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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)

    QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023
OR

     TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______________________ to ______________________
 
Commission file number: 001-32442

Image1.jpg

Inuvo, Inc.
(Exact name of registrant as specified in its charter)
Nevada87-0450450
(State or other jurisdiction of
incorporation or organization)
(I.R.S. Employer
 Identification No.)
500 President Clinton Ave., Suite 300 Little Rock, AR
72201
(Address of principal executive offices)(Zip Code)
(501) 205-8508
Registrant's telephone number, including area code
not applicable
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common stockINUVNYSE American

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 the filing requirements for at least the past 90 days.     Yes       No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes       No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Emerging growth company
If an emerging growth company, indicate by checkmark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act: 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes   No  



Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.
Title of ClassNovember 6, 2023
Common Stock137,981,678




TABLE OF CONTENTS
  Page No.
Part I
 
Item 1.Financial Statements.
Consolidated Balance Sheets
Consolidated Statements of Operations and Comprehensive Loss
Consolidated Statements of Cash Flows
Consolidated Statements of Stockholders' Equity
Notes to Consolidated Financial Statements
Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations.
Item 3.Quantitative and Qualitative Disclosures About Market Risk.
Item 4.Controls and Procedures.
 
Part II
 
Item 1.Legal Proceedings.
Item 1A.Risk Factors.
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds.
Item 3.Defaults upon Senior Securities.
Item 4.Mine Safety and Disclosures.
Item 5.Other Information.
Item 6.Exhibits.
Signatures


3


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). These forward-looking statements are subject to known and unknown risks, uncertainties and other factors which may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “will,” “should,” “intend,” “expect,” “plan,” “anticipate,” “believe,” “estimate,” “predict,” “potential,” or “continue,” or the negative of such terms or other comparable terminology. This report includes, among others, statements regarding our risks associated with:

a decline in general economic conditions;
decreased market demand for our products and services;
customer revenue concentration;
risks associated with customer collections;
seasonality impacts on financial results and cash availability;
dependence on advertising suppliers;
the ability to acquire traffic in a profitable manner;
failure to keep pace with technological changes;
interruptions within our information technology infrastructure;
dependence on key personnel;
regulatory and legal uncertainties;
failure to comply with privacy and data security laws and regulations;
third party infringement claims;
publishers who could fabricate fraudulent clicks;
the ability to continue to meet the NYSE American listing standards;
the impact of quarterly results on our common stock price;
dilution to our stockholders upon the exercise of outstanding restricted stock unit grants and warrants;
the on-going impact of the COVID-19 pandemic on our Company; and
our ability to identify, finance, complete and successfully integrate future acquisitions.

These forward-looking statements were based on various factors and were derived utilizing numerous assumptions and other factors that could cause our actual results to differ materially from those in the forward-looking statements. Most of these factors are difficult to predict accurately and are generally beyond our control. You should consider the areas of risk described in connection with any forward-looking statements that may be made herein. Readers are cautioned not to place undue reliance on these forward-looking statements and readers should carefully review this report in its entirety, including the risks described in Part II, Item 1A. Risk Factors appearing in this report, together with those appearing in Item 1A. Risk Factors, in our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the Securities and Exchange Commission ("SEC") on March 9, 2023 and our subsequent filings with the SEC.

Except for our ongoing obligations to disclose material information under the Federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events. These forward-looking statements speak only as of the date of this report, and you should not rely on these statements without also considering the risks and uncertainties associated with these statements and our business.

OTHER PERTINENT INFORMATION

Unless specifically set forth to the contrary, when used in this report the terms “Inuvo,” the “Company,” “we,” “us,” “our” and similar terms refer to Inuvo, Inc., a Nevada corporation, and its subsidiaries. When used in this report, “third quarter 2023” means for the three months ended September 30, 2023, “third quarter 2022” means for the three months ended September 30, 2022, “2022” means the fiscal year ended December 31, 2022 and “2023” means the fiscal year ending December 31, 2023. The information which appears on our corporate web site at www.inuvo.com and our various social media platforms are not part of this report.

4


PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
INUVO, INC.
CONSOLIDATED BALANCE SHEETS
September 30, 2023 (Unaudited) and December 31, 2022
 September 30, 2023December 31, 2022
Assets
Current assets  
Cash and cash equivalents$6,978,481 $2,931,415 
Marketable securities - short term 1,529,464 
Accounts receivable, net of allowance for doubtful accounts of $2,188,450 and $1,440,678, respectively.
10,159,727 11,119,892 
Prepaid expenses and other current assets959,037 798,977 
Total current assets18,097,245 16,379,748 
Property and equipment, net1,682,427 1,668,972 
Other assets  
Goodwill9,853,342 9,853,342 
Intangible assets, net of accumulated amortization4,910,916 5,649,291 
Referral and support services agreement advance575,000 800,000 
Marketable securities - long term 660,126 
Right of use assets - operating lease882,919 310,162 
Right of use assets - finance lease94,266 168,750 
Other assets79,539 66,919 
Total other assets16,395,982 17,508,590 
Total assets$36,175,654 $35,557,310 
Liabilities and Stockholders’ Equity
Current liabilities
Accounts payable$7,766,466 $8,044,802 
Accrued expenses and other current liabilities8,440,764 5,162,458 
Lease liability - operating lease170,001 287,523 
Lease liability - finance lease63,219 101,003 
Total current liabilities16,440,450 13,595,786 
Long-term liabilities  
Deferred tax liability107,000 107,000 
Lease liability - operating lease717,409 23,878 
Lease liability - finance lease24,243 70,597 
Other long-term liabilities17,874 10,733 
Total long-term liabilities866,526 212,208 
Stockholders’ equity
Preferred stock, $0.001 par value:
Authorized shares 500,000, none issued and outstanding
  
Common stock, $0.001 par value:
Authorized shares 200,000,000; issued and outstanding shares 137,983,918 and 120,137,124, respectively.
137,983 120,138 
Additional paid-in capital183,776,576 178,771,604 
Accumulated other comprehensive loss (84,868)
Accumulated deficit(165,045,881)(157,057,558)
Total stockholders' equity18,868,678 21,749,316 
Total liabilities and stockholders' equity$36,175,654 $35,557,310 
            See accompanying notes to the consolidated financial statements.
5






INUVO, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(Unaudited)
For the Three Months Ended September 30,For the Nine Months Ended September 30,
 2023202220232022
Net revenue$24,570,588 $17,072,189 $53,069,433 $58,332,859 
Cost of revenue2,274,626 6,782,047 7,833,729 24,717,143 
Gross profit22,295,962 10,290,142 45,235,704 33,615,716 
Operating expenses  
Marketing costs17,625,806 8,620,161 36,769,972 26,778,020 
Compensation3,525,943 3,237,414 10,202,200 9,611,011 
General and administrative2,335,295 2,206,119 6,229,069 5,944,027 
Total operating expenses23,487,044 14,063,694 53,201,241 42,333,058 
Operating loss(1,191,082)(3,773,552)(7,965,537)(8,717,342)
Financing (expense), net of interest income19,852 (13,149)(37,454)(11,078)
Other income (expense), net250 (23,861)14,668 (401,336)
Net loss(1,170,980)(3,810,562)(7,988,323)(9,129,756)
Other comprehensive income
Unrealized gain (loss) on marketable securities 36,170 84,868 $(186,239)
Comprehensive loss$(1,170,980)$(3,774,392)$(7,903,455)$(9,315,995)
Per common share data  
Basic and diluted:  
Net loss$(0.01)$(0.03)$(0.06)$(0.08)
Weighted average shares
Basic127,381,051 119,995,367 128,793,522 118,838,258 
Diluted127,381,051 119,995,367 128,793,522 118,838,258 
 
See accompanying notes to the consolidated financial statements.
6






INUVO, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
For the Nine Months Ended September 30,
 20232022
Operating activities:
Net loss$(7,988,323)$(9,129,756)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization1,984,139 1,949,845 
Depreciation-Right of Use Assets - Financing77,790 73,313 
Stock based compensation1,471,683 1,890,991 
Derecognition of contingency and grant (10,000)
Amortization of financing fees5,833 2,500 
Provision (recovery) of doubtful accounts747,772 259,576 
Loss (gain) on marketable securities(14,418)401,336 
Stock warrant expense(8,130)28,477 
Change in operating assets and liabilities:
Accounts receivable212,393 (550,866)
Referral and support services agreement advance225,000 225,000 
Prepaid expenses, other current assets and other assets(172,679)316,053 
Accrued expenses and other liabilities3,279,560 916,363 
Accounts payable(278,336)806,824 
Net cash used in operating activities(457,716)(2,820,344)
Investing activities:
Purchases of equipment and capitalized development costs(1,259,217)(1,311,315)
Purchase of marketable securities (1,693,963)
Proceeds from the sale of marketable securities2,288,873 1,403,282 
Net cash provided by (used in) investing activities1,029,656 (1,601,996)
Financing activities:
Gross proceeds from line of credit592,868  
Repayments on line of credit(592,868) 
Payments on finance lease obligations(84,138)(75,848)
Proceeds from at-the-market sales61,136  
Capital raise, net of issuance costs3,665,000  
Net taxes paid on restricted stock unit grants exercised(166,872)(196,894)
Net cash provided by/(used in) financing activities3,475,126 (272,742)
Net change – cash4,047,066 (4,695,082)
Cash and cash equivalent, beginning of year2,931,415 10,475,964 
Cash and cash equivalent, end of period$6,978,481 $5,780,882 
Supplemental information:
Interest paid$85,488 $15,128 
Acquisition of right of use asset for operating lease liability$1,105,148  
 
