Inuvo, Inc.

Previous wording

The Inuvo products and services use analytics, data and artificial intelligence in a manner that optimizes the purchase and

Current 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:

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 20 issued and four pending patents.

Current 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 17 issued and two pending patents.

Previous wording

Revenue for the three-month period ended March 31, 2025, increased by 56.9% as compared to the same time period in 2024. Revenue increased 61% and 31% from Platform and Agencies & Brands customers, respectively. Our two largest Platform partners accounted for 70.8% and 17.4% of total revenue, respectively. Revenue from both partners grew significantly—one following the launch of a new product in 2023 that we have continued to expand, and the other after we introduced a new product in the fourth quarter of 2024.

Current wording

Revenue for the three-month period ended June 30, 2025, increased 24.5% and revenue for the six-month period ended June 30, 2025, increased 40.2% as compared to the same periods in 2024, respectively. Our two largest Platform partners accounted for 66.5% and 19.8% of total revenue, respectively. Revenue from both partners grew significantly—one following the launch of a new product in 2023 that we have continued to expand, and the other after we introduced a new product in the fourth quarter of 2024.

Previous wording

Cost of revenue is primarily composed of payments to website publishers and app developers that host advertisements. To a lesser extent, cost of revenue includes payments to advertising exchanges that provide access to digital inventory where we serve advertisements. The increase in cost of revenue for the period ended March 31, 2025, compared to the same time period in 2024 was related to the change in revenue mix due to increasing demand from Platform clients. The change in gross margin in the current year quarter, 79.0% compared to 87.7% in the same quarter last year was primarily due to a change in the revenue mix.

Current wording

Cost of revenue is primarily composed of payments to website publishers and app developers that host advertisements. To a lesser extent, cost of revenue includes payments to advertising exchanges that provide access to digital inventory where we serve advertisements. The increase in cost of revenue for the three-and-six-month period ended June 30, 2025, compared to the same time periods in 2024 was related to the change in revenue mix due to increasing demand from Platform clients. The change in gross margin in the current year quarter, 75.4% compared to 84.0% in the same quarter last year was primarily due to a change in the revenue mix.

Previous wording

to various web properties. Marketing costs for the three-month period ended March 31, 2025 compared to the same period in 2024 increased due to a higher costs associated with higher revenue from Platform clients.

Current 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-month period ended June 30, 2025 compared to the same period in 2024 increased due to a higher costs associated with higher revenue from Platform clients.

Previous wording

Compensation expense was higher for the three-month period ended March 31, 2025, compared to the same time period in 2024 due primarily to a one-time accrual of an employee benefit of $335,000 and a higher incentive accrual. Our total employment, both full- and part-time, was 81 at March 31, 2025 compared to 93 at March 31, 2024.

Current wording

Compensation expense was approximately $170 thousand higher for the three months ended and approximately $544 thousand higher for the six months ended June 30, 2025, compared to the same time periods in 2024 primarily due to a higher incentive accrual and a one-time accrual of an employee benefit of $335,000 in the first quarter of this year. Our total employment, both full- and part-time, was 82 at June 30, 2025 compared to 83 at June 30, 2024.

Previous wording

General and administrative costs for the three months ended March 31, 2025, increased 153% compared to the same period in 2024. During 2024, we made a $1.1 million adjustment reducing 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 December 31, 2024.

Current wording

General and administrative costs for the three and six months ended June 30, 2025 increased $260 thousand and $1.3 million, respectively, compared to the same periods in 2024. During 2024, we made a $1.4 million adjustment reducing the allowance for expected credit losses primarily for a balance due from a former client in 2022. The client has since paid off its full outstanding balance and no longer has any obligation to us.

Previous wording

Finance expense, net of interest income, for the three months ended March 31, 2025, was $27,929 compared to $20,380 in the same quarter last year. The Financing expense, net this year included $77,259 of interest income from the Internal Revenue Service for a delayed refund.

Current wording

Finance expense, net, for the three and six months ended June 30, 2025, was approximately $18 thousand and $46 thousand, respectively. The Financing expense, net this year included $81 thousand and $158 thousand of interest income for the three and six months ended June 30, 2025 from the Internal Revenue Service for a delayed refund.

Previous wording

Other income was approximately $540,571 and $0 for the three months ended March 31, 2025 and 2024, respectively. In March 2025, the Company received a payment from the Internal Revenue Service totaling $610,352 in connection with an amended form filed in May 2023 for the Employee Retention Credit related to the first quarter of 2021. Of the total payment, $533,093 was recognized in Other Income, while $77,259 of interest was recorded in Financing expense, net.

Current wording

In March 2025, the Company received a payment from the Internal Revenue Service ("IRS") totaling $610,352 in connection with an amended form filed in May 2023 for the Employee Retention Credit ("ERC") related to the first quarter of 2021. Of this amount, $533,093 was recognized in Other Income, and $77,259 of interest was recorded in Financing expense, net. In June 2025, the Company received an additional ERC payment from the IRS related to the second quarter of 2021, totaling $606,156. Of this amount, $525,085 was recognized in Other Income, and $81,071 of interest was recorded in Financing expense, net.

