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 Suite 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 net revenues from two customers;
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•
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pending relocation of our headquarters and data operations collocations;
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failure to successfully manage the combination of Inuvo and Vertro;
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ability to continue and expand relationships with Internet media, content, advertising and product providers;
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dependence of our Network segment on relationships with distribution partners;
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dependence of our Applications segment on our ability to maintain and grow our customer base and the estimations and assumptions we use in that segment;
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material dependence on our relationships with Google and Yahoo!;
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company owned and operated websites and various risks associated with those websites;
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dependence on our banking arrangements with Bridge Bank, N.A. which are collateralized by our assets;
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possible need to raise additional capital;
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ability to effectively compete;
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need to keep pace with technology changes;
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possible interruptions of services;
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dependence on third-party providers;
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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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dependence on key personnel;
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regulatory uncertainties;
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failure to protect our intellectual property
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continued listing on the NYSE MKT;
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fluctuations in our quarterly earnings and the trading price of our common stock;
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ability to defend our company against lawsuits; and
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outstanding warrants and options and possible dilutive impact to our stockholders.
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The ValidClick® service at www.validclick.com. ValidClick is a 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.
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The owned and operated local search directory websites at www.yellowise.com and Local.ALOT.com. Both websites are powered by the LocalXML service that allows publishers the ability to make real-time calls to the LocalXML database and have users receive a listing of all local businesses that meet the search criteria. Users may also post reviews of their favorite and not-so-favorite businesses making the reviews available to all other users of the site.
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The BargainMatch CashBack website at
www.BargainMatch.com
. BargainMatch is a product shopping and comparison service that allows consumers the ability to price compare for products and receive CashBack when they purchase those products through BargainMatch. The service has been designed and positioned as a consumer loyalty solution. The product line also includes a consumer facing application.
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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. Typically, each advertising customer of MyAP is supported by a unique implementation of the software, customized to suit their individual needs and populated by publishers. Today, MyAP supports hundreds of customers.
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The Babytobee web site at
www.babytobee.com
. Babytobee is a web property that caters to pre-natal women. The site displays various content of interest to the targeted demographic and provides certain tools and suggestions for additional content as a service to the consumer.
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The ALOT product line offers two primary products to consumers, ALOT Home, a homepage product, and ALOT Appbar, a software application that consumers install into their web browsers. Both ALOT Home and ALOT Appbar include a search box from which consumers conduct type-in web search requests. The ALOT Appbar provides access to a library of applications, which are used by consumers to receive dynamic information, perform useful tasks, or access their favorite content online. There are hundreds of apps available for consumers to choose from ranging from a weather app that provides an at-a-glance snapshot of the weather for the coming four days, to a radio app that enables consumers to instantly listen to thousands of radio stations from around the world. All ALOT products and apps are free to download and use.
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The BargainMatch comparison-shopping and CashBack application is a browser based consumer shopping aid that overlays onto organic search listings merchant locations where a consumer can obtain CashBack when purchasing products. The application acts as a shopping companion, alerting consumers to opportunities they would normally not be aware of through normal Internet usage.
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In August 2004, we acquired 100% of the outstanding stock of WebCapades, Inc.,
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In January 2005, we acquired 100% of the outstanding stock of the Market Smart Advertising companies,
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In February 2005, we acquired 100% of the stock of Personals Plus, Inc.,
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In February 2005, we also acquired 100% of the stock of Ozona Online Network, Inc.,
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In March 2005, we acquired 100% of the stock of KowaBunga! Marketing, Inc.,
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In March 2005, we acquired the assets of Smart Interactive Ltd.,
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In April 2005, we acquired 100% of the stock of PrimaryAds Inc.,
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In July 2005, we acquired 100% of the stock of Real Estate School Online, Inc.,
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In December 2005, we acquired 100% of the stock of Vintacom, Inc.,
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In January 2006, we acquired 100% of the stock of Morex Marketing Group, LLC.
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In April 2006, we acquired 100% of the stock of the Litmus Media, Inc.,
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In April 2006, we also acquired 100% of the stock of Web Diversity Ltd.,
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In May 2006, we acquired 100% of the stock iLead Media, and
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In March 2012, we acquired Vertro, Inc. via a merger with a wholly-owned subsidiary
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In March 2010, we determined due to market and strategic reasons to exit the negative-option marketing programs which became part of our web properties segment following the iLead Media, Inc. acquisition in 2006. In doing so, in 2009 we impaired approximately $850,000 of intangible assets and goodwill related to this business.
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During the second quarter of 2008, we made a decision to divest our Market Smart Advertising, Inc. (“MSA”) operations and accounted for its operations as discontinued. In 2010, we sold the assets of MSA and its related companies Rightstuff, Inc. and Checkup Marketing, Inc., all North Carolina corporations which were our wholly-owned subsidiaries. The purchase price of the assets was $766,636, of which $247,147 was paid at closing and the balance was paid in three equal monthly installments of $173,163 each during the 90 days following the closing. Under the terms of the agreement, the purchaser also assumed certain liabilities related to the purchased assets. To ensure orderly transition of the business, we agreed to provide the purchaser with hosting services at no cost for 90 days following the closing. The agreement contains customary indemnification, non-disclosure and non-solicitation provisions. All the proceeds received from the sale of MSA were used to reduce our term note with Wachovia Bank, N.A. Additionally, we reported a non-cash charge loss on the sale of MSA of approximately $1.5 million for 2010 in discontinued operations.
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In August 2010, we contracted with an outsourced telemarketing company to handle in-bound calls generated from our lead generation website, BabytoBee. By May 2011, were unable to realize a profit from this organizational structure and exercised our right to terminate the Master Services Agreement between the parties. Pursuant to the Master Services Agreement, we were required to pay a one-time payment of $340,000. In addition, we wrote-off approximately $101,000 related to the sale of property and equipment to the outsourcing telecommunication company.
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In December 2010, we closed the sale of the assets of our Real Estate School Online, Inc. (“RESO”) subsidiary to DF Institute, Inc. under the terms of an Asset Purchase Agreement between the parties. The purchase price of the assets was $750,000, of which all was paid at closing less $31,716 working capital adjustment and $50,000 held in escrow for a period of one year. Earlier in 2010, we announced our intention to sell the business and we accounted for the subsidiary as a discontinued operation since that time. To ensure an orderly transition of the business, we agreed to provide transitional services until April 15, 2011 and we received a fee of $107,204 paid in five equal monthly installments. The Asset Purchase Agreement contains customary indemnification, non-disclosure and non-solicitation provisions. All the proceeds from the sale were used to reduce a term note with Wachovia Bank, N.A. In addition, we reported a gain on the sale of RESO in discontinued operations of approximately $500,000.
