Inuvo, Inc.
|
(Exact name of registrant as specified in its charter)
|
Nevada
|
87-0450450
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification No.)
|
|
|
1111 Main St Ste 201
Conway, AR
|
72032
|
(Address of principal executive offices)
|
(Zip Code)
|
Large accelerated filer
o
|
Accelerated filer
o
|
Non-accelerated filer
o
|
Smaller reporting company
x
|
Title of Class
|
|
Shares outstanding at October 24, 2014
|
Common Stock
|
|
23,563,798
|
|
|
|
Page No.
|
Part I
|
|||
|
|||
Item 1.
|
Financial Statements.
|
|
|
|
Consolidated Balance Sheets
|
|
|
|
Consolidated Statements of Comprehensive Income
|
|
|
|
Consolidated Statements of Cash Flows
|
|
|
|
Notes to Consolidated Financial Statements
|
|
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations.
|
|
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Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk.
|
|
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Item 4.
|
Controls and Procedures.
|
|
|
|
|||
Part II
|
|||
|
|||
Item 1.
|
Legal Proceedings.
|
|
|
Item 1A.
|
Risk Factors.
|
|
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds.
|
|
|
Item 3.
|
Defaults upon Senior Securities.
|
|
|
Item 4.
|
Mine Safety and Disclosures.
|
|
|
Item 5.
|
Other Information.
|
|
|
Item 6.
|
Exhibits.
|
|
|
Signatures
|
|
•
|
history of losses;
|
•
|
material dependence on our relationships with Yahoo! and Google;
|
•
|
present and future dependence on our financing arrangements with Bridge Bank, N.A. or any future lender which are collateralized by our assets;
|
•
|
covenants and restrictions in our grant agreement with the state of Arkansas;
|
•
|
possible need to raise additional capital;
|
•
|
dependence of our Partner Network segment on relationships with distribution partners;
|
•
|
introduction of new products and services, which require significant investment;
|
•
|
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;
|
•
|
ability to acquire traffic through other search engines;
|
•
|
lack of control over content and functionality of advertisements we display from third-party networks;
|
•
|
ability to effectively compete;
|
•
|
need to keep pace with technology changes;
|
•
|
fluctuations in our quarterly earnings and the trading price of our common stock;
|
•
|
possible interruptions of services;
|
•
|
dependence on third-party providers;
|
•
|
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;
|
•
|
dependence on key personnel;
|
•
|
regulatory and legal uncertainties;
|
•
|
ability to defend our company against lawsuits;
|
•
|
failure to protect our intellectual property;
|
•
|
risks from publishers who could fabricate clicks; and
|
•
|
outstanding restricted stock grants warrants and options and potential dilutive impact to our stockholders.
|
|
2014
|
|
2013
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash
|
$
|
3,459,946
|
|
|
$
|
3,137,153
|
|
Accounts receivable, net of allowance for doubtful accounts of $87,733 and $62,845, respectively
|
5,105,414
|
|
|
3,609,825
|
|
||
Unbilled revenue
|
19,013
|
|
|
24,472
|
|
||
Prepaid expenses and other current assets
|
426,189
|
|
|
510,968
|
|
||
Total current assets
|
9,010,562
|
|
|
7,282,418
|
|
||
Property and equipment, net
|
1,031,956
|
|
|
1,188,566
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
5,760,808
|
|
|
5,760,808
|
|
||
Intangible assets, net of accumulated amortization
|
9,728,823
|
|
|
10,324,326
|
|
||
Other assets
|
229,247
|
|
|
379,513
|
|
||
Total other assets
|
15,718,878
|
|
|
16,464,647
|
|
||
Total assets
|
$
|
25,761,396
|
|
|
$
|
24,935,631
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable
|
$
|
