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Organization and Business | 12 Months Ended
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Dec. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Organization and Business | Organization and Business Company Overview Inuvo, Inc. and subsidiaries ("we", "us" or "our") is an internet marketing and technology company that delivers targeted advertisements to websites and applications reaching both desktop and mobile devices. We deliver content and targeted advertisements over the internet and generate most of our revenue when an end user clicks on the advertisements we have delivered. We manage our business as two segments, the Partner Network and the Owned and Operated Network. In the third quarter of 2013 we reorganized our segments and retrospectively applied the current presentation to prior periods. The Partner Network delivers advertisements to our partners' websites and applications on desktop, tablet and mobile devices. We generate revenue in this segment when an advertisement is clicked, and we share a portion of that revenue with our partners. Our proprietary technology platform allows for targeted distribution of advertisements at a scale that measures in the billions of advertisements delivered monthly. The Owned and Operated Network designs, builds and markets consumer websites and applications. This segment consists of our mobile-ready ALOT websites and the ALOT Appbar (the "Appbar") and is focused on providing engaging content to our users. The majority of revenue generated by this segment is derived from clicks on advertisements delivered through web searches or advertisements displayed on the websites. On March 1, 2012 we completed the acquisition of Vertro, Inc. (“Vertro”, "March 2012 Acquisition"), an internet company that owns and operates the ALOT product portfolio. This acquisition is discussed further in Note 15 to the financial statements. Relocation of corporate headquarters During 2012, our leadership team began to explore opportunities for consolidation of our offices in New York City and Clearwater, FL. In the fourth quarter of 2012, the state of Arkansas offered us a grant to relocate our offices and operations to their state. On January 25, 2013, we reached an agreement with the state of Arkansas and received a grant of up to $1.75 million for costs related to the relocation and the purchase of equipment necessary to begin operations in Arkansas. The grant is contingent upon us having at least fifty full-time equivalent permanent positions within four years, maintaining at least fifty full-time equivalent permanent positions for the following six years and paying those positions an average total compensation of $90,000 per year. If we fail to meet the requirements of the grant after the initial four year period, we may be required to repay a portion of the grant, up to but not to exceed the full amount of the grant. Based on our hiring and financial forecasts, we believe we will meet all grant requirements. As of December 31, 2013 we had 32 employees located in Arkansas. Liquidity During 2012, our liquidity was unfavorably affected by investments in marketing costs to increase consumer downloads of our Appbar product. Although we realized operating efficiencies from the March 2012 Acquisition, we took additional steps to reduce our operating costs and improve our liquidity situation, most notably the relocation to Arkansas. As a result, cash flow from operations and our net working capital deficit have increased and outstanding bank debt has declined in 2013. Despite improvements during 2013, we see volatility in our cash position from time to time, especially in periods in which we see declines in revenue. To manage this, we may delay payments to the Partner Network publishers and other vendors to conserve cash or manage risk, which may affect their decisions to do business with us. In 2013, we decided to transition from the AppBar product to owned and operated websites and applications. This transition contributed to a liquidity squeeze and violations of covenants in the agreement with Bridge Bank, N.A. ("Bridge Bank") which they subsequently waived. See Note 6, "Notes Payable." We have access to a revolving line of credit with Bridge Bank, which had approximately $393,000 in availability as of December 31, 2013. The fourth quarter results reflect the transition out of the ToolBar product into higher growth, content based, mobile ready websites and applications. The lower revenue in the quarter resulted in lower borrowing capacity which we dealt with by reducing operating expense and lengthening payables of some accounts. As a result, we negotiated a covenant waiver and modification of terms with Bridge Bank, N.A. (“Bridge Bank”) (see Note 6, “Notes Payable”). We anticipate securing additional financing of $1 million in 2014 through debt or the sale of common stock. There are no assurances that additional financing will be available to us upon terms and conditions which are acceptable to our company. We also have access to a revolving line of credit under our agreement, as amended with Bridge Bank which had approximately $393,000 in availability as of December 31, 2013. We believe the revolving line of credit, cash generated by operations, and anticipated financing will provide sufficient cash for operations over the next twelve months. The accompanying consolidated financial statements were prepared by management on a go-forward basis and therefore do not include any adjustment to our assets and liabilities. NYSE MKT Our common stock is listed on the NYSE MKT, LLC (the "Exchange"). In November 2012 we were notified by the Exchange that we were out of compliance with certain aspects of their listing requirements; specifically, due to losses from continuing operations and/or net losses in our five most recent fiscal years, the Exchange's minimum requirement for continued listing is stockholders' equity of not less than $6,000,000. We were afforded the opportunity to submit a plan of compliance to the Exchange by December 31, 2012 to demonstrate our ability to regain compliance with their listing standards. We submitted our plan and were notified on February 15, 2013 that it was accepted. We are able to continue our listing during the plan period, which the Exchange recently extended to April 24, 2014, though subject to periodic review to determine whether we are making progress consistent with the plan. For the year ended December 31, 2013, net income was $477,216. We believe reporting a net income for the most recent fiscal year changes the Exchange's minimum requirement for continued listing to stockholders' equity of not less than $4,000,000. As of December 31, 2013, stockholder's equity was $5,341,866.

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