Good day and welcome to the Inuvo Inc 2020 Second Quarter Financial Results Conference Call. Today’s conference is being recorded. At this time, I would like to turn the conference over to Valter Pinto, Managing Director of KCSA Strategic Communications. Please go ahead, sir.

Thank you, operator, and good afternoon. I would like to thank everyone for joining us today for the Inuvo second quarter 2020 shareholder update conference call. Today Inuvo’s Chief Executive Officer, Richard Howe; and Chief Financial Officer, Wally Ruiz, will be your presenters on the call. I would like to start by letting our listeners know that as a consequence of the COVID-19 pandemic, both our office in San Jose, California and Little Rock, Arkansas remain closed. In Little Rock, we are excited to have twice leadership meetings, we are monitoring the pandemic on a day-to-day basis and we recommend returns for our employees if and only when we feel we can adequately safeguard our colleagues from exposure. I would also like to remind our shareholders that we anticipate filing our 10-Q with the Securities and Exchange Commission tomorrow, Friday, August 14, 2020. Before we begin, I’m going to review the company Safe Harbor statement. The statements in this conference call that are not descriptions of historical facts are forward-looking statements relating to future events, and as such, all forward-looking statements are made pursuant to the Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties, and actual results may differ materially. When used in this call, the words anticipate, could, enable, estimate, intend, expect, believe, potential, will, should, project, and similar expressions as they relate to Inuvo are forward-looking statements. Investors are cautioned that all forward-looking statements involve risks and uncertainties, which may cause actual results to differ from those anticipated by Inuvo at this time. In addition, other risks are more fully described in Inuvo’s public filings with the U.S. Securities and Exchange Commission, which can be reviewed at sec.gov. With that, let’s turn the call over to CEO, Richard Howe.

Thank you, Valter, and thanks everyone for joining us today. For the three months ended June 30, 2020, we delivered roughly 7.6 million in revenue, with approximately 5.7 million of it coming from the ValidClick platform and 1.9 million from the IntentKey platform. For the six-month period, revenue was 22.5 million, with 18.7 million from ValidClick and 3.8 million from the IntentKey. Revenue in the prior three and six-month periods was roughly 14 million and 29.5 million, respectively. Lower revenue through the first six months of the year was predominantly caused by decreasing advertising budgets associated with COVID-19 and isolated within the ValidClick platform. While revenue was down sharply year-over-year, we countered the income implications of lower revenue by implementing a number of short-term expense and contract modifications within the quarter. Net loss year-over-year within the quarter improved 30% from roughly 2 million in 2019 to 1.4 million in 2020. Sequentially net loss improved by over 50% or approximately $1.5 million. On our adjusted EBITDA basis, there was also an improvement year-over-year within the quarter of roughly 84%, going from a loss of $854,000 in the second quarter of 2019 to a loss of $140,000 in the second quarter of 2020. Sequentially adjusted EBITDA improved by roughly 90% or approximately $1.2 million. Reconciliation of adjusted EBITDA to net loss is contained in our earnings release. As we had messaged on our Q1 conference call, we had expected the ValidClick business to be impacted materially by the pandemic, and it was down roughly 29% for the first half of the year, and 53% within the quarter on a year-over-year basis. This impact on ValidClick was partially influenced by the markets that business serves. As a marketing tool for advertisers, the ValidClick platform is typically used by brands to extend their audience reach. As such, when budgets contract quickly, as they have during COVID, these services tend to be among the first budget adjustments affected. The Interactive Advertising Bureau recently surveyed advertisers to better understand how they were thinking about their marketing budgets, generally during COVID for the period between March and June. 26% of the responders noted that their ad spend was likely to be down, with 24% noting that they had paused all their advertising spend; 14% reported they had no plans to modify budgets and 15% were undetermined. The ValidClick business had its lowest month of the year in May. Since then, we have started to see a modest, but steady sequential monthly improvement. Through July, with August currently continuing that upward trend. Within ValidClick, the team has been using this time to build the products, bring more services in-house and negotiate better deals with traffic acquisition partners, so as to be in a position as the market turns to capitalize not only on growth but also on margin. One of those new products is currently scaling in collaboration with Verizon. The IntentKey business has held up very well in spite of dramatic reductions in marketing budgets across the industry. For the six-month period, the business is up 17% year-over-year. For the three months ended June 30, 2020, the business was roughly flat year-over-year. The impact COVID has had on the IntentKey business is perhaps best categorized as a pause in the growth rate, which we would expect to return as the economy begins to improve post-COVID. The lowest IntentKey revenue month in the year-to-date was April, and the May through July months all grew sequentially. August is currently forecast to continue that trend. We had frozen company hiring in March as a result of COVID, but have recently started recruiting activity within the IntentKey, having added an additional salesperson in July. We currently have 10 people in sales, sales support, and account management positions within the group. Gross margins within the IntentKey have continued to exceed expectations, now averaging over 50% through the first six months of 2020, which is approximately 100% improvement from the prior year period. We have had roughly a 60% increase in the number of RFPs we responded to within the quarter as compared to the prior year. The majority of these RFPs are for budgets expected to be allocated in Q3 and Q4. From a performance perspective, we exceeded client KPIs across more than 50 campaigns that were operational within the quarter by approximately 65%. Roughly a quarter of these campaigns were new and three-quarters were renewals. For our largest client, the IntentKey continues to perform very well. Our campaigns for that client currently include mobile video and display advertising. We had a successful test campaign in the quarter for desktop video, and we are currently in the process of testing connected TV campaigns. One successful test campaign has historically turned into recurring budget allocations. As a company, our capital position has never been stronger. At the end of July, we had roughly 12 million of cash on our balance sheet, which we intend to put to work towards growth initiatives. I would like to turn the call over to Wally for a more detailed assessment of our financial performance within the quarter.

