Inuvo Inc
For the period ended Sep 30, 2024. Filed Nov 8, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 8, 2024
INUV$0.41-0.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-08.
0001654954-24-010179
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-08.
0001654954-24-013975
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 44 previous paragraphs and 46 current paragraphs.
20 unchanged; 18 reworded; 4 added; 6 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 4 previous and 4 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (4)
Current report
General and administrative costs for the three and nine months ended September 30, 2024 decreased 31.2% and 38.4%, respectively, compared to the same periods in 2023 due primarily to an adjustment in the reserve for expected credit losses. During 2024, we made an adjustment to the allowance for expected credit losses for a balance due from a former client in 2022. The client has since paid off their full outstanding balance and no longer has any obligation to us as of September 30, 2024.
Current report
Financing expense, net of interest income, for the three and nine months ended September 30, 2024, was approximately $101,000 and $163,000, respectively.
Current report
Financing (expense), net of interest income, for the three and nine months ended September 30, 2023, was approximately $20,000 income and $37,000 expense, respectively.
Current report
The higher expenses in this year’s periods compared to last year was due to the amortization of the closing costs of the new credit agreement (see Note 5 – Bank Debt of our Consolidated Financial Statements) and to higher overall borrowing balances.
Removed paragraphs (6)
Previous report
General and administrative costs for the three and six months ended June 30, 2024 decreased $772 thousand and $1.7 million, respectively, compared to the same periods in 2023 due primarily to a decrease in the expense for doubtful accounts related to a former client in 2022 that now pays consistently, has significantly reduced its outstanding amount owed and is expected to pay the remaining amount due.
Previous report
Finance expense, net, for the three and six months ended June 30, 2024, was approximately $42 thousand and $63 thousand, respectively.
Previous report
Finance expense, net, for the three and six months ended June 30, 2023, was approximately $38 thousand and $57 thousand, respectively.
Previous report
Other income, net
Previous report
There was no net other income (expense) in the three-month and six- month period ended June 30, 2024 and the three-month period ended June 30, 2023. For the six-month period ended 2023, net other income was $14 thousand from the unrealized gains, as detailed in Note 3 - Property and Equipment of our Consolidated Financial Statements.
Previous report
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 the Shelf Registration Statement and a prospectus supplement relating to the offering was filed with the SEC on May 26, 2023.
Reworded paragraphs (18)
Previous wording
The Inuvo products and services use analytics, data and artificial intelligence in a manner that optimizes the purchase and placement of advertising in real time. These capabilities are typically sold with services both individually and in combination with each other based on client needs. These products and services include:
Current wording
The Inuvo products and services use analytics, data and artificial intelligence in a manner that optimizes the purchase and
Previous wording
There are many barriers to entry associated with the Inuvo business model, including a proficiency in large language model based artificial intelligence, large scale information processing, software development, consumer data products, analytics, IOT (internet of things) integration and the relationships required to execute within the IOT. Inuvo’s intellectual property is protected by 19 issued and eight pending patents.
Current wording
There are many barriers to entry associated with the Inuvo business model, including a proficiency in large language model
Previous wording
Revenue for the three-month period ended June 30, 2024, increased 9.4% and revenue for the six-month period ended June 30, 2024, increased 23.6% as compared to the same periods in 2023, respectively. The higher revenue for the three-and-six-month period ended June 30, 2024 compared to the prior year periods was attributable to increasing demand within Platforms. Within Agencies & Brands, a new client which started in 2024 and has begun scaling.
Current wording
Revenue for the three-month period ended September 30, 2024, decreased 9.0% and revenue for the nine-month period ended September 30, 2024, increased 8.5% as compared to the same periods in 2023, respectively. The higher revenue for the three-month period ended September 30, 2023 was mainly driven by an increased focus on and the launch of new product enhancements for Platform customers. The revenue for the three-month period ended September 30, 2023 was extraordinarily high, the highest quarterly revenue realized in the Company's history. The higher revenue for the nine-month period ended September 30, 2024 compared to comparable prior year period was primarily attributable to increasing demand within Platforms. Revenues related to Agencies & Brands increased by 15% for the three-month period ended September 30, 2024, compared to the same period in the prior year.
Previous wording
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-six-month period ended June 30, 2024, compared to the same time periods in 2023 was related to the change in revenue mix due to higher revenue from Platform clients.
