieve our goals and objectives or that we will be able to do so successfully on a profitable basis.Theseforward-looking statements are just predictions and involve risks and uncertainties,many of which are beyond our contr

23、ol,andactual results may differ materially from these statements.Factors that could cause actual results to differ materially from thosereflected in forward-looking statements include but are not limited to,those discussed in“Item 1A.Risk Factors,”and“Item 7.Managements Discussion and Analysis of Fi

24、nancial Condition and Results of Operations”of this Annual Report on Form 10-K.Investors are urged not to place undue reliance on forward-looking statements.Forward-looking statements speak only as ofthe date on which they were made.Except as may be required by law,we do not undertake any obligation

25、,and expresslydisclaim any obligation,to update or alter any forward-looking statements,whether as a result of new information,future eventsor otherwise.All forward-looking statements contained herein are qualified in their entirety by the foregoing cautionarystatements.SUMMARY OF RISKS AFFECTING OU

26、R BUSINESS Our business is subject to numerous risks and uncertainties,including those highlighted in the section titled“Risk Factors”later in this Annual Report on Form 10-K.These risks include,but are not limited to,the following:Risks Associated with our Business Operations and Industry We may be

27、 unable to increase Lead revenues and could continue to suffer declining revenues due to Dealerattrition or loss of Manufacturer customers.We may lose customers or quality Lead suppliers to our competitors.Risks associated with our ability to maintain or grow manufacturer relationships through our t

28、hird-party saleschannel and direct-to-Manufacturer wholesale programs.Risks associated with the availability of or access to used vehicle inventory.Increased costs associated with vehicle acquisition and reduced sales prices as a result of highly fragmentedand competitive retail used vehicle industr

29、y.Changes in internet search engine algorithms,pricing or operational dynamics could materially or adverselyaffect our financial performance.We are affected by general economic and market conditions,and conditions in the automotive industry.Natural disasters,public health crises,political crises and

30、 other catastrophic events or other events outside ofour control could materially and adversely impact our financial performance.If we lose our key personnel or are unable to attract,train and retain additional highly qualified personnel,ourfinancial performance may be adversely impacted.We are expo

31、sed to risks associated with overseas operations.Acquisition of new businesses,products or technologies,could divert our managements attention from ourbusiness,disrupt our operations and materially and adversely impact our financial performance.We are dependent upon third parties for certain support

32、 services and should they fail to perform,our financialperformance could be materially and adversely affected.Our financial performance may be materially and adversely affected by investments in technology in order tokeep our products and services relevant.Interruptions or failures in our informatio

33、n technology platforms,communication systems or security systemscould materially and adversely affect our financial performance.Financial,Accounting and Liquidity Risks Concentration of credit risk and risks due to significant customers could materially and adversely affect ourfinancial performance.

34、If we are unable to generate positive cash flows,we may not be able to continue operations unless we are ableto obtain additional cash through alternative sources.If we are unable to obtain adequate financing or financing on terms satisfactory to us,when we require it,ourability to maintain or grow

35、the business and respond to challenges or unforeseen circumstances could besignificantly limited,and our financial performance could be materially and adversely affected.2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm4/89 If o

36、ur internal controls and procedures fail,our financial condition,results of operations and cash flow could bematerially and adversely affected.2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm5/89Table of Contents Personal Infor

37、mation and Data Security and Privacy Risks The failure to comply with privacy laws could materially and adversely impact our financial performance.Risks associated with compliance with telemarketing and advertising laws and regulations.Data security risks related to confidential and personal informa

38、tion of customers and consumers.Risks related to online fraud and scams.Risks associated with compliance with anti-spam laws,rules,and regulations.Risks Associated with Regulatory Matters Uncertainty exists in the application of various new and existing laws and regulations to our business.Complianc

39、e with Automotive Dealer/Broker and Vehicle Advertising Laws.Compliance with Financial Broker and Consumer Credit Laws.Compliance with Insurance Broker Laws.Risks Associated with Tax Matters Changes in the taxation of internet commerce may result in increased costs.If our ability to use our net oper

40、ating loss carryforwards and other tax attributes is limited,we may not receivethe benefit of those assets.Risks Associated with Ownership of Our Securities The public market for our common stock may be volatile.Our common stock could be delisted from The Nasdaq Capital Market if we are not able to

41、satisfy continuedlisting requirements.Our certificate of incorporation and bylaws,tax benefit preservation plan and Delaware law contain provisionsthat could make it more difficult for a third party to acquire us.Our bylaws provide that the Court of Chancery of the State of Delaware will be the excl

42、usive forum forsubstantially all disputes between us and our stockholders,which could limit our stockholders ability to obtaina favorable judicial forum for disputes with us or our directors,officers,employees or agents.We may fail to meet our publicly announced guidance or other expectations about

43、our business and futureoperating results,which could cause our stock price to decline.Concentration of ownership among our existing executive officers and directors,their affiliates and holders of5%or more of our outstanding common stock may prevent new investors from influencing significantcorporat

44、e decisions.You may experience future dilution as a result of future equity offerings.If securities or industry analysts do not publish or cease publishing research or reports about us,our business orour market,or if they change their recommendations regarding our stock adversely,our stock price and

45、 tradingvolume could decline.We do not expect to declare any dividends in the foreseeable future.Risks Associated with Litigation Misappropriation or infringement of our intellectual property and proprietary rights and enforcement actions toprotect our intellectual property could materially and adve

46、rsely affect our financial performance.Our financial performance could be adversely affected by actions of third parties that could subject us tolitigation.Our financial performance could be materially and adversely affected by other litigation.2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/A

47、rchives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm6/89Table of Contents PART IItem 1.Business Overview AutoWeb,Inc.,a Delaware corporation,was formed on May 17,1996,and is headquartered in Tampa,Florida,withoffices in Irvine California and Guatemala City,Guatemala.AutoWeb is an autom

48、otive industry marketing and used vehicleacquisition and resale company focused on being a“matchmaker”by matching consumers seeking to acquire vehicles andvehicle sellers that can best meet those consumers needs.We assist consumers in multiple aspects of a vehicle transaction,including providing val

49、uable content and information to assist consumers in making informed decisions regarding their nextvehicle to acquire.The Company also assists consumers who would like to sell their current vehicle through the CompanysCarZeus vehicle acquisition business,which provides an additional product line ext

50、ension to the Companys digital marketingofferings.The terms“we,”“us,”“our,”the“Company”or“AutoWeb”and any other similar terms refer to AutoWeb,Inc.andits consolidated subsidiaries,unless otherwise indicated in this Annual Report on Form 10-K.On July 31,2021,the Company and Tradein Expert,Inc.,a Dela

51、ware corporation and wholly owned subsidiary of theCompany (“Tradein Expert”),entered into and consummated an Asset Purchase Agreement(“Purchase Agreement”),by andamong the Company,Tradein Expert,Car Acquisition,LLC,a Texas limited liability company dba CarZeus(“Seller”),C LLC,a Texas limited liabil

52、ity company,McCombs Family Partners,Ltd.,a Texas limited partnership and PhilKandera,an individual,pursuant to which Tradein Expert acquired specified assets of Sellers San Antonio,Texas-based usedvehicle acquisition platform that operates under the name CarZeus(“CarZeus Purchase Transaction”).Throu

53、gh the TradeinExpert entity(dba CarZeus),the Company purchases used vehicles directly from consumers and resells them through wholesalechannels.The operations of CarZeus are included in AutoWebs financial statements as of August 1,2021.The Company primarily generates revenue by assisting automotive

54、retail dealers(“Dealers”)and automotivemanufacturers(“Manufacturers”or“OEMs”)in marketing and selling new and used vehicles to consumers through theCompanys online lead and traffic referral programs,dealer marketing products and services,and online advertising.TheCompany also offers automotive consu

55、mers an option to sell their used vehicle outside of a dealership location.The Companyresells these vehicles indirectly to Dealers through wholesale auctions or through direct to Dealer sales.Our consumer-facing automotive websites(“Company Websites”)provide consumers with information and tools toai

56、d them with their automotive purchase decisions,the ability to sell their used vehicle without going to a Dealer,and theconvenience of submitting inquiries directly to Dealers requesting that the Dealers contact the consumers regarding purchasingor leasing vehicles(“Leads”).Leads are internally-gene

57、rated from our Company Websites(“Internally Generated Leads”)oracquired from third parties(“Non-Internally Generated Leads”)that generate Leads from their websites(“Non-CompanyWebsites”).Our click traffic referral program provides consumers who are shopping for vehicles online with targeted offersba

58、sed on make,model and geographic location.As these consumers conduct online research on our Company Websites or onthe site of one of our network of automotive publishers,they are presented with relevant offers on a timely basis and,upon theconsumer clicking on the displayed advertisement,are sent to

59、 the appropriate website location of one of our Dealer,Manufacturer,or other advertising customers.-1-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm7/89Table of Contents Products and Services We sell Internally Generated Lead

