Inuvo, Inc.

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 17 issued and two 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 18 issued and three pending patents.

Previous 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.

Current wording

Revenue for the three-month period ended September 30, 2025, increased approximately $199,000 and revenue for the nine-month period ended September 30, 2025, increased by approximately $14.3 million compared to the same periods in 2024, respectively. Platform clients represented 82.8% of the overall revenue in the third quarter of 2025 compared to 83.8% in the same quarter of 2024. Platform clients represented 86.2% of the overall revenue in the nine-month period ended September 30, 2025 compared to 83.6% in the same period of 2024. In the third quarter of 2025, our two largest Platform clients accounted for 62.8% and 19.6% of our overall revenue, respectively. In the nine-month period ended September 30, 2025, our two largest Platform clients accounted for 66.9% and 18.8% of our overall revenue, respectively. Revenue from both Platform clients grew significantly in 2025—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. Agencies & Brands revenue increased 7% for the three-month period ended September 30, 2025 compared to the same period last year and it was up 29% compared to the sequential quarter. Through the first nine-months, both Platform and Agency & Brands revenues were up year-over-year.

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 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.

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-nine-months period ended September 30, 2025, compared to the same periods in 2024 were primarily related to the change in mix within Platform revenue associated with a new product introduced in the fourth quarter of 2024, mentioned above. The change in gross margin in the current year quarter, 73.4% compared to 88.4% in the same quarter last year was primarily due to a change in the revenue mix.

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-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.

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, 2025 were 21.4% lower than the same quarter last year primarily due to lower revenue with a Platform client that provides advertising inventory to owned websites in addition to fully amortizing the remaining balance of $600,000 of the referral and support services asset (see Note 7 - Commitments of our Consolidated Financial Statements) in the third quarter of 2024. Marketing costs for the nine months ended September 30, 2025 were 5.8% higher compared to the same period in 2024 due primarily to higher revenue from Platform advertisers in the comparable periods.

Previous 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.

Current wording

Compensation expense was $39,000 higher for the three months ended September 30, 2025 compared to the same time period in 2024 primarily due to the accrual of separation expense of $150,000. Compensation expense for the nine months ended September 30, 2025 was $583,000 higher than the same period in 2024 primarily due to an increase in accrued incentive expense of $633,000 and to accruals of employment and separation agreements of $485,000. Our total employment, both full- and part-time, was 80 at September 30, 2025 compared to 82 at September 30, 2024.

Previous 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.

Current wording

General and administrative costs for the three and nine months ended September 30, 2025 increased 6.9% and 37.2%, respectively, compared to the same periods in 2024 due to a $1.4 million adjustment last year 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

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.

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 165,641 shares of common stock for gross proceeds of $1,184,740 during 2025.

Previous 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. Availability as of December 31, 2024 equaled the maximum credit commitment of $10,000,000. See Note 5 – Bank Debt to 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 subject to availability based on the amount of eligible accounts receivable. Eligibility is determined by criteria such as geographic location of the customer and aging of receivables. As of September 30, 2025, our accounts receivable, net of allowance for credit losses, was $9,930,168, of which a substantial portion qualified as eligible under the agreement. At September 30, 2025, the outstanding balance due under the Financing Agreement was $3,383,293. See Note 5 - Bank Debt.

Previous 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.

Current wording

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.

Previous 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.

Current wording

As of September 30, 2025, we have approximately $3.4 million in cash and cash equivalents and our net working capital deficit was $4.9 million. For the nine months ended September 30, 2025, we used $1.8 million in cash from operations Additionally, cash used in our investing activities totaled $1,240,992 for the nine months ended September 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 September 30, 2025, our accumulated deficit was $177.7 million. During the three months ended September 30, 2025 we experienced lower revenue from Platform clients as a result of changes to policies and procedures required by a Platform client. We expect revenue to increase as a result of making the necessary changes to comply with these requirements.

Previous 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. 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

its credit facility until such time as we reach profitability. Any repayments of the financing agreement will be made through collections from eligible accounts receivable. We believe that our current cash position, credit facility, and the equity raised through our ATM program during 2025 will be sufficient liquidity 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 or revenue from Platforms does not increase, we may need to fund operations through private or public sales of securities, debt financings or partnering/licensing transactions over the long term. Funding from sales of securities, debt financings or other sources may not be available on terms acceptable to us, if at all. These uncertainties could adversely impact our future liquidity.

Previous wording

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

Current wording

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

Previous 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.

Current wording

Net cash used in operating activities was $1,807,308 during the nine months ended September 30, 2025. We reported a net loss of $4,501,648, which included non-cash expenses of depreciation and amortization expense of $1,685,756, depreciation of right of use assets of $17,287, and stock-based compensation expense of $842,887. The change in operating assets and liabilities during the nine months ended September 30, 2025 was a net provision of cash of $48,874 primarily due to a decrease of $2,611,148 in accounts receivable partially offset by a decrease of other liabilities of $1,636,113. 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 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.

Current wording

During the comparable nine-month period in 2024, cash used in operating activities was $100,345 from a net loss of $5,903,142 and included several non-cash expenses of depreciation and amortization expense of $1,951,196 and stock-based compensation expense of $1,087,533. The change in operating assets and liabilities during the nine months ended September 30, 2024, was a net provision of cash of $3,210,679.

Previous 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.

Current wording

Net cash used in investing activities was $1,240,992 for the nine months ended September 30, 2025, and consisted primarily of capitalized internal development costs.

Previous 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.

Current wording

Net cash provided by 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 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.

Current wording

Net cash provided by financing activities was $3,968,636 during the nine months ended September 30, 2025, and was primarily due to the utilization of our Financing Agreement as discussed in Note 5 - Bank Debt.

Previous 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.

Current wording

Net cash used in financing activities during the nine months ended September 30, 2024 was $343,526 and was primarily due to taxes paid on restricted stock unit grants exercised.