þ
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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INUVO, INC.
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(Exact name of registrant as specified in its charter)
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Nevada
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87-0450450
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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1111 Main St Ste 201 Conway, AR
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72032
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(Address of principal executive offices)
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(Zip Code)
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Title of each class
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Name of each exchange on which registered
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Common Stock
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NYSE MKT
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Large accelerated filer
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o
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Accelerated filer
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o
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Non-accelerated filer
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o
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Smaller reporting company
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þ
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Page No.
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Part I
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Item 1.
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Business.
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Item 1A.
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Risk Factors.
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Item 1B.
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Unresolved Staff Comments.
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Item 2.
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Properties.
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Item 3.
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Legal Proceedings.
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Item 4.
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Mine Safety Disclosures
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Part II
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Item 5.
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Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
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Item 6.
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Selected Financial Data.
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Item 7.
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Management's Discussion and Analysis of Financial Condition and Results of Operation.
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Item 7A.
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Quantitative and Qualitative Disclosures About Market Risk.
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Item 8.
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Financial Statements and Supplementary Data.
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Item 9.
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Changes In and Disagreements With Accountants on Accounting and Financial Disclosure.
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Item 9A.
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Controls and Procedures.
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Item 9B.
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Other Information.
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Part III
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Item 10.
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Directors, Executive Officers and Corporate Governance.
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Item 11.
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Executive Compensation.
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Item 12.
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
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Item 13.
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Certain Relationships and Related Transactions, and Director Independence.
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Item 14.
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Principal Accountant Fees and Services.
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Part IV
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Item 15.
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Exhibits, Financial Statement Schedules.
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•
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history of losses;
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•
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material dependence on our relationships with Yahoo! and Google;
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•
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dependence on our financing arrangements with Bridge Bank, N.A. which are collateralized by our assets;
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•
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covenants and restrictions in our grant agreement with the state of Arkansas;
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•
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possible need to raise additional capital;
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•
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dependence of our Partner Network segment on relationships with distribution partners;
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•
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introduction of new products and services, which require significant investment;
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•
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dependence of our Owned and Operated Network segment on our ability to maintain and grow our customer base and the estimates and assumptions we use in that segment;
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•
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ability to acquire traffic through other search engines;
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•
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lack of control over content and functionality of advertisements we display from third-party networks;
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•
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ability to effectively compete;
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•
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need to keep pace with technology changes;
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•
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fluctuations in our quarterly earnings and the trading price of our common stock;
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•
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possible interruptions of services;
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•
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dependence on third-party providers;
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•
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liability associated with retrieved or transmitted information, failure to adequately protect personal information; security breaches and computer viruses, and other risks experienced by companies in our industry;
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•
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dependence on key personnel;
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•
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regulatory and legal uncertainties;
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•
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ability to defend our company against lawsuits;
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•
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failure to protect our intellectual property;
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•
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risks from publishers who could fabricate clicks;
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•
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continued listing on the NYSE MKT; and
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•
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outstanding restricted stock grants warrants and options and potential dilutive impact to our stockholders.
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•
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ValidClick: A proprietary software as a service platform that helps owners of websites and mobile applications monetize their properties. It offers a pay-per-click solution where advertisements are targeted to consumers based on demographics and search behaviors. We are able to provide ValidClick users with access to tens of thousands of advertisers.
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•
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Affiliate Management: We offer an affiliate management solution providing advertisers the ability to sign up, manage and track the activities of their publishers through a privately-branded platform with full data transparency. Typically, each advertising customer is supported by a customized software implementation.
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•
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ALOT Sites: We build and operate websites under the ALOT brand. During 2012, we launched a local directory listing service at local.alot.com. During 2013, we expanded our portfolio by launching content-rich, mobile-ready sites at health.alot.com, finance.alot.com and careers.alot.com. We offer advertisements primarily through search results on these sites and generate revenue when a user clicks on an advertisement we have delivered.
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•
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ALOT Appbar: The Appbar is a software application that a user installs in their web browser. Once installed, the user can add a number of applications to the Appbar, which provides easy access to weather, radio, shopping, social networking and other useful information. We offer advertisements in searches performed through a search box on the Appbar and generate revenue through clicks on those advertisements. Users also have the option of setting www.alot.com as their home page and ALOT as their default search engine. We also generate revenue from the Appbar through affiliate distribution programs and the sale of information we gather about our users without the disclosure of personally identifiable information.
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•
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pay fees to the lender associated with the credit facility;
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•
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meet prescribed financial covenants;
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•
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maintain our corporate existence in good standing;
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•
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grant the lender a security interest in our assets;
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•
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provide financial information to the lender; and
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•
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refrain from any transfer of any of our business or property, subject to customary exceptions.
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•
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our ability to attract new clients, including the length of our sales cycles, or to sell increased usage of our service to existing clients;
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•
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technical difficulties or interruptions in our services;
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•
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changes in privacy protection and other governmental regulations applicable to the our industry;
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•
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changes in our pricing policies or the pricing policies of our competitors;
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•
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the financial condition and business success of our clients;
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•
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purchasing and budgeting cycles of our clients;
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•
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acquisitions of businesses and products by us or our competitors;
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•
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competition, including entry into the market by new competitors or new offerings by existing competitors;
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•
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discounts offered to advertisers by upstream advertising networks;
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•
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our history of litigation;
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•
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our history of uncollectable receivables;
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•
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our ability to hire, train and retain sufficient sales, client management and other personnel;
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•
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timing of development, introduction and market acceptance of new services or service enhancements by us or our competitors;
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•
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concentration of marketing expenses for activities such as trade shows and advertising campaigns;
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•
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expenses related to any new or expanded data centers; and
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•
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general economic and financial market conditions.
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•
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unexpected increases in usage of our services;
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•
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computer viruses and other security issues;
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•
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interruption or other loss of connectivity provided by third-party internet service providers;
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•
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natural disasters or other catastrophic events; and
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•
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server failures or other hardware problems.
