Cover Page
Cover Page - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 28, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
Document Transition Report | false | |
Entity File Number | 001-32442 | |
Entity Registrant Name | Inuvo, Inc. | |
Entity Incorporation, State or Country Code | NV | |
Entity Tax Identification Number | 87-0450450 | |
Entity Address, Address Line One | 500 President Clinton Ave., | |
Entity Address, Address Line Two | Suite 300 | |
Entity Address, City or Town | Little Rock | |
Entity Address, State or Province | AR | |
Entity Address, Postal Zip Code | 72201 | |
City Area Code | 501 | |
Local Phone Number | 205-8508 | |
Title of 12(b) Security | Common stock | |
Trading Symbol | INUV | |
Security Exchange Name | NYSEAMER | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 121,641,455 | |
Entity Central Index Key | 0000829323 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets | ||
Cash and cash equivalents | $ 1,969,583 | $ 2,931,415 |
Marketable securities - short term | 0 | 1,529,464 |
Accounts receivable, net of allowance for doubtful accounts of $1,401,803 and $1,440,678, respectively. | 9,120,826 | 11,119,892 |
Prepaid expenses and other current assets | 970,411 | 798,977 |
Total current assets | 12,060,820 | 16,379,748 |
Property and equipment, net | 1,687,309 | 1,668,972 |
Other assets | ||
Goodwill | 9,853,342 | 9,853,342 |
Intangible assets, net of accumulated amortization | 5,403,166 | 5,649,291 |
Referral and support services agreement advance | 725,000 | 800,000 |
Marketable securities - long term | 0 | 660,126 |
Right of use assets - operating lease | 220,740 | 310,162 |
Right of use assets - finance lease | 138,108 | 168,750 |
Other assets | 66,919 | 66,919 |
Total other assets | 16,407,275 | 17,508,590 |
Total assets | 30,155,404 | 35,557,310 |
Current liabilities | ||
Accounts payable | 5,506,837 | 8,044,802 |
Accrued expenses and other current liabilities | 4,932,916 | 5,162,458 |
Line of credit | 592,868 | 0 |
Lease liability - operating lease | 209,658 | 287,523 |
Lease liability - finance lease | 86,276 | 101,003 |
Total current liabilities | 11,328,555 | 13,595,786 |
Long-term liabilities | ||
Deferred tax liability | 107,000 | 107,000 |
Lease liability - operating lease | 12,322 | 23,878 |
Lease liability - finance lease | 50,857 | 70,597 |
Other long-term liabilities | 7,253 | 10,733 |
Total long-term liabilities | 177,432 | 212,208 |
Preferred stock, $0.001 par value: | ||
Authorized shares 500,000, none issued and outstanding | 0 | 0 |
Common stock, $0.001 par value: | ||
Authorized shares 200,000,000; issued and outstanding shares 121,640,362 and 120,137,124, respectively. | 121,641 | 120,138 |
Additional paid-in capital | 179,025,439 | 178,771,604 |
Accumulated other comprehensive loss | 0 | (84,868) |
Accumulated deficit | (160,497,663) | (157,057,558) |
Total stockholders' equity | 18,649,417 | 21,749,316 |
Total liabilities and stockholders' equity | $ 30,155,404 | $ 35,557,310 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Statement of Financial Position [Abstract] | ||
Allowance for doubtful accounts | $ 1,401,803 | $ 1,440,678 |
Preferred stock, par or stated value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 500,000 | 500,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par or stated value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock shares issued (in shares) | 121,640,362 | 120,137,124 |
Common stock shares outstanding (in shares) | 121,640,362 | 120,137,124 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Statement [Abstract] | ||
Net revenue | $ 11,847,440 | $ 18,609,367 |
Cost of revenue | 3,190,563 | 8,661,506 |
Gross profit | 8,656,877 | 9,947,861 |
Operating expenses | ||
Marketing costs | 7,087,550 | 7,169,449 |
Compensation | 3,422,841 | 3,157,706 |
General and administrative | 1,581,889 | 1,726,672 |
Total operating expenses | 12,092,280 | 12,053,827 |
Operating loss | (3,435,403) | (2,105,966) |
Financing expense, net | (19,120) | (999) |
Other income, net | 14,418 | 17,702 |
Net loss | (3,440,105) | (2,089,263) |
Other comprehensive income | ||
Unrealized gain (loss) on marketable securities | 84,868 | (98,156) |
Comprehensive loss | $ (3,355,237) | $ (2,187,419) |
Per common share data: Basic and Diluted | ||
Net loss, basic (in usd per share) | $ (0.03) | $ (0.02) |
Net loss, diluted (in usd per share) | $ (0.03) | $ (0.02) |
Weighted average shares | ||
Basic (in shares) | 120,970,597 | 119,282,114 |
Diluted (in shares) | 120,970,597 | 119,282,114 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Operating activities: | ||
Net loss | $ (3,440,105) | $ (2,089,263) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 639,026 | 689,712 |
Depreciation-Right of Use Assets - Financing | 30,642 | 24,259 |
Stock based compensation | 432,084 | 671,158 |
Grant expense | 5,000 | (10,000) |
Amortization of financing fees | 2,083 | 2,500 |
Recovery of doubtful accounts | (38,875) | (81,753) |
Gain on marketable securities | (14,418) | (17,702) |
Stock warrant expense | (9,874) | 12,483 |
Change in operating assets and liabilities: | ||
Accounts receivable | 2,037,941 | (702,421) |
Referral and support services agreement advance | 75,000 | 75,000 |
Prepaid expenses, unbilled revenue and other current assets | (171,434) | (849,218) |
Accrued expenses and other liabilities | (240,104) | (977,599) |
Accounts payable | (2,537,965) | (327,918) |
