Good day everyone and welcome to the Inuvo Incorporated 2016 Year End Financial Results Conference Call. Today’s call is being recorded. And at this time, I would like to turn the conference over to Alan Sheinwald, KSCA Strategic Communications. Please go ahead, sir.

Thank you, operator and good afternoon. I’d like to thank everyone for joining us today for the Inuvo fourth quarter and full year 2016 shareholders update conference call. Today, Mr. Richard Howe, Chief Executive Officer; and Mr. Wally Ruiz, Chief Financial Officer of Inuvo will be your presenters on the call. Before we begin, I’m going to review the company’s 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, Incorporated are as such a forward-looking statement. 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 found and reviewed at www.sec.gov. With that out of the way now, I’d like to congratulate management on an outstanding year, which culminated recently with the acquisition of NetSeer. With that, I’d now like to turn the floor over to Mr. Richard Howe, CEO of Inuvo. Rich, the floor is yours.

Thank you, Alan, and thanks everyone for joining us today. 2016 was a very busy year for Inuvo, marked by a many successes and a few obstacles. We entered 2016 coming-off a significant growth rate of 42% in 2015, such rapid growth required that we hire additional resources quickly to fulfill obligations that came with that growth. This hiring continued into the early part of 2016. Operationally, we have generally tried to run the business and in efficient fee ratio of greater $1 million in revenue per employee. As of the end of January 2017, we had roughly 71 full and part-time employees, not counting the recent acquisition. Managing to this growth along with some temporary advertiser issues in Q2, did curtail business in the early part of 2016, however we recovered well in the second half of the year, growing 12% sequentially in each of the third and fourth quarters to end the year at roughly $71.5 million in revenue. Our CAGR, over the last two year has been a little over 20%, which is in line with our organic growth goal. We also had yet another year of positive EBITDA, adjusted for non-cash expenses. We delivered $2.6 million, well above the goal we had set for the business, given the growth investments we had been making. As a company, Inuvo has been delivering positive adjusted EBITDA for over five years. I’d like to take a minute now and talk about our two reporting segments, which we have historically referred to as the Owned and Operated Network segment and the Partner Network segment. Within the Owned and Operated segment, we build and market consumer websites and applications, this segment consists our main online property marketed under the ALOT brand and several other website targeted at specific demographics. In the…

Thank you, Rich, good afternoon everyone. Today we're reporting on the fourth quarter of 2016. Inuvo reported revenue of $19.7 million for the quarter that ended December 31, 2016, a 12% increase from the immediate prior quarter and a 7% decrease from the $21 million reported in the same quarter of 2015. For the full year ended December 31, 2016 Inuvo reported revenue of $71.5 million, a 2% increase over 2015. EBITDA adjusted for stock-based compensation expense, a non-GAAP financial measure was $612,000 in the quarter that ended December 31, 2016 or $0.02 per share that compares to $420,000 or $0.02 per diluted share in the immediate prior quarter and compares to $1.6 million or $0.11 per diluted share in the same quarter of 2015. For the full year of 2016, adjusted EBITDA delivered $2.6 million or $0.11 per share compared to $4.7 million or $0.19 per share in 2015. On a GAAP basis, Inuvo reported a net loss of $309,000 or $0.01 net loss per share in the quarter that ended December 31, 2016, in the same quarter of the prior year we reported a net income of $617,000 or $0.03 per diluted share. And for the full year of 2016 the GAAP net loss was $773,000 or $0.03 per share net loss compared to $2.3 million net income or $0.10 per share for 2015. As Rich mentioned, beginning this year we will refer to the partner network as the Ad-Tech segment. And the Owned and Operated Network will be referred to as the Digital Publishing segment. This renaming aligns with how we speak of the business internally among ourselves. The Ad-Tech segment, what we used to call the Partner Network reported $9.8 million of revenue in the fourth quarter of 2016, that's 50% of the total revenue of…

