UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

FORM 8-K

  

CURRENT REPORT

 

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

 

 

Date of Report (Date of earliest event reported)     October 30, 2014

 

INUVO, INC.

(Exact name of registrant as specified in its charter)

Nevada	001-32442	87-0450450
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1111 Main St., Suite 201, Conway AR	72032
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number, including area code	855-440-8484

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

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ITEM 2.02.           RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 

On October 30. 2014, Inuvo, Inc. issued a press release regarding its financial results for Q3 2014. A copy of the Company’s press release is being furnished herewith as Exhibit 99.1.

The information in this Current Report on Form 8-K under this caption and accompanying exhibits are being furnished under Item 2.02 and shall not be deemed to be “filed” for the purposes of Section18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of such section, nor shall such information be deemed incorporated by reference in any filing under the Securities Act of 1933 (the “Securities Act”) or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

The Company made reference to non-GAAP financial information in the press release. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.

ITEM 9.01.           Financial Statements and Exhibits.

(d)           Exhibits.

Exhibit No.		Description
99.1		Press release dated October, 30, 2014 regarding Q3 2014 financial results.

  

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

	INUVO, INC.
Date:  October 30, 2014	By:	/s/ John B. Pisaris
	John B. Pisaris, General Counsel

 

EXHIBIT INDEX

99.1		Press release dated October 30, 2014 regarding Q3 2014 financial results.

 

 

 

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Inuvo, Inc. Reports Third Quarter Sequential Revenue Increases 19% and Net Income of $0.02 per share.

$0.06 per share net income for the first nine months of 2014

CONWAY, AR, October 30, 2014 -- Inuvo, Inc. (NYSE MKT: INUV), an Internet marketing and technology company that delivers purchase-ready customers to advertisers through a broad network of desktop and mobile websites and apps, today announced net income of $403,000 or $0.02 per diluted share for the third quarter of 2014. Revenue for the quarter was $13 million, compared to $10.9 million in the second quarter of 2014 and $14.5 million for the third quarter of 2013. Adjusted EBITDA was $1.2 million in the third quarter of 2014 compared to $1.2 million in the second quarter of 2014 and $1.5 million in the third quarter of 2013.

"Sequential growth and net income have so far exceeded our expectations in 2014. We have been able to deliver solid results across the board through the first nine months with both business segments reporting double digit compounded sequential quarterly growth while also positively contributing to our mobile expansion objectives, where revenue in the quarter reached 49% of the total,”stated Richard Howe, Chairman and Chief Executive Officer of Inuvo. “We believe we are on the right track with solid quarterly financial performance, a stronger balance sheet and the successful transition out of a product line that represented half of 2012's revenue."

Third Quarter 2014 Highlights

•	Net income was $403,000 or $0.02 per diluted share.

•	ALOT sites and applications revenue was $5.6 million, a 187% improvement over 2013.

•	Adjusted EBITDA, a non-GAAP measure, was $1.2 million.

•	The Partner Segment grew 27% and the Owned & Operated Segment grew 10% sequentially.

•	Revenue and quality per lead delivered to clients had double digit percentage improvements.

•	Appbar revenue was less than $350,000 dollars.

First Nine Months 2014 Highlights

•	Net income was $1.5 million or $0.06 per diluted share, a 100% improvement over 2013.

•	ALOT sites revenue was $14.1 million, a 134% improvement over 2013.

•	Adjusted EBITDA was $3.7 million unchanged from the first nine months of 2013.

•	Revenue has grown from $10.1 million, to $10.9 million, to $13 million in the first, second and third quarters, respectively.

The Inuvo business is managed along two segments, the Partner Network and the Owned and Operated Network. The Partner Network facilitates transactions between advertisers and our partners' websites and applications. The Owned and Operated Network designs, builds and markets mobile-ready consumer websites and applications under the ALOT brand. The segments share the utilization of the company’s core ad delivery technology platform.

