Edgar Filing: interCLICK, Inc.

Revenues from branded advertisers continue to account for the substantial majority of our revenues. During the nine months ended September 30, 2009, revenues from such advertisers accounted for more than 95% of revenues.

Cost of Revenues and Gross Profit

Cost of revenues for the nine months ended September 30, 2009 increased to $17,498,860 from $10,330,018 for the nine months ended September 30, 2008, an increase of 69.4%. The increase is primarily attributable to the growth in advertising campaigns requiring the purchase of appropriate levels of inventory from publishers and higher data fees. Cost of revenues is comprised 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 52.3% of revenues for the nine months ended September 30, 2009 compared to 73.8% of revenues for the nine months ended September 30, 2008. The decrease is primarily attributable to: (1) improvements in our supply chain management platform, resulting in a better match between acquired publisher inventory and advertising campaign demand and (2) targeting efficiencies achieved through our proprietary technology platform.

Gross profit for the nine months ended September 30, 2009 increased to $15,968,353 from $3,662,285 for the nine months ended September 30, 2008, an increase of 336%. Our gross margin was 47.7% for the nine months ended September 30, 2009 compared to 26.2% for the nine months ended September 30, 2008.

Operating Expenses:

The following discussion of our costs reflects the reclassification of our expense categories we implemented with the third quarter of 2009; all prior periods have been retroactively adjusted.

General and Administrative

General and administrative expenses consist primarily of executive, administrative, operations and product support compensation (including non-cash stock based compensation), facilities costs, insurance, depreciation, professional fees, investor relations fees and bad debt expense. General and administrative expenses for the nine months ended September 30, 2009 increased to $8,021,106 from $6,113,362 for the nine months ended September 30, 2008, an increase of 31.2%. The increase is primarily attributable to headcount expansion over the period. We expect to continue hiring new employees for the balance of 2009, at a slightly faster pace than in the third quarter. General and administrative expenses represented 24.0% of revenues for the nine months ended September 30, 2009 compared to 43.7% of revenues for the nine months ended September 30, 2008.

Sales and Marketing

Sales and marketing expenses consist primarily of compensation (including non-cash stock based compensation) for sales and marketing and related support resources, sales commissions and trade show expenses. Sales and marketing expenses for the nine months ended September 30, 2009 increased to $5,468,122 from $2,443,776 for the nine months ended September 30, 2008, an increase of 124%. The increase is primarily attributable to our national sales-force expansion. Sales and marketing expenses represented 16.3% of revenues for the nine months ended September 30, 2009 compared to 17.5% of revenues for the nine months ended September 30, 2008.

Technology Support

Technology support consists primarily of compensation (including non-cash stock based compensation) of technology support and related resources. Technology support and related support resources have been directed primarily towards continued enhancement of our proprietary behavioral targeting platform, including integration of third party data providers, upgrades to our optimization system, and ongoing maintenance and improvement of our technology infrastructure. Technology support expenses for the nine months ended September 30, 2009 increased to $2,149,103 from $839,579 for the nine months ended September 30, 2008, an increase of 156%. The increase is primarily attributable to expenditures necessary to support interCLICK’s increased business and our development of enhanced technology solutions. Technology support expenses represented 6.4% of revenues for the nine months ended September 30, 2009 compared to 6.0% of revenues for the nine months ended September 30, 2008.

Amortization of Intangible Assets

Amortization of intangible assets includes amortization of customer relationships, developed technology and a domain name acquired through the Desktop acquisition. Amortization of intangible assets for the nine months ended September 30, 2009 decreased to $149,280 from $313,938 for the nine months ended September 30, 2008, a decrease of 52.4%. The decrease is primarily attributable to the accelerated amortization applicable to acquired customer relationships in prior periods. Amortization of intangible assets represented 0.4% of revenues for the nine months ended September 30, 2009 compared to 2.2% of revenues for the nine months ended September 30, 2008.

Net Loss From Discontinued Operations

Net loss from discontinued operations for the nine months ended September 30, 2009 was $0 as compared to $1,998,232 for the nine months ended September 30, 2008. There was a loss on sale of discontinued operations of $1,220 for the nine months ended September 30, 2009 as compared to $1,123,535 for the nine months ended September 30, 2008. The loss from discontinued operations for the nine months ended September 30, 2008 also contains $1,122,529 of stock-based expense.

Net Income (Loss)

Net loss for the nine months ended September 30, 2009 decreased to $849,728 from a net loss of $11,373,310 for the nine months ended September 30, 2008. The decrease was attributable to strong revenue and gross profit growth, partially offset by higher operating expenses which grew at a slower pace than revenue. Furthermore, the 2008 comparable period loss included loss from discontinued operations, net of income taxes, of $3,111,767, and equity in investee’s loss, net of income taxes, of $653,231.

Liquidity and Capital Resources

Net cash used in operating activities during the nine months ended September 30, 2009 totaled $1,697,040 and resulted primarily from an increase in accounts receivable of $7,268,876 and a net loss of $849,728, partially offset by an increase in accounts payable of $2,219,724, stock-based compensation of $1,953,884, an increase in accrued expenses of $1,377,328 and $506,786 of warrant derivative liability expense.

Net cash used in investing activities during the nine months ended September 30, 2009 totaled $65,422 and resulted from $86,851 of purchases of property and equipment, offset by proceeds from the sale of Options Media Group Holdings, Inc. (“OPMG”) stock of $21,429.

Net cash provided by financing activities during the nine months ended September 30, 2009 was $3,757,685 and resulted primarily from net proceeds of $2,257,000 from a private placement, $1,893,593 received under our credit facility (net of repayments), partially offset by the repayment of $400,000 of notes payable.

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 line of credit expires on May 12, 2010 and is secured by substantially all of the assets of interCLICK, except property and equipment financed elsewhere.

At September 30, 2009, interCLICK had $1,929,094 in cash and cash equivalents and working capital of $2,699,017. As of November 6, 2009, interCLICK had approximately $1,161,817 of cash and cash equivalents. As its business has expanded, interCLICK has had positive earnings before interest, taxes, depreciation and amortization, including stock-based compensation for the last four quarters. interCLICK continues to expand and had very strong year-over-year revenue growth in each quarter of 2009. Management anticipates that revenues will continue to increase through at least 2010. In addition to our cash and cash equivalents, the unused amount under the Crestmark line of credit available was $2,740,781 at November 6, 2009. 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.

In the next 12 months, we expect to acquire up to $2,000,000 in capital assets to further enhance the features and scale of our technology assets, which is necessary both to support the realization of growth objectives as well as to advance interCLICK’s present competitive position. We expect these capital assets will be acquired through conventional capital leases.

Related Party Transactions

New Accounting Pronouncements

See Note 3 to our unaudited condensed consolidated financial statements included in this report for discussion of recent accounting pronouncements.