Net cash used in operating activities | (3,230,999) | (3,580,762) |
Investing activities: | ||
Purchases of equipment and capitalized development costs | (411,238) | (466,634) |
Purchase of marketable securities | 0 | (1,081,080) |
Proceeds from the sale of marketable securities | 2,288,876 | 548,589 |
Net cash provided by (used in) investing activities | 1,877,638 | (999,125) |
Financing activities: | ||
Net proceeds from line of credit | 592,868 | 0 |
Payments on finance lease obligations | (34,467) | (24,407) |
Net taxes paid on restricted stock unit grants exercised | (166,872) | (128,521) |
Net cash provided by/(used in) financing activities | 391,529 | (152,928) |
Net change – cash | (961,832) | (4,732,815) |
Cash and cash equivalent, beginning of year | 2,931,415 | 10,475,964 |
Cash and cash equivalent, end of period | 1,969,583 | 5,743,149 |
Supplemental information: | ||
Interest paid | $ 29,953 | $ 7,782 |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY - USD ($) | Total | Common Stock | Additional Paid in Capital | Accumulated Deficit | Accumulated Other Comprehensive Income (Loss) |
Beginning balance (in shares) at Dec. 31, 2021 | 118,747,447 | ||||
Beginning balance at Dec. 31, 2021 | $ 32,807,995 | $ 118,748 | $ 176,586,529 | $ (143,951,019) | $ 53,737 |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (2,089,263) | (2,089,263) | |||
Unrealized gain (loss) on debt securities | (98,156) | (98,156) | |||
Stock-based compensation | 671,158 | 671,158 | |||
Stock issued for vested restricted stock awards (in shares) | 1,059,755 | ||||
Stock issued for vested restricted stock awards | 0 | $ 1,060 | (1,060) | ||
Shares withheld for taxes on vested restricted stock | (128,520) | (128,520) | |||
Stock warrants issued for referral agreement | 12,483 | 12,483 | |||
Ending balance (in shares) at Mar. 31, 2022 | 119,807,202 | ||||
Ending balance at Mar. 31, 2022 | 31,175,697 | $ 119,808 | 177,140,590 | (146,040,282) | (44,419) |
Beginning balance (in shares) at Dec. 31, 2022 | 120,137,124 | ||||
Beginning balance at Dec. 31, 2022 | 21,749,316 | $ 120,138 | 178,771,604 | (157,057,558) | (84,868) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Net loss | (3,440,105) | (3,440,105) | |||
Unrealized gain (loss) on debt securities | 84,868 | 84,868 | |||
Stock-based compensation | 432,084 | 432,084 | |||
Stock issued for vested restricted stock awards (in shares) | 1,503,238 | ||||
Stock issued for vested restricted stock awards | 0 | $ 1,503 | (1,503) | ||
Shares withheld for taxes on vested restricted stock | (166,872) | (166,872) | |||
Reversal of expense related to a change in warrant vesting | (9,874) | (9,874) | |||
Ending balance (in shares) at Mar. 31, 2023 | 121,640,362 | ||||
Ending balance at Mar. 31, 2023 | $ 18,649,417 | $ 121,641 | $ 179,025,439 | $ (160,497,663) | $ 0 |
Organization and Business
Organization and Business | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Business | 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 numerous world-renowned names across industries. The Inuvo solution incorporates a proprietary form of artificial intelligence, or AI, branded the IntentKey. This patented machine learning technology uses interactions with Internet content as a source of information from which to predict consumer intent. The AI can identify and advertise to the reasons why consumers are purchasing products and services not to who those consumers are. In this regard, the technology is designed for a privacy conscious future and is focused on 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 clients, Inuvo has also developed a collection of proprietary websites collectively branded as Bonfire Publishing where content is created specifically to attract qualified consumer traffic for clients through the publication of information across a wide range of topics including health, finance, travel, careers, auto, education and lifestyle. These sites 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 CampSight. 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 19 issued and eight pending patents. Liquidity Our principal sources of liquidity are the sale of our common stock and our credit facility discussed in Note 6 - Bank Debt. 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 $14,611,900. During the year ended December 31, 2021 and through 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 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”). 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. As of March 31, 2023, we have approximately $2 million in cash and cash equivalents. Our net working capital was $732 thousand. 