Current wording
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. For the three-month period ended September 30, 2024, the increase in cost of revenue compared to the same period in 2023 was related to the higher revenue within Agencies & Brands in this year's quarter. For the nine-month period ended September 30, 2024, the decrease in cost of revenue compared to the same period in 2023 was attributed to lower revenue within Agencies & Brands during the comparable period.
Previous wording
Marketing costs consist mostly of traffic acquisition (i.e., media) costs and include those expenses required to attract audiences to various web properties. Marketing costs for the three-and-six-month period ended June 30, 2024 compared to the same period in 2023 increased due to higher media costs required to serve Platform advertisers.
Current wording
Marketing costs consist mostly of traffic acquisition (i.e., media) costs and include those expenses required to attract an audience to various web properties. Marketing costs for the three months ended September 30, 2024 were 3.5% lower than the same quarter last year primarily due to lower revenue derived from Platform advertisers. Marketing costs for the nine months ended September 30, 2024 were 15.7% higher compared to the same period in 2023 due primarily to higher revenue from Platform advertisers in the comparable periods. In the third quarter of 2024 we fully amortized the remaining balance of the referral and support services asset (see Note 7 - Commitments of our Consolidated Financial Statements) increasing the Marketing costs in both the three and nine months ended September 30, 2024 .
Previous wording
Compensation expense was approximately $222 thousand lower for the three months ended and approximately $420 thousand lower for the six months ended June 30, 2024, compared to the same time periods in 2023 primarily due to lower incentive expense, stock-based compensation, and commission expense. Our total employment, both full- and part-time, was 83 at June 30, 2024 compared to 84 at June 30, 2023.
Current wording
Compensation expense was $420,000 lower for the three months ended September 30, 2024 and $840,000 lower for the nine months ended September 30, 2024, compared to the same time periods in 2023 primarily due to lower stock-based compensation and accrued incentive expense. Our total employment, both full- and part-time, was 82 at September 30, 2024 compared to 86 at September 30, 2023.
Previous wording
On May 7, 2024, we entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co. LLC (“Wainwright”), to sell shares of our common stock, par value $0.001 per share, (the “Shares”), having an aggregate sales price of up to $15,000,000, from time to time, through an “at the market offering” program under which Wainwright will act as sales agent. The sales, if any, of the Shares made under the ATM Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Company will pay Wainwright a commission rate of up to 3.0% of the aggregate gross proceeds from each sale of Shares. For the six-month period ended June 30, 2024, the Company has not sold any shares of common stock under the ATM Agreement.
Current wording
On May 7, 2024, we entered into an At The Market Offering Agreement (the “ATM Agreement”) with H.C. Wainwright & Co. LLC (“Wainwright”), to sell shares of our common stock, par value $0.001 per share, (the “Shares”), having an aggregate sales price of up to $15,000,000, from time to time, through an “at the market offering” program under which Wainwright will act as sales agent. The sales, if any, of the Shares made under the ATM Agreement will be made by any method permitted by law deemed to be an “at the market offering” as defined in Rule 415 promulgated under the Securities Act of 1933, as amended. The Company will pay Wainwright a commission rate of up to 3.0% of the aggregate gross proceeds from each sale of Shares. For the nine-month period ended September 30, 2024, the Company has not sold any shares of common stock under the ATM Agreement.
Previous wording
On July 31, 2024, we entered into a Financing and Security Agreement (the "Financing Agreement”) with SLR Digital Finance LLC ("SLR”), dated July 30, 2024. Pursuant to the terms of the Financing Agreement, SLR will finance up to $10 million dependent upon eligible receivables. See Note 13 - Subsequent Events of our Consolidated Financial Statements.
Current wording
On July 31, 2024, we entered into a Financing and Security Agreement (the "Financing Agreement”) with SLR Digital Finance LLC ("SLR”), effective July 30, 2024. Pursuant to the terms of the Financing Agreement, SLR will finance up to $10 million dependent upon eligible receivables. See Note 5 – Bank Debt of our Consolidated Financial Statements.
Previous wording
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 positive cash flows from operations. However, there is no assurance that we will be able to achieve this objective.
Current wording
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 technological advantage and higher margins. If we are successful in implementing our plan, we expect to return to positive cash flows from operations. However, there is no assurance that we will be able to achieve this objective.