See accompanying notes to the consolidated financial statements.
7






INUVO, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(unaudited)
For the Nine Months Ended September 30,

2023
Common Stock Additional Paid in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total
SharesStock
Balance as of December 31, 2022120,137,124 $120,138 $178,771,604 $(157,057,558)$(84,868)$21,749,316 
Net loss(3,440,105)(3,440,105)
Unrealized gain on debt securities84,868 84,868 
Stock-based compensation432,084 432,084 
Stock issued for vested restricted stock awards1,503,238 1,503(1,503) 
Shares withheld for taxes on vested restricted stock(166,872)(166,872)
Reversal of expense related to a change in warrant vesting(9,874)(9,874)
Balance as of March 31, 2023121,640,362 $121,641 $179,025,439 $(160,497,663)$ $18,649,417 
Net loss$(3,377,238)(3,377,238)
Unrealized loss on debt securities 
Stock-based compensation503,061 503,061 
Stock issued for vested restricted stock awards3,333 3 (3) 
Stock warrants issued for referral agreement1,276 1,276 
Capital raise, net of issuance costs16,000,000 16,000 3,649,000 3,665,000 
AGP Closing at-the-market sale173,558 1174 60,962 61,136 
Balance as of June 30, 2023137,817,253 $137,818 $183,239,735 $(163,874,901)$ $19,502,652 
Net loss$(1,170,980)(1,170,980)
Stock-based compensation$536,538 536,538 
Stock issued for vested restricted stock awards166,665 $165 $(165) 
Stock warrants issued for referral agreement468 468 
Balance as of September 30, 2023137,983,918 $137,983 $183,776,576 $(165,045,881)$ $18,868,678 

8






2022
Common Stock Additional Paid in CapitalAccumulated DeficitAccumulated Other Comprehensive Income (Loss)Total
SharesStock
Balance as of December 31, 2021118,747,447 $118,748 $176,586,529 $(143,951,019)$53,737 $32,807,995 
Net loss(2,089,263)(2,089,263)
Unrealized loss on debt securities(98,156)(98,156)
Stock-based compensation671,158 671,158 
Stock issued for vested restricted stock awards1,059,755 1,060(1,060) 
Shares withheld for taxes on vested restricted stock(128,520)(128,520)
Stock warrants issued for referral agreement12,483 12,483 
Balance as of March 31, 2022119,807,202 $119,808 $177,140,590 $(146,040,282)$(44,419)$31,175,697 
Net loss(3,229,927)(3,229,927)
Unrealized loss on debt securities(124,253)(124,253)
Stock-based compensation684,376 684,376 
Stock issued for vested restricted66,666 $66 $(66) 
Stock warrants issued for referral$462 462 
Balance as of June 30, 2022119,873,868 $119,874 $177,825,362 $(149,270,209)$(168,672)$28,506,355 
Net Loss$(3,810,562)(3,810,562)
Unrealized gain on debt securities$36,170 36,170 
Stock-based compensation535,458 535,458 
Shares withhold for taxes on vest restricted stock(68,372)(68,372)
Stock issued for vested restricted stock awards263,256 264 (264) 
Stock warrants issued for referral15,532 15,532 
Balance as of September 30, 2022120,137,124 $120,138 $178,307,716 $(153,080,771)— $(132,502)$25,214,581 

9






Inuvo, Inc.
Notes to Consolidated Financial Statements
(Unaudited)

Note 1 – Organization and Business
 
Company Overview
 
Inuvo is a technology company that develops and sells information technology solutions for marketing and advertising. These solutions predictively identify and message online audiences for any product, service or brand across devices, formats, and channels including video, mobile, connected TV, linear TV, display, social, search and native. These solutions allow Inuvo’s clients to engage with their audiences in a manner that drives responsiveness. Inuvo facilitates the delivery of hundreds of millions of marketing messages to consumers every single month and counts among its client's numerous world-renowned brands across industries.

The Inuvo solution incorporates a proprietary form of artificial intelligence, or AI, branded the IntentKey. This patented technology is a model of the human language built from crawling public content on billions of webpages. The AI uses this model of the language to predict and action audiences based on the reasons why consumers are interested, not who the people are within those audiences. In this regard, the technology is designed for a consumer privacy conscious future while
addressing the components of the advertising value chain most responsible for return on advertising spend, the intelligence behind the advertising decision.

Inuvo technology can be consumed both as a managed service and software-as-a-service. For certain clients, Inuvo has also developed proprietary digital properties collectively branded as Bonfire Publishing where content is created specifically to attack the audiences those clients are targeting. These online publications provide information across a wide range of topics including health, finance, travel, careers, auto, education and lifestyle. Collectively, these websites also provide the means to market test various Inuvo advertising technologies.

There are many barriers to entry associated with the Inuvo business model, including a proficiency in large scale information processing, predictive software development, marketing data products, analytics, artificial intelligence, integration to the internet of things ("IOT"), and the relationships required to execute within the IOT. Inuvo’s intellectual property is protected by 19 issued and eight pending patents.

Liquidity
As of September 30, 2023, we have approximately $7.0 million in cash and cash equivalents. Our net working capital was $1.7 million. We have encountered recurring losses and cash outflows from operations, which historically we have funded through equity offerings and debt facilities. In addition, our investment in internally developed software consists primarily of labor costs which are of a fixed nature. Through September 30, 2023, our accumulated deficit was $165.0 million.

Our principal sources of liquidity are the sale of our common stock and our credit facility discussed in Note 6 - Bank Debt.

On May 30, 2023, we raised $4.0 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 16,000,000 shares of our common stock. The shares were offered pursuant to an effective shelf registration statement on Form S-3 (the “Shelf Registration Statement”) and a prospectus supplement relating to the offering was filed with the SEC on May 26, 2023.

In March 2021, we contracted with an investment management company to manage our cash in excess of current operating
needs. We placed $2.0 million in cash equivalent accounts and $10.0 million in an interest-bearing account. At September 30, 2023, our funds with the investment management company were approximately $68 thousand and were invested in cash and cash equivalent accounts. A detail of the activity is described in Note 3 to our Consolidated Financial Statements.

On May 28, 2021, we entered into a Sales Agreement (the “Sales Agreement”) with A.G.P./Alliance Global Partners, as sales agent (the “Sales Agent”), pursuant to which we may offer and sell through or to the Sales Agent shares of our common stock (the “ATM Program”) up to an aggregate amount of gross proceeds of $14,611,900. During the year ended December 31, 2021 and through March 31, 2023, we did not issue any shares of common stock or receive any aggregate proceeds under the ATM Program, and we did not pay any commissions to the Sales Agent. During the quarter ended June 30, 2023, we sold 173,558 shares for gross proceeds totaling $63,136 under the ATM Program and paid the Sales Agent a commission of $1,902. We did not issues any shares of common stock or receive any aggregate proceeds under the ATM during, and we did not pay any commissions to the Sales Agent during the quarter ended September 30, 2023. Any shares of common stock offered and sold in
10






the ATM Program will be issued pursuant to our universal shelf registration statement on Form S-3. The ATM Program will terminate upon (a) the election of the Sales Agent upon the occurrence of certain adverse events, (b) 10 days’ advance notice from one party to the other, or (c) the sale of the balance available under our Shelf Registration Statement. Under the terms of the Sales Agreement, the Sales Agent is entitled to a commission at a fixed rate of 3.0% of the gross proceeds from each sale of shares under the Sales Agreement.

We have focused our resources behind a plan to market our collective multi-channel advertising capabilities differentiated by our AI technology, the IntentKey, where we have a technology advantage and higher margins. If we are successful in implementing our plan, we expect to return to a positive cash flow from operations. However, there is no assurance that we will be able to achieve this objective.

Management plans to support the Company’s future operations and capital expenditures primarily through cash raised through the sale of stock in May 2023, cash generated from future operations and borrowings from the credit facility until reaching profitability. The credit facility is due upon demand and therefore there can be no assurances that sufficient borrowings will be available to support future operations until profitability is reached. Our collection period is less than 30 days and can also be used to meet accrued obligations.We believe our current cash position and credit facility will be sufficient to sustain operations for at least the next twelve months from the date of this filing. If our plan to grow the IntentKey product is unsuccessful, we may need to fund operations through private or public sales of securities, debt financings or partnering/licensing transactions over the long term.

Customer concentration

For the three-month period ending September 30, 2023, three customers accounted for 87.2% of our overall revenue at 75.0%, 10.0% and 2.2% and for the nine-month period ended September 30, 2023, 79.8% of our overall revenue at 57.6%, 15.6% and 6.7%, respectively. Those same three customers accounted for 55.2% of our gross accounts receivable balance as of September 30, 2023. As of December 31, 2022, the same customers accounted for 23.9% of our gross accounts receivable balance.