60、s and Non-Internally Generated Leads directly to Dealers and indirectly to Dealersthrough a wholesale market consisting of Manufacturers and other third parties in the automotive Lead distributionindustry.The click traffic program sends consumers to Dealer,Manufacturer,or other advertising customer

61、websites when theconsumer clicks on advertisements on Company Websites as well as on websites operated by third parties contracted with theCompany as publishers under the click traffic program.We also offer Dealers and Manufacturers other products and services,including WebLeads+and Payment Pro,to a

62、ssist in capturing online,in-market customers and in selling more vehicles byimproving the conversion of Leads to sale transactions.In addition,as previously discussed,beginning August 1,2021,we alsoacquire used vehicles from consumers and re-sell those vehicles to Dealers,primarily indirectly throu

63、gh third party wholesaleauctions and through direct to Dealer sales.Lead Programs We provide Dealers and Manufacturers with opportunities to efficiently market their vehicles to potentialbuyers.Dealers and Manufacturers participate in our Lead,display advertising and direct marketing programs,reachi

64、ngconsumers who are in the market to acquire a vehicle.For consumers,we provide,at no cost,an easy way to obtain valuableinformation and research material to assist them in the vehicle shopping process.Consumer Leads are acquired through ourCompany Websites or from third parties through their websit

65、es.For consumers using our Company Websites,we provideresearch information,including vehicle specifications,trade in values,safety and pricing data,photos,videos,regional rebatesand incentives,and additional tools,such as comparison and configuration tools,to assist them in the buying process.We als

66、oprovide additional content on our Company Websites,including a database of articles,consumer and professional reviews,andother analyses.New Vehicle Leads Program.Our new vehicle Leads program allows consumers to submit requests for pricing andavailability of specific new vehicle makes and models.A

67、Lead provides a Dealer with information regarding the make andmodel of vehicle the consumer is interested in purchasing as well as the consumers contact information.Dealers participating in our new vehicle Leads program are provided with iControl,a proprietary technology thatprovides Dealers control

68、 over the volume and source of their Leads.iControl can be managed at the dealership(or by arepresentative of AutoWeb on behalf of the dealership)or at the Dealer group level from a web-based,easy-to-use console thatmakes it quick and efficient for dealerships to change their Lead acquisition strate

69、gy to adjust for inventory conditions andbroader industry patterns(such as changes in gas prices or consumer demand).From the console,dealerships can easily reduceor expand territories and increase,restrict or block specific models and Lead web sources,making it much easier to manageinventory challe

70、nges and focus marketing resources more efficiently.Our Leads are subject to a quality verification system designed to maintain high-quality Leads and increase Lead buyrates for our Lead customers.Quality verification includes validation of consumer contact information.Our proprietary qualityverific

71、ation process also involves arrangements with third-party vendors specializing in customer validation.After a Lead hasbeen verified,and if we have placement coverage for the Lead within our network of Dealer customers,we send the Lead toselected Dealers in the consumers geographic area that sell the

72、 type of vehicle requested by the consumer.Additionally,wesend an email to the consumer with the Dealers name and phone number,and,if applicable,the name of the dealershipsinternet manager.Dealers contact the consumer with a price quote and availability information for the requested vehicle.Wealso s

73、ell Leads wholesale to Manufacturers for delivery to their Dealers and also to third parties that have placement coveragefor the Lead outside of our Dealer network.Dealers participate in our retail new vehicle Leads program by entering into contracts directly with us or through majorDealer groups.Ge

74、nerally,Dealer contracts are non-exclusive and may be terminated for convenience by either party with 30days notice.The majority of our retail new vehicle Lead revenues consists of either a monthly subscription fee or a per-Leadfee paid by our network of Dealers.We generally reserve the right to adj

75、ust our fees at any time during the term of the contractwith at least 30 days notice.Manufacturers(directly or through their marketing agencies)and other third parties participate inour wholesale new vehicle Leads programs generally by entering into agreements where either party has the right to ter

76、minatefor convenience upon prior notice,with the length of time for the notice varying by contract.Revenues from retail new vehicleLeads accounted for approximately 16%and 17%of total revenues in 2021 and 2020,respectively.Revenues from wholesaleLeads accounted for approximately 53%and 58%of total r

77、evenues in 2021 and 2020,respectively.-2-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm8/89Table of Contents Used Vehicle Leads Program.Our used vehicle Leads program allows consumers to search for used vehiclesaccording to s

78、pecific search parameters including price,make,model,mileage,year and location of the vehicle.The consumeris able to locate and display the description,price and,if available,digital images of vehicles that satisfy the consumers searchparameters.The consumer can then submit a Lead for additional inf

79、ormation regarding a specific vehicle of interest that theCompany delivers to the Dealer offering the vehicle.In addition to sending Leads directly to Dealers through our Lead deliverysystem,consumers may choose to contact the Dealer using a toll-free number posted next to each vehicle in the consum

80、erssearch results.We charge each Dealer that participates in the used vehicle Leads program either a monthly subscription fee or aper Lead fee.Revenues from used vehicle Leads accounted for 3%and 4%of total revenues in 2021 and 2020,respectively.Advertising Programs Our Company Websites attract an a

81、udience of prospective automotive buyers that advertisers can target throughdisplay advertising.A primary way advertisers use our Company Websites to reach consumers is through vehicle contenttargeting.This allows automotive marketers to reach consumers while they are researching one of our automoti

82、ve segments,such as mini-vans or SUVs,and offers Manufacturers sponsorship opportunities to assist in their customer retention and newconsumer acquisition strategies.Our Company Websites also offer Manufacturers the opportunity to feature their makes andmodels within highly contextual content.Throug

83、h advertising placements,Manufacturers can direct consumers to theirrespective websites for further information.We believe this transfer of focused,interested consumers to Manufacturer sites isthe most significant action measured by Manufacturers in evaluating our performance and value for the Manuf

84、acturersmarketing programs.Through our agreement with a third party,the third party sells our fixed placement advertising across ourCompany Websites to automotive advertisers.We also offer a direct marketing platform that enables Manufacturers to target in-market consumers selectively during the oft

85、en-extended vehicle shopping process.Designed to keep a specific automotivebrand in consideration,our direct marketing programs allow automotive marketers to deliver specific communication througheither email or direct mail formats to in-market consumers during the shopping process.Our click traffic

86、 program is a pay-per-click advertising program.The click traffic program utilizes proprietarytechnology to provide consumers targeted offers based on make,model and geographic location.As consumers are conductingresearch on one of our consumer facing websites or on the site of one of our network of

87、 automotive publishers,they arepresented with timely,relevant offers and,upon the consumer clicking the displayed advertisement,are sent to the website ofone of our Dealer,Manufacturer or other advertising customers.The AutoWeb network of publisher websites reaches andengages with millions of potent

88、ial car buyers each month,and we believe our network of publisher websites provides high-intent,high-quality traffic that Dealers and other customers cannot typically reach through their own marketing efforts.Theclick traffic program is flexible and in addition to driving traffic to a vehicle detail

89、 page,it sends website traffic to new vehiclesales,service,used vehicles or any other department where our customers want to engage with in-market consumers.Inaddition,we believe that our click traffic program can be used to more effectively reach competitive shoppers who areresearching competitor b

90、rands than typical search engines.Advertisers only pay for the clicks they receive and are able tostructure campaigns with flexible budgets and no long-term commitments in order to effectively manage spend against their keyperformance indicators.We receive ongoing feedback from our customers that in

91、dicates this traffic provides highly targetedmarketing opportunities and is a valuable tool to assist Dealers in selling more vehicles.Advertising revenues,including direct marketing,accounted for 20%of total revenues in 2021 and 2020.Used Vehicle Acquisition As a result of the CarZeus Purchase Tran

92、saction,beginning August 1,2021,we now acquire used vehicles fromconsumers and resell these vehicles wholesale to Dealers,either indirectly through third party auctions or through direct todealer sales.Our used vehicle acquisition and resale operations are located in Texas with operations in San Ant

93、onio,Austin andHouston.Our used vehicle acquisition and resale operations accounted for 7%of total revenues in 2021.Other Dealer Products and Services The Company also offers products and services that assist Dealers in connecting with in-market consumers and inclosing vehicle sales.-3-2025/2/12 03:

94、45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm9/89Table of Contents WebLeads+.Designed to work in connection with a Dealers participation in our Leads programs,WebLeads+is athird-party product that offers a Dealer multiple coupon options

95、that display relevant marketing messages to consumers visitingthe Dealers website.With WebLeads+,consumers who visit the Dealers website are encouraged to take action in twoways.First,on the Dealer website,a consumer is presented with a customized special offer formatted for easy Leadsubmission.If a

96、 vehicle quote is requested,the Lead goes directly to the dealership management tool so the dealership salesteam can promptly address the customers request.Second,if the consumer leaves the Dealers website but remains online,theWebLeads+product keeps the coupon active in a new browser,which provides

97、 the Dealer a repeat branding opportunity and theconsumer an easy way to re-engage with the Dealers website through submission of a Lead.The additional Leads generatedby the coupons are seamlessly integrated into our Extranet tool.Payment Pro.Payment Pro is a Dealer website conversion tool based on