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 March 31, 2023, our accumulated deficit was $160.5 million. Management plans to support the Company’s future operations and capital expenditures primarily through 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 from the date of this filing. If our plan to grow the IntentKey product is unsuccessful, we may need to fund operations through private or public sales of securities, debt financings or partnering/licensing transactions over the long term. Customer concentration |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | 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, 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, 2022, which was filed with the SEC on March 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 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 Revenue recognition - We generate revenue by identifying audiences and presenting advertisements on behalf of our 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 or an impression on websites, some of which we own, may be on a CPM or CPC basis. We recognize revenue from ad placement and serving impressions in the period in which they occur. The Company settles ad placement and CPC transactions with its customers net of any adjustments for poor traffic quality. Payments to advertising exchanges that provide access to digital inventory and to a lesser extent, payments to website publishers and app developers that host advertisements we serve are recognized as cost of revenue. The following table provides revenues for Direct Customers, Indirect Customers and Consulting during the periods presented. For the Three Months Ended March 31, 2023 2022 Direct Customers $ 3,919,774 33.1% $ 10,725,569 57.6% Indirect Customers 7,913,190 66.8% 7,839,110 42.2% Consulting 14,476 0.1% 44,688 0.2% Total $ 11,847,440 100% $ 18,609,367 100% 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 |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | 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 As of March 31, 2023 As of December 31, 2022 Level 1 Total Level 1 Total Debt securities $ — $ — $ 936,563 $ 936,563 Equity securities $ — $ — $ 1,253,027 $ 1,253,027 Cash equivalents $ 462,338 $ 462,338 $ 801 $ 801 Total Investments at Fair Value $ 462,338 $ 462,338 $ 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 December 31, 2022 Cost Unrealized Gain (Loss) Fair Value Marketable securities Debt securities $ 1,021,431 $ (84,868) $ 936,563 Equity securities 1,776,773 (523,746) 1,253,027 Total marketable securities $ 2,189,590 |
Property and Equipment
Property and Equipment | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment | Property and Equipment The net carrying value of property and equipment was as follows as of: March 31, 2023 December 31, 2022 Furniture and fixtures $ 293,152 $ 293,152 Equipment 1,268,434 1,265,752 Capitalized internal use and purchased software 14,912,164 14,503,608 Leasehold improvements 458,885 458,885 Subtotal 16,932,635 16,521,397 Less: accumulated depreciation and amortization (15,245,326) (14,852,425) Total $ 1,687,309 $ 1,668,972 |
Other Intangible Assets and Goo
Other Intangible Assets and Goodwill | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Other Intangible Assets and Goodwill | Other Intangible Assets and Goodwill The following is a schedule of intangible assets and goodwill as of March 31, 2023: Term Carrying Accumulated Amortization and Impairment Net Carrying Value Year-to-date Amortization Customer list, Google 20 years $ 8,820,000 $ (4,887,750) $ 3,932,250 $ 110,250 Technology 5 years 3,600,000 (3,600,000) — — Customer list, ReTargeter 5 years 1,931,250 (1,416,250) 515,000 96,562 Customer list, all other 10 years 1,610,000 (1,610,000) — — Brand name, ReTargeter 5 years 643,750 (472,084) 171,666 32,188 Customer relationships 20 years 570,000 (175,750) 394,250 7,125 Trade names, web properties (1) - 390,000 — 390,000 — Intangible assets classified as long-term $ 17,565,000 $ (12,161,834) $ 5,403,166 $ 246,125 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: 2023 (remainder of year) $ 738,375 2024 769,917 2025 469,500 2026 469,500 2027 469,500 Thereafter 2,096,374 Total $ 5,013,166 The following is a schedule of intangible assets and goodwill as of December 31, 2022: Term Carrying Accumulated Amortization and Impairment Net Carrying Value 2022 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 $ — |
Bank Debt
Bank Debt | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Bank Debt | Bank DebtOn 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 (which may increase to 85% if certain conditions are met), up to the maximum credit commitment of $5,000,000. We will pay MHCA monthly interest at the rate of 1.75% in excess of the Wall Street Journal Prime 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 MHCA an amendment fee of $10,000 on issuance of the Agreement, and thereafter an annual commitment fee of $10,000. We are also obligated to pay MHCA a quarterly service fee of 0.20% on the monthly unused amount of the maximum credit line. If we should repay the amounts due under 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 March 31, 2023, the outstanding balances due under the Loan and Security Agreement was $592,868. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses and Other Current Liabilities | Accrued Expenses and Other Current Liabilities The accrued expenses and other current liabilities consist of the following as of: March 31, 2023 December 31, 2022 Accrued marketing costs $ 2,840,364 $ 3,321,598 Accrued payroll and commission liabilities 1,150,815 782,441 Accrued expenses and other 925,428 1,044,664 Arkansas grant contingency 15,000 10,000 Accrued taxes, current portion 1,309 3,755 Total $ 4,932,916 $ 5,162,458 |
Commitments