Previous wording
As of June 30, 2024, we have over $2 million in cash and cash equivalents. Our net working capital deficit was approximately $2.8 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 June 30, 2024, our accumulated deficit was $171.3 million.
Current wording
As of September 30, 2024, we have approximately $2.6 million in cash and cash equivalents. Our net working capital deficit was $3.4 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, 2024, our accumulated deficit was $173.4 million.
Previous wording
Management plans to support the Company’s future operations and capital expenditures primarily through cash raised from the sale of stock in May 2023 and cash generated from its credit facility until such time as we reach 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.
Current wording
Management plans to support the Company’s future operations and capital expenditures primarily through cash generated from its credit facility until such time as we reach 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.
Previous wording
The table below sets forth a summary of our cash flows for the six months ended June 30, 2024 and 2023:
Current wording
The table below sets forth a summary of our cash flows for the nine months ended September 30, 2024 and 2023:
Previous wording
Net cash used in operating activities was $1,160,170 during the six months ended June 30, 2024. We reported a net loss of $3,858,849, which included non-cash expenses of depreciation and amortization expense of $1,350,004, depreciation of right of use assets of $36,115 and stock-based compensation expense of $714,993. The change in operating assets and liabilities during the six months ended June 30, 2024 was a net provision of cash of $2,177,150 primarily due to a decrease in accounts receivable of $2,500,163 partially offset by a decrease of accrued liabilities and other liabilities of $324,358 and a decrease in accounts payable of $356,230. 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.
Current wording
Net cash used in operating activities was $100,345 during the nine months ended September 30, 2024. We reported a net loss of $5,903,142, which included non-cash expenses of depreciation and amortization expense of $1,951,196, depreciation of right of use assets of $48,317, stock-based compensation expense of $1,087,533, and $800,000 for the impairment and amortization of a referral and support services agreement. The change in operating assets and liabilities during the nine months ended September 30, 2024 was a net provision of cash of $4,185,284 primarily due to a decrease of $1,899,029 in accounts receivable and an increase of accrued and other liabilities of $940,076. 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.
Previous wording
During the comparable six-month period in 2023, cash used in operating activities was $2,833,853 from a net loss of $6,817,343 and included several non-cash expenses of depreciation and amortization expense of $1,317,203 and stock-based compensation expense of $935,145. The change in operating assets and liabilities during the six months ended June 30, 2023 was a net provision of cash of $1,371,741 primarily due to an increase of accrued liabilities and other liabilities of $3,069,680 partially offset by a lower accounts payable balance.
Current wording
During the comparable nine-month period in 2023, cash used in operating activities was $457,716 from a net loss of $7,988,323 and included several non-cash expenses of depreciation and amortization expense of $1,984,139 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 provision of cash of $3,265,938.
Previous wording
Net cash used in investing activities was $933,955 for the six months ended June 30, 2024, and consisted primarily of capitalized internal development costs.
Current wording
Net cash used in investing activities was $1,409,762 for the nine months ended September 30, 2024, and consisted primarily of capitalized internal development costs.
Previous wording
Net cash provided by investing activities was $1,452,445 for the six months ended June 30, 2023, and consisted primarily of the sale of marketable securities, partially offset by capitalized internal development costs.
Current wording
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.
Previous wording
Net cash used in financing activities was $334,425 during the six months ended June 30, 2024, and was primarily due to net taxes paid on restricted stock unit grants exercised.
Current wording
Net cash used in financing activities was $343,526 during the nine months ended September 30, 2024, and was primarily due to taxes paid on restricted stock unit grants exercised.
Previous wording
Net cash provided by financing activities during the six months ended June 30, 2023 was $3,495,105, and was primarily from proceeds from the capital raise (see Note 1 - Organization and Business of our Consolidated Financial Statements).
Current wording
Net cash provided by financing activities during the nine months ended September 30, 2023 was $3,475,126 and was primarily from proceeds from the capital raise (see Note 1 - Organization and Business of our Consolidated Financial Statements).
Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
placement of advertising in real time. These capabilities are typically sold with services both individually and in combination
Current report — wording carried from elsewhere
with each other based on client needs. These products and services include:
Current report — wording carried from elsewhere
based artificial intelligence, large scale information processing, software development, consumer data products, analytics, IOT
Current report — wording carried from elsewhere
(internet of things) integration and the relationships required to execute within the IOT. Inuvo’s intellectual property is protected by 19 issued and six pending patents.