Unassociated Document
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-Q
x
|
QUARTERLY
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
|
|
For
the quarterly period ended March 31, 2010
|
|
|
|
OR
|
|
|
o
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
|
|
|
For
the transition period from ________________ to
________________
|
Commission
file number 001-34523
interCLICK,
Inc.
(Exact
name of registrant as specified in its charter)
Delaware
|
|
01-0692341
|
(State or other jurisdiction of
|
|
(I.R.S. Employer
|
incorporation or organization)
|
|
Identification No.)
|
|
|
|
11
West 19th
Street, 10th
Floor, New York, NY
|
|
10011
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Registrant’s
telephone number: (646)
722-6260
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes x
No
o
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files).
Yes o
No
o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer o
|
Accelerated
filer o
|
|
|
Non-accelerated
filer o (Do
not check if a smaller reporting company)
|
Smaller
reporting company x
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act).
Yes o
No
x
Class
|
|
Outstanding
at May 12, 2010
|
Common
Stock, $0.001 par value per share
|
|
23,745,252
shares
|
TABLE
OF CONTENTS
|
Page
|
PART
I – FINANCIAL INFORMATION
|
F-1
|
|
|
Item
1.
|
Financial
Statements
|
F-1
|
|
|
|
|
Condensed
Consolidated Balance Sheets (unaudited)
|
F-2
|
|
|
|
|
Condensed
Consolidated Statements of Operations (unaudited)
|
F-3
|
|
|
|
|
Condensed
Consolidated Statement of Changes in Stockholders’ Equity
(unaudited)
|
F-4
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows (unaudited)
|
F-5
|
|
|
|
|
Notes
to Condensed Consolidated Financial Statements
(unaudited)
|
F-7
|
|
|
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
|
3
|
|
|
|
Item
3.
|
Qualitative
and Quantitative Disclosures about Market Risk
|
8
|
|
|
|
Item
4.
|
Controls
and Procedures
|
8
|
|
|
|
Item
4T.
|
Controls
and Procedures
|
8
|
|
|
|
PART
II – OTHER INFORMATION
|
9
|
|
|
Item
1.
|
Legal
Proceedings
|
9
|
|
|
|
Item
1A.
|
Risk
Factors
|
9
|
|
|
|
Item
2.
|
Unregistered
Sales of Equity Securities and Use of Proceeds
|
9
|
|
|
|
Item
3.
|
Defaults
Upon Senior Securities
|
9
|
|
|
|
Item
4.
|
(Removed
and Reserved)
|
9
|
|
|
|
Item
5.
|
Other
Information
|
9
|
|
|
|
Item
6.
|
Exhibits
|
9
|
|
|
|
SIGNATURES
|
11
|
PART
I – FINANCIAL INFORMATION
Item
1.
|
Financial
Statements.
|
INTERCLICK,
INC. AND SUBSIDIARY
INDEX
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
|
|
Page
|
|
Financial
Statements
|
|
|
|
|
|
|
|
Condensed
Consolidated Balance Sheets – March 31, 2010 (unaudited) and December 31,
2009
|
|
|
F-2 |
|
Condensed
Consolidated Statements of Operations for the three months ended March 31,
2010 and 2009 (unaudited)
|
|
|
F-3 |
|
Condensed
Consolidated Statement of Changes in Stockholders' Equity for the three
months ended March 31, 2010 (unaudited)
|
|
|
F-4 |
|
Condensed
Consolidated Statements of Cash Flows for the three months ended March 31,
2010 and 2009 (unaudited)
|
|
|
F-5 |
|
Notes
to Condensed Consolidated Financial Statements (unaudited)
|
|
|
F-7 |
|
INTERCLICK,
INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
March 31, 2010
|
|
|
December 31, 2009
|
|
|
|
(Unaudited)
|
|
|
(See Note 1)
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
9,325,188 |
|
|
$ |
12,653,958 |
|
Restricted
cash
|
|
|
500,649 |
|
|
|
- |
|
Accounts
receivable, net of allowance of $290,045 and $383,188,
respectively
|
|
|
15,272,827 |
|
|
|
21,631,305 |
|
Credit
facility reserve
|
|
|
240,018 |
|
|
|
1,052,167 |
|
Deferred
taxes, current portion
|
|
|
4,657,904 |
|
|
|
955,471 |
|
Prepaid
expenses and other current assets
|
|
|
261,509 |
|
|
|
367,183 |
|
Total
current assets
|
|
|
30,258,095 |
|
|
|
36,660,084 |
|
|
|
|
|
|
|
|
|
|
Restricted
cash
|
|
|
791,097 |
|
|
|
- |
|
Property
and equipment, net of accumulated depreciation of $740,250 and $597,288,
respectively
|
|
|
1,863,826 |
|
|
|
988,899 |
|
Intangible
assets, net of accumulated amortization of $948,850 and $909,350,
respectively
|
|
|
381,833 |
|
|
|
421,333 |
|
Goodwill
|
|
|
7,909,571 |
|
|
|
7,909,571 |
|
Investment
in available-for-sale marketable securities
|
|
|
245,821 |
|
|
|
715,608 |
|
Deferred
debt issue costs, net of accumulated amortization of $38,416 and $35,028,
respectively
|
|
|
1,584 |
|
|
|
4,972 |
|
Deferred
taxes, net of current portion
|
|
|
46,786 |
|
|
|
2,579,568 |
|
Other
assets
|
|
|
207,573 |
|
|
|
192,179 |
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
41,706,186 |
|
|
$ |
49,472,214 |
|
|
|
|
|
|
|
|
|
|
Liabilities
and Stockholders’ Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
7,259,396 |
|
|
$ |
10,934,236 |
|
Accrued
expenses (includes accrued compensation of $1,323,120 and $2,241,731,
respectively)
|
|
|
1,945,871 |
|
|
|
3,164,044 |
|
Credit
facility payable
|
|
|
1,200,091 |
|
|
|
5,260,834 |
|
Obligations
under capital leases, current portion
|
|
|
312,058 |
|
|
|
161,940 |
|
Income
taxes payable
|
|
|
- |
|
|
|
515,306 |
|
Warrant
derivative liability
|
|
|
47,573 |
|
|
|
69,258 |
|
Deferred
rent, current portion
|
|
|
10,094 |
|
|
|
3,508 |
|
Total
current liabilities
|
|
|
10,775,083 |
|
|
|
20,109,126 |
|
|
|
|
|
|
|
|
|
|
Obligations
under capital leases, net of current portion
|
|
|
676,483 |
|
|
|
338,562 |
|
Deferred
rent
|
|
|
179,265 |
|
|
|
83,823 |
|
Total
liabilities
|
|
|
11,630,831 |
|
|
|
20,531,511 |
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies - See Note 8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders’
equity:
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.001 par value; 10,000,000 shares authorized, zero shares issued
and outstanding
|
|
|
- |
|
|
|
- |
|
Common
stock, $0.001 par value; 140,000,000 shares authorized, 23,694,272 and
23,632,707 issued and outstanding, respectively
|
|
|
23,694 |
|
|
|
23,633 |
|
Additional
paid-in capital
|
|
|
43,158,814 |
|
|
|
42,229,293 |
|
Accumulated
deficit
|
|
|
(13,107,153 |
) |
|
|
(13,312,223 |
) |
Total
stockholders’ equity
|
|
|
30,075,355 |
|
|
|
28,940,703 |
|
|
|
|
|
|
|
|
|
|
Total
liabilities and stockholders’ equity
|
|
$ |
41,706,186 |
|
|
$ |
49,472,214 |
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
INTERCLICK,
INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
For the Three
|
|
|
For the Three
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
March 31, 2010
|
|
|
March 31, 2009
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
14,201,857 |
|
|
$ |
8,423,291 |
|
Cost
of revenues
|
|
|
7,819,181 |
|
|
|
4,474,279 |
|
Gross
profit
|
|
|
6,382,676 |
|
|
|
3,949,012 |
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
3,230,528 |
|
|
|
1,677,665 |
|
Sales
and marketing
|
|
|
2,116,714 |
|
|
|
1,416,522 |
|
Technology
support
|
|
|
1,339,578 |
|
|
|
584,331 |
|
Amortization
of intangible assets
|
|
|
39,500 |
|
|
|
49,760 |
|
Total
operating expenses
|
|
|
6,726,320 |
|
|
|
3,728,278 |
|
|
|
|
|
|
|
|
|
|
Operating
income (loss) from continuing operations
|
|
|
(343,644 |
) |
|
|
220,734 |
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
8,868 |
|
|
|
12 |
|
Warrant
derivative liability income (expense)
|
|
|
21,685 |
|
|
|
(72,767 |
) |
Other
than temporary impairment of available-for-sale securities
|
|
|
(458,538 |
) |
|
|
- |
|
Interest
expense
|
|
|
(102,409 |
) |
|
|
(113,592 |
) |
Total
other expense
|
|
|
(530,394 |
) |
|
|
(186,347 |
) |
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations before income taxes
|
|
|
(874,038 |
) |
|
|
34,387 |
|
|
|
|
|
|
|
|
|
|
Income
tax benefit
|
|
|
1,079,108 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
|
205,070 |
|
|
|
34,387 |
|
|
|
|
|
|
|
|
|
|
Discontinued
operations:
|
|
|
|
|
|
|
|
|
Loss
on sale of discontinued operations, net of income taxes
|
|
|
- |
|
|
|
(1,220 |
) |
Loss
from discontinued operations
|
|
|
- |
|
|
|
(1,220 |
) |
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
205,070 |
|
|
$ |
33,167 |
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
0.01 |
|
|
$ |
- |
|
Discontinued
operations
|
|
|
- |
|
|
|
- |
|
Net
income
|
|
$ |
0.01 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
0.01 |
|
|
$ |
- |
|
Discontinued
operations
|
|
|
- |
|
|
|
- |
|
Net
income
|
|
$ |
0.01 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Weighted
average number of common shares - basic
|
|
|
23,608,691 |
|
|
|
18,922,596 |
|
Weighted
average number of common shares - diluted
|
|
|
25,877,963 |
|
|
|
18,933,647 |
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
INTERCLICK,
INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY
FOR
THE THREE MONTHS ENDED MARCH 31, 2010
(Unaudited)
|
|
|
|
|
|
|
|
Additional
|
|
|
|
|
|
Total
|
|
|
|
Common Stock
|
|
|
Paid-In
|
|
|
Accumulated
|
|
|
Stockholders'
|
|
|
|
Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Deficit
|
|
|
Equity
|
|
Balance,
December 31, 2009
|
|
|
23,632,707 |
|
|
$ |
23,633 |
|
|
$ |
42,229,293 |
|
|
$ |
(13,312,223 |
) |
|
$ |
28,940,703 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
- |
|
|
|
- |
|
|
|
849,572 |
|
|
|
- |
|
|
|
849,572 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuances
of restricted shares
|
|
|
10,100 |
|
|
|
10 |
|
|
|
(10 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance
of common shares for stock options and warrants exercised
|
|
|
51,465 |
|
|
|
51 |
|
|
|
79,949 |
|
|
|
- |
|
|
|
80,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
205,070 |
|
|
|
205,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance,
March 31, 2010
|
|
|
23,694,272 |
|
|
$ |
23,694 |
|
|
$ |
43,158,804 |
|
|
$ |
(13,107,153 |
) |
|
$ |
30,075,345 |
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
INTERCLICK,
INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
For the Three
|
|
|
For the Three
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
March 31, 2010
|
|
|
March 31, 2009
|
|
Cash
flows from operating activities:
|
|
|
|
|
|
|
Net
income
|
|
$ |
205,070 |
|
|
$ |
33,167 |
|
Add
back loss from discontinued operations, net
|
|
|
- |
|
|
|
1,220 |
|
Income
from continuing operations
|
|
|
205,070 |
|
|
|
34,387 |
|
Adjustments
to reconcile net income from continuing operations to net cash
provided by (used in) operating activities:
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
849,582 |
|
|
|
576,570 |
|
Other
than temporary impairment of available-for-sale securities