Critical Accounting Estimates

In response to the SEC’s financial reporting release, FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, the Company has selected its more subjective accounting estimation processes for purposes of explaining the methodology used in calculating the estimate, in addition to the inherent uncertainties pertaining to the estimate and the possible effects on the 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. See Note 3 to the unaudited condensed consolidated financial statements.

With the present economic recession, management is particularly attentive to the potential for lengthening account receivable collection cycles and the attendant possibility of an increase in bad debts. However, as collection performance improved over the course of the first quarter of 2009 in part due to a major retailer client receiving an $80,000,000 capital investment, management opted to reduce bad debt reserves to $185,032, or 1.8% of gross accounts receivable at June 30, 2009, from $216,532 or 2.5% of gross accounts receivable, at March 31, 2009. At September 30, 2009, bad debt reserves were $258,100 or 1.8% of gross accounts receivable.

Management is sensitive to the carrying value of the 7,285,715 OPMG shares held on the balance sheet at $728,572 at September 30, 2009 that are valued based on the shares we sold privately in May 2009, and further supported by a private transaction in November 2009, rather than the quoted market price as of those dates. Management concluded that OPMG shares do not trade in a reliably active market and therefore management relied on the private transaction values. See Notes 5 and 9 to the unaudited condensed consolidated financial statements.

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 including those relating to our beliefs that we can achieve a better return on investment for our clients while still being able to target the premium websites, our expectation that we will continue to increase our advertising customer base and revenues on a year-over-year basis, our expectations regarding hiring new employees for the balance of 2009, our management’s anticipation that revenues will continue to increase through at least 2010, our expectation regarding having sufficient cash and borrowing capacity to meet our working capital needs for at least the next 12 months, and our expectations regarding our capital expenditures. Additionally, words such as “expects,” “anticipates,” “intends,” “believes,” “will” and similar words are used to identify forward-looking statements.

Some or all of the results anticipated by these forward-looking statements may not occur. Important factors, uncertainties and risks that may cause actual results to differ materially from these forward-looking statements include, but are not limited to, the Risk Factors in Part II, Item 1A, of this report on Form 10-Q, the impact of intense competition, the continuation or worsening of current economic conditions and the condition of the domestic and global credit and capital markets. Additionally, these forward-looking statements are presented as of the date this Form 10-Q is filed with the Securities and Exchange Commission. We do not intend to update any of these forward-looking statements.

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.

Disclosure Controls

We carried out an evaluation required by Rule 13a-15 or Rule 15d-15 of the Securities Exchange Act of 1934 (the “Exchange Act”) under the supervision and with the participation of our management, including our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures.

Disclosure controls and procedures are designed with the objective of ensuring that (i) information required to be disclosed in an issuer's reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC rules and forms and (ii) information is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosures.

The evaluation of our disclosure controls and procedures included a review of our objectives and processes and effect on the information generated for use in this report. This type of evaluation is done quarterly so that the conclusions concerning the effectiveness of these controls can be reported in our periodic reports filed with the SEC. We intend to maintain these controls as processes that may be appropriately modified as circumstances warrant.

Based on their evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures are effective in timely alerting them to material information which is required to be included in our periodic reports filed with the SEC as of the filing of this report.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting 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

Investing in our common stock involves a high degree of risk. You should carefully consider and evaluate all of the information included in this Form 10-Q, including the risk factors below before deciding whether to invest in interCLICK. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also impair our business operations or our financial condition. If any of the events discussed in the risk factors below occur, our business, consolidated financial condition, results of operations or prospects could be materially and adversely affected. In such case, the value and marketability of the common stock could decline, and you might lose all or part of your investment.

Risks Relating to the Company

Because we have a limited operating history to evaluate our company, the likelihood of our success must be considered in light of the problems, expenses, difficulties, complications and delay frequently encountered by an early-stage company.

Since we have a limited operating history it will make it difficult for investors and securities analysts to evaluate our business and prospects. You must consider our prospects in light of the risks, expenses and difficulties we face as an early stage company with a limited operating history. Investors should evaluate an investment in our company in light of the uncertainties encountered by early-stage companies in an intensely competitive industry. There can be no assurance that our efforts will be successful or that we will be able to maintain profitability.

Because we expect to need additional capital to fund our growing operations, we may not be able to obtain sufficient capital and may be forced to limit the scope of our operations.

We expect that as our business continues to grow we will need additional working capital. In addition to the proceeds we received from our June 2009 private placement, we are currently relying on our accounts receivable factoring line of credit with a commercial lender which expires in May 2010. This lender recently expanded our line to $7,000,000. This lender is privately-held and we have no access to any information about its financial condition. Because of the severe impact that the recession has had on the financial service sector, we may be adversely affected in our ability to draw on our line of credit, replace this line of credit or increase the amount we can borrow. The slowdown in the global economy, the freezing of the credit markets and decline in the stock market may adversely affect our ability to raise capital. If adequate additional debt and/or equity financing is not available on reasonable terms or at all, we may not be able to continue to expand our business, and we will have to modify our business plans accordingly. These factors would have a material and adverse effect on our future operating results and our financial condition.

Even if we secure additional working capital, we may not be able to negotiate terms and conditions for receiving the additional capital that are acceptable to us. Any future equity capital investments will dilute existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to our common stock. We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us.

Because of the severity of the global economic recession, our customers may delay in paying us or not pay us at all. This would have a material and adverse effect on our future operating results and financial condition.

One of the effects of the severe global economic recession is that businesses are tending to maintain their cash resources and delay in paying their creditors whenever possible. As a trade creditor, we lack leverage unlike secured lenders and providers of essential services. Should the economy further deteriorate, we may find that either advertisers, their representative agencies or both may delay in paying us. Additionally, we may find that advertisers will reduce Internet advertising which would reduce our future revenues. These events will result in a number of adverse effects upon us including increasing our borrowing costs, reducing our gross profit margins, reducing our ability to borrow under our line of credit, and reducing our ability to grow our business. These events would have a material and adverse effect upon us.

If advertising on the Internet loses its appeal, our revenue could decline.

Our business model may not continue to be effective in the future for a number of reasons, including the following: click and conversion rates have always been low and may decline as the number of advertisements and ad formats on the Web increases; Web users can install "filter" software programs which allow them to prevent advertisements from appearing on their computer screens or in their email boxes; Internet advertisements are, by their nature, limited in content relative to other media; companies may be reluctant or slow to adopt online advertising that replaces, limits or competes with their existing direct marketing efforts; companies may prefer other forms of Internet advertising we do not offer, including certain forms of search engine placements; companies may reject or discontinue the use of certain forms of online promotions that may conflict with their brand objectives; companies may not utilize online advertising due to concerns of "click-fraud", particularly related to search engine placements; regulatory actions may negatively impact certain business practices that we currently rely on to generate a portion of our revenue and profitability; and, perceived lead quality. If the number of companies who purchase online advertising from us does not continue to grow, we may experience difficulty in attracting publishers, and our revenue could decline.