Thank you, Rich. Good afternoon, everyone. I will recap the financial results for our second quarter. As Rich mentioned, Inuvo reported revenue of 7.6 million for the quarter ended June 30, 2020, while this compares to 14 million reported in the second quarter of last year. The decrease in this year’s revenue is primarily due to reduced advertising budgets, particularly in the ValidClick operations. ValidClick revenue in the current quarter was 5.7 million, compared to 12.1 million in the second quarter of last year. The lower ValidClick revenue was partially offset by higher revenue from our owned and operated sites. IntentKey revenue was virtually flat in the second quarter of this year compared with last year. So, for the first six months, it was up 70% from the prior year. Gross margins increased in the second quarter to 86% compared to 60% in the same quarter last year, due primarily to a renegotiation of payment terms and conditions, with a ValidClick marketing partner. IntentKey gross margins continue to increase within the second quarter of 2020, increasing to 55% compared to 24% in the same quarter of last year. Operating expenses were 2.7 million lower in the second quarter of this year compared to the prior year. Marketing costs primarily made up the expense required to attract consumers to websites and apps. These are the ValidClick traffic acquisition costs, also known as TAC. ValidClick revenue is generated predominantly from ads served to these websites. Therefore, ValidClick has a lower cost of revenue but a higher marketing expense as a result of TAC. Marketing costs were 3.9 million in the second quarter of this year compared to 6.5 million in the same quarter last year. The lower expense this year compared to last year is primarily due to lower ValidClick revenue compared to last year and to the renegotiation of payment terms and conditions with a ValidClick TAC provider. Compensation expense was 2.1 million in the second quarter of this year compared to 1.7 million in the prior year, primarily due to higher employee benefits expense, accrued commissions, stock-based compensation, and accrued incentive pay. Our headcount at June 30th of this year was 70 full and part-time employees compared to 62 at June 30th of last year. In spite of a higher headcount in this year’s quarter, the payroll for the quarter ended June 30, 2020 was lower than the same quarter last year, due to temporarily lowering the compensation for senior officers and employees with salaries in excess of 100,000 per year. Selling general and administrative expense decreased by 432,000 in the second quarter of this year compared to the prior year, due primarily to higher legal and professional fees incurred last year from the merger agreement we terminated in June 2019. Interest expense was 73,000 in the second quarter of this year, compared to an interest income of 149,000 in the second quarter of last year. Last year’s interest income or net interest expense, which was an income item included an adjustment to the derivative liability expense associated with the convertible promissory notes that we issued in March 2019. We had other expenses of 50,000 in the second quarter of this year, due to the loss associated with the mark-to-market of a derivative liability associated with the convertible notes that I just mentioned, and due to a buyout of a lease of computer equipment. We reported a net loss of 1.7 million or 0.02 per basic share, compared to a 2 million net loss or 0.06 per basic share last year for the second quarter. The adjusted EBITDA for the quarter ended June 30 was a loss of 140,000 compared to a loss of 854,000 in the second quarter of last year. Our balance sheet at June 30, 2020 had cash and cash equivalents of 4.2 million and outstanding financing debts of 3.4 million. In the second quarter, we engaged in a number of capital raising activities. In April, we closed the second tranche of a registered direct offering, in which we sold our common stock for gross proceeds of 245,000. Also in April, we obtained an unsecured 1.1 million loan under the Paycheck Protection Program or PPP loan. We used the proceeds entirely for payroll costs. In July, we applied for debt forgiveness as provided by the program. In May, the remaining promissory note holders that I had previously mentioned converted all of their notes, and as of today, or as of the end of June, no notes were outstanding. In June, we closed an additional registered direct offering of our common stock for gross proceeds of 5.5 million. Subsequent to June and in July, we closed the firm commitment underwritten follow-on public offering of our common stock for gross proceeds of 10.75 million. And just a word about COVID-19 and Inuvo. Beginning in late April 2020, we started to see a reduction in the number of advertisers available to ValidClick, and as a result, a decline in the monetization of traffic to those various websites and applications that ValidClick serves. This resulted in a reduction in revenue that we are now reporting in the second quarter. Additionally, while achieving 17% growth, IntentKey sales slowed in the early months of 2020, as a number of clients paused their marketing spend in the second quarter, resulting in a slowing down of the growth rate and us reporting a flat second quarter year-over-year. Generally, we have curtailed expenses, including compensation and travel. We have issued a work from home policy to protect our employees and their families. As mentioned earlier, we also implemented a temporary compensation change to senior officers, employees, and managers. As Rich mentioned, beginning in mid-June 2020, we experienced an improvement in daily revenue, which appears to be continuing into the third quarter. We do not yet feel comfortable enough with the trend to predict with any certainty how the second half of the year will materialize, nor whether our revenue run rate will continue to improve. We are focusing all of our resources on areas we believe have immediate revenue potential and continuing to find expense reductions as necessary, with as little disruption to our daily operations as possible. Now, I would like to turn the call back over to Rich for closing remarks.