|
|
|
458,538 |
|
|
|
- |
|
Depreciation
of property and equipment
|
|
|
142,962 |
|
|
|
72,386 |
|
Amortization
of intangible assets
|
|
|
39,500 |
|
|
|
49,760 |
|
Amortization
of debt issue costs
|
|
|
3,388 |
|
|
|
14,444 |
|
Changes
in deferred tax assets
|
|
|
(1,684,957 |
) |
|
|
- |
|
Provision
for bad debts
|
|
|
(93,142 |
) |
|
|
(207,767 |
) |
Change
in warrant derivative liability
|
|
|
(21,685 |
) |
|
|
72,767 |
|
Changes
in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
Decrease
(increase) in accounts receivable
|
|
|
6,451,620 |
|
|
|
(1,106,823 |
) |
Decrease
(increase) in prepaid expenses and other current assets
|
|
|
105,674 |
|
|
|
(92,687 |
) |
Increase
in other assets
|
|
|
(15,394 |
) |
|
|
- |
|
Decrease
in accounts payable
|
|
|
(3,674,840 |
) |
|
|
(165,636 |
) |
(Decrease)
increase in accrued expenses
|
|
|
(1,218,173 |
) |
|
|
374,356 |
|
Increase
in deferred rent
|
|
|
18,958 |
|
|
|
8,942 |
|
Increase
in accrued interest
|
|
|
- |
|
|
|
5,918 |
|
Net
cash provided by (used in) operating activities
|
|
|
1,567,101 |
|
|
|
(363,383 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities:
|
|
|
|
|
|
|
|
|
Proceeds
from sale of available-for-sale securities
|
|
|
11,249 |
|
|
|
- |
|
Increase
in restricted cash
|
|
|
(1,291,746 |
) |
|
|
- |
|
Purchases
of property and equipment
|
|
|
(439,219 |
) |
|
|
(19,263 |
) |
Net
cash used in investing activities
|
|
|
(1,719,716 |
) |
|
|
(19,263 |
) |
|
|
|
|
|
|
|
|
|
Cash
flows from financing activities:
|
|
|
|
|
|
|
|
|
Proceeds
from stock options and warrants exercised
|
|
|
80,000 |
|
|
|
- |
|
(Repayments
to) proceeds from credit facility, net
|
|
|
(3,248,594 |
) |
|
|
642,975 |
|
Principal
payments on capital leases
|
|
|
(7,561 |
) |
|
|
(3,198 |
) |
Net
cash (used in) provided by financing activities
|
|
|
(3,176,155 |
) |
|
|
639,777 |
|
|
|
|
|
|
|
|
|
|
Cash
flows from discontinued operations:
|
|
|
|
|
|
|
|
|
Cash
flows from investing activities-divestiture
|
|
|
- |
|
|
|
(250,000 |
) |
Net
cash used in discontinued operations
|
|
|
- |
|
|
|
(250,000 |
) |
|
|
|
|
|
|
|
|
|
Net
(decrease) increase in cash and cash equivalents
|
|
|
(3,328,770 |
) |
|
|
7,131 |
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at beginning of period
|
|
|
12,653,958 |
|
|
|
183,871 |
|
|
|
|
|
|
|
|
|
|
Cash
and cash equivalents at end of period
|
|
$ |
9,325,188 |
|
|
$ |
191,002 |
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
INTERCLICK,
INC. AND SUBSIDIARY
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
For the Three
|
|
|
For the Three
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
March 31, 2010
|
|
|
March 31, 2009
|
|
Supplemental
disclosure of cash flow information:
|
|
|
|
|
|
|
Interest
paid
|
|
$ |
131,470 |
|
|
$ |
76,412 |
|
Income
taxes paid
|
|
$ |
576,583 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Non-cash
investing and financing activities:
|
|
|
|
|
|
|
|
|
Property
and equipment acquired through capitalized leases
|
|
$ |
495,600 |
|
|
$ |
- |
|
Leasehold
improvements increased for deferred rent
|
|
$ |
83,070 |
|
|
$ |
- |
|
The
accompanying notes are an integral part of these unaudited condensed
consolidated financial statements.
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
Note 1. Nature of
Operations
Overview
interCLICK,
Inc. (the “Company”) was formed in Delaware on March 4, 2002 under the name
Outsiders Entertainment, Inc.
On August
28, 2007, the Company closed an Agreement and Plan of Merger and Reorganization
(the “CAN Merger Agreement”) and acquired Customer Acquisition Network, Inc.
(“CAN”), a privately-held corporation formed in Delaware on June 14,
2007. In connection with this acquisition, the Company changed
its name to Customer Acquisition Network Holdings, Inc. On June 25,
2008, the Company changed its name to interCLICK, Inc.
On August
31, 2007, the Company closed an Agreement and Plan of Merger (the “Desktop
Merger”), wherein the Company acquired Desktop Interactive, Inc. (“Desktop
Interactive”), a privately-held Delaware corporation engaged in the Internet
advertising business. Desktop Interactive merged with and into
Desktop Acquisition Sub, Inc. (“Desktop”), a wholly-owned subsidiary of the
Company. Desktop was the surviving corporation. Desktop
was formed in Delaware on August 24, 2007.
interCLICK
is an enterprise software company focused on digital advertising technology and
services. Powered by Open Segment Manager (“OSM”), the Company develops coherent
and transparent audience targeting strategies with major digital agencies and
advertisers, empowering them to reach their desired audiences efficiently, in
brand-safe environments, at unprecedented scale. Virtually all of the
Company’s revenues are generated in the United States.
On
January 4, 2008, the Company closed an Agreement and Plan of Merger (the
“Options Merger”), wherein the Company acquired Options Newsletter, Inc.
(“Options Newsletter”). Options Newsletter merged with and into
Options Acquisition Sub, Inc. (“Options Acquisition”), a wholly-owned subsidiary
of the Company. Options Acquisition was the surviving
corporation. On June 23, 2008, Options Acquisition was sold to
Options Media Group Holdings, Inc (“OPMG”).
Basis
of Presentation
The
interim condensed consolidated financial statements included herein have been
prepared by the Company, without audit, pursuant to the rules and
regulations of the Securities and Exchange Commission (the “SEC”). In
the opinion of the Company’s management, all adjustments (consisting of normal
recurring adjustments and reclassifications and non-recurring adjustments)
necessary to present fairly our results of operations and cash flows for the
three months ended March 31, 2010 and 2009 and our financial position as of
March 31, 2010 have been made. The results of operations for such
interim periods are not necessarily indicative of the operating results to be
expected for the full year.
Certain
information and disclosures normally included in the notes to the annual
consolidated financial statements have been condensed or omitted from these
interim consolidated financial statements. Accordingly, these interim
condensed consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in our Annual
Report on Form 10-K for the fiscal year ended December 31, 2009, as filed
with the SEC on March 31, 2010. The December 31, 2009 balance sheet
is derived from those statements.
All
references to outstanding shares, options, warrants and per share information
have been adjusted to give effect to the one-for-two reverse stock split
effective October 23, 2009.
The
Company is particularly sensitive to seasonality given that the majority of its
revenues are tied to CPM (cost-per-thousand) campaigns, which are strongest in
the fourth quarter and weakest in the first quarter. While not necessarily
indicative of future seasonality, the Company’s revenue mix in 2009 was as
follows: 15.2% in the first quarter, 19.3% in the second quarter, 26.1% in the
third quarter, and 39.4% in the fourth quarter.
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
Note
2. Significant Accounting Policies
Use
of Estimates
Our
unaudited condensed consolidated financial statements are prepared in accordance
with accounting principles generally accepted in the United States (“GAAP”).
These accounting principles require us to make certain estimates,
judgments and assumptions. We believe that the estimates, judgments and
assumptions upon which we rely are reasonable based upon information available
to us at the time that these estimates, judgments and assumptions are made.
These estimates, judgments and assumptions can affect the reported amounts
of assets and liabilities as of the date of our unaudited condensed consolidated
financial statements as well as the reported amounts of revenues and expenses
during the periods presented. Our unaudited condensed consolidated
financial statements would be affected to the extent there are material
differences between these estimates and actual results. In many cases, the
accounting treatment of a particular transaction is specifically dictated by
GAAP and does not require management’s judgment in its application. There
are also areas in which management’s judgment in selecting any available
alternative would not produce a materially different result. Significant
estimates include the valuation of accounts receivable and allowance for
doubtful accounts, estimates of depreciable lives and valuation of property and
equipment, valuation and amortization periods of intangible assets and deferred
costs, valuation of goodwill, valuation of discounts on debt, valuation of
derivatives, valuation of investment in available-for-sale securities, valuation
of shares of common stock, options and warrants granted for services or recorded
as debt discounts or other non-cash purposes, the valuation allowance on
deferred tax assets, and estimates of the tax effects of the sale of a
subsidiary.
Principles
of Consolidation
The
consolidated financial statements include the accounts of interCLICK, Inc. and
its wholly-owned subsidiary and Options Newsletter through its sale date.
All significant inter-company balances and transactions have been
eliminated in consolidation. As a result of the Options Divestiture,
the results of Options Newsletter are reported as “Discontinued
Operations”.
Restricted
Cash
Restricted
cash represents amounts pledged as security for certain agreements with
vendors. Upon satisfying the payment terms of the agreements, the
funds are expected to be released and available for use by the
Company.
In
January 2010, the Company pledged a $500,000, 3-month certificate of deposit, to
a third party in connection with a service agreement. In April 2010,
the certificate of deposit and the pledge were renewed for an additional three
months.
In
February 2010, the Company acquired $495,600 of computer equipment under a
capitalized lease agreement. In connection with the lease agreement, the
Company’s banking institution issued an irrevocable 1-year standby letter of
credit for the benefit of the leasing company. The Company opened a
14-month certificate of deposit, bearing 0.56% interest, maturing April 1, 2011,
with its banking institution in the amount of $495,600 and pledged that to the
letter of credit. The Company shall consider $495,600 as restricted cash
until such letter of credit expires.