Commitments | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments | 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 recorded in other current assets. The advance is being amortized as marketing expenses over five years. As of March 31, 2023, $475,000 has been amortized and the balance is $725,000. 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. The total amount of commission recognized as of March 31, 2023 and 2022 was approximately $26,000 and $158,000, respectively. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income TaxesWe 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 $39,109,118. 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 $37,976,018 for the deferred tax assets that may not be realized as of March 31, 2023 and December 31, 2022. We also have deferred tax liabilities totaling $1,240,100 as of March 31, 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. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-Based Compensation | 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 2023 and 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 March 31, 2023, the total number of authorized shares of our common stock under the 2017 ECP was 24,550,000. Compensation Expense For the three months ended March 31, 2023 and March 31, 2022, we recorded stock-based compensation expense for all equity incentive plans of $432,084 and $671,158, respectively. Total compensation cost not yet recognized at March 31, 2023 was $1,881,713, which will be recognized over a weighted-average recognition period of approximately one year. The following table summarizes the stock grants outstanding under 2017 ECP for the three months ended March 31, 2023: Options Outstanding RSUs Outstanding Options and RSUs Exercised Available Shares Total Awards Authorized Total — 3,130,015 6,464,123 14,955,862 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 for the three months ended March 31, 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 three months ended March 31, 2023: RSUs Number of Shares Weighted Average Grant Date Fair Value Outstanding, beginning of period 4,913,339 $ 0.79 Granted 120,000 $ 0.27 Vested (1,903,324) $ 0.87 Outstanding, end of period 3,130,015 $ 0.71 |
Stockholders' Equity
Stockholders' Equity | 3 Months Ended |
Mar. 31, 2023 | |
Equity [Abstract] | |
Stockholders' Equity | Stockholders' Equity 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 warrant exercisable into 300,000 shares of our common stock, at $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 second tranche, we recognized a credit of approximately $10 thousand for three month period ended March 31, 2023 relating to a change in the probability of performance criteria being achieved. Earnings per Share For the three-month period ended March 31, 2023 and 2022, we generated a net loss from continuing operations and as a result, any potential common shares are anti-dilutive. |
Leases
Leases | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Leases | 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 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 March 31, 2023 and December 31, 2022, total operating and financed right-of-use assets were $220,740 and $138,108, and $310,162 and $168,750, respectively. As of March 31, 2023 and 2022, we recorded $30,642 and $24,259, respectively, in amortization expense related to finance leases. 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 Three Months Ended March 31, Cash paid for operating lease liabilities $ 85,650 Weighted-average remaining lease term 2.0 years Weighted-average discount rate 6.25 % Minimum future lease payments ended March 31, 2023 2023 (remainder of year) 207,955 2024 16,236 2025 5,251 2026 1,590 231,032 Less imputed interest (9,052) Total lease liabilities $ 221,980 Information related to our financed lease liabilities are as follows: For the Three Months Ended March 31, Cash paid for finance lease liabilities $ 37,073 Weighted-average remaining lease term 1.8 years Weighted-average discount rate 6.25 % Minimum future lease payments ended March 31, 2023 2023 (remainder of the year) 68,397 2024 56,180 2025 18,491 143,068 Less imputed interest (5,935) Total lease liabilities $ 137,133 |
Leases | 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 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 March 31, 2023 and December 31, 2022, total operating and financed right-of-use assets were $220,740 and $138,108, and $310,162 and $168,750, respectively. As of March 31, 2023 and 2022, we recorded $30,642 and $24,259, respectively, in amortization expense related to finance leases. 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 Three Months Ended March 31, Cash paid for operating lease liabilities $ 85,650 Weighted-average remaining lease term 2.0 years Weighted-average discount rate 6.25 % Minimum future lease payments ended March 31, 2023 2023 (remainder of year) 207,955 2024 16,236 2025 5,251 2026 1,590 231,032 Less imputed interest (9,052) Total lease liabilities $ 221,980 Information related to our financed lease liabilities are as follows: For the Three Months Ended March 31, Cash paid for finance lease liabilities $ 37,073 Weighted-average remaining lease term 1.8 years Weighted-average discount rate 6.25 % Minimum future lease payments ended March 31, 2023 2023 (remainder of the year) 68,397 2024 56,180 2025 18,491 143,068 Less imputed interest (5,935) Total lease liabilities $ 137,133 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Basis of presentation | 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, 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, 2022, which was filed with the SEC on March 9, 2023. |
