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, ~~2022~~2023

☐ 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


Inuvo, Inc.
(Exact name of registrant as specified in its charter)


Nevada			87-0450450
(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 class	Trading Symbol(s)	Name of each exchange on which registered
Common stock	INUV	NYSE 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 filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller 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 Class						November ~~11, 2022~~6, 2023
Common Stock						~~120,134,884~~137,981,678

TABLE OF CONTENTS


		Page No.
Part I

Item 1.	Financial Statements.	5
	Consolidated Balance Sheets	5
	Consolidated Statements of Operations and Comprehensive Loss	6
	Consolidated Statements of Cash Flows	7
	Consolidated Statements of Stockholders' Equity	8
	Notes to Consolidated Financial Statements	10
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations.	1920
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	2324
Item 4.	Controls and Procedures.	2324

Part II

Item 1.	Legal Proceedings.	2324
Item 1A.	Risk Factors.	2425
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	2425
Item 3.	Defaults upon Senior Securities.	2425
Item 4.	Mine Safety and Disclosures.	2425
Item 5.	Other Information.	2425
Item 6.	Exhibits.	2526
Signatures		2627

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, ~~2021~~2022 as filed with the Securities and Exchange Commission ("SEC") on March ~~17, 2022~~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, ~~“third quarter 2021” means for the three months ended September 30, 2021, “2021”~~“2022” means the fiscal year ended December 31, ~~2021~~2022 and ~~“2022”~~“2023” means the fiscal year ending December 31, ~~2022.~~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.

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

INUVO, INC.

CONSOLIDATED BALANCE SHEETS

September 30, ~~2022~~2023 (Unaudited) and December 31, ~~2021~~2022


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Assets	Assets					Assets
Current assets	Current assets					Current assets
Cash and cash equivalents	Cash and cash equivalents	$	5,780,882	$	10,475,964	Cash and cash equivalents	$	6,978,481	$	2,931,415
Marketable securities - short term	Marketable securities - short term	1,871,051		1,927,979		Marketable securities - short term	—		1,529,464
Accounts receivable, net of allowance for doubtful accounts of $462,480 and $202,904, respectively.		9,557,103		9,265,813
Accounts receivable, net of allowance for doubtful accounts of $2,188,450 and $1,440,678, respectively.						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	Prepaid expenses and other current assets	1,092,683		1,408,186		Prepaid expenses and other current assets	959,037		798,977
Total current assets	Total current assets	18,301,719		23,077,942		Total current assets	18,097,245		16,379,748

Property and equipment, net	Property and equipment, net	1,693,407		1,506,766		Property and equipment, net	1,682,427		1,668,972
Other assets	Other assets					Other assets
Goodwill	Goodwill	9,853,342		9,853,342		Goodwill	9,853,342		9,853,342
Intangible assets, net of accumulated amortization	Intangible assets, net of accumulated amortization	5,895,416		6,720,585		Intangible assets, net of accumulated amortization	4,910,916		5,649,291
Referral and support services agreement advance	Referral and support services agreement advance	875,000		1,100,000		Referral and support services agreement advance	575,000		800,000
Marketable securities - long term	Marketable securities - long term	619,546		859,512		Marketable securities - long term	—		660,126
Right of use assets - operating lease	Right of use assets - operating lease	397,850		641,306		Right of use assets - operating lease	882,919		310,162
Right of use assets - finance lease	Right of use assets - finance lease	128,589		201,902		Right of use assets - finance lease	94,266		168,750
Other assets	Other assets	35,170		35,719		Other assets	79,539		66,919
Total other assets	Total other assets	17,804,913		19,412,366		Total other assets	16,395,982		17,508,590

Total assets	Total assets	$	37,800,039	$	43,997,074	Total assets	$	36,175,654	$	35,557,310

Liabilities and Stockholders’ Equity	Liabilities and Stockholders’ Equity					Liabilities and Stockholders’ Equity
Current liabilities	Current liabilities					Current liabilities
Accounts payable	Accounts payable	$	5,651,540	$	4,844,716	Accounts payable	$	7,766,466	$	8,044,802
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	6,281,538		5,374,391		Accrued expenses and other current liabilities	8,440,764		5,162,458
Lease liability - operating lease	Lease liability - operating lease	342,488		340,478		Lease liability - operating lease	170,001		287,523
Lease liability - finance lease	Lease liability - finance lease	92,887		102,954		Lease liability - finance lease	63,219		101,003

Total current liabilities	Total current liabilities	12,368,453		10,662,539		Total current liabilities	16,440,450		13,595,786

Long-term liabilities	Long-term liabilities					Long-term liabilities
Deferred tax liability	Deferred tax liability	107,000		107,000		Deferred tax liability	107,000		107,000

Lease liability - operating lease	Lease liability - operating lease	56,602		300,827		Lease liability - operating lease	717,409		23,878
Lease liability - finance lease	Lease liability - finance lease	39,630		105,411		Lease liability - finance lease	24,243		70,597
Other long-term liabilities	Other long-term liabilities	13,773		13,302		Other long-term liabilities	17,874		10,733
Total long-term liabilities	Total long-term liabilities	217,005		526,540		Total long-term liabilities	866,526		212,208

Stockholders’ equity	Stockholders’ equity					Stockholders’ equity
Preferred stock, $0.001 par value:	Preferred stock, $0.001 par value:					Preferred stock, $0.001 par value:
Authorized shares 500,000, none issued and outstanding	Authorized shares 500,000, none issued and outstanding	—		—		Authorized shares 500,000, none issued and outstanding	—		—
Common stock, $0.001 par value:	Common stock, $0.001 par value:					Common stock, $0.001 par value:
Authorized shares 200,000,000; issued and outstanding shares 120,137,124 and 118,747,447, respectively.		120,138		118,748
Authorized shares 200,000,000; issued and outstanding shares 137,983,918 and 120,137,124, respectively.						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	Additional paid-in capital	178,307,716		176,586,529		Additional paid-in capital	183,776,576		178,771,604
Accumulated other comprehensive (loss) income		(132,502)		53,737
Accumulated other comprehensive loss						Accumulated other comprehensive loss	—		(84,868)
Accumulated deficit	Accumulated deficit	(153,080,771)		(143,951,019)		Accumulated deficit	(165,045,881)		(157,057,558)

Total stockholders' equity	Total stockholders' equity	25,214,581		32,807,995		Total stockholders' equity	18,868,678		21,749,316
Total liabilities and stockholders' equity	Total liabilities and stockholders' equity	$	37,800,039	$	43,997,074	Total liabilities and stockholders' equity	$	36,175,654	$	35,557,310

See accompanying notes to the consolidated financial statements.

INUVO, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(Unaudited)


		For the Three Months Ended September 30,				For the Nine Months Ended September 30,					For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2022		2021		2022		2021			2023		2022		2023		2022
Net revenue	Net revenue	$	17,072,189	$	16,841,035	$	58,332,859	$	40,094,427	Net revenue	$	24,570,588	$	17,072,189	$	53,069,433	$	58,332,859
Cost of revenue	Cost of revenue	6,782,047		3,757,938		24,717,143		7,466,017		Cost of revenue	2,274,626		6,782,047		7,833,729		24,717,143
Gross profit	Gross profit	10,290,142		13,083,097		33,615,716		32,628,410		Gross profit	22,295,962		10,290,142		45,235,704		33,615,716
Operating expenses	Operating expenses									Operating expenses
Marketing costs	Marketing costs	8,620,161		10,163,006		26,778,020		25,681,930		Marketing costs	17,625,806		8,620,161		36,769,972		26,778,020
Compensation	Compensation	3,237,414		2,840,149		9,611,011		8,458,233		Compensation	3,525,943		3,237,414		10,202,200		9,611,011
General and administrative	General and administrative	2,206,119		1,824,869		5,944,027		5,226,737		General and administrative	2,335,295		2,206,119		6,229,069		5,944,027
Total operating expenses	Total operating expenses	14,063,694		14,828,024		42,333,058		39,366,900		Total operating expenses	23,487,044		14,063,694		53,201,241		42,333,058
Operating loss	Operating loss	(3,773,552)		(1,744,927)		(8,717,342)		(6,738,490)		Operating loss	(1,191,082)		(3,773,552)		(7,965,537)		(8,717,342)