6,642,228
|
|
|
$
|
6,235,533
|
|
Accrued expenses and other current liabilities
|
2,772,990
|
|
|
2,386,226
|
|
||
Term and credit notes payable - current portion
|
1,659,942
|
|
|
2,548,333
|
|
||
Total current liabilities
|
11,075,160
|
|
|
11,170,092
|
|
||
|
|
|
|
||||
Long-term liabilities
|
|
|
|
||||
Deferred tax liability
|
3,713,205
|
|
|
3,788,903
|
|
||
Term and credit notes payable - long term
|
2,833,333
|
|
|
3,595,300
|
|
||
Other long-term liabilities
|
775,399
|
|
|
1,039,470
|
|
||
Total long-term liabilities
|
7,321,937
|
|
|
8,423,673
|
|
||
|
|
|
|
||||
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 23,940,325
and 23,763,307, respectively; outstanding shares
23,563,798 and 23,386,780, respectively
|
23,939
|
|
|
23,763
|
|
||
Additional paid-in capital
|
128,470,661
|
|
|
127,908,328
|
|
||
Accumulated deficit
|
(119,733,742
|
)
|
|
(121,193,666
|
)
|
||
Treasury stock, at cost - 376,527 shares
|
(1,396,559
|
)
|
|
(1,396,559
|
)
|
||
Total stockholders' equity
|
7,364,299
|
|
|
5,341,866
|
|
||
Total liabilities and stockholders' equity
|
$
|
25,761,396
|
|
|
$
|
24,935,631
|
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||
|
2014
|
|
2013
|
|
2014
|
|
2013
|
||||||||
Net revenue
|
$
|
13,026,011
|
|
|
$
|
14,509,050
|
|
|
$
|
34,089,761
|
|
|
$
|
43,559,257
|
|
Cost of revenue
|
5,910,719
|
|
|
8,183,064
|
|
|
14,253,649
|
|
|
22,628,243
|
|
||||
Gross profit
|
7,115,292
|
|
|
6,325,986
|
|
|
19,836,112
|
|
|
20,931,014
|
|
||||
Operating expenses
|
|
|
|
|
|
|
|
||||||||
Marketing costs
|
4,277,446
|
|
|
2,939,584
|
|
|
11,555,731
|
|
|
10,625,638
|
|
||||
Compensation
|
1,192,227
|
|
|
1,412,842
|
|
|
3,431,237
|
|
|
4,727,936
|
|
||||
Selling, general and administrative
|
1,180,940
|
|
|
1,360,610
|
|
|
3,245,904
|
|
|
5,270,986
|
|
||||
Total operating expenses
|
6,650,613
|
|
|
5,713,036
|
|
|
18,232,872
|
|
|
20,624,560
|
|
||||
Operating income
|
464,679
|
|
|
612,950
|
|
|
1,603,240
|
|
|
306,454
|
|
||||
Other expense, net
|
|
|
|
|
|
|
|
||||||||
Interest expense, net
|
(84,870
|
)
|
|
(98,451
|
)
|
|
(285,973
|
)
|
|
(271,448
|
)
|
||||
Other expense, net
|
(84,870
|
)
|
|
(98,451
|
)
|
|
(285,973
|
)
|
|
(271,448
|
)
|
||||
Income from continuing operations before taxes
|
379,809
|
|
|
514,499
|
|
|
1,317,267
|
|
|
35,006
|
|
||||
Income tax benefit
|
—
|
|
|
75,699
|
|
|
75,698
|
|
|
237,946
|
|
||||
Net income from continuing operations
|
379,809
|
|
|
590,198
|
|
|
1,392,965
|
|
|
272,952
|
|
||||
Net income from discontinued operations
|
23,065
|
|
|
49,601
|
|
|
66,959
|
|
|
457,709
|
|
||||
Net income
|
402,874
|
|
|
639,799
|
|
|
1,459,924
|
|
|
730,661
|
|
||||
Foreign currency valuation
|
$
|
—
|
|
|
$
|
(294
|
)
|
|
$
|
—
|
|
|
$
|
(418
|
)
|
Total comprehensive income
|
$
|
402,874
|
|
|
$
|
639,505
|
|
|
$
|
1,459,924
|
|
|
$
|
730,243
|
|
|
|
|
|
|
|
|
|
||||||||
Per common share data
|
|
|
|
|
|
|
|
||||||||
Basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Net income from continuing operations
|
$
|
0.02
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
$
|
0.01
|
|
Net income from discontinued operations
|
—
|
|
|
—
|
|
|
—
|
|
|
0.02
|
|
||||
Net income
|
$
|
0.02
|
|
|
$
|
0.03
|
|
|
$
|
0.06
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Weighted average shares
|
|
|
|
|
|
|
|
||||||||
Basic
|
23,445,771
|
|
|
23,291,468
|
|
|
23,485,052
|
|
|
23,278,003
|
|
||||
Diluted
|
24,143,194
|
|
|
23,447,301
|
|
|
23,855,148
|
|
|
23,329,551
|
|
|
For the Nine Months Ended September 30,
|
||||||
|
2014
|
|
2013
|
||||
Operating activities:
|
|
|
|
||||
Net income
|
$
|
1,459,924
|
|
|
$
|
730,661