Three-month financial results for the period ended September 30, 2014

Net revenue for the three months ended September 30, 2014, was $13 million as compared to $14.5 million for the three months ended September 30, 2013. While there were both increases in the Owned and Operated Network and decreases in the Partner Network over this period, the principal reason for the overall decline revolves around the stated strategy to transition out of the Appbar product. Appbar revenue for the three months period decreased from $1.75 million in 2013 to $0.35 million in 2014 and for the nine month period decreased from $9.3 million in 2013 to $1.87 million in 2014. We expect the Appbar revenue to be near zero by the end of 2014. In addition, we incurred lower revenue but higher margin in the Partner Network in the quarter ended September 30, 2014 compared to the same quarter last year due to a focus on delivering higher quality clicks and the continued enforcement of publisher contract terms and conditions associated with that strategy. Revenue in our Owned and Operated Network was $5.9 million in the third quarter of 2014 compared to $3.7 million in

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the same quarter last year and reflects the transition from toolbar to content rich websites and applications within the segment. Though Marketing expense was higher in the third quarter 2014 compared to the same quarter last year due to the launching of owned & operated websites and applications, both Compensation expense and Selling, general and administrative expense ran below last year.

For the quarter ended September 30, 2014, Adjusted EBITDA, a non-GAAP measure was $1.2 million largely unchanged from the third quarter of 2013. The Company reported net income of $403,000, or $0.02 per diluted share, for the three months ended September 30, 2014.

Balance Sheet as of September 30, 2014

Cash and cash equivalents totaled $3.5 million at September 30, 2014. Current assets and total assets were $9 million and $25.8 million, respectively and current liabilities and total liabilities were $11.1 million and $18.4 million, respectively, as of September 30, 2014. Bank debt was reduced to $4.5 million from $6.1 million at December 31, 2013. Stockholders’ equity was approximately $7.4 million at September 30, 2014.

Conference Call Information

Date: Thursday, October 30, 2014

Time: 4:15 p.m. EDT

Domestic Dial-in number: 1-877-681-3374

International Dial-in number: 1-719-325-4749

Live webcast: http://public.viavid.com/index.php?id=111574

In addition, the call will be webcast on the Investor Relations section of the Company's website at http://investor.inuvo.com/events_and_presentations where it will also be archived for 45 days. A telephone replay will be available through Thursday, November 13, 2014. To access the replay, please dial 1-877-870-5176 (domestic) or 1-858-384-5517 (international). At the system prompt, enter the code 3233229 followed by the # sign. You will then be prompted for your name, company and phone number. Playback will then automatically begin.

About Inuvo, Inc.

Inuvo®, Inc. (NYSE MKT: INUV) is an Internet marketing and technology company that delivers purchase-ready customers to advertisers through a broad network of desktop and mobile websites and apps. To learn more about Inuvo, please visit www.inuvo.com.

Forward-looking Statements

This press release contains certain forward-looking statements that are based upon current expectations and involve certain risks and uncertainties within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Words or expressions such as "anticipate," "plan," "will," "intend," "believe" or "expect'" or variations of such words and similar expressions are intended to identify such forward-looking statements.

These forward-looking statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and difficult to predict and could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements, including, without limitation, statements made with respect to expectations with respect to our lack of profitable operating history, changes in our business, potential need for additional capital, fluctuations in demand; changes to economic growth in the U.S. economy; and government policies and regulations, including, but not limited to those affecting the Internet, all as set forth in our Annual Report on Form 10-K for the year ended December 31, 2013 and our most recent Form 10-Q. All forward-looking statements involve significant risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements, many of which are generally outside the control of Inuvo and are difficult to predict. Inuvo undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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Inuvo, Inc.
Wally Ruiz, Chief Financial Officer
501-205-8397
wallace.ruiz@inuvo.com
or
Investor Relations
Capital Markets Group

Alan Sheinwald
914-669-0222

alan@capmarketsgroup.com

 