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High
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Low
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||||
Year Ended December 31, 2013:
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|
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First Quarter
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$
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1.11
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$
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0.65
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Second Quarter
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$
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1.08
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$
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0.57
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Third Quarter
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$
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1.33
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$
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0.70
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Fourth Quarter
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$
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1.94
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$
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1.15
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Year Ended December 31, 2012
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|
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First Quarter
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$
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1.44
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$
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0.67
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Second Quarter
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$
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0.86
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|
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$
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0.48
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Third Quarter
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$
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0.73
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$
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0.40
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Fourth Quarter
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$
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2.12
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$
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0.74
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•
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the renewal of our service agreements with Yahoo! and Google;
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•
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the launch of four new ALOT-branded web properties;
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•
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the
$1.75 million
grant from the state of Arkansas;
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•
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the relocation of our corporate headquarters to Conway, AR;
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•
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the closing of our office in Clearwater, FL;
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•
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the subleasing of our office in New York City; and
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•
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the relocation of our data centers from New York City to Arkansas.
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For the Years Ended December 31,
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|||||||||||||
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2013
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|
2012
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Change
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% Change
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|||||||
Partner Network
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$
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35,859,352
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$
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25,888,154
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$
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9,971,198
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38.5
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%
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Owned and Operated Network
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19,130,988
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27,474,791
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(8,343,803
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)
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(30.4
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%)
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|||
Total net revenue
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$
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54,990,340
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$
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53,362,945
|
|
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$
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1,627,395
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|
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3.0
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%
|
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For the Year Ended December 31,
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|||||||||||||
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2013
|
|
2012
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Change
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% Change
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|||||||
Partner Network
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$
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27,816,675
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|
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$
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21,617,426
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$
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6,199,249
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28.7
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%
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Owned and Operated Network
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968,212
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4,018,084
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(3,049,872
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)
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(75.9
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%)
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|||
Cost of revenue
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$
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28,784,887
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|
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$
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25,635,510
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|
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$
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3,149,377
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|
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12.3
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%
|
|
For the Year Ended December 31,
|
|||||||||||||
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2013
|
|
2012
|
|
Change
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% Change
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|||||||
Marketing costs
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$
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14,389,493
|
|
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$
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18,189,643
|
|
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$
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(3,800,150
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)
|
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(20.9
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%)
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Compensation
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6,022,526
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|
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6,700,016
|
|
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(677,490
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)
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(10.1
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%)
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|||
Selling, general and administrative
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5,776,529
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|
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9,365,675
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(3,589,146
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)
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(38.3
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%)
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|||
Operating expenses
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$
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26,188,548
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|
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$
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34,255,334
|
|
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$
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(8,066,786
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)
|
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(23.5
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%)
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•
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pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;
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•
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provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and
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•
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provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on the financial statements.
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Exhibit No.
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Description of Exhibit
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2.1
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Agreement and Plan of Merger dated June 5, 2009 between Inuvo, Inc. and Kowabunga! Inc. (Incorporated by reference and filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 24, 2009.)
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2.2
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Agreement and Plan of Merger dated October 16, 2011 between Inuvo, Inc., Anhinga Merger Subsidiary, Inc. and Vertro, Inc. (Incorporated by reference to the Registrant’s Current Report on Form 8-K as fled on October 17, 2011.)
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3(i).1
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Articles of Incorporation, as amended)Incorporated by reference and filed as an exhibit to the Registrant’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 1, 2004.)
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3(i).2
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Amended to Articles of Incorporation filed March 14, 2005 (Incorporated by reference and filed as an exhibit to the Registrant’s Annual Report on Form 10-KSB filed with the Securities and Exchange Commission on March 31, 2006.)
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3(i).3
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Articles of Merger between Inuvo, Inc. and Kowabunga! Inc. (Incorporated by reference and filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on July 24, 2009.)
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3(i).4
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Certificate of Change Filed Pursuant to NRS 78.209 (Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed on September 30, 2010.)
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3(i).5
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Certificate of Merger as filed with the Secretary of State of Nevada on February 29, 2012 (Incorporated by reference to the Registrant's Annual Report on Form 10-K as filed on March 29, 2012.)
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3(i).6
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Articles of Amendment to Amended Articles of Incorporation as filed on February 29, 2012 (Incorporated by reference to the Registrant's Annual Report on Form 10-K as filed on March 29, 2012.)
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3(ii).1
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Amended and Restated By-Laws (Incorporated by reference to the Registrant’s Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 31, 2010.)
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3(ii).2
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Bylaw amendment adopted February 29, 2012 (Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed on March 6, 2012.)
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4.1
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Form of warrant to purchase shares of Registrant for 2009 consultants (Incorporated by reference to the Registrant's Annual Report on Form 10-K as filed on March 29, 2012.)
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4.2
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Form of warrant to purchase shares of Registrant for 2011 offering. (Incorporated by reference and filed as an exhibit to the Registrant’s Current Report on Form 8-K filed with the Securities and Exchange Commission on June 22, 2011.)
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4.3
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Form of warrant to purchase 40,000 shares of common stock issued to Alliance Advisors, LLC (Incorporated by reference to the Registrant's Annual Report on Form 10-K as filed on March 29, 2012.)
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4.4
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Form of warrant to purchase 10,000 shares of common stock issued to Alliance Advisors, LLC (Incorporated by reference to the Registrant's Annual Report on Form 10-K as filed on March 29, 2012.)
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4.5
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Form of warrant to purchase 51,724 shares pursuant to the Second Business Financing Modification Agreement with Bridge Bank, National Association, dated October 11, 2012. (Incorporated by reference to Form 10-Q filed with the Securities and Exchange Commission on November 8, 2012.)
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10.1
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2005 Long-Term Incentive Plan (Incorporated by reference to the Current Report on Form 8-K as filed on December 10, 2010.)
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10.2
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Lease Agreement, dated August 10, 2007, by and between Lightwave Drive, LLC and Think Partnership, Inc., as amended (Incorporated by reference to the Registrant's Annual Report on Form 10-K as filed on March 29, 2012.)