98、a third-party product that offersconsumers real-time online monthly payment information based on an instant evaluation process.Payments are based on athird-party review of the consumers credit,the actual vehicle being researched,and Dealer finance rates and without requiringa credit check.The Lead g

99、oes directly into the Dealers management tool so that the dealership sales team can promptly addressthe consumers inquiry.Strategy Our goal is to transition from primarily an automotive digital media provider to a transactionally focused matchmakerthat participates in the vehicle transaction process

100、 in multiple ways.We plan to achieve this objective through the followingprincipal strategies:Increase the Supply of High-Quality Leads.High-quality Leads are those Leads that result in high transaction(i.e.,vehicle acquisition)closing rates for our Dealer and Manufacturer customers.Internally Gener

101、ated Leads are generally higherquality than Non-Internally Generated Leads and increase the overall quality of our Lead portfolio.Non-Internally GeneratedLeads are of varying quality depending on the source of these Leads.We plan to increase the supply of high-quality Leadsgenerated to sell to our c

102、ustomers primarily by:Increasing traffic acquisition activities on Company Websites.Traffic to our Company Websites is monetizedprimarily though the creation of Leads that are delivered to our Dealer or Manufacturer customers to help them marketand sell new and used vehicles and through the sale of

103、advertising space on our Company Websites.We plan toincrease the traffic to our Company Websites through effective search engine optimization(“SEO”)and search enginemarketing(“SEM”)traffic acquisition activities and enhancements to our Company Websites.SEO is the practice ofoptimizing keywords in we

104、bsite content to drive traffic to a website through natural search.SEM is the practice ofbidding on keywords on search engines to drive traffic to a website.SEO and SEM traffic acquisition activities.Traffic to our Company Websites is obtained through a variety of sourcesand methods,including direct

105、 navigation,SEO,SEM,direct marketing and partnering with other website publishersthat provide links to our websites.Our goal is that over time,paid traffic such as SEM will be balanced by greatervisitation from direct navigation and SEO,which we expect to result in increased Lead volume and Lead gro

106、ss profitmargins.Continuing to enhance the quality and user experience of our Company Websites.We continuously makeenhancements to our Company Websites,including in the design and functionality and by adding new and compellingfeatures for consumers to engage with.These enhancements are intended to p

107、osition our Company Websites as best-in-class destinations for automotive purchase research by consumers.By doing so,we believe we will increase thevolume of our Internally Generated Leads.Increasing the conversion rate of visitors to Leads on our Company Websites.Through increased and optimized SEO

108、and SEM activities and significant content,tools and user interface enhancements to our websites,we believe we willbe able to increase the number of website visits and improve website“engagement”by consumers,thereby increasingthe conversion of page views into Leads.We believe that an increased conve

109、rsion rate of page views into Leads couldresult in higher revenue per visitor.Relationships with Suppliers of High-Quality,Non-Internally Generated Leads.We plan to continue to develop andmaintain strong relationships with suppliers that consistently provide high-quality Non-Internally Generated Lea

110、ds.-4-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm10/89Table of Contents Increasing Leads Sales to our Customers.Our principal source of revenue comes from the sale of Leads to our retailand wholesale Lead customers.Our goa

111、l is to increase sales of Leads to our customers primarily by:Increasing Lead Sales to Dealers.The sale of Leads to our Dealer network constitute a significant source of revenues.During 2021,we continued to focus our Dealer acquisition and retention strategies on dealerships to which we coulddeliver

112、 a higher percentage of Internally Generated Leads.We believe this will result in increased vehicle sales for ourDealers and ultimately stronger relationships with our Dealers due to the higher quality of Internally Generated Leadsas previously discussed.Our goal is to increase the number of Leads s

113、old to our retail Dealer customers by:oincreasing the quality of Leads sold to Dealers,oincreasing the number of Dealers in our Dealer network,oreducing Dealer network churn,oproviding customizable Lead programs to meet our Dealers unique marketing requirements,oproviding additional value-added mark

114、eting services that assist Dealers in more effectively utilizing the internetto market and sell new and used vehicles,oincreasing overall Dealer satisfaction by improving all aspects of our services,ofocusing on higher revenue Dealers that are more cost-effective to support,and oenhancing our intern

115、al Lead generation activities by leveraging our expanded retail lead coverage.Increasing Lead Sales to Wholesale Customers.We currently have agreements to sell Leads to Manufacturer Leadprograms.We intend to continue to demonstrate the value of third-party leads to Manufacturers by providing close r

116、ateand cross sell data to our wholesale customers that demonstrates that third-party leads result in incremental sales forManufacturers.Our intention is to increase revenue by providing a compelling use case that causes Manufacturers toenhance their business rules,program capacity,pricing and covera

117、ge so each Manufacturer can purchase an optimalmix of Leads.Focus on Internal Traffic Acquisition Processes.We are continuing to focus on prioritizing our internal trafficacquisition processes by obtaining higher quality impressions for both Dealers and wholesale customers,which webelieve should yie

118、ld increased gross profit margins.Continuing to develop the click traffic program for online automotive advertisers and publishers.Our click trafficprogram uses proprietary technology and a pay-per-click business model to analyze web traffic and adjust advertiser costsaccordingly based on traffic qu

119、ality.This traffic network is targeted to attract high-intent,high-volume publishers and isintended to allow them to monetize traffic that has previously been under-monetized.In-market car shoppers are presentedwith highly relevant display advertisements and benefit from an online experience that de

120、livers information that consumers usein making their car buying decisions.Manufacturers benefit from this high-quality traffic from serious in-market carbuyers.Our click traffic program enables Manufacturers and Dealers to optimize their advertising by driving traffic toappropriate areas of their Ti

121、er 1(Manufacturer national advertising),Tier 2(Manufacturer and advertising associations regionaladvertising)and Tier 3(Dealer)websites.We believe Manufacturers and Dealers will see the measurable attribution from this click traffic and will reallocatemarketing spend from traditional channels into t

122、his medium.We also plan to grow the size of this addressable marketplace byadding high-quality and high-volume automotive publishers to our network,targeting in-market consumers on a variety ofsocial media platforms and by continuing to optimize this advertising platform on our consumer-facing websi

123、tes.In addition,we believe that the flexibility of our solution combined with high-quality traffic with automotive purchase intent may allow usto grow our click advertiser base as the level of attribution from this product is understood by advertising partners.Display Advertising Revenues.As traffic

124、 to,and time spent on,our Company Websites by consumers increases,wewill seek to increase our advertising revenues.Through our agreement with a third party,we benefit from the third partysrelationships with major automotive Manufacturers and/or the third partys advertising agencies by increasing rev

125、enues for ourtraditional display advertising.Continuing to Expand our Products and Services.We gather significant amounts of data on consumer vehiclepurchase intent.We intend to use these data to create products and services,including direct business database offerings,thatwe believe will ultimately

126、 assist Manufacturers and Dealers in marketing and selling more vehicles.Our objective is togenerate revenues from this asset in the most effective and efficient ways possible.-5-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm

127、11/89Table of Contents Used Vehicle Acquisition.In connection with the CarZeus Purchase Transaction,beginning August 1,2021,we alsosell used vehicles which are acquired from consumers and sold to Dealers indirectly through third party wholesale auctions andthrough direct to Dealer sales.The CarZeus

128、Purchase Transaction provided the Company with an additional monetizationopportunity by leveraging our existing expertise in identifying high quality in-market buyers in order to participate moremeaningfully in the used vehicle acquisition and sales process through the acquisition of used vehicles f

129、rom consumers andresale of these vehicles into the wholesale sales channel.We believe this acquisition allows us to increase our total addressablemarket by expanding our presence in the used vehicle space,while giving us the opportunity to enhance the offerings andusefulness of our underutilized Com

130、pany Websites and monetize our traffic more effectively.We plan to use our trafficacquisition capabilities and operational efficiency to drive growth,improve financial performance and build scalable operatingprocesses to enhance performance within the San Antonio,Austin and Houston,Texas markets.Wit

131、h this foundation in place,we plan to prepare the business for broader geographic expansion over time.Strategic Acquisitions,Investments and Alliances.Our goal is to grow and enhance our business.We may do so,inpart,through strategic acquisitions,investments and alliances.We continue to review strat

132、egic opportunities that may provideopportunities for growth.We believe strategic acquisitions,investments and alliances may allow us to increase market share,benefit from advancements in technology and strengthen our business operations by enhancing our product and serviceofferings.Our ability to im

133、plement the foregoing strategies and plans and to achieve our goals is subject to risks anduncertainties,many of which are beyond our control.Accordingly,there is no assurance that we will successfully implementour strategies and plans or achieve our goals.See“Item 1A.Risk Factors”of this Annual Rep

134、ort on Form 10-K and thediscussion of“Forward-Looking Statements”immediately preceding Part I of this Annual Report on Form 10-K.Seasonality Our quarterly revenues and operating results have fluctuated in the past and may fluctuate in the future due to variousfactors,including consumer buying trends