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
1,320,734
|
|
|
2,563,887
|
|
||
Deferred income taxes
|
(75,698
|
)
|
|
(234,400
|
)
|
||
Amortization of financing fees
|
19,330
|
|
|
27,083
|
|
||
Adjustment of European liabilities related to discontinued operations
|
(93,013
|
)
|
|
(370,980
|
)
|
||
Provision of doubtful accounts
|
24,888
|
|
|
(44,882
|
)
|
||
Stock based compensation
|
658,800
|
|
|
539,766
|
|
||
Other, net
|
(96,291
|
)
|
|
—
|
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable and unbilled revenue
|
(1,515,018
|
)
|
|
1,155,254
|
|
||
Prepaid expenses and other assets
|
171,819
|
|
|
(216,538
|
)
|
||
Accounts payable
|
499,708
|
|
|
(2,500,619
|
)
|
||
Accrued expenses and other liabilities
|
255,626
|
|
|
240,943
|
|
||
Other, net
|
—
|
|
|
2,827
|
|
||
Net cash provided by operating activities
|
2,630,809
|
|
|
1,893,002
|
|
||
Investing activities:
|
|
|
|
||||
Purchases of equipment and capitalized development costs
|
(656,441
|
)
|
|
(878,466
|
)
|
||
Grant funds received for equipment and office construction
|
—
|
|
|
360,812
|
|
||
Net cash used in investing activities
|
(656,441
|
)
|
|
(517,654
|
)
|
||
Financing activities:
|
|
|
|
||||
Deposit to collateralize letter of credit
|
—
|
|
|
301,158
|
|
||
Prepaid financing fees and other
|
43,896
|
|
|
37,600
|
|
||
Proceeds from revolving line of credit
|
1,700,000
|
|
|
4,775,000
|
|
||
Payments on revolving line of credit
|
(2,934,002
|
)
|
|
(5,200,000
|
)
|
||
Proceeds from term note payable
|
2,000,000
|
|
|
—
|
|
||
Payments on term note payable and capital leases
|
(2,461,469
|
)
|
|
(1,033,835
|
)
|
||
Net cash used in financing activities
|
(1,651,575
|
)
|
|
(1,120,077
|
)
|
||
Effect of exchange rate changes
|
—
|
|
|
(418
|
)
|
||
Net change – cash
|
322,793
|
|
|
254,853
|
|
||
Cash, beginning of year
|
3,137,153
|
|
|
3,381,018
|
|
||
Cash, end of period
|
$
|
3,459,946
|
|
|
$
|
3,635,871
|
|
Supplemental information:
|
|
|
|
||||
Interest paid
|
$
|
237,365
|
|
|
$
|
253,767
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||
Furniture and fixtures
|
$
|
67,341
|
|
|
$
|
67,341
|
|
Equipment
|
2,576,329
|
|
|
2,547,686
|
|
||
Software
|
8,648,216
|
|
|
8,020,982
|
|
||
Leasehold improvements
|
66,903
|
|
|
66,903
|
|
||
Subtotal
|
11,358,789
|
|
|
10,702,912
|
|
||
Less: accumulated depreciation and amortization
|
(10,326,833
|
)
|
|
(9,514,346
|
)
|
||
Total
|
$
|
1,031,956
|
|
|
$
|
1,188,566
|
|
|
Term
|
|
Carrying
Value
|
|
Accumulated Amortization and Impairment
|
|
Net Carrying Value
|
|
Year-to-date Amortization
|
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
Customer list, Google
|
20 years
|
|
$
|
8,820,000
|
|
|
$
|
(1,139,250
|
)
|
|
$
|
7,680,750
|
|
|
$
|
330,750
|
|
Customer list, all other
|
10 years
|
|
1,610,000
|
|
|
(415,927
|
)
|
|
1,194,073
|
|
|
120,753
|
|
||||
Trade names, ALOT (1)
|
5 years
|
|
960,000
|
|
|
(496,000
|
)
|
|
464,000
|
|
|
144,000
|
|
||||
Trade names, web properties (1)
|
-
|
|
390,000
|
|
|
—
|
|
|
390,000
|
|
|
—
|
|
||||
Intangible assets classified as long-term
|
|
|
$
|
11,780,000
|
|
|
$
|
(2,051,177
|
)
|
|
$
|
9,728,823
|
|
|
$
|
595,503
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
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
|
|
|
$
|
—
|
|
(1)
|
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
|
$
|
198,501
|
|
2015
|
794,004
|
|
|
2016
|
794,004
|
|
|
2017
|
634,004
|
|
|
2018
|
602,004
|
|
|
Thereafter
|
6,316,306
|
|
|
Total
|
$
|
9,338,823
|
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||
Term note payable - 4.25 percent at September 30, 2014 (prime plus 1 percent), due September 10, 2017.
