þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
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.)
|
143 Varick Street, New York, NY
|
10013
|
|
(Address of principal executive offices)
|
(Zip Code)
|
(212) 231-2000
|
(Registrant's telephone number, including area code)
|
N/A
|
(Former name, former address and former fiscal year, if changed since last report)
|
Large accelerated filer
|
o
|
Accelerated filer
|
o
|
Non-accelerated filer
|
o
|
Smaller reporting company
|
þ
|
Title of Class
|
Shares Outstanding at May 11, 2012
|
|
Common Stock
|
23,482,122
|
Page No.
|
|||||
PART I. - FINANCIAL INFORMATION
|
|||||
Item 1.
|
Financial Statements
|
4
|
|||
Consolidated Balance Sheets at March 31, 2012 (Unaudited) and December 31, 2011
|
4
|
||||
Consolidated Statements of Comprehensive Loss for the Three Months Ended March 31, 2012 and 2011 (Unaudited)
|
5
|
||||
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011 (Unaudited)
|
6
|
||||
Notes to Consolidated Financial Statements (“Unaudited”)
|
7
|
||||
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operations
|
22
|
|||
Item 3.
|
Quantitative and Qualitative Disclosures About Market Risk
|
30
|
|||
Item 4
|
Controls and Procedures
|
30
|
|||
PART II - OTHER INFORMATION
|
|||||
Item 1.
|
Legal Proceedings
|
31
|
|||
Item 1A.
|
Risk Factors
|
33
|
|||
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
33
|
|||
Item 3.
|
Defaults Upon Senior Securities
|
33
|
|||
Item 4.
|
Mine Safety Disclosures
|
33
|
|||
Item 5.
|
Other Information
|
33
|
|||
Item 6.
|
Exhibits
|
34
|
●
|
Revenue;
|
●
|
Primary operating costs and expenses;
|
●
|
Capital expenditures;
|
●
|
Operating lease arrangements; and
|
●
|
Evaluation of possible acquisitions of or investments in business, products, and technologies.
|
2012
|
2011
|
|||||||
Net revenue
|
$
|
8,767,149
|
$
|
11,793,495
|
||||
Cost of revenue:
|
||||||||
Affiliate expenses
|
4,505,699
|
5,741,766
|
||||||
Data acquisition
|
779,975
|
621,764
|
||||||
Merchant processing fees and product costs
|
62,077
|
7,936
|
||||||
Cost of revenue
|
5,347,751
|
6,371,466
|
||||||
Gross profit
|
3,419,398
|
5,422,029
|
||||||
Operating expenses:
|
||||||||
Search costs
|
1,843,057
|
2,493,479
|
||||||
Compensation and telemarketing
|
1,296,565
|
2,672,277
|
||||||
Selling, general and administrative
|
1,985,463
|
1,435,166
|
||||||
Total operating expenses
|
5,125,085
|
6,600,922
|
||||||
Operating loss
|
(1,705,687
|
)
|
(1,178,893
|
)
|
||||
Other income (expenses):
|
||||||||
Litigation settlements
|
-
|
(374,800
|
)
|
|||||
Interest expense, net
|
(166,701
|
)
|
(96,669
|
)
|
||||
Other expenses, net
|
(166,701
|
)
|
(471,469
|
)
|
||||
Loss from continuing operations before taxes
|
(1,872,388
|
)
|
(1,650,362
|
)
|
||||
Income tax expense
|
-
|
-
|
||||||
Net loss from continuing operations
|
(1,872,388
|
)
|
(1,650,362
|
)
|
||||
Net (loss) income from discontinued operations
|
(1,709
|
)
|
257,136
|
|||||
Net loss
|
$
|
(1,874,097
|
)
|
$
|
(1,393,226
|
)
|
||
Other comprehensive income:
|
||||||||
Foreign currency revaluation
|
$
|
5,156
|
$
|
-
|
||||
Total comprehensive loss
|
$
|
(1,868,941
|
)
|
$
|
(1,393,226)
|
|||
Per common share data:
|
||||||||
Basic and diluted:
|
||||||||
Net loss from continuing operations
|
$
|
(0.13
|
)
|
$
|
(0.19
|
)
|
||
Net income from discontinued operations
|
(0.00
|
)
|
0.03
|
|||||
Net loss
|
$
|
(0.13
|
)
|
$
|
(0.16
|
)
|
||
Weighted average shares
(Basic and diluted)
|
14,431,201
|
8,558,790
|
2012
|
2011
|
|||||||
Operating activities:
|
||||||||
Net loss
|
$
|
(1,874,097
|
)
|
$
|
(1,393,226
|
)
|
||
Adjustments to reconcile net loss to net cash provided by operating activities:
|
||||||||
Depreciation and amortization
|
1,286,052
|