Financing expense, net		(13,149)		(6,261)		(11,078)		(36,641)
Financing (expense), net of interest income										Financing (expense), net of interest income	19,852		(13,149)		(37,454)		(11,078)
Other income (expense), net	Other income (expense), net	(23,861)		(79,080)		(401,336)		415,468		Other income (expense), net	250		(23,861)		14,668		(401,336)

Net loss	Net loss	(3,810,562)		(1,830,268)		(9,129,756)		(6,359,663)		Net loss	(1,170,980)		(3,810,562)		(7,988,323)		(9,129,756)
Other comprehensive income	Other comprehensive income									Other comprehensive income
Unrealized gain (loss) on marketable securities	Unrealized gain (loss) on marketable securities	36,170		—		(186,239)		$	—	Unrealized gain (loss) on marketable securities	—		36,170		84,868		$	(186,239)
Comprehensive loss	Comprehensive loss	$	(3,774,392)	$	(1,830,268)	$	(9,315,995)	$	(6,359,663)	Comprehensive loss	$	(1,170,980)	$	(3,774,392)	$	(7,903,455)	$	(9,315,995)

Per common share data	Per common share data									Per common share data
Basic and diluted:	Basic and diluted:									Basic and diluted:

Net loss	Net loss	$	(0.03)	$	(0.02)	$	(0.08)	$	(0.05)	Net loss	$	(0.01)	$	(0.03)	$	(0.06)	$	(0.08)

Weighted average shares	Weighted average shares									Weighted average shares
Basic	Basic	119,995,367		116,645,509		118,838,258		117,230,419		Basic	127,381,051		119,995,367		128,793,522		118,838,258
Diluted	Diluted	119,995,367		116,645,509		118,838,258		117,230,419		Diluted	127,381,051		119,995,367		128,793,522		118,838,258

See accompanying notes to the consolidated financial statements.

INUVO, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		For the Nine Months Ended September 30,					For the Nine Months Ended September 30,
		2022		2021			2023		2022
Operating activities:	Operating activities:					Operating activities:
Net loss	Net loss	$	(9,129,756)	$	(6,359,663)	Net loss	$	(7,988,323)	$	(9,129,756)
Adjustments to reconcile net loss to net cash used in operating activities:	Adjustments to reconcile net loss to net cash used in operating activities:					Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	1,949,845		2,343,874		Depreciation and amortization	1,984,139		1,949,845
Depreciation-Right of Use Assets - Financing	Depreciation-Right of Use Assets - Financing	73,313		237,423		Depreciation-Right of Use Assets - Financing	77,790		73,313
Stock based compensation	Stock based compensation	1,890,991		1,566,016		Stock based compensation	1,471,683		1,890,991
Stock warrant expense		28,477		—
Loss (gain) on marketable securities		401,336		(54,532)
Derecognition of contingency and grant						Derecognition of contingency and grant	—		(10,000)
Amortization of financing fees	Amortization of financing fees	2,500		8,750		Amortization of financing fees	5,833		2,500
Provision (recovery) of doubtful accounts	Provision (recovery) of doubtful accounts	259,576		(47,763)		Provision (recovery) of doubtful accounts	747,772		259,576
Derecognition of contingency and grant		(10,000)		(110,000)
Third party rights agreement termination		—		(420,000)
Loss (gain) on marketable securities						Loss (gain) on marketable securities	(14,418)		401,336
Stock warrant expense						Stock warrant expense	(8,130)		28,477

Change in operating assets and liabilities:	Change in operating assets and liabilities:					Change in operating assets and liabilities:

Accounts receivable	Accounts receivable	(550,866)		(2,645,508)		Accounts receivable	212,393		(550,866)
Prepaid expenses, unbilled revenue and other current assets		316,053		(77,503)
Referral and support services agreement advance	Referral and support services agreement advance	225,000		(1,500,000)		Referral and support services agreement advance	225,000		225,000
Prepaid expenses, other current assets and other assets						Prepaid expenses, other current assets and other assets	(172,679)		316,053
Accrued expenses and other liabilities	Accrued expenses and other liabilities	916,363		1,754,574		Accrued expenses and other liabilities	3,279,560		916,363
Accounts payable	Accounts payable	806,824		632,369		Accounts payable	(278,336)		806,824

Net cash used in operating activities	Net cash used in operating activities	(2,820,344)		(4,671,963)		Net cash used in operating activities	(457,716)		(2,820,344)
Investing activities:	Investing activities:					Investing activities:
Purchases of equipment and capitalized development costs	Purchases of equipment and capitalized development costs	(1,311,315)		(1,180,107)		Purchases of equipment and capitalized development costs	(1,259,217)		(1,311,315)
Purchase of marketable securities	Purchase of marketable securities	(1,693,963)		(2,973,453)		Purchase of marketable securities	—		(1,693,963)
Proceeds from the sale of marketable securities	Proceeds from the sale of marketable securities	1,403,282		102,200		Proceeds from the sale of marketable securities	2,288,873		1,403,282
Net cash used in investing activities		(1,601,996)		(4,051,360)
Net cash provided by (used in) investing activities						Net cash provided by (used in) investing activities	1,029,656		(1,601,996)
Financing activities:	Financing activities:					Financing activities:
Proceeds from sale of common stock, net		—		13,137,500

Proceeds from ValidClick licensing agreement		—		(149,900)

Gross proceeds from line of credit						Gross proceeds from line of credit	592,868		—
Repayments on line of credit						Repayments on line of credit	(592,868)		—
Payments on finance lease obligations	Payments on finance lease obligations	(75,848)		(181,998)		Payments on finance lease obligations	(84,138)		(75,848)

Proceeds from exercise of options		—		1,569

Proceeds from at-the-market sales						Proceeds from at-the-market sales	61,136		—
Capital raise, net of issuance costs						Capital raise, net of issuance costs	3,665,000		—
Net taxes paid on restricted stock unit grants exercised	Net taxes paid on restricted stock unit grants exercised	(196,894)		(272,049)		Net taxes paid on restricted stock unit grants exercised	(166,872)		(196,894)
Net cash (used in)/provided by financing activities		(272,742)		12,535,122
Net cash provided by/(used in) financing activities						Net cash provided by/(used in) financing activities	3,475,126		(272,742)

Net change – cash	Net change – cash	(4,695,082)		3,811,799		Net change – cash	4,047,066		(4,695,082)
Cash and cash equivalent, beginning of year	Cash and cash equivalent, beginning of year	10,475,964		7,890,665		Cash and cash equivalent, beginning of year	2,931,415		10,475,964
Cash and cash equivalent, end of period	Cash and cash equivalent, end of period	$	5,780,882	$	11,702,464	Cash and cash equivalent, end of period	$	6,978,481	$	5,780,882
Supplemental information:	Supplemental information:					Supplemental information:
Interest paid	Interest paid	$	15,128	$	42,474	Interest paid	$	85,488	$	15,128

Non cash investing and financing activities:
Acquisition of right of use asset for operating lease liability						Acquisition of right of use asset for operating lease liability	$	1,105,148	—

Assets purchased under finance lease obligations		$	—	$	125,825
Assets purchased under operating lease obligations		$	—	$	344,311

See accompanying notes to the consolidated financial statements.