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10.3
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Lease dated February 29, 2000 by and between Alot, Inc. (formerly Comet Systems, Inc.) and The Rector, Church-Wardens and Vestrymen of Trinity Church in New York, a religious corporation in the State of New York, including the previous amendment dated August 8, 2000. (Incorporated by reference to the Registrant's Annual Report on Form 10-K as filed on March 29, 2012.)
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10.4
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Lease Modification and Extension Agreement by and between Alot, Inc.(formerly known as MIVA Direct, Inc.) and The Rector, Church-Wardens and Vestrymen of Trinity Church in New York, dated February 23, 2006. (Incorporated by reference to the Registrant's Annual Report on Form 10-K as filed on March 29, 2012.)
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10.5
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Consent to Sublease with Trinity Church effective April 12, 2013 regarding the Company's New York office. (Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q as filed on May 9, 2013).
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10.6
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Third Business Financing Modification Agreement, dated March 29, 2013, effective May 1, 2013, with Bridge Bank, National Association. (Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q as filed on May 9, 2013).
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10.7
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Lease with First Orion Corp. effective March 1, 2013 regarding the Company's Conway, AR office. (Incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q as filed on May 9, 2013).
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10.8
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Amendment No. 8 to Yahoo! Publisher Network Contract effective as of September 1, 2013, executed and delivered October 10, 2013. (Incorporated by reference to Registrant’s Amendment No. 1 to Quarterly Report on Form 10-Q as filed on January 17, 2014).**
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10.9
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2010 Equity Compensation Plan (Incorporated by reference to the Registrant’s definitive proxy statement on Schedule 14A as filed on April 30, 2010.)
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10.1
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Amendment to Lease, dated as of July 25, 2012, between Capital Growth of Clearwater, LLC, and Inuvo, Inc. (Incorporated by reference to Form 10-Q filed with the Securities and Exchange Commission on August 9, 2012.)
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10.11
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First Business Financing Modification Agreement with Bridge Bank, National Association, dated June 29, 2012. (Incorporated by reference to Form 10-Q filed with the Securities and Exchange Commission on August 9, 2012.)
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10.12
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Agreement dated June 15, 2011, executed October 20, 2011, between Inuvo, Inc. and Alliance Advisors, LLC (Incorporated by reference to the Registrant's Annual Report on Form 10-K as filed on March 29, 2012.)
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10.13
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Employment Agreement dated March 1, 2012 between Inuvo, Inc. and Richard K. Howe (Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed on March 6, 2012.)
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10.14
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Second Business Financing Modification Agreement with Bridge Bank, National Association, dated October 11, 2012. (Incorporated by reference to Form 10-Q filed with the Securities and Exchange Commission on November 8, 2012.)
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10.15
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Employment Agreement dated March 1, 2012 between Inuvo, Inc. and Wallace D. Ruiz (Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed on March 6, 2012.)
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10.16
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Employment Agreement dated March 1, 2012 between Inuvo, Inc. and John B. Pisaris (Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed on March 6, 2012.)
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10.17
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Amendment dated February 29, 2012 to 2010 Equity Compensation Plan (Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed on March 6, 2012.)
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10.18
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Business Financing Agreement, dated March 1, 2012, with Bridge Bank, National Association (Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed on March 6, 2012.)
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10.19
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Intellectual Property Security Agreement, dated March 1, 2012, between Inuvo, Inc. and Bridge Bank, National Association (Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed on March 6, 2012.)
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10.2
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Intellectual Property Security Agreement, dated March 1, 2012, between subsidiaries and Bridge Bank, National Association (Incorporated by reference to the Registrant’s Current Report on Form 8-K as filed on March 6, 2012.)
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10.21
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Release Agreement dated December 19, 2012 by and between Peter A. Corrao and Inuvo, Inc. (Incorporated by reference to Form 8-K filed with the Securities and Exchange Commission on December 19, 2012.)
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10.22
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|
Quick Action Closing Fund Grant Agreement, dated January 25, 2013, with the Arkansas Economic Development Commission. (Incorporated by reference to Form 10-K filed with the Securities and Exchange Commission on March 13, 2013).
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10.23
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|
Grant Reimbursement Agreement, dated January 25, 2013, with the Arkansas Economic Development Commission. (Incorporated by reference to Form 10-K filed with the Securities and Exchange Commission on March 13, 2013).
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10.24
|
|
Google Services Agreement, as of February 1, 2013, between Google Inc. and Vertro, Inc. (Incorporated by reference to Amendment No. 1 to Form 10-K filed with the Securities and Exchange Commission on May 21, 2013). **
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10.25
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|
Lease Termination Agreement, dated January 29, 2013, between Inuvo, Inc. and Capital Growth of Clearwater, LLC. (Incorporated by reference to Form 10-K filed with the Securities and Exchange Commission on March 13, 2013).
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10.26
|
|
Yahoo! Publisher Network Contract, dated April 4, 2009, as amended. (Incorporated by reference to Amendment No. 1 to Form 10-Q filed with the Securities and Exchange Commission on December 28, 2012).**
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10.27
|
|
Fourth Business Financing Modification Agreement, dated March 6th, 2014, with Bridge Bank, National Association.*
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21.1
|
|
Subsidiaries of the Registrant*
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23.1
|
|
Consent of Mayer Hoffman McCann P.C.*
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31.1
|
|
Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer *
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31.2
|
|
Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer *
|
32.1
|
|
Section 1350 certification of Chief Executive Officer *
|
32.2
|
|
Section 1350 certification of Chief Financial Officer *
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101.INS
|
|
XBRL Instance Document ***
|
101.SCH
|
|
XBRL Taxonomy Extension Schema Document ***
|
1010.CAL
|
|
XBRL Taxonomy Extension Calculation Linkbase Document ***
|
101.DEF
|
|
XBRL Taxonomy Extension Definition Linkbase Document ***
|
101.LAB
|
|
XBRL Taxonomy Extension Label Linkbase Document ***
|
101.PRE
|
|
XBRL Taxonomy Extension Presentation Linkbase Document ***
|
|
Inuvo, Inc.