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Note 2 – Summary of Significant Accounting Policies
 
Basis of presentation
 
The consolidated financial statements presented are for Inuvo and its subsidiaries. The accompanying unaudited consolidated financial statements have been prepared based upon SEC rules that permit reduced disclosure for interim periods. Certain information and footnote disclosures have been condensed or omitted in accordance with those rules and regulations. The accompanying consolidated balance sheet as of December 31, 2022, was derived from audited financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States ("GAAP"). In our opinion, these consolidated financial statements reflect all adjustments that are necessary for a fair presentation of results of operations and financial condition for the interim periods shown including normal recurring accruals and other items. The results for the interim periods are not necessarily indicative of results for the full year. For a more complete discussion of significant accounting policies and certain other information, this report should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 9, 2023.

Use of estimates

The preparation of financial statements, in accordance with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, net revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used in the accompanying consolidated financial statements are based upon management’s regular evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements. We regularly evaluate estimates and assumptions related to allowance for doubtful accounts, capitalized labor, goodwill and purchased intangible asset valuations and income tax valuation allowance. Actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements, and such differences could be material.

Revenue Recognition

Revenue recognition - We generate revenue by identifying audiences and presenting advertisements on behalf of our customers.
We may contract directly with a brand, a Direct Customer or we may serve a brand through a contract with an agency, an
Indirect Customer. Revenue is recognized when services are provided to a customer in an amount that reflects the consideration
the Company expects to receive in exchange for those services. We charge our customers on a cents per thousand (CPM) basis,
cost per click ("CPC") basis, or as a specific dollar charge. Revenue billed as CPM is generally programmatic digital advertising and is performed under a contract known as an Insertion Order (“IO”). Programmatic digital advertising revenue is recognized in part or fully in the period the IO is partially or fully executed. Revenue earned from placing an ad or an impression on websites, some of which we own, may be on a CPM or CPC basis. We recognize revenue from ad placement and serving impressions in the period in which they occur. We settle ad placement and CPC transactions with our customers net of any adjustments for poor traffic quality. Payments to advertising exchanges that provide access to digital inventory and to a lesser extent, payments to website publishers and app developers that host advertisements we serve are recognized as cost of revenue.

The following table provides revenues for Direct Customers, Indirect Customers and Consulting during the periods presented.


For the Three Months Ended September 30,For the Nine Months Ended September 30,
2023202220232022
Direct Customers$2,981,145 12.1%$7,746,866 45.4%$10,207,707 19.2%$30,032,885 51.5%
Indirect Customers21,567,138 87.8%9,310,562 54.5%$42,798,227 80.6%$28,195,887 48.3%
Consulting22,305 0.1%14,761 0.1%$63,499 0.2%$104,087 0.2%
Total$24,570,588 100%$17,072,189 100%$53,069,433 100%$58,332,859 100%

Recently Adopted Accounting Pronouncements

On January 1, 2023, we adopted Accounting Standards Code (ASC) No. 326, Financial Instruments-Credit Losses. ASC 326 requires a financial asset (loans, debt securities, trade receivables, net investments in leases, off-balance sheet credit exposures, reinsurance receivables, and any other financials assets not excluded from scope) measured at amortized cost basis to be
12






presented at the net amount expected to be collected. The adoption of this new standard did not have a material impact on our consolidated financial statements.
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Note 3 Fair Value Measurements

The carrying amounts reported in the balance sheet for cash and cash equivalents, accounts receivable, accounts payable and accrued expenses approximate fair value based on the short-term nature of these items.

In accordance with accounting principles generally accepted in the United States, fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level hierarchy prioritizes the inputs used to measure fair value as follows:

Level 1 – Valuation is based on quoted prices in active markets for identical assets or liabilities. Level 1 assets and liabilities generally include debt and equity securities that are traded in an active exchange market. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2 – Valuation is based on observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

Level 3 – Valuation is based on unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. Level 3 assets and liabilities include financial instruments whose value is determined using pricing models, discounted cash flow methodologies, or similar techniques, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

The following table summarizes our cash equivalents and marketable securities measured at fair value. Certain marketable
securities consist of investments in debt and equity securities. We classify our cash equivalents and marketable securities within Level 1 because we use observable inputs that reflect quoted market prices for identical assets in active markets to determine their fair value. We have classified debt securities as available for sale securities with unrealized gains and losses recorded as other comprehensive income. We have classified equity securities as trading and are marked to market with changes recorded as other income on the income statement. Any interest income or dividends are recorded within financing expense, net on the income statement.

Investment Assets at Fair ValueInvestment Assets at Fair Value
As of September 30, 2023As of December 31, 2022
Level 1TotalLevel 1Total
Debt securities$ $ $936,563 $936,563 
Equity securities  1,253,027 1,253,027 
Cash equivalents68,474 68,474 801 801 
Total Investments at Fair Value$68,474 $68,474 $2,190,391 $2,190,391 

The cost, gross unrealized gains (losses) and fair value of marketable securities by major security type were as follows:

As of December 31, 2022
CostUnrealized Gain (Loss)Fair Value
Marketable securities
Debt securities$1,021,431 $(84,868)$936,563 
Equity securities1,776,773 (523,746)1,253,027 
Total marketable securities$2,189,590 
    

The realized loss on the securities as of September 30, 2023 was approximately $510,000.
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Note 4 – Property and Equipment
 
The net carrying value of property and equipment was as follows as of:
 September 30, 2023December 31, 2022
Furniture and fixtures$293,152 $293,152 
Equipment1,287,925 1,265,752 
Capitalized internal use and purchased software15,740,652 14,503,608 
Leasehold improvements458,885 458,885 
Subtotal17,780,614 16,521,397 
Less: accumulated depreciation and amortization(16,098,187)(14,852,425)
Total$1,682,427 $1,668,972 

During the three months ended September 30, 2023 and September 30, 2022, depreciation expense was $420,808 and $394,942, respectively. During the nine months ended September 30, 2023 and September 30, 2022, depreciation expense was $1,245,762 and $1,124,674, respectively.

Note 5 – Intangible Assets and Goodwill
 
The following is a schedule of intangible assets and goodwill as of September 30, 2023:
 TermCarrying
Value
Accumulated Amortization and ImpairmentNet Carrying ValueYear-to-date Amortization
Customer list, Google20 years$8,820,000 $(5,108,250)$3,711,750 $330,750 
Technology5 years3,600,000 (3,600,000)  
Customer list, ReTargeter5 years1,931,250 (1,609,375)321,875 289,687 
Customer list, all other10 years1,610,000 (1,610,000)  
Brand name, ReTargeter5 years643,750 (536,459)107,291 96,563 
Customer relationships20 years570,000 (190,000)380,000 21,375 
Trade names, web properties (1)-390,000 — 390,000 — 
Intangible assets classified as long-term$17,565,000 $(12,654,084)$4,910,916 $738,375 
Goodwill, total-$9,853,342 $— $9,853,342 $— 

(1)    The trade names related to our web properties have an indefinite life, and as such are not amortized.
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Amortization expense over the next five years and thereafter is as follows:
 
2023 (remainder of year)$246,125 
2024769,917 
2025469,500 
2026469,500 
2027469,500 
Thereafter2,096,374 
Total$4,520,916 

The following is a schedule of intangible assets and goodwill as of December 31, 2022:
 TermCarrying
Value
Accumulated Amortization and ImpairmentNet Carrying Value2022
Amortization
Customer list, Google20 years$8,820,000 $(4,777,500)$4,042,500 $441,000 
Technology5 years3,600,000 (3,600,000) 60,000 
Customer list, ReTargeter5 years1,931,250 (1,319,688)611,562 386,250 
Customer list, all other10 years1,610,000 (1,610,000) 26,794 
Brand name, ReTargeter5 years643,750 (439,896)203,854 128,750 
Customer relationships20 years570,000 (168,625)401,375 28,500 
Trade names, web properties-390,000 — 390,000 — 
Intangible assets classified as long-term$17,565,000 $(11,915,709)$5,649,291 $1,071,294 
Goodwill, total $9,853,342 $— $9,853,342 $— 

Note 6 – Bank Debt

On March 1, 2023, we entered into Amendment No. 1 to Loan and Security Agreement and Collateral Documents (“Agreement”) with Mitsubishi HC Capital America, Inc., f/k/a/ Hitachi Capital America Corp. (“MHCA”). Under the terms of the Agreement, MHCA has provided us with a $5,000,000 line of credit commitment. We are permitted to borrow up to 80% of the aggregate Eligible Accounts Receivable (which may increase to 85% if certain conditions are met), up to the maximum credit commitment of $5,000,000. We will pay MHCA monthly interest at the rate of 1.75% in excess of the Wall Street Journal Prime Rate. The principal and all accrued but unpaid interest are due on demand. In the event of a default under the terms of the Loan and Security Agreement, the interest rate increases to 6% greater than the interest rate in effect from time to time prior to a default. The Agreement contains certain affirmative and negative covenants to which we are also subject. We agreed to pay MHCA an amendment fee of $10,000 on issuance of the Agreement, and thereafter an annual commitment fee of $10,000. We are also obligated to pay MHCA a quarterly service fee of 0.20% on the monthly unused amount of the maximum credit line. If we terminate the Agreement (i) before February 28, 2024, we are obligated to pay MHCA an exit fee of $50,000, or (ii) after February 28, 2024 but before February 28, 2025, we are obligated to pay MHCA an exit fee of $25,000. The Loan and Security Agreement continues for an indefinite term. At September 30, 2023, there were no outstanding balances due under the Loan and Security Agreement.