If we make acquisitions, it could divert management’s attention, cause ownership dilution to our shareholders and be difficult to integrate.

Following our acquisition of Desktop in August 2007, we have grown rapidly and we expect to continue to evaluate and consider future acquisitions. Acquisitions generally involve significant risks, including difficulties in the assimilation of operations, services, technologies, and corporate culture of the acquired companies, diversion of management's attention from other business concerns, overvaluation of the acquired companies, and the acceptance of the acquired companies’ products and services by our customers. Acquisitions may not be successful, which can have a number of adverse effects upon us including adverse financial effects and may seriously disrupt our management’s time. The integration of our acquired operations, products and personnel may place a significant burden on management and our internal resources. The diversion of management attention and any difficulties encountered in the integration process could harm our business.

If we fail to manage our existing publishing inventory and third party data partnerships effectively, our profit margins could decline and should we fail to acquire additional publishing inventory our growth could be impeded.

Our success depends in part on our ability to manage our existing publishing inventory and third party data partnerships effectively. Our publishers are not bound by long-term contracts that ensure us a consistent supply of advertising space, which we refer to as inventory. In addition, publishers can change the amount of inventory they make available to us at any time. If a publisher decides not to make publishing inventory from its websites available to us, we may not be able to replace this inventory with that from other publishers with comparable traffic patterns and user demographics quickly enough to fulfill our advertisers’ requests, thus resulting in potentially lost revenues. Additionally, if a third-party data provider stopped offering their data to us, we may not be able to replace this data with another data provider of equal or better effectiveness. Our ability to maintain our existing data partnerships, as well as attract new data partners, will depend on various factors, some of which are beyond our control.

We expect that our advertiser customers’ requirements will become more sophisticated as the Internet continues to mature as an advertising medium. If we fail to manage our existing publisher inventory effectively to meet our advertiser customers’ changing requirements, our revenues could decline. Our growth depends on our ability to expand our publisher inventory. To attract new customers, we must maintain a consistent supply of attractive publisher inventory. We intend to expand our inventory by selectively adding to our network new publishers that offer attractive demographics, innovative and quality content and growing web user traffic. Our ability both to retain current as well as to attract new publishers to our network will depend on various factors, some of which are beyond our control. These factors include, but are not limited to: our ability to introduce new and innovative services, our efficiency in managing our existing publisher inventory and our pricing policies. We cannot assure you that the size of our publisher inventory will increase or remain constant in the future.

If the technology that we currently use to target the delivery of online advertisements and to prevent fraud on our network is restricted or becomes subject to regulation, our expenses could increase and we could lose customers or advertising inventory.

Recently, the Federal Trade Commission or FTC issued guidelines recommending that companies like interCLICK that engage in behavioral targeting engage in self-regulation in order to protect the privacy of consumers who use the Internet. If notwithstanding this report, the FTC were in the future to issue regulations, it may adversely affect what we perceive to be a competitive advantage. This could increase our costs and reduce our future revenues.

If we cannot manage our growth effectively, we may not maintain profitability.

Businesses which grow rapidly often have difficulty managing their growth. If our business continues to grow as rapidly as we have since August 2007 and as we anticipate, we will need to expand our management by recruiting and employing experienced executives and key employees capable of providing the necessary support.

We cannot assure you that our management will be able to manage our growth effectively or successfully. Our failure to meet these challenges could cause us to continue to lose money, which will reduce our stock price.

It may be difficult to predict our financial performance because our quarterly operating results may fluctuate.

Our revenues, operating results and valuations of certain assets and liabilities may vary significantly from quarter to quarter due to a variety of factors, many of which are beyond our control. You should not rely on period-to-period comparisons of our results of operations as an indication of our future performance. Our results of operations may fall below the expectations of market analysts and our own forecasts. If this happens, the market price of our common stock may fall significantly. The factors that may affect our quarterly operating results include the following:

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fluctuations in demand for our advertising solutions or changes in customer contracts;

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fluctuations in the amount of available advertising space on our network;

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the timing and amount of sales and marketing expenses incurred to attract new advertisers;

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the impact of our recent substantial increase in headcount to meet expected increases in revenue for the balance of 2009 and 2010;

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fluctuations in our average ad rates (i.e., the amount of advertising sold at higher rates rather than lower rates);

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fluctuations in the cost of online advertising and in the cost and/or amount of data available for behavioral targeting campaigns;

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seasonal patterns in Internet advertisers’ spending;

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worsening economic conditions which cause advertisers to reduce Internet spending and consumers to reduce their purchases;

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changes in the regulatory environment, including regulation of advertising or the Internet, that may negatively impact our marketing practices;

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the timing and amount of expenses associated with litigation, regulatory investigations or restructuring activities, including settlement costs and regulatory penalties assessed related to government enforcement actions;

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Any changes we make in our Critical Accounting Estimates described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in this report;

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the adoption of new accounting pronouncements, or new interpretations of existing accounting pronouncements, that impact the manner in which we account for, measure or disclose our results of operations, financial position or other financial measures; and

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Expenditures by advertisers also tend to be cyclical, reflecting overall economic conditions as well as budgeting and buying patterns. Any decline in the economic prospects of advertisers or the economy generally may alter advertisers’ current or prospective spending priorities, or may increase the time it takes us to close sales with advertisers, and could materially and adversely affect our business, results of operations and financial condition.

If we fail to retain our key personnel, we may not be able to achieve our anticipated level of growth and our business could suffer.

Our future depends, in part, on our ability to attract and retain key personnel and the continued contributions of our executive officers, each of whom may be difficult to replace. In particular, Michael Mathews, Chief Executive Officer, Michael Katz, President, Andrew Katz, Chief Technology Officer, Roger Clark, Chief Financial Officer, Jason Lynn, Vice President of Product Development, and Dave Myers, Vice President of Operations are important to the management of our business and operations and the development of our strategic direction. The loss of the services of Messrs. Mathews, Michael Katz, Andrew Katz, Clark, Lynn and Myers and the process to replace any key personnel would involve significant time and expense and may significantly delay or prevent the achievement of our business objectives.

Our two largest shareholders can exert significant control over our business and affairs and may have actual or potential interests that may depart from those of our other shareholders.

Our two largest shareholders and Co-Chairmen of the Board own a substantial number of shares of our common stock. The interests of such persons may differ from the interests of other shareholders. As a result, in addition to their positions with us, such persons will have significant influence over and control all corporate actions requiring shareholder approval, irrespective of how our other shareholders may vote, including their ability to:

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elect or defeat the election of our directors;

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amend or prevent amendment of our certificate of incorporation or bylaws;

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effect or prevent a merger, sale of assets or other corporate transaction; and

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control the outcome of any other matter submitted to the shareholders for vote.