135、,changing economic conditions,Manufacturer new vehicle production levels,Manufacturer incentive programs and actual or threatened severe weather events.Lead volume is typically highest in thesummer(third quarter)and winter(first quarter)months,followed by spring(second quarter)and fall(fourth quarte

136、r).Historical seasonality trends have been and may continue to be impacted by externalities such as pandemics,supply chaindisruptions and new vehicle inventory shortages.Intellectual Property Our intellectual property includes patents related to our innovations,products and services;trademarks relat

137、ed to ourbrands,products and services;copyrights in software and creative content;trade secrets;and other intellectual property rightsand licenses of various kinds.We seek to protect our intellectual property assets through patent,copyright,trade secret,trademark and other laws and through contractu

138、al provisions.We enter into confidentiality and invention assignmentagreements with our employees and contractors,and non-disclosure agreements with third parties with whom we conductbusiness in order to secure our proprietary rights and additionally limit access to,and disclosure of,our proprietary

139、information.We have registered trademarks with the United States Patent and Trademark Office,including AutoWeb,AutoW,the global highway logo,Autobytel,A,MyGarage,iControl,TextShield,and Payment Proand have a pending application for the registration of the CarZeus trademark.We cannot provide any assu

140、rances that any of ourintellectual property rights will be enforceable by us in litigation or will not be successfully challenged.Additional informationregarding certain risks related to our intellectual property is included in Part I,Item 1A“Risk Factors”of this Annual Report onForm 10-K.Competitio

141、n In the automotive-related digital marketing services marketplace we compete for Dealer and Manufacturercustomers.Competition with respect to our core Lead referral programs continued to be impacted by changing industryconditions in 2021.We continue to compete with several companies that maintain b

142、usiness models similar to ours,some withgreater resources.In addition,competition has increased from larger competitors that traditionally have competed only in theused vehicle market.Dealers continue to invest in their proprietary websites and traffic acquisition activities,and we expectthis trend

143、to continue as Dealers strive to own and control more Lead generating assets under their captive brands.Additionally,all major Manufacturers that market their vehicles in the U.S.have their own websites that market their vehicles direct toconsumers and generate Leads for delivery direct to Manufactu

144、rer Dealers.We compete primarily based on Lead quality andpricing.-6-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm12/89Table of Contents We believe third-party Leads have been the standard in our industry for many years.Howe

145、ver,we continue to observenew and emerging business models,including pay-per-sale and consumer pay models,relating to the generation and delivery ofLeads.From time to time,new products and services are introduced that take the focus away from third-party Lead generation,which we believe is a profita

146、ble way to sell vehicles to in-market buyers.Dealers and Manufacturers may decide to pull backon their third-party Lead programs to test these new approaches.In the display advertising marketplace,we compete with major internet portals,transaction-based websites,automotiverelated companies,numerous

147、lifestyle websites and emerging entrants in the automotive click revenue medium.According toindustry forecasts,the top two digital advertising platforms in the U.S.are Google and Facebook,which are expected tomaintain their dominant hold on digital advertising dollars.We also compete with traditiona

148、l marketing channels such as print,radio,and television.In pay-per-click advertising,we compete with established search engine providers as well as a growing number ofdigital marketing platforms focused on generating dealership website traffic from inventory listings and social mediacampaigns.In add

149、ition,some industry providers who have historically specialized in inventory aggregation or in providingSEM agency services to Dealers are now expanding into the area of website traffic generation.Further,many dealershipwebsite providers are now offering traffic solutions as part of their bundle of

150、services.Some traditional data providers are also moving to deliver personalized digital marketing services at scale.Thesedigital marketing hubs and data management platforms provide marketers with standardized access to audience data,content,workflow triggers and operational analytics to automate e

151、xecution and optimization of multichannel campaigns.These servicescould be used as a source of lead generation and website traffic by Dealers and Manufacturers and could replace our existingproduct offerings.The U.S.used car acquisition marketplace is highly fragmented,and we face competition from f

152、ranchised dealers,whosell both new and used vehicles,online buyers,independent used car dealers and private parties.Competition in our industryhas evolved with the adoption of online platforms and marketing tools,all of which facilitate increased competition.A numberof our competitors maintain busin

153、ess models similar to ours,many of which have much greater resources.We believe that ourprincipal competitive advantage in used vehicle acquisition is our ability to provide a high degree of customer satisfaction withthe car selling experience through competitive price offers and our customer-friend

154、ly sales process.Customers We have a concentration of credit risk with our automotive industry related accounts receivable balances,particularlywith Carat Detroit(General Motors),Urban Science Applications(which represents several Manufacturer programs)andAutodata Solutions and Shift Digital.Approxi

155、mately 43%or$30.9 million of total revenues and approximately 64%or$7.3million of gross accounts receivable were related to these four customers at December 31,2021 as follows:Customers%ofRevenue%ofAccountReceivable Carat Detroit 12%20%Urban Science Applications 12%18%Autodata Solutions 13%16%Shift

156、Digital 6%10%Total 43%64%Operations and Technology We believe our future success is significantly dependent upon our ability to provide high-performing,reliable,andcomprehensive websites and advertising systems;enhance consumer and Dealer product and service offerings;maintain thehighest levels of i

157、nformation privacy;and ensure transactional security.Our Company Websites and advertising systems arehosted at a secure third-party data center facility and with public cloud providers.The data center and public cloud systemsutilize redundant power infrastructure and network connectivity,distributed

158、 services,fire detection and suppression systemsand physical security protocols to prevent unauthorized access and to provide high service availability,upon which ourtechnology is built,deployed and operated.While our network and computer systems are built on industry standard technology,our Website

159、s and information technology systems are susceptible to,and have been impacted by,outages and interruptions,including the malware attack we experienced in January 2020.For additional information regarding risks related to ourinformation technology,see Part I,Item 1A“Risk Factors”of this Annual Repor

160、t on Form 10-K.-7-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm13/89Table of Contents System enhancements are primarily intended to accommodate increased traffic across our Company Websites,improvethe speed in which Leads an

161、d advertisements are processed,introduce new and enhanced products and services,and providecybersecurity protections against evolving technology threats.System enhancements entail the implementation of sophisticatednew technology and system processes.We implement industry standard automation and del

162、ivery processes and employcentralized quality assurance to improve the quality,scalability,security,compliance,and availability of our products.We planto continue to make investments in technology as necessary to improve our service offerings.Government Regulation We are subject to laws and regulati

163、ons generally applicable to providers of digital marketing services and companiesengaged in used vehicle acquisition and resale,including federal and state laws and regulations governing data security andprivacy;voice,email and text messaging communications with consumers;unfair and deceptive acts a

164、nd practices;advertising;contests,sweepstakes and promotions;content regulation and motor vehicle dealer licensing.For additional importantinformation related to government regulation of our business,including governmental regulations relating to the marketing andsale of automobiles,see the informat

165、ion set forth in Part I,Item 1A“Risk Factors”of this Annual Report on Form 10-K.Employees As of March 22,2022,we had 162 full-time employees.Available Information We file annual reports on Form 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K,proxy statementsand other information with

166、 the SEC.Our corporate website is located at .Information on our website is notincorporated by reference in this Annual Report on Form 10-K.We make these filings available at or through the InvestorRelations section of our website.In addition,the SEC maintains an internet site that contains reports,

167、proxy and informationstatements,and other information regarding issuers that file electronically with the SEC.The address of the SECs website iswww.sec.gov.-8-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm14/89Table of Conten

168、ts Item 1A.Risk Factors The risks described below are not the only risks that we face.The following risks as well as risks and uncertainties notcurrently known to us or that we currently deem to be immaterial may materially and adversely affect our business,results ofoperations,financial condition,e

169、arnings per share,cash flow or the trading price of our stock,individually and collectivelyreferred to in these Risk Factors as our“financial performance.”See also the discussion of“Forward-Looking Statements”immediately preceding Part I of this Annual Report on Form 10-K.Risks Associated with our B

170、usiness Operations and Industry We may be unable to increase Lead revenues and could continue to suffer declining revenues due to Dealer attrition or lossof Manufacturer customers.We predominately derive our Lead revenues from Lead fees paid by Dealers and Manufacturers participating in ourLeads pro

171、grams.Our Lead revenues decreased$9.0 million,or 15%,in 2021 compared to 2020.Our ability to increaserevenues from sales of Leads is dependent on a mix of interrelated factors that include attracting and retaining Dealers andManufacturers and increasing the number of high-quality Leads we sell to De

172、alers and Manufacturers.Our Lead sales strategyis intended to result in more profitable relationships with our Dealers both in terms of cost to supply Leads and to support theDealers.Dealer churn and termination of Manufacturer Lead programs impact our revenues,and if our sales strategy does notmiti

173、gate the loss in revenues by maintaining the overall number of Leads sold by increasing sales to other Dealers orManufacturers while maintaining the overall margins we receive from the Leads sold,our revenues will decrease.We cannotprovide any assurances that we will be able to increase Lead revenue