Thanks, Wally. 2016 is behind us and we are now fully focused on having our best year ever in 2017. Operationally, we continue to manage for growth, while maintaining a positive adjusted EBITDA. The goal at this point is to make the moves necessary with hiring and investments to continue fueling growth, while maintaining fiscally responsible practices, something we have proven we can and have done successfully for many years. We expect the core Inuvo business to deliver double- digit year-over-year growth and the newly acquired business to contribute at least $15 million of revenue in 2017. The operating plan for the new business, which will be reported under the Ad-Tech segment is to have it be accretive by year end and be a significant contributor in 2018. The acquisition of NetSeer should demonstrate to stockholders that Inuvo is in a good position to be the company that can roll up assets within Ad-Tech. Many of these smaller companies are now becoming attractive as their valuations have dropped. We expect to be continuously looking for such asset. With that, I'd like to turn the call over to the operator for questions. Operator?

[Operator Instructions]. We'll take our first question today from William Gibson with Roth Capital Partners. Please go ahead.

Thank you. I like a little more color on the marketing spend, and what type of growth you expect from Digital Publishing? Is this something where you back off the marketing spend and use it more as a test lab to leverage the other business or what are your thoughts there?

I'll take a start now pass it to Wally for the financial part of the question Bill. So I guess the answer is both yes and no, look that we have a great Digital Publishing assets here and clearly we've grown great business out of it what was it $45 million revenue this year. So the business itself has every opportunity to continue to grow and like any publishing business be it offline or online one of the successful ways you grow such a business is to be a great marketer it doesn't changed from the days when we were producing magazines and putting them in the mail. So we will continue to invest in our marketing competencies to grow that business. Now with that said, yes we do that business quite extensively as a source of reconnaissance if you will market reconnaissance and performance reconnaissance on our own technologies and we will continue to do that as well. As it relates to the growth of the segment for next year we didn't provide details about the relative split between the segments in our guidance for the year. But generally I think the businesses you should see the Ad-Tech segment grow faster than the Digital Publishing segment.

Yes particularly even without the acquisition of NetSeer you would have seen it growing faster. I think we were messaging that over the last couple of quarters Bill. But particularly now with NetSeer going into the Ad-Tech side it will be the -- growth rate will be quite a bit larger. So as a percentage you're going to see a greater percent coming from Ad-Tech, smaller percent from Digital Publishing. And -- but the relationship to marketing cost Digital Publishing will remain more or less the same and so in dollar terms you could figure that based upon the same percentage relationship that you've seen in the past.

Okay. And if I could one follow-up related question, year threw out a statistic that about 25% of your marketing spend was artificially or artificial intelligence driven, I'm a little surprised the number one bigger, and how do you define the other spend there?

Yes, so 45% is pretty good actually and like I said in my comments the objective is try to get 100% of this under machine watch if you will. And I think we'll get probably close to that sometime this year. The challenge there Bill is artificial intelligence is just that it's artificial. And there is risk associated with giving the power to a machine to make decisions about where to put an ad what price to offer for the ad and how many of those ads to show. And so you have to be very diligent when you're implementing those kinds of technologies to make sure that all of the various scenarios have been anticipated by the algorithms that you have written that form the basis for the intelligence. And so, it’s 25% mostly because we are still in the phases of ensuring that we don’t deploy technology on that side of our business which is responsible for making purchase decisions about ad space, that it doesn’t go array [ph] on us. And so we showed that we were very diligent about that, we take our time, we make sure it works and then we add a little bit more to it. And so that’s kind of the process that we’ve gone forward.

And as it gets more machine driven does that lower the costs as a percent. You talked about the relationships staying the same, but does that ultimately get to your lower cost to get there on the same revenue?

Yes, I think there is two I guess cost synergies that should result from successful deployment of those kinds of technologies; one is, the technology is just better at doing the purchasing than a human would be, so we will see lower cost to get the same inventory. And two, as the company scales, as the business scales we need less people to do that kind of work. So you would see an efficiency on the resource side of the business with the scaling.

Thanks, Rich.

Thank you.