Their power to control the designation of directors gives them the ability to exert influence over day-to-day operations.

In addition, such persons’ stock ownership may discourage a potential acquirer from making a tender offer or otherwise attempting to obtain control of us, which in turn could reduce our stock price or prevent our shareholders from realizing a premium over our stock price.

Because government regulation of the Internet may subject us to additional operating restrictions and regulations, our business and operating results may be adversely affected.

Companies engaging in online search, commerce and related businesses face uncertainty related to future government regulation of the Internet. Due to the rapid growth and widespread use of the Internet, federal and state governments are enacting and considering various laws and regulations relating to the Internet. Furthermore, the application of existing laws and regulations to Internet companies remains somewhat unclear. Our business and operating results may be negatively affected by new laws, and such existing or new regulations may expose us to substantial compliance costs and liabilities and may impede the growth in use of the Internet. Additionally, our third party data partners may be adversely affected by any new or existing laws.

The application of these statutes and others to the Internet search industry is not entirely settled. Further, several existing and proposed federal laws could have an impact on our business and our third party data partners’ business:

• The Digital Millennium Copyright Act and its related safe harbors, are intended to reduce the liability of online service providers for listing or linking to third-party websites that include materials that infringe copyrights or other rights of others.

• The CAN-SPAM Act of 2003 and certain state laws are intended to regulate interstate commerce by imposing limitations and penalties on the transmission of unsolicited commercial electronic mail via the Internet.

• There have been several bills introduced in the Congress in recent years relating to protecting privacy. As with any change in Presidential administration, especially to one more likely to protect privacy, new legislation in this area may be enacted.

• Adopted and pending consumer protection and privacy legislation, including the Federal Trade Commission Online Behavioral Advertising Principles referred to in a prior risk factor.

With respect to the subject matter of each of these laws, courts may apply these laws in unintended and unexpected ways. As a company that provides services over the Internet, we may be subject to an action brought under any of these or future laws governing online services. We may also be subject to costs and liabilities with respect to privacy issues. Several Internet companies have incurred costs and paid penalties for violating their privacy policies. Further, it is anticipated that new legislation may be adopted by federal and state governments with respect to user privacy. Additionally, foreign governments may pass laws which could negatively impact our business or may prosecute us for our products and services based upon existing laws. The restrictions imposed by and cost of complying with, current and possible future laws and regulations related to our business could harm our business and operating results. Further, any such laws that affect our third party data partners could indirectly harm our business and operating results.

If we are subject to legal claims, and/or government enforcement actions and held liable for our or our customers’ failure to comply with federal, state and foreign laws, regulations or policies governing consumer privacy, it could materially harm our business and damage our reputation.

Recent growing public concern regarding privacy and the collection, distribution and use of information about Internet users has led to increased federal, state and foreign scrutiny and legislative and regulatory activity concerning data collection and use practices. The United States Congress currently has pending legislation regarding privacy and data security measures (e.g., S. 495, the "Personal Data Privacy and Security Act of 2007"). Any failure by us to comply with applicable federal, state and foreign laws and the requirements of regulatory authorities may result in, among other things, indemnification liability to our customers and the advertising agencies we work with, administrative enforcement actions and fines, class action lawsuits, cease and desist orders, and civil and criminal liability. Recently, class action lawsuits have been filed alleging violations of privacy laws by Internet service providers. The European Union's directive addressing data privacy limits our ability to collect and use information regarding Internet users. These restrictions may limit our ability to target advertising in most European countries. Our failure to comply with these or other federal, state or foreign laws could result in liability and materially harm our business.

In addition to government activity, privacy advocacy groups and the technology and direct marketing industries are considering various new, additional or different self-regulatory standards. This focus, and any legislation, regulations or standards promulgated, may impact us adversely. Governments, trade associations and industry self-regulatory groups may enact more burdensome laws, regulations and guidelines, including consumer privacy laws, affecting our customers and us. Since many of the proposed laws or regulations are just being developed, and a consensus on privacy and data usage has not been reached, we cannot yet determine the impact these proposed laws or regulations may have on our business. However, if the gathering of profiling information were to be curtailed, Internet advertising would be less effective, which would reduce demand for Internet advertising and harm our business.

Third parties may bring class action lawsuits against us relating to online privacy and data collection. We disclose our information collection and dissemination policies, and we may be subject to claims if we act or are perceived to act inconsistently with these published policies. Any claims or inquiries could be costly and divert management's attention, and the outcome of such claims could harm our reputation and our business.

Our customers are also subject to various federal and state laws concerning the collection and use of information regarding individuals. These laws include the Children's Online Privacy Protection Act, the Federal Drivers Privacy Protection Act of 1994, the privacy provisions of the Gramm-Leach-Bliley Act, the Federal CAN-SPAM Act of 2003, as well as other laws that govern the collection and use of consumer credit information. We cannot assure you that our customers are currently in compliance, or will remain in compliance, with these laws and their own privacy policies. We may be held liable if our customers use our technologies in a manner that is not in compliance with these laws or their own stated privacy policies.

If we are not able to protect our intellectual property from unauthorized use, it could diminish the value of our products and services, weaken our competitive position and reduce our revenue.

Our success depends in large part on our proprietary demographic, behavioral, contextual, geographic and retargeting technologies. In addition, we believe that our trademarks are key to identifying and differentiating our products and services from those of our competitors. We may be required to spend significant resources to monitor and police our intellectual property rights. If we fail to successfully enforce our intellectual property rights, the value of our products and services could be diminished and our competitive position may suffer.

We rely on a combination of copyright, trademark and trade secret laws, confidentiality procedures and licensing arrangements to establish and protect our proprietary rights. Third-party software providers could copy or otherwise obtain and use our technologies without authorization or develop similar technologies independently, which may infringe upon our proprietary rights. We may not be able to detect infringement and may lose competitive position in the market before we do so. In addition, competitors may design around our technologies or develop competing technologies. Intellectual property protection may also be unavailable or limited in some foreign countries.

We generally enter into confidentiality or license agreements with our employees, consultants, vendors, customers, and corporate partners, and generally control access to and distribution of our technologies, documentation and other proprietary information. Despite these efforts, unauthorized parties may attempt to disclose, obtain or use our products and services or technologies. Our precautions may not prevent misappropriation of our products, services or technologies, particularly in foreign countries where laws or law enforcement practices may not protect our proprietary rights as fully as in the United States.

If we become involved in lawsuits relating to our intellectual property rights, it could be expensive and time consuming, and an adverse result could result in significant damages and/or force us to make changes to our business.

We rely on trade secrets to protect our intellectual property rights. If we are sued by a third party which alleges we are violating its intellectual property rights or if we sue a third party for violating our rights, intellectual property litigation is very expensive and can divert our limited resources. We may not prevail in any litigation. An adverse determination of any litigation brought by us could materially and adversely affect our future results of operations by either reducing future revenues or increasing future costs. Additionally, an adverse award of money damages could affect our financial condition.

Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. In addition, during the course of this kind of litigation, there could be public announcements of the results of hearings, motions or other interim proceedings or developments in the litigation. If securities analysts or investors perceive these results to be negative, it could have an adverse effect on the trading price of our common stock.

If we are not able to respond to the rapid technological change characteristic of our industry, our services may not be competitive.

The market for our services is characterized by rapid change in business models and technological infrastructure, and we will need to constantly adapt to changing markets and technologies to provide competitive services. We believe that our future success will depend, in part, upon our ability to develop our services for both our target market and for applications in new markets. We may not, however, be able to successfully do so, and our competitors may develop innovations that render our services obsolete or uncompetitive.

If our computer systems fail to operate effectively in the future, we may incur significant costs to remedy these failures and may sustain reduced revenues.

Our success depends on the continuing and uninterrupted performance of our computer systems. Sustained or repeated system failures that interrupt our ability to provide services to customers, including failures affecting our ability to deliver advertisements quickly and accurately and to process visitors’ responses to advertisements, would reduce significantly the attractiveness of our solutions to advertisers and publishers. Our business, results of operations and financial condition could also be materially and adversely affected by any systems damage or failure that impacts data integrity or interrupts or delays our operations. Our computer systems are vulnerable to damage from a variety of sources, including telecommunications failures, power outages and malicious or accidental human acts. Any of the above factors could substantially harm our business resulting in increased costs. Moreover, despite network security measures, our servers are potentially vulnerable to physical or electronic break-ins, computer viruses and similar disruptive problems in part because we cannot control the maintenance and operation of our third-party data centers. Any of these occurrences could cause material interruptions or delays in our business, result in the loss of data, render us unable to provide services to our customers, and expose us to material risk of loss or litigation and liability. If we fail to address these issues in a timely manner, it may materially damage our reputation and business causing our revenues to decline.

Computer viruses could damage our business.

Computer viruses, worms and similar programs may cause our systems to incur delays or other service interruptions and could damage our reputation and ability to provide our services and expose us to legal liability, all of which could have a material adverse effect on our business, results of operations, financial condition and the trading price of our common stock.

Our revenue and results of operations could be negatively impacted if Internet usage and the development of internet infrastructure do not continue to grow.

Our business and financial results will depend on continued growth in the use of the Internet. Internet usage may be inhibited for a number of reasons, such as: inadequate network infrastructure; security concerns; inconsistent quality of service; governmental regulation; and, unavailability of cost-effective, high-speed service.

If Internet usage continues to grow, our infrastructure may not be able to support the demands placed on it, and our performance and reliability may decline. In addition, websites have experienced interruptions in their service as a result of outages and other delays occurring throughout the Internet network infrastructure, and as a result of sabotage, such as electronic attacks designed to interrupt service on many websites. The Internet could lose its viability as a commercial medium due to reasons including increased governmental regulation or delays in the development or adoption of new technologies required to accommodate increased levels of Internet activity. If use of the Internet does not continue to grow, or if the Internet infrastructure does not effectively support our growth, our revenue and results of operations could be materially and adversely affected.

Because our third-party servers are located in South Florida, in the event of a hurricane our operations could be adversely affected.

We rely upon servers owned by third parties which are located in South Florida where our technology offices are located. Because South Florida is in a hurricane-sensitive area, we are susceptible to the risk of damage to our servers. This damage can interrupt our ability to provide services. If damage caused to our servers were to cause them to be inoperable for any amount of time, we would be forced to switch hosting facilities which could be more costly. We are not insured against any losses or expenses that arise from a disruption or any short-term outages from to our business due to hurricanes or tropical storms.

Since we rely on third-party co-location providers, a failure of service by these providers could adversely affect our business and reputation.

We rely upon third party co-location providers to host our main servers. In the event that these providers experience any interruption in operations or cease operations for any reason or if we are unable to agree on satisfactory terms for continued hosting relationships, we would be forced to enter into a relationship with other service providers or assume hosting responsibilities ourselves. If we are forced to switch hosting facilities, we may not be successful in finding an alternative service provider on acceptable terms or in hosting the computer servers ourselves. We may also be limited in our remedies against these providers in the event of a failure of service. In the past, short-term outages have occurred in the service maintained by co-location providers which could recur. We also rely on third-party providers for components of our technology platform. A failure or limitation of service or available capacity by any of these third-party providers could adversely affect our business and reputation.

If we fail to maintain an effective system of internal controls, we may not be able to accurately report our financial results or prevent fraud and our business may be harmed and our stock price may be adversely impacted.

Effective internal controls are necessary for us to provide reliable financial reports and to effectively prevent fraud. Any inability to provide reliable financial reports or to prevent fraud could harm our business. The Sarbanes-Oxley Act of 2002 requires management to evaluate and assess the effectiveness of our internal control over financial reporting. We determined that our internal control over financial reporting was effective as of the date of this report. In order to continue to comply with the requirements of the Sarbanes-Oxley Act, we are required to continuously evaluate and, where appropriate, enhance our policies, procedures and internal controls. If we fail to maintain the adequacy of our internal controls, we could be subject to litigation or regulatory scrutiny and investors could lose confidence in the accuracy and completeness of our financial reports. We cannot assure you that in the future we will be able to fully comply with the requirements of the Sarbanes-Oxley Act or that management will conclude that our internal control over financial reporting is effective. If we fail to fully comply with the requirements of the Sarbanes-Oxley Act, our business may be harmed and our stock price may decline.

Risks Relating to our Common Stock

Due to factors beyond our control, our stock price may be volatile.

Any of the following factors could affect the market price of our common stock:

Actual or anticipated variations in our quarterly results of operations;

Our failure to meet financial analysts’ performance expectations;

Our failure to achieve and maintain profitability;

Short selling activities;

The loss of major advertisers, publishers or data providers;

Announcements by us or our competitors of significant contracts, new products, acquisitions, commercial relationships, joint ventures or capital commitments;

The departure of key personnel;

Regulatory developments;

Changes in market valuations of similar companies; or

The sale of a large amount of common stock by our shareholders including those who invested prior to commencement of trading.

In the past, following periods of volatility in the market price of a company’s securities, securities class action litigation has often been instituted. A securities class action suit against us could result in substantial costs and divert our management’s time and attention, which would otherwise be used to benefit our business.

Because almost all of our outstanding shares are freely tradable, sales of these shares could cause the market price of our common stock to drop significantly, even if our business is performing well.

As of the date of this report, we had outstanding 20,667,707 shares of common stock of which our directors and executive officers own 5,701,398 shares which are subject to the limitations of Rule 144 under the Securities Act of 1933 or the Securities Act. All of the remaining outstanding shares are freely tradable, except for approximately 471,000 shares. These later restricted shares will eligible for sale under Rule 144 on various dates beginning November 29, 2009 through January 20, 2010.