On March
11, 2010, the Company entered into a sub-lease agreement to relocate its New
York City headquarters to a larger space, having 16,840 square
feet. In connection with the lease agreement, the Company’s banking
institution issued an irrevocable 1-year standby letter of credit for the
benefit of the landlord. The Company opened a 14-month certificate of
deposit, bearing 0.70% interest, maturing March 27, 2011, with its banking
institution in the amount of $294,700 and pledged that to the letter of
credit. The Company shall consider $294,700 as restricted cash until such
letter of credit expires.
Property
and Equipment
Property
and equipment are stated at cost less accumulated
depreciation. Depreciation is provided for on a straight-line basis
over the estimated useful lives of the assets per the following
table. Leasehold improvements are amortized over the lesser of their
useful life or the lease term. Expenditures for additions and
improvements are capitalized while repairs and maintenance are expensed as
incurred.
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
Category
|
|
Depreciation Term
|
Computer
equipment
|
|
3-5
years
|
Software
|
|
3
years
|
Furniture
and fixtures
|
|
3-5
years
|
Office
equipment
|
|
3-5
years
|
Leasehold
improvements
|
|
5
years
|
Fair
Value Measurements
On
January 1, 2008, the Company adopted the provisions of ASC Topic 820, “Fair
Value Measurements and Disclosures”. ASC Topic 820 defines fair value
as used in numerous accounting pronouncements, establishes a framework for
measuring fair value and expands disclosure of fair value
measurements. Excluded from the scope of ASC Topic 820 are certain
leasing transactions accounted for under ASC Topic 840, “Leases.” The
exclusion does not apply to fair value measurements of assets and liabilities
recorded as a result of a lease transaction but measured pursuant to other
pronouncements within the scope of ASC Topic 820.
Reclassifications
Certain
amounts in the accompanying 2009 financial statements had been reclassified at
December 31, 2009. In particular, bad debt expense is now included in
general and administrative expenses. Merger, acquisition, and
divestiture costs are now included in general and administrative
expenses. Ad serving costs have been reclassified from general and
administrative costs to cost of revenues. Whereas certain
compensation costs (including stock-based compensation) had been included in
sales and marketing expenses, a portion of these costs have been reclassified to
either general and administrative expenses or technology support
expenses. Deferred revenue is now included in accrued
expenses. The following table shows the reclassifications to the
condensed consolidated statement of operations for the three months ended March
31, 2009.
|
|
For the Three Months Ended March 31, 2009
|
|
|
|
|
|
|
Reclassifications
|
|
|
|
|
|
|
|
|
|
|
|
|
Merger,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition,
|
|
|
|
|
|
Compensation
|
|
|
|
|
|
|
As Previously
|
|
|
Bad Debt
|
|
|
and Divestiture
|
|
|
Ad Serving
|
|
|
and Employee-
|
|
|
As
|
|
|
|
Reported
|
|
|
Expense
|
|
|
Costs
|
|
|
Costs
|
|
|
Related Costs
|
|
|
Reclassified
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
8,423,291 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
8,423,291 |
|
Cost
of Revenue
|
|
|
4,440,598 |
|
|
|
|
|
|
|
|
$ |
33,681 |
|
|
|
|
|
|
4,474,279 |
|
Gross
profit
|
|
|
3,982,693 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,949,012 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General
and administrative
|
|
|
1,480,232 |
|
|
$ |
(207,767 |
) |
|
$ |
65,379 |
|
|
|
(33,681 |
) |
|
$ |
373,502 |
|
|
|
1,677,665 |
|
Sales
and marketing
|
|
|
2,042,306 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(625,784 |
) |
|
|
1,416,522 |
|
Technology
support
|
|
|
332,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
252,282 |
|
|
|
584,331 |
|
Merger,
acquisition and divestiture costs
|
|
|
65,379 |
|
|
|
|
|
|
|
(65,379 |
) |
|
|
|
|
|
|
|
|
|
|
- |
|
Amortization
of intangible assets
|
|
|
49,760 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
49,760 |
|
Bad
debt expense
|
|
|
(207,767 |
) |
|
|
207,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- |
|
Total
operating expenses
|
|
|
3,761,959 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,728,278 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income from continuing operations
|
|
$ |
220,734 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
220,734 |
|
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
Discontinued
Operations
On June
23, 2008, the Company completed the sale of its Options Acquisition subsidiary
pursuant to an Agreement of Merger and Plan of Reorganization. The amounts
associated with the sale of this subsidiary are reported as discontinued
operations in the accompanying consolidated financial statements, in accordance
with ASC Topic 820. In addition, certain allocable corporate expenses
pertaining to Options Acquisition are also included in discontinued
operations.
Accounting
for Derivatives
The
Company evaluates its options, warrants or other contracts to determine if those
contracts or embedded components of those contracts qualify as derivatives to be
separately accounted for under ASC Topic 815, “Derivatives and
Hedging”. The result of this accounting treatment is that the fair
value of the derivative is marked-to-market each balance sheet date and recorded
as a liability. In the event that the fair value is recorded as a
liability, the change in fair value is recorded in the statement of operations
as other income (expense). Upon conversion or exercise of a derivative
instrument, the instrument is marked to fair value at the conversion date and
then that fair value is reclassified to equity. Equity instruments that
are initially classified as equity that become subject to reclassification under
ASC Topic 815 are reclassified to liability at the fair value of the instrument
on the reclassification date.
Codification
Update
In
January 2010, the FASB issued ASU 2010-06, “Fair Value Measurements and
Disclosures (Topic 820): Improving Disclosures about Fair Value
Measurements”. This update provides amendments to Topic 820 that will
provide more robust disclosures about (1) the different classes of assets and
liabilities measured at fair value, (2) the valuation techniques and inputs
used, (3) the activity in Level 3 fair value measurements, and (4) the transfers
between Levels 1, 2, and 3. The adoption of ASU 2010-06 did not have
a material impact on the Company’s consolidated results of operations or
financial condition.
In
February 2010, the FASB issued ASU 2010-09, “Subsequent Events (Topic 855):
Amendments to Certain Recognition and Disclosure
Requirements”. This update addresses both the interaction of the
requirements of Topic 855, “Subsequent Events”, with the SEC’s reporting
requirements and the intended breadth of the reissuance disclosures provision
related to subsequent events (paragraph 855-10-50-4). The amendments in
this update have the potential to change reporting by both private and public
entities, however, the nature of the change may vary depending on facts and
circumstances. The adoption of ASU 2010-09 did not have a material
impact on the Company’s consolidated results of operations or financial
condition.
Note
3. Property and Equipment
Property
and equipment consisted of the following at March 31, 2010 and December 31,
2009:
|
|
March 31, 2010
|
|
|
December 31, 2009
|
|
Computer
equipment
|
|
$ |
2,138,701 |
|
|
$ |
1,433,461 |
|
Furniture
and fixtures
|
|
|
174,588 |
|
|
|
72,711 |
|
Software
|
|
|
140,372 |
|
|
|
57,572 |
|
Leasehold
improvements
|
|
|
127,972 |
|
|
|
- |
|
Office
equipment
|
|
|
22,443 |
|
|
|
22,443 |
|
|
|
|
2,604,076 |
|
|
|
1,586,187 |
|
Accumulated
depreciation
|
|
|
(740,250 |
) |
|
|
(597,288 |
) |
Property
and equipment, net
|
|
$ |
1,863,826 |
|
|
$ |
988,899 |
|
In
February 2010, the Company acquired $495,600 of computer equipment under a
capitalized lease agreement. Property and equipment held under
capitalized leases of $1,015,965 and $520,365 at March 31, 2010 and December 31,
2009, respectively, are included in computer equipment
above.
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
Depreciation
expense for the three months ended March 31, 2010 and 2009 was $142,962 and
$72,386, of which $31,768 and $1,468, respectively, pertained to
capitalized leases. Accumulated depreciation amounted to $740,250 and
$597,288, of which $48,920 and $17,152 pertained to capitalized leases, as of
March 31, 2010 and December 31, 2009, respectively.
Note
4. Intangible Assets
Intangible
assets, which were all acquired from the Desktop business combination, consisted
of the following at March 31, 2010 and December 31, 2009:
|
|
March 31, 2010
|
|
|
December 31, 2009
|
|
Customer
relationships
|
|
$ |
540,000 |
|
|
$ |
540,000 |
|
Developed
technology
|
|
|
790,000 |
|
|
|
790,000 |
|
Domain
name
|
|
|
683 |
|
|
|
683 |
|
|
|
|
1,330,683 |
|
|
|
1,330,683 |
|
Accumulated
amortization
|
|
|
(948,850 |
) |
|
|
(909,350 |
) |
Intangible
assets, net
|
|
$ |
381,833 |
|
|
$ |
421,333 |
|
Customer
relationships are fully amortized and were amortized based upon the estimated
percentage of annual or period projected cash flows generated by such
relationships, to the total cash flows generated over the estimated three-year
life of the customer relationships. Accordingly, this resulted in
accelerated amortization in which the majority of costs were amortized
during the two-year period following the acquisition date of the
intangible.
Developed
technology is being amortized on a straight-line basis over five
years.
The
domain name is fully amortized and was amortized over its remaining life of six
months following the acquisition date of the intangible.
The
following is a schedule of estimated future amortization expense of intangible
assets as of March 31, 2010:
Year Ending December 31,
|
|
|
|
2010
|
|
$ |
118,500 |
|
2011
|
|
|
158,000 |
|
2012
|
|
|
105,333 |
|
Total
|
|
$ |
381,833 |
|
Note
5. Investment in Available-For-Sale Marketable
Securities
The
following represents information about available-for sale securities held at
March 31, 2010:
Securities in loss positions
|
|
Amortized
|
|
|
Aggregate
|
|
|
Aggregate
|
|
more than 12 months
|
|
Cost Basis
|
|
|
Unrealized losses
|
|
|
Fair Value
|
|
Options
Media Group Holdings, Inc. ("OPMG")
|
|
$ |
245,821 |
|
|
$ |
- |
|
|
$ |
245,821 |
|
The
following represents information about available-for sale securities held at
December 31, 2009:
Securities in loss positions
|
|
Amortized
|
|
|
Aggregate
|
|
|
Aggregate
|
|
more
than 12 months
|
|
Cost Basis
|
|
|
Unrealized losses
|
|
|
Fair Value
|
|
Options
Media Group Holdings, Inc. ("OPMG")
|
|
$ |
715,608 |
|
|
$ |
- |
|
|
$ |
715,608 |
|
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
As of
December 31, 2009, the Company concluded that OPMG’s quoted market price was not
a reliable basis to use for fair valuation because OPMG was too thinly traded
and its stock price too volatile, and therefore did not reliably occur in an
active market. Furthermore, attempting to sell a significant number
of OPMG shares on the open market would not have been worthwhile because it
would require ICLK to trade many small blocks and pay broker commissions for
each transaction. The Company therefore believed that a private
transaction was among the most economically feasible ways to sell any portion of
ICLK’s investment in OPMG. Accordingly, the Company applied Level 2
considerations to determine the market value using the best available
evidence. The Company concluded that recent principal-to-principal
(non-distressed) transactions – in November 2009 and January 2010 at $0.10 per
share – were appropriate valuation inputs to determine fair value of OPMG shares
as of December 31, 2009.
