Inuvo, Inc.

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, 2025, as filed with the SEC on March 5, 2026 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 four customers for a significant portion of our revenues.***We are reliant upon four customers for most of our revenue. For the three-month period ending June 30, 2026, four customers accounted for 13.7%, 15.5%, 20.5%, and 30.5% of our overall revenue and for the six-month period ended June 30, 2026, 13.4%, 19.4%, 17.1% and 31.3% of our overall revenue, respectively. For the three-month period ending June 30, 2025, two Legacy Search customers accounted for 66.5% and 19.8% of our overall revenue, respectively and for the six-month period ended June 30, 2025, 68.8% and 18.5% of our overall revenue, 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 customer's 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.

***Our Legacy Search business has experienced significant revenue declines, and we may not be successful in restoring historical revenue levels or profitability.***For the three-month period ended June 30, 2026, we generated $7,535,055 in revenue of which 52.4% was from Legacy Search and 47.6% from Audience Modeling. For the three-month period ended June 30, 2025, we generated $22,671,333 in revenue of which 86.7% was from Legacy Search and 13.3% from Audience Modeling. For the six-month period ended June 30, 2026, we generated $15,462,609 in revenue of which 54.8% was from Legacy Search and 45.2% from Audience Modeling. For the six-month period ended June 30, 2025, we generated $49,379,365 in revenue of which 87.8% was from Legacy Search and 12.2% from Audience Modeling. The decline was primarily driven by changes in the search marketplace, including evolving compliance requirements, traffic quality standards and monetization dynamics associated with third-party advertising platforms. While we have implemented operational, compliance and cost-reduction initiatives intended to adapt to these changing market conditions, there can be no assurance that these efforts will successfully restore revenue, margins or profitability within our Legacy Search business, or at all. If monetization rates decline further, traffic volumes continue to decrease, or third-party platform requirements continue to evolve in ways that adversely impact our business model, our revenue, operating results and cash flows could continue to be negatively affected. In addition, if Legacy Search revenue does not improve, we may be required to implement additional cost reduction measures, including reductions in operating expenses and personnel, which could adversely affect our financial condition.

***We are subject to mandatory redemption obligations under our Note Purchase Agreement, and our failure to satisfy those obligations could have a material adverse effect on our liquidity and financial condition.***On June 29, 2026, we entered into a Note Purchase Agreement with Streeterville Capital, LLC ("Streeterville"), pursuant to which we issued a Secured Promissory Note A-1 and a Secured Promissory Note B (collectively, the "Notes") and used a portion of the proceeds to extinguish our prior obligations under our financing agreement with SLR Digital Finance, LLC and our convertible note held by 3i, LP. Beginning nine months after issuance, Streeterville has the right, at its sole discretion, to redeem up to $750,000 per month under the A-1 Note (the "Monthly Redemption" right); the B Note is not subject to the Monthly Redemption right. Beginning six months after issuance, Streeterville may also redeem amounts under either Note if our common stock trades at a specified premium to a defined minimum price (the "Limited Redemption" right). Our ability to satisfy these redemption obligations as they arise depends on our ability to generate sufficient cash flow from operations and maintain adequate levels of unrestricted cash. A portion of our cash is held in a deposit account subject to a Deposit Account Control Agreement in favor of Streeterville and is not available for general corporate purposes, which reduces the liquidity otherwise available to fund redemptions or other obligations. If our operating cash flow is insufficient, or if restricted cash is not released on a timely basis, we may be unable to satisfy Monthly Redemption or Limited Redemption demands as they are made. The Notes are secured by substantially all of our assets, including our intellectual property, and are guaranteed by our subsidiaries; any failure to satisfy our obligations under the Notes could result in a default and enforcement action against those assets, which would have a material adverse effect on our liquidity, financial condition and results of operations.