In general, Rule 144 provides that any non-affiliate of ours, who has held restricted common stock for at least six-months, is entitled to sell their restricted stock freely, provided that we stay current in our filings with the Securities and Exchange Commission or the SEC.

An affiliate of interCLICK may sell after six months with the following restrictions:

(i)

we are current in our filings,

(ii)

certain manner of sale provisions,

(iii)

filing of Form 144, and

(iv)

volume limitations limiting the sale of shares within any three-month period to a number of shares that does not exceed the greater of 1% of the total number of outstanding shares or, the average weekly trading volume during the four calendar weeks preceding the filing of a notice of sale.

Because almost all of our outstanding shares are freely tradable and the shares held by our affiliates may be freely sold (subject to the Rule 144 limitations), sales of these shares could cause the market price of our common stock to drop significantly, even if our business is performing well.

Delaware law contains anti-takeover provisions that could deter takeover attempts that could beneficial to our stockholders.

Provisions of Delaware law could make it more difficult for a third-party to acquire us, even if doing so would be beneficial to our stockholders. Section 203 of the Delaware General Corporation Law may make the acquisition of the Company and the removal of incumbent officers and directors more difficult by prohibiting stockholders holding 15% or more of our outstanding voting stock from acquiring the Company, without our board of directors' consent, for at least three years from the date they first hold 15% or more of the voting stock.

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 in reliance upon the exemption provided in Section 4(2) and Rule 506 thereunder as described below. All numbers have been adjusted to give effect to a one-for-two reverse stock split effective in the fourth quarter 2009.

Name or Class of Investor (1)	Date Sold	No. of Securities	Reason for Issuance

Employee	July 1, 2009	3,750 five-year stock options exercisable at $2.38 per share	Employment
Employee	July 6, 2009	10,000 five-year stock options exercisable at $2.36 per share	Employment
Executive	August 7, 2009	10,000 shares of common stock and 250,000 five-year stock options exercisable at $3.20 per share	Employment
Employee	August 10, 2009	10,000 five-year stock options exercisable at $3.86 per share	Employment
Employee	August 24, 2009	10,000 five-year stock options exercisable at $3.76 per share	Employment
Employees	August 25, 2009	70,000 five-year stock options exercisable at $3.80 per share	Employment
Employee	September 9, 2009	5,000 five-year stock options exercisable at $3.70 per share	Employment
Employees	September 28, 2009	157,500 five-year stock options exercisable at $4.00 per share	Employment

(1) While the SEC only requires disclosure when options issued under an employee stock option plan become exercisable, the Company has elected to disclose the issuance as a matter of convenience. All of these options were granted under the 2007 Incentive Stock and Award Plan.

Item 3.

Defaults Upon Senior Securities.

None

Item 4.

Submission of Matters to a Vote of Security Holders.

Incorporated herein by reference is the information disclosed under Item 8.01 on Form 8-K filed by the Company on October 23, 2009.

Item 5.

Other Information.

None

Item 6.

Exhibits.

No.	Description

2.1	Agreement of Merger and Plan of Reorganization, by and among Customer Acquisition Network Holdings, Inc., Customer Acquisition Network, Inc. and CAN Acquisition Sub, Inc.*	Contained in Form 8-K filed September 4, 2007
2.2	Agreement and Plan of Merger, by and among Customer Acquisition Network Holdings, Inc., Customer Acquisition Network, Inc., Desktop Acquisition Sub, Inc., Desktop Interactive, Inc. and Michael Katz, Brandon Guttman and Stephen Guttman*	Contained in Form 8-K filed September 4, 2007
2.3	Certificate of Merger, merging Customer Acquisition Sub, Inc. with and into Customer Acquisition Network Inc.	Contained in Form 8-K filed September 4, 2007
2.4	Certificate of Merger, merging Desktop Interactive, Inc. with and into Desktop Acquisition Sub, Inc.	Contained in Form 8-K filed September 4, 2007
2.5	Agreement of Merger and Plan of Reorganization, by and among Options Media Group Holdings, Inc., Options Acquisition Corp., Options Acquisition Sub, Inc. and Customer Acquisition Network Holdings, Inc.*	Contained in Form 8-K filed June 27, 2008
3.1	Amended and Restated Certificate of Incorporation	Contained in Form 8-K filed August 30, 2007
3.2	Certificate of Amendment to the Certificate of Incorporation	Contained in Form 8-K filed July 7, 2008
3.3	Certificate of Amendment to the Certificate of Incorporation	Contained in Form 8-A filed November 4, 2009
3.3	Amended and Restated Bylaws	Contained in Form 8-A filed November 4, 2009
10.1	Accounts Receivable Financing Agreement with Crestmark Commercial Capital Lending LLC	Contained in Form 10-K filed March 31, 2009
10.2	Amendment to the Accounts Receivable Financing Agreement with Crestmark Commercial Capital Lending LLC	Contained in Form 10-K filed March 31, 2009
10.3	Letter Agreement with Crestmark Commercial Capital Lending LLC increasing Line of Credit dated February 3, 2009	Contained in Form 10-K filed March 31, 2009
10.4	Second Amendment to the Accounts Receivable Financing Agreement with Crestmark Commercial Capital Lending LLC	Contained in Form 10-K filed March 31, 2009
10.5	Letter Agreement with Crestmark Commercial Capital Lending LLC increasing Line of Credit dated August 31, 2009	Contained in this Form 10-Q
10.6	Third Amendment to the Accounts Receivable Financing Agreement with Crestmark Commercial Capital Lending LLC	Contained in this Form 10-Q
10.7	Roger Clark Employment Agreement	Contained in Form 8-K filed August 13, 2009
31.1	Certification of Principal Executive Officer (Section 302)	Contained in this Form 10-Q
31.2	Certification of Principal Financial Officer (Section 302)	Contained in this Form 10-Q
32.1	Certification of Chief Executive Officer and Chief Financial Officer (Section 906)	Furnished with this Form 10-Q

*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:

(i)

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;

(ii)

the agreement may have different standards of materiality than standards of materiality under applicable securities laws;

(iii)

the representations are qualified by a confidential disclosure schedule that contains nonpublic information that is not material under applicable securities laws;

(iv)

facts may have changed since the date of the agreements; and

(v)

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.

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.