And we will now go to Lisa Thompson with Zacks Investment Research.

Hi, I’d like to ask a few more questions about NetSeer. So first off, how much of this acquisition could add to expenses, compensation in SG&A on a quarterly basis?

So we didn’t break that out Lisa. However, what we did say is on the year, so for the rest of this year, we would expect the business to deliver no less than $15 million of revenue and on the year be roughly neutral as a contributor to adjusted EBITDA.

Okay. So we have just have to guess where it goes. Okay, alright. And now you have this company integrating into your product offering, has that changed at all who your competitors are?

Well it introduces some new competitors that we didn’t compete with in the past because we didn’t have an image technology. And -- but I don’t think generally speaking Lisa, I don’t think it does because there is a lot of companies out there competing for real estate ad inventory. Like I said in my notes, I think what this really does is it gives us the opportunity to go in with one or more products and meet a specific need for our publishers. So for example now we can go to a publisher that maybe has a lot of image based galleries or slide shows as part of their content experience and sell them a solution that is aligned specifically with the core thing they do and then up sell them some of the other Ad-Tech that we have that we’ve referred to in the as SearchLinks as a secondary or up sell offering. And so I think it just gives us a bigger bag of product to sell, maybe is the way to look at it and as a result a better way to compete against the plethora of ad-tech companies that are out there, competing against us.

Okay, thanks. Maybe could you explain a little bit more what NetSeer does that you don’t do? I am not quite sure what’s their product is?

In simplest forms do not get into the technology of it. Anywhere you might see an image on any web page or anywhere you might see a video. We now have the means to be able to show ads within those two types of images. We didn’t do that before, we were for the most part placing ads within content or around content, but didn’t deal specifically with the images or the videos themselves.

Okay. And is this going to change your marketing or sales force or are they adding some sales people or changing your structure?

I don’t think it changes our structure, but we did acquire as part of that acquisition some very competent, very talent sales professionals. And so we’re pleased with that as well. So the sales team did get larger.

Okay great. And is there some place you can just point us where we could see one of their customers and what they do for them or are they also hide?

The competitive industry Lisa. I think we’ll follow-up with you on that one.

All right, some people put their names out there, once in a while. Okay.

Yes those are the ones we don’t feel.

Great. Alright, thanks a lot.

Thank you Lisa.

[Operator Instructions]. And we will go to William Gibson with Roth Capital Partners for a follow-up.

Yes couple of follow-up. Are we done with this continued affecting the bottom-line next year?

Can you be more specific Bill please?

Well basically the discontinued operations in addition or a drag on net income and I was wondering is that totally behind us now or?

It is Bill. Finally we actually cleaned out the bank account over there in December and there is no more operations, no.

And then the fourth quarter tax rate was part of that a makeup on some of the earlier reductions or what was behind that?

Yes that's exactly right. At the end of the year our tax consultants go and go through not only the federal but all the different state obligations that we have. And whether you have a book loss or not you may have a taxable income in a state right. And so it's adjusted, it was adjusted, you're right it was adjusted to get us correct provision on our balance sheet and on the income statement, so yes.

Okay. And then just one last question looking out a year where would you expect mobile to be as the percent of total revenue?

We're at a pretty comfortable split right now. And I think Bill we've talked with you and others about this. The desktop world is not going away in fact it still has more traffic than the mobile world does. So I don't think it's a situation where people should expect the Inuvo business at some point to be 100% mobile. We're at 60-40 now, it's been creeping up over the last few years. Maybe it gets to 70-30, but it's going to be probably in that band 60% to 70% mobile and the rest desktop.

Okay, good. Thank you.

You’re welcome.

[Operator Instructions]. And it appears there are no other questions. So I'd like to turn it back to Richard Howe for any additional or closing remarks.

Thank you, operator. I'd like to thank everyone who joined us on today's call. We appreciate your continued interest in Inuvo and we look forward to reporting our progress over the coming quarters.

And thank you very much. That does conclude our conference for today. I'd like to thank everyone for your participation.