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INUVO, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
		(Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Net revenue			$13,026,011				$14,509,050				$34,089,761				$43,559,257
Cost of revenue		5,910,719				8,183,064				14,253,649				22,628,243
Gross profit		7,115,292				6,325,986				19,836,112				20,931,014
Operating expenses
Marketing costs		4,277,446				2,939,584				11,555,731				10,625,638
Compensation		1,192,227				1,412,842				3,431,237				4,727,936
Selling, general and administrative		1,180,940				1,360,610				3,245,904				5,270,986
Total operating expenses		6,650,613				5,713,036				18,232,872				20,624,560
Operating income		464,679				612,950				1,603,240				306,454
Other expense, net		(84,870)				(98,451)				(285,973)				(271,448)
Net income from continuing operations before taxes		379,809				514,499				1,317,267				35,006
Income tax benefit		-				75,699				75,698				237,946
Net income from continuing operations		379,809				590,198				1,392,965				272,952
Net income from discontinued operations		23,065				49,601				66,959				457,709
Net income		402,874				639,799				1,459,924				730,661
Other comprehensive income
Foreign currency revaluation		-				(294)				-				(418)
Total comprehensive income			$402,874				$639,505				$1,459,924				$730,243
Earnings per share, basic and diluted
From continuing operations			$0.02				$0.03				$0.06				$0.01
From discontinued operations		-				-				-				0.02
Net income			$0.02				$0.03				$0.06				$0.03
Weighted average shares outstanding
Basic		23,445,771				23,291,468				23,485,052				23,278,003
Diluted		24,143,194				23,447,301				23,855,148				23,329,551
By Segment (Unaudited):

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Net revenue
Partner Network			$7,089,584				$10,807,377				$18,110,706			$28,232,281
Owned and Operated Network		5,936,427				3,701,673				15,979,055				15,326,976
Total			$13,026,011				$14,509,050				$34,089,761				$43,559,257
Gross profit
Partner Network			$1,207,382				$2,793,999				$4,024,984				$6,456,050
Owned and Operated Network		5,907,910				3,531,987				15,811,128				14,474,964
Total			$7,115,292				$6,325,986				$19,836,112				$20,931,014

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INUVO, INC.
RECONCILIATION OF NET INCOME FROM CONTINUING OPERATIONS BEFORE TAXES TO ADJUSTED EBITDA
(Unaudited)
		Three Months Ended								Nine Months Ended
		September 30,				September 30,				September 30,				September 30,
		2014				2013				2014				2013
Net income from continuing operations before taxes			$379,809				$514,499				$1,317,267				$35,006
Interest expense, net		84,870				98,451				285,973				271,448
Depreciation		225,924				409,685				725,231				1,619,719
Amortization		198,501				198,501				595,503				944,168
Stock-based compensation		279,970				239,353				658,800				539,766
Severances and other non-recurring, non-cash items		8,074				(623)				126,017				264,190
Adjusted EBITDA			$1,177,148				$1,459,866				$3,708,791				$3,674,297

Reconciliation of Net Income from Continuing Operations before Taxes to Adjusted EBITDA

In addition to disclosing financial results in accordance with United States generally accepted accounting principles (“GAAP”), our earnings release contains the non-GAAP financial measure “Adjusted EBITDA.”

Adjusted EBITDA is not a measure of performance defined in accordance with GAAP. However, management believes that Adjusted EBITDA is useful to investors in evaluating the Company’s performance because Adjusted EBITDA is a commonly used financial analysis tool for measuring and comparing companies in the Company’s industry in areas of operating performance.

Management believes that the disclosure of Adjusted EBITDA offers an additional view of the Company’s operations that, when coupled with the GAAP results and the reconciliation to GAAP net income, provides a more complete understanding of the Company’s results of operations and the factors and trends affecting the Company’s business.

We present Adjusted EBITDA as a supplemental measure of our performance. We defined Adjusted EBITDA as net income from continuing operations before taxes plus (i) interest expense, net, (ii) depreciation, (iii) amortization, (iv) stock-based compensation, and (v) accrued severance and other non-recurring, noncash expense. These further adjustments are itemized above. You are encouraged to evaluate these adjustments and the reasons we consider them appropriate for supplemental analysis. In evaluating Adjusted EBITDA, you should be aware that in the future we may incur expenses that are the same or similar to some of the adjustments in the presentation. Our presentation of Adjusted EBITDA should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.