November 16, 2009		/s/ Michael Mathews
		Michael Mathews
		Chief Executive Officer (Principal Executive Officer)

November 16, 2009		/s/ Roger Clark
		Roger Clark
		Chief Financial Officer (Principal Financial Officer)

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended September 30, 2009

	OR

o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from ________________ to ________________

Delaware		01-0692341
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

257 Park Avenue South, Ste. 602, New York, NY		10010
(Address of principal executive offices)		(Zip Code)

Large accelerated filer o	Accelerated filer o

Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

		Page
Financial Statements

	Condensed Consolidated Balance Sheets – September 30, 2009 (unaudited) and December 31, 2008	F-2
	Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2009 and 2008 (unaudited)	F-3
	Condensed Consolidated Statement of Changes in Stockholders' Equity for the nine months ended September 30, 2009 (unaudited)	F-4
	Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2009 and 2008 (unaudited)	F-5
	Notes to Condensed Consolidated Financial Statements (unaudited)	F-7

	September 30, 2009			December 31, 2008
	(Unaudited)			(See Note 1)
Assets

Current assets:
Cash and cash equivalents	$	1,929,094		$	183,871
Accounts receivable, net of allowance of $258,100 and $425,000, respectively		14,476,271			7,120,311
Due from factor		1,114,698			637,705
Prepaid expenses and other current assets		373,505			94,164
Total current assets		17,893,568			8,036,051

Property and equipment, net of accumulated depreciation of $507,771 and $ 282,490, respectively		458,483			596,913
Intangible assets, net of accumulated amortization of $869,850 and $720,570, respectively		460,833			610,113
Goodwill		7,909,571			7,909,571
Investment in available-for-sale marketable securities		728,572			1,650,000
Deferred debt issue costs, net of accumulated amortization of $31,639 and $6,667, respectively		8,361			33,333
Other assets		192,179			191,664

Total assets	$	27,651,567		$	19,027,645

Liabilities and Stockholders’ Equity

Current liabilities:
Accounts payable	$	7,508,531		$	5,288,807
Due to factor		5,559,011			3,188,425
Accrued expenses (includes accrued compensation of $1,346,484 and $0, respectively)		1,688,013			310,685
Warrant derivative liability		267,789			-
Deferred revenue		151,465			9,972
Obligations under capital leases, current portion		10,239			10,615
Accrued interest		6,296			16,948
Deferred rent, current portion		3,207			-
Senior secured note payable - related party		-			400,000
Payable and promissory note settlement liability		-			248,780
Total current liabilities		15,194,551			9,474,232

Obligations under capital leases, net of current portion		1,763			9,495
Deferred rent		83,062			72,696
Total liabilities		15,279,376			9,556,423

Commitments and contingencies

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,
20,644,856 and 18,922,596 issued and outstanding, respectively		20,645			18,923
Additional paid-in capital		28,076,682			24,908,509
Accumulated other comprehensive loss		(1,061,354	)		(197,704	)
Accumulated deficit		(14,663,782	)		(15,258,506	)
Total stockholders’ equity		12,372,191			9,471,222

Total liabilities and stockholders’ equity	$	27,651,567		$	19,027,645

Class		Outstanding at November 10, 2009
Common Stock, $0.001 par value per share		20,667,707 shares

		Page
PART I – FINANCIAL INFORMATION

Item 1.	Condensed Consolidated Financial Statements (unaudited)	F-1

	Condensed Consolidated Balance Sheets (unaudited)	F-2

	Condensed Consolidated Statements of Operations (unaudited)	F-3

	Condensed Consolidated Statements 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	11

Item 4.	Controls and Procedures	11

Item 4T.	Controls and Procedures	11

PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	12

Item 1A.	Risk Factors	12

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	19

Item 3.	Defaults Upon Senior Securities	19

Item 4.	Submission of Matters to a Vote of Security Holders	19

Item 5.	Other Information	19

Item 6.	Exhibits	19

SIGNATURES		21

	For the Three			For the Three			For the Nine			For the Nine
	Months Ended			Months Ended			Months Ended			Months Ended
	September 30, 2009			September 30, 2008			September 30, 2009			September 30, 2008

Revenues	$	14,395,236		$	5,756,707		$	33,467,213		$	13,992,303
Cost of revenues		7,141,926			4,011,020			17,498,860			10,330,018
Gross profit		7,253,310			1,745,687			15,968,353			3,662,285

Operating expenses:
General and administrative		3,383,752			1,881,513			8,021,106			6,113,362
Sales and marketing		2,317,245			886,511			5,468,122			2,443,776
Technology support		830,626			294,558			2,149,103			839,579
Amortization of intangible assets		49,760			104,571			149,280			313,938
Total operating expenses		6,581,383			3,167,153			15,787,611			9,710,655

Operating income (loss) from continuing operations		671,927			(1,421,466	)		180,742			(6,048,370	)

Other income (expense):
Interest income		-			8,140			12			14,903
Interest expense		(245,854	)		(189,382	)		(486,127	)		(1,422,885	)
Loss on disposal of property and equipment		-			(15,385	)		-			(15,385	)
Loss on settlement of debt		-			-			-			(20,121	)
Warrant derivative liability expense		(274,725	)		-			(506,786	)		-
Loss on sale of available-for-sale securities		-			(116,454	)		(36,349	)		(116,454	)
Total other income (expense)		(520,579	)		(313,081	)		(1,029,250	)		(1,559,942	)

Income (loss) from continuing operations before equity investment		151,348			(1,734,547	)		(848,508	)		(7,608,312	)

Equity in investee's loss, net of income taxes		-			(404,103	)		-			(653,231	)

Income (loss) from continuing operations		151,348			(2,138,650	)		(848,508	)		(8,261,543	)

Discontinued operations:
Loss from discontinued operations, net of income taxes		-			(1,053,059	)		-			(1,988,232	)
Loss on sale of discontinued operations, net of income taxes		-			(498,554	)		(1,220	)		(1,123,535	)
Loss from discontinued operations, net		-			(1,551,613	)		(1,220	)		(3,111,767	)

Net income (loss)		151,348			(3,690,263	)		(849,728	)		(11,373,310	)

Other comprehensive loss:
Unrealized loss on available-for-sale securities		-			(314,158	)		(899,999	)		(314,158	)
Reclassification adjustments for losses included in net income (loss)		-			116,454			36,349			116,454
Total other comprehensive loss		-			(197,704	)		(863,650	)		(197,704	)

Comprehensive income (loss)	$	151,348		$	(3,887,967	)	$	(1,713,378	)	$	(11,571,014	)

Earnings (loss) per share from continuing operations - basic and diluted	$	0.01		$	(0.12	)	$	(0.04	)	$	(0.45	)
Loss per share from discontinued operations - basic and diluted		-			(0.08	)		-			(0.17	)
Net earnings (loss) per share - basic and diluted	$	0.01		$	(0.20	)	$	(0.04	)	$	(0.62	)

Weighted average number of common shares - basic		20,628,042			18,904,118			19,578,110			18,450,209
Weighted average number of common shares - diluted		22,399,847			18,904,118			19,578,110			18,450,209