In
January 2010, the Company sold 112,500 OPMG shares having a basis of $11,250 for
proceeds of $11,250 resulting in no gain or loss.
During
the first quarter of 2010 and to date, OPMG’s trading volume has increased and
the stock price has increasingly stabilized. Coupled with the lack of
principal-to-principal transactions to support a value higher than current
market price, as well as the near-term potential of the Company selling OPMG
shares in the open market, this supports the use of a Level 1 input (market
price) for the basis of fair value as of March 31, 2010. On
such date, OPMG’s closing market price was $0.0349 per share. Thus,
the Company valued its investment at $245,821 as of March 31, 2010.
As of
March 31, 2010, the Company determined that its investment in OPMG shares was
other than temporarily impaired to $0.0349 per share from a basis of $0.10 per
share. This was based primarily on the extent and length of time over
which the investment had been in a continuous loss position and the Company’s
belief that it is unlikely OPMG’s stock price will increase significantly in the
foreseeable future. Furthermore, the Company has not conducted any
private sale transactions and has not received any offers to buy shares at any
price. The Company also is likely to attempt to sell some shares in
the open market in the near future.
Note
6. Credit Facility Agreement and Capital Lease Obligations
Credit
Facility Agreement
On
November 13, 2008, the Company entered into a revolving credit facility, in the
form of an Accounts Receivable Financing Agreement (the “Agreement”), with
Crestmark Commercial Capital Lending, LLC (“Crestmark”) to
finance certain eligible accounts receivable of the Company, as defined in the
Agreement, up to a maximum credit line of $3.5 million (subsequently increased
to $4.5 million on February 3, 2009, $5.5 million on April 30, 2009, and to $7.0
million on September 2, 2009), which would represent gross
financed accounts receivable less a 20% reserve holdback by
Crestmark. The Crestmark credit facility has an interest rate equal
to prime plus 1.0% (overall interest rate of 4.25% at March 31, 2010) and
is secured by all of the Company’s assets except property and equipment financed
elsewhere and the Company’s investment in OPMG shares. In addition,
the Company pays a monthly fee (initially 0.575% and decreased to 0.375% on
September 2, 2009) per 30 days on each financed invoice amount until the invoice
is paid. The Crestmark credit facility was for an initial term of six
months expiring May 12, 2009 (extended on March 3, 2009 for one year to May 12,
2010) and effective May 12, 2010, either the Company or Crestmark may terminate
the Agreement with 60 days prior written notice to the other party without being
subject to any early termination fee. The Company is in active
discussions with Crestmark and other lenders about establishing a larger line of
credit which would likely be secured by the Company’s accounts
receivable.
The
balance due on the credit facility at March 31, 2010 was $960,073, which is net
of the 20% reserve of $240,018 that is presented as Credit facility reserve, a
current asset. The unused amount under the credit facility available
to the Company at March 31, 2010 was $6,039,927. The average monthly
net balance due under the credit facility was $2,314,133 and $2,939,765 for the
three months ended March 31, 2010 and 2009, respectively.
The
following is a summary of accounts receivable financed as well as credit
facility fees incurred for the three months ended March 31, 2010 and
2009:
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
|
|
For the Three
|
|
|
For the Three
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
March 31, 2010
|
|
|
March 31, 2009
|
|
Accounts
receivable financed
|
|
$ |
3,026,976 |
|
|
$ |
6,573,640 |
|
|
|
|
|
|
|
|
|
|
Credit
facility fees incurred
|
|
$ |
94,495 |
|
|
$ |
93,819 |
|
Capital
Lease Obligations
In
February 2010, the Company purchased computer equipment for $495,600 through a
capital lease agreement, bearing interest of 8.35%, payable in 12 quarterly
installments of $47,119.
Capital
lease obligations consisted of the following at March 31, 2010 and December 31,
2009:
|
|
March 31, 2010
|
|
|
December 31, 2009
|
|
Capital
lease obligations
|
|
$ |
988,541 |
|
|
$ |
500,502 |
|
Less:
Current maturities
|
|
|
(312,058 |
) |
|
|
(161,940 |
) |
Amount
due after one year
|
|
$ |
676,483 |
|
|
$ |
338,562 |
|
Note
7. Fair Value of Financial Instruments
The
estimated fair value of certain financial instruments, including cash and cash
equivalents, restricted cash, accounts receivable, accounts payable and accrued
expenses are carried at historical cost basis, which approximates their fair
values because of the short-term nature of these instruments.
The
accounting standard for fair value measurements provides a framework for
measuring fair value and requires expanded disclosures regarding fair value
measurements. Fair value is defined as the price that would be received
for an asset or the exit price that would be paid to transfer a liability in the
principal or most advantageous market in an orderly transaction between market
participants on the measurement date. The accounting standard established
a fair value hierarchy which requires an entity to maximize the use of
observable inputs, where available. This hierarchy prioritizes the inputs
into three broad levels as follows. Level 1 inputs are quoted prices
(unadjusted) in active markets for identical assets or
liabilities. Level 2 inputs are quoted prices for similar assets and
liabilities in active markets or inputs that are observable for the asset or
liability, either directly or indirectly through market corroboration, for
substantially the full term of the financial instrument. Level 3
inputs are unobservable inputs based on the Company’s own assumptions used to
measure assets and liabilities at fair value. A financial asset or
liability’s classification within the hierarchy is determined based on the
lowest level input that is significant to the fair value
measurement.
We
classify assets and liabilities measured at fair value in their entirety based
on the lowest level of input that is significant to their fair value
measurement. Assets and liabilities measured at fair value on a recurring
basis consisted of the following at March 31, 2010:
|
|
Total Carrying
|
|
|
|
|
|
|
|
|
|
|
|
|
Value at
|
|
|
Fair Value Measurements at March 31, 2010
|
|
|
|
March 31, 2010
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment
in available-for-sale marketable securities
|
|
$ |
245,821 |
|
|
$ |
245,821 |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrant
derivative liability
|
|
$ |
47,573 |
|
|
$ |
- |
|
|
$ |
47,573 |
|
|
$ |
- |
|
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
Unrealized
gains (losses) recognized on the investment in available-for-sale marketable
securities are included in other comprehensive income (loss) in the accompanying
condensed consolidated statements of operations (See Note 5 for valuation
methodology). Realized gains (losses) recognized on the investment in
available-for-sale marketable securities are included in other income (expense)
in the accompanying condensed consolidated statements of
operations. Income (expense) recognized on the warrant derivative
liability are included in other income (expense) in the accompanying condensed
consolidated statements of operations.
The
valuation technique of the investment in available-for-sale marketable
securities changed during the three months ended March 31, 2010. At
March 31, 2010, the Company began utilizing the closing share price of OPMG’s
stock (Level 1) in order to value the Company’s remaining investment in OPMG
shares. Previously, the Company had been utilizing recent sales
prices in private transactions (Level 2) to value its investment in OPMG shares
as management believed OPMG’s quoted market price was not a reliable basis to
use for fair valuation based on the conclusion that OPMG was too thinly traded
and therefore did not reliably occur in an active market. During the
three months ended March 31, 2010, however, trading volume in OPMG increased
dramatically.
The
Company estimates the fair value of the warrant derivative liability utilizing
the Black-Scholes option pricing model, which is dependent upon several
variables such as the remaining contractual warrant term, expected volatility of
our stock price over the remaining contractual warrant term, expected risk-free
interest rate over the remaining contractual warrant term, and the expected
dividend yield rate over the remaining contractual warrant term. The
Company believes this valuation methodology is appropriate for estimating the
fair value of the warrant derivative liability (See Note 9). The
following table summarizes the assumptions the Company utilized to estimate the
fair value of the warrant derivative liability at March 31, 2010:
Assumptions
|
|
March 31, 2010
|
|
Expected
life (years)
|
|
|
3.2 |
|
Expected
volatility
|
|
|
105.9 |
% |
Risk-free
interest rate
|
|
|
1.60 |
% |
Dividend
yield
|
|
|
0.00 |
% |
The
expected term is based on the remaining contractual term. The
expected volatility is based on historical volatility. The risk-free
interest rate is based on the U.S. Treasury yields with terms equivalent to the
expected term of the related warrant at the date of the
valuation. Dividend yield is based on historical
trends. While the Company believes these estimates are reasonable,
the fair value would increase if a higher expected volatility was used, or if
the expected dividend yield increased.
Note
8. Commitments and Contingencies
Operating
Leases
In
January 2010, the Company entered into an agreement for its Chicago office space
with monthly rent of $2,151 commencing February 1, 2010 with 3.0% escalation
effective June 1, 2010.
In
February 2010, the lease amendment for the Company’s office space located in
Boca Raton, Florida became effective upon completion of the improvements to the
expansion premises. Accordingly, the Company moved into the expansion
premises and agreed to (i) lease additional space for a period of 60 months and
(ii) extend the lease term of the original space to terminate the same time as
the expanded space. Upon the expansion premises commencement date,
the original premises monthly rent was adjusted to $2,840 with 3.0% annual
escalation and the expansion premises monthly rent was $6,923 with 3.0% annual
escalation. The landlord provided an allowance of $83,070 for the
improvements to the expansion premises as well as an abatement of rent for the
first 14 months of the lease on the expansion premises. The leasehold
improvements were recognized with an $83,070 increase in property and equipment
and a corresponding increase in deferred rent, both of which shall be amortized
over the lease term.
On
February 22, 2010, the Company entered into a 5-year agreement, commencing May
1, 2010, for office space in Santa Monica, California bearing monthly rent of
$3,827 with an annual 3.0% escalation.
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
On March
11, 2010, the Company entered into a sub-lease agreement to relocate its New
York City headquarters to a larger space, having 16,840 square
feet. The new lease is for a term of 58 months commencing on May 1,
2010, bearing monthly rent of $49,117 with an annual 2.5%
escalation. The Company has entered into an agreement to sublease the
office space of its current New York City headquarters commencing May 1, 2010
for the remainder of the original lease term with monthly rent of $16,717 with
an annual 2.5% escalation. Accordingly, the Company estimates that
during the second fiscal quarter of 2010 it shall recognize in accrued expenses
an early cease use liability of approximately $498,000 pertaining to the prior
New York office space. The charge to operations for the establishment of the
accrued expense shall be offset by approximately $66,000 due to the elimination
of deferred rent related to the former office space. In connection
with the lease agreement, the Company’s banking institution issued an
irrevocable 1-year standby letter of credit for the benefit of the
landlord. The Company opened a certificate of deposit with its banking
institution in the amount of $294,700 and pledged that to the letter of
credit. The Company shall consider $294,700 as restricted cash until such
letter of credit expires.