1,144,107
|
||||||
Gain on litigation settlement – discontinued operations
|
-
|
(256,424
|
)
|
|||||
Litigation settlements in common stock
|
-
|
249,800
|
||||||
Deferred compensation
|
-
|
372,100
|
||||||
Stock based compensation
|
195,419
|
175,437
|
||||||
Change in operating assets and liabilities:
|
||||||||
Restricted cash
|
(176
|
)
|
(340,478
|
)
|
||||
Accounts receivable
|
2,220,953
|
(336,040
|
)
|
|||||
Prepaid expenses and other assets
|
215,619
|
97,742
|
||||||
Accounts payable
|
141,161
|
319,004
|
||||||
Deferred revenue
|
(833
|
)
|
(15,138
|
)
|
||||
Other accrued expenses and current liabilities
|
(1,309,141
|
)
|
321,588
|
|||||
Net cash provided by operating activities from continuing operations
|
874,957
|
338,472
|
||||||
Net cash used in operating activities of discontinued operations
|
(60,000
|
)
|
-
|
|||||
Net cash provided by operating activities
|
814,957
|
338,472
|
||||||
Investing activities:
|
||||||||
Purchases of equipment and capitalized development costs
|
(131,815
|
)
|
(47,792
|
)
|
||||
Net cash received from merger with Vertro, Inc., net of merger costs
|
2,439,3600
|
-
|
||||||
Purchase of names database and bundled downloads
|
(707,400
|
)
|
(917,227
|
)
|
||||
Net cash provided by (used in) investing activities
|
1,600,145
|
(965,019
|
)
|
|||||
Financing activities:
|
||||||||
Advances from term note payable
|
5,000,000
|
-
|
||||||
Deposit to collateralize letter of credit
|
(475,000
|
)
|
(475,000
|
)
|
||||
Advances from credit note payable
|
-
|
6,302,744
|
||||||
Payments on credit note payable and capital leases
|
(3,459,246
|
)
|
(3,507,617
|
)
|
||||
Net cash provided by financing activities
|
1,065,754
|
2,320,127
|
||||||
Accumulated other comprehensive income
|
5,156
|
-
|
||||||
Net change – cash
|
3,486,012
|
1,693,580
|
||||||
Cash, beginning of period
|
4,413
|
118,561
|
||||||
Cash, end of period
|
$
|
3,490,425
|
$
|
1,812,141
|
||||
Supplemental information:
|
||||||||
Interest paid
|
$
|
66,386
|
$
|
185,208
|
||||
Non-cash investing activities:
|
||||||||
Issuance of stock as settlement of deferred compensation
|
$
|
915,750
|
$
|
-
|
●
|
diversified revenue streams which should mitigate our dependence on one major customer;
|
|
●
|
an existing install and distribution capability through Vertro’s ALOT toolbar applications for our consumer facing innovations;
|
●
|
a stronger business from which to access both debt and capital markets to support growth;
|
|
●
|
the combination of two experienced digital marketing teams; and
|
●
|
the combination will eliminate approximately $2.9 million in overlapping annual operating and public company expenses.
|
●
|
The ValidClick® service at
www.validclick.com.
ValidClick is a fraud filtering, pay-per-click marketplace where publishers can integrate dynamically-generated advertisements within their websites based on the demographics and natural search behaviors of the consumer. ValidClick provides publishers with access to tens of thousands of advertisers in an easy-to-use XML-based implementation, giving the publisher greater control over content and integration than other competitive offerings.
|
●
|
The LocalXML service at
www.localxml.com
. LocalXML is a service which allows publishers to make real-time calls to the LocalXML database. These calls answer the simple questions “what” and “where.” For example, “what” equals “steaks” and “where” equals “Tampa,” from which the LocalXML database returns a complete listing of all local businesses in Tampa that meet this criteria. Publishers may customize how the data appears on their site, and include user reviews of the businesses searched. The LocalXML service is designed to be bundled with the ValidClick service described above.