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On October 16, 2011, we entered into an agreement and plan of merger with Vertro, Inc. On February 29, 2012, at special meetings of shareholders for Vertro and Inuvo, the shareholders of each company elected to merge the two companies. On March 1, 2012, the merger closed and Vertro became our wholly-owned subsidiary. Pursuant to the terms of the agreement, each share of Vertro common stock that was issued and outstanding at the effective
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We fail to have websites and applications approved;
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Our paid listings providers' performance deteriorates; or
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We violate our paid listings providers' guidelines or they change their implementation guidelines.
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pay fees to the lender associated with the credit facility;
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maintain our corporate existence in good standing;
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grant the lender a security interest in our assets;
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provide financial information to the lender; and
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refrain from any transfer of any of our business or property (subject to customary exceptions).
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we may incur substantial costs, delays, or other operational or financial problems in integrating acquired businesses, including integrating each company's accounting, management information, human resource, and other administrative systems to permit effective management;
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we may not be able to identify, acquire, or profitably manage any additional businesses;
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with smaller acquired companies, we may need to implement or improve controls, procedures, and policies appropriate for a public company;
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the acquired companies may adversely affect our consolidated operating results, particularly since some of the acquired companies may have a history of operating losses;
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acquisitions may divert management's attention from the operation of our businesses;
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we may not be able to retain key personnel of acquired businesses;
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there may be cultural challenges associated with integrating employees from acquired companies into our organization; and
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we may encounter unanticipated events, circumstances, or legal liabilities.
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attract new clients and maintain current client relationships;
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achieve effective advertising campaign results for our clients;
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continue to expand the number of services and technologies we offer;
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successfully implement our business model, which is evolving;
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respond to pricing pressure in some of our lines of business;
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maintain our reputation and build trust with our clients;
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identify, attract, retain and motivate qualified personnel;
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accurately measure impressions, searches, clicks, or other online actions for our advertisers, publishers, or partners;
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adapt to changes in online advertising, email, and other filtering software; and
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manage online credit card billing and customer service concerns.
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user privacy;
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trespass;
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defamation;
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database and data protection;
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limitations on the distribution of materials considered harmful to children;
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liability for misinformation provided over the web;
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user protection, pricing, taxation, and advertising restrictions (including, for example, limitation on the advertising on Internet gambling websites or of certain products);
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delivery of contextual advertisements via connected desktop software;
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intellectual property ownership and infringement, including liability for listing or linking to third-party websites that include materials infringing copyrights or other rights;
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distribution, characteristics, and quality of products and services; and
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other consumer protection laws.
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decrease the demand for our services;
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increase our cost of doing business;
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preclude us from developing additional products or services;
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result in adverse publicity to us;
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subject us to fines, litigation, or criminal penalties; or
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enjoin us from conducting our business or providing any of our services;
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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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technical difficulties or interruptions in our services;
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changes in privacy protection and other governmental regulations applicable to the our industry;
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changes in our pricing policies or the pricing policies of our competitors;
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the financial condition and business success of our clients;
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purchasing and budgeting cycles of our clients;
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acquisitions of businesses and products by us or our competitors;
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competition, including entry into the market by new competitors or new offerings by existing competitors;
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discounts offered to advertisers by upstream advertising networks;
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our history of litigation;
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our history of uncollectable receivables;
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our ability to hire, train and retain sufficient sales, client management and other personnel;
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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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concentration of marketing expenses for activities such as trade shows and advertising campaigns;
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expenses related to any new or expanded data centers; and
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general economic and financial market conditions.
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actual or expected fluctuations in its operating results;
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variance in its financial performance from the expectations of market analysts;
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changes in general economic conditions or conditions in its industry generally;
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changes in conditions in the financial markets;
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announcements of significant acquisitions or contracts by Inuvo or its competitors;
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its inability to raise additional capital and maintain its exchange listing;
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changes in applicable laws or regulations, court rulings and enforcement and legal actions;
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additions or departures of key management personnel;
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actions by its stockholders;
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changes in market prices for its products; and
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changes in stock market analyst research and recommendations regarding the shares of our common stock, other comparable companies or its industry generally.
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High
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Low
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Year Ended December 31, 2011:
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First Quarter
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$
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5.85
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$
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2.58
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Second Quarter
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$
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3.02
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$
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1.65
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Third Quarter
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$
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4.49
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$
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1.02
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Fourth Quarter
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$
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1.94
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$
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0.69
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Year Ended December 31, 2012
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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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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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Year Ended December 31,
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||||||||||||||||
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2012 ($)
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% of Revenue
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2011 ($)
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% of Revenue
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$ Change
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% Change
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Network
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28,892,793
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54.1
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%
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35,753,243
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99.8
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%
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(6,860,450
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)
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(19.2
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)%
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Applications
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24,470,152
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45.9
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%
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66,753
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0.2
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%
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24,403,399
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*
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Total net revenue
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53,362,945
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|
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100.0
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%
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35,819,996
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|
|
100.0
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%
|
|
17,542,949
|
|
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49.0
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%
|
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Year Ended December 31,
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||||||||||||||||
|
2012 ($)
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|
% of Revenue
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|
2011 ($)
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|
% of Revenue
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|
$ Change
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|
% Change
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||||||
Affiliate expenses
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20,680,931
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38.8
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%
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18,130,731
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50.6
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%
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2,550,200
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14.1
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%
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Data acquisition
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4,282,568
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8.0
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%
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2,526,001
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7.1
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%
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|
1,756,567
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69.5
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%
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Merchant processing fees and product costs
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672,011
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1.3
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%
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175,027
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|
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0.5
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%
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496,984
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|
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283.9
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%
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Total cost of revenue
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25,635,510
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|
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48.1
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%
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|
20,831,759
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|
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58.2
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%
|
|
4,803,751
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|
|
23.1
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%
|
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Year Ended December 31,
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||||||||||||||||
|
2012 ($)
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|
% of Gross Profit
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2011 ($)
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% of Gross Profit
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$ Change
|
|
% Change
|
||||||
Network
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7,129,783
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|
|
25.7
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%
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|
14,921,984
|
|
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99.6
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%
|
|
(7,792,201
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)
|
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(52.2
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)%
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Applications
|
20,597,652
|
|
|
74.3
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%
|
|
66,253
|
|
|
0.4
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%
|
|
20,531,399
|
|
|
*
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Total gross profit
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27,727,435
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|
|
100.0
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%
|
|
14,988,237
|
|
|
100.0
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%
|
|
12,739,198
|
|
|
85.0
|
%
|
|
Year Ended December 31,
|
||||||||||||||||
|
2012 ($)
|
|
% of Revenue
|
|
2011 ($)
|
|
% of Revenue
|
|
$ Change
|
|
% Change
|
||||||
Search costs
|
18,189,643
|
|
|
34.1
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%
|
|
7,446,116
|
|
|
20.8
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%
|
|
10,743,527
|
|
|
144.3
|
%
|
Compensation and telemarketing
|
6,816,013
|
|
|
12.8
|
%
|
|
7,670,869
|
|
|
21.4
|
%
|
|
(854,856
|
)
|
|
(11.1
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)%
|
Selling, general and administrative
|
9,249,678
|
|
|
17.3
|
%
|
|
5,567,103
|
|
|
15.5
|
%
|
|
3,682,575
|
|
|
66.1
|
%
|
Total operating expenses
|
34,255,334
|
|
|
64.2
|
%
|
|
20,684,088
|
|
|
57.7
|
%
|
|
13,571,246
|
|
|
65.6
|
%
|
•
|
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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•
|
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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•
|
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, entered into as of August 19, 2004, by and among Registrant, WebCapades Acquisition Sub, Inc., WebCapades, Inc., Scott Mitchell and Kristine E. Mitchell (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 August 25, 2004.)