Minimum
Fees
The
Company is party to multi-year agreements with third parties whereby the Company
is obligated to incur minimum data fees of $1,545,500 in 2010 and $900,000 in
2011. Under the agreements, the Company has expensed $383,141 in fees
during the three months ended March 31, 2010.
Legal
Matters
From time
to time, we may be involved in litigation relating to claims arising out of our
operations in the normal course of business. As of March 31, 2010, there were no
pending or threatened lawsuits that could reasonably be expected to have a
material effect on the results of our operations.
There are
no proceedings in which any of our directors, officers or affiliates, or any
registered or beneficial shareholder, is an adverse party or has a material
interest adverse to our interest.
Note
9. Stockholders’ Equity
Preferred
Stock
The
Company is authorized to issue up to 10,000,000 shares of preferred stock having
a par value of $0.001 per share, of which none was issued and outstanding at
March 31, 2010 and December 31, 2009.
Common
Stock
The
Company is authorized to issue up to 140,000,000 shares of common
stock having a par value of $0.001 per share, of which 23,694,272 and
23,632,707 shares were issued and outstanding at March 31, 2010 and December 31,
2009, respectively.
During
the three months ended March 31, 2010, proceeds of $80,000 were received and an
aggregate of 51,465 shares were issued as a result of stock option and warrant
exercises.
Stock
Warrants
A summary
of the Company’s warrant activity during the three months ended March 31, 2010
is presented below:
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
Warrants
|
|
Shares
|
|
|
Price
|
|
|
Term
|
|
|
Value
|
|
Balance
Outstanding, December 31, 2009
|
|
|
1,286,809 |
|
|
$ |
3.51 |
|
|
|
|
|
|
|
Granted
|
|
|
- |
|
|
$ |
- |
|
|
|
|
|
|
|
Exercised
|
|
|
(27,500 |
) |
|
$ |
2.80 |
|
|
|
|
|
|
|
Forfeited
|
|
|
- |
|
|
$ |
- |
|
|
|
|
|
|
|
Expired
|
|
|
(5,000 |
) |
|
$ |
11.14 |
|
|
|
|
|
|
|
Balance
Outstanding, March 31, 2010
|
|
|
1,254,309 |
|
|
$ |
3.49 |
|
|
|
2.6 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
March 31, 2010
|
|
|
1,091,809 |
|
|
$ |
3.45 |
|
|
|
2.7 |
|
|
$ |
- |
|
15,494 of
the Company’s warrants contain round-down protection (price protection), which
caused the warrants to be treated as derivatives (see Note 7). The
fair value of the warrant derivative liability was $47,573 as of March 31, 2010
and has been recorded as a liability in the accompanying condensed consolidated
balance sheet. The change in fair value (taking into consideration the
cumulative effect of the change in accounting principle adopted on January 1,
2009) of the warrant derivative liability of $21,685 and $72,767 during the
three months ended March 31, 2010 and 2009 has been recorded in the accompanying
condensed consolidated statements of operations as warrant derivative liability
income (expense). Due to the aforementioned price protection,
warrants to purchase an aggregate of 6,505 shares of common stock were issued
during the three months ended March 31, 2009. As of March 31, 2010,
15,494 warrants are outstanding that continue to have price protection, at an
exercise price of $1.52 per share, for which the price protection shall expire
in May 2010.
Stock
Incentive Plan and Stock Option Grants to Employees and Directors
In 2007,
the Company adopted the 2007 Stock Incentive Plan (the “Plan”) and the 2007
Incentive Stock and Award Plan (the “2007 Award Plan”) that provide for the
grant of shares of common stock and/or options to purchase shares of common
stock to directors, employees and consultants.
During
the three months ended March 31, 2010, the Company granted 423,500 stock
options, all of which were under the 2007 Award Plan, at various exercise prices
ranging from $3.68 to $5.46 per share. The options vest pro rata over
three to four years; all options expire five years from the grant
date.
The
total fair value of stock options granted to employees during the three
months ended March 31, 2010 was $1,342,408, which is being recognized over the
respective vesting periods. The Company recorded compensation expense of
$801,137 for the three months ended March 31, 2010, in connection with employee
stock options.
As of
March 31, 2010, 88,483 shares were remaining under the 2007 Award Plan for
future issuance.
The
Company estimates the fair value of share-based compensation utilizing the
Black-Scholes option pricing model, which is dependent upon several variables
such as the expected option term, expected volatility of our stock price over
the expected term, expected risk-free interest rate over the expected option
term, expected dividend yield rate over the expected option term, and an
estimate of expected forfeiture rates. The Company believes this
valuation methodology is appropriate for estimating the fair value of stock
options granted to employees and directors which are subject to ASC Topic 718
requirements. These amounts are estimates and thus may not be
reflective of actual future results, nor amounts ultimately realized by
recipients of these grants. The Company recognizes compensation on a
straight-line basis over the requisite service period for each
award. The following table summarizes the assumptions the Company
utilized to record compensation expense for stock options granted during the
three months ended March 31, 2010 and 2009:
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
|
|
For the Three
|
|
|
For the Three
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
Assumptions
|
|
March 31, 2010
|
|
|
March 31, 2009
|
|
Expected
life (years)
|
|
|
3.5
- 3.75 |
|
|
|
5.0 |
|
Expected
volatility
|
|
|
106.1% - 110.1 |
% |
|
|
117.2 |
% |
Weighted-average
volatility
|
|
|
108.1 |
% |
|
|
117.2 |
% |
Risk-free
interest rate
|
|
|
2.23%
- 2.69 |
% |
|
|
1.89 |
% |
Dividend
yield
|
|
|
0.00 |
% |
|
|
0.00 |
% |
Expected
forfeiture rate
|
|
|
8.4 |
% |
|
|
1.0 |
% |
For stock
options issued through September 30, 2009, the expected life is based on the
contractual term. Thereafter, the Company utilized the simplified
method to estimate the expected life for stock options granted to
employees. The simplified method was used as the Company does not
have sufficient historical data regarding stock option exercises. The
expected volatility is based on historical volatility. The risk-free
interest rate is based on the U.S. Treasury yields with terms equivalent to the
expected life of the related option at the time of the
grant. Dividend yield is based on historical trends. While
the Company believes these estimates are reasonable, the compensation expense
recorded would increase if the expected life was increased, a higher expected
volatility was used, or if the expected dividend yield increased.
A summary
of the Company’s stock option activity for employees and directors during the
three months ended March 31, 2010 is presented below:
|
|
|
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
|
|
|
Weighted
|
|
|
Average
|
|
|
|
|
|
|
|
|
|
Average
|
|
|
Remaining
|
|
|
Aggregate
|
|
|
|
Number of
|
|
|
Exercise
|
|
|
Contractual
|
|
|
Intrinsic
|
|
Options
|
|
Shares
|
|
|
Price
|
|
|
Term
|
|
|
Value
|
|
Balance
Outstanding, December 31, 2009
|
|
|
4,994,167 |
|
|
$ |
2.69 |
|
|
|
|
|
|
|
Granted
|
|
|
423,500 |
|
|
$ |
4.52 |
|
|
|
|
|
|
|
Exercised
|
|
|
(40,000 |
) |
|
$ |
2.00 |
|
|
|
|
|
|
|
Forfeited
|
|
|
(179,375 |
) |
|
$ |
2.97 |
|
|
|
|
|
|
|
Expired
|
|
|
- |
|
|
$ |
- |
|
|
|
|
|
|
|
Balance
Outstanding, March 31, 2010
|
|
|
5,198,292 |
|
|
$ |
2.84 |
|
|
|
3.7 |
|
|
$ |
6,065,805 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expected
to vest, March 31, 2010
|
|
|
5,030,421 |
|
|
$ |
2.81 |
|
|
|
3.7 |
|
|
$ |
5,963,991 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercisable,
March 31, 2010
|
|
|
1,935,208 |
|
|
$ |
2.15 |
|
|
|
3.0 |
|
|
$ |
3,273,763 |
|
The
weighted-average grant-date fair value of options granted to employees during
the three months ended March 31, 2010 and 2009 was $3.17 and $1.24,
respectively. The total intrinsic value of options exercised by
employees during the three months ended March 31, 2010 and 2009 was $130,550 and
$0, respectively.
Nonvested
Common Stock Grants to Employees
On
January 25, 2010, the Company granted an aggregate of 7,600 restricted shares of
common stock having a fair value of $39,596 (based on a quoted trading price of
$5.21 per share) to employees. The shares were issued under the 2007
Award Plan and vest annually over a two-year period, subject to continued
employment by the Company.
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
During
the three months ended March 31, 2010 and 2009, the Company recognized an
aggregate amount of $32,010 and $1,283 of stock-based compensation for nonvested
shares of common stock issued to employees.
|
|
|
|
|
Weighted
|
|
|
|
|
|
|
Average
|
|
|
|
Number of
|
|
|
Grant Date
|
|
Nonvested Shares
|
|
Shares
|
|
|
Fair Value
|
|
Nonvested
at December 31, 2009
|
|
|
73,594 |
|
|
$ |
4.21 |
|
Granted
|
|
|
7,600 |
|
|
$ |
5.21 |
|
Vested
|
|
|
(11,758 |
) |
|
$ |
3.48 |
|
Forfeited
|
|
|
- |
|
|
$ |
- |
|
Nonvested
at March 31, 2010
|
|
|
69,436 |
|
|
$ |
4.44 |
|
The total
fair value of shares vested to employees during the three months ended March 31,
2010 was $49,951.
As of
March 31, 2010, there was $7,809,267 of total unrecognized compensation costs
related to nonvested share-based compensation arrangements. That cost
is expected to be recognized over a weighted-average period of 1.4
years.
Note
10. Net Earnings per Share
Basic
earnings per share are computed using the weighted average number of shares of
common stock outstanding during the period. Diluted earnings per
share are computed using the weighted average number of common shares and
potentially dilutive securities outstanding during the
period. Potentially dilutive securities consist of the incremental
shares of common stock issuable upon exercise of stock options and warrants
(using the treasury stock method) as well as nonvested shares of common stock
and convertible debt. The options, warrants and nonvested shares are
considered to be common stock equivalents and are only included in the
calculation of diluted earnings per common share when their effect is
dilutive. Potentially dilutive securities are excluded from the
computation if their effect is anti-dilutive.
Components
of basic and diluted earnings per share for the three months ended March 31,
2010 were as follows:
|
|
For the Three Months Ended March 31, 2010
|
|
|
|
Income
|
|
|
Shares
|
|
|
Per-Share
|
|
|
|
(Numerator)
|
|
|
(Denominator)
|
|
|
Amount
|
|
Net
income
|
|
$ |
205,070 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
EPS
|
|
|
|
|
|
|
|
|
|
|
Income
available to common stockholders
|
|
$ |
205,070 |
|
|
|
23,608,691 |
|
|
$ |
0.01 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of Dilutive Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
- |
|
|
|
1,957,450 |
|
|
|
|
|
Stock
warrants
|
|
|
- |
|
|
|
296,660 |
|
|
|
|
|
Nonvested
shares
|
|
|
- |
|
|
|
15,162 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
available to common stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
+
assumed conversions
|
|
$ |
205,070 |
|
|
|
25,877,963 |
|
|
$ |
0.01 |
|
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
Options
to purchase 656,000 shares of common stock and warrants to purchase 173,750
shares of common stock were outstanding during the three months ended March 31,
2010, but were not included in the computation of diluted earnings per share
because the effects would have been anti-dilutive. In addition, 1,900
nonvested shares were not included in the computation of diluted earnings per
share because the number of shares assumed purchased (calculated using the
compensation cost attributed to future services and not yet recognized) under
the treasury stock method exceeds the number of shares that would be
issued.