								Accumulated
					Additional			Other						Total
	Common Stock				Paid-In			Comprehensive			Accumulated			Stockholders'
	Shares		Amount		Capital			Loss			Deficit			Equity
Balance, December 31, 2008		18,922,596	$	18,923	$	24,908,509		$	(197,704	)	$	(15,258,506	)	$	9,471,222

Cumulative effect of change in accounting principle		-		-		(1,864,466	)		-			1,444,452			(420,014	)

Stock - based compensation		5,274		5		1,891,879			-			-			1,891,884

Common stock issued to eliminate or modify price protection for warrants		352,500		352		658,659			-			-			659,011

Common stock issued for services rendered and to be rendered		75,000		75		185,925			-			-			186,000

Common stock and warrants issued under private placement, net of placement fees		1,250,000		1,250		2,255,750			-			-			2,257,000

Common stock issued to extend debt maturity date		5,000		5		11,995			-			-			12,000

Common stock issued in lieu of cash to pay accrued interest		5,528		6		13,260			-			-			13,266

Unrealized loss on available for sale securities		-		-		-			(899,999	)		-			(899,999	)

Reclassification adjustment for losses on available-for-sale securities included in net income(loss)		-		-		-			36,349			-			36,349

Stock options exercised		28,958		29		15,171			-			-			15,200

Net loss		-		-		-			-			(849,728	)		(849,728	)

Balance, September 30, 2009		20,644,856	$	20,645	$	28,076,682		$	(1,061,354	)	$	(14,663,782	)	$	12,372,191

	September 30, 2009			December 31, 2008
Customer relationships	$	540,000		$	540,000
Developed technology		790,000			790,000
Domain name		683			683
		1,330,683			1,330,683
Accumulated amortization		(869,850	)		(720,570	)
Intangible assets, net	$	460,833		$	610,113

Year Ending December 31,
2009	$	39,500
2010		158,000
2010		158,000
2011		105,333
Total	$	460,833

Securities in loss positions			Aggregate		Aggregate
more than 12 months	Cost		Unrealized losses		Fair Value
Options Media Group Holdings, Inc. ("OPMG")	$	1,789,926	$	1,061,354	$	728,572

	September 30,		December 31,
	2009		2008
6% Senior secured promissory note payable - related party	$	-	$	400,000
Less: Current maturities		-		(400,000	)
Amount due after one year	$	-	$	-

	For the Three Months Ended September 30, 2009
	Income		Shares		Per-Share
	(Numerator)		(Denominator)		Amount
Income from continuing operations	$	151,348

Basic EPS
Income available to common stockholders	$	151,348		20,628,033	$	0.01

Effect of Dilutive Securities
Stock options		-		1,565,617
Warrants		-		158,012
Nonvested common stock		-		23,448
Convertible debt		1,496		24,728

Diluted EPS
Income available to common stockholders + assumed conversions	$	152,844		22,399,838	$	0.01

					Weighted
			Weighted		Average
			Average		Remaining		Aggregate
	No. of		Exercise		Contractual		Intrinsic
	Shares		Price		Term		Value
Balance Outstanding, 12/31/08		701,025	$	4.68
Granted		425,000	$	2.80
Exercised		-		-
Forfeited		-		-
Expired		-		-
Balance Outstanding, 9/30/09		1,126,025	$	3.44		3.1	$	-

Exercisable, 9/30/09		1,126,025	$	3.44		3.1	$	-

	For the Nine			For the Nine
	Months Ended			Months Ended
Assumptions	September 30, 2009			September 30, 2008
Expected life (years)		5.0			5.0
Expected volatility		115.5% - 121.4	%		52.8% - 80.0	%
Weighted-average volatility		119.6	%		60.5	%
Risk-free interest rate		1.89% - 2.86	%		3.03% - 3.73	%
Dividend yield		0.00	%		0	%

Assumptions	September 30, 2009
Expected life (years)		3.6 - 3.7
Expected volatility		115.8	%
Risk-free interest rate		1.45	%
Dividend yield		0.00	%

				Weighted
				Average
				Grant Date
Nonvested Shares	Shares			Fair Value
Nonvested at December 31, 2008		-			-
Granted		38,125		$	2.46
Vested		(5,274	)	$	2.00
Forfeited		-			-
Nonvested at September 30, 2009		32,851		$	2.53

	Total Carrying
	Value at		Fair Value Measurements at September 30, 2009
	September 30, 2009		(Level 1)		(Level 2)		(Level 3)
Assets:
Investment in available-for-sale marketable securities	$	728,572	$	-	$	728,572	$	-

Liabilities:
Warrant derivative liability	$	267,789	$	-	$	267,789	$	-

	September 30, 2009			September 30, 2008
Customer 1		24.6	%		0.0	%
Totals		24.6	%		0.0	%

	For the Three Months Ended September 30, 2009			For the Three Months Ended September 30, 2008

Revenues	$	14,395,236		$	5,756,707
Cost of revenues		7,141,926			4,011,020
Gross profit		7,253,310			1,745,687

Total operating expenses		6,581,383			3,167,153

Operating income (loss) from continuing operations		671,927			(1,421,466	)

Total other expense		(520,579	)		(313,081	)

Income (loss) from continuing operations before equity investment		151,348			(1,734,547	)

Equity in investee’s loss, net of income taxes		-			(404,103	)

Income (loss) from continuing operations		151,348			(2,138,650	)

Loss from discontinued operations, net of income taxes		-			(1,551,613	)

Net income (loss)	$	151,348		$	(3,690,263	)

Earnings (loss) per share from continuing operations – basic and diluted	$	0.01		$	(0.12	)
Loss per share from discontinued operations – basic and diluted		-			(0.08	)
Net earnings (loss) per share – basic and diluted	$	0.01		$	(0.20	)

Weighted average shares outstanding – basic		20,628,042			18,904,118
Weighted average shares outstanding – diluted		22,399,847			18,904,118

	For the Nine Months Ended September 30, 2009			For the Nine Months Ended September 30, 2008

Revenues	$	33,467,213		$	13,992,303
Cost of revenues		17,498,860			10,330,018
Gross profit		15,968,353			3,662,285

Total operating expenses		15,787,611			9,710,655

Operating income (loss) from continuing operations		180,742			(6,048,370	)

Total other income (expense)		(1,029,250	)		(1,559,942	)

Loss from continuing operations before equity investment		(848,508	)		(7,608,312	)

Equity in investee’s loss, net of income taxes		-			(653,231	)

Loss from continuing operations		(848,508	)		(8,261,543	)

Loss from discontinued operations, net of income taxes		(1,220	)		(3,111,767	)

Net loss	$	(849,728	)	$	(11,373,310	)

Loss per share from continuing operations – basic and diluted	$	(0.04	)	$	(0.45	)
Loss per share from discontinued operations – basic and diluted		-			(0.17	)
Loss per share – basic and diluted	$	(0.04	)	$	(0.62	)

Weighted average shares outstanding – basic and diluted		19,578,110			18,450,209