Use of estimates | 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 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 | Revenue Recognition Revenue recognition - We generate revenue by identifying audiences and presenting advertisements on behalf of our 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 or an impression on websites, some of which we own, may be on a CPM or CPC basis. We recognize revenue from ad placement and serving impressions in the period in which they occur. The Company settles ad placement and CPC transactions with its customers net of any adjustments for poor traffic quality. Payments to advertising exchanges that provide access to digital inventory and to a lesser extent, payments to website publishers and app developers that host advertisements we serve are recognized as cost of revenue. |
Recently Adopted Accounting Pronouncements | 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 |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Accounting Policies [Abstract] | |
Summary of Revenue from Products and Services | The following table provides revenues for Direct Customers, Indirect Customers and Consulting during the periods presented. For the Three Months Ended March 31, 2023 2022 Direct Customers $ 3,919,774 33.1% $ 10,725,569 57.6% Indirect Customers 7,913,190 66.8% 7,839,110 42.2% Consulting 14,476 0.1% 44,688 0.2% Total $ 11,847,440 100% $ 18,609,367 100% |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Fair Value Disclosures [Abstract] | |
Schedule of Investments and Assets at Fair Value | 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 As of March 31, 2023 As of December 31, 2022 Level 1 Total Level 1 Total Debt securities $ — $ — $ 936,563 $ 936,563 Equity securities $ — $ — $ 1,253,027 $ 1,253,027 Cash equivalents $ 462,338 $ 462,338 $ 801 $ 801 Total Investments at Fair Value $ 462,338 $ 462,338 $ 2,190,391 $ 2,190,391 As of December 31, 2022 Cost Unrealized Gain (Loss) Fair Value Marketable securities Debt securities $ 1,021,431 $ (84,868) $ 936,563 Equity securities 1,776,773 (523,746) 1,253,027 Total marketable securities $ 2,189,590 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Property, Plant and Equipment [Abstract] | |
Net Carrying Value of Property and Equipment | The net carrying value of property and equipment was as follows as of: March 31, 2023 December 31, 2022 Furniture and fixtures $ 293,152 $ 293,152 Equipment 1,268,434 1,265,752 Capitalized internal use and purchased software 14,912,164 14,503,608 Leasehold improvements 458,885 458,885 Subtotal 16,932,635 16,521,397 Less: accumulated depreciation and amortization (15,245,326) (14,852,425) Total $ 1,687,309 $ 1,668,972 |
Other Intangible Assets and G_2
Other Intangible Assets and Goodwill (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets from Continuing Operations | The following is a schedule of intangible assets and goodwill as of March 31, 2023: Term Carrying Accumulated Amortization and Impairment Net Carrying Value Year-to-date Amortization Customer list, Google 20 years $ 8,820,000 $ (4,887,750) $ 3,932,250 $ 110,250 Technology 5 years 3,600,000 (3,600,000) — — Customer list, ReTargeter 5 years 1,931,250 (1,416,250) 515,000 96,562 Customer list, all other 10 years 1,610,000 (1,610,000) — — Brand name, ReTargeter 5 years 643,750 (472,084) 171,666 32,188 Customer relationships 20 years 570,000 (175,750) 394,250 7,125 Trade names, web properties (1) - 390,000 — 390,000 — Intangible assets classified as long-term $ 17,565,000 $ (12,161,834) $ 5,403,166 $ 246,125 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. The following is a schedule of intangible assets and goodwill as of December 31, 2022: Term Carrying Accumulated Amortization and Impairment Net Carrying Value 2022 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 $ — |
Schedule of Amortization Expense | Amortization expense over the next five years and thereafter is as follows: 2023 (remainder of year) $ 738,375 2024 769,917 2025 469,500 2026 469,500 2027 469,500 Thereafter 2,096,374 Total $ 5,013,166 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Payables and Accruals [Abstract] | |
Schedule of Accrued Expenses and Other Current Liabilities | The accrued expenses and other current liabilities consist of the following as of: March 31, 2023 December 31, 2022 Accrued marketing costs $ 2,840,364 $ 3,321,598 Accrued payroll and commission liabilities 1,150,815 782,441 Accrued expenses and other 925,428 1,044,664 Arkansas grant contingency 15,000 10,000 Accrued taxes, current portion 1,309 3,755 Total $ 4,932,916 $ 5,162,458 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Stock Grants Outstanding | The following table summarizes the stock grants outstanding under 2017 ECP for the three months ended March 31, 2023: Options Outstanding RSUs Outstanding Options and RSUs Exercised Available Shares Total Awards Authorized Total — 3,130,015 6,464,123 14,955,862 24,550,000 |
Schedule of Stock Option Award Activity | The following table summarizes the activity of stock option awards for the three months ended March 31, 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 — — |