174、s,prevent Dealer attrition or program terminations byManufacturers or offset the revenues lost due to Dealer attrition or program terminations by Manufacturers by other means,andour failure to do so could materially and adversely affect our financial performance.We may lose customers or quality Lead

175、 suppliers to our competitors.Our ability to provide increased numbers of high-quality Leads to our customers is dependent on increasing thenumber of Internally Generated Leads and acquiring high-quality Non-Internally Generated Leads from third parties.Originating Internally Generated Leads is depe

176、ndent on our ability to increase consumer traffic to our Company Websites byproviding secure and easy to use websites with relevant and quality content for consumers and increasing visibility of ourbrands to consumers and by our SEM activities.We compete for Dealer and Manufacturer customers and for

177、 acquisition ofNon-Internally Generated Leads with companies that maintain automotive Lead referral businesses that are very similar to ours.Many of these competitors are larger than us and have greater financial resources than we have.If we lose customers or qualityLead supply volume to our competi

178、tors,or if our pricing or cost to acquire Leads is adversely impacted,our financialperformance will be materially and adversely affected.We depend on Manufacturers,through our third-party sales channel and direct-to-Manufacturer wholesale programs,for asignificant amount of our revenues,and we may n

179、ot be able to maintain or grow these relationships.We depend on Manufacturers,through our third-party sales channel and direct-to-Manufacturer wholesale programsfor a significant amount of our revenues.A decline in the level of advertising on our websites,reductions in advertising rates,terminations

180、 of their third-party Lead programs by Manufacturers or any significant failure to develop additional sources ofadvertising would cause our advertising revenues to decline,which could have a material adverse effect on our financialperformance.We periodically negotiate revisions to existing agreement

181、s and these revisions could decrease our wholesaleprogram revenues in future periods.A number of our third-party sales channel agreements and Manufacturer agreements maybe terminated at any time without cause or upon expiration of the current term of the agreement.We may not be able tomaintain our r

182、elationships with sales channel third parties or Manufacturers on favorable terms or find alternative comparablerelationships capable of replacing revenues on terms satisfactory to us.If we cannot do so,our revenues would decline,whichcould have a material adverse effect on our financial performance

183、.A reduction in the availability of,or access to,used vehicle inventory could adversely affect our business by increasing thecosts of vehicles purchased and reducing the volume of units purchased for resale.Our Tradein Expert(dba CarZeus)operations acquire used vehicles primarily from individual con

184、sumers.There can beno assurance that sufficient inventory of used vehicles will continue to be available to Tradein Expert.or will be available atprices acceptable to Tradein Expert.Tradein Expert might have to absorb a portion of any cost increases in inventory withoutbeing able to pass those incre

185、ases to vehicle purchasers.Any reduction in the availability of used vehicle inventory or increasesin the cost of vehicles could adversely affect Tradein Experts financial performance.Tradein Expert could have negative grossprofit when the cost of inventory is greater than the resale price of that i

186、nventory.As a result of severely constrained new carinventories,there has been a significant increase in demand and prices for used vehicles-9-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm15/892025/2/12 03:45auto20211231_10k

187、.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm16/89Table of Contents The retail used vehicle industry is fragmented and highly competitive,which could result in increased costs to acquirevehicles,lower sales prices due to competitive pressure.Tradein Exper

188、t competes principally with(i)the used vehicle retail operations of franchised automobile dealerships,(ii)independent used vehicle dealers,some of which have significantly greater financial resources,and(iii)individuals who sellused vehicles in private transactions.Increased competition in the used

189、vehicle market,including new entrants to the market,could result in increased costs for used vehicles and lower-than-expected vehicle sales and margins for Tradein Expert.Further,if Tradein Experts competitors seek to gain or retain market share by increasing the prices they pay for used vehicles or

190、reducing prices for used vehicles they sell,Tradein Expert may have to respond by increasing the prices it pays for vehicles orreducing the sales prices of used vehicles it sells to its customers in order to remain competitive,which may result in a decreasein Tradein Experts sales and ability to ach

191、ieve profitability.Our financial performance could be materially and adversely affected by changes in internet search engine algorithms,pricing or operational dynamics.We use Google to generate a significant portion of the traffic to our websites,and,to a lesser extent,we use othersearch engines and

192、 meta-search websites to generate traffic to our websites,principally through pay-per-click advertisingcampaigns.The pricing and operating dynamics on these search engines can experience rapid change commercially,technicallyand competitively.For example,Google frequently updates and changes the logi

193、c that determines the placement and display ofresults of a consumers search,such that the placement of links to our websites can be negatively affected and our costs toimprove or maintain our placement in search results can increase.Our ability to continue to use Google could be impacted as aresult

194、of the Companys credit position.Our financial performance would be materially and adversely affected if we were nolonger able to use Google for generation of traffic to our websites.We are affected by general economic and market conditions,and,in particular,conditions in the automotive industry.Our

195、financial performance is affected by general economic and market factors,conditions in the automotive industry,and the market for automotive marketing services,including,but not limited to,the following:Pricing and purchase incentives for vehicles;Availability and terms,including interest rates,of a

196、utomotive financing;The expectation that consumers will be purchasing fewer vehicles overall during their lifetime as a result ofbetter-quality vehicles and longer warranties;The impact of fuel prices,which increased significantly in the last year and into 2022(most recently as aresult of the impact

197、 of sanctions placed on Russia due to its invasion of Ukraine)and are expected tocontinue to increase,on demand for the number and types of vehicles;Increases or decreases in the number of retail Dealers or in the number of Manufacturers and otherwholesale customers in our customer base;Volatility i

198、n spending by Manufacturers and others in their marketing budgets and allocations;The competitive impact of consolidation in the online automotive consumer referral industry;The effect of changes in transportation policy,including the potential increase of public transportationoptions;The effect of

199、fewer vehicles being purchased as a result of new business models and changes in consumerattitudes regarding the need for vehicle ownership;The impact of inflation,which has been increasing significantly,on consumer spending and consumerconfidence;Disruption in the automotive manufacturing and parts

200、 supply chains caused by natural disasters,epidemicsand pandemics,adverse weather,incidents of civil unrest and other events may affect the supply of vehicleand parts inventories to Manufacturers and Dealers;and The impact of high unemployment on the willingness or ability of consumers to acquire ne

201、w or usedvehicles.2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm17/89-10-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm18/89Table of Contents Natural

202、disasters,public health crises,political crises and other catastrophic events or other events outside of our controlcould damage our facilities or systems or the facilities or systems of third parties on which we depend on,adversely impactand cause disruptions in supply chains or vehicle inventory a

203、nd could adversely impact consumer confidence and spending.If any of our facilities or the facilities of our third-party service or Lead providers are affected by natural disasters,such as earthquakes,tsunamis,wildfires,power shortages,floods,public health crises(such as pandemics and epidemics),pol

204、itical crises(such as terrorism,insurrection,war,political instability or other conflict)or other events outside our control,including a cyberattack,our critical business or IT systems could be destroyed or disrupted and our ability to conduct normalbusiness operations,and our financial performance,

205、could be materially and adversely affected.Moreover,these types of eventscould negatively impact Dealers,Manufacturers and consumer confidence and spending in the impacted regions or,dependingupon the severity,globally,which could adversely impact our financial performance.In early 2020 and continui

206、ng as of the date of this Annual Report on Form 10-K,the outbreak of coronavirus andemerging variants has led to quarantines,mask mandates,vaccination requirements and stay-at-home/work-from-home ordersin a number of countries,states,cities and regions and the closure or limited or restricted access

207、 to public and private offices,businesses and facilities,causing widespread disruptions to travel,economic activity,supply chains and financial markets.Thecontinuing effect of the coronavirus pandemic has led our Manufacturer and Dealer customers to experience disruptions in thesupply of vehicle and

208、 parts inventories,and in the overall health,safety and availability of their labor force.Manufacturers havealso shut down assembly plants,adversely impacting inventories of new vehicles.Volatility in the financial markets,concernsabout exposure to the virus,governmental quarantines,mask mandates,va

209、ccination requirements,stay-at-home/work-from-home orders,business closures and employment furloughs and layoffs have also impacted consumer confidence and spending.Lower consumer confidence may continue even after quarantines,mask mandates,vaccination requirements,stay-at-home/work-from-home orders

210、 and business closures have ended.These disruptions have impacted the willingness or desire ofour customers to acquire vehicle Leads or other digital marketing services from us.We are also experiencing direct disruptionsin our operations due to the overall health and safety of,and concerns for,our l

211、abor force and as a result of governmental“social distancing”programs,quarantines,mask mandates,vaccination requirements and stay-at-home/work-from-home orders,leading us to reduce or restrict access to our offices and allowing employees to work remotely from their homes.In addition to the continued

212、 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 dueto a worldwide shortage of these chips.As a result,the ability of Manufacturers to maint