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2.2
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Plan of Merger by Registrant, WebCapades Acquisition Sub, Inc., and WebCapades, 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 August 25, 2004.)
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2.3
|
|
Agreement and Plan of Reorganization by and among Registrant and WorldMall Acquisition Corporation, WorldMall, Inc., S. Patrick Martin and the other stockholders of WorldMall, Inc. dated as of March, 2001 (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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2.4
|
|
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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2.5
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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
|
|
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.)
|
3(i).2
|
|
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.)
|
3(i).3
|
|
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.)
|
3(i).4
|
|
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.)
|
3(i).5
|
|
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.)
|
3(i).6
|
|
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.)
|
3(ii).1
|
|
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.)
|
3(ii).2
|
|
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.)
|
4.1
|
|
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.)
|
4.2
|
|
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.)
|
4.3
|
|
Rights Agreement dated February 14, 2008 (Incorporated by reference to the Current Report on Form 8-K as filed with the Securities and Exchange Commission on February 19, 2008).
|
4.4
|
|
Exchange Agent Agreement dated February 24, 2012 between Inuvo, Inc. and Colonial Stock Transfer Co., Inc. (Incorporated by reference to the Registrant's Annual Report on Form 10-K as filed on March 29, 2012.)
|
4.5
|
|
Form of Amendment No. 1 to Rights Agreement (Incorporated by reference to the Registrant’s Current Report on Form 8-K as fled on October 17, 2011.)
|
4.6
|
|
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.)
|
4.7
|
|
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.)
|
4.8
|
|
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.)
|
10.1
|
|
2005 Long-Term Incentive Plan (Incorporated by reference to the Current Report on Form 8-K as filed on December 10, 2010.)
|
10.2
|
|
Specimen Stock Option Agreement between the Registrant and Optionees (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 1, 2008.)
|
10.3
|
|
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.)
|
10.4
|
|
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.)
|
10.5
|
|
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.)
|
10.6
|
|
Reserved.
|
10.7
|
|
Reserved.
|
10.8
|
|
Reserved.
|
10.9
|
|
Reserved.
|
10.1
|
|
2010 Equity Compensation Plan (Incorporated by reference to the Registrant’s definitive proxy statement on Schedule 14A as filed on April 30, 2010.)
|
10.11
|
|
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.)
|
10.12
|
|
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.)
|
10.13
|
|
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.)
|
10.14
|
|
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.)
|
10.15
|
|
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.)
|
10.16
|
|
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.)
|
10.17
|
|
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.)
|
10.18
|
|
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.)
|
10.19
|
|
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.)
|
10.2
|
|
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.)
|
10.21
|
|
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.)
|
10.22
|
|
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.)
|
10.23
|
|
Quick Action Closing Fund Grant Agreement, dated January 25, 2013, with the Arkansas Economic Development Commission. *
|
10.24
|
|
Grant Reimbursement Agreement, dated January 25, 2013, with the Arkansas Economic Development.* Commission. *
|
10.25
|
|
Google Services Agreement, as of February 1, 2013, between Google Inc. and Vertro, Inc. */**
|
10.26
|
|
Lease Termination Agreement, dated January 29, 2013, between Inuvo, Inc. and Capital Growth of Clearwater, LLC. *
|
10.27
|
|
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).
|
21.1
|
|
Subsidiaries of the Registrant*
|
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.
|
|
|
|
|
|
|
Date: March 13, 2013
|
By:
|
/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 13, 2013
|
Richard K. Howe
|
|
|
|
|
|
|
|
|
|
/s/ Wallace D. Ruiz
|
|
Chief Financial Officer, principal financial and accounting officer
|
|
March 13, 2013
|
Wallace D. Ruiz
|
|
|
|
|
|
|
|
|
|
/s/ Joseph P. Durrett
|
|
Director
|
|
March 13, 2013
|
Joseph P. Durrett
|
|
|
|
|
|
|
|
|
|
/s/ Adele Goldberg
|
|
Director
|
|
March 13, 2013
|
Adele Goldberg
|
|
|
|
|
|
|
|
|
|
/s/ Charles Morgan
|
|
Director
|
|
March 13, 2013
|
Charles Morgan
|
|
|
|
|
|
|
|
|
|
/s/ Charles Pope
|
|
Director
|
|
March 13, 2013
|
Charles Pope
|
|
|
|
|
|
|
|
|
|
/s/ Patrick Terrell
|
|
Director
|
|
March 13, 2013
|
Patrick Terrell
|
|
|
|
|
|
CONTENTS
|
|
Report of Independent Registered Public Accounting Firm
|
|
|
Consolidated Financial Statements:
|
|
|
Consolidated Balance Sheets
|
|
|
Consolidated Statements of Comprehensive Loss
|
|
|
Consolidated Statements of Stockholders’ Equity (Deficit)
|
|
|
Consolidated Statements of Cash Flows
|
|
|
Notes to Consolidated Financial Statements
|
|
|
December 31, 2012
|
|
December 31, 2011
|
||||
|
|
|
|
||||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash
|
$
|
3,381,018
|
|
|
$
|
4,413
|
|
Restricted cash
|
301,158
|
|
|
475,586
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $231,542 and $477,289, respectively