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Note 7 – Accrued Expenses and Other Current Liabilities

The accrued expenses and other current liabilities consist of the following as of:
 September 30, 2023December 31, 2022
Accrued marketing costs$7,054,416 $3,321,598 
Accrued payroll and commission liabilities1,096,895 782,441 
Accrued expenses and other272,229 1,044,664 
Arkansas grant contingency10,000 10,000 
Accrued taxes, current portion7,224 3,755 
Total$8,440,764 $5,162,458 

Note 8 – Commitments    

On September 17, 2021, we signed a multi-year agreement with a business development partner to provide referral and support services to us. The agreement required an advance fee of $1.5 million which we recorded as $300,000 in other current assets, the remainder in non-current assets, which is being amortized as marketing expenses over five years. As of September 30, 2023, $625,000 has been amortized and the balance is $575,000. As part of the agreement, we granted a warrant exercisable into 300,000 shares of our common stock, which vests over two years upon achieving certain performance metrics (see Note 11 - Stockholders' Equity). Additionally, we agreed to pay quarterly support fees upon reaching certain levels of operational activity. In April 2022, we agreed to Amendment No. 2 ("amendment") to the agreement. The amendment replaced the quarterly support fees with a commission on quarterly cumulative programmatic revenue.

The amendment also revised the cumulative target media spend and the associated commission. In addition, effective September 26, 2023, Inuvo and the business development partner entered into an Offset Agreement whereby the parties agreed that the commission due to the partner be offset against the outstanding receivable balances due to Inuvo approximating $700,000 in addition to a $67,000 reduction in 2023 commission expense. Commission expense for the nine months ended September 30, 2023 and 2022 was approximately $49,000 and $493,000, respectively.

Note 9 – Income Taxes

We have no current income tax expense and incur only the minimum state taxes which are included in operating expenses. We have deferred tax assets of $41,453,068. We believe it is more likely than not that essentially none of our deferred tax assets will be realized, and we have recorded a valuation allowance of $40,042,968 for the deferred tax assets that may not be realized as of September 30, 2023 and December 31, 2022. We also have deferred tax liabilities totaling $1,517,100 as of September 30, 2023, related to intangible assets acquired in March 2012 and February 2017. These balances are presented as a net deferred tax liability of $107,000 composed of indefinite lived intangible assets.

Note 10 – Stock-Based Compensation

We maintain a stock-based compensation program intended to attract, retain and provide incentives for talented employees and directors and align stockholder and employee interests. During the 2023 and 2022 periods, we granted restricted stock units ("RSUs") from the 2017 Equity Compensation Plan, as amended (“2017 ECP”). RSU vesting periods are generally up to three years and/or based upon achieving certain financial targets.

On January 1, 2022, in accordance with the plan provisions, the number of shares available for issuance under the 2017 ECP was increased by 150,000 shares. On June 16, 2022, our stockholders approved an amendment to the 2017 ECP increasing the number of shares of our common stock reserved for issuance by 15,000,000 shares. As of September 30, 2023, the total number of authorized shares of our common stock under the 2017 ECP was 24,550,000.

Compensation Expense

For the three and nine months ended September 30, 2023, we recorded stock-based compensation expense for all equity incentive plans of $536,538 and $1,471,683, respectively. For the three and nine months ended September 30, 2022, we recorded stock-based compensation expense for all equity incentive plans of $535,457 and $1,890,991, respectively. Total compensation cost not yet recognized at September 30, 2023 was $2,051,862, which will be recognized over a weighted-average recognition period of approximately three years.

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The following table summarizes the stock grants outstanding under 2017 ECP as of September 30, 2023:

 Options OutstandingRSUs OutstandingOptions and RSUs ExercisedAvailable SharesTotal Awards Authorized
Total 6,860,016 6,634,121 11,055,863 24,550,000 

The fair value of restricted stock units is determined using market value of the common stock on the date of the grant. The fair
value of stock options is determined using the Black-Scholes-Merton valuation model. The use of this valuation model
involves assumptions that are judgmental and highly sensitive in the determination of compensation expense and include the
expected life of the option, stock price volatility, risk-free interest rate, dividend yield, exercise price, and forfeiture rate.
Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. The forfeiture rate, which
is estimated at a weighted average of 0% of unvested options outstanding, is adjusted periodically based on the extent to which
actual forfeitures differ, or are expected to differ, from the previous estimate.

The following table summarizes the activity of stock option activity for the nine months ended September 30, 2023:
Shares Subject to Options Outstanding
Number of SharesWeighted Average Exercise Price
Outstanding, beginning of period100,000 $0.52 
Stock options canceled(100,000)$0.52 
Outstanding, end of period  

The following table summarizes the activities for our RSUs for the nine months ended September 30, 2023:
RSUs
Number of SharesWeighted Average Grant Date Fair Value
Outstanding, beginning of period4,913,339 $0.79 
Granted4,070,000 $0.31 
Vested(2,073,322)$0.86 
Cancelled(50,001)$0.54 
Outstanding, end of period6,860,016 $0.49 

Note 11 – Stockholders' Equity

Common Stock

On May 30, 2023, we raised $4.0 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 16,000,000 shares of our common stock.

Warrants

On September 17, 2021, we signed an agreement with a marketing platform and consulting company to provide referral and support services to us for a period of five years (see Note 8 - Commitments). As part of that agreement, we granted a seven year warrant exercisable into 300,000 shares of our common stock, at $0.72 per share, which vests in two tranches when certain performance metrics are achieved. The warrant was valued using the Black Scholes option pricing model at a total of $149,551 based on a seven-year term, an implied volatility of 100%, a risk-free equivalent yield of 1.17%, and a stock price of $0.71. The warrant is classified as equity and will be expensed over the vesting period of each tranche if the performance criteria are achieved. On August 31, 2022, 85,862 shares vested in accordance with the contracted performance criteria. On August 31,
18






2023, 21,136 shares vested. For the second tranche, we reversed approximately $8.1 thousand for the nine month period ended September 30, 2023 due to a change in the probability of performance criteria being achieved during the three-month period ended March 2023. In accordance with our agreement, after the second anniversary of the Original Issue Date, any interests in Warrant shares that have not vested pursuant to the terms and conditions of the agreement shall be deemed forfeited and shall never become exercisable. At the period ended September 30, 2023, approximately 193 thousand shares have been forfeited.


Earnings per Share

For the three-month period ended September 30, 2023 and 2022, we generated a net loss from continuing operations and as a result, any potential common shares are anti-dilutive.

Note 12 – Leases
We have entered into operating and finance leases primarily for real estate and equipment rental. These leases have terms which range from three years to six years, and often include one or more options to renew or in the case of equipment rental, to purchase the equipment. These operating and finance leases are listed as separate line items on our consolidated balance sheets and represent our right to use the underlying asset for the lease term. Our obligation to make lease payments is also listed as separate line items on our consolidated balance sheets. As of September 30, 2023 and December 31, 2022, total operating and financed right-of-use assets were $882,919 and $94,266, and $310,162 and $168,750, respectively. As of September 30, 2023 and 2022, we recorded $77,790 and $73,313, respectively, in amortization expense related to finance leases. As of September 30, 2023 and 2022, we recorded $274,707 and $282,580 , respectively, in rent expense related to operating leases.

In May 2023, we entered into an agreement to lease 4,128 square feet of office space in San Jose, CA commencing on September 1, 2023. The lease has a term of sixty-five months with an abatement period of five months and will cost approximately $208,000 during its first year. Thereafter, the lease payments increase by 3%.

Because the rate implicit in each lease is not readily determinable, we use our incremental borrowing rate to determine the present value of the lease payments.

Information related to our operating lease liabilities are as follows:
For the Nine Months Ended September 30,
Cash paid for operating lease liabilities$85,960 
Weighted-average remaining lease term3.88 years
Weighted-average discount rate10.5 %
Minimum future lease payments ended September 30, 2023
2023 (remainder of year)85,909 
2024220,665 
2025209,681 
2026206,020 
2027204,027 
Thereafter221,030 
1,147,332 
Less imputed interest(259,922)
Total lease liabilities$887,410 

Information related to our financed lease liabilities are as follows:
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For the Nine Months Ended September 30,
Cash paid for finance lease liabilities$22,683 
Weighted-average remaining lease term1.47 years
Weighted-average discount rate6.25 %
Minimum future lease payments ended September 30, 2023
2023 (remainder of the year)15,738 
202456,180 
202518,490 
90,408 
Less imputed interest(2,946)
Total lease liabilities$87,462 

Note 13 – Allowance for Doubtful Accounts

The allowance for doubtful accounts at September 30, 2023 was $2,188,450, an increase of $747,772 from December 31, 2022. During 2022, we expanded our Direct customer business by 73% due in part by acquiring new customers. These customers typically require longer credit terms than CPC based customers. One of these Direct customers was a significant portion, 24.1% of our total 2022 revenue, and has stretched its payments to 120 days and beyond. Ultimately, we agreed to extended payments from the customer through September 2024.