INUVO, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(unaudited)

For the Nine Months Ended September 30,


2022
2023													2023
		Common Stock			Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total			Common Stock				Additional Paid in Capital		Accumulated Deficit		Accumulated Other Comprehensive Income (Loss)		Total
		Shares	Stock											Shares		Stock
Balance as of December 31, 2021		118,747,447	$	118,748	$	176,586,529	$	(143,951,019)	$	53,737	$	32,807,995
Balance as of December 31, 2022													Balance as of December 31, 2022	120,137,124		$	120,138	$	178,771,604	$	(157,057,558)	$	(84,868)	$	21,749,316
Net loss	Net loss						(2,089,263)				(2,089,263)		Net loss							(3,440,105)				(3,440,105)
Unrealized loss on debt securities									(98,156)		(98,156)
Unrealized gain on debt securities													Unrealized gain on debt securities									84,868		84,868
Stock-based compensation	Stock-based compensation				671,158						671,158		Stock-based compensation					432,084						432,084
Stock issued for vested restricted stock awards	Stock issued for vested restricted stock awards	1,059,755	1,060		(1,060)						—		Stock issued for vested restricted stock awards	1,503,238		1,503		(1,503)						—
Shares withheld for taxes on vested restricted stock	Shares withheld for taxes on vested restricted stock				(128,520)						(128,520)		Shares withheld for taxes on vested restricted stock					(166,872)						(166,872)
Stock warrants issued for referral agreement					12,483						12,483
Balance as of March 31, 2022		119,807,202	$	119,808	$	177,140,590	$	(146,040,282)	$	(44,419)	$	31,175,697
Reversal of expense related to a change in warrant vesting													Reversal of expense related to a change in warrant vesting					(9,874)						(9,874)
Balance as of March 31, 2023													Balance as of March 31, 2023	121,640,362		$	121,641	$	179,025,439	$	(160,497,663)	$	—	$	18,649,417
Net loss	Net loss						(3,229,927)				(3,229,927)		Net loss							$	(3,377,238)			(3,377,238)
Unrealized loss on debt securities	Unrealized loss on debt securities								(124,253)		(124,253)		Unrealized loss on debt securities											—
Stock-based compensation	Stock-based compensation				684,376						684,376		Stock-based compensation					503,061						503,061
Stock issued for vested restricted stock awards	Stock issued for vested restricted stock awards	66,666	66		(66)						—		Stock issued for vested restricted stock awards	3,333		3		(3)						—
Stock warrants issued for referral agreement	Stock warrants issued for referral agreement				462						462		Stock warrants issued for referral agreement					1,276						1,276

Balance as of June 30, 2022		119,873,868	$	119,874	$	177,825,362	$	(149,270,209)	$	(168,672)	$	28,506,355
Capital raise, net of issuance costs													Capital raise, net of issuance costs	16,000,000		16,000		3,649,000						3,665,000
AGP Closing at-the-market sale													AGP Closing at-the-market sale	173,558	1	174		60,962						61,136
Balance as of June 30, 2023													Balance as of June 30, 2023	137,817,253		$	137,818	$	183,239,735	$	(163,874,901)	$	—	$	19,502,652
Net loss	Net loss						(3,810,562)				(3,810,562)		Net loss							$	(1,170,980)			(1,170,980)
Unrealized gain on debt securities									36,170		36,170
Stock-based compensation	Stock-based compensation				535,458						535,458		Stock-based compensation					$	536,538					536,538
Shares withheld for taxes on vest restricted stock					(68,372)						(68,372)
Stock issued for vested restricted stock awards	Stock issued for vested restricted stock awards	263,256	264		(264)						—		Stock issued for vested restricted stock awards	166,665		$	165	$	(165)					—
Stock warrants issued for referral agreement	Stock warrants issued for referral agreement				15,532						15,532		Stock warrants issued for referral agreement					468						468
Balance as of September 30, 2022		120,137,124	$	120,138	$	178,307,716	$	(153,080,771)	$	(132,502)	$	25,214,581
Balance as of September 30, 2023													Balance as of September 30, 2023	137,983,918		$	137,983	$	183,776,576	$	(165,045,881)	$	—	$	18,868,678


2021
2022											2022
		Common Stock			Additional Paid in Capital		Accumulated Deficit		Total			Common Stock			Additional Paid in Capital		Accumulated Deficit			Accumulated Other Comprehensive Income (Loss)		Total
		Shares	Stock									Shares	Stock
Balance as of December 31, 2020		98,035,829	$	98,036	$	161,541,448	$	(136,350,370)	$	25,289,114
Balance as of December 31, 2021											Balance as of December 31, 2021	118,747,447	$	118,748	$	176,586,529	$	(143,951,019)		$	53,737	$	32,807,995
Net loss	Net loss						(2,147,268)		(2,147,268)		Net loss						(2,089,263)					(2,089,263)
Unrealized loss on debt securities											Unrealized loss on debt securities									(98,156)		(98,156)
Stock-based compensation	Stock-based compensation				394,870				394,870		Stock-based compensation				671,158							671,158
Stock issued for vested restricted stock awards	Stock issued for vested restricted stock awards	1,467,465	1,467		(1,467)				—		Stock issued for vested restricted stock awards	1,059,755	1,060		(1,060)							—
Shares withheld for taxes on vested restricted stock	Shares withheld for taxes on vested restricted stock				(161,244)				(161,244)		Shares withheld for taxes on vested restricted stock				(128,520)							(128,520)
Proceeds from exercise of options					1,569				1,569
Sale of common stock, net		19,015,151	19,016		13,118,484				13,137,500
Balance as of March 31, 2021		118,518,445	$	118,519	$	174,893,660	$	(138,497,638)	$	36,514,541
Stock warrants issued for referral agreement											Stock warrants issued for referral agreement				12,483							12,483
Balance as of March 31, 2022											Balance as of March 31, 2022	119,807,202	$	119,808	$	177,140,590	$	(146,040,282)		$	(44,419)	$	31,175,697
Net loss	Net loss						(2,382,127)		(2,382,127)		Net loss						(3,229,927)					(3,229,927)
Unrealized loss on debt securities											Unrealized loss on debt securities									(124,253)		(124,253)
Stock-based compensation	Stock-based compensation				557,602				557,602		Stock-based compensation				684,376							684,376
Balance as of June 30, 2021		118,518,445	$	118,519	$	175,451,262	$	(140,879,765)	$	34,690,016
Net loss							(1,830,268)		(1,830,268)
Stock issued for vested restricted											Stock issued for vested restricted	66,666	$	66	$	(66)						—
Stock warrants issued for referral											Stock warrants issued for referral				$	462						462
Balance as of June 30, 2022											Balance as of June 30, 2022	119,873,868	$	119,874	$	177,825,362	$	(149,270,209)		$	(168,672)	$	28,506,355
Net Loss											Net Loss						$	(3,810,562)				(3,810,562)
Unrealized gain on debt securities											Unrealized gain on debt securities									$	36,170	36,170
Stock-based compensation	Stock-based compensation				613,544				613,544		Stock-based compensation				535,458							535,458
Shares withheld for taxes on vest restricted stock					(110,805)				(110,805)
Shares withhold for taxes on vest restricted stock											Shares withhold for taxes on vest restricted stock				(68,372)							(68,372)
Stock issued for vested restricted stock awards	Stock issued for vested restricted stock awards	229,002	229		(229)				—		Stock issued for vested restricted stock awards	263,256	264		(264)							—
Stock warrants issued for referral agreement					6,575				6,575
Balance as of September 30, 2021		118,747,447	$	118,748	$	175,960,347	$	(142,710,033)	$	33,369,062
Stock warrants issued for referral											Stock warrants issued for referral				15,532							15,532
Balance as of September 30, 2022											Balance as of September 30, 2022	120,137,124	$	120,138	$	178,307,716	$	(153,080,771)	—	$	(132,502)	$	25,214,581

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 ~~clients~~client's numerous world-renowned ~~names~~brands across industries.

The Inuvo solution incorporates a proprietary form of artificial intelligence, or AI, branded the IntentKey. This patented ~~machine learning~~ technology is a model of the human language built from crawling public content on billions of webpages. The AI uses ~~interactions with Internet content as a source~~this model of ~~information from which~~the language to predict ~~consumer intent. The AI can identify~~ and ~~advertise to~~action audiences based on the reasons why consumers are ~~purchasing products and services~~interested, not to who the people are within those ~~consumers are.~~audiences. In this regard, the technology is designed for a consumer privacy conscious future ~~and is focused on~~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 ~~a collection of~~ proprietary ~~websites~~digital properties collectively branded as Bonfire Publishing where content is created specifically to ~~attract qualified consumer traffic for~~attack the audiences those clients ~~through the publication of~~are targeting. These online publications provide information across a wide range of topics including health, finance, travel, careers, auto, education and lifestyle. ~~These sites~~Collectively, these websites also provide the means to market test various Inuvo advertising technologies. ~~Further, Inuvo also provides Search and Social advertising services through a proprietary set of technologies branded as ValidClick.~~

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 1719 issued and eight pending patents.