|
●
|
The Yellowise.com™ directory search web site at
www.yellowise.com
and the recently launched Local.ALOT.com web sites are included in the Publisher Network segment as well. Yellowise.com is a local search and review site powered by the LocalXML service. Users may search by category and location, and receive requested search results. Users may also post reviews of their favorite and not-so-favorite businesses making the reviews available to all other users of the site. Yellowise.com is the in-market website we use to ensure the LocalXML service performs in accordance with market needs.
|
●
|
The Kowabunga consumer daily deals website at www.kowabunga.com. Kowabunga is a daily deal program focused on rural America, a market Inuvo believes is underserved by market leaders. Inuvo has access to millions of consumers through its search marketing operations that are potential customers for a local deal of the day.
Inuvo is partnering with a national direct marketer, which currently markets offers from thousands of merchants in rural America.
Inuvo has developed the infrastructure to present daily local offers from the inventory of its partner to the consumers from the Inuvo Platform. Inuvo believes that the potential reach of this program is to approximately 20 million households in 25 states, with a potential for 90% household penetration, 2,500 national and local retail advertisers. Kowabunga was launched in the third quarter of 2011.
|
●
|
The BargainMatch consumer product comparison-shopping and shopping rewards website at www.BargainMatch.com. BargainMatch is also a service which allows publishers to offer their visitors an online shopping experienced branded around their site with rewards to consumers coming in the form of cash back on every online purchase made through the publisher. The service has been designed and positioned as a consumer loyalty solution. The product line also includes a consumer facing application which can be downloaded at
www.bargainmatch.com/installnow
.
|
●
|
The MyAP® Affiliate Platform at
www.MyAP.com.
MyAP is a complete affiliate tracking and management software solution providing advertisers the ability to sign up, manage and track the activities of their publishers through a reliable, easy-to-use, and privately-branded platform with full data transparency. Where the Inuvo Platform is an open platform where many advertisers and publishers interact, the MyAP platform is designed specifically to allow merchants to build private affiliate networks. Each advertising customer of MyAP is supported by a unique implementation of the software, customized to suit their individual needs and populated by publishers who use the platform exclusively for that advertiser. Today, MyAP supports hundreds of customers.
|
●
|
ALOT Display comprises various display advertising opportunities throughout the ALOT product platform, including our
www.alothome.com
default home page, hundreds of Apps in our ALOT Appbar, and other ALOT-branded websites.
|
March 31,
2012
|
December 31,
2011
|
|||||||
(unaudited)
|
||||||||
Furniture and fixtures
|
$
|
427,121
|
$
|
427,121
|
||||
Equipment
|
2,233,795
|
2,005,505
|
||||||
Software
|
7,399,680
|
5,469,804
|
||||||
Leasehold improvements
|
343,795
|
310,416
|
||||||
Subtotal
|
10,404,391
|
8,212,846
|
||||||
Less: accumulated depreciation and amortization
|
(7,065,141
|
)
|
(6,622,835
|
)
|
||||
Total
|
$
|
3,339,250
|
$
|
1,590,011
|
Description
|
Term
|
Carrying Value
|
Accumulated
Amortization
|
Net Carrying
Value
|
||||||||||
Names database
(1)
|
9 months
|
$
|
15,414,068
|
$
|
(14,624,842
|
)
|
$
|
789,226
|
||||||
Customer list
|
20 years
|
8,820,000
|
(36,750
|
)
|
8,783,250
|
|||||||||
Customer list
|
10 years
|
1,610,000
|
(13,416)
|
1,596,584
|
||||||||||
Bundled downloads
(1)
|
4.5 months
|
714,848
|
(268,836)
|
446,012
|
||||||||||
Exclusivity and non-compete agreements
|
1 year
|
270,000
|
(160,000
|
)
|
110,000
|
|||||||||
Tradenames
(2)
|
5 years
|
960,000
|
(16,000)
|
944,000
|
||||||||||
Tradenames
|
-
|
390,000
|
-
|
390,000
|
||||||||||
Total intangible assets
|
$
|
28,178,916
|
$
|
(15,119,844
|
)
|
$
|
13,059,072
|
|||||||
Goodwill
|
$
|
6,062,750
|
$
|
-
|
$
|
6,062,750
|
(1)
|
Amortization of our Names Database for the three months ended March 31, 2012 and 2011 was approximately $499,000 and $572,000, respectively. Amortization of our bundled downloads for the three months ended March 31, 2012 was approximately $269,000. Intangible assets with an amortization term of less than one year are shown in the current assets section of the consolidated balance sheets.