|
5,400,290
|
|
|
5,426,865
|
|
||
Unbilled revenue
|
58,219
|
|
|
49,196
|
|
||
Intangible assets - current, net of accumulated amortization
|
328,665
|
|
|
947,882
|
|
||
Prepaid expenses and other current assets
|
467,957
|
|
|
433,601
|
|
||
Total current assets
|
9,937,307
|
|
|
7,337,543
|
|
||
Property and equipment, net
|
2,110,771
|
|
|
1,590,011
|
|
||
Other assets
|
|
|
|
||||
Goodwill
|
5,760,808
|
|
|
1,776,544
|
|
||
Intangible assets, net of accumulated amortization
|
11,138,330
|
|
|
390,000
|
|
||
Other assets
|
182,387
|
|
|
2,243
|
|
||
Total other assets
|
17,081,525
|
|
|
2,168,787
|
|
||
Total assets
|
$
|
29,129,603
|
|
|
$
|
11,096,341
|
|
|
|
|
|
||||
Liabilities and Stockholders’ Equity (Deficit)
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Term and credit notes payable - current portion
|
$
|
1,333,333
|
|
|
$
|
452,000
|
|
Accounts payable
|
10,196,930
|
|
|
6,198,921
|
|
||
Deferred compensation
|
—
|
|
|
929,428
|
|
||
Accrued expenses and other current liabilities
|
1,872,722
|
|
|
1,611,831
|
|
||
Current liabilities of discontinued operations
|
—
|
|
|
160,000
|
|
||
Total current liabilities
|
13,402,985
|
|
|
9,352,180
|
|
||
|
|
|
|
||||
Long-term liabilities
|
|
|
|
||||
Deferred tax liability
|
4,099,000
|
|
|
—
|
|
||
Term and credit notes payable - long term
|
6,488,889
|
|
|
2,454,303
|
|
||
Other long-term liabilities
|
932,377
|
|
|
300,124
|
|
||
Total long-term liabilities
|
11,520,266
|
|
|
2,754,427
|
|
||
|
|
|
|
||||
Stockholders’ equity (deficit)
|
|
|
|
||||
Preferred stock, $.001 par value:
|
|
|
|
||||
Authorized shares - 500,000 - none issued and outstanding
|
—
|
|
|
—
|
|
||
Common stock, $.001 par value:
|
|
|
|
|
|
||
Authorized shares - 40,000,000 and 20,000,000, issued shares 23,586,186 and 10,422,617, respectively
|
|
|
|
||||
Outstanding shares - 23,209,659 and 10,035,790, respectively
|
23,586
|
|
|
10,422
|
|
||
Additional paid-in capital
|
127,249,789
|
|
|
115,096,953
|
|
||
Accumulated deficit
|
(121,670,882
|
)
|
|
(114,648,037
|
)
|
||
Accumulated other comprehensive income
|
418
|
|
|
—
|
|
||
Treasury stock, at cost - 376,527 and 386,827 shares, respectively
|
(1,396,559
|
)
|
|
(1,469,604
|
)
|
||
Total stockholders' equity (deficit)
|
4,206,352
|
|
|
(1,010,266
|
)
|
||
Total liabilities and stockholders' equity (deficit)
|
$
|
29,129,603
|
|
|
$
|
11,096,341
|
|
|
For the Year Ended
December 31, |
||||||
|
2012
|
|
2011
|
||||
|
|
|
|
||||
Net revenue
|
$
|
53,362,945
|
|
|
$
|
35,819,996
|
|
Cost of revenue
|
|
|
|
||||
Affiliate expenses
|
20,680,931
|
|
|
18,130,731
|
|
||
Data acquisition
|
4,282,568
|
|
|
2,526,001
|
|
||
Merchant processing fees and product costs
|
672,011
|
|
|
175,027
|
|
||
Cost of revenue
|
25,635,510
|
|
|
20,831,759
|
|
||
Gross profit
|
27,727,435
|
|
|
14,988,237
|
|
||
Operating expenses
|
|
|
|
||||
Search costs
|
18,189,643
|
|
|
7,446,116
|
|
||
Compensation and telemarketing
|
6,816,013
|
|
|
7,670,869
|
|
||
Selling, general and administrative
|
9,249,678
|
|
|
5,567,103
|
|
||
Total operating expenses
|
34,255,334
|
|
|
20,684,088
|
|
||
Operating loss
|
(6,527,899
|
)
|
|
(5,695,851
|
)
|
||
Other income (expense)
|
|
|
|
||||
Litigation settlements
|
(75,000
|
)
|
|
(374,800
|
)
|
||
Impairment of assets and loss on sale of assets
|
—
|
|
|
(2,824,100
|
)
|
||
Interest expense, net
|
(563,198
|
)
|
|
(330,880
|
)
|
||
Other income (expense), net
|
(638,198
|
)
|
|
(3,529,780
|
)
|
||
Loss from continuing operations before taxes
|
(7,166,097
|
)
|
|
(9,225,631
|
)
|
||
Income tax benefit (expense)
|
326,779
|
|
|
(7,876
|
)
|
||
Net loss from continuing operations
|
(6,839,318
|
)
|
|
(9,233,507
|
)
|
||
Net income (loss) from discontinued operations
|
(183,527
|
)
|
|
257,136
|
|
||
Net loss
|
(7,022,845
|
)
|
|
(8,976,371
|
)
|
||
Other comprehensive income
|
|
|
|
||||
Foreign currency revaluation
|
418
|
|
|
—
|
|
||
Total comprehensive loss
|
$
|
(7,022,427
|
)
|
|
$
|
(8,976,371
|
)
|
|
|
|
|
||||
Per common share data
|
|
|
|
||||
Basic and diluted
|
|
|
|
||||
Net loss from continuing operations
|
$
|
(0.33
|
)
|
|
$
|
(0.99
|
)
|
Net loss (income) from discontinued operations
|
(0.01
|
)
|
|
0.03
|
|
||
Net loss
|
$
|
(0.34
|
)
|
|
$
|
(0.96
|
)
|
|
|
|
|
||||
Weighted average shares (basic and diluted)
|
21,004,235
|
|
|
9,364,038
|
|
|
Common Stock
|
|
Additional Paid in Capital
|
|
Accumulated Deficit
|
|
Accumulated Other Comprehensive Income
|
|
Treasury Stock
|
|
Total
Stockholders’
Equity (Deficit)
|
|||||||||||||||
|
Shares
|
|
Stock
|
|
|
|
|
|
||||||||||||||||||
Balances December 31, 2010
|
8,558,790
|
|
|
$
|
9,110
|
|
|
$
|
111,766,319
|
|
|
$
|
(105,671,666
|
)
|
|
—
|
|
|
$
|
(2,096,106
|
)
|
|
$
|
4,007,657
|
|
|
Forfeited restricted stock units
|
(3,000
|
)
|
|
(3
|
)
|
|
3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Sale of stock, net of stock issuance costs
|
1,350,000
|
|
|
1,350
|
|
|
2,634,446
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,635,796
|
|
||||||
Issuance of common stock for litigation settlements
|
130,000
|
|
|
130
|
|
|
365,270
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
365,400
|
|
||||||
Retirement of treasury shares
|
—
|
|
|
(165
|
)
|
|
(626,337
|
)
|
|
—
|
|
|
—
|
|
|
626,502
|
|
|
—
|
|
||||||
Stock based compensation
|
|
|
|
|
|
|
957,252
|
|
|
|
|
|
—
|
|
|
|
|
|
957,252
|
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
(8,976,371
|
)
|
|
—
|
|
|
—
|
|
|
(8,976,371
|
)
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balances December 31, 2011
|
10,035,790
|
|
|
10,422
|
|
|
115,096,953
|
|
|
(114,648,037
|
)
|
|
—
|
|
|
(1,469,604
|
)
|
|
(1,010,266
|
)
|
||||||
Issuance of common stock to stockholders of Vertro, Inc. for all of the outstanding shares of Vertro, Inc. in the merger of Vertro into Inuvo, Inc.
