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Groove Portfolio Focus Stock #1

Price $1.05
Avg. Daily Trading Volume - 48500
Shares Outstanding - 23 million
Insider / Institutional Ownership - 34%
Float - 9.4M Shares

Inuvo's Consumer Facing Web Properties Offer Significant Upside Potential

Inuvo (NYSE-AMEX: INUV) is a small cap company that is leveraging its core advertising business to build consumer facing web properties that benefit from the data, traffic and distribution capabilities of the Inuvo platform. The recent acquisition of Vertro adds the distribution strengths of the ALOT portfolio and its Google Network monetization capabilities.

Inuvo’s key driver of revenue historically (prior to its merger with Vertro) was an advertising network where ads are served across thousands of third party owned Web sites, from which Inuvo and the third party derive income from either clicks or commissions on sales. Key assets associated with that business include the advertising inventory sourced and compiled either directly or indirectly and the technology that serves, tracks, manages and protects both the advertisers and publishers within that marketplace. The Search Network currently works with close to 2,000 web publishers whose sites get 10's of millions of unique visitors per month and Inuvo serves over 10 million clicks per month.

Post merger, the ALOT search and display ad offerings through the Google Network will be one of the leading drivers of growth for the combined entity with its ALOT Appbar and website offerings. The premise of the ALOT business is very simple and easy to understand - the company makes money when consumers click on the ads provided by Google while using the Alot applications and websites. Thus, if a consumer is searching for something, for instance if they want to open an account to trade stocks online, the might enter the term “online stock broker” into the search box on their Alot toolbar or homepage. The search is powered by Google or Yahoo and returns the same websites and ads that would appear if the search had been conducted from the Google or Yahoo homepage. There will be website links at the top and on the sides of the page that are “paid links” that are placed by advertisers who bid in an auction type format to have their ad at the top of Google results for that given search term. When a searcher/consumer clicks on that ad/link to the company’s website, the advertiser/company pays the amount it bid per click to Google or Yahoo. Google/Yahoo will in turn pay some percentage of that revenue to Alot.com/Inuvo. While this percentage is not disclosed, we have determined from a number of evidentiary sources that the amount is approximately 75-80% - so its basically a split where Google keeps 20% and pays the remaining 80% of the revenue to Vertro. Alot offers customizable Appbars that allow consumers to choose from among hundreds of Apps to include in the bar at the top of their browser. These apps offer quick and easy access to a consumer’s favorite web applications (Facebook, Email, Pinterest,etc), entertainment (Netflix, YouTube, Pandora, ALOT Radio) or shopping (Ebay, Amazon, Groupon) and hundreds of other options, while the websites offer unique content addressing multiple verticals of interest to consumers including health, travel, finance and lifestyle offerings. The main web search functionality offered is powered by Google, so that any given search query will return the same results as would be returned from a search on Google.com. The ALOT home page offers a very basic and simple starting point for consumers who like a clutter free home page and the best search search tool available (Google search).

In summary, our due diligence leads us to believe that INUV represents an opportunity where the Groove VC community can profit simply by investing, then using the ALOT sites for searching and spread the word about the various Alot Apps. Very few people are aware of INUVO and its quite rare to have the opportunity to invest in a company that will be growing its top and bottom lines at the rates we expect to see from Inuvo over the next few quarters.

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