Components
of basic and diluted earnings per share for the three months ended March 31,
2009 were as follows:
|
|
For the Three Months Ended March 31, 2009
|
|
|
|
Income
|
|
|
Shares
|
|
|
Per-Share
|
|
|
|
(Numerator)
|
|
|
(Denominator)
|
|
|
Amount
|
|
Net
income
|
|
$ |
34,387 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
EPS
|
|
|
|
|
|
|
|
|
|
|
Income
available to common stockholders
|
|
$ |
34,387 |
|
|
|
18,922,596 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect
of Dilutive Securities
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock
options
|
|
|
- |
|
|
|
11,051 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
EPS
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
available to common stockholders
|
|
|
|
|
|
|
|
|
|
|
|
|
+
assumed conversions
|
|
$ |
34,387 |
|
|
|
18,933,647 |
|
|
$ |
- |
|
Options
to purchase 2,517,977 shares of common stock and warrants to purchase 711,809
shares of common stock were outstanding during the three months ended March 31,
2009, but were not included in the computation of diluted earnings per share
because the effects would have been anti-dilutive. In addition,
28,125 nonvested shares were not included in the computation of diluted earnings
per share because the number of shares assumed purchased (calculated using the
compensation cost attributed to future services and not yet recognized) under
the treasury stock method exceeds the number of shares that would be
issued.
Note
11. Income Taxes
The
Company files a consolidated U.S. income tax return that includes its U.S.
subsidiary. The Company also files state income tax returns in California,
Florida, Illinois, New York and Texas. The Company has recorded an income
tax benefit for the three months ended March 31, 2010 of $(1,079,108). The
tax benefit is based on the Company's estimate of the effective tax rate
expected to be applicable for the full year. The effective tax rate of
123.5% for the three months ended March 31, 2010 differs from the statutory rate
principally because of state income taxes, a valuation allowance established on
capital loss carryforwards and other non deductible expenses. The
effective rate is based on the Company's best estimate of projected income
through the end of the year, in which the first quarter is typically seasonally
weakest and the fourth quarter is expected to be seasonally strongest (see Note
1).
Note
12. Concentrations
Concentration
of Credit Risk
Financial
instruments that potentially subject the Company to concentration of credit risk
consist of cash and cash equivalents and accounts receivable. Cash and
cash equivalents are deposited in the local currency in various financial
institutions in the United States. The balance, at any given time, may
exceed Federal Deposit Insurance Corporation insurance limits. As of
March 31, 2010 and December 31, 2009, there was approximately $11,216,000
and $13,336,000, respectively, in excess of insurable
limits.
INTERCLICK,
INC. AND SUBSIDIARY
NOTES
TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
MARCH
31, 2010
(Unaudited)
Concentration
of Revenues, Accounts Receivable and Publisher Expense
For the
three months ended March 31, 2010 and 2009, the Company had significant
customers with individual percentage of total revenues equaling 10% or greater
as follows:
|
|
For the Three
|
|
|
For the Three
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
March 31, 2010
|
|
|
March 31, 2009
|
|
Customer
|
|
|
14.2 |
% |
|
|
0.0 |
% |
Customer
|
|
|
11.3 |
% |
|
|
0.0 |
% |
Customer
|
|
|
0.0 |
% |
|
|
15.4 |
% |
Totals
|
|
|
25.5 |
% |
|
|
15.4 |
% |
At March
31, 2010 and December 31, 2009, concentration of accounts receivable with
significant customers representing 10% or greater of accounts receivable was as
follows:
|
|
March 31, 2010
|
|
|
December 31, 2009
|
|
Customer
|
|
|
13.6 |
% |
|
|
0.0 |
% |
Customer
|
|
|
10.9 |
% |
|
|
17.9 |
% |
Totals
|
|
|
24.5 |
% |
|
|
17.9 |
% |
For the
three months ended March 31, 2010 and 2009, the Company made significant
purchases of advertising impressions from publishers with individual percentage
of total publisher expense (included in cost of revenues) equaling 10% or
greater as follows:
|
|
For the Three
|
|
|
For the Three
|
|
|
|
Months Ended
|
|
|
Months Ended
|
|
|
|
March 31, 2010
|
|
|
March 31, 2009
|
|
Publisher
|
|
|
25.2 |
% |
|
|
14.6 |
% |
Totals
|
|
|
25.2 |
% |
|
|
14.6 |
% |
Note
13. Subsequent Events
In April
2010, the Company vacated its current New York City headquarters, which the
Company subleased commencing May 1, 2010 for the remainder of the original lease
term with monthly rent of $16,717 with an annual 2.5%
escalation. Accordingly, the Company estimates that during the second
fiscal quarter of 2010 it shall recognize in accrued expenses an early cease use
liability of approximately $498,000 pertaining to the prior New York office
space. The charge to operations for the establishment of the accrued expense
shall be offset by approximately $66,000 due to the elimination of deferred rent
related to the former office space (See Note 8).
Item
2.
|
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations.
|
The
following discussion and analysis should be read in conjunction with our
unaudited condensed consolidated financial statements and related notes
appearing elsewhere in this report. In addition to historical information, this
discussion and analysis contains forward-looking statements that involve risks,
uncertainties, and assumptions. Our actual results may differ materially from
those anticipated in these forward-looking statements as a result of certain
factors, including but not limited to those set forth under “Risk Factors” in
our Form 10-K for the year ended December 31, 2009.
This
following discussion and analysis includes both financial measures in accordance
with GAAP, as well as a non-GAAP financial measure, EBITDA. EBITDA represents
operating income or loss before interest, taxes, depreciation and
amortization, including stock-based compensation. EBITDA should be
viewed as supplemental to, and not as an alternative for, net income or loss,
income or loss from operations or any other measure for determining operating
performance or liquidity, as determined under GAAP. We have included a
reconciliation of our non-GAAP financial measure to net income. See page 6 of
this report.
EBITDA is
used by our management as an additional measure of our performance for purposes
of business decision-making, including developing budgets and managing
expenditures. Period-to-period comparisons of EBITDA helps our management
identify additional trends in our financial results that may not be shown solely
by period-to-period comparisons of income or loss, or income or loss from
operations. Our management recognizes that EBITDA has inherent limitations
because of the excluded items, particularly those items that are recurring in
nature.
We
believe that the presentation of EBITDA is useful to investors in their analysis
of our results for reasons similar to the reasons why our management finds it
useful and because it helps facilitate investor understanding of decisions made
by our management in light of the performance metrics used in making those
decisions. In addition, we believe that providing EBITDA, together with a
reconciliation to GAAP, helps investors make comparisons between interCLICK and
other companies. In making any comparisons to other companies, investors need to
be aware that companies use different non-GAAP measures to evaluate their
financial performance. Investors should pay close attention to the specific
definition being used and to the reconciliation between such measure and the
corresponding GAAP measure provided by each company under applicable SEC
rules.
Company
Overview
interCLICK
is an enterprise software company focused on digital advertising technology and
services. Powered by Open Segment Manager (OSM), the Company develops coherent
and transparent audience targeting strategies with major digital agencies and
advertisers, empowering them to reach their desired audiences efficiently, in
brand-safe environments, at unprecedented scale. We generate our
revenue through the sale of online display advertising which is placed on
third-party publisher websites.
Significant
events which affected our results of operations during the three months ended
March 31, 2010 include:
|
·
|
Revenues
of $14,201,857 increased by 69% compared to $8,423,291 in the three months
ended March 31, 2009;
|
|
·
|
Gross
profit margins were 44.9% as compared to 46.9% in the prior year
comparable period;
|
|
·
|
Headcount
increased to 94 people at March 31, 2010, from 43 people at the end of the
prior year comparable period;
|
|
·
|
EBITDA
of $688,400 decreased by 25% compared to $919,450 in the prior year
comparable period;
|
|
·
|
We
have achieved positive EBITDA for six straight quarters beginning with the
fourth quarter of 2008; and
|
|
·
|
Net
income was $205,070, or $0.01 per share, compared to $33,167, or $0.00 per
share, in the prior year comparable period. Results for the
three months ended March 31, 2010 included an income tax benefit of
$1,079,108 and an other than temporary impairment of available-for-sale
securities of $458,538.
|
Results
of Operations
The
following table presents our results of operations for the three months ended
March 31, 2010 and 2009. The following discussion of our costs reflects the
reclassification of our expense categories we implemented in the third quarter
of 2009; all prior periods have been retroactively adjusted.
|
|
For
the Three
|
|
|
For
the Three
|
|
|
|
Months
Ended
|
|
|
Months
Ended
|
|
Unaudited
|
|
March
31, 2010
|
|
|
March
31, 2009
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
14,201,857 |
|
|
$ |
8,423,291 |
|
Cost
of revenues
|
|
|
7,819,181 |
|
|
|
4,474,279 |
|
Gross
profit
|
|
|
6,382,676 |
|
|
|
3,949,012 |
|
|
|
|
|
|
|
|
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
Sales
and
marketing
|
|
|
2,116,714
|
|
|
|
1,416,522
|
|
General
and administrative
|
|
|
3,230,528 |
|
|
|
1,677,665 |
|
Technology
support
|
|
|
1,339,578 |
|
|
|
584,331 |
|
Amortization
of intangible assets
|
|
|
39,500 |
|
|
|
49,760 |
|
Total
operating expenses
|
|
|
6,726,320 |
|
|
|
3,728,278 |
|
|
|
|
|
|
|
|
|
|
Operating
income (loss) from continuing operations
|
|
|
(343,644 |
) |
|
|
220,734 |
|
|
|
|
|
|
|
|
|
|
Other
income (expense):
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
8,868 |
|
|
|
12 |
|
Other
than temporary impairment of available-for-sale securities
|
|
|
(458,538 |
) |
|
|
- |
|
Warrant
derivative liability income (expense)
|
|
|
21,685 |
|
|
|
(72,767 |
) |
Interest
expense
|
|
|
(102,409 |
) |
|
|
(113,592 |
) |
Total
other expense
|
|
|
(530,394 |
) |
|
|
(186,347 |
) |
|
|
|
|
|
|
|
|
|
Income
(loss) from continuing operations before income taxes
|
|
|
(874,038 |
) |
|
|
34,387 |
|
|
|
|
|
|
|
|
|
|
Income
tax benefit
|
|
|
1,079,108 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Income
from continuing operations
|
|
|
205,070 |
|
|
|
34,387 |
|
|
|
|
|
|
|
|
|
|
Loss
from discontinued operations
|
|
|
- |
|
|
|
(1,220 |
) |
|
|
|
|
|
|
|
|
|
Net
income
|
|
$ |
205,070 |
|
|
$ |
33,167 |
|
|
|
|
|
|
|
|
|
|
Basic
earnings per share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
0.01 |
|
|
$ |
- |
|
Discontinued
operations
|
|
$ |
- |
|
|
$ |
- |
|
Net
income
|
|
$ |
0.01 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Diluted
earnings per share:
|
|
|
|
|
|
|
|
|
Continuing
operations
|
|
$ |
0.01 |
|
|
$ |
- |
|
Discontinued
operations
|
|
$ |
- |
|
|
$ |
- |
|
Net
income
|
|
$ |
0.01 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Weighted
average shares: |
|
|
|
|
|
|
|
|
Basic
|
|
|
23,608,691 |
|
|
|
18,922,596 |
|
Diluted
|
|
|
25,877,963 |
|
|
|
18,933,647 |
|
Three Months Ended March 31, 2010
Compared with Three Months Ended March 31, 2009
Revenues
Revenues
for the three months ended March 31, 2010 increased to $14,201,857 from
$8,423,291 for the three months ended March 31, 2009, an increase of
69%. Growth was driven by strong industry momentum in the back half
of the quarter, aggressive incremental spending activity from existing clients,
and higher demand for OSM.
interCLICK
is particularly sensitive to seasonality given that the majority of its revenues
are tied to CPM (cost-per-thousand) campaigns, which are strongest in the fourth
quarter and weakest in the first quarter.