Liquidity

As of September 30, ~~2022,~~2023, we have approximately ~~$7.7~~$7.0 million in cash and cash ~~equivalents and short-term marketable securities.~~equivalents. Our net working capital was ~~$5.9~~$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, ~~2022,~~2023, our accumulated deficit was ~~$153.1~~$165.0 million.

Our principal sources of liquidity are the sale of our common stock and our credit facility ~~with Hitachi described~~discussed in Note 6 ~~to our Consolidated Financial Statements.~~ - Bank Debt.

On ~~January 19, 2021,~~May 30, 2023, we raised ~~$8.0~~$4.0 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of ~~13,333,334~~16,000,000 shares of our common ~~stock,~~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 ~~January 22, 2021, we raised an additional $6.25 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 5,681,817 shares of our common stock.~~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$2.0 million in cash equivalent accounts and ~~$10~~$10.0 million in an interest-bearing account. At September 30, ~~2022,~~2023, our funds with the investment management company were approximately ~~$4.2 million~~$68 thousand and were invested in cash and cash equivalent ~~accounts and marketable debt and equity securities.~~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 ~~$35,000,000.~~$14,611,900. During the year ended December 31, 2021 and through ~~September 30, 2022,~~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 “Shelf Registration Statement”).~~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.

WeManagement 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 ~~filing date. We~~date of this filing. If our plan to grow the IntentKey product is unsuccessful, we may need to fund operations ~~over the longer term~~ through private or public sales of securities, debt financings or partnering/licensing ~~transactions. There can be no assurances that financing will be available on acceptable terms, if at all, in~~transactions over the ~~future.~~long term.

Customer concentration

For the three-month period ending September 30, ~~2022, our~~2023, three ~~largest~~ customers ~~by revenue~~ accounted for ~~74.0%~~87.2% of our overall revenue at ~~33.1%~~75.0%, ~~30.0%~~10.0% and ~~10.9%, respectively~~2.2% and for the nine-month period ~~ending~~ended September 30, ~~2022, 61.6%~~2023, 79.8% of our overall revenue at ~~26.1%~~57.6%, ~~26.4%~~15.6% and ~~9.1%~~6.7%, respectively. Those same three customers accounted for ~~70.3%~~55.2% of our gross accounts receivable balance as of September 30, ~~2022.~~2023. As of December 31, ~~2021,~~2022, the same customers accounted for ~~34.3%~~23.9% of our gross accounts receivable balance.

~~COVID-19~~

In March 2020, the World Health Organization classified the COVID-19 outbreak as a pandemic. The full impact of the COVID-19 outbreak continues to evolve as of the date of this report. We continue to monitor the pandemic and related government guidelines and regulations and their impact on our operations, financial condition and liquidity.

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, ~~2021,~~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, ~~2021,~~2022, which was filed with the SEC on March ~~17, 2022.~~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

~~Both~~Revenue recognition - We generate revenue by identifying audiences and presenting advertisements on behalf of our ~~platforms generate~~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 ~~placements and clicks on advertisements~~or an impression on websites, some of which we ~~own.~~own, may be on a CPM or CPC basis. We recognize revenue from ad ~~placements~~placement and ~~clicks~~serving impressions in the period in which they occur. We ~~also recognize revenue from serving impressions when we complete all or a part of an order from an advertiser. The revenue is recognized in the period that the impression is served. We subsequently~~ settle ~~these~~ad placement and CPC transactions with our ~~business partners at which time~~customers net of any adjustments for ~~invalid~~poor traffic ~~may impact the amount collected.~~quality. Payments to ~~publishers who display advertisements on our behalf~~advertising exchanges that provide access to digital inventory and to a lesser extent, payments to ~~ad exchanges~~website publishers and app developers that host advertisements we serve are recognized as cost of revenue.

The ~~below~~following table isprovides revenues for Direct Customers, Indirect Customers and Consulting during the ~~proportion of revenue that is generated through advertisements on our ValidClick (Search and Social) and IntentKey (Programmatic) platforms:~~

For the Three Months Ended September 30, For the Nine Months Ended September 30,
2022 2021 2022 2021
ValidClick Platform $ 11,376,654 66.6 % $ 11,742,855 69.7 % $ 35,895,754 61.5 % $ 29,955,169 74.7 %
IntentKey Platform 5,695,535 33.4 % 5,098,180 30.3 % 22,437,105 38.5 % $ 10,139,258 25.3 %
Total $ 17,072,189 100.0 % $ 16,841,035 100.0 % $ 58,332,859 100.0 % $ 40,094,427 100.0 %

~~Recent Accounting Pronouncements Not Yet Adopted~~

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (ASU 2016-13), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. ASU 2016-13 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. On November 15, 2019, the FASB delayed the effective date for certain small public companies and other private companies. As amended, the effective date of ASC Topic 326 was delayed until fiscal years beginning after December 15, 2022 for SEC filers that are eligible to be smaller reporting companies under the SEC’s definition, as well as private companies and not-for-profit entities. We are currently evaluating the potential impact of this new standard to our consolidated financial statements.periods presented.


	For the Three Months Ended September 30,				For the Nine Months Ended September 30,
		2023	2022			2023			2022
Direct Customers			$	2,981,145	12.1%	$	7,746,866	45.4%	$	10,207,707	19.2%	$	30,032,885	51.5%
Indirect Customers			21,567,138		87.8%	9,310,562		54.5%	$	42,798,227	80.6%	$	28,195,887	48.3%
Consulting			22,305		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

~~Reclassification:~~

Wepresented at the net amount expected to be collected. The adoption of this new standard did not have ~~reclassified amounts pertaining to marketable securities~~a material impact on ~~the statement of cash flows for the nine months ended September 30, 2021 to conform to the current period's presentation.~~our consolidated financial statements.

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 Value				Investment Assets at Fair Value					Investment Assets at Fair Value				Investment Assets at Fair Value
		As of September 30, 2022				As of December 31, 2021					As of September 30, 2023				As of December 31, 2022
		Level 1		Total		Level 1		Total			Level 1		Total		Level 1		Total

Debt securities	Debt securities	$	888,928	$	888,928	$	959,207	$	959,207	Debt securities	$	—	$	—	$	936,563	$	936,563
Equity securities	Equity securities	$	1,601,669	$	1,601,669	$	1,828,284	$	1,828,284	Equity securities	—		—		1,253,027		1,253,027
Cash equivalents	Cash equivalents	$	1,756,382	$	1,756,382	$	5,222,759	$	5,222,759	Cash equivalents	68,474		68,474		801		801
Total Investments at Fair Value	Total Investments at Fair Value	$	4,246,979	$	4,246,979	$	8,010,250	$	8,010,250	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 September 30, 2022						As of December 31, 2022
		Cost		Unrealized Gain (Loss)		Fair Value		Cost		Unrealized Gain (Loss)		Fair Value			As of December 31, 2022
																Cost		Unrealized Gain (Loss)		Fair Value
Marketable securities	Marketable securities													Marketable securities
Debt securities	Debt securities	$	1,021,430	$	(132,502)	$	888,928	$	905,470	$	53,737	$	959,207	Debt securities		$	1,021,431	$	(84,868)	$	936,563
Equity securities	Equity securities	2,216,621		(614,952)		1,601,669		2,100,305		(272,021)		1,828,284		Equity securities		1,776,773		(523,746)		1,253,027
Total marketable securities	Total marketable securities					$	2,490,597					$	2,787,491	Total marketable securities						$	2,189,590

The realized loss on the securities as of September 30, 2023 was approximately $510,000.