|
|
|
|
|
|
|
March 10, 2014
|
By:
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/s/ Wallace D. Ruiz
|
|
|
|
Chief Financial Officer
|
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
/s/ Richard K. Howe
|
|
Chairman of the Board of Directors, Chief Executive Officer, and principal executive officer
|
|
March 10, 2014
|
Richard K. Howe
|
|
|
|
|
|
|
|
|
|
/s/ Wallace D. Ruiz
|
|
Chief Financial Officer, principal financial and accounting officer
|
|
March 10, 2014
|
Wallace D. Ruiz
|
|
|
|
|
|
|
|
|
|
/s/ Joseph P. Durrett
|
|
Director
|
|
March 10, 2014
|
Joseph P. Durrett
|
|
|
|
|
|
|
|
|
|
/s/ Charles D. Morgan
|
|
Director
|
|
March 10, 2014
|
Charles D. Morgan
|
|
|
|
|
|
|
|
|
|
/s/ Charles L. Pope
|
|
Director
|
|
March 10, 2014
|
Charles L. Pope
|
|
|
|
|
|
|
|
|
|
/s/ Patrick Terrell
|
|
Director
|
|
March 10, 2014
|
Patrick Terrell
|
|
|
|
|
|
CONTENTS
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
Consolidated Financial Statements:
|
|
|
Consolidated Balance Sheets
|
|
|
Consolidated Statements of Comprehensive Income (Loss)
|
|
|
Consolidated Statements of Stockholders’ Equity
|
|
|
Consolidated Statements of Cash Flows
|
|
|
Notes to Consolidated Financial Statements
|
|
|
2013
|
|
2012
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash
|
$
|
3,137,153
|
|
|
$
|
3,381,018
|
|
Restricted cash
|
—
|
|
|
301,158
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $62,845 and $231,542, respectively
|
3,609,825
|
|
|
5,400,290
|
|
||
Unbilled revenue
|
24,472
|
|
|
58,219
|
|
||
Intangible assets - current, net of accumulated amortization
|
—
|
|
|
328,665
|
|
||
Prepaid expenses and other current assets
|
510,968
|
|
|
467,957
|
|
||
Total current assets
|
7,282,418
|
|
|
9,937,307
|
|
||
Property and equipment, net
|
1,188,566
|
|
|
2,110,771
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
5,760,808
|
|
|
5,760,808
|
|
||
Intangible assets, net of accumulated amortization
|
10,324,326
|
|
|
11,138,330
|
|
||
Other assets
|
379,513
|
|
|
182,387
|
|
||
Total other assets
|
16,464,647
|
|
|
17,081,525
|
|
||
Total assets
|
$
|
24,935,631
|
|
|
$
|
29,129,603
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
6,235,533
|
|
|
10,196,930
|
|
||
Accrued expenses and other current liabilities
|
2,386,226
|
|
|
1,872,722
|
|
||
Term and credit notes payable - current portion
|
2,548,333
|
|
|
1,333,333
|
|
||
Total current liabilities
|
11,170,092
|
|
|
13,402,985
|
|
||
|
|
|
|
||||
Long-term liabilities
|
|
|
|
||||
Deferred tax liability
|
3,788,903
|
|
|
4,099,000
|
|
||
Term and credit notes payable - long term
|
3,595,300
|
|
|
6,488,889
|
|
||
Other long-term liabilities
|
1,039,470
|
|
|
932,377
|
|
||
Total long-term liabilities
|
8,423,673
|
|
|
11,520,266
|
|
||
|
|
|
|
||||
Stockholders’ equity
|
|
|
|
||||
Preferred stock, $.001 par value:
|
|
|
|
||||
Authorized shares 500,000, none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.001 par value:
|
|
|
|
|
|
||
Authorized shares 40,000,000; issued shares 23,763,307 and 23,586,186, respectively; outstanding shares 23,386,780 and 23,209,659, respectively
|
23,763
|
|
|
23,586
|
|
||
Additional paid-in capital
|
127,908,328
|
|
|
127,249,789
|
|
||
Accumulated deficit
|
(121,193,666
|
)
|
|
(121,670,882
|
)
|
||
Accumulated other comprehensive income
|
—
|
|
|
418
|
|
||
Treasury stock, at cost - 376,527 shares
|
(1,396,559
|
)
|
|
(1,396,559
|
)
|
||
Total stockholders' equity
|
5,341,866
|
|
|
4,206,352
|
|
||
Total liabilities and stockholders' equity
|
$
|
24,935,631
|
|
|
$
|
29,129,603
|
|
|
For the Years Ended December 31,
|
||||||
|
2013
|
|
2012
|
||||
Net revenue
|
$
|
54,990,340
|
|
|
$
|
53,362,945
|
|
Cost of revenue
|
28,784,887
|
|
|
25,635,510
|
|
||
Gross profit
|
26,205,453
|
|
|
27,727,435
|
|
||
Operating expenses
|
|
|
|
||||
Marketing costs
|
14,389,493
|
|
|
18,189,643
|
|
||
Compensation
|
6,022,526
|
|
|
6,700,016
|
|
||
Selling, general and administrative
|
5,776,529
|
|
|
9,365,675
|
|
||
Total operating expenses
|
26,188,548
|
|
|
34,255,334
|
|
||
Operating income (loss)
|
16,905
|
|
|
(6,527,899
|
)
|
||
Other expense, net
|
|
|
|
||||
Litigation settlements
|
—
|
|
|
(75,000
|
)
|
||
Interest expense, net
|
(356,956
|
)
|
|
(563,198
|
)
|
||
Other expense, net
|
(356,956
|
)
|
|
(638,198
|
)
|
||
Loss from continuing operations before taxes
|
(340,051
|
)
|
|
(7,166,097
|
)
|
||
Income tax benefit
|
313,645
|
|
|
326,779
|
|
||
Net loss from continuing operations
|
(26,406
|
)
|
|
(6,839,318
|
)
|
||
Net income (loss) from discontinued operations
|
503,622
|
|
|
(183,527
|
)
|
||
Net income (loss)
|
477,216
|
|
|
(7,022,845
|
)
|
||
Other comprehensive income
|
|
|
|
||||
Foreign currency revaluation
|
(418
|
)
|
|
418
|
|
||
Total comprehensive income (loss)
|
$
|
476,798
|
|
|
$
|
(7,022,427
|
)
|
|
|
|
|
||||
Per common share data
|
|
|
|
||||
Basic and diluted
|
|
|
|
||||