Schedule of Nonvested Restricted Stock Units Activity | The following table summarizes the activities for our RSUs for the three months ended March 31, 2023: RSUs Number of Shares Weighted Average Grant Date Fair Value Outstanding, beginning of period 4,913,339 $ 0.79 Granted 120,000 $ 0.27 Vested (1,903,324) $ 0.87 Outstanding, end of period 3,130,015 $ 0.71 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Schedule of Information Relating to Leases | Information related to our operating lease liabilities are as follows: For the Three Months Ended March 31, Cash paid for operating lease liabilities $ 85,650 Weighted-average remaining lease term 2.0 years Weighted-average discount rate 6.25 % Information related to our financed lease liabilities are as follows: For the Three Months Ended March 31, Cash paid for finance lease liabilities $ 37,073 Weighted-average remaining lease term 1.8 years Weighted-average discount rate 6.25 % |
Schedule of Operating Lease Maturity | Minimum future lease payments ended March 31, 2023 2023 (remainder of year) 207,955 2024 16,236 2025 5,251 2026 1,590 231,032 Less imputed interest (9,052) Total lease liabilities $ 221,980 |
Schedule of Finance Lease Liability | Minimum future lease payments ended March 31, 2023 2023 (remainder of the year) 68,397 2024 56,180 2025 18,491 143,068 Less imputed interest (5,935) Total lease liabilities $ 137,133 |
Organization and Business - Nar
Organization and Business - Narrative (Details) | 3 Months Ended | |||
Mar. 31, 2023 USD ($) patent | Mar. 31, 2022 | Dec. 31, 2022 USD ($) | May 28, 2021 USD ($) | |
Debt Instrument [Line Items] | ||||
Number of patents issued | patent | 19 | |||
Number of pending patents | patent | 8 | |||
Cash and cash equivalents | $ 2,000,000 | |||
Net working capital | 732,000 | |||
Accumulated deficit | $ 160,497,663 | $ 157,057,558 | ||
Sales Agreement | ||||
Debt Instrument [Line Items] | ||||
Sale of stock, consideration received on transaction, authorized amount | $ 14,611,900 | |||
Period for which advance notice is due to terminate agreement | 10 days | |||
Commission fee, percent | 3% | |||
Net Revenue | Customer Concentration Risk | Customer One, Two, Three and Four | ||||
Debt Instrument [Line Items] | ||||
Percentage of concentration risk | 67% | |||
Net Revenue | Customer Concentration Risk | Customer One, Two, and Three | ||||
Debt Instrument [Line Items] | ||||
Percentage of concentration risk | 66.30% | |||
Net Revenue | Customer Concentration Risk | Customer One | ||||
Debt Instrument [Line Items] | ||||
Percentage of concentration risk | 26.40% | 22% | ||
Net Revenue | Customer Concentration Risk | Customer Two | ||||
Debt Instrument [Line Items] | ||||
Percentage of concentration risk | 25.30% | 18.20% | ||
Net Revenue | Customer Concentration Risk | Customer Three | ||||
Debt Instrument [Line Items] | ||||
Percentage of concentration risk | 14.60% | 14.50% | ||
Net Revenue | Customer Concentration Risk | Customer Four | ||||
Debt Instrument [Line Items] | ||||
Percentage of concentration risk | 12.30% | |||
Accounts Receivable | Customer Concentration Risk | Customer One, Two, Three and Four | ||||
Debt Instrument [Line Items] | ||||
Percentage of concentration risk | 64.10% | |||
Accounts Receivable | Customer Concentration Risk | Customer One, Two, and Three | ||||
Debt Instrument [Line Items] | ||||
Percentage of concentration risk | 24% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Summary of Revenue from Products and Services (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 11,847,440 | $ 18,609,367 |
Percentage of total revenue | 100% | 100% |
Consulting | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 14,476 | $ 44,688 |
Percentage of total revenue | 0.10% | 0.20% |
Direct Customers | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 3,919,774 | $ 10,725,569 |
Percentage of total revenue | 33.10% | 57.60% |
Indirect Customers | ||
Disaggregation of Revenue [Line Items] | ||
Net revenue | $ 7,913,190 | $ 7,839,110 |
Percentage of total revenue | 66.80% | 42.20% |
Fair Value Measurements - Summa
Fair Value Measurements - Summary of Investments at Fair Value (Details) - Fair Value, Recurring - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | $ 0 | $ 936,563 |
Equity securities | 0 | 1,253,027 |
Cash equivalents | 462,338 | 801 |
Total Investments at Fair Value | 462,338 | 2,190,391 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities | 0 | 936,563 |
Equity securities | 0 | 1,253,027 |
Cash equivalents | 462,338 | 801 |
Total Investments at Fair Value | $ 462,338 | $ 2,190,391 |
Fair Value Measurements - Sum_2
Fair Value Measurements - Summary of Cash Equivalents and Marketable Securities (Details) - Fair Value, Recurring - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, fair value | $ 0 | $ 936,563 |
Equity securities, fair value | 0 | 1,253,027 |
Level 1 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Debt securities, cost | 1,021,431 | |
Debt securities, unrealized gain (loss) | (84,868) | |
Debt securities, fair value | 0 | 936,563 |
Equity securities, cost | 1,776,773 | |
Equity securities, unrealized gain (loss) | (523,746) | |
Equity securities, fair value | $ 0 | 1,253,027 |
Total marketable securities | $ 2,189,590 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 16,932,635 | $ 16,521,397 | |
Less: accumulated depreciation and amortization | (15,245,326) | (14,852,425) | |
Total | 1,687,309 | 1,668,972 | |
Depreciation expense | 392,901 | $ 356,793 | |
Furniture and fixtures | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 293,152 | 293,152 | |
Equipment | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 1,268,434 | 1,265,752 | |