Note 4 – Property and Equipment

The net carrying value of property and equipment was as follows as of:


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Furniture and fixtures	Furniture and fixtures	$	293,152	$	293,152	Furniture and fixtures	$	293,152	$	293,152
Equipment	Equipment	1,263,308		1,164,671		Equipment	1,287,925		1,265,752
Capitalized internal use and purchased software	Capitalized internal use and purchased software	14,125,059		12,914,820		Capitalized internal use and purchased software	15,740,652		14,503,608
Leasehold improvements	Leasehold improvements	461,325		458,885		Leasehold improvements	458,885		458,885
Subtotal	Subtotal	16,142,844		14,831,528		Subtotal	17,780,614		16,521,397
Less: accumulated depreciation and amortization	Less: accumulated depreciation and amortization	(14,449,437)		(13,324,762)		Less: accumulated depreciation and amortization	(16,098,187)		(14,852,425)
Total	Total	$	1,693,407	$	1,506,766	Total	$	1,682,427	$	1,668,972

During the three months ended September 30, ~~2022~~2023 and September 30, ~~2021,~~2022, depreciation expense was ~~$394,942~~$420,808 and ~~$325,112,~~$394,942, respectively. During the nine months ended September 30, ~~2022~~2023 and September 30, ~~2021,~~2022, depreciation expense was ~~$1,124,674~~$1,245,762 and ~~$944,746,~~$1,124,674, respectively.

Note 5 – ~~Other~~ Intangible Assets and Goodwill

The following is a schedule of intangible assets and goodwill as of September 30, ~~2022:~~2023:


		Term	Carrying Value		Accumulated Amortization and Impairment		Net Carrying Value		Year-to-date Amortization			Term	Carrying Value		Accumulated Amortization and Impairment		Net Carrying Value		Year-to-date Amortization

Customer list, Google	Customer list, Google	20 years	$	8,820,000	$	(4,667,250)	$	4,152,750	$	330,750	Customer list, Google	20 years	$	8,820,000	$	(5,108,250)	$	3,711,750	$	330,750
Technology	Technology	5 years	3,600,000		(3,600,000)		—		60,000		Technology	5 years	3,600,000		(3,600,000)		—		—
Customer list, ReTargeter	Customer list, ReTargeter	5 years	1,931,250		(1,223,126)		708,124		289,688		Customer list, ReTargeter	5 years	1,931,250		(1,609,375)		321,875		289,687
Customer list, all other	Customer list, all other	10 years	1,610,000		(1,610,000)		—		26,794		Customer list, all other	10 years	1,610,000		(1,610,000)		—		—
Brand name, ReTargeter	Brand name, ReTargeter	5 years	643,750		(407,708)		236,042		96,562		Brand name, ReTargeter	5 years	643,750		(536,459)		107,291		96,563
Customer relationships	Customer relationships	20 years	570,000		(161,500)		408,500		21,375		Customer relationships	20 years	570,000		(190,000)		380,000		21,375
Trade names, web properties (1)	Trade names, web properties (1)	-	390,000		—		390,000		—		Trade names, web properties (1)	-	390,000		—		390,000		—
Intangible assets classified as long-term	Intangible assets classified as long-term		$	17,565,000	$	(11,669,584)	$	5,895,416	$	825,169	Intangible assets classified as long-term		$	17,565,000	$	(12,654,084)	$	4,910,916	$	738,375

Goodwill, total	Goodwill, total	-	$	9,853,342	$	—	$	9,853,342	$	—	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.

~~Amortization expense over the next five years and thereafter is as follows:~~

2022 (remainder of year) $ 246,125
2023 984,500
2024 769,917
2025 469,500
2026 469,500
Thereafter 2,565,876
Total $ 5,505,418

~~Note 6 – Bank Debt~~

On March 12, 2020, we closed on the Loan and Security Agreement dated February 28, 2020 with Hitachi. Under the terms of the Loan and Security Agreement, Hitachi has provided us with a $5,000,000 line of credit commitment. We are permitted to borrow (i) 90% of the aggregate Eligible Accounts Receivable, plus (ii) the lesser of (A) 75% of the aggregate Unbilled

Amortization expense over the next five years and thereafter is as follows:


2023 (remainder of year)	$	246,125
2024	769,917
2025	469,500
2026	469,500
2027	469,500
Thereafter	2,096,374
Total	$	4,520,916

The following is a schedule of intangible assets and goodwill as of December 31, 2022:


	Term	Carrying Value		Accumulated Amortization and Impairment		Net Carrying Value		2022 Amortization

Customer list, Google	20 years	$	8,820,000	$	(4,777,500)	$	4,042,500	$	441,000
Technology	5 years	3,600,000		(3,600,000)		—		60,000
Customer list, ReTargeter	5 years	1,931,250		(1,319,688)		611,562		386,250
Customer list, all other	10 years	1,610,000		(1,610,000)		—		26,794
Brand name, ReTargeter	5 years	643,750		(439,896)		203,854		128,750
Customer relationships	20 years	570,000		(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 ~~or (B) 50% of the amount available~~(which may increase to ~~borrow under (i)~~85% if certain conditions are met), up to the maximum credit ~~commitment.~~commitment of $5,000,000. We will pay ~~Hitachi a~~MHCA monthly interest at the rate of 2%1.75% in excess of the Wall Street Journal Prime ~~Rate, with a minimum rate of 6.75% per annum, on outstanding amounts.~~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 ~~Hitachi a~~MHCA an amendment fee of $10,000 on issuance of the Agreement, and thereafter an annual commitment fee of ~~$50,000, with one half due upon the execution of the agreement and the balance due six months thereafter. Thereafter, we are obligated to pay Hitachi a commitment fee of $15,000 annually.~~$10,000. We are also obligated to pay ~~Hitachi~~MHCA a quarterly service fee of ~~0.30%~~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, ~~2022,~~2023, there were no outstanding balances due under the Loan and Security Agreement.

Note 7 – Accrued Expenses and Other Current Liabilities

The accrued expenses and other current liabilities consist of the following as of:


		September 30, 2022		December 31, 2021			September 30, 2023		December 31, 2022
Accrued marketing costs	Accrued marketing costs	$	4,404,234	$	4,267,980	Accrued marketing costs	$	7,054,416	$	3,321,598
Accrued payroll and commission liabilities						Accrued payroll and commission liabilities	1,096,895		782,441
Accrued expenses and other	Accrued expenses and other	1,006,427		956,998		Accrued expenses and other	272,229		1,044,664
Accrued payroll and commission liabilities		864,239		121,533
Arkansas grant contingency	Arkansas grant contingency	5,000		10,000		Arkansas grant contingency	10,000		10,000
Accrued taxes, current portion	Accrued taxes, current portion	1,638		17,880		Accrued taxes, current portion	7,224		3,755

Total	Total	$	6,281,538	$	5,374,391	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 ~~with $300,000~~which we recorded as a$300,000 in other current ~~asset and $1.2 million as other assets. The advance~~assets, the remainder in non-current assets, which is being amortized as marketing expenses over five years. As of September 30, ~~2022, $325,000~~2023, $625,000 has been ~~amortized.~~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 ~~$35,576,360.~~$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 ~~$33,988,760~~$40,042,968 for the deferred tax assets that may not be realized as of September 30, ~~2022~~2023 and December 31, ~~2021.~~2022. We also have deferred tax liabilities totaling ~~$1,694,600~~$1,517,100 as of September 30, ~~2022,~~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 ~~2022~~2023 and ~~2021~~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, ~~2022,~~2023, the total number of authorized shares of our common stock ~~reserved for issuance~~ 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. ~~For the three and nine months ended~~Total compensation cost not yet recognized at September 30, ~~2021, we recorded stock-based compensation expense for all equity incentive plans~~2023 was $2,051,862, which will be recognized over a weighted-average recognition period of ~~$613,544 and $1,566,016, respectively. Total~~approximately three years.