Given the
continued overall growth in online advertising, coupled with other strategic
initiatives undertaken by interCLICK, including the continued enhancement of our
OSM platform and our continued ability to acquire top tier advertising
impressions from publishers, we expect to continue to increase our advertising
customer base and revenues on a year-over-year basis for the foreseeable
future.
Revenues
from branded advertisers account for the substantial majority of our
revenues. During the three months ended March 31, 2010, revenues from
such advertisers accounted for more than 95% of revenues.
Cost
of Revenues and Gross Profit
Cost of
revenues for the three months ended March 31, 2010 increased to $7,819,181 from
$4,474,279 for the three months ended March 31, 2009, an increase of
75%. The increase is primarily attributable to the growth in
advertising campaigns requiring the purchase of appropriate levels of
advertising impressions from publishers and higher third-party data fees. Cost
of revenues is comprised primarily of the amounts we paid to website publishers
on interCLICK’s online advertising network, amounts paid to third-party data
providers, and ad serving and rich media expenses directly associated with a
given campaign. Cost of revenues represented 55.1% of revenues for
the three months ended March 31, 2010 compared to 53.1% of revenues for the
three months ended March 31, 2009. The increase is primarily attributable to
higher third-party data fees. This increase was partially offset by:
(1) improvements in our supply chain management platform, resulting in a better
match between acquired advertising impressions and advertising campaign demand
and (2) targeting efficiencies achieved through OSM.
Gross
profit for the three months ended March 31, 2010 increased to $6,382,676 from
$3,949,012 for the three months ended March 31, 2009, an increase of 62%.
Our gross margin was 44.9% for the three months ended March 31, 2010
compared to 46.9% for the three months ended March 31, 2009. We
expect gross margins will remain in the mid-40’s percentage range in the
near-term.
Operating
Expenses
Operating
expenses consist of general and administrative, sales and marketing, technology
support, and amortization of intangible assets. These are discussed
in further detail below. Total operating expenses for the three
months ended March 31, 2010 increased to $6,726,320 from $3,728,278 for the
three months ended March 31, 2009, an increase of 80%. The increase
is primarily attributable to significant headcount expansion from 43 employees
as of March 31, 2009 to 94 employees as of March 31, 2010, as well as the prior
year comparable period including decreased expense resulting from a change in
estimates for determining allowance for doubtful accounts and sales commission
accruals. The majority of hiring was in the technology, product and
operations areas to support the growth of our business and the ongoing
innovation, development and marketing of our technology platform, including
OSM. We expect to hire approximately more than two dozen new
employees throughout the remainder or 2010.
General and Administrative
General
and administrative expenses consist primarily of executive, administrative,
operations and product support compensation (including stock based
compensation), facilities costs, insurance, depreciation, professional fees,
investor relations fees and bad debt expense. General and
administrative expenses for the three months ended March 31, 2010 increased to
$3,230,528 from $1,677,665 for the three months ended March 31, 2009, an
increase of 93%. The increase is primarily attributable to our
headcount expansion and the prior year comparable period including decreased
expense resulting from a change in estimates for determining allowance for
doubtful accounts. General and administrative expenses represented
22.7% of revenues for the three months ended March 31, 2010 compared to 19.9% of
revenues for the three months ended March 31, 2009.
Sales
and Marketing
Sales and
marketing expenses consist primarily of compensation (including stock based
compensation) for sales and marketing and related support resources, sales
commissions and trade show expenses. Sales and marketing expenses for the three
months ended March 31, 2010 increased to $2,116,714 from $1,416,522 for the
three months ended March 31, 2009, an increase of 49%. The
increase is primarily attributable to our headcount expansion and the prior year
period including decreased expense resulting from a change in estimates for
determining sales commission accruals. Sales and marketing expenses
represented 14.9% of revenues for the three months ended March 31, 2010 compared
to 16.8% of revenues for the three months ended March 31, 2009.
Technology
Support
Technology
support consists primarily of compensation (including stock based compensation)
of technology support and related resources. Technology support and related
resources have been directed primarily towards continued enhancement of our
platform, our development of our new OSM platform, including integration of
third party data providers, upgrades to our advertising serving platform, and
ongoing maintenance and improvement of our technology infrastructure.
Technology support expenses for the three months ended March 31, 2010 increased
to $1,339,578 from $584,331 for the three months ended March 31, 2009, an
increase of 129%. The increase is primarily attributable to our headcount
expansion and expenditures necessary to support interCLICK’s increased business
and our development of OSM. Technology support expenses represented 9.4% of
revenues for the three months ended March 31, 2010 compared to 6.9% of revenues
for the three months ended March 31, 2009.
Amortization
of Intangible Assets
Amortization
of intangible assets includes amortization of customer relationships, developed
technology and a domain name acquired through the Desktop acquisition in
2007. Amortization of intangible assets for the three months ended
March 31, 2010 decreased to $39,500 from $49,760 for the three months ended
March 31, 2009, a decrease of 21%. The decrease is primarily
attributable to the customer relationships being fully depreciated at December
31, 2009.
Amortization of intangible assets represented 0.3% of revenues for the three
months ended March 31, 2010 compared to 0.6% of revenues for the three months
ended March 31, 2009.
Net
Income
Net
income for the three months ended March 31, 2010 was $205,070 compared to
$33,167 for the three months ended March 31, 2009, an increase of
518%. The change was primarily attributable to strong revenue and
gross profit growth and an income tax benefit in the current year period of
$1,079,108, largely offset by operating expenses growing at a faster pace than
revenue, resulting primarily from significantly increased headcount, an other
than temporary impairment of available-for-sale securities of $458,538, and the
prior year comparable period including decreased expense resulting
from a change in estimates for determining allowance for doubtful
accounts and sales commission accruals.
Reconciliations
of Certain Non-GAAP Measures
|
|
For the Three
Months Ended
|
|
|
For the Three
Months Ended
|
|
Unaudited
|
|
March
31, 2010
|
|
|
March
31, 2009
|
|
|
|
|
|
|
|
|
|
|
GAAP
net income
|
|
$ |
205,070 |
|
|
$ |
33,167 |
|
|
|
|
|
|
|
|
|
|
Loss
from sale of discontinued operations, net of tax
|
|
|
- |
|
|
|
1,220 |
|
Income
tax benefit
|
|
|
(1,079,108 |
) |
|
|
- |
|
|
|
|
|
|
|
|
|
|
Income
(loss) from continuting operations before income taxes
|
|
|
(874,038 |
) |
|
|
34,387 |
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
102,409 |
|
|
|
113,592 |
|
Interest
income
|
|
|
(8,868 |
) |
|
|
(12 |
) |
Warrant
derivative liability (income) expense
|
|
|
(21,685 |
) |
|
|
72,767 |
|
Other
than temporary impairment of available-for sale securities
|
|
|
458,538 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
Operating
income (loss) from continuing operations
|
|
|
(343,644 |
) |
|
|
220,734 |
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
|
849,582 |
|
|
|
576,570 |
|
Amortization
of intangible assets
|
|
|
39,500 |
|
|
|
49,760 |
|
|
|
|
142,962 |
|
|
|
72,386 |
|
|
|
|
|
|
|
|
|
|
EBITDA
|
|
$ |
688,400 |
|
|
$ |
919,450 |
|
Liquidity and Capital
Resources
Net cash
provided by operating activities during the three months ended March 31, 2010
totaled $1,567,101 and resulted primarily from a decrease in accounts receivable
of $6,451,620, partially offset by a change in deferred taxes of $1,684,957 and
decreases in accounts payable of $3,674,840 and accrued expenses of
$1,218,173.
Net cash
used in investing activities during the three months ended March 31, 2010
totaled $1,719,746 and resulted primarily from a $1,291,746 increase in
restricted cash and $439,219 used for purchases of property and
equipment.
Net cash
used in financing activities during the three months ended March 31, 2010 was
$3,176,155 and resulted primarily from net repayments under our credit facility
of $3,248,594.
On
November 13, 2008, interCLICK entered into a revolving credit facility with
Crestmark Commercial Capital Lending, LLC to finance certain eligible accounts
receivables of interCLICK in an amount up to $3.5 million (subsequently
increased to $4.5 million on February 3, 2009, increased to $5.5 million on
April 30, 2009, and increased to $7.0 million on September 2,
2009). The credit facility is secured by substantially all of the
assets of interCLICK, except property and equipment financed
elsewhere. Effective May 12, 2010, either interCLICK or Crestmark may
terminate the Agreement with 60 days prior written notice to the other party
without being subject to any early termination fee. interCLICK does
not expect Crestmark to terminate the agreement and neither party has informed
the other party of their intent to terminate as of the date of this
report. In the event the agreement with Crestmark does terminate, the
Company is confident in its ability to obtain sufficient
financing. The Company is in active discussions with Crestmark and
other lenders about establishing a larger credit facility which would likely be
secured by the Company’s accounts receivable.
At March
31, 2010, interCLICK had working capital of $15,598,834, including $9,325,188 in
cash and cash equivalents and $500,649 in near-term restricted
cash. interCLICK’s working capital is impacted by the seasonal nature
of its business, whereby revenue and receivables are typically weakest in the
first quarter and strongest in the fourth quarter. As of May
7, 2010, interCLICK had approximately $8,847,018 of cash and cash
equivalents and $1,291,840 in total restricted cash. As our business
has expanded, interCLICK has delivered positive EBITDA for the last six
quarters. We discuss this non-GAAP financial measure and its limitations
under Company Overview above. interCLICK continues to expand and had
year-over-year revenue growth in each quarter of 2009 and in the first quarter
of 2010. Management anticipates that revenues will continue to
increase through 2010. In addition to our cash and cash equivalents,
the unused amount under the Crestmark credit facility was approximately
$6,300,000 at May 7, 2010. For all of these reasons, interCLICK
expects that it has sufficient cash and borrowing capacity to meet its working
capital needs for at least the next 12 months.