Net income (loss) from continuing operations
|
$
|
—
|
|
|
$
|
(0.33
|
)
|
Net income (loss) from discontinued operations
|
0.02
|
|
|
(0.01
|
)
|
||
Net income (loss)
|
$
|
0.02
|
|
|
$
|
(0.34
|
)
|
|
|
|
|
||||
Weighted average shares
|
|
|
|
||||
Basic
|
23,281,439
|
|
|
21,004,235
|
|
||
Diluted
|
23,281,439
|
|
|
21,004,235
|
|
|
Common Stock
|
|
Additional Paid in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income
|
|
Treasury Stock
|
|
Total
|
|||||||||||||||
|
Shares
|
|
Stock
|
|
|
|
|
|
||||||||||||||||||
Balances as of December 31, 2011
|
10,035,790
|
|
|
$
|
10,422
|
|
|
$
|
115,096,953
|
|
|
$
|
(114,648,037
|
)
|
|
$
|
—
|
|
|
$
|
(1,469,604
|
)
|
|
$
|
(1,010,266
|
)
|
Stock issued to Vertro shareholders
|
12,393,308
|
|
|
12,394
|
|
|
11,118,589
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,130,983
|
|
||||||
Stock issuance costs
|
—
|
|
|
—
|
|
|
(687,678
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(687,678
|
)
|
||||||
Issuance of warrants to purchase common stock
|
—
|
|
|
—
|
|
|
45,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
45,000
|
|
||||||
Retirement of treasury shares
|
—
|
|
|
(21
|
)
|
|
(80,786
|
)
|
|
—
|
|
|
—
|
|
|
80,807
|
|
|
—
|
|
||||||
Issuance of common stock to pay outstanding obligations under our deferred compensation program and bonus agreements
|
732,780
|
|
|
732
|
|
|
915,018
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
915,750
|
|
||||||
Stock issued for vested restricted stock awards
|
58,751
|
|
|
59
|
|
|
(59
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Shares withheld for taxes on restricted stock awards
|
(10,970
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,762
|
)
|
|
(7,762
|
)
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
842,752
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
842,752
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,022,845
|
)
|
|
—
|
|
|
—
|
|
|
(7,022,845
|
)
|
||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
418
|
|
|
—
|
|
|
418
|
|
||||||
Balances as of December 31, 2012
|
23,209,659
|
|
|
$
|
23,586
|
|
|
$
|
127,249,789
|
|
|
$
|
(121,670,882
|
)
|
|
$
|
418
|
|
|
$
|
(1,396,559
|
)
|
|
$
|
4,206,352
|
|
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
477,216
|
|
|
—
|
|
|
—
|
|
|
477,216
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
686,745
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
686,745
|
|
||||||
Refund of stock issuance costs
|
—
|
|
|
—
|
|
|
35,500
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
35,500
|
|
||||||
Stock options exercised
|
3,750
|
|
|
4
|
|
|
2,096
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,100
|
|
||||||
Stock issued for vested restricted stock awards
|
173,371
|
|
|
173
|
|
|
(173
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Foreign currency translation
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
(418
|
)
|
|
—
|
|
|
(418
|
)
|
|||||||
Taxes withheld on vested restricted stock
|
—
|
|
|
—
|
|
|
(65,629
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(65,629
|
)
|
||||||
Balances as of December 31, 2013
|
23,386,780
|
|
|
$
|
23,763
|
|
|
$
|
127,908,328
|
|
|
$
|
(121,193,666
|
)
|
|
$
|
—
|
|
|
$
|
(1,396,559
|
)
|
|
$
|
5,341,866
|
|
|
2013
|
|
2012
|
||||
Operating activities:
|
|
|
|
||||
Net income (loss)
|
$
|
477,216
|
|
|
$
|
(7,022,845
|
)
|
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
3,055,182
|
|
|
7,321,679
|
|
||
Deferred income taxes
|
(310,097
|
)
|
|
(444,000
|
)
|
||
Amortization of financing fees
|
33,333
|
|
|
98,223
|
|
||
Adjustment of European liabilities related to discontinued operations
|
(459,473
|
)
|
|
(160,000
|
)
|
||
(Recovery) Provision for doubtful accounts
|
(137,362
|
)
|
|
299,565
|
|
||
Stock based compensation
|
686,745
|
|
|
842,752
|
|
||
Warrant issuance to Bridge Bank
|
—
|
|
|
45,000
|
|
||
Change in operating assets and liabilities, net of acquisition:
|
|
|
|
||||
Accounts receivable and unbilled revenue
|
1,961,574
|
|
|
1,811,832
|
|
||
Prepaid expenses and other assets
|
36,587
|
|
|
592,143
|
|
||
Accounts payable
|
(3,501,924
|
)
|
|
244,396
|
|
||
Accrued expenses and other liabilities
|
(22,481
|
)
|
|
(2,638,071
|
)
|
||
Other
|
(9,677
|
)
|
|
—
|
|
||
Net cash provided by operating activities
|
1,809,623
|
|
|
990,674
|
|
||
Investing activities:
|
|
|
|
||||
Purchases of equipment and capitalized development costs
|
(677,526
|
)
|
|
(894,415
|
)
|
||
Acquisition of Vertro, Inc., net of stock issuance costs
|
—
|
|
|
2,432,642
|
|
||
Purchase of names database and bundled downloads
|
—
|
|
|
(3,065,569
|
)
|
||
Net cash used in investing activities
|
(677,526
|
)
|
|
(1,527,342
|
)
|
||
Financing activities:
|
|
|
|
||||
Proceeds from term note
|
—
|
|
|
5,000,000
|
|
||
Return (Deposit) to collateralize letter of credit
|
301,158
|
|
|
(300,572
|
)
|
||
Proceeds from revolving line of credit
|
7,225,000