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 
Company Overview

Inuvo is a technology company that develops and sells information technology solutions for marketing and advertising. These solutions predictively identify and message online audiences for any product, service or brand across devices, formats, and channels including video, mobile, connected TV, linear TV, display, social, search and native. These solutions allow Inuvo’s clients to engage with their audiences in a manner that drives responsiveness. Inuvo facilitates the delivery of hundreds of millions of marketing messages to consumers every single month and counts among its client’s numerous world-renowned brands across industries.

The Inuvo solution incorporates a proprietary form of artificial intelligence, or AI, branded the IntentKey. This patented technology is a model of the human language built from crawling public content on billions of webpages. The AI uses this model of the language to predict and action audiences based on the reasons why consumers are interested, not who the people are within those audiences. In this regard, the technology is designed for a consumer privacy conscious future while addressing the components of the advertising value chain most responsible for return on advertising spend, the intelligence behind the advertising decision.

Inuvo technology can be consumed both as a managed service and software-as-a-service. For certain clients, Inuvo has also developed proprietary digital properties collectively branded as Bonfire Publishing where content is created specifically to attack the audiences those clients are targeting. These online publications provide information across a wide range of topics including health, finance, travel, careers, auto, education and lifestyle. Collectively, these websites also provide the means to market test various Inuvo advertising technologies.

There are many barriers to entry associated with the Inuvo business model, including a proficiency in large scale information processing, predictive software development, marketing data products, analytics, artificial intelligence, integration to the internet of things ("IOT"), and the relationships required to execute within the IOT. Inuvo’s intellectual property is protected by19 issued and eight pending patents.


Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities and the reported amounts of
20






revenue and expenses during the reported periods. The more critical accounting estimates include estimates related to revenue recognition, accounts receivable allowances, capitalized software costs, goodwill and stock-based compensation. We also have other key accounting policies, which involve the use of estimates, judgments and assumptions that are significant to understanding our results, which are described in Note 2 to our audited consolidated financial statements for 2022 appearing in our Annual Report on Form 10-K for the year ended December 31, 2022 as filed with the SEC on March 9, 2023. The estimates and assumptions that management makes affect the reported amounts of assets, liabilities, net revenues and expenses and disclosure of contingent assets and liabilities. The estimates and assumptions used are based upon management’s regular evaluation of the relevant facts and circumstances as of the date of the consolidated financial statements. We regularly evaluate estimates and assumptions related to goodwill and purchased intangible asset valuations and valuation allowance. Actual results may differ from the estimates and assumptions used in preparing the accompanying consolidated financial statements, and such differences could be material.


Results of Operations
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 20232022Change% Change20232022Change% Change
Net Revenue$24,570,588 $17,072,189 $7,498,399 43.9 %$53,069,433 $58,332,859 $(5,263,426)(9.0)%
Cost of Revenue2,274,626 6,782,047 (4,507,421)(66.5)%7,833,729 24,717,143 (16,883,414)(68.3)%
Gross Profit$22,295,962 $10,290,142 $12,005,820 116.7 %$45,235,704 $33,615,716 $11,619,988 34.6 %
Net Revenue
Revenue for the three-month period ended September 30, 2023, increased 43.9% and revenue for the nine-month period ended September 30, 2023, decreased 9.0% as compared to the same periods in 2022, respectively. The higher revenue for the three-month period ended September 30, 2023 compared to comparable prior year period was primarily attributable to an increased focus on Indirect channels and customers since the start of the year. As a result, our indirect revenue for both periods ended September 30, 2023 increased. Our direct revenues this year compared to last year decreased in both the three-months and nine-months periods ended September 30, 2023 due to the loss of Direct clients during the fourth quarter 2022. Refer to the table in Note 2 for which provides revenues for Direct Customers and Indirect Customers.

Cost of Revenue

Cost of revenue is primarily composed of payments to advertising exchanges that provide access to digital inventory where we serve advertisements. To a lesser extent, cost of revenue includes payments to website publishers and app developers that host advertisements. The decline in cost of revenue for the three and nine months period ended September 30, 2023, compared to the same time periods in 2022 was related to the decline in Direct Customer revenues as discussed in the Net Revenue section above. The higher gross margin in the current year quarter, 90.7% compared to 60.3% in the same quarter last year was due to changes in revenue mix, where a greater percent of the revenue this year was from Indirect Customers which typically have higher gross margins.


Operating Expenses
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
 20232022Change% Change20232022Change% Change
Marketing costs$17,625,806 $8,620,161 $9,005,645 104.5 %$36,769,972 $26,778,020 $9,991,952 37.3 %
Compensation3,525,943 3,237,414 288,529 8.9 %10,202,200 9,611,011 591,189 6.2 %
General and administrative2,335,295 2,206,119 129,176 5.9 %6,229,069 5,944,027 285,042 4.8 %
Operating expenses$23,487,044 $14,063,694 $9,423,350 67.0 %$53,201,241 $42,333,058 $10,868,183 25.7 %

Marketing costs consist mostly of traffic acquisition (i.e., Campaigns) costs and include those expenses required to attract an audience to various web properties. Marketing costs were 104.5% higher for the three months ended September 30, 2023 and 37.3% higher for the nine months ended September 30, 2023, compared to the same periods in 2022 due to higher spending focused on Indirect Customers.
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As we reported in our Form 10-Q filing for the quarterly period June 30, 2022, we previously identified certain advertising transactions with a prominent advertising network that, during the quarter ended June 30, 2022, appeared, according to our technology and assessment, to be comprised of invalid advertising clicks. As a result, in that quarter, we refunded $1.5 million to our clients that were impacted and reversed any revenue that would have been recognized related to this invalid traffic. In addition, in June 2022, we held back approximately $1.4 million in net payments due to the advertising network. On September 21, 2023 we reached an agreement with the advertising network resulting in extinguishing of all related liabilities and a reversal of Marketing costs.

Compensation expense was $289 thousand higher for the three months ended September 30, 2023 and $591 thousand higher for the nine months ended September 30, 2023, compared to the same time periods in 2022 primarily due to higher salary, commissions, and incentive expense. Our total employment, both full- and part-time, was 86 at September 30, 2023 compared to 92 at September 30, 2022.

General and administrative costs for the three and nine months ended September 30, 2023 increased 5.9% and 4.8%, respectively, compared to the same periods in 2022. The increase in expense for the three months period ended September 30, 2023 was due primarily to an increase in the reserve for doubtful accounts.

Financing expense, net
 
Financing (expense), net of interest income, for the three and nine months ended September 30, 2023, was approximately $20 thousand income and $37 thousand expense, respectively. We reported an interest income amount for the three months ended September 30, 2023 due to a decrease in our utilization of our line of credit and an increase in our bank interest income.

Other income, net

Other income (expense) in the three and nine months period ending on September 30, 2023 was income of $250, and $15 thousand, respectively.

Other income (expense), net, for the three and nine months ended September 30, 2022 was an expense of approximately $24
thousand and $401 thousand, respectively, from net realized and unrealized gains and losses discussed in Note 3 to our
Consolidated Financial Statements.


Liquidity and Capital Resources

As of September 30, 2023, we have approximately $7.0 million in cash and cash equivalents and our net working capital was approximately $1.7 million. We have encountered recurring losses and cash outflows from operations, which historically we have funded through equity offerings and debt facilities. In addition, our investment in internally developed software consists primarily of labor costs which are of a fixed nature. Through September 30, 2023, our accumulated deficit was $165.0 million.

Our principal sources of liquidity are the sale of our common stock and our credit facility discussed in Note 6 - Bank Debt. On May 30, 2023, we raised $4.0 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 16,000,000 shares of our common stock The shares were offered pursuant to an effective shelf registration statement on Form S-3 (the “Shelf Registration Statement”) and a prospectus supplement relating to the offering was filed with the SEC on May 26, 2023.

In March 2021, we contracted with an investment management company to manage our cash in excess of current operating
needs. We placed $2 million in cash equivalent accounts and $10 million in an interest-bearing account. At September 30, 2023, our funds with the investment management company were approximately $68 thousand and were invested in cash and cash equivalent accounts. A detail of the activity is described in Note 3 to our Consolidated Financial Statements.

On May 28, 2021, we entered into a Sales Agreement (the “Sales Agreement”) with A.G.P./Alliance Global Partners, as sales agent (the “Sales Agent”), pursuant to which we may offer and sell through or to the Sales Agent shares of our common stock (the “ATM Program”) up to an aggregate amount of gross proceeds of $14,611,900. During the year ended December 31, 2021 and through March 31, 2023, we did not issue any shares of common stock or receive any aggregate proceeds under the ATM Program, and we did not pay any commissions to the Sales Agent. During the quarter ended June 30, 2023, we sold 173,558 shares for gross proceeds totaling $63,136 under the ATM Program and paid the Sales Agent a commission of $1,902. We did not issues any shares of common stock or receive any aggregate proceeds under the ATM during, and we did not pay any commissions to the Sales Agent during the quarter ended September 30, 2023.Any shares of common stock offered and sold in the ATM Program will be issued pursuant to our universal shelf registration statement on Form S-3. The ATM Program will
22






terminate upon (a) the election of the Sales Agent upon the occurrence of certain adverse events, (b) 10 days’ advance notice from one party to the other, or (c) the sale of the balance available under our Shelf Registration Statement. Under the terms of the Sales Agreement, the Sales Agent is entitled to a commission at a fixed rate of 3.0% of the gross proceeds from each sale of shares under the Sales Agreement.