213、ain regular production output of certainvehicles,and the corresponding reduction in available new vehicle inventories,have adversely impacted new vehicle sales andincreased demand for used vehicles.Further disrupting the automotive industry and the number of vehicles available for sale orlease are d

214、isruptions in the supply of other components used in vehicle manufacturing.We are unable to predict the continuing extent,duration and impact of the supply chain disruptions on the automotiveindustry in general,and on our business and operations specifically.The spread of coronavirus variants and go

215、vernmentalresponses thereto may prolong or increase the negative impacts of the pandemic.Vehicle sales have declined,and we continueto experience cancellations or suspensions of purchases of Leads and other digital marketing services by our customers,whichcould continue to materially and adversely a

216、ffect our financial performance.In light of the continuing impact of the pandemicand supply chain disruptions,we have continued taking steps to reduce our overall Lead and click generation efforts andcorresponding costs to better align our volumes with industry demand and consumer intent and ability

217、 to purchase or leasevehicles.We will continue to evaluate these and other cost reduction measures,and explore all options available to us,in orderto minimize the impact of these events on us.If we lose our key personnel or are unable to attract,train and retain additional highly qualified executive

218、,sales,marketing,managerial and technical personnel,our financial performance may be adversely impacted.Our future success depends on our ability to identify,hire,train and retain highly-qualified executive,sales,marketing,managerial and technical personnel.In addition,as we introduce new services,w

219、e may need to hire additional personnel.Wemay not be able to attract,assimilate or retain such personnel in the future.The inability to attract and retain the necessaryhighly qualified executive,managerial,technical,sales and marketing personnel could have a material adverse effect on ourfinancial p

220、erformance.-11-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm19/89Table of Contents Our business and operations are substantially dependent on the performance of our executive officers and other keyemployees.Each of these exe

221、cutive officers and other key employees could be difficult to replace.There is no guarantee thatany of our executive officers or other key employees will remain employed with us.The loss of the services of one or more ofour executive officers or other key employees could have a material adverse effe

222、ct on our financial performance.Qualified individuals are in high demand,and we may incur significant costs to attract and retain them.In order toattract and retain executives and other key employees in a competitive marketplace,we must provide competitive compensationpackages,including cash and sto

223、ck-based compensation.Our primary forms of stock-based incentive awards are stock optionsand restricted stock.If the anticipated value of such stock-based incentive awards does not materialize,if our stock-basedcompensation otherwise ceases to be viewed as a valuable benefit,or if our total compensa

224、tion package is not viewed as beingcompetitive,our ability to attract,retain and motivate executives and other key employees could be adversely impacted.We are exposed to risks associated with overseas operations.We currently maintain website,software development and other operations in Guatemala an

225、d may contract with thirdparty service providers that provide services to us through their overseas operations.These overseas operations are subject tomany inherent risks,including but not limited to:Political and social instability;Exposure to different business practices and legal standards,partic

226、ularly with respect to labor and employmentlaws and intellectual property;Continuation of overseas conflicts and the risk of terrorist attacks and resulting heightened security;The imposition of governmental controls and restrictions and unexpected changes in regulatory requirements;Theft and other

227、crimes;Nationalization of business and blocking of cash flows;Changes in taxation and tariffs;Difficulties in staffing and managing international operations;and Foreign currency exchange fluctuations.These risks can significantly impact our overseas operations and outsourcing.Increases in the cost,o

228、r disruptions,ofsuch operations and outsourcing,could materially and adversely affect our financial performance.In addition,we are subject tocertain anti-corruption laws,including the U.S.Foreign Corrupt Practices Act,in addition to the laws of the foreign countries inwhich we operate.If we or any o

229、f our employees or agents violates these laws,we could become subject to sanctions orsignificant penalties that could negatively affect our reputation and financial performance.We may acquire other businesses,products or technologies,which could divert our managements attention from ourbusiness,disr

230、upt our operations and materially and adversely impact our financial performance.As part of our strategy to grow our business,we evaluate whether to acquire other businesses,products or technologiesthat we believe will complement or enhance our existing business rather than develop these internally.

231、The identification ofsuitable acquisition candidates can be difficult,time-consuming and costly,and we may not be able to identify suitablecandidates or to complete identified acquisitions.The integration of acquisitions requires significant time and resources,and wemay not manage these processes su

232、ccessfully.We cannot provide any assurances that any completed acquisitions will besuccessful.In order to complete acquisitions,we may issue common stock or securities convertible into or exercisable forcommon stock,potentially creating dilution for existing stockholders.Issuance of equity securitie

233、s may also restrict utilizationof net operating loss carryforwards because of an annual limitation due to ownership change limitations under the InternalRevenue Code.We may also borrow to finance acquisitions,and the amount and terms of any potential future acquisition-related or other borrowings ma

234、y not be favorable to the Company and could affect our financial performance.An announcedacquisition transaction may not close timely or at all,which may cause our financial performance to differ from expectations ina given period.-12-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/ed

235、gar/data/1023364/000185173422000161/auto20211231_10k.htm20/89Table of Contents Acquisitions involve numerous risks that include the following,any of which could materially and adversely affect ourfinancial performance:We may not fully realize all of the anticipated benefits of an acquisition or may

236、not realize them in the timeframeexpected,including due to acquisitions where we expand into product and service offerings or enter or expand intomarkets in which we are not experienced;We may be required to make substantial investments of resources to support our acquisitions,which would result ins

237、ignificant ongoing operating expenses and could divert resources and management attention from other areas ofour business;Acquisitions may result in significant costs and expenses and charges to earnings,including those related toseverance pay,early retirement costs,employee benefit costs,goodwill a

238、nd asset impairment charges,charges fromthe elimination of duplicative facilities and contracts,assumed litigation and other liabilities,legal,accounting andfinancial advisory fees,and required payments to executive officers and key employees under retention plans;Our due diligence process may fail

239、to identify significant issues with an acquired company that may result inunexpected or increased costs,expenses or liabilities that could make an acquisition less profitable or unprofitable;The failure to further our strategic objectives through acquisitions may require us to expend additional reso

240、urces todevelop products,services and technology internally;Acquisitions may lead to litigation that can be costly to defend or settle,even if no actual liability exists;Integrations of acquisitions are often complex,time consuming and expensive,and if acquisitions are notsuccessfully integrated,the

241、y could materially and adversely affect our financial performance.The challengesinvolved with integration of acquisitions include:oDiversion of management attention to assimilating the acquired business from other business operationsand concerns;oIntegration of the acquired businesss accounting,mana

242、gement information,human resources,legal andother administrative systems into our systems;oDifficulties in assimilating the operations and personnel of an acquired business into our own business;oConvincing our customers and suppliers and the customers and suppliers of the acquired business thatthe

243、transaction will not diminish client service standards or business focus and that they should not deferpurchasing decisions or switch to other suppliers;oConsolidating and rationalizing corporate IT infrastructure,which may include multiple legacy systemsfrom various acquisitions and integrating sof

244、tware code and business processes;oPersuading employees that business cultures are compatible,maintaining employee morale,retainingkey employees and integrating employees into the Company;oCoordinating and combining administrative,manufacturing,technology,research and development,salesand marketing

245、and other operations,subsidiaries,facilities and relationships;oTransition of the acquired businesss users to our websites and mobile applications;oTransition of customers to our products and services and our contracts;oRisks associated with the businesses,products or technologies we acquired,which

246、may differ from or bemore significant than the risks our business faces;oLiability for the activities,products or services of the business we acquired,including patent andtrademark infringement claims,violations of laws,commercial disputes,tax liabilities and other knownand unknown liabilities;oLiti

247、gation or other claims in connection with the business,product or technology we acquired,includingclaims from terminated employees,consumers,former stockholders or other third parties;and 2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto2021123

248、1_10k.htm21/89 oThe need to implement or improve controls,procedures and policies at a business that prior to theacquisition may have lacked effective controls,procedures and policies.We are dependent upon third parties for certain support services and should they fail to perform,our financial perfo

249、rmancecould be materially and adversely affected.We rely on various third parties from which we acquire Leads,clicks,or consumer traffic for resale to our customersand to provide certain support services.Should a third party fail to perform or perform adequately,our financial performancecould be mat

250、erially and adversely affected.-13-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm22/89Table of Contents Our business is dependent on keeping pace with advances in technology.If we are unable to keep pace with advances intechn

251、ology,consumers may stop using our services and our revenues will decrease.Our financial performance may bematerially and adversely affected by material investments in technology.The internet and electronic commerce markets are characterized by rapid technological change,changes in user andcustomer

252、requirements,frequent new service and product introductions embodying new technologies,including mobile internetapplications,and the emergence of new industry standards and practices that could render our existing websites and technologyobsolete.These market characteristics are intensified by the ev

253、olving nature of the market and the fact that companies areexpected to introduce new internet products and services on a regular basis.If we are unable to adapt to changing technologies,our financial performance could be materially and adversely affected.Our performance will depend,in part,on our ab

254、ility tocontinue to enhance our existing services,develop new technology that addresses the increasingly sophisticated and variedneeds of our prospective customers,license leading technologies and respond to technological advances and emerging industrystandards and practices on a timely and cost-eff