|
|
$
|
2,000,000
|
|
|
$
|
2,888,888
|
|
Revolving credit line - 3.75 percent at September 30, 2014 (prime plus .5 percent), due September 29, 2016.
|
|
2,493,275
|
|
|
3,254,745
|
|
||
Total
|
|
4,493,275
|
|
|
6,143,633
|
|
||
Less: current portion
|
|
(1,659,942
|
)
|
|
(2,548,333
|
)
|
||
Term note payable and revolving credit line - long term portion
|
|
$
|
2,833,333
|
|
|
$
|
3,595,300
|
|
2014
|
$
|
166,667
|
|
2015
|
666,667
|
|
|
2016
|
666,667
|
|
|
2017
|
499,999
|
|
|
Total
|
$
|
2,000,000
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||
Accrued marketing costs
|
$
|
1,501,992
|
|
|
$
|
1,198,152
|
|
Accrued expenses and other
|
423,616
|
|
|
519,859
|
|
||
Loss contingency
|
308,000
|
|
|
263,238
|
|
||
Accrued sales reserve
|
295,503
|
|
|
—
|
|
||
Deferred Arkansas grant, current portion
|
169,376
|
|
|
242,225
|
|
||
Capital leases, current portion
|
36,916
|
|
|
51,205
|
|
||
Accrued taxes
|
31,968
|
|
|
25,765
|
|
||
Accrued payroll and commission liabilities
|
5,619
|
|
|
85,782
|
|
||
Total
|
$
|
2,772,990
|
|
|
$
|
2,386,226
|
|
|
September 30, 2014
|
|
December 31, 2013
|
||||
Taxes payable
|
$
|
506,453
|
|
|
$
|
506,453
|
|
Deferred Arkansas grant, less current portion
|
164,024
|
|
|
360,576
|
|
||
Deferred rent
|
83,524
|
|
|
120,218
|
|
||
Capital leases, less current portion
|
21,398
|
|
|
52,223
|
|
||
Total
|
$
|
775,399
|
|
|
$
|
1,039,470
|
|
|
Options Outstanding
|
|
RSUs Outstanding
|
|
Options and RSUs Exercised
|
|
Available Shares
|
|
Total
|
|||||
2010 ECP
|
250,498
|
|
|
907,874
|
|
|
1,108,353
|
|
|
1,419,220
|
|
|
3,685,945
|
|
2005 LTIP
|
33,748
|
|
|
407,721
|
|
|
542,364
|
|
|
16,167
|
|
|
1,000,000
|
|
Total
|
284,246
|
|
|
1,315,595
|
|
|
1,650,717
|
|
|
1,435,387
|
|
|
4,685,945
|
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
||||||||
|
|
September 30, 2014
|
|
September 30, 2013
|
|
September 30, 2014
|
|
September 30, 2013
|
||||
Weighted average shares outstanding for basic EPS
|
|
23,445,771
|
|
|
23,291,468
|
|
|
23,485,052
|
|
|
23,278,003
|
|
Effect of dilutive securities
|
|
|
|
|
|
|
|
|
||||
Options
|
|
4,876
|
|
|
8,090
|
|
|
4,408
|
|
|
6,486
|
|
Restricted stock units
|
|
679,932
|
|
|
140,259
|
|
|
357,040
|
|
|
44,738
|
|
Warrants
|
|
12,615
|
|
|
7,484
|
|
|
8,649
|
|
|
324
|
|
Weighted average shares outstanding for diluted EPS
|
|
24,143,194
|
|
|
23,447,301
|
|
|
23,855,148
|
|
|
23,329,551
|
|
|
Lease Payments
|
|
Sublease income
|
||||
2014
|
$
|
134,449
|
|
|
$
|
148,909
|
|
2015
|
552,451
|
|
|
604,569
|
|
||
2016
|
46,788
|
|
|
50,753
|
|
||
Total