Capitalized internal use and purchased software | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | 14,912,164 | 14,503,608 | |
Leasehold improvements | |||
Property, Plant and Equipment [Line Items] | |||
Subtotal | $ 458,885 | $ 458,885 |
Other Intangible Assets and G_3
Other Intangible Assets and Goodwill - Schedule of Goodwill and Intangible Assets (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | ||
Net Carrying Value | $ 5,013,166 | |
Year-to-date Amortization | 246,125 | $ 1,071,294 |
Trade names, web properties | 390,000 | 390,000 |
Intangible assets classified as long-term | ||
Carrying Value | 17,565,000 | 17,565,000 |
Accumulated Amortization and Impairment | (12,161,834) | (11,915,709) |
Net Carrying Value | 5,403,166 | 5,649,291 |
Goodwill, Impaired, Accumulated Impairment Loss | ||
Carrying Value | 9,853,342 | 9,853,342 |
Net Carrying Value | $ 9,853,342 | $ 9,853,342 |
Customer list, Google | ||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | ||
Term | 20 years | 20 years |
Carrying Value | $ 8,820,000 | $ 8,820,000 |
Accumulated Amortization and Impairment | (4,887,750) | (4,777,500) |
Net Carrying Value | 3,932,250 | 4,042,500 |
Year-to-date Amortization | $ 110,250 | $ 441,000 |
Technology | ||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | ||
Term | 5 years | 5 years |
Carrying Value | $ 3,600,000 | $ 3,600,000 |
Accumulated Amortization and Impairment | (3,600,000) | (3,600,000) |
Net Carrying Value | 0 | 0 |
Year-to-date Amortization | $ 0 | $ 60,000 |
Customer list, ReTargeter | ||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | ||
Term | 5 years | 5 years |
Carrying Value | $ 1,931,250 | $ 1,931,250 |
Accumulated Amortization and Impairment | (1,416,250) | (1,319,688) |
Net Carrying Value | 515,000 | 611,562 |
Year-to-date Amortization | $ 96,562 | $ 386,250 |
Customer list, all other | ||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | ||
Term | 10 years | 10 years |
Carrying Value | $ 1,610,000 | $ 1,610,000 |
Accumulated Amortization and Impairment | (1,610,000) | (1,610,000) |
Net Carrying Value | 0 | 0 |
Year-to-date Amortization | $ 0 | $ 26,794 |
Brand name, ReTargeter | ||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | ||
Term | 5 years | 5 years |
Carrying Value | $ 643,750 | $ 643,750 |
Accumulated Amortization and Impairment | (472,084) | (439,896) |
Net Carrying Value | 171,666 | 203,854 |
Year-to-date Amortization | $ 32,188 | $ 128,750 |
Customer relationships | ||
Schedule of Finite-Lived Intangible Assets and Goodwill [Line Items] | ||
Term | 20 years | 20 years |
Carrying Value | $ 570,000 | $ 570,000 |
Accumulated Amortization and Impairment | (175,750) | (168,625) |
Net Carrying Value | 394,250 | 401,375 |
Year-to-date Amortization | $ 7,125 | $ 28,500 |
Other Intangible Assets and G_4
Other Intangible Assets and Goodwill - Amortization Expense (Details) | Mar. 31, 2023 USD ($) |
Goodwill and Intangible Assets Disclosure [Abstract] | |
2023 (remainder of year) | $ 738,375 |
2024 | 769,917 |
2025 | 469,500 |
2026 | 469,500 |
2027 | 469,500 |
Thereafter | 2,096,374 |
Net Carrying Value | $ 5,013,166 |
Bank Debt (Details)
Bank Debt (Details) - USD ($) | Mar. 01, 2023 | Mar. 31, 2023 | Dec. 31, 2022 |
Debt Instrument [Line Items] | |||
Line of credit | $ 592,868 | $ 0 | |
Hitachi Capital America Corp. | |||
Debt Instrument [Line Items] | |||
Amendment fee | $ 10,000 | ||
Annual commitment fee amount | $ 10,000 | ||
Quarterly service fee (as a percentage) | 0.20% | ||
Hitachi Capital America Corp. | Debt Covenant Period One | |||
Debt Instrument [Line Items] | |||
Exit fee | $ 50,000 | ||
Hitachi Capital America Corp. | Debt Covenant Period Two | |||
Debt Instrument [Line Items] | |||
Exit fee | 25,000 | ||
Loan And Security Agreement | Hitachi Capital America Corp. | |||
Debt Instrument [Line Items] | |||
Line of credit facility, maximum borrowing capacity | $ 5,000,000 | ||
Percentage of aggregate eligible accounts receivable | 80% | ||
Stated interest rate | 1.75% | ||
Debt instrument, default interest rate | 0.06 | ||
Loan And Security Agreement | Hitachi Capital America Corp. | Maximum | |||
Debt Instrument [Line Items] | |||
Percentage of aggregate eligible accounts receivable | 85% |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) | Mar. 31, 2023 | Dec. 31, 2022 |
Payables and Accruals [Abstract] | ||
Accrued marketing costs | $ 2,840,364 | $ 3,321,598 |
Accrued payroll and commission liabilities | 1,150,815 | 782,441 |
Accrued expenses and other | 925,428 | 1,044,664 |
Arkansas grant contingency | 15,000 | 10,000 |
Accrued taxes, current portion | 1,309 | 3,755 |
Total | $ 4,932,916 | $ 5,162,458 |
Commitments (Details)
Commitments (Details) - USD ($) | 3 Months Ended | |||
Sep. 17, 2021 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Other Commitments [Line Items] | ||||
Referral and support services agreement advance | $ 1,500,000 | $ 725,000 | $ 800,000 | |
Referral agreement term | 5 years | |||
Amortization of referral agreement as marketing expense | 475,000 | |||
Number of securities called by each warrant or right (in shares) | 300,000 | |||
Vesting period | 2 years | |||
Commission recognized | $ 26,000 | $ 158,000 | ||
Other Current Assets | ||||
Other Commitments [Line Items] | ||||
Referral and support services agreement advance | $ 300,000 |
Income Taxes (Details)
Income Taxes (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Income Tax Disclosure [Abstract] | |