Thanks, Wally. We continue to navigate our way through the economic changes associated with COVID, and the early trends heading into the strongest part of our year suggest recovery has started. The IntentKey has continued to grow throughout the first half of the year in spite of significant and industry-wide marketing budget declines resulting from COVID. While ValidClick was impacted more severely than IntentKey, we have seen encouraging monthly sequential growth within ValidClick following its low points in May. With now the strongest balance sheet in the history of our company, we feel confident in our ability to not only manage recovery, but to thrive on the other side. I would like to turn it over to the operator.

Thank you. And we will take our first question from Brian Kinstlinger of Alliance Global Partners.

Hi good evening guys, thanks for taking my questions and pretty impressive breakeven on next lower revenue. In terms of IntentKey, can you talk about your ability to win new logos in this environment? Or when you look at leasing ramp, I guess month-by-month, that you talked about that revenue growth coming from existing customers or coming from new customers?

It is coming from both, leading into the second quarter, Brian. I believe our first quarter year-over-year growth rate alone for the IntentKey was north of 40%, if memory serves which is why for the second quarter, we had 17% growth in that business for the half of the year. But clearly to achieve the kind of growth rate we are seeing in the first quarter and the quarters before that, we need to try and get new logos, and we have that, and we did find new logos in the quarter. It is really just that the marketing budget got paused for a lot of companies. But what we are seeing now is we are starting to be released again. So, IntentKey is picking back up. It is hard for us to gauge since there has never been a COVID before. There has been no example for us to quantitatively have new budgets come back. Do they come back in full form at full strength in Q3 and Q4, or at half capacity? I don’t know. But right now, things are moving in that direction for sure.

So when you look at your - can you provide - maybe quantify a customer count for IntentKey at the end of June versus the end of March and maybe today?

Yes. I don’t have it handy, and I don’t think we give out the customer counts. But there are lots of customers with IntentKey. I believe in my script, I mentioned that running in the second quarter, I think we have 50 campaigns; now, there are sometimes multiple campaigns for customers, but there were 50 campaigns running for the IntentKey in the second quarter. To your question about demand, I think the other thing I mentioned that people should pick up on is that we had like 60 RFPs in the second quarter. The budgetary season for marketing tends to pick up in a big way towards the end of the second quarter, as people try to fill their budgets for their Q3 and Q4 season. So, that many RFPs for us feels like a good sign that the demand is going to be coming back in the back half of the year.