|
|
|
5,308,742
|
|
||
Refund of (Prepaid) financing fees
|
35,500
|
|
|
(100,000
|
)
|
||
Exercise of stock options
|
2,100
|
|
|
—
|
|
||
Payments on revolving line of credit
|
(7,570,255
|
)
|
|
(5,140,045
|
)
|
||
Payments on term note payable and capital leases
|
(1,369,047
|
)
|
|
(855,270
|
)
|
||
Net cash (used in) provided by financing activities
|
(1,375,544
|
)
|
|
3,912,855
|
|
||
Effect of exchange rate changes
|
(418
|
)
|
|
418
|
|
||
Net change – cash
|
(243,865
|
)
|
|
3,376,605
|
|
||
Cash, beginning of year
|
3,381,018
|
|
|
4,413
|
|
||
Cash, end of year
|
$
|
3,137,153
|
|
|
$
|
3,381,018
|
|
Supplemental information:
|
|
|
|
||||
Interest paid
|
$
|
327,379
|
|
|
$
|
312,247
|
|
Income taxes refunded
|
$
|
(3,548
|
)
|
|
$
|
—
|
|
Non-cash investing activities:
|
|
|
|
||||
Issuance of stock as settlement of deferred compensation
|
$
|
—
|
|
|
$
|
915,750
|
|
Restricted advances on term note payable
|
$
|
—
|
|
|
$
|
475,000
|
|
Purchase of property and equipment under capital lease
|
$
|
47,482
|
|
|
$
|
94,915
|
|
Retirement of treasury stock
|
$
|
—
|
|
|
$
|
73,045
|
|
|
2013
|
|
2012
|
||||
Balance at the beginning of the year
|
$
|
231,542
|
|
|
$
|
477,289
|
|
Provision for bad debts
|
—
|
|
|
299,565
|
|
||
Charge-offs
|
(31,335
|
)
|
|
(554,145
|
)
|
||
Recoveries
|
(137,362
|
)
|
|
—
|
|
||
Allowance for doubtful accounts acquired from the merger with Vertro, Inc.
|
—
|
|
|
8,833
|
|
||
Balance at the end of the year
|
$
|
62,845
|
|
|
$
|
231,542
|
|
|
2013
|
|
2012
|
||||
Furniture and fixtures
|
$
|
67,341
|
|
|
$
|
421,425
|
|
Equipment
|
2,547,686
|
|
|
2,473,813
|
|
||
Software
|
8,020,982
|
|
|
8,018,509
|
|
||
Leasehold improvements
|
66,903
|
|
|
348,159
|
|
||
Subtotal
|
$
|
10,702,912
|
|
|
$
|
11,261,906
|
|
Less: accumulated depreciation and amortization
|
(9,514,346
|
)
|
|
(9,151,135
|
)
|
||
Total
|
$
|
1,188,566
|
|
|
$
|
2,110,771
|
|
|
Term
|
|
Carrying
Value
|
|
Accumulated Amortization and Impairment
|
|
Net Carrying Value
|
|
Year-to-date Amortization
|
||||||||
Names database (1)
|
9 months
|
|
$
|
17,417,397
|
|
|
$
|
(17,417,397
|
)
|
|
$
|
—
|
|
|
$
|
322,771
|
|
Bundled downloads (1)
|
4.5 months
|
|
2,447,075
|
|
|
(2,447,075
|
)
|
|
—
|
|
|
5,894
|
|
||||
Intangible assets classified as current
|
|
|
$
|
19,864,472
|
|
|
$
|
(19,864,472
|
)
|
|
$
|
—
|
|
|
$
|
328,665
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Customer list, Google
|
20 years
|
|
$
|
8,820,000
|
|
|
$
|
(808,500
|
)
|
|
$
|
8,011,500
|
|
|
$
|
441,000
|
|
Customer list, all other
|
10 years
|
|
1,610,000
|
|
|
(295,174
|
)
|
|
1,314,826
|
|
|
161,004
|
|
||||
Exclusivity agreement
|
1 year
|
|
120,000
|
|
|
(120,000
|
)
|
|
—
|
|
|
20,000
|
|
||||
Trade names, ALOT (2)
|
5 years
|
|
960,000
|
|
|
(352,000
|
)
|
|
608,000
|
|
|
192,000
|
|
||||
Trade names, web properties (2)
|
-
|
|
390,000
|
|
|
—
|
|
|
390,000
|
|
|
—
|
|
||||
Intangible assets classified as long-term
|
|
|
$
|
11,900,000
|
|
|
$
|
(1,575,674
|
)
|
|
$
|
10,324,326
|
|
|
$
|
814,004
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill, Partner Network
|
|
|
$
|
1,776,544
|
|
|
$
|
—
|
|
|
$
|
1,776,544
|
|
|
|
||
Goodwill, Owned and Operated Network
|
|
|
3,984,264
|
|
|
—
|
|
|
3,984,264
|
|
|
|
|||||
Goodwill, total
|
|
|
$
|
5,760,808
|
|
|
$
|
—
|
|
|
$
|
5,760,808
|
|
|
n/a
|
|
Term
|
|
Carrying
Value
|
|
Accumulated Amortization and Impairment
|
|
Net Carrying Value
|
|
Year-to-date Amortization
|
||||||||
Names database (1)
|
9 months
|
|
$
|
17,417,397
|
|
|
$
|
(17,094,626
|
)
|
|
$
|
322,771
|
|
|
$
|
1,590,529
|
|
Bundled downloads (1)
|
4.5 months
|
|
2,447,075
|
|
|
(2,441,181
|
)
|
|
5,894
|
|
|
2,441,181
|
|
||||
Intangible assets classified as current
|
|
|
19,864,472
|
|
|
(19,535,807
|
)
|
|
328,665
|
|
|
4,031,710
|
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
Customer list, Google
|
20 years
|
|
$
|
8,820,000
|
|
|
$
|
(367,500
|
)
|
|
$
|
8,452,500
|
|
|
$
|
367,500
|
|
Customer list, all other
|
10 years
|
|
1,610,000
|
|
|
(134,170
|
)
|
|
1,475,830
|
|
|
134,170
|
|
||||
Exclusivity agreement
|
1 year
|
|
120,000
|
|
|
(100,000
|
)
|
|
20,000
|
|
|
100,000
|
|
||||
Trade names, ALOT (2)
|
5 years
|
|
960,000
|
|
|
(160,000
|
)
|
|
800,000
|
|
|
160,000
|
|
||||
Tradenames, web properties (2)
|
-
|
|
390,000
|
|
|
—
|
|
|
390,000
|
|
|
—
|
|
||||
Intangible assets classified as long-term
|
|
|
$
|
11,900,000
|
|
|
$
|
(761,670
|
)
|
|
$
|
11,138,330
|
|
|
$
|
761,670
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill, Partner Network
|
|
|
$
|
1,776,544
|
|
|
$
|
—
|
|
|
$
|
1,776,544
|
|
|
|
||
Goodwill, Owned and Operated Network
|
|
|
3,984,264
|
|
|
—
|
|
|
3,984,264
|
|
|
|
|||||
Goodwill, total
|
|
|
$
|
5,760,808
|
|
|
$
|
—
|
|
|
$
|
5,760,808
|
|
|
n/a
|
(1)
|
The amortization of our names database and bundled downloads assets are included in cost of revenue.
