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Organization and Business | 3 Months Ended
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Mar. 31, 2014
Organization, Consolidation and Presentation of Financial Statements [Abstract] |
Organization and Business | Organization and Business Overview Business 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. 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 March 31, 2014 we had 26 employees located in Arkansas. Liquidity During 2013, we saw volatility in our cash position reflecting the current revenue levels. To manage available cash, we may delay payments to the Partner Network publishers and other vendors, 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 reduced liquidity and violations of covenants in the agreement with Bridge Bank, N.A. ("Bridge Bank"). During the first quarter of 2014, Bridge Bank waived the events of default associated with the covenant violations and amended the financing agreement. See Note 5, "Notes Payable." We have access to a revolving line of credit with Bridge Bank, which had approximately $627,000 in availability as of March 31, 2014. We believe the revolving line of credit and cash generated by operations will provide sufficient cash for operations over the next twelve months. During the first quarter of 2014 we filed an S-3 registration statement with the Securities and Exchange Commission ("SEC") to replace the existing, expiring S-3 “shelf” registration statement. 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. Customer concentration We generate the majority of our revenue from two customers, Yahoo! and Google. At March 31, 2014 and December 31, 2013 these two customers accounted for 90.2% percent and 88.0% percent of our gross accounts receivable balance, respectively. For the three months ended March 31, 2014 and March 31, 2013 they accounted for 95.7% percent and 91.3% percent of net revenue, respectively. 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 continued 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. The Exchange initially required that we regain compliance with the continued listing standards by April 24, 2014. While we reported net income in 2013, we reported a loss of $26,000 from continuing operations in 2013 which resulted in our company failing to regain compliance with the continued listing standards at the end of 2013 as initially expected. In April 2014, after discussions with the Exchange, the Exchange agreed to extend the time for our company to regain compliance with the continued listing standards to May 30, 2014. This date is the maximum period the Exchange is permitted to provide us to regain compliance with its continued listing standards and is not subject to further extension. We believe that as a result of reporting net income from continuing operations of $649,000 for the first quarter of 2014, as well as stockholders’ equity in excess of $6,000,000, we are currently in compliance with the continued listing standards. The Exchange will continue to monitor our compliance with the continued listing standards through periodic review to determine whether we are making progress consistent with the plan. If we should fail to comply with continued listing standards in future periods, our common stock is subject to immediate delisting proceedings.

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