|
|
(2)
|
The carrying value of the Tradenames acquired in the merger with Vertro.
|
2012
|
$
|
1,920,738
|
||
2013
|
814,000
|
|||
2014
|
794,000
|
|||
2015
|
794,000
|
|||
2016
|
794,000
|
|||
Thereafter
|
7,552,334,334
|
|||
Total
|
$
|
12,669,072
|
March 31,
2012
|
December 31,
2011
|
|||||||
(unaudited)
|
||||||||
Accrued expenses
|
$
|
739,267
|
$
|
1,401,521
|
||||
Accrued search costs
|
1,678,132
|
109,706
|
||||||
Accrued affiliate expenses
|
167,345
|
16,570
|
||||||
Taxes
|
259,881
|
-
|
||||||
Accrued payroll and bonus liabilities
|
244,684
|
8,370
|
||||||
Capital leases – current portion
|
42,993
|
57,581
|
||||||
Total
|
$
|
3,132,302
|
$
|
1,593,748
|
March 31,
2012
|
December 31,
2011
|
|||||||
(unaudited)
|
||||||||
Deferred rent
|
$
|
385,471
|
$
|
283,469
|
||||
Taxes payable
|
506,453
|
-
|
||||||
Long-term deposits
|
32,738
|
-
|
||||||
Capital leases – less current portion
|
3,300
|
16,655
|
||||||
Total
|
$
|
927,962
|
$
|
300,124
|
Lender
|
Due Date
|
Interest Rate
|
March 31,
2012
(unaudited)
|
December 31,
2011
|
||||||||
Bridge Bank – term note; paid in full on March 1, 2012
|
February 2013
|
Prime + 2 percentage points
|
$
|
-
|
$
|
475,000
|
||||||
Bridge Bank – term note
|
February 2016
|
Prime + 1 percentage points
|
5,000,000
|
|||||||||
Bridge Bank – credit facility; paid in full on March 1, 2012
|
February 2014
|
Prime + 2 percentage points
|
-
|
2,431,303
|
||||||||
Totals
|
5,000,000
|
2,906,303
|
||||||||||
Less: term and credit facility payable – current portion
|
(1,111,000
|
)
|
(452,000
|
)
|
||||||||
Term and credit facility – long-term
|
$
|
3,889,000
|
$
|
2,454,303
|
2012
|
$
|
777,778
|
||
2013
|
1,333,333
|
|||
2014
|
1,333,333
|
|||
2015
|
1,333,333
|
|||
2016
|
222,223
|
|||
Total
|
$
|
5,000,000
|
Stock Options Outstanding
|
RSA's Outstanding
|
Options and RSA’s
Exercised
|
Available Shares
|
Total
|
|||||||||||
2010 ECP
|
621,124
|
6,787
|
891,478
|
1,866,556
|
3,385,945
|
||||||||||
2005 LTIP
|
649,675
|
75,000
|
172,193
|
103,132
|
1,000,000
|
||||||||||
Total
|
1,270,799
|
81,787
|
1,063,671
|
1,969,688
|
4,385,945
|
2012
|
2011
|
|||||||||||||||
Options
|
Weighted Average Exercise Price
|
Options
|
Weighted Average Exercise Price
|
|||||||||||||
Outstanding, beginning of period
|
1,358,717
|
$
|
2.81
|
1,223,159
|
$
|
3.74
|
||||||||||
Granted
|
-
|
$
|
-
|
300,000
|
$
|
2.93
|
||||||||||
Forfeited or expired
|
(87,918
|
)
|
$
|
2.54
|
(55,005
|
)
|
$
|
5.31
|
||||||||
Exercised
|
-
|
$
|
-
|
-
|
$
|
-
|
||||||||||
Outstanding, end of period
|
1,270,799
|
$
|
2.83
|
1,468,154
|
$
|
3.32
|
||||||||||
Exercisable, end of period
|
721,955
|
$
|
3.02
|
405,088
|
$
|
4.70
|
2012
|
2011
|
|||||||
Expected life in years
|
-
|
4.2
|
||||||
Volatility
|
-
|
176.3
|
%
|
|||||
Risk free interest rate
|
-
|
2.7
|
%
|
|||||
Dividend yield
|
-
|
0.0
|
%
|
Three Months Ended
|
||||||||
2012
|
2011
|
|||||||
Revenue
|
$
|
-
|
$
|
-
|
||||
(Loss) income from discontinued operations before sale
|
(1,709)
|
257,136
|
||||||
(Loss) income from discontinued operations
|
$
|
(1,709)
|
$
|
257,136
|
Three Months Ended March 31
|
||||||||||||||||
2012
|
2011
|
|||||||||||||||
Segment:
|
Amount
|
Percent
|
Amount
|
Percent
|
||||||||||||
Publisher Network
|
$
|
5,624,956
|
64.2
|