|
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
|
|
||||||
Issuance of common stock in employee 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
|
)
|
||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
418
|
|
|
—
|
|
|
418
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balances December 31, 2012
|
23,209,659
|
|
|
$
|
23,586
|
|
|
$
|
127,249,789
|
|
|
$
|
(121,670,882
|
)
|
|
$
|
418
|
|
|
$
|
(1,396,559
|
)
|
|
$
|
4,206,352
|
|
|
2012
|
|
2011
|
||||
Operating activities:
|
|
|
|
||||
Net (loss)
|
$
|
(7,022,845
|
)
|
|
$
|
(8,976,371
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
7,321,679
|
|
|
4,213,771
|
|
||
Deferred income taxes
|
(444,000
|
)
|
|
—
|
|
||
Amortization of financing fees
|
98,223
|
|
|
108,824
|
|
||
Litigation settlements in stock
|
—
|
|
|
249,800
|
|
||
Provision for doubtful accounts
|
299,565
|
|
|
83,020
|
|
||
Deferred compensation
|
—
|
|
|
356,193
|
|
||
Stock based compensation
|
842,752
|
|
|
1,530,487
|
|
||
Loss on sale of assets
|
—
|
|
|
193,133
|
|
||
Impairment of assets
|
—
|
|
|
2,630,967
|
|
||
Warrant issuance to Bridge Bank
|
45,000
|
|
|
—
|
|
||
Change in operating assets and liabilities, net of acquisition:
|
|
|
|
||||
Accounts receivable and unbilled revenue
|
1,811,832
|
|
|
(1,010,829
|
)
|
||
Prepaid expenses and other assets
|
592,143
|
|
|
38,580
|
|
||
Accounts payable
|
244,396
|
|
|
719,125
|
|
||
Accrued expenses and other liabilities
|
(2,638,071
|
)
|
|
62,581
|
|
||
Net cash provided by operating activities from continuing operations
|
1,150,674
|
|
|
199,281
|
|
||
Net cash used in operating activities of discontinued operations
|
(160,000
|
)
|
|
(386,424
|
)
|
||
Net cash provided by (used in) operating activities
|
990,674
|
|
|
(187,143
|
)
|
||
|
|
|
|
||||
Investing activities:
|
|
|
|
||||
Purchases of equipment and capitalized development costs
|
(894,415
|
)
|
|
(462,114
|
)
|
||
Acquisition of Vertro, Inc., net of stock issuance costs
|
2,432,642
|
|
|
—
|
|
||
Purchase of names database and bundled downloads
|
(3,065,569
|
)
|
|
(2,567,029
|
)
|
||
Net cash used in investing activities
|
(1,527,342
|
)
|
|
(3,029,143
|
)
|
||
|
|
|
|
||||
Financing activities:
|
|
|
|
||||
Proceeds from sale of common stock, net
|
—
|
|
|
2,635,796
|
|
||
Proceeds from term note
|
5,000,000
|
|
|
—
|
|
||
Deposit to collateralize letter of credit
|
(300,572
|
)
|
|
(335,093
|
)
|
||
Proceeds from revolving line of credit
|
5,308,742
|
|
|
7,304,756
|
|
||
Prepaid financing fees
|
(100,000
|
)
|
|
(130,025
|
)
|
||
Payments on revolving line of credit
|
(5,140,045
|
)
|
|
(6,248,453
|
)
|
||
Payments on term note payable and capital leases
|
(855,270
|
)
|
|
(124,843
|
)
|
||
Net cash provided by financing activities
|
3,912,855
|
|
|
3,102,138
|
|
||
Effect of exchange rate changes
|
418
|
|
|
—
|
|
||
Net change – cash
|
3,376,605
|
|
|
(114,148
|
)
|
||
Cash, beginning of year
|
4,413
|
|
|
118,561
|
|
||
Cash, end of year
|
$
|
3,381,018
|
|
|
$
|
4,413
|
|
|
|
|
|
||||
Supplemental information:
|
|
|
|
||||
Interest paid
|
$
|
312,247
|
|
|
$
|
236,783
|
|
Income taxes paid, net
|
—
|
|
|
$
|
7,876
|
|
|
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, plant and equipment under capital lease
|
$
|
94,915
|
|
|
$
|
—
|
|
Retirement of treasury stock
|
$
|
73,045
|
|
|
$
|
—
|
|
a)
|
Basis of presentation
|
b)
|
Cash and restricted cash
|
c)
|
Revenue recognition
|
d)
|
Accounts receivable
|
e)
|
Advertising and search expenses
|
f)
|
Property and equipment
|
g)
|
Capitalized Software Costs
|
h)
|
Goodwill and other intangible assets
|
i)
|
Income taxes
|
j)
|
Impairment of long-lived assets
|
k)
|
Share-based compensation
|
l)
|
Treasury Stock
|
m)
|
Net loss per share
|
n)
|
Operating segments
|
o)
|
Concentration of credit risk
|
p)
|
Risks and concentrations
|
q)
|
Fair value of financial instruments
|
Level 1
|
Quoted prices in active markets for identical assets or liabilities.
|
Level 2
|
Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted price for identical or similar assets and liabilities in markets that are not active; or other input that are observable or can be corroborated by observable market data.
|
Level 3
|
Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.
|
r)
|
Use of estimates
|
s)
|
Litigation and settlement costs
|
t)
|
Recent accounting pronouncements
|
u)
|
Reclassifications
|
|
2012
|
|
2011
|
||||
Balance at the beginning of the year
|
$
|
477,289
|
|
|
$
|
450,634
|
|
Provision for bad debts
|
299,565
|
|
|
83,020
|
|
||
Charge-offs
|
(554,145
|
)
|
|
(132,753
|
)
|
||
Recoveries
|
—
|
|
|
76,388
|
|
||
Allowance for doubtful accounts acquired from the merger with Vertro, Inc.