Current income tax expense | $ 0 |
Deferred tax asset | 39,109,118 |
Valuation allowance | 37,976,018 |
Deferred tax liability | 1,240,100 |
Net deferred tax liability composed of indefinite lived intangible assets | $ 107,000 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narrative (Details) | 3 Months Ended | |||
Jun. 16, 2022 shares | Jan. 01, 2022 shares | Mar. 31, 2023 USD ($) shares | Mar. 31, 2022 USD ($) | |
Share-Based Payment Arrangement [Abstract] | ||||
Option and restricted stock unit vesting period (up to) | 3 years | |||
Increase in shares of common stock reserved for grants (in shares) | shares | 15,000,000 | 150,000 | ||
Number of shares reserved for issuance (in shares) | shares | 24,550,000 | |||
Stock based compensation | $ | $ 432,084 | $ 671,158 | ||
Compensation cost related to non vested awards not yet recognized | $ | $ 1,881,713 | |||
Average remaining expense recognition period | 1 year | |||
Weighted average forfeiture rate | 0 |
Stock-Based Compensation - Sche
Stock-Based Compensation - Schedule of Grants (Details) - shares | Mar. 31, 2023 | Dec. 31, 2022 |
Share-Based Payment Arrangement [Abstract] | ||
Options Outstanding (in shares) | 0 | 100,000 |
RSUs Outstanding (in shares) | 3,130,015 | |
Options and RSUs Exercised (in shares) | 6,464,123 | |
Available Shares (in shares) | 14,955,862 | |
Total Awards Authorized (in shares) | 24,550,000 |
Stock-Based Compensation - Sc_2
Stock-Based Compensation - Schedule of Outstanding Options (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number of Shares | |
Outstanding beginning balance (in shares) | shares | 100,000 |
Stock options canceled (in shares) | shares | (100,000) |
Outstanding ending balance (in shares) | shares | 0 |
Weighted Average Exercise Price | |
Outstanding beginning balance (in usd per share) | $ / shares | $ 0.52 |
Stock options canceled (in usd per share) | $ / shares | 0.52 |
Outstanding ending balance (in usd per share) | $ / shares | $ 0 |
Stock-Based Compensation - Sc_3
Stock-Based Compensation - Schedule of Unvested RSU (Details) | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number of Shares | |
Outstanding, end of period (in shares) | 3,130,015 |
Restricted Stock Units | |
Number of Shares | |
Outstanding, beginning of period (in shares) | 4,913,339 |
Granted (in shares) | 120,000 |
Vested (in shares) | (1,903,324) |
Outstanding, end of period (in shares) | 3,130,015 |
Weighted Average Grant Date Fair Value | |
Outstanding, beginning of year (in usd per share) | $ / shares | $ 0.79 |
Grants (in usd per share) | $ / shares | 0.27 |
Vested (in usd per share) | $ / shares | 0.87 |
Outstanding, end of year (in usd per share) | $ / shares | $ 0.71 |
Stockholders' Equity (Details)
Stockholders' Equity (Details) | 3 Months Ended | |||
Aug. 31, 2022 shares | Sep. 17, 2021 USD ($) $ / shares tranche shares | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | |
Class of Warrant or Right [Line Items] | ||||
Referral agreement term | 5 years | |||
Class of warrant or right, granted in period (in shares) | shares | 300,000 | |||
Exercise price of warrant (in usd per share) | $ / shares | $ 0.72 | |||
Number of tranches | tranche | 2 | |||
Warrants outstanding | $ | $ 149,551 | |||
Warrants outstanding, term | 7 years | |||
Shares vested (in shares) | shares | 85,862 | |||
Stock warrant credit | $ | $ 9,874 | $ (12,483) | ||
Measurement Input, Implied Volatility | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding, measurement input | 1 | |||
Measurement Input, Risk-free Yield | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding, measurement input | 0.0117 | |||
Measurement Input, Share Price | ||||
Class of Warrant or Right [Line Items] | ||||
Warrants outstanding, measurement input | $ / shares | 0.71 | |||
Maximum | ||||
Class of Warrant or Right [Line Items] | ||||
Referral agreement term | 5 years |
Leases - Narrative (Details)
Leases - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Lessee, Lease, Description [Line Items] | |||
Right of use assets - operating lease | $ 220,740 | $ 310,162 | |
Right of use assets - finance lease | 138,108 | $ 168,750 | |
Finance lease amortization expense | $ 30,642 | $ 24,259 | |
Minimum | |||
Lessee, Lease, Description [Line Items] | |||
Term of contract | 3 years | ||
Maximum | |||
Lessee, Lease, Description [Line Items] | |||
Term of contract | 5 years |
Leases - Operating Leases (Deta
Leases - Operating Leases (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Leases [Abstract] | |
Cash paid for operating lease liabilities | $ 85,650 |
Weighted-average remaining lease term | 2 years |
Weighted-average discount rate | 6.25% |
Minimum future lease payments ended March 31, 2023 | |
2023 (remainder of year) | $ 207,955 |
2024 | 16,236 |
2025 | 5,251 |
2026 | 1,590 |
Payments due | 231,032 |
Less imputed interest | (9,052) |
Total lease liabilities | $ 221,980 |
Leases - Finance Leases (Detail
Leases - Finance Leases (Details) | 3 Months Ended |
Mar. 31, 2023 USD ($) | |
Leases [Abstract] | |
Cash paid for finance lease liabilities | $ 37,073 |
Weighted-average remaining lease term | 1 year 9 months 18 days |
Weighted-average discount rate | 6.25% |
Minimum future lease payments ended March 31, 2023 | |
2023 (remainder of the year) | $ 68,397 |
2024 | 56,180 |
2025 | 18,491 |
Payments due | 143,068 |
Less imputed interest | (5,935) |
Total lease liabilities | $ 137,133 |