%
|
$
|
9,850,062
|
83.5
|
%
|
||||||||
Software Search
|
1,767,340
|
20.2
|
%
|
-
|
-
|
|||||||||||
Partner Programs
|
1,374,853
|
15.6
|
%
|
1,943,433
|
16.5
|
%
|
||||||||||
Total Revenue
|
$
|
8,767,149
|
100.0
|
%
|
$
|
11,793,495
|
100.0
|
%
|
Three Months Ended
March 31
|
||||||||
Segment:
|
2012
|
2011
|
||||||
Publisher Network
|
$
|
1,241,195
|
$
|
4,113,419
|
||||
Software Search
|
1,452,308
|
-
|
||||||
Partner Programs
|
725,895
|
1,308,610
|
||||||
Total
|
$
|
3,419,398
|
$
|
5,422,029
|
Three Months Ended
March 31
|
||||||||
Segment:
|
2012
|
2011
|
||||||
Publisher Network
|
$
|
904,270
|
$
|
1,487,292
|
||||
Software Search
|
50,724
|
|||||||
Partner Programs
|
1,056,492
|
627,169
|
||||||
Corporate
|
(1,799,250
|
)
|
(1,912,471
|
) | ||||
Total
|
$
|
212,236
|
$
|
201,990
|
Total consideration paid in common stock
|
$ | 11,442,196 | ||
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
|
(4,286,206 | ) | ||
Intangible assets
|
(11,857,537 | ) | ||
Fair value of liabilities assumed: | ||||
Accounts payable | 3,753,613 | |||
Line of credit | 1,000,000 | |||
Accrued expenses | 2,779,807 | |||
Deferred tax liability | 4,543,000 | |||
Other long-term liabilities | 709,991 | |||
Cash received in merger
|
$ | 3,127,037 |
●
|
The ValidClick® service at
www.validclick.com.
ValidClick is a fraud filtering, pay-per-click marketplace where publishers can integrate dynamically-generated advertisements within their websites based on the demographics and natural search behaviors of the consumer. ValidClick provides publishers with access to tens of thousands of advertisers in an easy-to-use XML-based implementation, giving the publisher greater control over content and integration than other competitive offerings.
|
●
|
The LocalXML service at
www.localxml.com
. LocalXML is a service which allows publishers to make real-time calls to the LocalXML database. These calls answer the simple questions “what” and “where.” For example, “what” equals “steaks” and “where” equals “Tampa,” from which the LocalXML database returns a complete listing of all local businesses in Tampa that meet this criteria. Publishers may customize how the data appears on their site, and include user reviews of the businesses searched. The LocalXML service is designed to be bundled with the ValidClick service described above.
|
●
|
The Yellowise.com™ directory search web site at
www.yellowise.com
and the recently launched Local.ALOT.com web sites are included in the Publisher Network segment as well. Yellowise.com is a local search and review site powered by the LocalXML service. Users may search by category and location, and receive requested search results. Users may also post reviews of their favorite and not-so-favorite businesses making the reviews available to all other users of the site. Yellowise.com is the in-market website we use to ensure the LocalXML service performs in accordance with market needs.
|
●
|
The Kowabunga consumer daily deals website at www.kowabunga.com. Kowabunga is a daily deal program focused on rural America, a market Inuvo believes is underserved by market leaders. Inuvo has access to millions of consumers through its
search marketing operations that are potential customers for a local deal of the day.