1617

~~compensation cost not yet recognized at September 30, 2022 was $2,762,270, which will be recognized over a weighted-average recognition period of approximately one year.~~

The following table summarizes the stock grants outstanding under ~~the~~ 2017 ECP ~~and the 2010 Equity Compensation Plan (“2010 ECP”) for the nine months ended~~as of September 30, ~~2022:~~2023:

Options Outstanding RSUs Outstanding Options and RSUs Exercised Available Shares Total Awards Authorized
2017 ECP 100,000 4,913,339 4,560,799 14,975,862 24,550,000
2010 ECP (*) — — 5,011,511 — 5,011,511
Total 100,000 4,913,339 9,572,310 14,975,862 29,561,511

~~(*) Expired April 2020~~


	Options Outstanding	RSUs Outstanding	Options and RSUs Exercised	Available Shares	Total 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 ~~awards~~activity for the nine months ended September 30, ~~2022:~~
Shares Subject to Options Outstanding
Number of Shares Weighted Average Exercise Price
Outstanding, beginning of period 1,500 $ 0.56
Stock options exercised — $ —
Stock options granted 100,000 $ 0.52
Stock options canceled (1,500) $ 0.56
Outstanding, end of period 100,000 0.52
Exercisable, end of period 100,000 0.52
2023:


	Shares Subject to Options Outstanding
	Number of Shares	Weighted Average Exercise Price
Outstanding, beginning of period	100,000	$	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, ~~2022:~~2023:


		RSUs				RSUs
		Number of Shares	Weighted Average Grant Date Fair Value			Number of Shares	Weighted Average Grant Date Fair Value
Outstanding, beginning of period	Outstanding, beginning of period	3,960,001	$	1.33	Outstanding, beginning of period	4,913,339	$	0.79
Granted	Granted	2,960,000	$	0.41	Granted	4,070,000	$	0.31
Vested	Vested	(1,826,661)	$	1.34	Vested	(2,073,322)	$	0.86
Canceled		(180,001)	$	0.95
Cancelled					Cancelled	(50,001)	$	0.54

Outstanding, end of period	Outstanding, end of period	4,913,339	$	0.79	Outstanding, end of period	6,860,016	$	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 ~~$.72~~$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. ~~For the nine- month period ended September 30, 2022, we recognized approximately $28 thousand in expense.~~On

~~Earnings per Share~~August 31,

1718

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- and nine-month periods~~three-month period ended September 30, ~~2022~~2023 and ~~2021,~~2022, we generated a net loss from continuing operations and as a result, any potential common shares are anti-dilutive.

~~Common Stock~~

On January 7, 2021, we filed Articles of Amendment to our Articles of Incorporation in the State of Nevada increasing the number of authorized shares of our common stock from 100,000,000 to 150,000,000. On August 19, 2021, we filed Articles of Amendment to our Articles of Incorporation in the State of Nevada increasing the number of authorized shares of our common stock from 150,000,000 to 200,000,000.

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 ~~five~~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, ~~2022~~2023 and December 31, ~~2021,~~2022, total operating and financed right-of-use assets were ~~$397,850~~$882,919 and ~~$128,589,~~$94,266, and ~~$641,306~~$310,162 and ~~$201,902,~~$168,750, respectively.

As of September 30, ~~2022~~2023 and ~~2021,~~2022, we recorded ~~$73,313~~$77,790 and ~~$237,423,~~$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	$	~~316,597~~85,960
Weighted-average remaining lease term	~~3.2~~3.88 years
Weighted-average discount rate	~~6.25~~10.5		%


Minimum future lease payments ended September 30, 2022
2022 (remainder of the year)		$	97,360
2023		301,029
Minimum future lease payments ended September 30, 2023				Minimum future lease payments ended September 30, 2023
2023 (remainder of year)				2023 (remainder of year)	85,909
2024	2024	16,236		2024	220,665
2025	2025	5,251		2025	209,681
2026	2026	1,590		2026	206,020
2027				2027	204,027
Thereafter				Thereafter	221,030
		421,466			1,147,332
Less imputed interest	Less imputed interest	(22,376)		Less imputed interest	(259,922)
Total lease liabilities	Total lease liabilities	$	399,090	Total lease liabilities	$	887,410

Information related to our financed lease liabilities are as follows:


	For the Nine Months Ended September 30,
Cash paid for finance lease liabilities	$	~~92,622~~22,683
Weighted-average remaining lease term	~~1.6~~1.47 years
Weighted-average discount rate	6.25		%


Minimum future lease payments ended September 30, 2022
2022 (remainder of the year)		$	25,276
2023		84,127
Minimum future lease payments ended September 30, 2023				Minimum future lease payments ended September 30, 2023
2023 (remainder of the year)				2023 (remainder of the year)	15,738
2024	2024	31,220		2024	56,180
2025				2025	18,490
		140,623			90,408
Less imputed interest	Less imputed interest	(8,106)		Less imputed interest	(2,946)
Total lease liabilities	Total lease liabilities	$	132,517	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 ~~clients~~client’s numerous world-renowned ~~names~~brands across industries.

~~Impact of COVID-19 Pandemic~~

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

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 ~~2021~~2022 appearing in our Annual Report on Form 10-K for the year ended December 31, ~~2021~~2022 as filed with the SEC on March ~~17, 2022. 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.~~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,									For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2022		2021		Change		% Change		2022		2021		Change		% Change			2023		2022		Change		% Change		2023		2022		Change		% Change
Net Revenue	Net Revenue	$	17,072,189	$	16,841,035	$	231,154	1.4	%	$	58,332,859	$	40,094,427	$	18,238,432	45.5	%	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 Revenue	Cost of Revenue	6,782,047		3,757,938		3,024,109		80.5	%	24,717,143		7,466,017		17,251,126		231.1	%	Cost of Revenue	2,274,626		6,782,047		(4,507,421)		(66.5)	%	7,833,729		24,717,143		(16,883,414)		(68.3)	%
Gross Profit	Gross Profit	$	10,290,142	$	13,083,097	$	(2,792,955)	(21.3)	%	$	33,615,716	$	32,628,410	$	987,306	3.0	%	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, ~~2022 was up 1%~~2023, increased 43.9% and revenue for the nine-month period ended September 30, 2023, decreased 9.0% as compared to the same ~~time period~~periods in ~~2021. We reported 45%~~2022, respectively. The higher ~~year over year~~ revenue for the nine months ended September 30, 2022 as compared to the same period in 2021. Generally, we believe revenue in the period was negatively impacted by a deceleration in consumer spending. ValidClick revenue was down by 3% for three-month period ending September 30, 2022 compared to the same period in 2021. The ValidClick revenue decrease was due in part to our accounts being shut down due to our dispute with a well-known advertising platform regarding invalid advertising clicks we purchased in the second quarter of this year (See ~~Operating Expenses~~ ~~below). We are currently in an arbitration proceeding with the advertising platform regarding the invalid advertising clicks. IntentKey revenue was up 12%~~ for the three-month period ~~ending~~ended September 30, ~~2022~~2023 compared to comparable prior year period was primarily attributable to an increased focus on Indirect channels and customers since the ~~same period~~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 ~~2021. IntentKey revenue was negatively impacted by~~both the three-months and nine-months periods ended September 30, 2023 due to the loss of Direct clients ~~sourced through an advertising agency that lost~~during the ~~client~~fourth quarter 2022. Refer to ~~a competitor. ValidClick revenue was up by 19.8%~~the table in Note 2 for which provides revenues for Direct Customers and ~~IntentKey up 121% for nine months period ending September 30, 2022. Both platforms acquired new customers within the year.~~Indirect Customers.