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 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. We will pay Wainwright a commission rate of up to 3.0% of the aggregate gross proceeds from each sale of Shares. For the year ended December 31, 2024, we have not sold any shares of common stock under the ATM Agreement. For the three-month period ended March 31, 2025, we utilized the ATM Agreement and sold 1,594,313 shares of common stock for gross proceeds of $1,163,491.

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 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. We will pay Wainwright a commission rate of up to 3.0% of the aggregate gross proceeds from each sale of Shares. For the year ended December 31, 2024, we have not sold any shares of common stock under the ATM Agreement. We utilized the ATM Agreement and sold 1,594,313 shares of common stock for gross proceeds of $1,163,491 in January 2025.

Previous wording

As of March 31, 2025, we have approximately $2.6 million in cash and cash equivalents. Our net working capital deficit was approximately $2.2 million. In March 2025, we received a payment from the Internal Revenue Service totaling $610,352, which was recorded as other income and interest income, in connection with an amended form filed in May 2023 for the Employee Retention Credit related to the first quarter of 2021. Additionally, our investing activities totaled $451,729 for the three-month period ended March 31, 2025. This amount primarily consists of internally developed software costs, which are largely comprised of fixed labor costs, along with other capitalized expenditures. We have encountered recurring losses and cash outflows from operations, which historically we have funded through equity offerings and debt facilities. Through March 31, 2025, our accumulated deficit was $174.5 million.

Current wording

As of June 30, 2025, we have over $2.1 million in cash and cash equivalents and our net working capital deficit was approximately $3.4 million.. In March 2025, we received a payment from the Internal Revenue Service of $610,352, and in June 2025 we received an additional payment from the Internal Revenue Service of $606,156. These amounts were recorded as other income and interest income, in connection with an amended form filed in May 2023 for the Employee Retention Credit related to the first and second quarters of 2021. Additionally, our investing activities totaled $858,441 for the six-month period ended June 30, 2025. This amount primarily consists of internally developed software costs, which are largely comprised of fixed labor costs, along with other capitalized expenditures. We have encountered recurring losses and cash outflows from operations, which historically we have funded through equity offerings and debt facilities. Through June 30, 2025, our accumulated deficit was $176.0 million.

Previous wording

The table below sets forth a summary of our cash flows for the three months ended March 31, 2025 and 2024:

Current wording

The table below sets forth a summary of our cash flows for the six months ended June 30, 2025 and 2024:

Previous wording

Net cash used in operating activities was $366,912 during the three months ended March 31, 2025. We reported a net loss of $1,259,821, which included non-cash expenses of depreciation and amortization expense of $568,042, depreciation of right of use assets of $6,090 and stock-based compensation expense of $304,284. The change in operating assets and liabilities during the three months ended March 31, 2025 was a net use of cash of $79,752 primarily due to a decrease in the accounts payable balance of $1,165,346, offset by the decrease in accounts receivable balance of $491,707 and an increase in accrued expenses and other current liabilities of $754,973. 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 $223,257 during the six months ended June 30, 2025. We reported a net loss of $2,761,084, which included non-cash expenses of depreciation and amortization expense of $1,130,600 and stock-based compensation expense of $596,073. The change in operating assets and liabilities during the six months ended June 30, 2025 was a net provision of cash of $692,028 primarily due to a decrease in accounts receivable of $2,825,264 and an increase in accounts payable of $382,182, partially offset by a decrease of accrued liabilities and other liabilities of $2,358,189. 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 three-month period in 2024, cash used in operating activities was $1,355,592 from a net loss of $2,111,658 that included several non-cash expenses of depreciation and amortization expense of $673,203 and stock-based compensation expense of $396,312, offset by a reduction to the allowance for expected credit losses of $1.1 million. The change in operating assets and liabilities during the three months ended March 31, 2024, was a net provision of cash of $640,110.

Current wording

During the comparable six-month period in 2024, cash used in operating activities was $1,160,170 from a net loss of $3,858,849 and included non-cash expenses of depreciation and amortization expense of $1,350,004 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 $2,021,797 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.

Previous wording

Net cash used in investing activities was $472,228 for the three months ended March 31, 2024, and consisted primarily of capitalized internal development costs.

Current wording

Net cash used in investing activities was $858,441 for the six months ended June 30, 2025, and consisted primarily of capitalized internal development costs.

Previous wording

Net cash used by investing activities was $451,729 for the three months ended March 31, 2025, and consisted primarily of capitalized internal development costs.

Current wording

Net cash provided by investing activities was $933,955 for the six months ended June 30, 2024, and consisted primarily of capitalized internal development costs.

Previous wording

Net cash provided by financing activities was $921,389 and during the three months ended March 31, 2025, and was primarily from the proceeds from the ATM Agreement as discussed in Note 1 – Organization and Business.

Current wording

Net cash provided by financing activities was $757,641 during the six months ended June 30, 2025, and was primarily from the proceeds from the ATM Agreement as discussed in Note 1 – Organization and Business.

Previous wording

Net cash used in financing activities was $180,677 during the three months ended March 31, 2024, and was primarily from net taxes paid on restricted stock unit grants exercised.

Current wording

Net cash used in financing activities during the six months ended June 30, 2024 was $334,425, and was primarily due to net taxes paid on restricted stock unit grants exercised.