Inuvo is partnering with a national direct marketer, which currently markets offers from thousands of merchants in rural America
. Inuvo has developed the infrastructure to present daily local offers from the inventory of its partner to the consumers from the Inuvo Platform. Inuvo believes that the potential reach of this program is to approximately 20 million households in 25 states, with a potential
for 90% household penetration, 2,500 national and local retail advertisers. Kowabunga was launched in the third quarter of 2011.
|
●
|
The BargainMatch consumer product comparison-shopping and shopping rewards website at www.BargainMatch.com. BargainMatch is also a service which allows publishers to offer their visitors an online shopping experienced branded around their site with rewards to consumers coming in the form of cash back on every online purchase made through the publisher. The service has been designed and positioned as a consumer loyalty solution. The product line also includes a consumer facing application which can be downloaded at
www.bargainmatch.com/installnow
.
|
●
|
The MyAP® Affiliate Platform at
www.MyAP.com.
MyAP is a complete affiliate tracking and management software solution providing advertisers the ability to sign up, manage and track the activities of their publishers through a reliable, easy-to-use, and privately-branded platform with full data transparency. Where the Inuvo Platform is an open platform where many advertisers and publishers interact, the MyAP platform is designed specifically to allow merchants to build private affiliate networks. Each advertising customer of MyAP is supported by a unique implementation of the software, customized to suit their individual needs and populated by publishers who use the platform exclusively for that advertiser. Today, MyAP supports hundreds of customers.
|
●
|
ALOT Display comprises various display advertising opportunities throughout the ALOT product platform, including our
www.alothome.com
default home page, hundreds of Apps in our ALOT Appbar, and other ALOT-branded websites.
|
2012
|
% of Revenue
|
2011
|
% of Revenue
|
|||||||||||||
Net revenues
|
$
|
8,767
|
100.0
|
%
|
$
|
11,793
|
100.0
|
%
|
||||||||
Cost of revenue
|
5,348
|
61.0
|
6,371
|
54.0
|
||||||||||||
Gross profit
|
3,419
|
39.0
|
5,422
|
46.0
|
||||||||||||
Total operating expenses
|
5,125
|
58.5
|
6,601
|
56.0
|
||||||||||||
Operating loss
|
(1,706
|
)
|
(19.5
|
)
|
(1,179
|
)
|
(10.0
|
)
|
||||||||
Other expenses
|
(166
|
)
|
(1.8
|
)
|
(471
|
)
|
(4.0
|
)
|
||||||||
Net loss from continuing operations
|
(1,872
|
)
|
(21.3
|
)
|
(1,650
|
)
|
(14.0
|
)
|
||||||||
Discontinued operations
|
(2
|
) |
-
|
257
|
2.2
|
|||||||||||
Net loss
|
$
|
(1,874
|
)
|
(21.3
|
)%
|
$
|
(1,393
|
)
|
(11.8
|
)%
|
Three Months Ended March 31,
|
||||||||||||||||||||||||
2012 ($)
|
% of Revenue
|
2011 ($)
|
% of Revenue
|
$ Change | % Change | |||||||||||||||||||
Publisher Network
|
5,625
|
64.2
|
%
|
9,850
|
83.5
|
%
|
(4,225
|
) |
(42.9
|
)% | ||||||||||||||
Software Search
|
1,767
|
20.2
|
%
|
-
|
-
|
%
|
1,767
|
-
|
||||||||||||||||
Partner Programs
|
1,375
|
15.6
|
%
|
1,943
|
16.5
|
%
|
(568
|
) |
(29.2
|
)% | ||||||||||||||
Total net revenue
|
8,767
|
100.0
|
%
|
11,793
|
100.0
|
%
|
(3,026
|
) |
(25.7
|
)% |
Three Months Ended March 31,
|
|||||||||||||||||||
2012 ($)
|
% of Revenue
|
2011 ($)
|
% of Revenue
|
$ Change
|
% Change
|
||||||||||||||
Affiliate expenses
|
4,506
|
51.4
|
%
|
5,742
|
48.7
|
%
|
(1,236
|
) |
(21.5
|
)%
|
|||||||||
Data acquisition
|
780
|
8.9
|
%
|
622
|