We have focused our resources behind a plan to market our collective multi-channel advertising capabilities differentiated by our AI technology, the IntentKey, where we have a technology advantage and higher margins. If we are successful in implementing our plan, we expect to return to a positive cash flow from operations. However, there is no assurance that we will be able to achieve this objective.

Management plans to support the Company’s future operations and capital expenditures primarily through cash raised through the sale of stock in May 2023, cash generated from future operations and borrowings from the credit facility until reaching profitability. The credit facility is due upon demand and therefore there can be no assurances that sufficient borrowings will be available to support future operations until profitability is reached. We believe our current cash position and credit facility will be sufficient to sustain operations for at least the next twelve months from the date of this filing. If our plan to grow the IntentKey product is unsuccessful, we may need to fund operations through private or public sales of securities, debt financings or partnering/licensing transactions over the long term.

Cash Flows

The table below sets forth a summary of our cash flows for the nine months ended September 30, 2023 and 2022:

For the Nine Months Ended September 30,
20232022
Net cash used in operating activities
$(457,716)$(2,820,344)
Net cash provided by/(used in) investing activities
$1,029,656$(1,601,996)
Net cash provided by/(used in) financing activities
$3,475,126$(272,742)

Cash Flows - Operating

Net cash used in operating activities was $457,716 during the nine months ended September 30, 2023. We reported a net loss of $7,988,323, which included non-cash expenses of depreciation and amortization expense of $1,984,139, depreciation of right of use assets of $77,790 and stock-based compensation expense of $1,471,683. The change in operating assets and liabilities during the nine months ended September 30, 2023 was a net use of cash of $3,265,938 primarily due to an increase of accrued liabilities and other liabilities of $3,279,560, partially offset by a lower accounts payable balance. Our terms are such that we generally collect receivables prior to paying trade payables. However, our Media sales arrangements typically have slower payment terms than the terms of related payables.

During the comparable nine-month period in 2022, cash used in operating activities was $2,820,344 from a net loss of $9,129,756 and included several non-cash expenses of depreciation and amortization expense of $1,949,845 and stock-based compensation expense of $1,890,991. The change in operating assets and liabilities during the nine months ended September 30, 2022, was a net use of cash of $1,713,374.

Cash Flows - Investing

Net cash provided by investing activities was $1,029,656 for the nine months ended September 30, 2023, and consisted primarily of the sale of marketable securities, partially offset by capitalized internal development costs.

Net cash used in investing activities was $1,601,996 for the nine months ended September 30, 2022, and consisted primarily of the purchase of marketable securities and capitalized internal development costs.

Cash Flows - Financing

Net cash provided by financing activities was $3,475,126 during the nine months ended September 30, 2023, and was primarily from proceeds from the capital raise (see Note 1).

Net cash used in financing activities during the nine months ended September 30, 2022 was $272,742.
23







Off Balance Sheet Arrangements

As of September 30, 2023, we do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with us is a party, under which we have any obligation arising under a guarantee contract, derivative instrument or variable interest or a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable to a smaller reporting company.

ITEM 4.  CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934. Disclosure controls and procedures are controls and procedures designed to reasonably assure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, such as this report, is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and to reasonably assure that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

Our management does not expect that our disclosure controls will prevent all errors and fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

As required by Rule 13a-15 under the Securities Exchange Act of 1934, as of September 30, 2023, the end of the period covered by this report, our management concluded their evaluation of the effectiveness of the design and operation of our disclosure controls and procedures. As of the evaluation date, our Chief Executive Officer and Chief Financial Officer concluded that we maintain disclosure controls and procedures that are effective in providing reasonable assurance that information required to be disclosed in our reports under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods prescribed by SEC rules and regulations, and that such information is accumulated and communicated to our management 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 during the quarter ended September 30, 2023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


PART II

Item 1 - LEGAL PROCEEDINGS

None.
24







ITEM 1A. RISK FACTORS-UPDATE

We desire to take advantage of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. Accordingly, we incorporate by reference the risk factors disclosed in Part I, Item 1A of our Form 10-K for the year ended December 31, 2022, as filed with the SEC on March 9, 2023 and our subsequent filings with the SEC, subject to the new or modified risk factors appearing below that should be read in conjunction with the risk factors disclosed in such Form 10-K and our subsequent filings.

We rely on three customers for a significant portion of our revenues. We are reliant upon three customers for most of our revenue. During the third quarter of 2023, they accounted for 75.0%, 10.0% and 2.2% of our revenues, respectively. During the same period in 2022, these customers accounted for 10.2%, 33.1%, and 10.9% of our revenue sources, respectively. The amount of revenue we receive from these customers is dependent on a number of factors outside of our control, including changes in the respective customers advertising budget, both in terms of allocated dollars and media mix, financial resources of the customers, as well as general economic conditions. We would likely experience a significant decline in revenue and our business operations could be significantly harmed if these customers do not continue to utilize our services. Additionally, our business operations and financial condition could be significantly harmed if these customers do not pay for our services on a timely basis. The loss of any of these customers or a material change in the revenue or gross profit they generate or their failure to timely pay us for our services would have a material adverse impact on our business, results of operations and financial condition in future periods.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

None.

ITEM 4.  MINE SAFETY AND DISCLOSURES.
 
Not applicable.

ITEM 5. OTHER INFORMATION.

None.
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ITEM 6. EXHIBITS
 
No.Exhibit DescriptionFormDate FiledNumberFiled or Furnished Herewith
3(i).110-KSB3/1/044
3(i).210-KSB3/31/063.2
3(i).38-K7/24/093.4
3(i).48-K12/10/103(i).4
3(i).510-K3/29/123(i).5
3(i).610-K3/29/123(i).6
3(i).710-Q5/15/203(i).7
3(i).8
Certificate of Validation of Amendment to Amended Articles of Incorporation as filed October 16, 2020.
10-Q11/9/203(i).8
3(i).910-K2/11/213(i).9
3(i).1010-Q11/12/213(i).10
3(ii).110-K3/31/103(ii).4
3(ii).28-K3/6/123(ii).1
10.18-K6/27/2310.1
10.28-K7/25/2310.1
10.38-K8/18/2310.1
10.48-K9/22/2310.1
31.1Filed
31.2Filed
32.1Furnished
32.2Furnished
101.INSInline XBRL Instance Document Filed
101.SCHInline XBRL Taxonomy Extension Schema DocumentFiled
101.CALInline XBRL Taxonomy Extension Calculation Linkbase Document Filed
101.DEFInline XBRL Taxonomy Extension Definition Linkbase Document Filed
101.LABInline XBRL Taxonomy Extension Label Linkbase Document Filed
101.PREInline XBRL Taxonomy Extension Presentation Linkbase Document Filed
101.PREInline XBRL Taxonomy Extension Presentation Linkbase DocumentFiled
104The cover page for Inuvo, Inc.’s quarterly report on Form 10-Q for the period ended September 30, 2023, formatted in Inline XBRL (included with Exhibit 101 attachments).Filed

26






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.
 
 Inuvo, Inc. 
November 13, 2023By:/s/ Richard K. Howe
 Richard K. Howe,
Chief Executive Officer, principal executive officer
    
November 13, 2023By:
/s/ Wallace D. Ruiz
 
Wallace D. Ruiz,
  Chief Financial Officer, principal financial and accounting officer 
 
27
EDGAR SUBMISSION SUMMARY Issuer Name Inuvo, Inc. Submission Type 8-K Live File On Return Copy On Exchange NONE Confirming Copy Off Filer CIK 0000829323 Filer CCC xxxxxxxx Period of Report 06-23-2023 Item IDs Item 1.01 (Entry into a Material Definitive Agreement) Item IDs Item 9.01 (Financial Statements and Exhibits) Emerging Growth Company No Notify via Filing website Only Off Emails confirmations@issuerdirect.com Documents Form Type File Name Description 8-K inuvo_8k.htm FORM 8-K EX-10.1 inuvo_ex101.htm EXTENSION AMENDMENT TO GOOGLE SERVICES AGREEMENT EX-101.SCH inuv-20230623.xsd XBRL TAXONOMY EXTENSION SCHEMA EX-101.LAB inuv-20230623_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE EX-101.CAL inuv-20230623_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-101.PRE inuv-20230623_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE EX-101.DEF inuv-20230623_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE Module and Segment References


 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) June 23, 2023 INUVO, INC. (Exact name of registrant as specified in its charter) Nevada 001-32442 87-0450450 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 500 President Clinton Ave., Ste. 300, Little Rock, AR 72201 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code (501) 205-8508 (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Common Stock, $0.001 par value INUV NYSE American Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