255、ective basis.The development of our websites,mobile applications and otherproprietary technology entails significant technical and business risks.We may not be successful in using new technologieseffectively or adapting our websites or other proprietary technology to customer requirements or to emer

256、ging industrystandards.In addition,our financial performance could be materially and adversely affected by material investments intechnology in order to keep pace with technological advances.Interruptions or failures in our information technology platforms,communication systems or security systems c

257、ouldmaterially and adversely affect our financial performance.Our information technology and communications systems are susceptible to outages and interruptions due to fire,flood,earthquake,power loss,telecommunications failures,cyberattacks,terrorist attacks,technology operations anddevelopment fai

258、lures,failure of redundant systems and disaster recovery plans and similar events.Such outages andinterruptions could damage our reputation and materially and adversely impact our financial performance.Despite our networksecurity measures,our information technology platforms are vulnerable to comput

259、er viruses,worms,physical and electronicbreak-ins,sabotage,malware attacks,insider threats and similar disruptions from unauthorized tampering,as well ascoordinated denial-of-service attacks.We do not have multiple site capacity for all of our services.In the event of delays ordisruptions to service

260、s we rely on third-party providers to perform disaster recovery planning and services on our behalf.We arevulnerable to extended failures to the extent that planning and services are not adequate to meet our continued technologyplatform,communication or security systems needs.We rely on third-party

261、providers for our primary and secondary internetconnections.Our co-location service and public cloud services that provide infrastructure and platform services,environmentaland power support for our technology platforms,communication systems and security systems are received from third-partyprovider

262、s.We have little or no control over these third-party providers.Any disruption of the services they provide us or anyfailure of these third-party providers to effectively design and implement sufficient security systems or plan for increases incapacity could,in turn,cause delays or disruptions in ou

263、r services.We are insured for some,but not all,of these events.Evenfor those events for which we are insured and have coverage under the terms and conditions of the applicable policies,there areno assurances given that the coverage limits would be sufficient to cover all losses we might incur or exp

264、erience.We haverecently conducted evaluations of our technology and business systems,and based on these evaluations,we believe that ourtechnology infrastructure,our accounting and business systems and disaster recovery procedures are in need of upgrades andreplacements.Failure to implement these upd

265、ates and upgrades could result in systems failures,inability to promptly recoverfrom system failures,and data security risks.We anticipate incurring significant expenses in upgrading and replacingtechnology infrastructure and business systems over the next three years.Our financial performance may b

266、e materially andadversely affected by material investments in new technology infrastructure and business systems.-14-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm23/89Table of Contents Financial,Accounting and Liquidity Risk

267、s Concentration of credit risk and risks due to significant customers could materially and adversely affect our financialperformance.Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cashequivalents and accounts receivable.Cash and cash

268、equivalents are primarily maintained with one financial institution in theUnited States.Deposits held by banks exceed the amount of insurance provided for such deposits.Generally,these depositsmay be redeemed upon demand.Accounts receivable are primarily derived from fees billed to Dealers and Manuf

269、acturers.Wehave a concentration of credit risk with our automotive industry related accounts receivable balances,particularly with CaratDetroit(General Motors),Urban Science Applications(which represents several Manufacturer programs),Autodata Solutionsand Shift Digital.During 2021,approximately 43%

270、,or$30.9 million of our total revenues and approximately 64%or$7.3million of gross accounts receivable were related to these four customers at December 31,2021.No collateral is required tosupport our accounts receivables,and we maintain an allowance for bad debts for potential credit losses.If there

271、 is a decline inthe general economic environment or other factors that negatively affects the financial condition of our customers or an increasein the number of customers that are dissatisfied with our services,additional estimated allowances for bad debts and customercredits may be required,and th

272、e adverse impact on our financial performance could be material.If we are unable to generate positive cash flows,we may not be able to continue operations unless we are able to obtainadditional cash through private or public sales of securities,debt financings or partnering/licensing transactions.As

273、 of December 31,2021,we had cash and cash equivalents of$7.3 million and restricted cash of$4.3 million.Forthe year ended December 31,2021,we had a net loss of$5.7 million and had net cash used in operations of$0.9 million.As ofDecember 31,2021,we had an accumulated deficit of$355.4 million and stoc

274、kholders equity of$12.8 million.Although wehave developed a strategic plan with the objective to achieve cash generation as a business,if we are unsuccessful in achievingthis objective,we may need to seek to satisfy our future cash needs through private or public sales of securities,debt financingso

275、r partnering/licensing transactions;however,there is no assurance that we will be successful in satisfying our future cashneeds such that we will be able to continue operations.If we continue to experience losses and cannot comply with thecovenants in our Loan,Security and Guarantee Agreement dated

276、as of March 26,2020,as amended,with CIT NorthbridgeCredit LLC,as agent,(“CNC Credit Agreement”)or if our borrowing base limits are diminished,we may not be able toborrow sufficient funds under CNC Credit Agreement to satisfy our future cash needs.If we are unable to obtain adequate financing or fina

277、ncing on terms satisfactory to us,when we require it,our ability tocontinue to implement new strategic plans,modernize and upgrade our technology and systems,pursue business objectivesand respond to business opportunities,challenges or unforeseen circumstances could be significantly limited,and ourf

278、inancial performance could be materially and adversely affected.Our future capital requirements will depend on many factors,including but not limited to,implementing new strategicplans,modernizing and upgrading our technology and systems,pursuing business objectives and responding to businessopportu

279、nities,challenges or unforeseen circumstances,developing new or improving existing products or services,enhancingour operating infrastructure and acquiring complementary businesses and technologies.In addition,if we continue toexperience losses and cannot comply with covenants in the CNC Credit Agre

280、ement or if our borrowing base limits arediminished,we may be unable to borrow sufficient funds under the CNC Credit Agreement to satisfy our future cash needs.Although we have developed a strategic plan with the objective to achieve cash generation as a business,if our plans areunsuccessful,we may

281、need to seek to satisfy our future cash needs through private or public sales of securities,debt financingsor partnering/licensing transactions;however,there is no assurance that we will be successful in satisfying our future cashneeds such that we will be able to continue operations.We will require

282、 additional capital to implement new strategic plans,modernize and upgrade our technology andsystems,pursue business objectives and respond to business opportunities,challenges or unforeseen circumstances,including todevelop new products or services,improve existing products and services,enhance our

283、 operating infrastructure and acquirecomplementary businesses and technologies.As a result,we expect that we will need to engage in equity or debt financings tosecure additional funds.There can be no assurance that additional funds will be available when needed from any source or,ifavailable,will be

284、 available on terms that are acceptable to us.If capital is not available to us,or is not available to us onfavorable terms,our financial performance would be materially and adversely affected.-15-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/au

285、to20211231_10k.htm24/89Table of Contents The CNC Credit Agreement contains restrictive covenants that may make it more difficult for us to obtain additionalcapital,as could any additional debt financing that we may secure in the future that could involve additional restrictivecovenants.Volatility in

286、 the credit markets may also have an adverse effect on our ability to obtain debt financing.If we raiseadditional funds through further issuances of equity or convertible debt securities,our existing stockholders could suffersignificant dilution,and any new equity securities we issue could have righ

287、ts,preferences and privileges superior to those ofholders of our common stock.If we are unable to obtain adequate financing or financing on terms satisfactory to us,when werequire it,our ability to continue to implement new strategic plans,modernize and upgrade our technology and systems,pursuebusin

288、ess objectives and respond to business opportunities,challenges or unforeseen circumstances could be significantlylimited,and our financial performance could be materially and adversely affected.The CNC Credit Agreement expires inMarch 2023.If our internal controls and procedures fail,our financial

289、condition,results of operations and cash flow could be materiallyand adversely affected.Pursuant to the Sarbanes-Oxley Act,management is responsible for establishing and maintaining adequate internalcontrol over financial reporting.Our internal controls over financial reporting are processes designe

290、d to provide reasonableassurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with U.S.generally accepted accounting principles.A material weakness is a control deficiency,or combination of control deficiencies,that results in a more than

291、 remote likelihood that a material misstatement of annual or interim financial statements will not beprevented or detected.As a smaller reporting company(as defined by the SEC),we are not required to obtain a separateattestation of our internal control over financial reporting from our independent a

292、uditors.Our ability to report our financialresults on a timely and accurate basis could be adversely affected by a failure in our internal control over financial reporting.Ifour financial statements are not fairly presented,investors may not have an accurate understanding of our operating results an

293、dfinancial condition.If our financial statements are not timely filed with the SEC,we could be delisted from The Nasdaq CapitalMarket.If either or both of these events occur,it could have a material adverse effect on our ability to operate our business andthe market price of our common stock.In addi

294、tion,a failure in our internal control over financial reporting could materially andadversely affect our financial performance.Our internal controls may not prevent all potential errors or fraud.Any control system,no matter how well designedand implemented,can only provide reasonable and not absolut