|
$
|
733,688
|
|
|
$
|
804,231
|
|
|
For the Three Months Ended
|
|
For the Nine Months Ended
|
||||||||||||||||||||||
|
September 30, 2014
|
|
September 30, 2013
|
|
September 30, 2014
|
|
September 30, 2013
|
||||||||||||||||||
|
$
|
|
% of Revenue
|
|
$
|
|
% of Revenue
|
|
$
|
|
% of Revenue
|
|
$
|
|
% of Revenue
|
||||||||||
Partner Network
|
7,089,584
|
|
|
54.4
|
%
|
|
10,807,377
|
|
|
74.5
|
%
|
|
$
|
18,110,706
|
|
|
53.1
|
%
|
|
$
|
28,232,281
|
|
|
64.8
|
%
|
Owned and Operated Network
|
5,936,427
|
|
|
45.6
|
%
|
|
3,701,673
|
|
|
25.5
|
%
|
|
$
|
15,979,055
|
|
|
46.9
|
%
|
|
$
|
15,326,976
|
|
|
35.2
|
%
|
Total net revenue
|
13,026,011
|
|
|
100.0
|
%
|
|
14,509,050
|
|
|
100.0
|
%
|
|
$
|
34,089,761
|
|
|
100.0
|
%
|
|
$
|
43,559,257
|
|
|
100.0
|
%
|
|
$
|
|
Gross Profit %
|
|
$
|
|
Gross Profit %
|
|
$
|
|
Gross Profit %
|
|
$
|
|
Gross Profit %
|
||||||||
Partner Network
|
1,207,382
|
|
|
17.0
|
%
|
|
2,793,999
|
|
|
25.9
|
%
|
|
4,024,984
|
|
|
22.2
|
%
|
|
6,456,050
|
|
|
22.9
|
%
|
Owned and Operated Network
|
5,907,910
|
|
|
99.5
|
%
|
|
3,531,987
|
|
|
95.4
|
%
|
|
15,811,128
|
|
|
98.9
|
%
|
|
14,474,964
|
|
|
94.4
|
%
|
Total gross profit
|
7,115,292
|
|
|
54.6
|
%
|
|
6,325,986
|
|
|
43.6
|
%
|
|
19,836,112
|
|
|
58.2
|
%
|
|
20,931,014
|
|
|
48.1
|
%
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||||||||||||||||
|
2014
|
|
2013
|
|
Change
|
|
% Change
|
|
2014
|
|
2013
|
|
Change
|
|
% Change
|
||||||||||||||
Partner Network
|
$
|
7,089,584
|
|
|
$
|
10,807,377
|
|
|
$
|
(3,717,793
|
)
|
|
(34.4
|
%)
|
|
$
|
18,110,706
|
|
|
$
|
28,232,281
|
|
|
$
|
(10,121,575
|
)
|
|
(35.9
|
%)
|
Owned and Operated Network
|
5,936,427
|
|
|
3,701,673
|
|
|
2,234,754
|
|
|
60.4
|
%
|
|
15,979,055
|
|
|
15,326,976
|
|
|
$
|
652,079
|
|
|
4.3
|
%
|
|||||
Net Revenue
|
$
|
13,026,011
|
|
|
$
|
14,509,050
|
|
|
$
|
(1,483,039
|
)
|
|
(10.2
|
%)
|
|
$
|
34,089,761
|
|
|
$
|
43,559,257
|
|
|
$
|
(9,469,496
|
)
|
|
(21.7
|
%)
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||||||||||||||||
|
2014
|
|
2013
|
|
Change
|
|
% Change
|
|
2014
|
|
2013
|
|
Change
|
|
% Change
|
||||||||||||||
Partner Network
|
$
|
5,882,202
|
|
|
$
|
8,013,378
|
|
|
$
|
(2,131,176
|
)
|
|
(26.6
|
%)
|
|
$
|
14,085,722
|
|
|
$
|
21,776,231
|
|
|
$
|
(7,690,509
|
)
|
|
(35.3
|
%)
|
Owned and Operated Network
|
28,517
|
|
|
169,686
|
|
|
(141,169
|
)
|
|
(83.2
|
%)
|
|
167,927
|
|
|
852,012
|
|
|
$
|
(684,085
|
)
|
|
(80.3
|
%)
|
|||||
Cost of revenue
|
$
|
5,910,719
|
|
|
$
|
8,183,064
|
|
|
$
|
(2,272,345
|
)
|
|
(27.8
|
%)
|
|
$
|