 
Item 1.01 Entry into a Material Definitive Agreement. On June 23, 2023, Vertro, Inc. (“Vertro”), a wholly-owned subsidiary of Inuvo, Inc. entered into an Extension Amendment (the “Amendment”), effective as of July 1, 2023, to the Google Services Agreement with Google LLC, to amend certain provisions of the Google Services Agreement, dated February 24, 2021 (as amended, the “Agreement”). The Amendment modifies the terms of the Agreement by extending the term for an additional month from the then current expiration date. The new expiration date of the Agreement is July 31, 2023. The summary of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K. Item 9.01 Financial Statements and Exhibits. (d) Exhibits. 10.1 Extension Amendment to Google Services Agreement by and between Vertro, Inc. and Google LLC, dated as of June 23, 2023, and effective as of July 1, 2023. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). 2


 
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 hereunto duly authorized. INUVO, INC. Date: June 27, 2023 By: /s/ John Pisaris John Pisaris, General Counsel 3


 
EXHIBIT 10.1 EXTENSION AMENDMENT TO GOOGLE SERVICES AGREEMENT This Extension Amendment to the Google Services Agreement (“Amendment”), effective as of the first day following the current expiration date of the Agreement (as defined below) (“Amendment Effective Date”), is between Vertro, Inc. (“Company”) and Google LLC (“Google”) and amends the existing Google Services Agreement between Company and Google (the “Agreement”). Capitalized terms not defined in this Amendment have the meanings given to those terms in the Agreement. The parties agree as follows: 1. Extension. The term of the Agreement is extended for an additional one month from the current expiration date. 2. General. The parties may execute this Amendment in counterparts, including facsimile, PDF, or other electronic copies, which taken together will constitute one instrument. Except as expressly modified herein, the terms of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the Amendment Effective Date by persons duly authorized. Company: By: /s/ Dana Robbins Name: Dana Robbins Title: SVP Digital Publishing Date: 23-June-2023 Google LLC By: /s/ Phillip Schindler Name: Philipp Schindler Title: Authorized Signatory Date: 23-June-2023


 
THIS PAGE IS INTENTIONALLY LEFT BLANK IT IS NOT A PART OF EDGAR SUBMISSION


 
EDGAR SUBMISSION SUMMARY Issuer Name Inuvo, Inc. Submission Type 8-K Live File On Return Copy On Exchange NONE Confirming Copy Off Filer CIK 0000829323 Filer CCC xxxxxxxx Period of Report 07-24-2023 Item IDs Item 1.01 (Entry into a Material Definitive Agreement) Item IDs Item 9.01 (Financial Statements and Exhibits) Emerging Growth Company No Notify via Filing website Only Off Emails confirmations@issuerdirect.com Documents Form Type File Name Description 8-K inuvo_8k.htm FORM 8-K EX-10.1 inuvo_ex101.htm SERVICES AGREEMENT EX-101.SCH inuv-20230724.xsd XBRL TAXONOMY EXTENSION SCHEMA EX-101.LAB inuv-20230724_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE EX-101.CAL inuv-20230724_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-101.PRE inuv-20230724_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE EX-101.DEF inuv-20230724_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE Module and Segment References


 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) July 24, 2023 INUVO, INC. (Exact name of registrant as specified in its charter) Nevada 001-32442 87-0450450 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 500 President Clinton Ave., Ste. 300, Little Rock, AR 72201 (Address of principal executive offices) (Zip Code) Registrant’s telephone number, including area code (501) 205-8508 (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Common Stock, $0.001 par value INUV NYSE American Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


 
Item 1.01 Entry into a Material Definitive Agreement. On July 24, 2023, Vertro, Inc. (“Vertro”), a wholly-owned subsidiary of Inuvo, Inc. entered into an Extension Amendment (the “Amendment”), effective as of August 1, 2023, to the Google Services Agreement with Google LLC, to amend certain provisions of the Google Services Agreement, dated February 24, 2021 (as amended, the “Agreement”). The Amendment modifies the terms of the Agreement by extending the term for an additional month from the then current expiration date. The new expiration date of the Agreement is August 31, 2023. The summary of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K. Item 9.01 Financial Statements and Exhibits. (d) Exhibits. 10.1 Extension Amendment to Google Services Agreement by and between Vertro, Inc. and Google LLC, dated as of July 24, 2023, and effective as of August 1, 2023. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). 2


 
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 hereunto duly authorized. INUVO, INC. Date: July 25, 2023 By: /s/ John Pisaris John Pisaris, General Counsel 3


 
EXHIBIT 10.1 Contract ID: 998745 EXTENSION AMENDMENT TO GOOGLE SERVICES AGREEMENT This Extension Amendment to the Google Services Agreement (“ Amendment”), effective as of the first day following the current expiration date of the Agreement (as defined below) (“Amendment Effective Date”), is between Vertro, Inc. (“Company”) and Google LLC (“Google”) and amends the existing Google Services Agreement between Company and Google (the “Agreement”). Capitalized terms not defined in this Amendment have the meanings given to those terms in the Agreement. The parties agree as follows: 1. Extension. The term of the Agreement is extended for an additional one month from the current expiration date. 2. General. The parties may execute this Amendment in counterparts, including facsimile, PDF, or other electronic copies, which taken together will constitute one instrument. Except as expressly modified herein, the terms of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the Amendment Effective Date by persons duly authorized. Company: By: /s/ Dana Robbins Name: Dana Robbins Title: SVP Digital Publishing Date: 24-July-2023 Google LLC By: /s/ Phillip Schindler Name: Philipp Schindler Title: Authorized Signatory Date: 24-July-2023


 
EDGAR SUBMISSION SUMMARY Issuer Name Inuvo, Inc. Submission Type 8-K Live File On Return Copy On Exchange NONE Confirming Copy Off Filer CIK 0000829323 Filer CCC xxxxxxxx Period of Report 08-18-2023 Item IDs Item 1.01 (Entry into a Material Definitive Agreement) Item IDs Item 9.01 (Financial Statements and Exhibits) Emerging Growth Company No Notify via Filing website Only Off Emails confirmations@issuerdirect.com Documents Form Type File Name Description 8-K inuvo_8k.htm FORM 8-K EX-10.1 inuvo_ex101.htm EXTENSION AMENDMENT EX-101.SCH inuvo-20230818.xsd XBRL TAXONOMY EXTENSION SCHEMA EX-101.LAB inuvo-20230818_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE EX-101.CAL inuvo-20230818_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-101.PRE inuvo-20230818_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE EX-101.DEF inuvo-20230818_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE Module and Segment References


 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) August 18, 2023 Inuvo, Inc. (Exact name of registrant as specified in its charter) Nevada 001-32442 87-0450450 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 500 President Clinton Ave., Ste. 300, Little Rock, AR 72201 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (501) 205-8508 (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Common Stock, $0.001 par value INUV NYSE American Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


 
Item 1.01 Entry into a Material Definitive Agreement. On August 18, 2023, Vertro, Inc. (“Vertro”), a wholly-owned subsidiary of Inuvo, Inc. entered into an Extension Amendment (the “Amendment”), effective as of September 1, 2023, to the Google Services Agreement with Google LLC, to amend certain provisions of the Google Services Agreement, dated February 24, 2021 (as amended, the “Agreement”). The Amendment modifies the terms of the Agreement by extending the term for an additional month from the then current expiration date. The new expiration date of the Agreement is September 30, 2023. The summary of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K. Item 9.01 Financial Statements and Exhibits. (d) Exhibits. 10.1 Extension Amendment to Google Services Agreement by and between Vertro, Inc. and Google LLC, dated as of August 18, 2023, and effective as of September 1, 2023. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). 2


 
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 hereunto duly authorized. INUVO, INC. Date: August 23, 2023 By: /s/ John Pisaris John Pisaris, General Counsel 3


 
EXHIBIT 10.1 Contract ID: 1004920 EXTENSION AMENDMENT TO GOOGLE SERVICES AGREEMENT This Extension Amendment to the Google Services Agreement (“ Amendment”), effective as of the first day following the current expiration date of the Agreement (as defined below) (“Amendment Effective Date”), is between Vertro, Inc. (“Company”) and Google LLC (“Google”) and amends the existing Google Services Agreement between Company and Google (the “Agreement”). Capitalized terms not defined in this Amendment have the meanings given to those terms in the Agreement. The parties agree as follows: 1. Extension. The term of the Agreement is extended for an additional one month from the current expiration date. 2 . General. The parties may execute this Amendment in counterparts, including facsimile, PDF, or other electronic copies, which taken together will constitute one instrument. Except as expressly modified herein, the terms of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the Amendment Effective Date by persons duly authorized. Company: By: /s/ Dana Robbins Name: Dana Robbins Title: SVP Digital Publishing Date: 18-Aug-2023 Google LLC By: /s/ Phillip Schindler Name: Philipp Schindler Title: Authorized Signatory Date: 18-Aug-2023