Cost of Revenue

Cost of revenue ~~for the three and nine months ended September 30, 2022, was~~is primarily ~~generated by~~composed of payments to advertising exchanges that provide access to ~~a supply of advertising~~digital inventory where we serve ~~advertisements using information predicted by the IntentKey platform and, to~~advertisements. To a lesser extent, cost of revenue includes payments to website publishers and app developers that host advertisements we serve through ValidClick. Cost of revenue associated with ValidClick revenue is small and generates a high gross margin. As ValidClick revenue declines as a percent of total Net Revenue, total gross margin similarly decreases.advertisements. The ~~components of the~~decline in cost of revenue ~~have shifted,~~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 ~~the IntentKey platform revenue becomes a greater percentage of net revenue and as the ValidClick service has continued to expand its owned and operated publishing assets. The increase~~discussed in the ~~cost of revenue~~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 ~~this shift~~changes in revenue ~~and to~~mix, where a greater percent of the ~~acquisition of new customers as mentioned in the~~ ~~Net Revenue~~ ~~section above.~~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,									For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2022		2021		Change		% Change		2022		2021		Change		% Change			2023		2022		Change		% Change		2023		2022		Change		% Change
Marketing costs	Marketing costs	$	8,620,161	$	10,163,006	$	(1,542,845)	(15.2	%)	$	26,778,020	$	25,681,930	$	1,096,090	4.3	%	Marketing costs	$	17,625,806	$	8,620,161	$	9,005,645	104.5	%	$	36,769,972	$	26,778,020	$	9,991,952	37.3	%
Compensation	Compensation	3,237,414		2,840,149		397,265		14.0	%	9,611,011		8,458,233		$	1,152,778	13.6	%	Compensation	3,525,943		3,237,414		288,529		8.9	%	10,202,200		9,611,011		591,189		6.2	%
General and administrative	General and administrative	2,206,119		1,824,869		381,250		20.9	%	5,944,027		5,226,737		$	717,290	13.7	%	General and administrative	2,335,295		2,206,119		129,176		5.9	%	6,229,069		5,944,027		285,042		4.8	%
Operating expenses	Operating expenses	$	14,063,694	$	14,828,024	$	(764,330)	(5.2	%)	$	42,333,058	$	39,366,900	$	2,966,158	7.5	%	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 ~~includes~~include those expenses required to attract an audience to ~~owned and operated~~various web properties. Marketing costs were 104.5% higher for the three months ended September 30, 2022 compared to the same period in 2021 decreased as the result of lower revenue within ValidClick due to ongoing, incidental issues resulting from the invalid advertising clicks acquired in the second quarter of this year. Marketing costs2023 and 37.3% higher for the nine months ended September 30, ~~2022~~2023, compared to the same periods in 2022 due to higher spending focused on Indirect Customers.

As we reported in our Form 10-Q filing for the quarterly period ~~in 2021 increased as the result of higher revenue within ValidClick. In~~ June 30, 2022, we previously identified ~~some of the~~certain advertising ~~we purchased from~~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 ~~by the invalid clicks~~ and reversed any revenue that would have been recognized ~~during the quarter ended June 30, 2022~~ related to this invalid traffic. In addition, ~~we provided evidence to the network from which we bought the media and demanded a refund of the spend. The network~~ in ~~question immediately launched an internal investigation.~~

~~We have~~June 2022, we held back approximately $1.4 million in net payments due ~~until such time as a satisfactory resolution is determined and have not reflected any offsetting adjustment~~ to the ~~related marketing expense and payables. For the time being, the amount held back is recorded as a marketing expense and~~advertising network. On September 21, 2023 we reached an accounts payable. The fraud that was discovered was atypical, sophisticated and not common within the network in question. As of September 30, 2022, no invalid traffic associated from the fraud was detected and the recompense fromagreement with the advertising network ~~is still pending.~~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, ~~2022~~2023, compared to the same time periods in ~~2021~~2022 primarily due ~~primarily~~ to higher salary, ~~expense, stock-based compensation expense~~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 compared to 77 at September 30, 2021.~~2022.

General and administrative costs for the three and nine months ended September 30, ~~2022~~2023 increased ~~21%~~5.9% and ~~14%~~4.8%, respectively, compared to the same periods in ~~2021. These costs included professional fees, facilities, IT costs, travel and entertainment, corporate expenses and depreciation and amortization expense.~~2022. The ~~largest increases~~increase in expense for the three months period ended September 30, ~~2022 as compared~~2023 was due primarily to an increase in the same period last year were from bad debt expense ($247 thousand higher), professional fees ($226 thousand higher) and travel and entertainment ($121 thousand higher), partially offset by lower facilities and amortization expense in 2022.reserve for doubtful accounts.

Financing expense, net

~~Finance expense,~~Financing (expense), net of interest income, for the three and nine months ended September 30, ~~2022~~2023, was approximately ~~$13~~$20 thousand income and ~~$11~~$37 thousand ~~respectively, and was primarily~~expense, respectively. We reported an interest income amount for the three months ended September 30, 2023 due to ~~financing expenses~~a decrease in our utilization of ~~approximately $22 thousand~~our line of credit and ~~$35 thousand, respectively; offset by~~an increase in our bank interest income.

Other income, net ~~of fees, on marketable securities of approximately $9 thousand and $24 thousand, respectively.~~

Other income (expense)~~, net~~ 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.

Other income (expense), net, for the three months ended September 30, 2021 was an expense of approximately $79 thousand and represents unrealized losses on trading securities discussed in Note 3 to our Consolidated Financial Statements. Other income (expense), net, for the nine months ended September 30, 2021 was income of approximately $415 thousand and included the reversal of the deferred revenue from the contract cancellation and the reversal of an accrued sales reserve of $50 thousand.

Liquidity and Capital Resources

As of September 30, ~~2022,~~2023, we have approximately ~~$7.7~~$7.0 million in cash and cash equivalents and ~~short-term marketable securities. Our~~our net working capital was ~~$5.9~~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, ~~2022,~~2023, our accumulated deficit was ~~$153.1~~$165.0 million.

Our principal sources of liquidity are the sale of our common stock and our credit facility ~~with Hitachi described~~discussed in Note 6 ~~to our Consolidated Financial Statements.~~- Bank Debt. On ~~January 19, 2021,~~May 30, 2023, we raised ~~$8.0~~$4.0 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of ~~13,333,334~~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 ~~January 22, 2021, we raised an additional $6.25 million in gross proceeds in a registered direct offering, before expenses, through the sale of an aggregate of 5,681,817 shares of our common stock.~~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, ~~2022,~~2023, our funds with the investment management company were approximately ~~$4.2 million~~$68 thousand and were invested in cash and cash equivalent ~~accounts and marketable debt and equity securities.~~accounts. A detail of the activity is described in Note 3 to our Consolidated Financial Statements.

~~(the~~ (the “ATM Program”) up to an aggregate amount of gross proceeds of ~~$35,000,000.~~$14,611,900. During the year ended December 31, 2021 and through ~~September 30, 2022,~~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. ~~Any~~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 “Shelf Registration Statement”).~~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 ~~grow~~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. We~~months from the date of this filing. If our plan to grow the IntentKey product is unsuccessful, we may need to fund operations ~~over the longer term~~ through private or public sales of securities, debt financings or partnering/licensing ~~transactions. There can be no assurances that financing will be available on acceptable terms, if at all, in~~transactions over the ~~future.~~long term.

Cash Flows

The table below sets forth a summary of our cash flows for the nine months ended September 30, ~~2022~~2023 and ~~2021:~~2022:

For the Nine Months Ended September 30,
2022 2021
Net cash used in operating activities $(2,820,344) $(4,671,963)
Net cash used in investing activities $(1,601,996) $(4,051,360)
Net cash (used in)/provided by financing activities $(272,742) $12,535,122


	For the Nine Months Ended September 30,
	2023	2022
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 ~~$2,820,344~~$457,716 during the nine months ended September 30, ~~2022.~~2023. We reported a net loss of ~~$9,129,756,~~$7,988,323, which included non-cash expenses of depreciation and amortization expense of ~~$1,949,845,~~$1,984,139, depreciation of right of use assets of ~~$73,313~~$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 primarily due to an increase in the accounts receivable balance by $550,866, partially offset by the increase in accrued expenses of $916,363 and accounts payable balance of $806,824. Our ValidClick sales terms are such that we generally collect receivables prior to paying trade payables. Our IntentKey sales arrangements typically have slower payment terms than the terms of related payables. As our IntentKey sales grow proportionally our accounts receivable and our days sales outstanding have increased resulting in increased capital needs for our business and we expect this trend to continue with the anticipated growth of IntentKey. The net loss was partially a result of the network media issue noted in Marketing Expense above. We refunded $1.5 million to our clients and reversed revenue that would have been recognized during the quarter ended June 30, 2022. In addition, we demanded a refund of the spend and held back approximately $1.4 million in net payments until such time as a satisfactory resolution is determined. The held payments may be reversed in future quarters upon a satisfactory resolution.