Okay. And then can you talk about the sales cycle for new logos? How quickly can something transpire? Does it start with a test campaign, and how quickly can that ramp?

The answer to your question is it is not as simple as you think because the results that we have seen can vary quite dramatically. We have closed business in 22 days, and it has taken us nine months to close business. You are looking at a pretty substantial range there. I would say like all things fail, the quality and determination of the salespeople is proving to be a big factor in terms of making the number closer to 22 days versus the nine month period. The reality is, you know, closing a material logo with a material budget is likely to fall somewhere in between and maybe even on the higher end of the middle of that range. Yes, it is almost invariably, new clients always start with a test. I mentioned in my script, even our largest customers, when they add new capabilities that they want to test with us, they use a test, which is exactly what happened. I said we are doing a connected TV test for our largest client right now, actually started in August. What happens is, if the performance results for those tests look good, invariably, the client starts a more regular budget allocation towards whatever it is we are testing for them.

Great. Now I think you clearly laid out the strength in demand trends for IntentKey, month-by-month, and maybe I missed it, but can you kind of lay out how you are seeing ValidClick? Was that business recovering albeit at a much slower clip over the last few months?

So, ValidClick was expected to have a greater, let’s say impact as a result of COVID than IntentKey was. The reason for that is because it is not a primary budget source for marketers. Unlike the IntentKey, it is like a major channel, a major spend category. It tends to be an add-on budgetary expense. The good news about ValidClick is that it is an add-on budgetary expense for hundreds of thousands of advertisers, which is the advantage of that business for us, because globally our integrations with the demand-side partners give us access to many advertisers. You kind of get a little bit of budget from a lot of brands. The challenge is when budgets pull back, when a marketer tends to pull back, it is those kinds of budgets that pull back first. That is why we saw a disproportionate reduction in the ValidClick business. Now, with that being said, the business did bottom out in May. We saw sequential growth in June over May, and we saw sequential growth in July over June, and we are seeing growth trends in August that are above July. We feel like the ValidClick business is coming back up, and it will come back up - it will come back.

Okay. That puts me around; I mean, IntentKey? Have you been able to scale that business? You have already had your margins dramatically expand there. What are the mature gross margins in the IntentKey business?

I have said a few times when I have been asked this question that I think the sustainable margins for the IntentKey are probably in the 50% to 60% margin range. However, with that being said, I also mentioned, and perhaps it would not be picked up enough, that we are actually in the process of building a SaaS version of the IntentKey that allows clients to run their own campaigns. We expect that to be launched in 2021, and when we launch that product, there will be margins north of 90% for that business model. This has always been part of the design for the IntentKey business model, but we wanted to offer it as a service before we offered the new SaaS product. This way, we could generate excitement and prove results that are significant revenue base running our program to have success proof points to claim for the SaaS version. Going forward, we think past 2021 we will always have a services business that will have a complimentary SaaS business, which should see increasing margins; that won’t start until we launch the SaaS version.

Great. Thanks for taking my questions.

Thank you.

And we will go next to Ryan Meyers of Lake Street Capital Markets.

Hello guys, thanks for taking my questions. First one from me. What was the cash at the end of July given the equity raise?

It was approximately 12 million.

Okay. And then just one more sort of housekeeping item. What should we be using for share count to account for the recent equity raise?

Should be approximately 97.5 million.

Alright, that is helpful. Thank you. So then do you expect the IntentKey revenue to be up sequentially, or how should we think about the seasonality for the rest of the year?

Well, we are certainly hopeful. We are not planning to be reliant. As I said, in my preamble, COVID is just - listen, none of us had to deal with COVID, nor has anyone else. It is hard for me to take a trend that we are seeing right now, which for the IntentKey, by the way, is growth May over April. April was the lowest month for the IntentKey, and now we have growth over April, growth over June, July growth over June, and August is forecast to be higher than July. So there is a trend that is headed in the right direction as it relates to the IntentKey. But I don’t know if that trend is going to continue. I suspect it will; it looks like it will. If it does, then we should be back to year-over-year quarterly growth in Q3.

Okay. And then you mentioned you guys added one salesperson in July, and are you thinking about that for the rest of the year, as far as adding more sales reps?

I’m looking right now to hire at least two more in preparation for the budgetary season coming up, and for next year, so we are identifying candidates and actively pursuing candidates for sales right now.

Great. Thanks, guys.

You bet, Ryan.

With that last question, this will conclude today’s calls. We appreciate everyone’s participation today. You may now disconnect.