|
(2)
|
We have determined that our trade names intangible related to our web properties has an indefinite life, and as such it is not amortized. We determined our ALOT trade names should be amortized over
five
years.
|
2014
|
$
|
794,004
|
|
2015
|
794,004
|
|
|
2016
|
794,004
|
|
|
2017
|
634,004
|
|
|
2018
|
602,004
|
|
|
Thereafter
|
$
|
6,316,306
|
|
Total
|
$
|
9,934,326
|
|
|
|
2013
|
|
2012
|
||||
Term note payable - 4.25 percent at December 31, 2013 (prime plus 1 percent), due March 10, 2015
|
|
$
|
2,888,888
|
|
|
$
|
4,222,222
|
|
Revolving credit line - 3.75 percent at December 31, 2013 (prime plus 0.5 percent), due March 29, 2015
|
|
3,254,745
|
|
|
3,600,000
|
|
||
Total
|
|
$
|
6,143,633
|
|
|
$
|
7,822,222
|
|
Less: current portion
|
|
(2,548,333
|
)
|
|
(1,333,333
|
)
|
||
Term and revolving credit line - long term portion
|
|
$
|
3,595,300
|
|
|
$
|
6,488,889
|
|
2014
|
$
|
2,548,333
|
|
2015
|
340,555
|
|
|
Total
|
$
|
2,888,888
|
|
|
2013
|
|
2012
|
||||
Accrued marketing costs
|
$
|
1,198,152
|
|
|
$
|
247,583
|
|
Accrued expenses and other
|
519,859
|
|
|
935,716
|
|
||
Loss contingency
|
263,238
|
|
|
—
|
|
||
Deferred Arkansas grant, current portion
|
242,225
|
|
|
—
|
|
||
Accrued payroll and commission liabilities
|
85,782
|
|
|
522,082
|
|
||
Capital leases, current portion
|
51,205
|
|
|
44,287
|
|
||
Accrued taxes
|
25,765
|
|
|
123,054
|
|
||
Total
|
$
|
2,386,226
|
|
|
$
|
1,872,722
|
|
|
2013
|
|
2012
|
||||
Taxes payable
|
$
|
506,453
|
|
|
$
|
506,453
|
|
Deferred Arkansas grant, less current portion
|
360,576
|
|
|
—
|
|
||
Deferred rent
|
120,218
|
|
|
345,814
|
|
||
Capital leases, less current portion
|
52,223
|
|
|
47,372
|
|
||
Long-term deposits
|
—
|
|
|
32,738
|
|
||
Total
|
$
|
1,039,470
|
|
|
$
|
932,377
|
|
|
2013
|
|
2012
|
||||
Current tax provision
|
$
|
—
|
|
|
$
|
—
|
|
Deferred tax (benefit) provision
|
(310,097
|
)
|
|
(444,000
|
)
|
||
Total tax (benefit) provision
|
$
|
(310,097
|
)
|
|
$
|
(444,000
|
)
|
|
2013
|
|
2012
|
||
Expected statutory rate
|
(35
|
%)
|
|
(34
|
%)
|
State income tax rate, net of federal benefit
|
(4
|
%)
|
|
(4
|
%)
|
Permanent differences
|
(4
|
%)
|
|
2
|
%
|
Valuation allowance
|
(2,708
|
%)
|
|
48
|
%
|
Net operating loss adjustment
|
2,657
|
%
|
|
—
|
%
|
Other
|
26
|
%
|
|
(18
|
%)
|
|
(68
|
%)
|
|
(6
|
%)
|
|
2013
|
|
2012
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carry forward
|
$
|
22,757,000
|
|
|
$
|
10,710,000
|
|
Intangible assets
|
6,425,000
|
|
|
6,303,000
|
|
||
Deferred rent
|
33,000
|
|
|
124,000
|
|
||
Depreciation
|
779,000
|
|
|
837,000
|
|
||
Allowance for doubtful accounts
|
57,000
|
|
|
88,000
|
|
||
Accrued expense
|
—
|
|
|
—
|
|
||
Stock based expenses
|
1,239,000
|
|
|
1,263,000
|
|
||
Other
|
540,000
|
|
|
225,000
|
|
||
Subtotal
|
31,830,000
|
|
|
19,550,000
|
|
||
Less valuation allowance
|
(31,830,000
|
)
|
|
(19,550,000
|
)
|
||
Total
|
—
|
|
|
—
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||
Intangibles
|
3,788,903
|
|
|
4,099,000
|
|
||
Total
|
3,788,903
|
|
|
4,099,000
|
|
||
Total deferred tax assets (liabilities)
|
(3,788,903
|
)
|
|
(4,099,000
|
)
|
|
Options Outstanding
|
|
RSUs Outstanding
|
|
Options and RSUs Exercised
|
|
Available Shares
|
|
Total
|
|||||
2010 ECP
|
258,998
|
|
|
86,744
|
|
|
1,060,823
|
|
|
2,129,380
|
|
|
3,535,945
|
|
2005 LTIP
|
33,748
|
|
|
623,036
|
|
|
328,711
|
|
|
14,505
|
|
|
1,000,000
|
|
Total
|
292,746
|
|
|
709,780
|
|
|
1,389,534
|
|
|
2,143,885
|
|
|
4,535,945
|
|
|
Options
|
|
Weighted Average Exercise Price
|
|||
Outstanding, beginning of year
|
1,179,199
|
|
|
$
|
2.66
|
|
Granted
|
—
|
|
|
$
|
—
|
|
Forfeited, expired or cancelled
|
(882,703
|
)
|
|
$
|
2.65
|
|
Exercised