|
$
|
8,833
|
|
|
$
|
—
|
|
Balance at the end of the year
|
$
|
231,542
|
|
|
$
|
477,289
|
|
|
2012
|
|
2011
|
||||
Furniture and fixtures
|
$
|
421,425
|
|
|
$
|
421,425
|
|
Equipment
|
2,473,813
|
|
|
2,095,825
|
|
||
Software
|
8,018,509
|
|
|
5,382,424
|
|
||
Leasehold improvements
|
348,159
|
|
|
313,172
|
|
||
Subtotal
|
$
|
11,261,906
|
|
|
$
|
8,212,846
|
|
Less: accumulated depreciation and amortization
|
(9,151,135
|
)
|
|
(6,622,835
|
)
|
||
Total
|
$
|
2,110,771
|
|
|
$
|
1,590,011
|
|
|
Term
|
|
Carrying
Value
|
|
Accumulated Amortization and Impairment
|
|
Net Carrying Value
|
|
2012 Amortization Expense
|
||||||||
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
|
|
||||
Trade names, web properties (2)
|
-
|
|
390,000
|
|
|
—
|
|
|
390,000
|
|
|
—
|
|
||||
Intangible assets classified as long-term
|
|
|
$
|
11,900,000
|
|
|
$
|
(761,670
|
)
|
|
$
|
11,138,330
|
|
|
$
|
761,670
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
|
$
|
5,760,808
|
|
|
$
|
—
|
|
|
$
|
5,760,808
|
|
|
N/A
|
|
Term
|
|
Carrying
Value
|
|
Accumulated Amortization and Impairment
|
|
Net Carrying Value
|
|
2011 Amortization Expense
|
||||||||
Names database, classified as current (1)
|
9 months
|
|
$
|
16,130,086
|
|
|
$
|
(15,182,204
|
)
|
|
$
|
947,882
|
|
|
$
|
3,582,107
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Website development
|
5 years
|
|
4,210,000
|
|
|
(4,210,000
|
)
|
|
—
|
|
|
99,171
|
|
||||
Customer lists
|
5 years
|
|
3,500,000
|
|
|
(3,500,000
|
)
|
|
—
|
|
|
22,186
|
|
||||
Exclusivity agreement
|
1 year
|
|
150,000
|
|
|
(150,000
|
)
|
|
—
|
|
|
37,500
|
|
||||
Tradenames, web properties (2)
|
-
|
|
390,000
|
|
|
—
|
|
|
390,000
|
|
|
—
|
|
||||
Intangible assets classified as long-term
|
|
|
$
|
8,250,000
|
|
|
$
|
(7,860,000
|
)
|
|
$
|
390,000
|
|
|
$
|
158,857
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Goodwill
|
|
|
$
|
3,893,405
|
|
|
$
|
(2,116,861
|
)
|
|
$
|
1,776,544
|
|
|
N/A
|
(1)
|
The amortization of our names database and bundled downloads assets are included in cost of revenue. As of January 1, 2012, the names database is amortized over
nine
months due to the change in our estimate of their useful life. The change in estimate resulted in the names database being classified as current in the 2012 and 2011 consolidated balance sheets, respectively. Per ASC 250,
Accounting Changes and Error Corrections
, this change in estimate does not require a restatement in amounts in prior periods and will only change classifications prospectively.
|
(2)
|
We have determined that our Inuvo trade name intangible has an indefinite life, and as such it is not amortized. We determined our ALOT trade names acquired with Vertro should be amortized over
five
years.
|
2013
|
$
|
1,142,669
|
|
2014
|
794,004
|
|
|
2015
|
794,004
|
|
|
2016
|
794,004
|
|
|
2017
|
634,004
|
|
|
Thereafter
|
$
|
6,918,310
|
|
Total
|
$
|
11,076,995
|
|
Lender
|
|
Due Date
|
|
Interest Rate
|
|
2012
|
|
2011
|
||||
Bridge Bank – term note payable - March 1, 2012
|
|
February 10, 2016
|
|
4.25% (prime, plus 1 percentage point)
|
|
$
|
4,222,222
|
|
|
$
|
—
|
|
Bridge Bank – term note payable - February 15, 2011
|
|
Matured March 1, 2012
|
|
5.25% (prime, plus 2 percentage points)
|
|
—
|
|
|
475,000
|
|
||
Bridge Bank – revolving credit line - March 1, 2012
|
|
March 1, 2014
|
|
3.75% (prime, plus 0.5 percentage point)
|
|
3,600,000
|
|
|
—
|
|
||
Bridge Bank – revolving credit line - February 15, 2011
|
|
Matured March 1, 2012
|
|
5.25% (prime, plus 2 percentage points)
|
|
—
|
|
|
2,431,303
|
|
||
Total
|
|
|
|
|
|
$
|
7,822,222
|
|
|
$
|
2,906,303
|
|
Less: current portion
|
|
|
|
|
|
(1,333,333
|
)
|
|
(452,000
|
)
|
||
Term and revolving credit line - long term portion
|
|
|
|
|
|
$
|
6,488,889
|
|
|
$
|
2,454,303
|
|
2013
|
$
|
1,333,333
|
|
2014
|
1,333,333
|
|
|
2015
|
1,333,333
|
|
|
2016
|
222,223
|
|
|
Total
|
$
|
4,222,222
|
|
|
2012
|
|
2011
|
||||
Accrued expenses and other
|
$
|
1,012,638
|
|
|
$
|
1,419,604
|
|
Accrued search costs
|
247,583
|
|
|
109,706
|
|
||
Accrued affiliate expenses
|
46,132
|
|
|
16,570
|
|
||
Capital leases – current portion
|
44,287
|
|
|
57,581
|
|
||
Accrued payroll and commission liabilities
|
522,082
|
|
|
8,370
|
|
||
Total
|
$
|
1,872,722
|
|
|
$
|
1,611,831
|
|
|
2012
|
|
2011
|
||||
Taxes payable
|
$
|
506,453
|
|
|
$
|
—
|
|
Deferred rent
|
345,814
|
|
|
283,469
|
|
||
Capital leases – less current portion
|
47,372
|
|
|
16,655
|
|
||
Long-term deposits
|
32,738
|
|
|
—
|
|
||
Total
|
$
|
932,377
|
|
|
$
|
300,124
|
|
|
2012
|
|
2011
|
||||
Current tax provision
|
$
|
—
|
|
|
$
|
—
|
|
Deferred tax (benefit) provision
|
(444,000
|
)
|
|
—
|
|
||
Total tax (benefit) provision
|
$
|
(444,000
|
)
|
|
$
|
—
|
|
|
2012
|
|
2011
|
||
Expected statutory rate
|
(34
|
)%
|
|
(34
|
)%
|
State income tax rate, net of federal benefit
|
(4
|
)%
|
|
(4
|
)%
|
Permanent differences
|
2
|
%
|
|
2
|
%
|
Valuation allowance
|
48
|
%
|
|
36
|
%
|
Other
|
(18
|
)%
|
|
—
|
%
|
|
(6
|
)%
|
|
—
|
%
|
|
2012
|
|
2011
|
||||
Deferred tax assets:
|
|
|
|
||||
Net operating loss carry forward
|
$
|
10,710,000
|
|
|
$
|
8,331,000
|
|
Intangible assets
|
6,303,000
|
|
|
5,499,000
|
|
||
Deferred rent
|
124,000
|
|
|
177,000
|
|
||
Depreciation
|
837,000
|
|
|
299,000
|
|
||
Allowance for doubtful accounts
|
88,000
|
|
|
257,000
|
|
||
Accrued expense
|
—
|
|
|
257,000
|
|
||
Stock based expenses
|
1,263,000
|
|
|
942,000
|
|
||
Other
|
225,000
|
|
|
220,000
|
|
||
Subtotal
|
19,550,000
|
|
|
15,982,000
|
|
||
Less valuation allowance
|
(19,550,000
|
)
|
|
(15,982,000
|
)
|
||
Total
|
—
|
|
|
—
|
|
||
Deferred tax liabilities:
|
|
|
|
|
|
||
Intangibles
|
4,099,000
|
|
|