During the comparable nine-month period in 2021, cash used in operating activities was $4,671,963 from a net loss of $6,359,663, which included several non-cash expenses of depreciation and amortization expense of $2,343,874 and stock-based compensation expense of $1,566,016.$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 ~~and $4,051,360~~ for the nine months ended September 30, 2022, and ~~2021, respectively. Cash used in investing activities in 2022 and 2021~~ consisted primarily of the purchase of marketable securities and ~~to a lesser extent,~~ capitalized internal development costs.

Cash Flows - Financing

Net cash ~~used in~~provided by financing activities was ~~$272,742~~$3,475,126 during the nine months ended September 30, ~~2022.~~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.

~~Net cash provided by financing activities was $12,535,122 during the nine months ended September 30, 2021 was primarily from proceeds from the sale of common stock.~~

Off Balance Sheet Arrangements

As of September 30, ~~2022,~~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, ~~2022,~~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, ~~2022~~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.

~~None.~~

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, ~~2021,~~2022, as filed with the SEC on March ~~17, 2022~~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 ~~2022,~~2023, they accounted for ~~33.1%~~75.0%, ~~30.0%~~10.0% and ~~10.9%~~2.2% of our revenues, respectively. During the same period in ~~2021, three different~~2022, these customers accounted for 10.2%, 33.1%, and 10.9% of our ~~largest~~ revenue ~~source at 36.4%, 14.3% and 13.6%,~~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.

2425

ITEM 6. EXHIBITS

~~No.~~

~~Exhibit Description~~

~~Form~~

~~Date Filed~~

~~Number~~

~~Filed or Furnished Herewith~~

~~3(i).1~~

~~Articles of Incorporation, as amended~~

~~10-KSB~~

~~3/1/04~~

~~3(i).2~~

~~Amended to Articles of Incorporation filed March 14, 2005~~

~~10-KSB~~

~~3/31/06~~

~~3.2~~

~~3(i).3~~

~~Articles of Merger between Inuvo, Inc. and Kowabunga! Inc.~~

~~8-K~~

~~7/24/09~~

~~3.4~~

~~3(i).4~~

~~Certificate of Change Filed Pursuant to NRS 78.209~~

~~8-K~~

~~12/10/10~~

~~3(i).4~~

~~3(i).5~~

~~Certificate of Merger as filed with the Secretary of State of Nevada on February 29, 2012~~

~~10-K~~

~~3/29/12~~

~~3(i).5~~

~~3(i).6~~

~~Articles of Amendment to Amended Articles of Incorporation as filed on February 29, 2012~~

~~10-K~~

~~3/29/12~~

~~3(i).6~~

~~3(i).7~~

~~Articles of Amendment to Amended Articles of Incorporation as filed on October 31, 2019~~

~~10-Q~~

~~5/15/20~~

~~3(i).7~~

~~3(i).8~~

~~Certificate of Validation of Amendment to Amended Articles of Incorporation as filed October~~ 16~~, 2020.~~

~~10-Q~~

~~11/9/20~~

~~3(i).8~~

~~3(i).9~~

~~Articles of Amendment to Articles of Incorporation as filed January 7, 2021~~

~~10-K~~

~~2/11/21~~

~~3(i).9~~

~~3(i).10~~

~~Articles of Amendment to Articles of Incorporation as filed on August 19, 2021~~

~~10-Q~~

~~11/12/21~~

~~3(i).10~~

~~3(ii).1~~

~~Amended and Restated By-Laws~~

~~10-K~~

~~3/31/10~~

~~3(ii).4~~

~~3(ii).2~~

~~Bylaw amendment adopted February 29, 2012~~

~~8-K~~

~~3/6/12~~

~~3(ii).1~~

~~31.1~~

~~Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer~~

~~Filed~~

~~31.2~~

~~Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer~~

~~Filed~~

~~32.1~~

~~Section 1350 certification of Chief Executive Officer~~

~~Furnished~~

~~32.2~~

~~Section 1350 certification of Chief Financial Officer~~

~~Furnished~~

~~101.INS~~

~~Inline XBRL Instance Document~~

~~Filed~~

~~101.SCH~~

~~Inline XBRL Taxonomy Extension Schema Document~~

~~Filed~~

~~101.CAL~~

~~Inline XBRL Taxonomy Extension Calculation Linkbase Document~~

~~Filed~~

~~101.DEF~~

~~Inline XBRL Taxonomy Extension Definition Linkbase Document~~

~~Filed~~

~~101.LAB~~

~~Inline XBRL Taxonomy Extension Label Linkbase Document~~

~~Filed~~

~~101.PRE~~

~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~

~~Filed~~

~~101.PRE~~

~~Inline XBRL Taxonomy Extension Presentation Linkbase Document~~

~~Filed~~

~~104~~

~~The cover page for Inuvo, Inc.’s quarterly report on Form 10-Q for the period ended September 30, 2022, formatted in Inline XBRL (included with Exhibit 101 attachments).~~

~~Filed~~

No.

Exhibit Description

Form

Date Filed

Number

Filed or Furnished Herewith

3(i).1

Articles of Incorporation, as amended

10-KSB

3/1/04

3(i).2

Amended to Articles of Incorporation filed March 14, 2005

10-KSB

3/31/06

3.2

3(i).3

Articles of Merger between Inuvo, Inc. and Kowabunga! Inc.

8-K

7/24/09

3.4

3(i).4

Certificate of Change Filed Pursuant to NRS 78.209

8-K

12/10/10

3(i).4

3(i).5

Certificate of Merger as filed with the Secretary of State of Nevada on February 29, 2012

10-K

3/29/12

3(i).5

3(i).6

Articles of Amendment to Amended Articles of Incorporation as filed on February 29, 2012

10-K

3/29/12

3(i).6

3(i).7

Articles of Amendment to Amended Articles of Incorporation as filed on October 31, 2019

10-Q

5/15/20

3(i).7

3(i).8

Certificate of Validation of Amendment to Amended Articles of Incorporation as filed October 16, 2020.

10-Q

11/9/20

3(i).8

3(i).9

Articles of Amendment to Articles of Incorporation as filed January 7, 2021

10-K

2/11/21

3(i).9

3(i).10

Articles of Amendment to Articles of Incorporation as filed on August 19, 2021

10-Q

11/12/21

3(i).10

3(ii).1

Amended and Restated By-Laws

10-K

3/31/10

3(ii).4

3(ii).2

Bylaw amendment adopted February 29, 2012

8-K

3/6/12

3(ii).1

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

8-K

6/27/23

10.1

10.2

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

8-K

7/25/23

10.1

10.3

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

8-K

8/18/23

10.1

10.4

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

8-K

9/22/23

10.1

31.1

Rule 13a-14(a)/15d-14(a) certification of Chief Executive Officer

Filed

31.2

Rule 13a-14(a)/15d-14(a) certification of Chief Financial Officer

Filed

32.1

Section 1350 certification of Chief Executive Officer

Furnished

32.2

Section 1350 certification of Chief Financial Officer

Furnished

101.INS

Inline XBRL Instance Document

Filed

101.SCH

Inline XBRL Taxonomy Extension Schema Document

Filed

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document

Filed

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document

Filed

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document

Filed

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document

Filed

104

The 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

2526

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 ~~14, 2022~~13, 2023	By:	/s/ Richard K. Howe
		Richard K. Howe,
		Chief Executive Officer, principal executive officer

November ~~14, 2022~~13, 2023	By:	/s/ Wallace D. Ruiz
		Wallace D. Ruiz,
		Chief Financial Officer, principal financial and accounting officer

2627


2022 (remainder of year)	$	246,125
2023	984,500
2024	769,917
2025	469,500
2026	469,500
Thereafter	2,565,876
Total	$	5,505,418