 
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EDGAR SUBMISSION SUMMARY Issuer Name Inuvo, Inc. Submission Type 8-K Live File On Return Copy On Exchange NONE Confirming Copy Off Filer CIK 0000829323 Filer CCC xxxxxxxx Period of Report 09-22-2023 Item IDs Item 1.01 (Entry into a Material Definitive Agreement) Item IDs Item 9.01 (Financial Statements and Exhibits) Emerging Growth Company No Notify via Filing website Only Off Emails confirmations@issuerdirect.com Documents Form Type File Name Description 8-K inuvo_8k.htm FORM 8-K EX-10.1 inuvo_ex101.htm EXTENSION AMENDMENT TO GOOGLE SERVICES AGREEMENT EX-101.SCH inuvo-20230922.xsd XBRL TAXONOMY EXTENSION SCHEMA EX-101.LAB inuvo-20230922_lab.xml XBRL TAXONOMY EXTENSION LABEL LINKBASE EX-101.CAL inuvo-20230922_cal.xml XBRL TAXONOMY EXTENSION CALCULATION LINKBASE EX-101.PRE inuvo-20230922_pre.xml XBRL TAXONOMY EXTENSION PRESENTATION LINKBASE EX-101.DEF inuvo-20230922_def.xml XBRL TAXONOMY EXTENSION DEFINITION LINKBASE Module and Segment References


 
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC 20549 FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of Report (Date of earliest event reported) September 22, 2023 Inuvo, Inc. (Exact name of registrant as specified in its charter) Nevada 001-32442 87-0450450 (State or other jurisdiction of incorporation) (Commission File Number) (IRS Employer Identification No.) 500 President Clinton Ave., Ste. 300, Little Rock, AR 72201 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (501) 205-8508 (Former name or former address, if changed since last report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below): ☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) ☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) ☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) ☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) Securities registered pursuant to Section 12(b) of the Act: Title of each class Trading Symbol Name of each exchange on which registered Common Stock, $0.001 par value INUV NYSEAmerican Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2). Emerging growth company ☐ If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐


 
Item 1.01 Entry into a Material Definitive Agreement. On September 22, 2023, Vertro, Inc. (“Vertro”), a wholly-owned subsidiary of Inuvo, Inc. entered into an Extension Amendment (the “Amendment”), effective as of August 1, 2023, to the Google Services Agreement with Google LLC, to amend certain provisions of the Google Services Agreement, dated February 24, 2021 (as amended, the “Agreement”). The Amendment modifies the terms of the Agreement by extending the term for an additional month from the then current expiration date. The new expiration date of the Agreement is October 31, 2023. The summary of the Amendment does not purport to be complete and is qualified in its entirety by reference to the Amendment, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K. Item 9.01 Financial Statements and Exhibits. (d) Exhibits. 10.1 Extension Amendment to Google Services Agreement by and between Vertro, Inc. and Google LLC, dated as of September 22, 2023, and effective as of October 1, 2023. 104 Cover Page Interactive Data File (embedded within the Inline XBRL document). 2


 
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 hereunto duly authorized. INUVO, INC. Date: September 27, 2023 By: /s/ John Pisaris John Pisaris, General Counsel 3


 
EXHIBIT 10.1 Contract ID: 1012582 EXTENSION AMENDMENT TO GOOGLE SERVICES AGREEMENT This Extension Amendment to the Google Services Agreement (“Amendment”), effective as of the first day following the current expiration date of the Agreement (as defined below) (“Amendment Effective Date”), is between Vertro, Inc. (“Company”) and Google LLC (“Google”) and amends the existing Google Services Agreement between Company and Google (the “Agreement”). Capitalized terms not defined in this Amendment have the meanings given to those terms in the Agreement. The parties agree as follows: 1. Extension. The term of the Agreement is extended for an additional one month from the current expiration date. 2. General. The parties may execute this Amendment in counterparts, including facsimile, PDF, or other electronic copies, which taken together will constitute one instrument. Except as expressly modified herein, the terms of the Agreement remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this Amendment as of the Amendment Effective Date by persons duly authorized. Company: By: /s/ Dana Robbins Name: Dana Robbins Title: SVP Digital Publishing Date: 22-Sep-2023 Google LLC By: /s/ Phillip Schindler Name: Philipp Schindler Title: Authorized Signatory Date: 22-Sep-2023


 
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EXHIBIT 31.1 Rule 13a-14(a)/15d-14(a) Certification I, Richard K. Howe, certify that: I have reviewed this quarterly report on Form 10-Q of Inuvo, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


 
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 13, 2023 /s/ Richard K. Howe Richard K. Howe Chief Executive Officer, principal executive officer


 
EXHIBIT 31.2 Rule 13a-14(a)/15d-14(a) Certification I, Wallace D. Ruiz, certify that: I have reviewed this quarterly report on Form 10-Q of Inuvo, Inc.; Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and


 
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and The registrant's other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting. Date: November 13, 2023 /s/ Wallace D. Ruiz Wallace D. Ruiz Chief Financial Officer, principal financial and accounting officer


 
EXHIBIT 32.1 Section 1350 Certification In connection with the Quarterly Report of Inuvo, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, Richard K. Howe, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that: The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company. Date: November 13, 2023 /s/ Richard K. Howe Richard K. Howe Chief Executive Officer, principal executive officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.


 
EXHIBIT 32.2 Section 1350 Certification In connection with the Quarterly Report of Inuvo, Inc. (the “Company”) on Form 10-Q for the quarter ended September 30, 2023, as filed with the Securities and Exchange Commission (the “Report”), I, Wallace D. Ruiz, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. SS. 1350, as adopted pursuant to SS. 906 of the Sarbanes-Oxley Act of 2002, that: The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, and The information contained in the Report fairly presents, in all material respects, the financial conditions and results of operations of the Company. Date: November 13, 2023 /s/ Wallace D. Ruiz Wallace D. Ruiz Chief Financial Officer, principal financial and accounting officer A signed original of this written statement required by Section 906, or other document authenticating, acknowledging, or otherwise adopting the signature that appears in typed form within the electronic version of this written statement has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.


 
v3.23.3
Cover Page - shares
9 Months Ended
Sep. 30, 2023
Nov. 06, 2023
Cover [Abstract]    
Document Type 10-Q  
Document Quarterly Report true  
Document Period End Date Sep. 30, 2023  
Document Transition Report false  
Entity File Number 001-32442  
Entity Registrant Name Inuvo, Inc.  
Entity Incorporation, State or Country Code NV  
Entity Tax Identification Number 87-0450450  
Entity Address, Address Line One 500 President Clinton Ave.,  
Entity Address, Address Line Two Suite 300  
Entity Address, City or Town Little Rock  
Entity Address, State or Province AR  
Entity Address, Postal Zip Code 72201  
City Area Code 501  
Local Phone Number 205-8508  
Title of 12(b) Security Common stock  
Trading Symbol INUV  
Security Exchange Name NYSEAMER  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business true  
Entity Emerging Growth Company false  
Entity Shell Company false  
Entity Common Stock, Shares Outstanding (in shares)   137,981,678
Entity Central Index Key 0000829323  
Amendment Flag false  
Document Fiscal Year Focus 2023  
Document Fiscal Period Focus Q3  
Current Fiscal Year End Date --12-31  
v3.23.3
CONSOLIDATED BALANCE SHEETS - USD ($)
Sep. 30, 2023
Dec. 31, 2022
Current assets    
Cash and cash equivalents $ 6,978,481 $ 2,931,415
Marketable securities - short term 0 1,529,464
Accounts receivable, net of allowance for doubtful accounts of $2,188,450 and $1,440,678, respectively. 10,159,727 11,119,892
Prepaid expenses and other current assets 959,037 798,977
Total current assets 18,097,245 16,379,748
Property and equipment, net 1,682,427 1,668,972
Other assets    
Goodwill 9,853,342 9,853,342
Intangible assets, net of accumulated amortization 4,910,916 5,649,291
Referral and support services agreement advance 575,000 800,000
Marketable securities - long term 0 660,126
Right of use assets - operating lease 882,919 310,162
Right of use assets - finance lease 94,266 168,750
Other assets 79,539 66,919
Total other assets 16,395,982 17,508,590
Total assets 36,175,654 35,557,310
Current liabilities    
Accounts payable 7,766,466 8,044,802
Accrued expenses and other current liabilities 8,440,764 5,162,458
Lease liability - operating lease 170,001 287,523
Lease liability - finance lease 63,219 101,003
Total current liabilities 16,440,450 13,595,786
Long-term liabilities    
Deferred tax liability 107,000 107,000
Lease liability - operating lease 717,409 23,878
Lease liability - finance lease 24,243 70,597
Other long-term liabilities 17,874 10,733
Total long-term liabilities 866,526 212,208
Preferred stock, $0.001 par value:    
Authorized shares 500,000, none issued and outstanding 0 0
Common stock, $0.001 par value:    
Authorized shares 200,000,000; issued and outstanding shares 137,983,918 and 120,137,124, respectively. 137,983 120,138
Additional paid-in capital 183,776,576 178,771,604
Accumulated other comprehensive loss 0 (84,868)
Accumulated deficit (165,045,881) (157,057,558)
Total stockholders' equity 18,868,678 21,749,316
Total liabilities and stockholders' equity $ 36,175,654 $ 35,557,310