—
|
|
||
Total
|
4,099,000
|
|
|
—
|
|
||
Total deferred tax assets (liabilities)
|
(4,099,000
|
)
|
|
—
|
|
|
Options Outstanding
|
|
RSAs Outstanding
|
|
Options and RSAs Exercised
|
|
Available Shares
|
|
Total
|
|||||
2010 ECP
|
605,690
|
|
|
173,805
|
|
|
904,744
|
|
|
1,701,706
|
|
|
3,385,945
|
|
2005 LTIP
|
573,509
|
|
|
—
|
|
|
224,164
|
|
|
202,327
|
|
|
1,000,000
|
|
Total
|
1,179,199
|
|
|
173,805
|
|
|
1,128,908
|
|
|
1,904,033
|
|
|
4,385,945
|
|
|
2012
|
|
2011
|
||||||||||
|
Options
|
|
Weighted Average Exercise Price
|
|
Options
|
|
Weighted Average Exercise Price
|
||||||
Outstanding, beginning of year
|
1,358,717
|
|
|
$
|
2.81
|
|
|
1,223,159
|
|
|
$
|
3.74
|
|
Granted
|
49,500
|
|
|
$
|
0.56
|
|
|
340,000
|
|
|
$
|
2.83
|
|
Forfeited or expired
|
(229,018
|
)
|
|
$
|
3.09
|
|
|
(204,442
|
)
|
|
$
|
6.61
|
|
Exercised
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Outstanding, end of year
|
1,179,199
|
|
|
$
|
2.66
|
|
|
1,358,717
|
|
|
$
|
2.81
|
|
Exercisable, end of year
|
896,101
|
|
|
$
|
2.79
|
|
|
629,043
|
|
|
$
|
3.03
|
|
Range of
Exercise Price
|
|
Shares
|
|
Weighted Average Remaining
Contractual Life ( Years)
|
|
Weighted Average
Exercise Price
|
|||
$0.00 – $3.00
|
|
1,128,949
|
|
|
2.49
|
|
$
|
7.20
|
|
$3.01 - $9.99
|
|
50,250
|
|
|
6.66
|
|
5.52
|
|
|
Total
|
|
1,179,199
|
|
|
7.13
|
|
$
|
2.66
|
|
|
2012
|
|
2011
|
||
Expected life (in years)
|
3.15
|
|
|
4.90
|
|
Volatility
|
174.2
|
%
|
|
163.4
|
%
|
Risk free interest rate
|
0.30
|
%
|
|
1.96
|
%
|
Dividend yield
|
—
|
%
|
|
—
|
%
|
|
RSAs
|
|
Weighted Average Fair Value
|
|||
Outstanding, beginning of year
|
322,276
|
|
|
$
|
1.73
|
|
Granted
|
1,271,008
|
|
|
$
|
0.78
|
|
Forfeited
|
(316,715
|
)
|
|
$
|
0.59
|
|
Vested
|
(1,102,764
|
)
|
|
$
|
1.13
|
|
Outstanding, end of year
|
173,805
|
|
|
$
|
0.70
|
|
|
2012
|
|
2011
|
||||
(Loss) from discontinued operations from EU operations acquired with Vertro merger
|
$
|
(183,527
|
)
|
|
$
|
—
|
|
Gain from litigation settlement in discontinued operations
|
—
|
|
|
257,136
|
|
||
(Loss) Gain on sale of discontinued operations
|
$
|
(183,527
|
)
|
|
$
|
257,136
|
|
2013
|
$
|
1,067,871
|
|
2014
|
537,501
|
|
|
2015
|
547,967
|
|
|
2016
|
45,749
|
|
|
2017
|
—
|
|
|
Total
|
2,199,088
|
|
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
|
|
Grantee: ___Inuvo, Inc._______
|
Grant Control: #QACF 200823
|
|
|
Grant Amount: __$1,750,000________
|
Activity Type: Multi-Activity
|
|
|
|
|
GRANTOR
|
GRANTEE
|
|
|
Arkansas Economic Development Commission
|
Name: Inuvo, Inc.
|
900 W. Capitol, Ste. 400
|
Address: 1111 Main St., #208
|
Little Rock, AR 72201
|
Conway AR 72033
|
Phone: (501) 682-1121
|
Phone:
|
1.
|
This grant agreement which is comprised of this signature page (Part I), the General Terms and Conditions (Parts II), the Scope of Grant and Special Conditions (Part III), and the attached budget (hereinafter all referred to as the “Grant Agreement”) is entered into by the Arkansas Economic Development Commission, Grantor, and Inuvo, Inc., the Grantee, for the purpose of providing funds to the Grantee to undertake economic development projects which support private sector job creation opportunities pursuant to Act 510 of 2007 and its successors. The Grantee agrees to initiate and complete an economic development project in accordance with the terms of this Grant Agreement.
|
2.
|
The Grantee further warrants it will conduct and administer the grant in accordance with this agreement and all applicable State laws and regulations.
|
ARKANSAS ECONOMIC DEVELOPMENT
|
INUVO, INC.
|
COMMISSION
|
|
|
|
|
|
BY:
|
BY:
|
/s/ Michael J. Gaines
|
/s/ Richard Howe
|
Michael J. Gaines
|
Richard Howe
|
Deputy Director
|
Executive Chairman and CEO
|
|
|
|
|
1/25/2013
|
1/25/2013
|
Date
|
Date
|
(h)
|
Notwithstanding the foregoing, Grantor’s sole and exclusive remedy against Grantee for a violation of the terms of this Grant Agreement and the Grant Reimbursement Agreement shall be the repayment of the Grant amounts owed in accordance with the applicable formulas set forth in this Grant Agreement and the Grant Reimbursement Agreement.
|
(c)
|
Other responsibilities of the Grantee under this Grant Agreement and any close-out agreement, and applicable laws and regulations appear to have been carried out satisfactorily or there is no further State interest in keeping the grant open for the purpose of securing performance.
|
25.
|
To the extent not inconsistent with the terms of this Grant Agreement or the Grant Reimbursement Agreement, the Grantee agrees, as a condition of receiving grant assistance, to abide by and adhere to any policy directives, rules, regulations or other requirements which may be issued from time to time by the Grantor, and which in the reasonable and fair opinion of the Grantor are necessary to efficient or legal execution of the project.
|
26.
|
The Grantee agrees to use reasonable efforts to ensure that all work is performed and completed in a manner consistent with timelines established at the Grants inception. Failure to meet these timelines without acceptable justification may result in sanction and or deobligation of funding to Grantee and/or sub-contractors.
|
27.
|
If the Grantee is acquired prior to 3/31/2023, and the purchasing entity does not assume the requirements outlined in the Grant Agreement, Grant Reimbursement Agreement, and accompanying d
|
Cost Classification
|
AEDC
|
Company
|
Totals
|
||||
|
|
|
|
||||
Relocation Costs
|
|
$1,381,115
|
|
|
|
$1,381,115
|
|
|
|
|
|
||||
Equipment
|
|
$368,885
|
|
|
368,885
|
|
|
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
||||
|
|
|
|
||||
Totals
|
|
$1,750,000
|
|
|
|
$1,750,000
|
|
1.
|
Grant.