|
(3,750
|
)
|
|
$
|
0.56
|
|
Outstanding, end of year
|
292,746
|
|
|
$
|
2.72
|
|
Exercisable, end of year
|
266,408
|
|
|
$
|
2.72
|
|
Range of
Exercise Price
|
|
Shares
|
|
Weighted Average Remaining
Contractual Life ( Years)
|
|
Weighted Average
Exercise Price
|
|||
$0.00 – $3.00
|
|
262,658
|
|
|
7.0
|
|
$
|
2.71
|
|
$3.01 - $9.99
|
|
3,750
|
|
|
6.1
|
|
3.70
|
|
|
Total
|
|
266,408
|
|
|
7.0
|
|
$
|
2.72
|
|
|
2012
|
|
Expected life (in years)
|
3.15
|
|
Volatility
|
174.2
|
%
|
Risk free interest rate
|
0.30
|
%
|
Dividend yield
|
—
|
%
|
|
Restricted Stock
|
|
Weighted Average Fair Value
|
|||
Outstanding, beginning of year
|
181,535
|
|
|
$
|
0.71
|
|
Granted
|
1,116,000
|
|
|
$
|
1.07
|
|
Settled
|
(252,755
|
)
|
|
$
|
0.68
|
|
Terminated
|
(335,000
|
)
|
|
$
|
0.87
|
|
Outstanding, end of year
|
709,780
|
|
|
$
|
1.45
|
|
|
Lease Payments
|
|
Sublease income
|
||||
2014
|
$
|
537,501
|
|
|
$
|
591,266
|
|
2015
|
547,651
|
|
|
604,569
|
|
||
2016
|
45,749
|
|
|
50,753
|
|
||
Total
|
$
|
1,130,901
|
|
|
$
|
1,246,588
|
|
Total consideration paid in common stock
|
$
|
11,130,983
|
|
Fair value of assets acquired:
|
|
|
|
Accounts receivable, net
|
(2,093,845
|
)
|
|
Other current assets
|
(520,342
|
)
|
|
Property and equipment
|
(2,059,729
|
)
|
|
Other assets
|
(283,911
|
)
|
|
Goodwill
|
(3,984,264
|
)
|
|
Intangible assets
|
(11,857,537
|
)
|
|
Fair value of liabilities assumed:
|
|
|
|
Accounts payable
|
3,753,613
|
|
|
Outstanding balance on credit facility
|
1,000,000
|
|
|
Accrued expenses
|
2,782,361
|
|
|
Deferred tax liability
|
4,543,000
|
|
|
Other long-term liabilities
|
709,991
|
|
|
Cash received in merger
|
$
|
3,120,320
|
|
Stock issuance costs
|
(687,678
|
)
|
|
Net cash received in merger
|
$
|
2,432,642
|
|
|
2013
|
|
2012
|
||||||||
|
$
|
|
% of Revenue
|
|
$
|
|
% of Revenue
|
||||
Partner Network
|
35,859,352
|
|
|
65.2
|
%
|
|
25,888,154
|
|
|
48.5
|
%
|
Owned and Operated Network
|
19,130,988
|
|
|
34.8
|
%
|
|
27,474,791
|
|
|
51.5
|
%
|
Total net revenue
|
54,990,340
|
|
|
100.0
|
%
|
|
53,362,945
|
|
|
100.0
|
%
|
|
2013
|
|
2012
|
||||||||
|
$
|
|
Gross Profit %
|
|
$
|
|
Gross Profit %
|
||||
Partner Network
|
8,042,677
|
|
|
22.4
|
%
|
|
4,270,728
|
|
|
16.5
|
%
|
Owned and Operated Network
|
18,162,776
|
|
|
94.9
|
%
|
|
23,456,707
|
|
|
85.4
|
%
|
Total gross profit
|
26,205,453
|
|
|
47.7
|
%
|
|
27,727,435
|
|
|
52.0
|
%
|
Payment Date
|
Principal Payment Amount
|
March 10, 2014
|
$250,000
|
April 10, 2014
|
$0
|
May 10, 2014
|
$0
|
June 10, 2014
|
$0
|
July 10, 2014
|
$90,000
|
August 10, 2014
|
$140,000
|
September 10, 2014
|
$140,000
|
October 10, 2014
|
$190,000
|
November 10, 2014
|
$190,000
|
December 10, 2014
|
$215,000
|
March 10, 2014
|
By:
|
/s/ Mayer Hoffman McCann P.C.
|
|
|
|
Mayer Hoffman McCann P.C.
|
|
|
|
Clearwater, Florida
|
|
1.
|
I have reviewed this annual report on Form 10-K of Inuvo, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
I have reviewed this annual report on Form 10-K of Inuvo, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
|
a.
|
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
|
b.
|
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
|
1.
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
|
2.
|
The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company.
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1.
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The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and
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2.
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The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company.
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