5.3
|
%
|
158
|
(25.4
|
)%
|
||||||||||
Merchant processing fees and product costs
|
62
|
0.7
|
%
|
8
|
0.1
|
%
|
54
|
675
|
%
|
||||||||||
Total cost of revenue
|
5,348
|
61.0
|
%
|
6,372
|
54.1
|
%
|
(1,024
|
) |
(16.1
|
)%
|
Three Months Ended March 31,
|
||||||||||||||||||||||||
2012
($)
|
% of Gross Profit
|
2011
($)
|
% of Gross Profit
|
$
Change
|
%
Change
|
|||||||||||||||||||
Publisher network
|
1,241
|
36.3
|
%
|
4,113
|
75.9
|
%
|
(2,872
|
)
|
(69.8
|
)%
|
||||||||||||||
Software search
|
1,452
|
42.5
|
%
|
-
|
-
|
%
|
1,452
|
-
|
||||||||||||||||
Partner Programs
|
726
|
21.2
|
%
|
1,309
|
24.1
|
%
|
(583
|
)
|
(44.5
|
)%
|
||||||||||||||
Total gross profit
|
3,419
|
100.0
|
%
|
5,422
|
100.0
|
%
|
(2,003
|
)
|
(36.9
|
)%
|
2012
($)
|
% of
Revenue
|
2011
($)
|
% of
Revenue
|
$
Change
|
%
Change
|
|||||||||||||||||||
Search costs
|
1,843
|
21.0
|
%
|
2,494
|
21.1
|
%
|
(651)
|
(26.1)
|
%
|
|||||||||||||||
Compensation and telemarketing
|
1,297
|
14.8
|
%
|
2,672
|
22.7
|
%
|
(1,375
|
)
|
(51.5
|
)%
|
||||||||||||||
Selling, general and administrative
|
1,985
|
22.7
|
%
|
1,435
|
12.2
|
%
|
550
|
38.3
|
%
|
|||||||||||||||
Total operating expenses
|
5,125
|
58.5
|
%
|
6,601
|
56
|
%
|
(1,476
|
)
|
(22.4
|
)%
|
Three Months Ended March 31, | ||||||||||||||||||||||||
2012
($)
|
% of
Revenue
|
2011
($)
|
% of
Revenue
|
$
Change
|
%
Change
|
|||||||||||||||||||
Publisher Network
|
337
|
3.8
|
%
|
2,626
|
22.2
|
%
|
(2,289)
|
(87.2)
|
%
|
|||||||||||||||
Software Search
|
1,671
|
19.1
|
%
|
-
|
-
|
1,671
|
-
|
|||||||||||||||||
Partner Programs
|
168
|
1.9
|
%
|
1,254
|
10.6
|
%
|
(1,086
|
)
|
(86.6
|
)%
|
||||||||||||||
Corporate
|
2,949
|
33.7
|
%
|
2,721
|
23.2
|
%
|
228
|
8.4
|
%
|
|||||||||||||||
Total operating expenses |
5,125
|
58.5
|
% |
6,601
|
56
|
% |
(1,476
|
) |
(22.4
|
)% |
*
|
Pursuant to Rule 406T of Regulation S-T, these interactive data files are deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing, are deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and otherwise are not subject to liability under those sections.
|
**
|
filed herewith.
|
***
|
Portions of this exhibit have been omitted pursuant to a request for confidential treatment filed with the Commission under Rule 24b-2. The omitted confidential material has been filed separately with the Commission. The location of the omitted confidential information is indicated in the exhibit with asterisks (***).
|
INUVO, INC.
|
|||
Date: May 14, 2012
|
By:
|
/s/ Peter A. Corrao
|
|
Peter A. Corrao,
|
|||
Chief Executive Officer, principal executive officer
|
Date: May 14, 2012
|
By:
|
/s/ Wallace D. Ruiz
|
|
Wallace D. Ruiz,
|
|||
Chief Financial Officer, principal financial and accounting officer
|
1.
|
I have reviewed this report on Form 10-Q for the period ended March 31, 2012 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 15-d-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.
|
/s/ Peter A. Corrao | |||
Peter A. Corrao,
|
|||
Chief Executive Officer, principal executive officer
|
1.
|
I have reviewed this report on Form 10-Q for the period ended March 31, 2012 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 15-d-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.
|
/s/ Wallace D. Ruiz, | |||
Wallace D. Ruiz,
|
|||
Chief Financial Officer, principal financial and accounting officer
|
/s/ Peter A. Corrao | |||
Peter A. Corrao,
|
|||
Chief Executive Officer, principal executive officer
|
/s/ Wallace D. Ruiz | |||
Wallace D. Ruiz,
|
|||
Chief Financial Officer, principal financial and accounting officer
|