Conditioned upon receipt of the grant funds by the Company from the
|
(b)
|
The making and performance of this Agreement and each and every other document
|
i.
|
Terms of repayment for non-compliance for 8(a) shall be determined number by number 3. of this Agreement.
|
9.
|
Notice.
All communications and notices provided for hereunder shall be in writing and
|
▪
|
to endeavor to create and maintain at least 50 net new positions (Net New Positions) with an Average Total Compensation of all positions equaling at least $90,000 annually according to the employment schedule
|
▪
|
the new jobs created as described above will be located at the Inuvo headquarters located in Conway, Arkansas
|
▪
|
the new jobs created as described above and according to the employment schedule below will be created and maintained for the time period specified in the employment schedule
|
▪
|
Inuvo will submit annual job reports beginning on 4/30/2014 and continuing for nine (9) years thereafter.
|
|
Defined Year
|
Est. Number of Positions Created Per Year
|
Number of Positions Maintained Per Year
|
Est. Number of Total Positions On Payroll Per Year
|
Year 1
|
4/1/13-3/31/14
|
0-26
|
0
|
0-26
|
Year 2
|
4/1/14-3/31/15
|
12
|
0-26
|
38
|
Year 3
|
4/1/15-3/31/16
|
6
|
38
|
42
|
Year 4
|
4/1/16-3/31/17
|
8
|
42
|
50
|
Year 5
|
4/1/17-3/31/18
|
0
|
50
|
50
|
Year 6
|
4/1/18-3/30/19
|
0
|
50
|
50
|
Year 7
|
4/1/19-3/31/20
|
0
|
50
|
50
|
Year 8
|
4/1/20-3/31/21
|
0
|
50
|
50
|
Year 9
|
4/1/21-3/31/22
|
0
|
50
|
50
|
Year 10
|
4/1/22-3/31/23
|
0
|
50
|
50
|
COMPANY INFORMATION
|
COMPANY: VERTRO, INC.
|
|||
|
Business Contact:
|
Legal Contact:
|
Technical Contact:
|
Name:
|
Richard Howe
|
John Pisaris
|
Rick Anderson
|
Title:
|
CEO
|
General Counsel
|
VP of Technology
|
Address, City, State,
Postal Code: |
143 Varick St.
New York NY 10013
|
143 Varick St.
New York NY 10013
|
15550 Lightwave Dr.
Suite 300
Clearwater FL 33760
|
Phone:
|
212.231.2000
|
212.231.2000
|
727.324.0150
|
Fax:
|
|
|
|
Email:
|
Richard.Howe@inuvo.com
|
John.Pisaris@inuvo.com
|
Rick.Anderson@inuvo.com
|
|
TERM
|
TERM: ***
|
SEARCH SERVICES
|
WEBSEARCH SERVICE (“WS”)
|
Search Fees
|
***
|
***
|
ADVERTISING SERVICES
|
ADSENSE FOR SEARCH (“AFS”)
|
AFS Revenue Share Percentage
|
AFS Deduction Percentage
|
***
|
See Exhibit A
|
***
|
CURRENCY
|
|
AUD
|
|
|
|
JPY
|
|
|
|
CAD
|
|
|
|
KRW
|
|
|
|
EUR
|
|
|
X
|
USD
|
|
|
|
GBP
|
|
|
|
OTHER
|
|
|
2.
|
Launch, Implementation and Maintenance of Services.
|
10.
|
Payment.
|
Google
|
Company
|
By: 2013.01 /s/ Nikesh Arora
|
By: /s/ Rich Howe
|
Print Name: Nikesh Arora
|
Print Name: Rich Howe
|
Title: President, Global Sales and Business Development Group, Google, Inc.
|
Title: Chairman/CEO
|
Date:
|
Date:
|
Inuvo, Inc.
|
|
Nevada Corporation
|
|
|
|
|
Morex Marketing Group, LLC / BabytoBee
|
New York Limited Liability Company
|
|
|
|
|
Kidzadu, Inc.
|
Florida Corporation
|
|
|
|
|
ValidClick
|
Missouri Corporation
|
|
|
|
|
Check-Up Marketing, Inc.
|
North Carolina Corporation
|
|
|
|
|
MarketSmart Advertising, Inc.
|
North Carolina Corporation
|
|
|
|
|
Rightstuff, Inc.
|
North Carolina Corporation
|
|
|
|
|
Exact Supplements, LLC
|
Florida Limited Liability Company
|
|
|
|
|
Home Biz Ventures, LLC
|
Florida Limited Liability Company
|
|
|
|
|
Vintacom Florida, Inc.
|
Florida Corporation
|
|
|
|
|
Real Estate School Online, Inc.
|
Florida Corporation
|
|
|
|
|
iLead Media, LLC
|
Delaware Limited Liability Company
|
|
|
|
|
Kowabunga Marketing, Inc.
|
Michigan Corporation
|
|
|
|
|
PrimaryAds, Inc.
|
New Jersey Corporation
|
|
|
|
|
Vertro, Inc.
|
Delaware Corporation
|
|
|
|
|
ALOT, Inc.
|
Delaware Corporation
|
|
|
|
|
Varick & Spring I, Inc.
|
Delaware Corporation
|
|
|
|
|
Varick & Spring (MSB), Inc.
|
Delaware Corporation
|
|
|
|
|
Who Midco Corporation
|
Delaware Corporation
|
|
|
|
|
Varick and Spring II, Inc.
|
Delaware Corporation
|
|
|
|
|
Varick and Spring UK, Limited
|
United Kingdom
|
|
|
|
|
Varick and Spring (Deutschland) GmbH
|
Germany
|
1.
|
I have reviewed this annual report on Form 10-K for the year ended December 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 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 our 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.
|
March 13, 2013
|
By:
|
/s/ Richard K. Howe
|
|
|
|
Richard K. Howe,
Chief Executive Officer, principal executive officer
|
|
1.
|
I have reviewed this annual report on Form 10-K for the year ended December 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 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 our 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.
|
|
March 13, 2013
|
By:
|
/s/ Wallace D. Ruiz
|
|
|
|
Wallace D. Ruiz,
|
|
|
|
Chief Financial Officer, principal financial and accounting officer
|
|
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.
|
March 13, 2013
|
By:
|
/s/ Richard K. Howe
|
|
|
|
Richard K. Howe,
|
|
|
|
Chief Executive Officer, principal executive officer
|
|
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.
|
March 13, 2013
|
By:
|
/s/ Wallace D. Ruiz
|
|
|
|
Wallace D. Ruiz,
|
|
|
|
Chief Financial Officer, principal financial and accounting officer
|
|