During
three months ended March 31, 2010, we acquired $934,819 in capital assets,
including $495,600 through conventional capital leases to further enhance the
features and scale of our technology assets, which are necessary both to
support the realization of growth objectives as well as to advance interCLICK’s
present competitive position. During the remainder of 2010, we expect
to acquire approximately $500,000 in additional capital assets, a portion of
which will likely be financed through capital leases.
Related
Party Transactions
No related party transactions had a
material impact on our operating results.
New
Accounting Pronouncements
See Note 2 to our financial statements
included in this report for discussion of recent accounting
pronouncements.
Critical
Accounting Estimates
Management’s
discussion and analysis of financial condition and results of operations is
based upon our consolidated financial statements, which have been prepared in
accordance with accounting principles generally accepted in the United States of
America. The preparation of these consolidated financial statements requires us
to make estimates and assumptions that affect the reported amounts of assets,
liabilities, revenues, and expenses, and related disclosure of contingent assets
and liabilities. On an ongoing basis, we evaluate our estimates and assumptions,
including, but not limited to, those related to the valuation of accounts
receivable and allowance for doubtful accounts, purchase price fair value
allocation for business combinations, estimates of depreciable lives and
valuation of property and equipment, valuation and amortization periods of
intangible assets and deferred costs, valuation of goodwill, valuation of
discounts on debt, valuation of derivatives, valuation of investment in
available-for-sale securities, valuation of common shares, options and warrants
granted for services or recorded as debt discounts or other non-cash purposes
including business combinations, the valuation allowance on deferred tax assets,
estimates of the tax effects of business combinations and sale of subsidiary,
and estimates in equity investee’s losses. We base our estimates on historical
experience and on various other assumptions that are believed to be reasonable
under the circumstances, the results of which form the basis for making
judgments about the carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates and assumptions.
In
response to the SEC’s financial reporting release, FR-60, “Cautionary Advice
Regarding Disclosure About Critical Accounting Policies”, the Company has
selected a more subjective accounting estimation processes for purposes of
explaining the methodology used in calculating estimates, in addition to the
inherent uncertainties pertaining to the estimate and the possible effects on
interCLICK’s financial condition. The accounting estimates are discussed below.
These estimates involve certain assumptions that if incorrect could create a
material adverse impact on the interCLICK’s results of operations and financial
condition.
Management
is particularly attentive to the length account receivable collection cycles and
the attendant possibility of an increase in bad debts. However,
collection performance improved during 2009 and during the three months ended
March 31, 2010 at which time the Company’s bad debt reserve was $290,045, or
1.9% of gross accounts receivable, as compared to $383,188, or 1.7% of gross
accounts receivable, as of December 31, 2009.
Management
is sensitive to the carrying value of the 7,043,585 OPMG shares held on the
balance sheet at $245,821 at March 31, 2010. These shares are valued based
on the quoted market price which is expected to continue to
fluctuate. As of December 31, 2009, management concluded that private
transactions were among the most economically feasible ways to sell any portion
of the Company’s investment in OPMG shares as trading volume in OPMG was too
thinly traded and therefore did not reliably occur in an active
market. This change in estimate is based on management’s conclusion
that during the three months ended March 31, 2010, OPMG’s trading volume has
increasingly stabilized and thus is now a reliable basis for fair
valuation. In the future, we may attempt to sell some OPMG shares in
the open market which could materially reduce the carrying value of our
investment. See Notes 5 and 7 to the condensed consolidated
financial statements.
Cautionary
Note Regarding Forward Looking Statements
This report contains forward-looking
statements within the meaning of the Private Securities Litigation Reform Act of
1995 including anticipated revenues, expected increases in our advertising
customer base, expected gross margins, expected hiring of new employees, having
sufficient cash and borrowing capacity to meet its working capital for at least
the next 12 months and expectations regarding acquiring additional capital
assets. Forward-looking statements can be identified by words such as
“anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects”
and similar references to future periods.
Forward-looking statements are based on
our current expectations and assumptions regarding our business, the economy and
other future conditions. Because forward-looking statements relate to the
future, they are subject to inherent uncertainties, risks and changes in
circumstances that are difficult to predict. Our actual results may differ
materially from those contemplated by the forward-looking statements. We caution
you therefore against relying on any of these forward-looking statements. They
are neither statements of historical fact nor guarantees or assurances of future
performance. Important factors that could cause actual results to differ
materially from those in the forward-looking statements include the impact of
intense competition, the continuation or worsening of current economic
conditions, a potential decrease in corporate advertising spending, a potential
decrease in consumer spending and the condition of the domestic and global
credit and capital markets.
Further information on our risk factors
is contained in our filings with the SEC, including our Form 10-K for the year
ended December 31, 2009. Any forward-looking statement made by us in
this report speaks only as of the date on which it is made. Factors
or events that could cause our actual results to differ may emerge from time to
time, and it is not possible for us to predict all of them. We undertake no
obligation to publicly update any forward-looking statement, whether as a result
of new information, future developments or otherwise, except as may be required
by law.
Item
3.
|
Quantitative
and Qualitative Disclosures About Market
Risk.
|
Not
applicable to smaller reporting companies
Item
4.
|
Controls
and Procedures.
|
Not
applicable to smaller reporting companies
Item
4T.
|
Controls
and Procedures.
|
Evaluation
of Disclosure Controls and Procedures. Our management carried out
an evaluation, with the participation of our Principal Executive Officer and
Principal Financial Officer, required by Rule 13a-15 of the Securities
Exchange Act of 1934 (the “Exchange Act”) of the effectiveness of our disclosure
controls and procedures as defined in Rule 13a-15(e) under the Exchange Act.
Based on that evaluation,
our Principal Executive Officer and Principal Financial Officer concluded that
our disclosure controls and procedures were effective as of the end of the
period covered by this report to ensure that information required to be
disclosed by us in the reports that we file or submit under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in the SEC’s rules and forms and is accumulated and communicated to our
management, including our Principal Executive Officer and Principal Financial
Officer, as appropriate to allow timely decisions regarding required
disclosure.
Changes in Internal Control
Over Financial Reporting. There were no changes in our internal control
over financial reporting as defined in Rule 13a-15(f) under the Exchange Act
that occurred during the period covered by this report that have materially
affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
PART
II – OTHER INFORMATION
Item
1.
|
Legal
Proceedings.
|
None
Not
applicable to smaller reporting companies.
Item
2.
|
Unregistered
Sales of Equity Securities and Use of
Proceeds.
|
In
addition to those unregistered securities previously disclosed in reports filed
with the SEC, we have sold securities without registration under the Securities
Act of 1933 (the “Act”).
|
|
Date
Sold
|
|
No. of
Securities
|
|
Consideration
|
Warrant
holder (1)
|
|
February
25, 2010
|
|
11,465
shares of common stock
|
|
Cashless
exercise of warrants with exercise price of $2.80 per
share
|
(1)
Exemption under Section 3(a)(9) of the Act.
Item
3.
|
Defaults
Upon Senior Securities.
|
None
Item
4.
|
(Removed
and Reserved).
|
Item
5.
|
Other
Information.
|
None
Exhibit
|
|
|
|
Incorporated by Reference
|
|
Filed or
Furnished
|
|
#
|
|
Exhibit Description
|
|
Form
|
|
Date
|
|
Number
|
|
Herewith
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.1
|
|
Customer
Acquisition Network Agreement of Merger and Plan of Reorganization
**
|
|
8-K
|
|
9/4/07
|
|
2.1
|
|
|
|
2.2
|
|
Desktop
Agreement and Plan of Merger **
|
|
8-K
|
|
9/4/07
|
|
2.2
|
|
|
|
3.1
|
|
Amended
and Restated Certificate of Incorporation
|
|
8-K
|
|
8/30/07
|
|
3.1
|
|
|
|
3.2
|
|
Certificate
of Amendment to the Articles of Incorporation
|
|
8-K
|
|
7/1/08
|
|
3.1
|
|
|
|
3.3
|
|
Certificate
of Amendment to the Articles of Incorporation
|
|
8-A12b
|
|
11/31/09
|
|
3.3
|
|
|
|
3.4
|
|
Bylaws
|
|
S-3/A
|
|
11/25/09
|
|
3.6
|
|
|
|
10.1
|
|
New
York Lease Agreement
|
|
10-K
|
|
3/31/10
|
|
10.20
|
|
|
|
31.1
|
|
Certification
of Principal Executive Officer (Section 302)
|
|
|
|
|
|
|
|
Filed
|
|
31.2
|
|
Certification
of Principal Financial Officer (Section 302)
|
|
|
|
|
|
|
|
Filed
|
|
32.1
|
|
Certification
of Principal Executive Officer and Principal Financial Officer
(Section 906)
|
|
|
|
|
|
|
|
Furnished
|
|
** The confidential disclosure
schedules are not filed in accordance with SEC Staff policy, but will be
provided to the Staff upon request. Certain material agreements contain
representations and warranties, which are qualified by the following
factors:
|
a.
|
the
representations and warranties contained in any agreements filed with this
report were made for the purposes of allocating contractual risk between
the parties and not as a means of establishing facts;
|
|
b.
|
the
agreement may have different standards of materiality than standards of
materiality under applicable securities laws;
|
|
c.
|
the
representations are qualified by a confidential disclosure schedule that
contains nonpublic information that is not material under applicable
securities laws;
|
|
d.
|
facts
may have changed since the date of the agreements; and
|
|
e.
|
only
parties to the agreements and specified third-party beneficiaries have a
right to enforce the agreements.
|
Notwithstanding
the above, any information contained in a schedule that would cause a reasonable
investor (or that a reasonable investor would consider important in making a
decision) to buy or sell our common stock has been included. We have been
further advised by our counsel that in all instances the standard of materiality
under the federal securities laws will determine whether or not information has
been omitted; in other words, any information that is not material under the
federal securities laws may be omitted. Furthermore, information which may have
a different standard of materiality will nonetheless be disclosed if material
under the federal securities laws.
Copies of
this report (including the financial statements) and any of the exhibits
referred to above will be furnished at no cost to our shareholders who make a
written request to interCLICK, Inc., 11 West 19th Street,
10th
Floor, New York, NY 10011 Attention: Secretary.
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
|
|
interCLICK,
INC.
|
|
|
|
May
14, 2010
|
|
/s/ Michael
Mathews
|
|
|
Michael
Mathews
|
|
|
Chief
Executive Officer
(Principal
Executive Officer)
|
|
|
|
May
14, 2010
|
|
/s/ Roger
Clark
|
|
|
Roger
Clark
|
|
|
Chief
Financial Officer
(Principal
Financial Officer)
|