14,253,649
|
|
|
$
|
22,628,243
|
|
|
$
|
(8,374,594
|
)
|
|
(37.0
|
%)
|
|
For the Three Months Ended September 30,
|
|
For the Nine Months Ended September 30,
|
||||||||||||||||||||||||||
|
2014
|
|
2013
|
|
Change
|
|
% Change
|
|
2014
|
|
2013
|
|
Change
|
|
% Change
|
||||||||||||||
Marketing costs
|
$
|
4,277,446
|
|
|
$
|
2,939,584
|
|
|
$
|
1,337,862
|
|
|
45.5
|
%
|
|
$
|
11,555,731
|
|
|
$
|
10,625,638
|
|
|
$
|
930,093
|
|
|
8.8
|
%
|
Compensation
|
1,192,227
|
|
|
1,412,842
|
|
|
(220,615
|
)
|
|
(15.6
|
%)
|
|
3,431,237
|
|
|
4,727,936
|
|
|
(1,296,699
|
)
|
|
(27.4
|
%)
|
||||||
Selling, general and administrative
|
1,180,940
|
|
|
1,360,610
|
|
|
(179,670
|
)
|
|
(13.2
|
%)
|
|
3,245,904
|
|
|
5,270,986
|
|
|
(2,025,082
|
)
|
|
(38.4
|
%)
|
||||||
Operating expenses
|
$
|
6,650,613
|
|
|
$
|
5,713,036
|
|
|
$
|
937,577
|
|
|
16.4
|
%
|
|
$
|
18,232,872
|
|
|
$
|
20,624,560
|
|
|
$
|
(2,391,688
|
)
|
|
(11.6
|
%)
|
•
|
pay fees to the lender associated with the credit facility;
|
•
|
meet prescribed financial covenants;
|
•
|
maintain our corporate existence in good standing;
|
•
|
grant the lender a security interest in our assets;
|
•
|
provide financial information to the lender; and
|
•
|
refrain from any transfer of any of our business or property, subject to customary exceptions.
|
Exhibit No.
|
|
Description of Exhibit
|
10.1
|
|
Business Financing Modification Agreement, dated September 29, 2014 with Bridge Bank N.A.
|
10.2
|
|
Bridge Bank BFA Modification, dated October 9, 2014
|
31.1
|
|
Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer *
|
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 *
|
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.
|
|
|
|
|
|
|
October 30, 2014
|
By:
|
/s/ Richard K. Howe
|
|
|
|
Richard K. Howe,
|
|
|
|
Chief Executive Officer, principal executive officer
|
|
|
|
|
|
October 30, 2014
|
By:
|
/s/
Wallace D. Ruiz
|
|
|
|
Wallace D. Ruiz,
|
|
|
|
Chief Financial Officer, principal financial officer
|
|
4.
|
DESCRIPTION OF CHANGE IN TERMS
.
|
A.
|
Modifications to Business Financing Agreement
:
|
2.
|
DE
SCRIPTION
OF
CHANGE IN TERMS
.
|
A.
|
Modification(s)
to
Busine
ss
Financing Agreement:
|
i)
|
Section 4.15
of t
h
e
Bus
i
nes
s
Financing Agreement is
hereby
amended and
r
estated
in
it
s e
ntirety
to read a
s
follows:
|
ii)
|
The following
defi
n
ed
term
se
t
fo
r
th in Sect
i
o
n 1
2.
1
of the Business F
i
nancing Agreeme
nt
|
4.
|
INTENTIONALLY OMITTED
.
|
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.
|
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.
|