295、e assurance that the objectives of the control system will beachieved.We,or our independent registered public accountants,may identify material weaknesses in our internal controlswhich could adversely affect our ability to ensure proper financial reporting and could affect investor confidence in us

296、and theprice of our common shares.Personal Information and Data Security and Privacy Risks Our business is subject to various laws,rules and regulations relating to data security and privacy.New data securityand privacy laws,rules and regulations may be adopted regarding the internet or other online

297、 services that could limit ourbusiness flexibility or cause us to incur higher compliance costs.In each case,our financial performance could be materiallyand adversely affected.Identified below are some of these risks that we believe could materially and adversely affect ourfinancial performance.-16

298、-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm25/89Table of Contents The failure to comply with privacy laws could materially and adversely impact our financial performance.Various laws,rules and regulations govern the colle

299、ction,use,retention,sale,disclosure,sharing and security of dataand personal information that we receive from consumers,customers,advertisers and Lead referral and advertising affiliates.Inaddition,we have and post on our website our own privacy policies and practices concerning the collection,use,r

300、etention,sale,disclosure,sharing and security of user data and personal information.Any failure,or perceived failure,by us to comply withour posted privacy policies,Federal Trade Commission requirements or orders or other federal or state privacy or consumerprotection-related laws,regulations or ind

301、ustry self-regulatory principles could result in proceedings or actions against us bygovernmental entities or others.Further,failure or perceived failure by us to comply with our policies,applicable requirementsor industry self-regulatory principles related to the collection,use,retention,sale,discl

302、osure,sharing and security of data andpersonal information or other privacy-related matters could result in a loss of user confidence in us,damage to our brands,andultimately in a loss of consumers,customers,advertisers or Lead referral and advertising affiliates.We cannot predict whethernew legisla

303、tion or regulations concerning privacy and data security issues related to our business will be adopted,or if adopted,whether they could impose requirements that may result in a decrease in our Lead referrals and materially and adversely affectour financial performance.Proposals that have or are cur

304、rently being considered include restrictions relating to the collection,use,retention,sale,disclosure,sharing and security of data and personal information obtained through the tracking of internetuse,including the possible implementation of a“Do Not Track”list,that would allow internet users to opt

305、-out of such tracking.Other proposals include enhanced rights for consumers to obtain information regarding the sharing or sale of their personalinformation and rights to opt-out or prevent the sharing or sale of their personal information to third parties,similar to theEuropean Unions General Data

306、Protection Regulation.The State of California enacted the California Consumer Privacy Act of2018(“CCPA”),that includes significant personal information privacy rights for consumers,including rights to know about thepersonal information collected and sold by a business,have a consumers personal infor

307、mation deleted,and to opt-out of anysales of the consumers personal information.The CCPA provides for civil penalties for violations,as well as a private right ofaction for data breaches that is expected to increase data breach litigation.In addition,in November 2020,voters in Californiaapproved Pro

308、position 24,which enacted the California Privacy Rights Act of 2020(“CPRA”).This act includes variousamendments to the CCPA and expansion of rights thereunder and creates a new California Privacy Protection Agency with fulladministrative power,authority and jurisdiction to implement and enforce the

309、CCPA,as amended by the CPRA.Other stateshave enacted data privacy legislation and other states may do so in the future.Compliance with these laws,could have amaterial and adverse effect on our financial performance.The CCPA,as amended,and regulations promulgated thereunder mayincrease our compliance

310、 costs and potential liability.Modifications to our data processing practices and policies,products andconsumer experience that we have made and may need to make to comply with the CCPA,as amended,and similar legislation,or that we may be required to make in the future as a result of the continuing

311、changes to the requirements under that legislationor similar future legislation,may materially negatively impact our financial performance.Risks associated with telemarketing and advertising.We and our third-party Lead suppliers are subject to various federal and state laws,rules,regulations and ord

312、ersregarding telemarketing and privacy,including restrictions on the use of unsolicited emails and restrictions on marketingactivities conducted through the use of telephonic communications(including text messaging to mobile telephones).Ourfinancial performance could be materially and adversely affe

313、cted by newly-adopted or amended laws,rules,regulations andorders relating to telemarketing and increased enforcement of such laws,rules,regulations or orders by governmental agenciesor by private litigants.The regulations adopted by the Federal Communications Commission under the Telephone Consumer

314、Protection Act(“TCPA”)require the prior express written consent of the called party before a caller can initiate telemarketingcalls(i)to wireless numbers(including text messaging)using an automatic telephone dialing system or an artificial orprerecorded voice;or(ii)to residential lines using an arti

315、ficial or prerecorded voice.Failure to comply with the TCPA can resultin significant penalties,including statutory damages.We may become subject to lawsuits(including class-action lawsuits)alleging that our business violated the TCPA.Under the TCPA,plaintiffs may seek actual monetary loss or statuto

316、ry damages of$500 per violation,whichever is greater,and courts may treble the damage award for willful or knowing violations.Suchlitigation,even if not meritorious,could result in substantial costs and diversion of management attention and an adverseoutcome could materially and adversely affect our

317、 financial performance.Our efforts to comply with these regulations maynegatively affect conversion rates of Leads,and thus,our revenue or profitability.-17-2025/2/12 03:45auto20211231_10k.htmhttps:/www.sec.gov/Archives/edgar/data/1023364/000185173422000161/auto20211231_10k.htm26/89Table of Contents

318、 Data security risks.A significant issue for online businesses like ours is the secure transmission of confidential and personal informationover public networks and data security of retained confidential and personal information.Concerns over the security oftransactions conducted on the internet,con

319、sumer identity theft and user privacy issues have been significant issues impactingthe growth in consumer use of the internet,online advertising and e-commerce.Despite our implementation of securitydetection,prevention and monitoring measures,our computer systems or those of our vendors are suscepti

320、ble to electronic orphysical computer break-ins,viruses and other disruptive harms and security breaches.For example,in early 2020 wediscovered that our network was impacted by malware that encrypted servers on most systems and disrupted consumer andcustomer access to many of our services,although w

321、e did not discover any evidence that caused us to conclude that there hasbeen any unauthorized access to or acquisition of any consumer personal information or customer confidential information.Inaddition,consumers may experience losses of personally identifiable information as a result of corporate

322、 identity theft.Advances in computer capabilities,new discoveries in the field of cryptography or other developments may specificallycompromise our security measures.Because the techniques used to obtain unauthorized access,disable or degrade service,orsabotage systems change frequently and often ar

323、e not recognized until launched against a target,we may be unable to anticipatethese techniques or to implement adequate preventative measures on a timely basis.Any perceived or actual unauthorizeddisclosure of personally identifiable information that we collect or store,whether through breach of ou

324、r network by anunauthorized party,employee theft or misuse,or otherwise,could harm our reputation and brands,substantially impair ourability to attract and retain our audiences,or subject us to claims or litigation arising from damages suffered by consumers orLead or traffic suppliers.If consumers e

325、xperience identity theft related to personally identifiable information we collect orstore,we may be exposed to liability,adverse publicity and damage to our reputation.To the extent that unauthorized disclosureof personally identifiable information or corporate identity theft gives rise to reluctan

326、ce to use our websites or to supply usleads or traffic,or a decline in consumer confidence in financial transactions over the internet,our business could be adverselyaffected.Alleged or actual breaches of the network of one of our business partners or competitors whom consumers associatewith us coul

327、d also harm our reputation and brands.In addition,we could incur significant costs in complying with the multitudeof state,federal and foreign laws regarding the unauthorized disclosure of personal information,including states that haveenacted laws requiring companies to inform individuals of any se

328、curity breaches that result in their personal information beingstolen.Because our success depends on the acceptance of online services and e-commerce,we may incur significant costs toprotect against the threat of security breaches or to alleviate problems caused by those breaches.Although we have de

329、velopedsystems and processes that are designed to protect our data and user data,to prevent data loss and to prevent or detect securitybreaches,we cannot assure you that such measures will provide absolute security,and we may need to expend significantresources in protecting against or remediating s

330、ecurity breaches and cyberattacks.We are insured for some,but not all,of the foregoing risks.Even for those risks for which we are insured and havecoverage under the terms and conditions of the applicable policies,there are no assurances given that the coverage limits wouldbe sufficient to cover all

331、 costs,liabilities or losses we might incur or experience.Online fraud and scams.Internet fraud has been increasing over the past few years,and we have experienced fraudulent use of our name andtrademarks on websites in connection with the purported sale of vehicles offered on third-party websites,w

332、ith payments to behandled through an online escrow service purported to be owned and operated by us.These fraudulent online transactions andscams,should they continue to increase in prevalence,could affect our reputation with consumers and give rise to claims byconsumers for funds transferred to the

333、 fraudulent accounts,which could materially and adversely affect our financialperformance.Anti-spam laws,rules,and regulations.Various state and federal laws,rules and regulations regulate email communications and internet advertising andrestrict or prohibit unsolicited email(commonly known as“spam”).These laws,rules or regulations may adversely affect ourability to market our services to consumer